Alexandria Real Estate Q3 loss widens to $639M
Nine-month impairment charges totaled $865.9 million, while properties and land were classified as held for sale.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Form Type
10-Q
Alexandria Real Estate Equities, Inc. (ARE) reported third-quarter 2026 total revenue of $671.2 million, versus $751.9 million a year earlier, and a net loss attributable to common stockholders of $638.5 million, compared with $234.9 million. Real estate impairment expense was $637.9 million, versus $323.9 million.
For the nine months ended September 30, 2026, total revenue was $2.005 billion versus $2.272 billion, and net cash provided by operating activities was $875.4 million versus $1.102 billion; real estate impairment charges totaled $865.9 million. As of September 30, 18 operating properties and one development project totaling 1.3 million RSF, plus land parcels totaling 2.1 million SF, were classified as held for sale. A $343.3 million impairment reduced 421 Park Drive’s carrying amount to an estimated fair value less costs to sell of approximately $238.9 million; the company expects to complete the sale within the next 12 months.
During the nine months, ARE issued $1.0 billion of junior subordinated notes and repaid $1.602 billion of unsecured senior notes. Cash and cash equivalents were $508.9 million at September 30, 2026.
0 points · 0 major1 major · 4 points
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- None.
Negative
- Major pointNine-month real estate impairment charges totaled $865.9 million. 12% of market cap
- Moderate pointThird-quarter revenue declined to $671.2 million from $751.9 million.
- Moderate pointNine-month operating cash flow was $875.4 million, versus $1.102 billion.
- Minor pointThird-quarter common-stockholder net loss grew to $638.5 million from $234.9 million.
Filing Explained
The filing records the Campus Point by Alexandria disposition as completed on
Key Figures
Third-quarter total revenue: $671.2 million
Net loss attributable to common stockholders: $638.5 million
Third-quarter real estate impairment expense: $637.9 million
+5 more
8 metrics
Third-quarter total revenue
$671.2 million
Three months ended September 30, 2026; $751.9 million in 2025
Net loss attributable to common stockholders
$638.5 million
Three months ended September 30, 2026; $234.9 million in 2025
Third-quarter real estate impairment expense
$637.9 million
Three months ended September 30, 2026; $323.9 million in 2025
Nine-month total revenue
$2.005 billion
Nine months ended September 30, 2026; $2.272 billion in 2025
Net cash provided by operating activities
$875.4 million
Nine months ended September 30, 2026; $1.102 billion in 2025
Nine-month real estate impairment charges
$865.9 million
Nine months ended September 30, 2026
Operating and development properties held for sale
1.3 million RSF
18 operating properties and one development project as of September 30, 2026
Land parcels held for sale
2.1 million SF
As of September 30, 2026
Key Terms
impairment of real estate, held for sale, redeemable noncontrolling interests, net investment hedges
4 terms
impairment of real estate financial
"impairment of real estate in our consolidated statement of operations"
held for sale financial
"classified as held for sale"
An asset or a group of assets classified as 'held for sale' is one the company intends to sell rather than keep using, and management has committed to that plan with an active effort to find a buyer. Investors care because these items are removed from ongoing operating results and valued differently, offering a clearer view of the business’s continuing performance—think of it like marking a piece of furniture for the garage sale rather than counting it as part of your regular household setup.
redeemable noncontrolling interests financial
"Redeemable noncontrolling interests are adjusted for additional contributions"
A redeemable noncontrolling interest is a minority ownership stake in a company that the holder can force the company to buy back at a set price or under certain conditions. For investors this matters because it creates a future cash obligation and can be treated more like a liability than permanent equity, affecting a company’s reported debt, net income and valuation — think of it as a part-owner who can cash out, forcing the business to pay them.
net investment hedges technical
"cross-currency swap agreements designated and qualifying as net investment hedges"
A net investment hedge is a financial step a company takes to protect the reported value of its ownership in foreign subsidiaries from swings in exchange rates. By using derivatives or foreign‑currency borrowings to offset translation gains or losses, the company reduces how much its balance sheet and reported equity jump around when currencies move — like locking a price tag on a foreign store so its value in the home currency stays steadier for investors.
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What were ARE’s revenue and net loss in the third quarter of 2026?
ARE reported third-quarter 2026 total revenue of $671.2 million and a net loss attributable to common stockholders of $638.5 million. In the third quarter of 2025, total revenue was $751.9 million and the comparable net loss was $234.9 million.
How much real estate impairment did ARE record?
ARE recorded $637.9 million of real estate impairment expense in the third quarter of 2026 and $865.9 million for the nine months ended September 30, 2026. Third-quarter 2025 impairment expense was $323.9 million.
What properties did ARE classify as held for sale?
As of September 30, 2026, ARE classified 18 operating properties and one development project totaling 1.3 million RSF, plus land parcels totaling 2.1 million SF, as held for sale. The company expects to complete the sale of 421 Park Drive within the next 12 months.
AI-generated analysis. How Rhea-AI works. Not financial advice.
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2026
OR
EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission file number 1-12993
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
(Address of principal executive offices) (Zip code)
(626 ) 578-0777
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and
posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting
company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
☒ | Smaller reporting company | |||
Accelerated filer | ☐ | Emerging growth company | ||
Non-accelerated filer | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of October 15, 2026, 174,160,645 shares of common stock, par value $0.01 per share, were outstanding.
i
TABLE OF CONTENTS
Page | ||
PART I – FINANCIAL INFORMATION | ||
Item 1. | FINANCIAL STATEMENTS (UNAUDITED) | |
Consolidated Balance Sheets as of September 30, 2026 and December 31, 2025 .................................................. | 1 | |
Consolidated Financial Statements for the Three and Nine Months Ended September 30, 2026 and 2025: | ||
Consolidated Statements of Operations ................................................................................................................... | 2 | |
Consolidated Statements of Comprehensive Income ............................................................................................ | 3 | |
Consolidated Statements of Changes in Stockholders’ Equity and Noncontrolling Interests .......................... | 4 | |
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2026 and 2025 ................... | 8 | |
Notes to Consolidated Financial Statements .................................................................................................................... | 10 | |
Item 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ........................................................................................................................................................................ | 51 |
Item 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK ......................................................... | 129 |
Item 4. | CONTROLS AND PROCEDURES ..................................................................................................................................... | 130 |
PART II – OTHER INFORMATION | ||
Item 1. | LEGAL PROCEEDINGS ...................................................................................................................................................... | 131 |
Item 1A. | RISK FACTORS .................................................................................................................................................................... | 131 |
Item 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS ................................................... | 131 |
Item 5. | OTHER INFORMATION ....................................................................................................................................................... | 131 |
Item 6. | EXHIBITS ............................................................................................................................................................................... | 132 |
SIGNATURES ................................................................................................................................................................................................. | 133 | |
ii
GLOSSARY
The following abbreviations or acronyms that may be used in this document
have the meanings set forth below:
ASU | Accounting Standards Update |
ATM | At the Market |
CAD | Canadian Dollar |
CIP | Construction in Progress |
EPS | Earnings per Share |
FASB | Financial Accounting Standards Board |
FFO | Funds From Operations |
GAAP | U.S. Generally Accepted Accounting Principles |
IRS | Internal Revenue Service |
JV | Joint Venture |
Nareit | National Association of Real Estate Investment Trusts |
NAV | Net Asset Value |
NYSE | New York Stock Exchange |
REIT | Real Estate Investment Trust |
RSF | Rentable Square Feet/Foot |
SEC | Securities and Exchange Commission |
SF | Square Feet/Foot |
SoDo | South of Downtown submarket of Seattle |
SOFR | Secured Overnight Financing Rate |
U.S. | United States |
USD | U.S. Dollar |
VIE | Variable Interest Entity |
1
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
Alexandria Real Estate Equities, Inc.
Consolidated Balance Sheets
(In thousands)
September 30, 2026 | December 31, 2025 | ||
(Unaudited) | |||
Assets | |||
Investments in real estate | $ | $ | |
Investments in unconsolidated real estate joint ventures | |||
Cash and cash equivalents | |||
Restricted cash | |||
Tenant receivables | |||
Deferred rent | |||
Deferred leasing costs | |||
Investments | |||
Other assets | |||
Total assets | $ | $ | |
Liabilities, Noncontrolling Interests, and Equity | |||
Unsecured senior notes payable | $ | $ | |
Junior subordinated notes payable | |||
Unsecured senior line of credit and commercial paper | |||
Accounts payable, accrued expenses, and other liabilities | |||
Dividends payable | |||
Total liabilities | |||
Commitments and contingencies | |||
Redeemable noncontrolling interests | |||
Alexandria Real Estate Equities, Inc.’s stockholders’ equity: | |||
Common stock | |||
Additional paid-in capital | |||
Accumulated other comprehensive loss | ( | ( | |
Alexandria Real Estate Equities, Inc.’s stockholders’ equity | |||
Noncontrolling interests | |||
Total equity | |||
Total liabilities, noncontrolling interests, and equity | $ | $ |
The accompanying notes are an integral part of these consolidated financial statements.
2
Alexandria Real Estate Equities, Inc.
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||
2026 | 2025 | 2026 | 2025 | ||||
Revenues: | |||||||
Income from rentals | $ | $ | $ | $ | |||
Other income | |||||||
Total revenues | |||||||
Expenses: | |||||||
Rental operations | |||||||
General and administrative | |||||||
Interest | |||||||
Depreciation and amortization | |||||||
Impairment of real estate | |||||||
Total expenses | |||||||
Equity in earnings (losses) of unconsolidated real estate joint ventures | ( | ||||||
Investment income (losses) | ( | ||||||
(Loss) gain on early extinguishment of debt | ( | ( | ( | ||||
Gain on sales of real estate | |||||||
Net loss | ( | ( | ( | ( | |||
Net income attributable to noncontrolling interests | ( | ( | ( | ( | |||
Net loss attributable to Alexandria Real Estate Equities, Inc.’s stockholders | ( | ( | ( | ( | |||
Net income attributable to unvested restricted stock awards | ( | ( | ( | ( | |||
Net loss attributable to Alexandria Real Estate Equities, Inc.’s common stockholders | $( | $( | $( | $( | |||
Net loss per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders: | |||||||
Basic | $( | $( | $( | $( | |||
Diluted | $( | $( | $( | $( | |||
The accompanying notes are an integral part of these consolidated financial statements.
3
Alexandria Real Estate Equities, Inc.
Consolidated Statements of Comprehensive Income
(In thousands)
(Unaudited)
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||
2026 | 2025 | 2026 | 2025 | ||||
Net loss | $( | $( | $( | $( | |||
Other comprehensive (loss) income | |||||||
Change in foreign currency translation adjustments: | |||||||
Unrealized foreign currency translation (losses) gains arising during the period | ( | ( | ( | ||||
Reclassification of gains | ( | ||||||
Unrealized (losses) gains on foreign currency translation, net | ( | ( | ( | ||||
Total other comprehensive (loss) income | ( | ( | ( | ||||
Comprehensive loss | ( | ( | ( | ( | |||
Less: comprehensive income attributable to noncontrolling interests | ( | ( | ( | ( | |||
Comprehensive loss attributable to Alexandria Real Estate Equities, Inc.’s stockholders | $( | $( | $( | $( | |||
The accompanying notes are an integral part of these consolidated financial statements.
4
Alexandria Real Estate Equities, Inc.
Consolidated Statement of Changes in Stockholders’ Equity and Noncontrolling Interests
(Dollars in thousands)
(Unaudited)
Alexandria Real Estate Equities, Inc.’s Stockholders’ Equity | ||||||||||||||||
Number of Common Shares | Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Noncontrolling Interests | Total Equity | Redeemable Noncontrolling Interests | |||||||||
Balance as of June 30, 2026 | $ | $ | $ | $( | $ | $ | $ | |||||||||
Net (loss) income | — | — | — | ( | — | ( | ||||||||||
Total other comprehensive loss | — | — | — | — | ( | — | ( | — | ||||||||
Contributions from and sales of noncontrolling interests | — | — | ( | — | — | — | ||||||||||
Distributions to and redemption of noncontrolling interests | — | — | — | — | — | ( | ( | ( | ||||||||
Issuance pursuant to stock plan | — | — | — | — | ||||||||||||
Taxes related to the net settlement of equity awards | ( | ( | ( | — | — | — | ( | — | ||||||||
Dividends declared on common stock ($ | — | — | — | ( | — | — | ( | — | ||||||||
Reclassification of net loss and distributions | — | — | ( | — | — | — | ||||||||||
Balance as of September 30, 2026 | $ | $ | $ | $( | $ | $ | $ | |||||||||
The accompanying notes are an integral part of these consolidated financial statements.
5
Alexandria Real Estate Equities, Inc.
Consolidated Statement of Changes in Stockholders’ Equity and Noncontrolling Interests
(Dollars in thousands)
(Unaudited)
Alexandria Real Estate Equities, Inc.’s Stockholders’ Equity | ||||||||||||||||
Number of Common Shares | Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Noncontrolling Interests | Total Equity | Redeemable Noncontrolling Interests | |||||||||
Balance as of June 30, 2025 | $ | $ | $ | $( | $ | $ | $ | |||||||||
Net (loss) income | — | — | — | ( | — | ( | ||||||||||
Total other comprehensive loss | — | — | — | — | ( | — | ( | — | ||||||||
Contributions from and sales of noncontrolling interests | — | — | — | — | — | — | ||||||||||
Distributions to and redemption of noncontrolling interests | — | — | ( | — | — | ( | ( | ( | ||||||||
Transfer of noncontrolling interests | — | — | — | — | — | ( | ( | |||||||||
Reallocation of capital to joint venture partner | — | — | ( | — | — | — | ||||||||||
Issuance pursuant to stock plan | — | — | — | — | ||||||||||||
Taxes related to the net settlement of equity awards | ( | ( | ( | — | — | — | ( | — | ||||||||
Dividends declared on common stock ($ | — | — | — | ( | — | — | ( | — | ||||||||
Reclassification of net loss and distributions | — | — | ( | — | — | — | ||||||||||
Balance as of September 30, 2025 | $ | $ | $ | $( | $ | $ | $ | |||||||||
The accompanying notes are an integral part of these consolidated financial statements.
6
Alexandria Real Estate Equities, Inc.
Consolidated Statement of Changes in Stockholders’ Equity and Noncontrolling Interests
(Dollars in thousands)
(Unaudited)
Alexandria Real Estate Equities, Inc.’s Stockholders’ Equity | ||||||||||||||||
Number of Common Shares | Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Noncontrolling Interests | Total Equity | Redeemable Noncontrolling Interests | |||||||||
Balance as of December 31, 2025 | $ | $ | $ | $( | $ | $ | $ | |||||||||
Net (loss) income | — | — | — | ( | — | ( | ||||||||||
Total other comprehensive loss | — | — | — | — | ( | — | ( | — | ||||||||
Contributions from and sales of noncontrolling interests | — | — | — | — | — | |||||||||||
Distributions to and redemption of noncontrolling interests | — | — | — | — | — | ( | ( | ( | ||||||||
Issuance pursuant to stock plan | — | — | — | — | ||||||||||||
Taxes related to the net settlement of equity awards | ( | ( | ( | — | — | — | ( | — | ||||||||
Dividends declared on common stock ($ | — | — | — | ( | — | — | ( | — | ||||||||
Reclassification of net loss and distributions | — | — | ( | — | — | — | ||||||||||
Balance as of September 30, 2026 | $ | $ | $ | $( | $ | $ | $ | |||||||||
The accompanying notes are an integral part of these consolidated financial statements.
7
Alexandria Real Estate Equities, Inc.
Consolidated Statement of Changes in Stockholders’ Equity and Noncontrolling Interests
(Dollars in thousands)
(Unaudited)
Alexandria Real Estate Equities, Inc.’s Stockholders’ Equity | ||||||||||||||||
Number of Common Shares | Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Noncontrolling Interests | Total Equity | Redeemable Noncontrolling Interests | |||||||||
Balance as of December 31, 2024 | $ | $ | $ | $( | $ | $ | $ | |||||||||
Net (loss) income | — | — | — | ( | — | ( | ||||||||||
Total other comprehensive income | — | — | — | — | — | — | ||||||||||
Contributions from and sales of noncontrolling interests | — | — | — | — | — | |||||||||||
Distributions to and redemption of noncontrolling interests | — | — | ( | — | — | ( | ( | ( | ||||||||
Transfer of noncontrolling interests | — | — | — | — | — | ( | ( | |||||||||
Reallocation of capital to joint venture partner | — | — | ( | — | — | — | ||||||||||
Issuance pursuant to stock plan | — | — | — | — | ||||||||||||
Taxes related to the net settlement of equity awards | ( | ( | ( | — | — | — | ( | — | ||||||||
Repurchase of common stock | ( | ( | ( | — | — | — | ( | — | ||||||||
Dividends declared on common stock ($ | — | — | — | ( | — | — | ( | — | ||||||||
Reclassification of net loss and distributions | — | — | ( | — | — | — | ||||||||||
Balance as of September 30, 2025 | $ | $ | $ | $( | $ | $ | $ | |||||||||
The accompanying notes are an integral part of these consolidated financial statements.
8
Alexandria Real Estate Equities, Inc. Consolidated Statements of Cash Flows (In thousands) (Unaudited) | |||
Nine Months Ended September 30, | |||
2026 | 2025 | ||
Operating Activities: | |||
Net loss | $( | $( | |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||
Depreciation and amortization | |||
Impairment of real estate | |||
Gain on sales of real estate | ( | ||
(Gain) loss on early extinguishment of debt | ( | ||
Equity in (earnings) losses of unconsolidated real estate joint ventures | ( | ||
Distributions of earnings from unconsolidated real estate joint ventures | |||
Amortization of loan fees | |||
Amortization of debt discounts | |||
Amortization of acquired above- and below-market leases | ( | ( | |
Deferred rent | ( | ( | |
Stock compensation expense | |||
Investment (income) losses | ( | ||
Changes in operating assets and liabilities: | |||
Tenant receivables | |||
Deferred leasing costs | ( | ( | |
Other assets | ( | ( | |
Accounts payable, accrued expenses, and other liabilities | ( | ( | |
Net cash provided by operating activities | |||
Investing Activities: | |||
Proceeds from sales of real estate | |||
Additions to investments in real estate | ( | ( | |
Sale of interests in unconsolidated real estate joint ventures | |||
Investments in unconsolidated real estate joint ventures | ( | ( | |
Change in escrow deposits | ( | ||
Return of capital from unconsolidated real estate joint ventures | |||
Additions to non-real estate investments | ( | ( | |
Sales of and distributions from non-real estate investments | |||
Net cash used in investing activities | $( | $( | |
9
Alexandria Real Estate Equities, Inc. Consolidated Statements of Cash Flows (In thousands) (Unaudited) | |||
Nine Months Ended September 30, | |||
2026 | 2025 | ||
Financing Activities: | |||
Borrowings under secured notes payable | $ | $ | |
Repayments of borrowings under secured notes payable | ( | ( | |
Proceeds from issuance of unsecured senior notes payable | |||
Repayments of unsecured senior notes payable | ( | ( | |
Proceeds from issuance of junior subordinated notes payable | |||
Proceeds from issuances under commercial paper program | |||
Repayments of borrowings under commercial paper program | ( | ( | |
Payments of loan fees | ( | ( | |
Taxes paid related to net settlement of equity awards | ( | ( | |
Repurchase of common stock | ( | ||
Dividends on common stock | ( | ( | |
Contributions from and sales of noncontrolling interests | |||
Distributions to noncontrolling interests | ( | ( | |
Purchases and redemptions of noncontrolling interests | ( | ( | |
Net cash provided by financing activities | |||
Effect of foreign exchange rate changes on cash and cash equivalents | ( | ( | |
Net (decrease) increase in cash, cash equivalents, and restricted cash | ( | ||
Cash, cash equivalents, and restricted cash as of the beginning of period | |||
Cash, cash equivalents, and restricted cash as of the end of period | $ | $ | |
Supplemental Disclosure and Non-Cash Investing and Financing Activities: | |||
Cash paid during the period for interest, net of interest capitalized | $ | $ | |
Accrued construction for current-period additions to real estate | $ | $ | |
Transfer of real estate assets and/or equipment from tenants | $ | $ | |
Acquisition of real estate and other assets in connection with the assumption of related secured notes payable of an unconsolidated real estate joint venture | $ | $ | |
Notes receivable issued in connection with sales of real estate | $ | $ | |
Derecognition of net investment in real estate from sales-type lease | $ | $ | |
Reallocation of additional paid-in capital to consolidated joint venture partner’s noncontrolling interest | $ | $ | |
Exchange of joint venture interests: | |||
Disposition of our interest in Pacific Technology Park | $ | $ | |
Acquisition of our partner’s noncontrolling interest in 199 East Blaine Street | $ | $ | |
The accompanying notes are an integral part of these consolidated financial statements.
10
Alexandria Real Estate Equities, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
1.ORGANIZATION AND BASIS OF PRESENTATION
Alexandria Real Estate Equities, Inc. (NYSE: ARE), an S&P 500® life science REIT, is 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
Megacampus™ ecosystems in AAA life science and advanced technology innovation cluster locations, including Greater Boston, San
Diego, the San Francisco Bay Area, Seattle, Maryland, Research Triangle, and New York City. As of September 30, 2026, Alexandria
has a total market capitalization of $21.01 billion and an asset base that includes 36.5 million RSF of operating properties and 1.9
million RSF of Class A/A+ properties undergoing construction. As used in this quarterly report on Form 10-Q, references to the
“Company,” “Alexandria,” “ARE,” “we,” “us,” and “our” refer to Alexandria Real Estate Equities, Inc. and its consolidated subsidiaries.
The accompanying unaudited consolidated financial statements include the accounts of Alexandria Real Estate Equities, Inc. and its
consolidated subsidiaries. All significant intercompany balances and transactions have been eliminated.
We have prepared the accompanying interim consolidated financial statements in accordance with GAAP and in conformity
with the rules and regulations of the SEC. In our opinion, these interim consolidated financial statements presented herein reflect all
adjustments of a normal recurring nature necessary to fairly present the interim consolidated financial statements. The results of
operations for the interim period are not necessarily indicative of the results that may be expected for the year ending December 31,
2026. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial
statements and the notes thereto included in our annual report on Form 10-K for the year ended December 31, 2025. Any references to
our total market capitalization, number or quality of buildings or tenants, quality of location, square footage, number of leases, or
occupancy percentage, and any amounts derived from these values in these notes to consolidated financial statements are outside the
scope of our independent registered public accounting firm’s procedures.
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
On an ongoing basis, as circumstances indicate the need for reconsideration, we evaluate each legal entity that is not wholly
owned by us in accordance with the consolidation accounting guidance. Our evaluation considers all of our variable interests, including
equity ownership, as well as fees paid to us for our involvement in the management of each partially owned entity. To fall within the
scope of the consolidation guidance, an entity must meet both of the following criteria:
•The entity has a legal structure that has been established to conduct business activities and to hold assets; such entity
can be in the form of a partnership, limited liability company, or corporation, among others; and
•We have a variable interest in the legal entity — i.e., variable interests that are contractual, such as equity ownership, or
other financial interests that change with changes in the fair value of the entity’s net assets.
If an entity does not meet both criteria above, we apply other accounting literature, such as the equity method of accounting. If
an entity does meet both criteria above, we evaluate such entity for consolidation under either the variable interest model if the legal
entity meets any of the characteristics below to qualify as a VIE, or under the voting model for all other legal entities that are not VIEs.
A legal entity is determined to be a VIE if it has any of the following three characteristics:
1)The entity does not have sufficient equity to finance its activities without additional subordinated financial support;
2)The entity is established with non-substantive voting rights (i.e., the entity deprives the majority economic interest
holder(s) of voting rights); or
3)The equity holders, as a group, lack the characteristics of a controlling financial interest. Equity holders meet this criterion
if they lack any of the following:
•The power, through voting rights or similar rights, to direct the activities of the entity that most significantly influence
the entity’s economic performance, as evidenced by:
•Substantive participating rights in day-to-day management of the entity’s activities; or
•Substantive kick-out rights over the party responsible for significant decisions;
•The obligation to absorb the entity’s expected losses; or
•The right to receive the entity’s expected residual returns.
11
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
For an entity, including our real estate joint ventures, structured as a limited partnership or a limited liability company, our
evaluation of whether the equity holders (equity partners other than the general partner or the managing member of a joint venture) lack
the characteristics of a controlling financial interest includes the evaluation of whether the limited partners or non-managing members
(the noncontrolling equity holders) lack both substantive participating rights and substantive kick-out rights, defined as follows:
•Participating rights provide the noncontrolling equity holders the ability to direct significant financial and operating
decisions made in the ordinary course of business that most significantly influence the entity’s economic performance.
•Kick-out rights allow the noncontrolling equity holders to remove the general partner or managing member without cause.
If we conclude that any of the three characteristics of a VIE is met, including that the equity holders lack the characteristics of a
controlling financial interest because they lack both substantive participating rights and substantive kick-out rights, we conclude that the
entity is a VIE and evaluate it for consolidation under the variable interest model.
Variable interest model
If an entity is determined to be a VIE, we evaluate whether we are the primary beneficiary. The primary beneficiary analysis is
a qualitative analysis based on power and benefits. We consolidate a VIE if we have both power and benefits — that is, (i) we have the
power to direct the activities of a VIE that most significantly influence the VIE’s economic performance (power) and (ii) we have the
obligation to absorb losses of or the right to receive benefits from the VIE that could potentially be significant to the VIE (benefits). We
consolidate VIEs whenever we determine that we are the primary beneficiary. Refer to Note 4 – “Consolidated and unconsolidated real
estate joint ventures” and Note 7 – “Investments” to our unaudited consolidated financial statements for information on specific entities
that qualify as VIEs. If we have a variable interest in a VIE but are not the primary beneficiary, we account for our investment using the
equity method.
Voting model
If a legal entity fails to meet any of the three characteristics of a VIE (i.e., insufficiency of equity, existence of non-substantive
voting rights, or lack of a controlling financial interest), we then evaluate such entity under the voting model. Under the voting model, we
consolidate the entity if we determine that we, directly or indirectly, have greater than 50% of the voting shares (or own a majority of the
limited partnership’s kick-out rights through voting interests), and that other equity holders do not have substantive participating rights.
Refer to Note 4 – “Consolidated and unconsolidated real estate joint ventures” to our unaudited consolidated financial statements for
information on specific real estate joint ventures that qualify for evaluation under the voting model.
Noncontrolling interests in consolidated real estate joint ventures
Noncontrolling interests represent the third-party interests in consolidated real estate joint ventures in which we have a
controlling interest. Certain of our partners’ noncontrolling interests have the right to require us to redeem their ownership interests in
the respective entities. We classify the ownership interests in these entities as redeemable noncontrolling interests outside of total
equity in our consolidated balance sheets. Redeemable noncontrolling interests are adjusted for additional contributions and
distributions, the proportionate share of net earnings or losses, and other comprehensive income or loss. If the amount of a redeemable
noncontrolling interest is less than the maximum redemption value at the balance sheet date, such amount is adjusted to the maximum
redemption value. Subsequent declines in the redemption value are recognized only to the extent that previous increases have been
recognized.
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. Actual results could
materially differ from those estimates.
12
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Evaluation of business combination or asset acquisition
We evaluate each acquisition of real estate or in-substance real estate (including equity interests in entities that predominantly
hold real estate assets) to determine whether the integrated set of assets and activities acquired meets the definition of a business and
must be accounted for as a business combination. An acquisition of an integrated set of assets and activities that does not meet the
definition of a business is accounted for as an asset acquisition. If either of the following criteria is met, the integrated set of assets and
activities acquired would not qualify as a business:
•Substantially all of the fair value of the gross assets acquired is concentrated in either a single identifiable asset or a group
of similar identifiable assets; or
•The integrated set of assets and activities is lacking, at a minimum, an input and a substantive process that together
significantly contribute to the ability to create outputs (i.e., revenue generated before and after the transaction).
An acquired process is considered substantive if:
•The process includes an organized workforce (or includes an acquired contract that provides access to an organized
workforce) that is skilled, knowledgeable, and experienced in performing the process;
•The process cannot be replaced without significant cost, effort, or delay; or
•The process is considered unique or scarce.
Generally, our acquisitions of real estate or in-substance real estate do not meet the definition of a business because
substantially all of the fair value is concentrated in a single identifiable asset or group of similar identifiable assets (i.e., land, buildings,
and related intangible assets) or because the acquisition does not include a substantive process in the form of an acquired workforce or
an acquired contract that cannot be replaced without significant cost, effort, or delay. When evaluating acquired service or management
contracts, we consider the nature of the services performed, the terms of the contract relative to similar arm’s-length contracts, and the
availability of comparable vendors in evaluating whether the acquired contract constitutes a substantive process.
Recognition of real estate acquired
We evaluate each acquisition of real estate or in-substance real estate (including equity interests in entities that predominantly
hold real estate assets) to determine whether the integrated set of assets and activities acquired meets the definition of a business and
must be accounted for as a business combination. An acquisition of an integrated set of assets and activities that does not meet the
definition of a business is accounted for as an asset acquisition.
For acquisitions of real estate or in-substance real estate that are accounted for as business combinations, we allocate the
acquisition consideration (excluding acquisition costs) to the assets acquired, liabilities assumed, noncontrolling interests, and
previously existing ownership interests at fair value as of the acquisition date. Assets include intangible assets such as tenant
relationships, acquired in-place leases, and favorable intangibles associated with in-place leases in which we are the lessor. Liabilities
include unfavorable intangibles associated with in-place leases in which we are the lessor. In addition, for acquired in-place finance or
operating leases in which we are the lessee, acquisition consideration is allocated to lease liabilities and related right-of-use assets,
adjusted to reflect favorable or unfavorable terms of the lease when compared with market terms. Any excess (deficit) of the
consideration transferred relative to the fair value of the net assets acquired is accounted for as goodwill (bargain purchase gain).
Acquisition costs related to business combinations are expensed as incurred.
Generally, we expect that acquisitions of real estate or in-substance real estate will not meet the definition of a business
because substantially all of the fair value is concentrated in a single identifiable asset or group of similar identifiable assets (i.e., land,
buildings, and related intangible assets). The accounting model for asset acquisitions is similar to the accounting model for business
combinations, except that the acquisition consideration (including acquisition costs) is allocated to the individual assets acquired and
liabilities assumed on a relative fair value basis. Any excess (deficit) of the consideration transferred relative to the sum of the fair value
of the assets acquired and liabilities assumed is allocated to the individual assets and liabilities based on their relative fair values. As a
result, asset acquisitions do not result in the recognition of goodwill or a bargain purchase gain. Incremental and external direct
acquisition costs related to acquisitions of real estate or in-substance real estate (such as legal and other third-party services) are
capitalized.
13
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
We exercise judgment to determine the key assumptions used to allocate the purchase price of real estate acquired among its
components. The allocation of the consideration to the various components of properties acquired during the year can have an effect on
our net income due to the useful depreciable and amortizable lives applicable to each component and the recognition of the related
depreciation and amortization expense in our consolidated statements of operations. We apply judgment in utilizing available
comparable market information to assess relative fair value. We assess the relative fair values of tangible and intangible assets and
liabilities based on available comparable market information, including estimated replacement costs, rental rates, and recent market
transactions. In addition, we may use estimated cash flow projections that utilize appropriate discount and capitalization rates.
Estimates of future cash flows are based on a number of factors, including the historical operating results, known and anticipated
trends, and market/economic conditions that may affect the property.
The value of tangible assets acquired is based upon our estimation of fair value on an “as if vacant” basis. The value of
acquired in-place leases includes the estimated costs during the hypothetical lease-up period and other costs that would have been
incurred in the execution of similar leases under the market conditions at the acquisition date of the acquired in-place lease. If there is a
bargain fixed-rate renewal option for the period beyond the noncancelable lease term of an in-place lease, we evaluate intangible
factors, such as the business conditions in the industry in which the lessee operates, the economic conditions in the area in which the
property is located, and the ability of the lessee to sublease the property during the renewal term, in order to determine the likelihood
that the lessee will renew. When we determine that the lessee is reasonably certain to exercise such bargain renewal option, we
consider the option in determining the intangible value of such lease and its related amortization period. We also recognize the relative
fair values of assets acquired, the liabilities assumed, and any noncontrolling interest in acquisitions of less than a 100% interest when
the acquisition constitutes a change in control of the acquired entity.
Depreciation and amortization
The values allocated to buildings and building improvements, land improvements, tenant improvements, and equipment are
depreciated on a straight-line basis. For buildings and building improvements, we depreciate using the shorter of the respective ground
lease terms or their estimated useful lives, not to exceed 40 years. Land improvements are depreciated over their estimated useful
lives, not to exceed 20 years. Tenant improvements are depreciated over their respective lease terms or estimated useful lives, and
equipment is depreciated over the shorter of the lease term or its estimated useful life. Right-of-use assets are amortized on a straight-
line basis over the remaining terms of each related lease. The values of acquired in-place leases and associated favorable intangibles
(i.e., acquired above-market leases) are classified in other assets in our consolidated balance sheets and are amortized over the
remaining terms of the related leases as a reduction of income from rentals in our consolidated statements of operations. The values of
unfavorable intangibles (i.e., acquired below-market leases) associated with acquired in-place leases are classified in accounts
payable, accrued expenses, and other liabilities in our consolidated balance sheets and are amortized over the remaining terms of the
related leases as an increase in income from rentals in our consolidated statements of operations.
Capitalized project costs
We capitalize project costs, including pre-construction costs, interest, property taxes, insurance, and other costs directly
related and essential to the development, redevelopment, pre-construction, or construction of a project. Capitalization of development,
redevelopment, pre-construction, and construction costs is required while activities are ongoing to prepare an asset for its intended use.
Fluctuations in our development, redevelopment, pre-construction, and construction activities could result in significant changes to total
expenses and net income. Costs incurred after a project is substantially complete and ready for its intended use are expensed as
incurred. Should development, redevelopment, pre-construction, or construction activity cease, interest, property taxes, insurance, and
certain other costs would no longer be eligible for capitalization and would be expensed as incurred. Expenditures for repairs and
maintenance are expensed as incurred.
Real estate sales
A property is classified as held for sale when all of the following criteria for a plan of sale have been met: (i) management,
having the authority to approve the action, commits to a plan to sell the property; (ii) the property is available for immediate sale in its
present condition, subject only to terms that are usual and customary; (iii) an active program to locate a buyer and other actions
required to complete the plan to sell have been initiated; (iv) the sale of the property is probable and is expected to be completed within
(vi) actions necessary to complete the plan of sale indicate that it is unlikely that significant changes to the plan will be made or that the
plan will be withdrawn. Depreciation of assets ceases upon designation of a property as held for sale.
If the disposal of a property represents a strategic shift that has (or will have) a major effect on our operations or financial
results, such as (i) a major line of business, (ii) a major geographic area, (iii) a major equity method investment, or (iv) other major parts
of an entity, then the operations of the property, including any interest expense directly attributable to it, are classified as discontinued
operations in our consolidated statements of operations, and amounts for all prior periods presented are reclassified from continuing
operations to discontinued operations. The disposal of an individual property generally will not represent a strategic shift and therefore
will typically not meet the criteria for classification as a discontinued operation.
14
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
We recognize gains or losses on real estate sales in accordance with the accounting standard on the derecognition of
nonfinancial assets arising from contracts with noncustomers. Our ordinary output activities consist of the leasing of space to our
tenants in our operating properties, not the sales of real estate. Therefore, sales of real estate (in which we are the seller) qualify as
contracts with noncustomers. In our transactions with noncustomers, we apply certain recognition and measurement principles
consistent with our method of recognizing revenue arising from contracts with customers. Derecognition of the asset is based on the
transfer of control. If a real estate sales contract includes our ongoing involvement with the property, then we evaluate each promised
good or service under the contract to determine whether it represents a separate performance obligation, constitutes a guarantee, or
prevents the transfer of control. If a good or service is considered a separate performance obligation, an allocated portion of the
transaction price is recognized as revenue as we transfer the related good or service to the buyer.
The recognition of gain or loss on the sale of a partial interest also depends on whether we retain a controlling or
noncontrolling interest in the property. If we retain a controlling interest in the property upon completion of the sale, we continue to
reflect the asset at its book value, record a noncontrolling interest for the book value of the partial interest sold, and recognize additional
paid-in capital for the difference between the consideration received and the partial interest at book value. Conversely, if we retain a
noncontrolling interest upon completion of the sale of a partial interest of real estate, we recognize a gain or loss as if 100% of the asset
were sold.
Prior to and subsequent to the end of each quarter, we review current activities and changes in the business conditions of all of
our long-lived assets to determine the existence of any triggering events or impairment indicators requiring an impairment analysis. If
triggering events or impairment indicators are identified, we review an estimate of the future undiscounted cash flows, including, if
necessary, a probability-weighted approach if multiple outcomes are under consideration.
Long-lived assets to be held and used, including our rental properties, CIP, land held for development, right-of-use assets
related to operating leases in which we are the lessee, and intangibles, are individually evaluated for impairment when conditions exist
that may indicate that the carrying amount of a long-lived asset may not be recoverable. The carrying amount of a long-lived asset to be
held and used is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual
disposition of the asset. Triggering events or impairment indicators for long-lived assets to be held and used are assessed by project
and include significant fluctuations in estimated net operating income, occupancy changes, significant near-term lease expirations,
current and historical operating and/or cash flow losses, construction costs, estimated completion dates, rental rates, and other market
factors. We assess the expected undiscounted cash flows based upon numerous factors, including, but not limited to, projected rental
rates, estimated exit capitalization rates, and anticipated construction costs for projects under construction, which are based on
available market information, current and historical operating results, known trends, current market/economic conditions that may affect
the asset, and our assumptions about the use of the asset, including, if necessary, a probability-weighted approach if multiple outcomes
are under consideration.
Upon determination that an impairment has occurred, a write-down is recognized to reduce the carrying amount of the asset to
its estimated fair value. If an impairment charge is not required to be recognized, the recognition of depreciation or amortization is
adjusted prospectively, as necessary, to reduce the carrying amount of the asset to its estimated disposition value over the remaining
period that the asset is expected to be held and used. We may adjust depreciation of properties that are expected to be disposed of or
redeveloped prior to the end of their useful lives.
We use the held for sale impairment model for our properties classified as held for sale, which is different from the held and
used impairment model. Under the held for sale impairment model, an impairment charge is recognized if the carrying amount of the
long-lived asset classified as held for sale exceeds its fair value less cost to sell. Because of these two different models, it is possible for
a long-lived asset previously classified as held and used to require the recognition of an impairment charge upon classification as held
for sale.
As of September 30, 2026, in addition to operating properties in the U.S., we had 11 properties in Canada. The functional
currency for our subsidiaries operating in the U.S. is the U.S. dollar. The local currency of a foreign subsidiary serves as its functional
currency. The assets and liabilities of our foreign subsidiaries are translated into U.S. dollars at the exchange rate in effect as of the
financial statement date. Revenue and expense accounts of our foreign subsidiaries are translated using the weighted-average
exchange rate for the periods presented. Gains or losses resulting from the translation are classified in accumulated other
comprehensive income (loss) as a separate component of total equity and are excluded from net income (loss).
15
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Whenever a foreign investment meets the criteria for classification as held for sale, we evaluate the recoverability of the
investment under the held for sale impairment model. We may recognize an impairment charge if the carrying amount of the investment
exceeds its fair value less cost to sell. In determining an investment’s carrying amount, we consider its net book value and any
cumulative unrealized foreign currency translation adjustment related to the investment. The appropriate amounts of foreign exchange
rate gains or losses classified in accumulated other comprehensive income (loss) are reclassified to net income (loss) when realized
upon the sale of our investment or upon the complete or substantially complete liquidation of our investment.
We hold investments in publicly traded companies and privately held entities primarily involved in the life science industry. As a
REIT, we generally limit our ownership of each individual entity’s voting stock to less than 10 %. We evaluate each investment to
determine whether we have the ability to exercise significant influence, but not control, over an investee. We evaluate investments in
which our ownership is equal to or greater than 20%, but less than or equal to 50%, of an investee’s voting stock with a presumption
that we have this ability. For our investments in limited partnerships that maintain specific ownership accounts, we presume that such
ability exists when our ownership interest exceeds 3% to 5%. In addition to our ownership interest, we consider whether we have a
board seat or whether we participate in the investee’s policy-making process, among other criteria, to determine if we have the ability to
exert significant influence, but not control, over an investee. If we determine that we have such ability, we account for the investment
under the equity method, as described below. From time to time, we may hold equity investments in publicly traded companies that are
subject to temporary contractual sale restrictions. We do not recognize a discount related to a contractual sale restriction.
Investments accounted for under the equity method
Under the equity method of accounting, we initially recognize our investment at cost and subsequently adjust the carrying
amount of the investment for our share of earnings or losses reported by the investee, distributions received, and other-than-temporary
impairments. For additional information about our investments accounted for under the equity method, refer to Note 7 – “Investments” to
our unaudited consolidated financial statements.
Investments that do not qualify for the equity method of accounting
For investees over which we determine that we do not have the ability to exercise significant influence or control, we account
for each investment depending on whether it is an investment in a (i) publicly traded company, (ii) privately held entity that reports NAV
per share, or (iii) privately held entity that does not report NAV per share, as described below.
Investments in publicly traded companies
Our investments in publicly traded companies are classified as investments with readily determinable fair values and are
presented at fair value in our consolidated balance sheets, with changes in fair value classified in investment income (losses) in our
consolidated statements of operations. The fair values for our investments in publicly traded companies are determined based on sales
prices or quotes available on securities exchanges.
Investments in privately held companies
Our investments in privately held entities without readily determinable fair values consist of (i) investments in privately held
entities that report NAV per share and (ii) investments in privately held entities that do not report NAV per share. These investments are
accounted for as follows:
Investments in privately held entities that report NAV per share
Investments in privately held entities that report NAV per share, such as our privately held investments in limited partnerships,
are presented at fair value using NAV as a practical expedient, with changes in fair value classified in investment income (losses) in our
consolidated statements of operations. We use NAV per share reported by limited partnerships generally without adjustment, unless we
are aware of information indicating that the NAV reported by a limited partnership does not accurately reflect the fair value of the
investment at our reporting date.
Investments in privately held entities that do not report NAV per share
Investments in privately held entities that do not report NAV per share are accounted for using a measurement alternative
under which these investments are measured at cost, adjusted for observable price changes and impairments, with changes classified
in investment income (losses) in our consolidated statements of operations.
16
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
An observable price arises from an orderly transaction for an identical or similar investment of the same issuer, which is
observed by an investor without expending undue cost and effort. Observable price changes result from, among other things, equity
transactions of the same issuer executed during the reporting period, including subsequent equity offerings or other reported equity
transactions related to the same issuer. To determine whether these transactions are indicative of an observable price change, we
evaluate, among other factors, whether these transactions have similar rights and obligations, including voting rights, distribution
preferences, and conversion rights to the investments we hold.
Impairment evaluation of equity method investments and investments in privately held entities that do not report NAV per share
We monitor equity method investments and investments in privately held entities that do not report NAV per share for new
developments, including operating results, prospects and results of clinical trials, new product initiatives, new collaborative agreements,
capital-raising events, and merger and acquisition activities. These investments are evaluated on the basis of a qualitative assessment
for indicators of impairment by monitoring the presence of the following triggering events or impairment indicators:
(i)a significant deterioration in the earnings performance, credit rating, asset quality, or business prospects of the investee;
(ii)a significant adverse change in the regulatory, economic, or technological environment of the investee;
(iii)a significant adverse change in the general market condition, including the research and development of technology and
products that the investee is bringing or attempting to bring to the market;
(iv)significant concerns about the investee’s ability to continue as a going concern; and/or
(v)a decision by investors to cease providing support or reduce their financial commitment to the investee.
If such indicators are present, we are required to estimate the investment’s fair value and immediately recognize an
impairment charge in an amount equal to the investment’s carrying value in excess of its estimated fair value.
Investment income/loss recognition and classification
We recognize both realized and unrealized gains and losses in our consolidated statements of operations, classified in
investment income (losses) in our consolidated statements of operations. Unrealized gains and losses represent:
(i)changes in fair value for investments in publicly traded companies;
(ii)changes in NAV for investments in privately held entities that report NAV per share;
(iii)observable price changes for investments in privately held entities that do not report NAV per share; and
(iv)our share of unrealized gains or losses reported by our equity method investees.
Realized gains and losses on our investments represent the difference between proceeds received upon disposition of
investments and their historical or adjusted cost basis. For our equity method investments, realized gains and losses represent our
share of realized gains or losses reported by the investee. Impairments are realized losses, which result in an adjusted cost basis, and
represent charges to reduce the carrying values of investments in privately held entities that do not report NAV per share and equity
and 2025 (in thousands):
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||
2026 | 2025 | 2026 | 2025 | |||||
Income from rentals: | ||||||||
Revenues subject to the lease accounting standard: | ||||||||
Operating leases | $ | $ | $ | $ | ||||
Direct financing and sales-type leases | ||||||||
Revenues subject to the lease accounting standard | ||||||||
Revenues subject to the revenue recognition accounting standard | ||||||||
Income from rentals | ||||||||
Other income | ||||||||
Total revenues | $ | $ | $ | $ | ||||
17
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
During the three and nine months ended September 30, 2026, revenues that were subject to the lease accounting standard
aggregated $642.2 million and $1.91 billion, respectively, and represented 95.7 % and 95.5 % of our total revenues. During the three and
nine months ended September 30, 2025, revenues that were subject to the lease accounting standard aggregated $724.1 million and
$2.18 billion, respectively, and represented 96.3 % and 96.0 % of our total revenues. Our other income consisted primarily of
management and other fees and interest income earned during each period presented. For a detailed discussion related to our revenue
streams, refer to “Lease accounting” and “Recognition of revenue arising from contracts with customers” in Note 2 – “Summary of
significant accounting policies” to our unaudited consolidated financial statements.
Definition and classification of a lease
When we enter into a contract or amend an existing contract, we evaluate whether the contract meets the definition of a lease.
To meet the definition of a lease, the contract must meet all three criteria:
(i)One party (lessor) must hold an identified asset;
(ii)The counterparty (lessee) must have the right to obtain substantially all of the economic benefits from the use of the asset
throughout the period of the contract; and
(iii)The counterparty (lessee) must have the right to direct the use of the identified asset throughout the period of the contract.
We classify our leases as either finance leases or operating leases if we are the lessee, or sales-type, direct financing, or
operating leases if we are the lessor. We use the following criteria to determine if a lease is a finance lease (as a lessee) or sales-type
or direct financing lease (as a lessor):
(i)Ownership is transferred from lessor to lessee by the end of the lease term;
(ii)An option to purchase is reasonably certain to be exercised;
(iii)The lease term is for the major part of the underlying asset’s remaining economic life;
(iv)The present value of lease payments equals or exceeds substantially all of the fair value of the underlying asset; or
(v)The underlying asset is specialized and is expected to have no alternative use at the end of the lease term.
If a lease meets any of the above criteria, we account for it as a finance, a sales-type, or a direct financing lease. If a lease
does not meet any of the criteria, we account for it as an operating lease.
A lease is accounted for as a sales-type lease if it is considered to transfer control of the underlying asset to the lessee. A
lease is accounted for as a direct financing lease if risks and rewards are conveyed without the transfer of control, which is normally
indicated by the existence of a residual value guarantee from an unrelated third party other than the lessee.
This classification will determine the method of recognition of the lease:
•For an operating lease, we recognize income from rentals if we are the lessor, or rental operations expense if we are the
lessee, over the term of the lease on a straight-line basis.
•For a sales-type lease or a direct financing lease, we recognize the income from rentals, or for a finance lease, we
recognize rental operations expense, over the term of the lease using the effective interest method.
•At inception of a sales-type lease or a direct financing lease, if we determine the fair value of the leased property is lower
than its carrying amount, we recognize a selling loss immediately at lease commencement. If fair value exceeds the
carrying amount of a lease, a gain is recognized at lease commencement on a sales-type lease. For a direct financing
18
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Costs to execute leases
We capitalize initial direct costs, which represent only incremental costs to execute a lease that would not have been incurred
if the lease had not been obtained. Costs that we incur to negotiate or arrange a lease, regardless of its outcome, such as for fixed
employee compensation, tax or legal advice to negotiate lease terms, and other costs, are expensed as incurred.
Operating leases
We account for the revenue from our lease contracts by utilizing the single component accounting policy. This policy requires
us to account for, by class of underlying asset, the lease component and nonlease component(s) associated with each lease as a single
component if two criteria are met:
(i)The timing and pattern of transfer of the lease component and the nonlease component(s) are the same; and
(ii)The lease component would be classified as an operating lease if it were accounted for separately.
Lease components consist primarily of fixed rental payments, which represent scheduled rental amounts due under our
leases, and contingent rental payments. Nonlease components consist primarily of tenant recoveries representing reimbursements of
rental operating expenses under our triple net lease structure, including recoveries for property taxes, insurance, utilities, repairs and
maintenance, and common area expenses.
If the lease component is the predominant component, we account for all revenues under such lease as a single component in
accordance with the lease accounting standard. Conversely, if the nonlease component is the predominant component, all revenues
under such lease are accounted for in accordance with the revenue recognition accounting standard. Our operating leases qualify for
the single component accounting, and the lease component in each of our leases is predominant. Therefore, we account for all
revenues from our operating leases under the lease accounting standard and classify these revenues as income from rentals in our
consolidated statements of operations.
We commence recognition of income from rentals related to the operating leases at the date the property is ready for its
intended use by the tenant and the tenant takes possession or controls the physical use of the leased asset. When a lease includes
construction of improvements, we determine whether the improvements are landlord or tenant assets. In determining if the
improvements are landlord or tenant improvements, we consider various factors, including, but not limited to, the following:
•Which party retains legal title to the improvements upon lease expiration;
•Whether the improvements are expected to have significant residual value at the end of the lease term;
•Whether the improvements are unique to the tenant;
•What happens to the improvements upon lease expiration (i.e., whether they are removed or preserved for the landlord);
•Which party bears all costs of the improvements (including the risk of cost overruns); and
•Which party supervises the construction of the improvements.
If the improvements are landlord assets, we capitalize such improvements. If the improvements are tenant assets, we do not
capitalize these assets. Improvements that qualify as tenant assets, if funded by us, are accounted for as lease incentives and
amortized as a reduction of revenue over the term of the lease. If the tenant funds improvements without reimbursement from us, and
we determine these improvements to be landlord assets, we consider the amount associated with the improvements to be non-cash
lease payments, which are recognized as incremental revenue over the term of the related lease.
Income from rentals related to fixed rental payments under operating leases is recognized on a straight-line basis over the
respective operating lease terms. We classify amounts expected to be received in later periods as deferred rent in our consolidated
balance sheets. Amounts received currently but recognized as revenue in future periods are classified in accounts payable, accrued
expenses, and other liabilities in our consolidated balance sheets.
Income from rentals related to variable payments includes tenant recoveries and contingent rental payments. Tenant
recoveries, including reimbursements of utilities, repairs and maintenance, common area expenses, real estate taxes and insurance,
and other operating expenses, are recognized as revenue in the period during which the applicable expenses are incurred and the
tenant’s obligation to reimburse us arises. Income from rentals related to other variable payments is recognized when associated
contingencies are removed.
We assess collectibility of future lease payments from our tenants for each of our operating leases. If we determine that
collectibility is probable, we recognize income from rentals based on the methodology described above. If we determine that
collectibility is not probable, we recognize an adjustment to lower our income from rentals. Furthermore, we may recognize a general
allowance at a portfolio level (not the individual level) if we do not expect to collect future lease payments in full.
19
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
For each lease for which we determine that collectibility of future lease payments is not probable, we cease the recognition of
income from rentals on a straight-line basis and limit the recognition of income to the lesser of payments collected from the lessee or
lease income that would have been recognized on a straight-line basis. We do not resume straight-line recognition of income from
rentals for these leases until we determine that the collectibility of future payments related to these leases is probable. We also record a
general allowance related to the deferred rent balances that at the portfolio level (not the individual level) are not expected to be
collected in full through the lease term. As of September 30, 2026 and December 31, 2025, our general allowance balance aggregated
$27.0 million and $14.3 million, respectively.
Direct financing and sales-type leases
Income from rentals related to direct financing and sales-type leases is recognized over the lease term using the effective
interest rate method. At lease commencement, we derecognize the underlying asset classified within investments in real estate and
record net investment in a lease within other assets in our consolidated balance sheets. This initial net investment is determined by
aggregating the present values of the total future lease payments and the estimated residual value of the property, less any unearned
income related to a direct financing lease. Over the lease term, the investment in the lease accretes in value, producing a constant
periodic rate of return on the net investment in the lease. Income from these leases is classified in income from rentals in our
consolidated statements of operations. Lease payments received reduce the net investment in the lease.
We evaluate our net investment in direct financing and sales-type leases for impairment under the current expected credit
losses accounting standard. For additional information, refer to “Provision for expected credit losses” in Note 2 – “Summary of
significant accounting policies” to our unaudited consolidated financial statements.
As a lessor, we classify a lease with variable lease payments that do not depend on an index or a rate as an operating lease
on the commencement date of the lease if both of the following criteria are met:
(i)The lease would have been classified as a sales-type lease or direct financing lease under the current lease accounting
standard; and
(ii)The sales-type lease or direct financing lease classification would have resulted in a selling loss at lease commencement.
We do not derecognize the underlying asset and do not recognize a loss upon lease commencement but continue to
depreciate the underlying asset over its useful life.
We have operating lease agreements in which we are the lessee consisting of ground and office leases. At the lease
commencement date (or at the acquisition date if the lease is acquired as part of a real estate acquisition), we are required to recognize
a liability to account for our future obligations under these operating leases, and a corresponding right-of-use asset.
The lease liability is measured based on the present value of the future lease payments, including payments during the term
under our extension options that we are reasonably certain to exercise. The present value of the future lease payments is calculated for
each operating lease using each respective remaining lease term and a corresponding estimated incremental borrowing rate, which is
the interest rate that we estimate we would have to pay to borrow on a collateralized basis over a similar term for an amount equal to
the lease payments. Subsequently, the lease liability is accreted by applying a discount rate established at the lease commencement
date to the lease liability balance as of the beginning of the period and is reduced by the payments made during the period. We classify
the operating lease liability in accounts payable, accrued expenses, and other liabilities in our consolidated balance sheets.
The right-of-use asset is measured based on the corresponding lease liability, adjusted for initial direct leasing costs 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. Subsequently, the right-of-use
asset is amortized on a straight-line basis during the lease term. We classify the right-of-use asset in other assets in our consolidated
balance sheets.
We recognize revenues associated with transactions arising from contracts with customers, excluding revenues subject to the
lease accounting standard discussed in “Lease accounting” above, in accordance with the revenue recognition accounting standard. A
customer is distinguished from a noncustomer by the nature of the goods or services that are transferred. Customers are provided with
goods or services that are generated by a company’s ordinary output activities, whereas noncustomers are provided with nonfinancial
assets that are outside of a company’s ordinary output activities.
20
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
We generally recognize revenue representing the transfer of goods and services to customers in an amount that reflects the
consideration to which we expect to be entitled in the exchange. In order to determine the recognition of revenue from customer
contracts, we use a five-step model to (i) identify the contract with the customer, (ii) identify the performance obligations in the contract,
(iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will
not occur, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) we
satisfy the performance obligation.
We identify contractual performance obligations and determine whether revenue should be recognized at a point in time or
over time, based on when control of goods and services transfers to a customer. We consider whether we control the goods or services
prior to the transfer to the customer in order to determine whether we should account for the arrangement as a principal or agent. If we
determine that we control the goods or services provided to the customer, then we are the principal to the transaction, and we recognize
the gross amount of consideration expected in the exchange. If we simply arrange but do not control the goods or services being
transferred to the customer, then we are considered to be an agent to the transaction, and we recognize the net amount of
consideration we are entitled to retain in the exchange.
Total revenues subject to the revenue recognition accounting standard and classified within income from rentals in our
consolidated statements of operations for the three and nine months ended September 30, 2026 included $11.4 million and $35.7
million, respectively, primarily related to short-term parking revenues associated with long-term lease agreements. Short-term parking
revenues do not qualify for the single component accounting policy, as discussed in “Lessor accounting” in Note 2 – “Summary of
significant accounting policies,” due to the difference in the timing and pattern of transfer of our parking service obligations and
associated lease components within the same lease agreement. We recognize short-term parking revenues in accordance with the
revenue recognition accounting standard when the service is provided and the performance obligation is satisfied, which normally
occurs at a point in time.
During the term of each lease, we monitor the credit quality and any related material changes of our tenants by (i) monitoring
the credit rating of tenants that are rated by a nationally recognized credit rating agency, (ii) reviewing financial statements of the
tenants that are publicly available or that are required to be delivered to us pursuant to the applicable lease, (iii) monitoring news
reports regarding our tenants and their respective businesses, and (iv) monitoring the timeliness of lease payments.
We carry notes receivable at amortized cost, adjusted for an estimated provision for expected credit losses. Interest income on
notes receivable is recognized using the effective interest rate method and is classified within other income in our consolidated
statements of operations. Direct costs incurred in originating notes, along with any premium or discount, are deferred and amortized as
an adjustment to interest income over the note’s term using the effective interest rate method. Notes receivable are classified within
other assets in our consolidated balance sheets. Refer to Note 8 – “Other assets” to our unaudited consolidated financial statements for
additional details.
We are required to estimate and recognize lifetime expected losses, rather than incurred losses, for most financial assets
measured at amortized cost and certain other instruments, including trade, notes, and other receivables (excluding receivables arising
from operating leases), loans, held-to-maturity debt securities, net investments in leases arising from sales-type and direct financing
leases, and off-balance-sheet credit exposures (e.g., loan commitments). The recognition of such expected losses, even if the expected
risk of credit loss is remote, typically results in earlier recognition of credit losses. At each reporting date, we reassess our provision for
expected credit losses, and, if necessary, we recognize an adjustment for our current estimate of expected credit losses. Refer to
Note 5 – “Leases” and Note 8 – “Other assets” to our unaudited consolidated financial statements for additional details.
An assessment of the collectibility of operating lease payments and the recognition of an adjustment to lease income based on
this assessment is governed by the lease accounting standard discussed in “Lease accounting” earlier in Note 2 — “Summary of
significant accounting policies” to our unaudited consolidated financial statements.
We are organized and operate as a REIT pursuant to the Internal Revenue Code (the “Code”). Under the Code, a REIT that
distributes at least 90 % of its REIT taxable income to its stockholders annually (excluding net capital gains) and meets certain other
conditions is not subject to federal income tax on its distributed taxable income, but could be subject to certain federal, foreign, state,
and local taxes. We distribute 100 % of our taxable income annually; therefore, a provision for federal income taxes is not required. In
addition to our REIT returns, we file federal, foreign, state, and local tax returns for our subsidiaries. We file with jurisdictions located in
the U.S., Canada, and other international locations. Our tax returns are subject to routine examination in various jurisdictions for the
2020 through 2025 calendar years.
21
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
We have implemented an entity-wide accounting policy to account for forfeitures related to unmet service conditions of share-
based awards granted to employees and non-employees when they occur. Under this policy, when forfeitures occur, any previously
recognized expense related to those forfeited awards is reversed in the period of forfeiture.
Our employee and non-employee share-based awards are measured at fair value on the grant date and recognized over the
recipient’s required service period. For share-based awards with performance conditions, we continue to assess the probability of
achieving the performance conditions and recognize expense only when it becomes probable that the performance targets will be met.
Conversely, for share-based awards with market conditions, expense is recognized regardless of whether the market condition is met.
Dividends paid on share-based awards with nonforfeitable dividends are initially classified in retained earnings and reclassified
to compensation cost only if the underlying awards are forfeited. Conversely, for share-based awards with forfeitable dividends,
declared dividends are initially classified in retained earnings and in dividends payable within our consolidated balance sheets. If the
underlying awards are forfeited, the corresponding accrued dividend is reversed in the period of forfeiture. Upon vesting of the
underlying share-based awards with forfeitable dividends, the accumulated dividend payment is made and the dividend payable liability
From time to time, we enter into forward equity sales agreements and account for them in accordance with the accounting
guidance governing financial instruments and derivatives. Under the accounting guidance, our forward equity sales agreements are
typically not deemed to be liabilities as they generally do not embody obligations to repurchase our shares, nor do they embody
obligations to issue a variable number of shares for which the monetary value is predominantly fixed, varied with something other than
the fair value of our shares, or varied inversely in relation to our shares. We also evaluate whether the agreements meet the derivatives
and hedging guidance scope exception to be accounted for as equity instruments. Our forward equity sales agreements are classified
as equity contracts based on the following assessment: (i) none of the agreements’ exercise contingencies are based on observable
markets or indices besides those related to the market for our own stock price and operations; and (ii) none of the settlement provisions
From time to time, we utilize derivative instruments to manage our exposure to certain risks, including interest rate and foreign
currency exchange rate risks. We are exposed to foreign currency exchange rate risk related to our net investment in Canada. To
mitigate the impact of fluctuations in the USD-CAD exchange rate associated with our net investment in Canada, we use cross-currency
swap agreements designated and qualifying as net investment hedges under applicable derivatives and hedging standards.
We designate the USD-CAD cross-currency swap agreements as net investment hedges using the spot method to assess
hedge effectiveness. The spot component represents changes in fair value attributable to movements in the USD-CAD spot exchange
rate, which reflects the market exchange rate between the two currencies as of each reporting date. Changes in the fair value of the
designated spot component are recorded in other comprehensive income (loss) as part of the foreign currency translation adjustment,
to the extent the relationship is highly effective, until the net investment is sold or substantially liquidated. The related amounts due from
or due to counterparties are included in other assets or in accounts payable, accrued expenses, and other liabilities, respectively, within
our consolidated balance sheet.
We elected to account for the forward points (the portion of the derivative’s fair value attributable to the difference between the
forward exchange rate and spot exchange rate) as an excluded component in accordance with applicable derivatives and hedging
accounting standards. The excluded component is recognized over the life of the cross-currency swap agreements using a systematic
and rational basis (as interest settlements occur) and is classified within other income in our consolidated statement of operations.
Generally, a parent entity of an issuer that holds guaranteed securities must provide separate subsidiary issuer or guarantor
financial statements, unless it qualifies for disclosure exceptions. A parent entity may be eligible for disclosure exceptions if it meets the
following criteria:
(i)The subsidiary issuer or guarantor is a consolidated subsidiary of the parent company, and
(ii)The subsidiary issues a registered security that is:
•issued jointly and severally with the parent company, or
•fully and unconditionally guaranteed by the parent company.
A parent entity that meets the above criteria may instead present summarized financial information (“alternative disclosures”)
either within the consolidated financial statements or in “Item 2. Management’s discussion and analysis of financial condition and results
of operations” (“Item 2”). We evaluated the criteria and determined that we are eligible for the disclosure exceptions, which allow us to
provide alternative disclosures; as such, we present alternative disclosures in Item 2.
22
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Fees incurred in obtaining long-term financing are capitalized and classified with the corresponding debt instrument appearing
on our consolidated balance sheets. Loan fees related to our unsecured senior line of credit are capitalized and classified within other
assets. Capitalized amounts are amortized over the term of the related loan, and the amortization is classified in interest expense in our
consolidated statements of operations.
We use the “nature of the distribution” approach to determine the classification within our consolidated statements of cash
flows of cash distributions received from equity method investments, including our unconsolidated real estate joint ventures and equity
method non-real estate investments. Under this approach, distributions are classified based on the nature of the underlying activity that
generated the cash distributions. If we lack the information necessary to apply this approach in the future, we will be required to apply
the “cumulative earnings” approach as an accounting change on a retrospective basis. Under the cumulative earnings approach,
distributions up to the amount of cumulative equity in earnings recognized are classified as cash inflows from operating activities, and
those in excess of that amount are classified as cash inflows from investing activities.
We present cash and cash equivalents separately from restricted cash within our consolidated balance sheets. However, we
include restricted cash with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown
in the consolidated statements of cash flows. We provide a reconciliation between the consolidated balance sheets and the
consolidated statements of cash flows, which is required when the balance includes more than one line item for cash, cash equivalents,
and restricted cash. We also provide a disclosure of the nature of the restrictions related to material restricted cash balances.
On November 4, 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses, which will require
entities to provide enhanced disclosures related to certain expense categories included in line items on the statement of operations.
The ASU aims to increase transparency and provide investors with additional detailed information about the nature of expenses
reported on the face of the income statement. The new standard does not change the requirements for the presentation of expenses on
the face of the statement of operations.
Under this ASU, entities are required to disaggregate, in a tabular format, expense line items presented on the face of the
statement of operations — excluding earnings or losses from equity method investments — if they include any of the following expense
categories: employee compensation, depreciation, intangible asset amortization, depletion, and purchases of inventory. For any
remaining items within each relevant expense line item, entities must provide a qualitative description of the nature of those expenses.
The new ASU is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after
December 15, 2027. Early adoption is permitted. We expect to adopt this ASU on January 1, 2027. Although the adoption is not
expected to have an impact on our financial statements, it is expected to result in incremental disclosures within the notes to our
23
3.INVESTMENTS IN REAL ESTATE
thousands):
September 30, 2026 | December 31, 2025 | |||
Rental properties: | ||||
Land (related to rental properties) | $ | $ | ||
Buildings and building improvements | ||||
Other improvements | ||||
Rental properties | ||||
Current and future development and redevelopment projects | ||||
Gross investments in real estate | ||||
Less: accumulated depreciation | ( | ( | ||
Investments in real estate assets held for sale, less accumulated depreciation(1) | ||||
Investments in real estate | $ | $ |
(1)Refer to “Assets held for sale” below.
Assets held for sale
As of September 30, 2026, we had 18 operating properties and one development project aggregating 1.3 million RSF, and land
parcels aggregating 2.1 million SF that were classified as held for sale.
The disposal of the properties classified as held for sale does not represent a strategic shift that has, or will have, a major
effect on our operations or financial results, as the dispositions relate to an individual asset or a group of assets across multiple markets
and do not represent the exit from any significant market. Accordingly, these assets do not meet the criteria for classification as
discontinued operations. We cease depreciation of our properties upon their classification as held for sale.
classification as held for sale as of September 30, 2026 and December 31, 2025 (in thousands):
September 30, 2026 | December 31, 2025 | ||
Investments in real estate, less accumulated depreciation | $ | $ | |
Other assets | |||
Total assets | |||
Total liabilities | ( | ( | |
Total accumulated other comprehensive loss (income) | ( | ||
Net assets classified as held for sale | $ | $ |
For additional information, refer to “Real estate sales” in Note 2 – “Summary of significant accounting policies” to our unaudited
consolidated financial statements.
24
3.INVESTMENTS IN REAL ESTATE (continued)
consisted of the following (dollars in thousands):
Square Footage | Sales Price (Our Share) | ||||||||||||
Property | Submarket/Market | Date of Sale | Interest Sold | Operating | Land and Future | ||||||||
Completed during nine months ended September 30, 2026: | |||||||||||||
3825 and 3875 Fabian Way | Palo Alto/San Francisco Bay Area | 7/14/26 | $ | ||||||||||
One Hampshire Street | Cambridge/Greater Boston | 8/21/26 | |||||||||||
3911, 3931, 4025, 4031, 4045, and 4075 Sorrento Valley Boulevard | Sorrento Valley/San Diego | 9/23/26 | |||||||||||
Other | Various | ||||||||||||
(1) | |||||||||||||
Completed in October 2026: | |||||||||||||
Campus Point by Alexandria(2) | University Town Center/San Diego | 10/23/26 | (2) | ||||||||||
$ | |||||||||||||
(1)Represents the aggregate contractual sales price of our dispositions, which differs from the sum of sales proceeds disclosed in our consolidated statement of cash flows
under “Investing activities” (proceeds from sales of real estate), amounts under “Financing activities” (contributions from and sales of noncontrolling interests), and
amounts under “Supplemental disclosure and non-cash investing and financing activities” (non-cash consideration) primarily due to the timing of payment, closing costs,
and other sales adjustments such as prorations of rents and expenses.
(2)Refer to Note 4 – “Consolidated and unconsolidated real estate joint ventures” to our unaudited consolidated financial statements in Item 1 for additional details.
Impairment of real estate
During the nine months ended September 30, 2026, we recognized impairment charges aggregating $865.9 million, classified
within impairment of real estate in our consolidated statement of operations, primarily related to the following assets:
Greater Boston market
•During the three months ended June 30, 2026, we recognized an additional impairment charge of $24.8 million related to one
vacant office property, aggregating 104,956 RSF, in the Cambridge submarket of our Greater Boston market, to reduce its
carrying amount to its updated estimated fair value less costs to sell of approximately $43.7 million based on recent
negotiations with a potential buyer. This asset was classified as held for sale in December 2025 following our assessment of
the project’s financial outlook, including the significant capital required to redevelop and lease the property. As a result, we
decided to sell this asset and reinvest the sales proceeds in other projects with greater value-creation opportunities, and
recognized an impairment charge of $105.7 million in December 2025. The sale was completed in August 2026, with no gain
or loss recognized.
•Impairment charge of $343.3 million was recognized to reduce the carrying amount of one development property at 421 Park
Drive in our Fenway submarket, to its estimated fair value less costs to sell of approximately $238.9 million based on recent
negotiations with an institutional user for the sale of 339,668 RSF, representing substantially all of the 392,011 RSF
development project at this location. The asset met the criteria for classification as held for sale as of September 30, 2026,
following our decision to sell and reallocate the substantial near-term capital that the asset would have required to complete
the development toward other projects with greater value-creation opportunities. We expect to complete the sale within the
next 12 months.
San Diego market
•During the three months ended June 30, 2026, an impairment charge of $64.2 million was recognized to reduce the carrying
amount of a land parcel located outside of a Megacampus aggregating 425,000 SF in the Sorrento Mesa submarket of our
San Diego market, to its estimated fair value less costs to sell of approximately $43.3 million. The land parcel met the criteria
for classification as held for sale as of June 30, 2026, following our reevaluation of the capital required to develop the site and
its alignment with our Megacampus strategy, resulting in our decision to monetize the asset and reallocate capital to other
projects with greater value-creation opportunities. The asset is expected to be sold to a residential developer and we expect to
complete the sale within the next 12 months.
•During the three months ended June 30, 2026, an impairment charge of $28.2 million was recognized to reduce the carrying
amounts of five operating properties, primarily comprising non-laboratory space, aggregating 95,814 RSF and one land parcel
aggregating 144,000 SF in the Sorrento Valley submarket of our San Diego market, to their estimated fair values less costs to
sell of approximately $26.7 million. These assets met the criteria for classification as held for sale as of June 30, 2026,
following our evaluation of the significant capital that would have been required to convert these properties through
redevelopment for laboratory use and their lack of alignment with our Megacampus strategy, resulting in our decision to
monetize these assets and reallocate capital to other projects with greater value-creation opportunities. The sale was
completed in September 2026, with no gain or loss recognized.
25
3.INVESTMENTS IN REAL ESTATE (continued)
•Impairment charge of $9.4 million was recognized during the three months ended September 30, 2026 to reduce the carrying
amount of one operating property aggregating 27,689 RSF in the Sorrento Valley submarket of our San Diego market, to its
estimated fair value less costs to sell of approximately $10.9 million. This asset met the criteria for classification as held for
sale as of September 30, 2026, following our evaluation of the asset’s lack of alignment with our Megacampus strategy,
resulting in our decision to sell this asset and reallocate capital to other projects with greater value-creation opportunities. We
expect to complete the sale within the next 12 months.
•During the three months ended September 30, 2026, we recognized an additional impairment charge of $8.5 million related to
market, to reduce the carrying amounts to their estimated fair values less costs to sell of approximately $54.7 million based on
updated negotiations with prospective buyers. These assets were classified as held for sale as of June 30, 2026, following our
decision to dispose of these properties and reinvest the sales proceeds in other projects with greater value-creation
opportunities, at which time we recognized an impairment charge of $4.2 million. We expect to complete the sales within the
next 12 months.
San Francisco Bay Area market
•During the three months ended June 30, 2026, we recognized an additional impairment charge of $29.3 million related to one
future development project, aggregating 1.1 million SF, in the SoMa submarket of our San Francisco Bay Area market. The
additional impairment charge was recognized to reduce the carrying amount of this asset to its updated estimated fair value
less costs to sell of approximately $41.8 million based on recent negotiations with a potential buyer. The asset was classified
as held for sale in December 2025 following our commitment to dispose of it and reinvest the sales proceeds in other projects
with greater value-creation opportunities, resulting in an impairment charge of $333.4 million recognized in December 2025.
We expect to complete the sale within the next 12 months.
•In June 2026, we entered into a purchase and sale agreement to sell a previously impaired future development project
aggregating 250,000 SF and one operating property aggregating 228,000 RSF in the Palo Alto submarket of our San
Francisco Bay Area market. These assets were classified as held for sale in December 2025, at which time we recognized an
impairment charge of $144.7 million. During the three months ended June 30, 2026, we recognized a $23.3 million partial
reversal of the impairment charge to increase the carrying values of the assets to their aggregate sales price of $163.0 million,
less costs to sell. This adjustment was recorded as a partial offset to impairment of real estate in our consolidated statements
of operations and did not exceed the cumulative impairment previously recognized on these assets. The sale was completed
in July 2026, with no gain or loss recognized.
•Impairment charge of $135.3 million was recognized to reduce the carrying amounts of four vacant office properties,
aggregating 292,746 RSF, located on a non-Megacampus in the Palo Alto submarket of our San Francisco Bay Area market,
to their estimated fair values less costs to sell of approximately $95.3 million. These assets met the criteria for classification as
held for sale as of September 30, 2026. We acquired these office properties in 2022 with the intent to redevelop them into
laboratory space. Following our evaluation of the significant capital that would have been required to convert these properties
and to lease the vacant spaces, we decided to sell these assets and reallocate capital to other projects with greater value-
creation opportunities. We expect to complete the sale within the next 12 months.
•Impairment charge of $79.2 million was recognized to reduce the carrying amounts of six non-Megacampus properties
aggregating 103,325 RSF in the San Carlos submarket of our San Francisco Bay Area market, to their estimated fair values
less costs to sell of approximately $39.4 million. These assets met the criteria for classification as held for sale as of
September 30, 2026. We acquired these office-flex assets in 2021 with the intent to redevelop them into laboratory space.
Following our evaluation of the significant capital that would have been required to convert these properties, we decided to sell
the assets and reallocate the proceeds to other projects with greater value-creation opportunities. We expect to complete the
sale within the next 12 months.
•Impairment charge of $41.6 million was recognized to reduce the carrying amount of one future development project
aggregating 240,000 SF in the Palo Alto submarket of our San Francisco Bay Area market, to its estimated fair value less
costs to sell of approximately $124.2 million. This non-Megacampus asset met the criteria for classification as held for sale as
of September 30, 2026, following our decision to sell the property. Originally acquired in 2018 to support the expansion of our
Megacampus ecosystem, the project was evaluated based on an updated assessment of its financial outlook, including the
capital required to complete the development and lease the property. As a result, we decided to sell the asset and reallocate
the proceeds to other projects with greater value-creation opportunities. We expect to complete the sale within the next 12
months.
Texas market
•Impairment charge of $50.4 million was recognized to reduce the carrying amount of a non-Megacampus land parcel
aggregating 344,000 SF in the Austin submarket of our Texas market, to its estimated fair value less costs to sell of
approximately $11.1 million. The land parcel met the criteria for classification as held for sale as of September 30, 2026,
following our reevaluation of the capital required to develop the site and its alignment with our Megacampus strategy, resulting
in our decision to sell the asset and reallocate capital to other projects with greater value-creation opportunities. We expect to
complete the sale within the next 12 months.
26
3.INVESTMENTS IN REAL ESTATE (continued)
Canada (Non-cluster) market
•During the nine months ended September 30, 2026, we recognized a $55.0 million impairment charge related to a 247,743
RSF non-laboratory property in Canada. The property was classified as held for sale as of June 30, 2026, and written down to
its estimated fair value less costs to sell of approximately $42.5 million. We decided to sell the property rather than make the
significant near-term investment required to redevelop it, and we intend to redeploy the capital to other projects with greater
value-creation opportunities. We expect to complete the sale within the next 12 months.
During the six months ended June 30, 2026, we recognized an additional impairment charge of $27.8 million on our Montreal
portfolio following an amendment to the sales agreement, reducing its carrying amount to its estimated fair value less costs to
sell of approximately $134.5 million. This portfolio had been classified as held for sale since the fourth quarter of 2025, when
we recognized the initial impairment charge of $107.1 million.
During the three months ended September 30, 2026, the sales agreement was terminated and we decided to retain the
portfolio. Accordingly, we reclassified the portfolio from held for sale to held and used and remeasured the assets as required
under GAAP. As a result, we reversed $31.5 million of previously recognized impairment, primarily related to foreign currency
translation losses that were no longer expected to be recognized in earnings. The reversal increased the carrying amount of
the applicable real estate assets and was recorded as a reduction of impairment of real estate in our consolidated statements
of operations.
ARE‑East River Science Park, LLC (“ARE”), a subsidiary of Alexandria Real Estate Equities, Inc., holds an option granted in
2006 to incorporate a land parcel adjacent to and north of the Alexandria Center® for Life Science – New York City campus (the “Option
Parcel”) into the existing ground lease, which would allow for the future development of an additional life science building within the
campus. ARE’s investment in pre‑construction costs related to the Option Parcel aggregated $185.9 million as of September 30, 2026.
On August 6, 2024, ARE filed a lawsuit in the U.S. District Court for the Southern District of New York against New York City
Health + Hospitals Corporation (“H+H”) and the New York City Economic Development Corporation (“EDC”) relating to disputes under
the ground lease and option arrangements governing the Option Parcel. ARE filed an amended complaint on January 24, 2025,
asserting claims for fraudulent inducement, breach of contract, breach of the implied covenant of good faith and fair dealing, and
declaratory relief concerning the continued validity of the option.
On March 27, 2026, the court granted defendants’ partial motion to dismiss the fraud in the inducement and implied covenant
of good faith and fair dealing claims. ARE intends to appeal this order at the appropriate time and to vigorously pursue its claims. The
court did not dismiss ARE’s claim for declaratory relief, which remains pending.
On April 10, 2026, H+H and EDC answered the amended complaint and asserted counterclaims seeking, among other things,
declaratory relief relating to the alleged expiration of the option and entitlement to a $5.0 million security deposit, and damages of at
least $3.8 million. The case remains pending.
As a result of the foregoing matters, the timing of any development of the Option Parcel is currently indeterminate. Excluding
the potential impact of the counterclaims filed by H+H and EDC, this matter exposes us to potential losses ranging from zero to the full
amount of the investment in the project aggregating $185.9 million as of September 30, 2026, depending on the resolution of the
remaining declaratory relief proceedings, the outcome of any appeal, and/or the ability to develop the project. We performed a
probability-weighted recoverability analysis based on initial estimates of various possible outcomes and determined no impairment was
present as of September 30, 2026.
Separately from, and not as part of, the pending litigation related to the Option Parcel, EDC, on behalf of H+H as the landlord
and itself as lease administrator, delivered on April 20, 2026, a notice alleging that ARE is in default of certain information delivery
obligations under the ground lease relating to the existing operating towers at the Alexandria Center for Life Science – New York City
campus, including sublease, tax, and financial information. The notice asserts that the failure to cure the alleged defaults within the
applicable 30 -day cure period would result in daily charges of $1,000 increasing thereafter up to $2,000 . ARE disputes the allegations
set forth in the notice of default and intends to vigorously defend against them.
On May 12, 2026, ARE filed a lawsuit in the Commercial Division of the New York State Supreme Court against H+H and EDC,
seeking a Yellowstone injunction, a preliminary injunction, and a temporary restraining order to toll all cure periods under the notice of
default and to enjoin EDC and H+H from issuing a notice of termination (the “NYS Action”). The court denied ARE’s request for a
temporary restraining order on May 13, 2026, and denied ARE’s request for a Yellowstone injunction and a preliminary injunction on
June 15, 2026. On June 17, 2026, ARE filed a notice of appeal from the court’s order, dated June 15, 2026. On July 1, 2026, ARE filed
an application for interim relief pending appeal. Following oral arguments before a single justice, the application was denied without
prejudice to determination by a full panel. On September 10, 2026, the Appellate Division, First Department, denied ARE’s request for
relief pending the determination of its merits appeal. ARE’s merits appeal remains pending.
27
3.INVESTMENTS IN REAL ESTATE (continued)
On July 2, 2026, ARE filed an amended complaint in the NYS Action, adding claims for breach of contract, breach of the
implied covenant of good faith and fair dealing, tortious interference, and unfair competition, and is seeking declaratory and injunctive
relief, based on the defendants’ alleged misuse of ARE’s confidential subtenant information and diversion of an ARE subtenant to a
competing City-sponsored project. On August 6, 2026, EDC and H+H moved to dismiss the amended complaint in its entirety, and the
motion has been fully briefed; oral arguments are scheduled for January 15, 2027. The NYS Action remains pending.
28
4.CONSOLIDATED AND UNCONSOLIDATED REAL ESTATE JOINT VENTURES
own, develop, and operate real estate properties. As of September 30, 2026, our real estate joint ventures held the following properties:
Property(1) | Market | Submarket | Our Ownership Interest | ||||||
Consolidated real estate joint ventures: | |||||||||
50 and 60 Binney Street | Greater Boston | Cambridge/Inner Suburbs | |||||||
75/125 Binney Street | Greater Boston | Cambridge/Inner Suburbs | |||||||
100 and 225 Binney Street and 300 Third Street | Greater Boston | Cambridge/Inner Suburbs | |||||||
15 Necco Street | Greater Boston | Seaport Innovation District | |||||||
3215 Merryfield Row | San Diego | Torrey Pines | |||||||
Campus Point by Alexandria(2) | San Diego | University Town Center | (3) | ||||||
5200 Illumina Way | San Diego | University Town Center | |||||||
9625 Towne Centre Drive | San Diego | University Town Center | |||||||
SD Tech by Alexandria(4) | San Diego | Sorrento Mesa | |||||||
Summers Ridge Science Park(5) | San Diego | Sorrento Mesa | |||||||
Alexandria Center® for Science and Technology – Mission Bay(6) | San Francisco Bay Area | Mission Bay | |||||||
211 and 213 East Grand Avenue | San Francisco Bay Area | South San Francisco | |||||||
500 Forbes Boulevard | San Francisco Bay Area | South San Francisco | |||||||
Alexandria Center® for Life Science – Millbrae | San Francisco Bay Area | South San Francisco | |||||||
1201 and 1208 Eastlake Avenue East | Seattle | Lake Union | |||||||
400 Dexter Avenue North | Seattle | Lake Union | |||||||
800 Mercer Street | Seattle | Lake Union | |||||||
Unconsolidated real estate joint ventures: | |||||||||
1655 and 1725 Third Street | San Francisco Bay Area | Mission Bay | |||||||
101 West Dickman Street | Maryland | Beltsville | (7) | ||||||
(1)Refer to the table on the next page that shows the categorization of our real estate joint ventures under the consolidation framework.
(2)Includes 10200, 10290, and 10300 Campus Point Drive and 4135, 4155, 4165, 4224, and 4242 Campus Point Court.
(3)In October 2026, we completed a partial sale of our interest in this joint venture. Refer to “Campus Point by Alexandria Megacampus” within this Note 4 for additional
information.
(4)Includes 9605, 9645, 9675, 9725, 9735, 9805, 9808, 9855, and 9868 Scranton Road and 10055, 10065, and 10075 Barnes Canyon Road.
(5)Includes 9965, 9975, 9985, and 9995 Summers Ridge Road.
(6)Includes 1450, 1500, and 1700 Owens Street, and 455 Mission Bay Boulevard South.
(7)Represents a joint venture with a local real estate operator in which our joint venture partner manages the day-to-day activities that significantly affect the economic
performance of the joint venture.
Our consolidation policy is described under “Consolidation” in Note 2 – “Summary of significant accounting policies” to our
unaudited consolidated financial statements. Consolidation accounting is highly technical, but its framework is primarily based on the
controlling financial interests and benefits of the joint ventures. We generally consolidate a joint venture that is a legal entity we control
(i.e., we have the power to direct the activities of the joint venture that most significantly affect its economic performance) through
contractual rights, regardless of our ownership interest, and where we determine that we have benefits through the allocation of
earnings or losses and fees paid to us that could be significant to the joint venture (the “VIE model”).
We also generally consolidate joint ventures when we have a controlling financial interest through voting rights and where our
voting interest is greater than 50% (the “voting model”). Voting interest differs from ownership interest for some joint ventures. We
account for joint ventures that do not meet the consolidation criteria under the equity method of accounting by recognizing our share of
income and losses.
29
4.CONSOLIDATED AND UNCONSOLIDATED REAL ESTATE JOINT VENTURES (continued)
The table below shows the categorization of our real estate joint ventures under the consolidation framework:
Property | Consolidation Model | Voting Interest | Consolidation Analysis | Conclusion | |||||
50 and 60 Binney Street | VIE model | Not applicable under VIE model | Consolidated | ||||||
75/125 Binney Street | We have: | ||||||||
100 and 225 Binney Street and 300 Third Street | |||||||||
15 Necco Street | (i) | The power to direct the activities of the joint venture that most significantly affect its economic performance; and | |||||||
3215 Merryfield Row | |||||||||
Campus Point by Alexandria | |||||||||
5200 Illumina Way | |||||||||
9625 Towne Centre Drive | (ii) | Benefits that can be significant to the joint venture. | |||||||
SD Tech by Alexandria | |||||||||
Summers Ridge Science Park | |||||||||
Alexandria Center® for Science and Technology – Mission Bay | |||||||||
211 and 213 East Grand Avenue | Therefore, we are the primary beneficiary of each VIE | ||||||||
500 Forbes Boulevard | |||||||||
Alexandria Center® for Life Science – Millbrae | |||||||||
1201 and 1208 Eastlake Avenue East | |||||||||
400 Dexter Avenue North | |||||||||
800 Mercer Street | |||||||||
101 West Dickman Street | We do not control the joint venture and are therefore not the primary beneficiary. | Equity method of accounting | |||||||
1655 and 1725 Third Street | Voting model | Does not exceed 50% | Our voting interest is 50% or less. | ||||||
Consolidated real estate joint ventures
Consolidated VIEs’ balance sheet information
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 spending, and our
joint venture partners may also contribute equity into these entities for financing-related activities.
September 30, 2026 | December 31, 2025 | |||
Investments in real estate | $ | $ | ||
Cash and cash equivalents | ||||
Other assets | ||||
Total assets | $ | $ | ||
Secured notes payable | $ | $ | ||
Other liabilities | ||||
Total liabilities | ||||
Redeemable noncontrolling interests | ||||
Alexandria Real Estate Equities, Inc.’s share of equity | ||||
Noncontrolling interests’ share of equity | ||||
Total liabilities and equity | $ | $ |
30
4.CONSOLIDATED AND UNCONSOLIDATED REAL ESTATE JOINT VENTURES (continued)
In determining whether to aggregate the balance sheet information of consolidated VIEs, we considered the similarity of each
VIE, including the primary purpose of these entities to own, manage, operate, and lease real estate properties owned by the VIEs, and
the similar nature of our involvement in each VIE as a managing member. Due to the similarity of the characteristics, we present the
balance sheet information of these entities on an aggregated basis. As of September 30, 2026, none of our consolidated VIEs’ assets
were subject to restrictions that limit their use to settle specific obligations of the VIEs, no creditors or other partners of our consolidated
VIEs had recourse to our general credit, and our maximum exposure to our consolidated VIEs was limited to our variable interests in
each VIE.
99 Coolidge Avenue
In July 2025, we amended the agreement for our consolidated real estate joint venture at 99 Coolidge Avenue in our
Cambridge/Inner Suburbs submarket. Pursuant to the amendment, the carrying amount of our partner’s noncontrolling interest was
adjusted from $42.0 million to $48.7 million, and the interest was converted into a redeemable noncontrolling interest that accrued a
fixed 4.05 % annual preferred return (“distributions”). In January 2026, our partner exercised its option to require us to purchase its
entire preferred interest, and the redemption was completed in January 2026 for $49.7 million, inclusive of unpaid distributions.
Campus Point by Alexandria Megacampus
As of September 30, 2026, we held a 59.3 % ownership interest in a consolidated joint venture that owns substantially all of the
Campus Point by Alexandria Megacampus, comprising seven operating properties aggregating 1.6 million RSF, located in our
University Town Center submarket of our San Diego market.
In October 2026, we completed the sale of an approximately 29 % noncontrolling interest in the consolidated real estate joint
venture that owns substantially all of the Campus Point by Alexandria Megacampus for $475.0 million. We expect our new partner’s
initial share of the annual distributions to approximate 5.5 % of the $475.0 million contributed capital. Upon completion of the sale, our
ownership interest in the real estate joint venture decreased to approximately 30 %. We expect to fund the majority of future construction
costs at the Megacampus, which is expected to increase our ownership interest in the campus over time to over 50 %, with the
ownership interests of our new joint venture partner and existing joint venture partner decreasing to below 20 % and 30 %, respectively.
Our new joint venture partner has the right to require us to purchase its interest after the seventh anniversary of the transaction
in exchange for shares of our common stock, subject to a contractual share issuance limit, or, at our election, in cash or a combination
of cash and shares.
We retained control and therefore continue to consolidate the properties held by the real estate joint venture. Accordingly, we
accounted for the $44.2 million difference between the consideration received and the book value of our interest sold as an increase to
additional paid-in capital, with no gain recognized in earnings.
Noncontrolling interests in consolidated real estate joint ventures
Noncontrolling interests represent the third-party interests in consolidated real estate joint ventures in which we have a
controlling interest. Noncontrolling interests are adjusted for additional contributions and distributions, the proportionate share of the net
earnings or losses, and other comprehensive income or loss. Distributions, profits, and losses related to these entities are allocated in
accordance with the respective operating agreements. During the nine months ended September 30, 2026 and 2025, we distributed
$171.2 million and $186.8 million, respectively, to our consolidated real estate joint venture partners.
Unconsolidated real estate joint ventures
investments in unconsolidated real estate joint ventures in our consolidated balance sheets, consisted of the following as of
September 30, 2026 and December 31, 2025 (in thousands):
Property | September 30, 2026 | December 31, 2025 | ||
1655 and 1725 Third Street | $ | $ | ||
101 West Dickman Street | ||||
Other | ||||
$ | $ |
As of September 30, 2026, our maximum exposure related to our only unconsolidated VIE, 101 West Dickman Street, is
limited to our investment in this joint venture and a guarantee of up to $5.4 million of the outstanding balance related to the VIE’s
31
4.CONSOLIDATED AND UNCONSOLIDATED REAL ESTATE JOINT VENTURES (continued)
thousands):
Interest Rate(1) | At 100% | Our Share | ||||||||||||
Unconsolidated Joint Venture | Maturity Date | Stated Rate | Aggregate Commitment | Debt Balance(2) | ||||||||||
101 West Dickman Street | (3) | SOFR+ | (4) | $ | $ | |||||||||
1655 and 1725 Third Street | ||||||||||||||
$ | $ | |||||||||||||
(1)Includes interest expense and amortization of loan fees.
(2)Represents outstanding principal, net of unamortized deferred financing costs, as of September 30, 2026.
(3)In October 2026, the unconsolidated real estate joint venture refinanced this debt with a new $22.5 million secured note payable bearing interest at SOFR+1.85 % and
maturing in October 2030. As of September 30, 2026, our investment in this unconsolidated real estate joint venture was $9.9 million.
(4)This loan is subject to a SOFR floor of 0.75 %.
32
5.LEASES
statements for information about lease accounting standards that set principles for the recognition, measurement, presentation, and
disclosure of leases for both parties to a lease agreement (i.e., lessees and lessors).
Leases in which we are the lessor
As of September 30, 2026, we had 328 properties aggregating 36.5 million operating RSF in key cluster locations, including
Greater Boston, San Diego, the San Francisco Bay Area, Seattle, Maryland, Research Triangle, and New York City. We primarily focus
on developing Class A/A+ properties in AAA life science and advanced technology innovation clusters that offer the scale and strategic
design integral to our Megacampus strategy. Strategically located near top academic and medical research institutions, our
Megacampus ecosystems feature curated amenities and services and convenient access to transit, creating environments that help our
tenants attract and retain top talent.
As of September 30, 2026, all leases in which we are the lessor were classified as operating leases, with the exception of one
direct financing and one sales-type lease. Our leases are described below.
Operating leases
As of September 30, 2026, our 328 properties were subject to operating lease agreements. Five of these properties are
subject to operating lease agreements that each contain a purchase option as described below:
(i)Two of these properties, representing two land parcels in the San Francisco Bay Area market, are subject to lease
agreements that each contain an option for the lessee to purchase the underlying asset from us at fair market value during
each of the 30-day periods commencing on the dates that are 15 years, 30 years, and 74.5 years after the rent
commencement date of October 1, 2017 . The remaining lease term related to each of the two land parcels is 66.2 years.
(ii)Two operating properties in the Seattle market, held by a consolidated real estate joint venture, are subject to purchase
options held by our partner in this joint venture, which is also a tenant at these properties. One purchase option allows our
partner to purchase our 30 % interest in one property for $40.0 million in 2031. Contingent upon the exercise of this option,
the second purchase option allows our partner to purchase our 30 % interest in one property for $69.1 million in 2034. Our
partner’s remaining lease terms for these operating leases are 6.4 years and 18.0 years, respectively.
(iii)One property subject to an operating lease agreement contains a purchase option exercisable at fair market value in
Certain operating leases contain options for tenants to extend their leases at prevailing market rates at the time of expiration.
In addition, certain operating leases contain an early termination option that requires advance notification and payment of an early
termination fee by the tenant.
At the commencement of each lease, we establish the lease term comprising the noncancelable period for each lease together
with periods covered by options to extend or terminate the lease that we determine the lessee is reasonably certain to exercise. Our
assessment of whether a lessee is reasonably certain to exercise or not exercise an option considers all economic factors relevant to
the assessment, including property-based, market-based, and tenant-based factors. We do not reassess the lease term or a lessee
option to purchase the underlying asset unless there is a lease modification that is not accounted for as a separate contract.
reimbursements, in effect as of September 30, 2026 are outlined in the table below (in thousands):
Year | Amount | |
2026 | $ | |
2027 | ||
2028 | ||
2029 | ||
2030 | ||
Thereafter | ||
Total | $ |
Refer to Note 3 – “Investments in real estate” to our unaudited consolidated financial statements for additional information
about our owned real estate assets, which are the underlying assets under our operating leases.
33
5.LEASES (continued)
Direct financing and sales-type leases
As of September 30, 2026, we have one direct financing lease agreement, with a net investment balance of $43.2 million, for a
parking structure with a remaining lease term of 66.2 years. The lessee has an option to purchase the underlying asset at fair market
value during each of the 30-day periods commencing on the dates that are 15 years, 30 years, and 74.5 years after the rent
commencement date of October 1, 2017 .
As of September 30, 2026, we also have one sales-type lease for a property in the Seattle market. As of September 30, 2026,
the net investment in this lease is $16.9 million. At the end of the lease term in 2026, title to the property under this lease will transfer to
the tenant for a sales price of approximately $18.5 million.
As of September 30, 2026, our estimated provision for expected credit losses related to our direct financing and sales-type
leases aggregated $1.8 million, which was predominantly related to our direct financing lease. We estimate the provision for expected
credit losses related to our direct financing lease using a probability of default methodology, which incorporates the borrower’s
investment-grade credit rating from S&P Global Ratings, to evaluate the probability of default. Additionally, we incorporate the projected
value of the real estate securing the investments to estimate potential recoveries in the event of default, among other inputs. The
estimate of the expected credit loss related to our sales-type lease was determined using historical industry losses and transaction-
specific information, including the estimated fair value of the underlying real estate asset securing this transaction, the short-term nature
of this lease, and other available information. For further details, refer to “Provision for expected credit losses” in Note 2 – “Summary of
significant accounting policies” to our unaudited consolidated financial statements.
December 31, 2025 are summarized in the table below (in thousands):
September 30, 2026 | December 31, 2025 | ||
Gross investment in direct financing and sales-type leases | $ | $ | |
Less: unearned income on direct financing lease | ( | ( | |
Less: provision for expected credit losses | ( | ( | |
Net investment in leases | $ | $ |
are outlined in the table below (in thousands):
Year | Total | |
2026 | $ | |
2027 | ||
2028 | ||
2029 | ||
2030 | ||
Thereafter | ||
Total | $ |
34
5.LEASES (continued)
Income from rentals
revenues subject to the lease accounting standard and the revenue recognition accounting standard as shown below (in thousands):
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||
2026 | 2025 | 2026 | 2025 | |||||
Income from rentals: | ||||||||
Revenues subject to the lease accounting standard: | ||||||||
Operating leases | $ | $ | $ | $ | ||||
Direct financing and sales-type leases | ||||||||
Revenues subject to the lease accounting standard | ||||||||
Revenues subject to the revenue recognition accounting standard | ||||||||
Income from rentals | $ | $ | $ | $ | ||||
Revenues subject to the revenue recognition accounting standard and classified in income from rentals consist primarily of
short-term parking revenues that are not considered lease revenues under the lease accounting standard. Refer to “Revenues” and
“Recognition of revenue arising from contracts with customers” in Note 2 – “Summary of significant accounting policies” to our
unaudited consolidated financial statements for additional information.
Residual value risk management strategy
Our leases do not have guarantees of residual value on the underlying assets. We manage risk associated with the residual
value of our leased assets by (i) evaluating each potential acquisition of real estate to determine whether it meets our business
objective to invest primarily in high-demand markets, (ii) directly managing our leased properties, conducting frequent property
inspections, proactively addressing potential maintenance issues, and/or timely resolving any occurring issues, and (iii) carefully
selecting our tenants and monitoring their credit quality throughout their respective lease terms.
Leases in which we are the lessee
Operating lease agreements
We have ground and office operating lease agreements in which we are the lessee. Certain of these leases have options to
extend or terminate the contract terms upon meeting certain criteria. There are no notable restrictions or covenants imposed by the
leases, nor guarantees of residual value.
We recognize a right-of-use asset, which is classified within other assets in our consolidated balance sheets, and a related
liability, which is classified within accounts payable, accrued expenses, and other liabilities in our consolidated balance sheets, to
account for our future obligations under ground and office lease arrangements in which we are the lessee. Refer to “Lessee accounting”
in Note 2 – “Summary of significant accounting policies” to our unaudited consolidated financial statements.
As of September 30, 2026, the present value of the remaining contractual payments aggregating $754.4 million under our
operating lease agreements, including our extension options that we are reasonably certain to exercise, was $354.0 million. 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 $686.2 million. As of September 30, 2026, the weighted-average
remaining lease term of operating leases in which we are the lessee was approximately 60 years, including extension options that we
are reasonably certain to exercise, and the weighted-average discount rate was 4.7 %. The weighted-average discount rate is based on
the incremental borrowing rate estimated for each lease, which is the interest rate that we estimate we would have to pay to borrow on
a collateralized basis over a similar term for an amount equal to the lease payments.
Ground lease obligations as of September 30, 2026 included leases for 31 of our properties, which accounted for
approximately 9 % of our total number of properties. Our ground lease obligations have remaining lease terms ranging from
approximately 28 to 97 years, including extension options that we are reasonably certain to exercise.
35
5.LEASES (continued)
lease liability reflected in our unaudited consolidated balance sheet as of September 30, 2026 is in the table below (in thousands):
Year | Total | |
2026 | $ | |
2027 | ||
2028 | ||
2029 | ||
2030 | ||
Thereafter | ||
Total future payments under our operating leases in which we are the lessee | ||
Effect of discounting | ( | |
Operating lease liability | $ |
Lessee operating costs
Operating lease costs relate to our ground and office leases in which we are the lessee. Ground leases generally require fixed
annual rent payments and may also include escalation clauses and renewal options. For the nine months ended September 30, 2026
and 2025, amounts paid and classified as operating activities in our unaudited consolidated statements of cash flows for leases in which
we are the lessee aggregated $18.0 million and $165.2 million, respectively. The decrease is primarily due to the ground lease
prepayment of $135.0 million made in January 2025 for a 24-year lease term extension to our existing ground lease agreement at the
Alexandria Technology Square® Megacampus in our Cambridge submarket.
Our operating lease obligations related to our office leases have remaining terms of up to 10 years, exclusive of extension
options. For the three and nine months ended September 30, 2026 and 2025, our costs for operating leases in which we are the lessee
were as follows (in thousands):
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||
2026 | 2025 | 2026 | 2025 | |||||
Gross operating lease costs | $ | $ | $ | $ | ||||
Capitalized lease costs | ( | ( | ( | ( | ||||
Expenses for operating leases in which we are the lessee | $ | $ | $ | $ | ||||
6. CASH, CASH EQUIVALENTS, AND RESTRICTED CASH
thousands):
September 30, 2026 | December 31, 2025 | ||
Cash and cash equivalents | $ | $ | |
Restricted cash: | |||
Development escrows | |||
Security deposits | |||
Other | |||
Total | $ | $ |
36
7.INVESTMENTS
REIT, we generally limit our ownership of each individual entity’s voting stock to less than 10 %. We evaluate each investment to
determine whether we have the ability to exercise significant influence, but not control, over an investee. We evaluate investments in
which our ownership is equal to or greater than 20%, but less than or equal to 50%, of an investee’s voting stock with a presumption
that we have this ability. For our investments in limited partnerships that maintain specific ownership accounts, we presume that such
ability exists when our ownership interest exceeds 3% to 5%. In addition to our ownership interest, we consider whether we have a
board seat or whether we participate in the investee’s policy-making process, among other criteria, to determine if we have the ability to
exert significant influence, but not control, over an investee. If we determine that we have such ability, we account for the investment
under the equity method, as described below.
From time to time, we may hold equity investments in publicly traded companies that are subject to temporary contractual sale
restrictions. We do not recognize a discount related to such contractual sale restrictions.
Investments accounted for under the equity method
Under the equity method of accounting, we initially recognize our investment at cost and subsequently adjust the carrying
amount of the investment for our share of earnings or losses reported by the investee, distributions received, and other-than-temporary
impairments.
As of September 30, 2026, we had nine investments in limited partnerships maintaining specific ownership accounts for each
investor, which were accounted for under the equity method. These investments aggregated $394.4 million. Our ownership interest in
each of these nine investments was greater than 5%.
Investments that do not qualify for the equity method of accounting
For investees over which we determine that we do not have the ability to exercise significant influence or control, we account
for each investment depending on whether it is an investment in a (i) publicly traded company, (ii) privately held entity that reports NAV
per share, or (iii) privately held entity that does not report NAV per share, as described below.
Investments in publicly traded companies
Our investments in publicly traded companies are classified as investments with readily determinable fair values and are
presented at fair value in our consolidated balance sheets, with changes in fair value classified in investment income (losses) in our
consolidated statements of operations. The fair values for our investments in publicly traded companies are determined based on sales
prices or quotes available on securities exchanges.
Investments in privately held companies
Our investments in privately held entities without readily determinable fair values consist of (i) investments in privately held
entities that report NAV per share and (ii) investments in privately held entities that do not report NAV per share. These investments are
accounted for as follows:
Investments in privately held entities that report NAV per share
Investments in privately held entities that report NAV per share, such as our privately held investments in limited partnerships,
are presented at fair value using NAV as a practical expedient, with changes in fair value classified in investment income (losses) in our
consolidated statements of operations. We use NAV per share reported by limited partnerships generally without adjustment, unless we
are aware of information indicating that the NAV reported by a limited partnership does not accurately reflect the fair value of the
investment at our reporting date.
Investments in privately held entities that do not report NAV per share
Investments in privately held entities that do not report NAV per share are accounted for using a measurement alternative
under which these investments are measured at cost, adjusted for observable price changes and impairments, with changes classified
in investment income (losses) in our consolidated statements of operations.
An observable price arises from an orderly transaction for an identical or similar investment of the same issuer, which is
observed by an investor without expending undue cost and effort. Observable price changes result from, among other things, equity
transactions of the same issuer executed during the reporting period, including subsequent equity offerings or other reported equity
transactions related to the same issuer. To determine whether these transactions are indicative of an observable price change, we
evaluate, among other factors, whether these transactions have similar rights and obligations, including voting rights, distribution
preferences, and conversion rights to the investments we hold.
37
7.INVESTMENTS (continued)
Impairment evaluation of equity method investments and investments in privately held entities that do not report NAV per share
We monitor equity method investments and investments in privately held entities that do not report NAV per share for new
developments, including operating results, prospects and results of clinical trials, new product initiatives, new collaborative agreements,
capital-raising events, and merger and acquisition activities. These investments are evaluated on the basis of a qualitative assessment
for indicators of impairment by monitoring the presence of the following triggering events or impairment indicators:
(i)a significant deterioration in the earnings performance, credit rating, asset quality, or business prospects of the investee;
(ii)a significant adverse change in the regulatory, economic, or technological environment of the investee;
(iii)a significant adverse change in the general market condition, including the research and development of technology and
products that the investee is bringing or attempting to bring to the market;
(iv)significant concerns about the investee’s ability to continue as a going concern; and/or
(v)a decision by investors to cease providing support or reduce their financial commitment to the investee.
If such indicators are present, we are required to estimate the investment’s fair value and immediately recognize an
impairment charge in an amount equal to the investment’s carrying value in excess of its estimated fair value.
Investment income/loss recognition and classification
We recognize both realized and unrealized gains and losses in our consolidated statements of operations, classified in
investment income (losses) in our consolidated statements of operations. Unrealized gains and losses represent:
(i)changes in fair value for investments in publicly traded companies;
(ii)changes in NAV for investments in privately held entities that report NAV per share;
(iii)observable price changes for investments in privately held entities that do not report NAV per share; and
(iv)our share of unrealized gains or losses reported by our equity method investees.
Realized gains and losses on our investments represent the difference between proceeds received upon disposition of
investments and their historical or adjusted cost basis. For our equity method investments, realized gains and losses represent our
share of realized gains or losses reported by the investee. Impairments are realized losses, which result in an adjusted cost basis, and
represent charges to reduce the carrying values of investments in privately held entities that do not report NAV per share and equity
method investments, if impairments are deemed other than temporary, to their estimated fair value.
Funding commitments to investments in privately held entities that report NAV
We are committed to funding approximately $317.5 million for our investments in privately held entities that report NAV. Our
funding commitments expire at various dates over the next 11 years, with a weighted-average expiration of 7.8 years as of September
30, 2026. These investments are not redeemable by us, but we may receive distributions from these investments throughout their
terms. Our investments in privately held entities that report NAV generally have expected initial terms in excess of 10 years. The
weighted-average remaining term during which these investments are expected to be liquidated was 5.4 years as of September 30,
2026.
September 30, 2026 | |||||||
Cost | Unrealized Gains | Unrealized Losses | Carrying Amount | ||||
Publicly traded companies | $ | $ | $( | $ | |||
Entities that report NAV | ( | ||||||
Entities that do not report NAV: | |||||||
Entities with observable price changes | ( | ||||||
Entities without observable price changes | |||||||
Investments accounted for under the equity method | N/A | N/A | N/A | ||||
Total investments | $ | $ | $( | $ | |||
38
7.INVESTMENTS (continued)
December 31, 2025 | |||||||
Cost | Unrealized Gains | Unrealized Losses | Carrying Amount | ||||
Publicly traded companies | $ | $ | $( | $ | |||
Entities that report NAV | ( | ||||||
Entities that do not report NAV: | |||||||
Entities with observable price changes | ( | ||||||
Entities without observable price changes | |||||||
Investments accounted for under the equity method | N/A | N/A | N/A | ||||
Total investments | $ | $ | $( | $ | |||
Cumulative gains and losses (realized and unrealized) on investments in privately held entities that do not report NAV still held
as of September 30, 2026 aggregated to a loss of $137.8 million, which consisted of upward adjustments aggregating $50.6 million,
downward adjustments aggregating $10.8 million, and impairments aggregating $177.6 million.
(in thousands):
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||
2026 | 2025 | 2026 | 2025 | |||||
Realized gains | $ | (1) | $ | $ | (1) | $ | ||
Unrealized gains (losses) | ( | |||||||
Investment income (losses) | $ | (2) | $ | $ | (2) | $( | ||
(1)Consists of realized gains of $16.0 million and $44.5 million, partially offset by impairment charges of $13.6 million and $35.0 million during the three and nine months
ended September 30, 2026, respectively.
(2)Investment income of $24.0 million and $152.6 million included $340 thousand of equity in losses and $28.2 million of equity in earnings of our equity method
investments during the three and nine months ended September 30, 2026, respectively.
Nine Months Ended September 30, | ||||
2026 | 2025 | |||
Investments in privately held entities that do not report NAV still held as of the end of each period: | ||||
Upward adjustments | $ | $ | ||
Downward adjustments and impairments | ( | ( | ||
$( | $( | |||
Unrealized gains on non-real estate investments still held as of the end of each period (excluding equity method investments) | $ | $ | ||
Refer to “Investments” in Note 2 – “Summary of significant accounting policies” to our unaudited consolidated financial
statements for additional information.
39
8. OTHER ASSETS
thousands):
September 30, 2026 | December 31, 2025 | ||
Acquired in-place leases | $ | $ | |
Deferred compensation plan | |||
Deferred financing costs – unsecured senior line of credit | |||
Deposits | |||
Furniture, fixtures, equipment, and software | |||
Net investment in leases | |||
Notes receivable | |||
Operating lease right-of-use assets | |||
Other assets | |||
Prepaid expenses | |||
Property, plant, and equipment | |||
Total | $ | $ |
Notes receivable
September 30, 2026 | ||||||||
Weighted-Average | ||||||||
Notes Receivable | Effective Interest Rate | Maturity Date | Balance | December 31, 2025 | ||||
Secured by real estate assets in San Diego | 1/10/29 | $ | $ | |||||
Secured by real estate assets in Greater Boston | 12/16/29 | |||||||
Less: provision for expected credit losses | ( | ( | ||||||
Notes receivable | $ | $ | ||||||
Our notes receivable represent held-to-maturity debt securities carried at amortized cost and are generally secured by real
estate. Under the current expected credit losses accounting standard, we are required to estimate and, if necessary, recognize a
provision for expected credit losses related to these notes. We do not have a history of losses on such securities; therefore, we utilize
available information on historical losses for the commercial real estate industry. We determine expected credit losses for our notes
receivable using historical industry losses and considering loan-specific information, including credit ratings of the borrowers, estimated
fair values of underlying real estate assets, loan-to-value ratios, the presence of guarantors, and/or other available information. During
the three and nine months ended September 30, 2026, no adjustment to the provision for expected credit losses related to our notes
receivable was required. The provision is evaluated on an ongoing basis, with any necessary adjustments recognized in the
40
9.FAIR VALUE MEASUREMENTS
and disclose the estimated fair value of financial assets and liabilities by utilizing a fair value hierarchy that distinguishes between data
obtained from sources independent of the reporting entity and the reporting entity’s own assumptions about market participant
assumptions. This hierarchy consists of three broad levels, as follows: (i) quoted prices in active markets for identical assets or liabilities
(Level 1), (ii) significant other observable inputs (Level 2), and (iii) significant unobservable inputs (Level 3). Significant other observable
inputs can include quoted prices for similar assets or liabilities in active markets, as well as inputs that are observable for the asset or
liability, such as interest rates, foreign exchange rates, and yield curves. Significant unobservable inputs are typically based on an
entity’s own assumptions, since there is little, if any, related market activity. In instances in which the determination of the fair value
measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the
entire fair value measurement falls is based on the lowest level of input that is significant to the fair value measurement in its entirety.
Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers
factors specific to the asset or liability.
Assets and liabilities measured at fair value on a recurring basis
value hierarchy as of September 30, 2026 and December 31, 2025 (in thousands). There were no transfers of assets measured at fair
value on a recurring basis to or from Level 3 in the fair value hierarchy during the nine months ended September 30, 2026.
Fair Value Measurement Using | ||||||||
Description | Total | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||
Assets: | ||||||||
Investments in publicly traded companies: | ||||||||
As of September 30, 2026 | $ | $ | $ | $ | ||||
As of December 31, 2025 | $ | $ | $ | $ | ||||
Cross-currency swap agreements: | ||||||||
As of September 30, 2026 | $ | $ | $ | $ | ||||
Liabilities: | ||||||||
Cross-currency swap agreements: | ||||||||
As of December 31, 2025 | $ | $ | $ | $ | ||||
Our investments in publicly traded companies represent investments with readily determinable fair values, and are carried at
fair value, with changes in fair value classified in investment income (losses) in our consolidated financial statements. We also hold
investments in privately held entities, which consist of (i) investments that report NAV and (ii) investments that do not report NAV, as
further described below.
Our investments in privately held entities that report NAV, such as our privately held investments in limited partnerships, are
carried at fair value using NAV as a practical expedient, with changes in fair value classified in net income. As of September 30, 2026
and December 31, 2025, the carrying values of investments in privately held entities that report NAV aggregated $680.4 million and
$512.4 million, respectively. These investments are excluded from the fair value hierarchy above as required by the fair value
accounting standard. We estimate the fair value of each of our investments in limited partnerships based on the most recent NAV
prepared by the general partner and reported by each limited partnership. As a result, the determination of fair values of our
investments in privately held entities that report NAV generally does not involve significant estimates, assumptions, or judgments on our
part.
Our cross-currency swap agreements are recognized at fair value. Refer to Note 2 – “Summary of significant accounting
policies” and Note 11 – “Hedge agreements” to our unaudited consolidated financial statements for additional information.
41
9.FAIR VALUE MEASUREMENTS (continued)
Assets and liabilities measured at fair value on a nonrecurring basis
value hierarchy, as of September 30, 2026 and December 31, 2025 (in thousands).
Fair Value Measurement Using | ||||||||||
Description | Carrying Amount | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||
Real estate assets with carrying values adjusted based on fair values during the: | ||||||||||
Nine months ended September 30, 2026 | $ | (1) | $ | $ | $ | |||||
Year ended December 31, 2025 | $ | (1) | $ | $ | $ | |||||
Investments in privately held entities that do not report NAV with carrying values adjusted based on fair values during the: | ||||||||||
Nine months ended September 30, 2026 | $ | $ | $ | (2) | $ | (3) | ||||
Year ended December 31, 2025 | $ | $ | $ | (2) | $ | (3) | ||||
(1)These amounts represent the aggregate carrying amounts of real estate assets for which adjustments based on nonrecurring fair value measurements were recognized
during the respective periods, including assets for which impairment losses or reversals of previously recognized impairment losses were recorded. These assets
primarily include a subset of our total real estate assets classified as held for sale as of September 30, 2026 and December 31, 2025. The fair values for these real
estate assets were estimated based on executed purchase and sale agreements, letters of intent, valuations provided by third-party real estate brokers, or market
comparables from recent transactions. Refer to “Investments in real estate” in Note 2 – “Summary of significant accounting policies” and “Assets held for sale” in Note 3
– “Investments in real estate” to our unaudited consolidated financial statements for additional information.
(2)These amounts represent the carrying amounts of our equity investments in privately held entities with observable price changes for which adjustments based on
nonrecurring fair value measurements were recognized during the respective periods. These amounts are included in the investment balances of $1.74 billion and $1.50
billion in our unaudited consolidated balance sheets as of September 30, 2026 and December 31, 2025, respectively, disclosed in Note 7 – “Investments” to our
unaudited consolidated financial statements.
(3)These amounts are included in the investments in privately held entities without observable price changes balances aggregating $406.4 million and $413.3 million as of
September 30, 2026 and December 31, 2025, respectively, disclosed in Note 7 – “Investments” to our unaudited consolidated financial statements, and represent the
carrying amounts of investments in privately held entities that do not report NAV for which impairments have been recognized during the respective periods in
accordance with the measurement alternative guidance described in “Investments” in Note 2 – “Summary of significant accounting policies” to our unaudited
consolidated financial statements.
Investments in privately held entities that do not report NAV
Our investments in privately held entities that do not report NAV are measured at cost, adjusted for observable price changes
and impairments, with changes recognized in net income (loss). These investments are adjusted based on the observable price
changes in orderly transactions for the identical or similar investment of the same issuer. Further adjustments are not made until
another observable transaction occurs. Therefore, the determination of fair values of our investments in privately held entities that do
not report NAV does not involve significant estimates and assumptions or subjective and complex judgments.
We also subject our investments in privately held entities that do not report NAV to a qualitative assessment for indicators of
impairment. If indicators of impairment are present, we are required to estimate the investment’s fair value and immediately recognize
an impairment charge in an amount equal to the investment’s carrying value in excess of its estimated fair value.
The estimates of fair value typically incorporate valuation techniques that include an income approach reflecting a discounted
cash flow analysis, and a market approach that includes a comparative analysis of acquisition multiples and pricing multiples generated
by market participants. In certain instances, we may use multiple valuation techniques for a particular investment and estimate its fair
value based on an average of multiple valuation results.
Refer to Note 7 – “Investments” to our unaudited consolidated financial statements for additional information.
Assets and liabilities not measured at fair value in the statement of financial position but for which the fair value is disclosed
The fair values of our unsecured senior notes payable, junior subordinated notes payable, and the amounts outstanding on our
unsecured senior line of credit and commercial paper program were estimated using widely accepted valuation techniques, including
discounted cash flow analyses using significant other observable inputs such as available market information on discount and
borrowing rates with similar terms, maturities, and credit ratings. Because the valuations of our financial instruments are based on these
types of estimates, the actual fair value of our financial instruments may differ materially if our estimates do not prove to be accurate.
Additionally, the use of different market assumptions or estimation methods may have a material effect on the estimated fair value
amounts.
42
9.FAIR VALUE MEASUREMENTS (continued)
junior subordinated notes payable, and the amounts outstanding under our unsecured senior line of credit and commercial paper
program, including the level within the fair value hierarchy for which the estimates were derived, were as follows (in thousands):
September 30, 2026 | |||||||||
Book Value | Fair Value Hierarchy | Estimated Fair Value | |||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||
Liabilities: | |||||||||
Unsecured senior notes payable | $ | $ | $ | $ | $ | ||||
Junior subordinated notes payable | $ | $ | $ | $ | $ | ||||
Unsecured senior line of credit | $ | $ | $ | $ | $ | ||||
Commercial paper program | $ | $ | $ | $ | $ | ||||
December 31, 2025 | |||||||||
Book Value | Fair Value Hierarchy | Estimated Fair Value | |||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||
Liabilities: | |||||||||
Unsecured senior notes payable | $ | $ | $ | $ | $ | ||||
Unsecured senior line of credit | $ | $ | $ | $ | $ | ||||
Commercial paper program | $ | $ | $ | $ | $ | ||||
The carrying values of cash and cash equivalents, restricted cash, tenant receivables, deposits, notes receivable, accounts
43
10.SECURED AND UNSECURED SENIOR DEBT
Stated Rate | Interest Rate(1) | Maturity Date(2) | Principal Payments Remaining for the Periods Ending December 31, | Unamortized (Deferred Financing Cost), (Discount)/ Premium | ||||||||||||||||||||
Debt | 2026 | 2027 | 2028 | 2029 | 2030 | Thereafter | Principal | Total | ||||||||||||||||
Unsecured senior notes payable | $ | $ | $ | $ | $ | $ | $ | $( | $ | |||||||||||||||
Unsecured senior notes payable | ( | |||||||||||||||||||||||
Unsecured senior notes payable | ( | |||||||||||||||||||||||
Unsecured senior notes payable | ( | |||||||||||||||||||||||
Unsecured senior notes payable | ( | |||||||||||||||||||||||
Unsecured senior notes payable | ( | |||||||||||||||||||||||
Unsecured senior notes payable | ( | |||||||||||||||||||||||
Unsecured senior notes payable | ( | |||||||||||||||||||||||
Unsecured senior notes payable | ( | |||||||||||||||||||||||
Unsecured senior notes payable | ( | |||||||||||||||||||||||
Unsecured senior notes payable | ( | |||||||||||||||||||||||
Unsecured senior notes payable | ( | |||||||||||||||||||||||
Unsecured senior notes payable | ( | |||||||||||||||||||||||
Unsecured senior notes payable | ( | |||||||||||||||||||||||
Unsecured senior notes payable | ( | |||||||||||||||||||||||
Unsecured senior notes payable | ||||||||||||||||||||||||
Unsecured senior notes payable | ( | |||||||||||||||||||||||
Unsecured senior notes payable | ( | |||||||||||||||||||||||
Unsecured senior notes payable | ( | |||||||||||||||||||||||
Unsecured senior notes payable | ( | |||||||||||||||||||||||
Unsecured senior notes payable weighted- average interest rate/subtotal | ( | |||||||||||||||||||||||
Junior subordinated notes payable | (3) | (3) | (3) | ( | ||||||||||||||||||||
Unsecured senior line of credit and commercial paper program(4) | (4) | (4) | (4) | ( | ||||||||||||||||||||
Weighted-average interest rate/total | $ | $ | $ | $ | $ | $ | $ | $( | $ | |||||||||||||||
(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.
(2)Reflects any extension options that we control.
(3)Refer to footnote 3 on the following page.
(4)Refer to footnote 4 on the following page. In September 2026, we amended and restated our $5.0 billion unsecured senior line of credit, which, among other changes, extended the maturity date from January 22, 2030 to January 22, 2032,
44
10.SECURED AND UNSECURED SENIOR DEBT (continued)
Fixed-Rate Debt | Variable-Rate Debt | Weighted-Average | ||||||||||
Interest | Remaining Term (in years) | |||||||||||
Total | Percentage | Rate(1) | ||||||||||
Unsecured senior notes payable | $ | $ | $ | |||||||||
Junior subordinated notes payable | (3) | (3) | ||||||||||
Unsecured senior line of credit(2) and commercial paper program | (4) | |||||||||||
Total/weighted average | $ | $ | $ | (4) | ||||||||
Percentage of total debt | ||||||||||||
(1)Represents the weighted-average interest rate as of the end of the applicable period, including expense/income related to the amortization of loan fees, amortization of
debt premiums (discounts), and other bank fees.
(2)As of September 30, 2026, we had no outstanding balance on our unsecured senior line of credit.
(3)Our junior subordinated notes will initially bear interest at 7.250 % per year through, but excluding, February 15, 2032. Thereafter, the interest rate will reset every five
years to the five-year U.S. Treasury rate plus 2.889 %, subject to a minimum interest rate of 7.250 %. In addition, we may redeem the notes at 100% of principal plus
accrued and unpaid interest during the period beginning November 17, 2031 and ending on February 15, 2032, and thereafter on any interest payment date.
(4)We calculate the weighted-average remaining term of our commercial paper notes by using the maturity date of our unsecured senior line of credit. Using the maturity
date of our outstanding commercial paper notes, the consolidated weighted-average maturity of our debt is 11.2 years. The commercial paper notes sold during the nine
months ended September 30, 2026 were issued at a weighted-average yield to maturity of 4.19 % and had a weighted-average maturity term of 14 days. Our total
In February 2026, we completed tender offers to repurchase an aggregate debt principal amount of approximately $1.33 billion
of a portion of our outstanding 4.00 % Senior Notes due 2050, 3.00 % Senior Notes due 2051, and 3.55 % Senior Notes due 2052. Cash
consideration paid was $952.2 million. The repurchase was primarily funded through the issuance of $750.0 million of 5.25 % unsecured
senior notes due 2036, and approximately $200 million of short-term borrowings under our commercial paper program. In connection
with the debt repurchase, we recognized a gain on early extinguishment of debt aggregating $366.4 million, including the write-off of
unamortized debt issuance costs and other transaction-related costs.
In January 2026, we repaid $300.0 million of 4.30 % unsecured senior notes payable upon maturity. No gain or loss was
incurred in connection with this repayment.
In April 2026, we repaid $350.0 million of 3.80 % unsecured senior notes payable upon maturity. No gain or loss was incurred
in connection with this repayment.
Issuance of junior subordinated notes payable
In August 2026, we completed a public offering of $1.00 billion aggregate principal amount of 7.250 % Series A fixed-to-fixed
reset rate junior subordinated notes due 2057. The notes will initially bear interest at 7.250 % per year through, but excluding,
February 15, 2032. Thereafter, the interest rate will reset every five years to the five-year U.S. Treasury rate plus 2.889 %, subject to a
minimum interest rate of 7.250 %. We may elect to defer interest payments for up to five consecutive years, subject to the terms of the
notes, including certain restrictions on paying dividends and repurchasing equity. The notes may be redeemed at our option in whole or
in part at 100% of principal plus accrued and unpaid interest during the period beginning November 17, 2031 and ending on
February 15, 2032, and thereafter on any interest payment date. The notes may also be redeemed in whole, but not in part, at 100% of
principal plus accrued and unpaid interest upon certain tax events and at 102% of principal plus accrued and unpaid interest upon
certain rating agency events.
$5.0 billion unsecured senior line of credit
In September 2026, we amended and restated our $5.0 billion unsecured senior line of credit which, among other changes,
extended the maturity date from January 22, 2030 to January 22, 2032, including extension options that we control. The amendment
also reduced the applicable borrowing rate to SOFR plus 0.725 % from SOFR plus 0.835 % and eliminated the existing sustainability-
linked pricing adjustments. The facility fee was revised to 0.15 % from 0.14 %. In connection with the amendment, we recognized a loss
on early extinguishment of debt of approximately $3.3 million for the partial write-off of unamortized loan fees.
As of September 30, 2026, our unsecured senior line of credit, which matures in 2032, including extension options under our
control, had aggregate commitments of $5.0 billion, and bore an interest rate of SOFR plus 0.725 %. In addition to the cost of borrowing,
the unsecured senior line of credit is subject to an annual facility fee of 0.15 % based on the aggregate commitments outstanding. As of
September 30, 2026, we had no outstanding balance on our unsecured senior line of credit.
45
10.SECURED AND UNSECURED SENIOR DEBT (continued)
$2.50 billion commercial paper program
Our commercial paper program allows us to issue up to $2.50 billion of commercial paper notes that bear interest at short-term
fixed rates with a maturity of generally 30 days or less and a maximum maturity of 397 days from the date of issuance. This program is
back-stopped 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 the amount of commercial paper notes outstanding. We use the net
proceeds from the issuances of the notes for general working capital and other general corporate purposes, which may include, but are
not limited to, the repayment of other debt and selective development, redevelopment, or acquisition of properties. During the nine
months ended September 30, 2026, the notes were issued at a weighted-average yield to maturity of 4.19 % and had a weighted-
average maturity term of 14 days. As of September 30, 2026, we had $1.09 billion outstanding under our commercial paper program.
thousands):
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||
2026 | 2025 | 2026 | 2025 | ||||
Interest incurred | $ | $ | $ | $ | |||
Capitalized interest | ( | ( | ( | ( | |||
Interest expense | $ | $ | $ | $ | |||
11. HEDGE AGREEMENTS
We have fixed-to-fixed cross-currency swap agreements designated as net investment hedges to mitigate the impact of
fluctuations in the USD–CAD exchange rate on our real estate investments in Canada. Under the terms of these agreements, USD
fixed interest amounts are payable to us and CAD fixed interest amounts are payable to the counterparty.
On April 30, 2026, our cross-currency swap agreements with an aggregate notional amount of CAD $340.0 million matured.
No amounts were reclassified from accumulated other comprehensive income to earnings because the related net investment had not
been sold or substantially liquidated.
During the three months ended June 30, 2026, we entered into new fixed-to-fixed cross-currency swap agreements
designated as net investment hedges with an aggregate notional amount of CAD $270.0 million. During the three months ended
September 30, 2026, we terminated these agreements and entered into new fixed-to-fixed cross-currency swap agreements with the
same aggregate CAD notional amount, designated as net investment hedges, which were deemed effective on the commencement
date. These agreements mature on January 31, 2028.
As of September 30, 2026, our outstanding cross-currency swap agreements had an aggregate notional amount of CAD
$270.0 million, or approximately USD $194.1 million, and were highly effective.
Unrealized gains or losses on these agreements are recognized in accumulated other comprehensive income and will be
reclassified into net income upon complete or substantially complete liquidation of our investment in Canada. Refer to “Hedge
accounting” in Note 2 – “Summary of significant accounting policies” to our unaudited consolidated financial statements for additional
information.
The tables below summarize the fair value of our cross-currency swap agreements designated as net investment hedges and
the effect on our consolidated financial statements. Amounts are presented in USD (in thousands).
Balance Sheet Location | September 30, 2026 | December 31, 2025 | ||
Other assets | $ | $ | ||
Accounts payable, accrued expenses, and other liabilities | $ | $ |
46
11. HEDGE AGREEMENTS (continued)
Effect Recognized (in thousands) | Location in Consolidated Statement of Comprehensive Income | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||
2026 | 2025 | 2026 | 2025 | |||||||
Total unrealized (losses) gains recognized in other comprehensive income | Unrealized (losses) gains on foreign currency translation, net | $( | $ | $ | $ | |||||
Effect Recognized (in thousands) | Location in Consolidated Statement of Operations | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||
2026 | 2025 | 2026 | 2025 | |||||||
Total gain recognized in net income(1) | Other income | $ | $ | $ | $ | |||||
(1)Represents net interest settlements and interest rate forward points excluded from assessment of hedge effectiveness. Refer to “Hedge accounting” in Note 2 –
“Summary of significant accounting policies” to our unaudited consolidated financial statements for additional information.
12. ACCOUNTS PAYABLE, ACCRUED EXPENSES, AND OTHER LIABILITIES
September 30, 2026 and December 31, 2025 (in thousands):
September 30, 2026 | December 31, 2025 | ||
Accounts payable and accrued expenses | $ | $ | |
Accrued construction | |||
Acquired below-market leases | |||
Conditional asset retirement obligations | |||
Deferred rent liabilities | |||
Operating lease liability | |||
Unearned rent and tenant security deposits | |||
Other liabilities | |||
Total | $ | $ |
As of September 30, 2026 and December 31, 2025, our conditional asset retirement obligations primarily consisted of the soil
and groundwater remediation liabilities associated with certain properties. Some of our properties may contain asbestos or may be
subjected to other hazardous or toxic substances, which, under certain conditions, require remediation. We engage independent
environmental consultants to conduct Phase I or similar environmental assessments at our properties. This type of assessment
generally includes a site inspection, interviews, and a public records review; asbestos, lead-based paint, and mold surveys; subsurface
sampling; and other testing. We recognize a liability for the fair value of a conditional asset retirement obligation when the fair value of
the liability can be reasonably estimated. In addition, environmental laws and regulations subject our tenants, and potentially us, to
liability that may result from our tenants’ routine handling of hazardous substances and wastes as part of their operations at our
properties. As of September 30, 2026, we are not aware of any additional environmental liability that we believe would require additional
disclosures or recognition in our consolidated financial statements.
47
13.EARNINGS PER SHARE
awards with forfeitable dividends.
Unvested restricted stock awards (“RSAs”) with nonforfeitable dividends are considered participating securities and included in
the computation of EPS using the two-class method. Under this method, we allocate net income (after amounts attributable to
noncontrolling interests) to common stockholders and these RSAs by using the weighted-average shares of each class outstanding for
quarter-to-date and year-to-date periods independently, based on their respective participation rights to dividends declared (or
accumulated) and undistributed earnings.
Unvested RSAs with forfeitable dividends do not qualify as participating securities under the two-class method because the
dividends are forfeited if the awards do not vest. As a result, undistributed earnings are not allocated to these awards prior to vesting,
and these awards have no effect on the computation of basic EPS while unvested. Once these awards vest, they are included in the
denominator of basic EPS, weighted for the portion of the reporting period they were vested. Prior to vesting, these awards are included
in the denominator of diluted EPS if they are dilutive, which is determined using the treasury stock method. Under this method,
incremental shares are calculated as the difference between the total unvested shares and the number of shares that could
hypothetically be repurchased using the assumed proceeds (including unrecognized compensation cost related to these awards).
These incremental shares are weighted for the portion of the reporting period they were unvested and are included in the diluted EPS
denominator only if their inclusion reduces EPS (i.e., if they are not antidilutive).
In addition, from time to time, we enter into forward equity sales agreements. We consider the potential dilution resulting from
the forward equity sales agreements on the EPS calculations. At inception, the agreements do not have an effect on the computation of
basic EPS as no shares are delivered until settlement. The common shares issued upon the settlement of the forward equity sales
agreements, weighted for the period these common shares were outstanding, are included in the denominator of basic EPS. To
determine the dilution resulting from the forward equity sales agreements during the period of time prior to settlement, we calculate the
number of weighted-average shares outstanding – diluted using the treasury stock method. As of September 30, 2026, no forward
equity sales agreements were outstanding.
months ended September 30, 2026 and 2025 (in thousands, except per share amounts):
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||
2026 | 2025 | 2026 | 2025 | ||||
Net loss | $( | $( | $( | $( | |||
Net income attributable to noncontrolling interests | ( | ( | ( | ( | |||
Net income attributable to unvested RSAs with nonforfeitable dividends | ( | ( | ( | ( | |||
Numerator for basic and diluted EPS – net loss attributable to Alexandria Real Estate Equities, Inc.’s common stockholders | $( | $( | $( | $( | |||
Denominator for basic EPS – weighted-average shares of common stock outstanding | |||||||
Dilutive effect of unvested RSAs with forfeitable dividends | |||||||
Denominator for diluted EPS – weighted-average shares of common stock outstanding | |||||||
Net loss per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders: | |||||||
Basic | $( | $( | $( | $( | |||
Diluted | $( | $( | $( | $( | |||
48
14.STOCKHOLDERS’ EQUITY
Common stock repurchase program
On December 8, 2025, we announced that our Board of Directors authorized a new common stock repurchase program that
allows for the repurchase of up to $500.0 million of our common stock through December 31, 2026 . This new program replaced our
prior stock repurchase program. As of the date of this report, no repurchases have been made under the new program and
$500.0 million remains available for future share repurchases.
ATM common stock offering program
In February 2024, we entered into an ATM common stock offering program that allows us to sell up to an aggregate of
$1.50 billion of our common stock.
During the nine months ended September 30, 2026, we had no activity under our ATM program. As of September 30, 2026,
the remaining aggregate amount available under our ATM program for future sales of common stock was $1.47 billion.
Dividends
During the three months ended March 31, 2026, we declared cash dividends on our common stock aggregating $125.5 million,
or $0.72 per share.
During the three months ended June 30, 2026, we declared cash dividends on our common stock aggregating $125.4 million,
or $0.72 per share.
During the three months ended September 30, 2026, we declared cash dividends on our common stock aggregating
$125.4 million, or $0.72 per share.
Accumulated other comprehensive loss
The change in accumulated other comprehensive loss attributable to Alexandria Real Estate Equities, Inc.’s stockholders for
the nine months ended September 30, 2026 was due to net unrealized losses of $4.3 million, and included $12.3 million of unrealized
foreign currency translation losses related to our operations in Canada, partially offset by $8.0 million of unrealized gains resulting from
the changes in the fair value of our cross-currency swap agreements due to the weakening of the Canadian dollar. Refer to Note 11 –
“Hedge agreements” to our unaudited consolidated financial statements for additional information.
Common stock, preferred stock, and excess stock authorizations
Our charter authorizes the issuance of 400.0 million shares of common stock, of which 170.8 million shares were issued and
outstanding as of September 30, 2026. Our charter also authorizes the issuance of up to 100.0 million shares of preferred stock, none
of which were issued and outstanding as of September 30, 2026. In addition, 200.0 million shares of “excess stock” (as defined in our
charter) are authorized, none of which were issued and outstanding as of September 30, 2026.
49
15.SEGMENT INFORMATION
tenants primarily in the life science industry. Our properties are leased predominantly through triple-net lease agreements and share
key characteristics, including generic and reusable improvements, consistent lease structures, and business and financial strategy. All
properties are located within North America, predominantly in the U.S., and operate within a comparable regulatory environment.
Operating segments
Our Chief Operating Decision Maker (“CODM”), represented by our Executive Chairman and our Chief Executive Officer,
evaluates operating results at the geographic market level to assess performance and allocate resources. Our operating segments align
with our markets, including Greater Boston, San Diego, the San Francisco Bay Area, and Seattle, among others. Regular market
performance updates are provided directly to the CODM. These updates include each market’s net operating income (“NOI”), which
serves as the profit or loss measure used by the CODM for performance assessment and resource allocation. NOI provides useful
information regarding performance of each market as it reflects income and expenses incurred in connection with real estate operations
in each market. This metric enables the CODM to evaluate the profitability and performance of each market on a consistent and
comparable basis, supporting decisions on capital resource allocation, including in connection with development, redevelopment,
acquisition, and disposition activities in each market.
Evaluation of economic similarity and aggregation of operating segments
In accordance with the segment reporting accounting standard, we evaluate the economic similarity of our operating
segments. Seven of our nine operating segments exhibit consistent long-term economic characteristics, including similar historical long-
term NOI margins, which are also expected to remain similar in the future. Additionally, these markets share similar operational
characteristics, including nature of services provided (i.e., leasing, operating, developing, and redeveloping life science properties),
tenant base (i.e., a variety of tenants involved in the life science industry), methods of operation (i.e., consistent lease structures,
property management practices, and business strategies), and nature of the regulatory environment (consistent across North America,
where all our operating segments are located). Based on shared economic characteristics, we have aggregated our seven operating
segments into one reportable segment for segment reporting purposes. The remaining operating segments, which do not meet the
aggregation criteria and individually do not meet the quantitative thresholds to qualify as reportable segments, were included in the “all
other” category in the tables below.
September 30, 2026 and 2025 (in thousands):
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||
2026 | 2025 | 2026 | 2025 | ||||
Reportable segment revenues: | |||||||
Revenues from external customers | $ | $ | $ | $ | |||
Other income | |||||||
Reportable segment total revenues | |||||||
Reportable segment total rental operating expenses | ( | ( | ( | ( | |||
Reportable segment net operating income (reportable segment profit or loss) | $ | $ | $ | $ | |||
Significant expenses included in the reportable segment profit or loss measure (i.e., NOI) are represented by the reportable
segment total rental operating expenses and are disclosed in the table above. These expenses primarily include property taxes, utilities,
repairs and maintenance, engineering, janitorial, and other costs.
50
15.SEGMENT INFORMATION (continued)
segment total rental operating expenses to consolidated rental operations, and the reportable segment NOI to the consolidated net
income (in thousands):
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||
2026 | 2025 | 2026 | 2025 | ||||
Reconciliation of reportable segment revenues to consolidated total revenues: | |||||||
Reportable segment total revenues | $ | $ | $ | $ | |||
All other revenues | |||||||
Consolidated total revenues | $ | $ | $ | $ | |||
Reconciliation of reportable segment total rental operating expenses to consolidated rental operations: | |||||||
Reportable segment total rental operating expenses | $( | $( | $( | $( | |||
All other rental operating expenses | ( | ( | ( | ( | |||
Consolidated rental operations | $( | $( | $( | $( | |||
Reconciliation of reportable segment net operating income to consolidated net (loss) income: | |||||||
Reportable segment net operating income (reportable segment profit or loss) | $ | $ | $ | $ | |||
All other revenues | |||||||
All other rental operating expenses | ( | ( | ( | ( | |||
Other items not allocated to segments: | |||||||
General and administrative | ( | ( | ( | ( | |||
Interest expense | ( | ( | ( | ( | |||
Depreciation and amortization | ( | ( | ( | ( | |||
Impairment of real estate | ( | ( | ( | ( | |||
Equity in earnings (losses) of unconsolidated real estate joint ventures | ( | ||||||
Investment income (losses) | ( | ||||||
(Loss) gain on early extinguishment of debt | ( | ( | ( | ||||
Gain on sales of real estate | |||||||
Consolidated net loss | $( | $( | $( | $( | |||
The following table reconciles reportable segment investments in real estate to consolidated total assets (in thousands).
Reportable segment investments in real estate constitute the total assets of our reportable segment. Consolidated assets not allocated
to segments represent all asset line items presented in our consolidated balance sheets other than consolidated investments in real
estate.
September 30, 2026 | December 31, 2025 | ||
Reportable segment investments in real estate | $ | $ | |
All other investments in real estate | |||
Consolidated investments in real estate | |||
Consolidated assets not allocated to segments | |||
Consolidated total assets | $ | $ |
16.SUBSEQUENT EVENTS
Sale of a partial interest in October 2026
In October 2026, we completed the sale of an approximately 29 % noncontrolling interest in the consolidated real estate joint
venture that owns substantially all of Campus Point by Alexandria Megacampus for $475.0 million. Refer to Note 4 – “Consolidated and
51
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 and financial 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 industry 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, banking conditions, and/or regional
armed hostilities; 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 Part I, “Item 1A. Risk factors”; and Part II, “Item 7. Management’s discussion and analysis of financial condition and results of
operations” in our annual report on Form 10-K for the year ended December 31, 2025, and under respective sections in 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.
52
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. With our founding in 1994, Alexandria pioneered the life science real estate
niche. Alexandria is the preeminent and longest-tenured owner, operator, and developer of collaborative Megacampus ecosystems in
AAA life science and advanced technology innovation cluster locations, including Greater Boston, San Diego, the San Francisco Bay
Area, Seattle, Maryland, Research Triangle, and New York City. As of September 30, 2026, Alexandria has a total market capitalization
of $21.01 billion and an asset base that includes 36.5 million RSF of operating properties and 1.9 million RSF of Class A/A+ properties
undergoing construction.
We develop dynamic Megacampus ecosystems that enable and inspire some of the world’s most brilliant minds and innovative
companies to create life-changing scientific and technological innovations. We believe in the utmost professionalism, humility, and
teamwork. Our tenants include multinational pharmaceutical companies; life science product, service, and device companies; public
and private biotechnology companies; advanced technologies companies; biomedical institutions; U.S. government institutions; and
others. Alexandria has a long-standing and proven track record of developing Class A/A+ properties clustered in highly dynamic and
collaborative Megacampus environments that enhance our tenants’ 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
companies through our venture capital platform.
As of September 30, 2026:
•Investment-grade or publicly traded large cap tenants represented 57% of our annual rental revenue;
•Approximately 97% of our leases (on an annual rental revenue basis) contained effective annual rent escalations
approximating 3% that were either fixed or indexed based on a consumer price index or other index;
•Approximately 91% of our leases (on an annual rental revenue basis) were triple net leases, which require tenants to pay
substantially all real estate taxes, insurance, utilities, repairs and maintenance, common area expenses, and other
operating expenses (including increases thereto) in addition to base rent;
•Approximately 91% 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; and
•74% of our leasing activity during the last twelve months was generated from our existing tenant base.
A key element of our business and financial strategy is our unique focus on Class A/A+ properties primarily located in
collaborative Megacampus ecosystems in AAA life science and advanced technology innovation clusters. Our Megacampus
ecosystems are designed for optionality and scalability, offering our tenants a clear path to address their growth requirements, including
through our future developments and redevelopments. Strategically located near top academic and medical research institutions and
equipped with curated amenities and services and convenient access to transit, our Megacampus ecosystems are designed to support
our tenants in attracting and retaining top talent and in meeting our tenants’ growth needs, which we believe is a key driver of tenant
demand for our properties. Our strategy also includes drawing upon our deep, broad, and long-standing real estate and life science
industry relationships in order to retain tenants, identify and attract new and leading tenants, and source additional real estate.
53
Executive summary
Operating results
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||
2026 | 2025 | 2026 | 2025 | ||||
Net loss attributable to Alexandria’s common stockholders – diluted: | |||||||
In millions | $(638.5) | (1) | $(234.9) | $(351.4) | $(356.1) | ||
Per share | $(3.74) | $(1.38) | $(2.06) | $(2.09) | |||
Funds from operations attributable to Alexandria’s common stockholders – diluted, as adjusted: | |||||||
In millions | $264.4 | $377.8 | $856.5 | $1,166.3 | |||
Per share | $1.54 | $2.22 | $5.00 | $6.85 | |||
(1)Includes $637.9 million of real estate impairment charges related to assets held for sale for the three months ended September 30, 2026. Refer to Note 3 – “Investments
in real estate” to our unaudited consolidated financial statements in Item 1 for additional details.
For additional information, refer to “Funds from operations and funds from operations, as adjusted, attributable to Alexandria
Real Estate Equities, Inc.’s common stockholders” under “Definitions and reconciliations.”
A best-in-class REIT with a high-quality and diverse tenant base, strong margins, and long lease terms
(As of or for the three months ended September 30, 2026, unless stated otherwise) | |||
Occupancy of operating properties | 87.1% | ||
Occupancy of operating properties, including executed leases with future occupancy | 90.8% | ||
Percentage of total annual rental revenue in effect from Megacampus platform | 80% | ||
Percentage of total annual rental revenue in effect from investment-grade or publicly traded large cap tenants | 57% | ||
Operating margin | 66% | ||
Adjusted EBITDA margin | 65% | ||
Percentage of leases containing annual rent escalations | 97% | ||
Weighted-average remaining lease term: | |||
All tenants | 7.7 | years | |
Top 20 tenants | 10.0 | years | |
Strong tenant collections: | |||
Rents and receivables for the three months ended September 30, 2026, collected as of the date of this report | 99.9% | ||
Strong and flexible balance sheet with significant liquidity; top 20% credit rating ranking among all publicly traded U.S. REITs; long-
duration remaining debt term (as of September 30, 2026)
•$21.01 billion in total market capitalization.
•$8.11 billion in total equity capitalization.
•Net debt and preferred stock to Adjusted EBITDA:
•Target for the three months ending December 31, 2026, annualized: 5.6x–6.2x.
•For the three months ended September 30, 2026 annualized: 6.9x; 6.6x on a pro forma basis reflecting the October 2026
closing of the sale of our partial interest in the Campus Point by Alexandria joint venture.
•Significant liquidity of $4.56 billion and closed extension of our $5.0 billion unsecured senior line of credit to 2032.
•Only 6% of our total debt matures through 2028.
•11.6-year weighted-average remaining debt term, the longest among S&P 500 REITs.
•Total debt and preferred stock, as adjusted, to gross assets of 30%.
•Intermediate-term goal for leverage: mid-5x range.
54
Solid 3Q26 total leasing volume exceeding 1.2 million RSF; highest total quarterly volume since 4Q24
•Total leasing volume surpassed 1.2 million RSF during the three months ended September 30, 2026, exceeding the average
quarterly leasing volume of 979,822 RSF for the period from the first quarter of 2025 through the second quarter of 2026 by
approximately 256,000 RSF, and representing the highest quarterly volume since the fourth quarter of 2024.
•Includes 450,961 RSF of leasing of previously vacant space, the second-highest quarterly amount in company history.
•74% of our leasing activity during the last twelve months was generated from our existing tenant base.
Three Months Ended | Nine Months Ended September 30, 2026 | |||||||
September 30, 2026 | June 30, 2026 | March 31, 2026 | ||||||
Leasing volume in RSF: | ||||||||
Leasing of previously vacant space | 450,961 | 329,148 | 148,734 | 928,843 | ||||
Leasing of development and redevelopment space | — | 68,771 | 117,935 | 186,706 | ||||
450,961 | 397,919 | 266,669 | 1,115,549 | |||||
Lease renewals and re-leasing of space | 785,069 | 640,998 | 380,687 | 1,806,754 | ||||
Total leasing volume | 1,236,030 | 1,038,917 | 647,356 | 2,922,303 | ||||
Lease renewals and re-leasing of space: | ||||||||
Rental rate changes | (2.4)% | (0.7)% | (15.0)% | (5.1)% | ||||
Rental rate changes (cash basis) | (3.3)% | (4.3)% | (15.8)% | (6.9)% | ||||
Ongoing execution of Alexandria’s capital recycling strategy
We plan to continue funding a significant portion of our capital requirements for the year ending December 31, 2026 through
dispositions of land, non-core dispositions, and sales of partial interests. In October 2026, we completed the sale of an approximately
29% noncontrolling interest in Campus Point by Alexandria Megacampus for $475.0 million to a new joint venture partner.
Sources of capital: transactions | Sales Price | |
(dollars in millions) | ||
Non-core and land dispositions | $242 | |
Sales of partial interests | 475 | |
Completed as of the date of this report | 717 | |
Pending transactions subject to: | ||
Non-refundable deposits | 355 | |
Signed letters of intent and/or purchase and sale agreement late-stage negotiations | 1,548 | |
2,620 | ||
Proceeds from dispositions and sales of partial interests in excess of 2026 guidance midpoint which may be deferred into 2027 | (720) | |
2026 guidance midpoint for dispositions and sales of partial interests | $1,900 |
Occupancy of operating properties and leasing progress on temporary vacancy
Occupancy of operating properties as of June 30, 2026 | 86.9% | ||
Key changes in occupancy: | |||
Reclassification of 339,020 RSF at 311 Arsenal Street from redevelopment to operating in 3Q26, including 167,543 RSF of executed leases and leases under negotiation for space not yet delivered | (0.9) | (1) | |
Reclassification of held-for-sale properties with vacancy | 0.6 | ||
Net increase in occupancy primarily due to lease commencements during 3Q26 | 0.5 | ||
Occupancy of operating properties as of September 30, 2026 | 87.1 | ||
Vacant operating space with executed leases and future occupancy | 3.7 | (2) | |
Occupancy of operating properties as of September 30, 2026, including executed leases with future occupancy | 90.8% |
(1)Refer to “Resolution of certain construction projects under evaluation and reduction of capital spend and funding needs” within this section for additional details.
(2)Represents executed leases aggregating 1.3 million RSF within our operating portfolio, with occupancy expected upon completion of building and/or tenant
improvements. The weighted-average expected occupancy date is approximately June 2027, with expected annual rental revenue of approximately $52 million. We
expect 32% of the total 1.3 million RSF to be occupied by December 31, 2026. The RSF presented excludes 686 thousand RSF of pre-leased space related to
development and redevelopment projects under construction with future delivery. Refer to “New Class A/A+ development and redevelopment properties: under
construction” in Item 2 for additional details.
55
Key operating metrics
•Same property net operating income changes
•Decreased by 6.7% and 2.8% (cash basis) for the three months ended September 30, 2026, compared to the three
months ended September 30, 2025.
•Decreased by 9.2% and 8.4% (cash basis) for the nine months ended September 30, 2026, compared to the nine months
ended September 30, 2025.
•The decline was due to a decrease in same property occupancy, primarily driven by previously disclosed key lease
expirations with expected downtime aggregating 282,878 RSF and 1.2 million RSF in the three and nine months ended
September 30, 2026, respectively, with weighted-average lease expiration dates of August 2026 and April 2026,
respectively.
•Same properties average occupancy:
•88.1% for the three months ended September 30, 2026, compared to 91.7% same properties average occupancy for the
three months ended September 30, 2025.
•88.6% for the nine months ended September 30, 2026, compared to 92.8% same properties average occupancy for the
nine months ended September 30, 2025.
Resolution of certain construction projects under evaluation and reduction of capital spend and funding needs
•We entered into a purchase and sale agreement with an institutional user for the sale of 421 Park Drive on the Alexandria
Center® for Life Science – Fenway Megacampus, aggregating 339,668 RSF, which represents substantially all of our
development project at this location. The disposition is expected to generate significant sales proceeds and to reduce future
potential construction spend by approximately $136 million, with closing anticipated in the fourth quarter of 2026.
•We have executed leases of 66,859 RSF and have additional leases under negotiation of 100,684 RSF for advanced
technology use at our project at 311 Arsenal Street in The Arsenal on the Charles Megacampus. This activity enables us to
pivot the redevelopment project to a lower-cost advanced technology use, reducing future potential construction spend by
approximately $220 million. As a result of this leasing progress, the entire project aggregating 339,020 RSF was reclassified
from redevelopment to operating as of September 30, 2026.
•We continue to evaluate the business and financial strategy for three remaining projects aggregating 667,002 RSF, including
options that could further reduce future construction funding requirements.
•Non-income-producing assets as of September 30, 2026 are 12% of gross assets, a reduction of 800 bps since December 31,
2024.
Alexandria’s development and redevelopment pipeline delivered incremental annual net operating income of $40 million during 3Q26,
with an additional $85 million expected from projects to be delivered by 4Q28
•During the three months ended September 30, 2026, we placed into service 529,061 RSF of development and redevelopment
projects across multiple submarkets. The projects were 84% occupied at delivery and generated incremental annual net
operating income aggregating $40 million. Key deliveries for the three months ended September 30, 2026 included:
•198,992 RSF to Novo Nordisk for its R&D Center at 60 Sylvan Road on the Alexandria Center® for Life Science –
Waltham Megacampus.
•174,662 RSF at 99 Coolidge Avenue located on a Megacampus in Watertown.
•Annual net operating income (cash basis) from recently delivered projects is expected to increase by $67 million upon the
burn-off of initial free rent, which has a weighted-average remaining period of approximately four months.
•80% of the RSF in our total development and redevelopment pipeline is within our Megacampus ecosystems.
Development and Redevelopment Projects | Incremental Annual Net Operating Income | RSF | Occupied/Leased/ Negotiating Percentage | ||||
(dollars in millions) | |||||||
Placed into service: | |||||||
Six months ended June 30, 2026 | $58 | 532,219 | 91% | ||||
Three months ended September 30, 2026 | 40 | 529,061 | 84 | ||||
Placed into service during nine months ended September 30, 2026 | $98 | (1) | 1,061,280 | 87% | |||
Expected to be placed into service:(2) | |||||||
Fiscal year 2027 | $24 | 905,582 | 77% | ||||
Fiscal year 2028 | 61 | ||||||
$85 | |||||||
(1)Excludes future incremental annual net operating income from spaces placed into service that were vacant and/or unleased at delivery.
(2)Excludes 667,002 RSF of redevelopment projects currently under evaluation.
56
Continued successful management of general and administrative expenses
•For the trailing twelve months ended September 30, 2026, general and administrative expenses represented 7.5% of net
operating income, nearly half the average of other S&P 500 REITs for 2023–2025.
•Compared to 2024, we continue to expect approximately $76 million of cumulative general and administrative expense savings
for the two-year period 2025 and 2026 (based on the midpoint of our 2026 guidance range). Some of the cost savings in 2025
were temporary, and approximately half of the cost reductions achieved in 2025 are expected to continue in 2026 (based on
the midpoint of our 2026 guidance range).
Key capital events
•In August 2026, we completed a public offering of $1.00 billion aggregate principal amount of 7.250% Series A fixed-to-fixed
reset rate junior subordinated notes due 2057. The notes will initially bear interest at 7.250% per year through, but excluding,
February 15, 2032. Thereafter, the interest rate will reset every five years to the five-year U.S. Treasury rate plus 2.889%,
subject to a minimum interest rate of 7.250%. We may elect to defer interest payments for up to five consecutive years, subject
to the terms of the notes, including certain restrictions on paying dividends and repurchasing equity. We may also redeem at
100% of principal plus accrued and unpaid interest during the period beginning November 17, 2031 and ending on
February 15, 2032, and thereafter on any interest payment date. This issuance supports our liquidity, capital structure and
deleveraging objectives while receiving 50% equity treatment from key rating agencies for purposes of the computations of
leverage, fixed charges, and other credit metrics.
•In September 2026, we closed our amended and restated $5.0 billion unsecured senior line of credit, which, among other
changes, extended the maturity date from January 22, 2030 to January 22, 2032, including extension options that we control.
The amendment also reduced the applicable borrowing rate to SOFR plus 0.725% from SOFR plus 0.835%. In connection with
the amendment, we recognized a loss on early extinguishment of debt of approximately $3.3 million related to the partial write-
off of unamortized loan fees.
•Under our common stock repurchase program authorized in December 2025, we may repurchase up to $500.0 million of our
common stock through December 31, 2026. As of the date of this report, no shares have been repurchased under this
program and $500.0 million remains available for future share repurchases.
Dividend strategy to share net cash flows from operating activities with stockholders while retaining a significant portion for reinvestment
•Common stock dividend declared of $0.72 per share for the three months ended September 30, 2026, consistent with the
preceding quarter. The declared dividend per common share reflects our commitment to maintaining the strength of our
balance sheet, enhancing financial flexibility, supporting liquidity, and sharing cash flows with our stockholders.
•Significant net cash provided by operating activities, as adjusted, retained for reinvestment aggregating $2.55 billion for the
years ended December 31, 2022 through 2025 and the midpoint of our 2026 guidance range.
•Dividend yield of 6.1% as of September 30, 2026 and dividend payout ratio of 47% for the three months ended September 30,
2026.
Investments
•As of September 30, 2026:
•Our non-real estate investments aggregated $1.74 billion.
•Unrealized gains presented in our consolidated balance sheet were $243.9 million, comprising gross unrealized gains and
losses aggregating $322.4 million and $78.5 million, respectively.
•Investment income of $24.0 million for the three months ended September 30, 2026, presented in our consolidated statement
of operations, consisted of $16.0 million of realized gains, $21.6 million of unrealized gains, and $13.6 million of impairment
charges.
57
Trends that may affect our future results
Currently identified key market trends and uncertainties that had or may have a negative effect on our business are discussed
below. Although we seek to minimize the risks posed by these trends and uncertainties as discussed in the mitigating factors section
below, there can be no assurance that these measures will be successful in preventing or mitigating material impacts on our future
results of operations, financial position, and cash flows. Refer to “Item 1A. Risk factors” in Part I of our annual report on Form 10-K for
the year ended December 31, 2025 for discussion of additional risks we face.
New and existing supply and reduced demand for life science space may continue to negatively affect our rental rates,
occupancy, and operating results.
•Influx of supply. During and after the COVID-19 pandemic, the shift toward hybrid and remote work arrangements as well as
exceptionally strong demand for life science space, driven by public health urgency and supported by historically low interest
rates, prompted certain office and other real estate investors to repurpose underutilized office spaces into laboratory facilities,
initiating a wave of new development activity across the sector. Our success and the success of other laboratory operators
prompted new and existing developers to commence speculative redevelopment and/or development laboratory projects in
anticipation of demand for such facilities. These conversion and speculative development projects have contributed to a
significant influx of new laboratory properties in our top three markets—Greater Boston, San Diego, and San Francisco Bay
Area. Life science real estate availability in these top markets—measured as the percentage of life science RSF available
relative to total life science RSF—rose to approximately 29% during 2025, from approximately 4% in 2021. This surge created
supply that materially exceeded current demand. As pandemic-driven urgency faded, the amount of available space became
the dominant factor influencing tenant activity, with absorption unable to match the influx of supply.
•Decrease in demand. Adding to these challenges, life science tenant demand—after reaching historically high levels in 2021—
has moderated significantly. The average tenant demand, measured by life science tenants’ RSF requirements, declined by
more than 60% in 2025 compared to 2021 across our top three markets: Greater Boston, San Diego, and San Francisco Bay
Area. This reflected a shift from extraordinary tenant demand driven by pandemic-related urgency to levels more consistent
with historical pre-pandemic norms, particularly those observed during 2016-2018. Importantly, this shift occurred amid
substantially higher available supply, as discussed above, further negatively impacting occupancy and rental rates in top life
science markets.
Exacerbating the recent demand trend, the life science industry faced an unusual convergence of macroeconomic, regulatory,
policy, and political challenges in 2025 that continued to affect the sector during 2026. These included consequential shifts in
leadership at the U.S. Department of Health and Human Services (“HHS”), tariff-related measures, operational, leadership,
and staff disruptions at the NIH and the FDA, threatened reductions in NIH funding of biomedical research and proposals to
limit NIH funding of indirect grant costs, heightened scrutiny of pharmaceutical pricing, and increased global competition from
China, discussed below. Collectively, these factors, including those described below, increased uncertainty, leading tenants to
defer leasing commitments and expansion decisions pending greater clarity. As a result, absorption of available space has
been notably slower.
◦Prolonged biotech bear market and capital constraints. The life science sector experienced the fifth consecutive year
of a broad-based biotech bear market in 2025. Life science venture capital fundraising declined to its lowest level since
2016, reducing overall levels of venture capital funds available to deploy in the future. Life science venture funds also
continued to be highly risk averse, focusing investments on clinical-stage and asset-based opportunities that may not
drive significant laboratory space needs. The initial public offering market for biotech companies remained largely closed
in 2025, eliminating a key source of liquidity and growth capital, but began to reopen in 2026. Elevated financing costs and
broader economic and regulatory uncertainty continued to constrain access to debt and equity financing. These factors
slowed company formation, reduced headcount growth, and delayed laboratory expansion decisions, directly impacting
leasing demand for specialized life science space. Although capital markets and leasing activity showed early signs of
improvement in 2026, the recovery remained uneven, and laboratory demand continued to be constrained by disciplined
capital allocation and significant excess supply.
◦Regulatory and policy factors affecting absorption. At the same time, the regulatory environment experienced
significant disruption. The FDA saw more than 50% turnover in senior leadership during the first half of 2025,
accompanied by employee layoffs and delays in regulatory review decisions. Leadership turnover continued in 2026,
including the departure of the FDA Commissioner in May 2026. Changing expectations related to clinical trial requirements
and flexibility for rare diseases with large unmet needs created additional uncertainty around development timelines for
certain regulated products. These conditions have reduced some tenants’ near-term confidence in expansion and capital
investment decisions.
Biomedical research institutions faced increased uncertainty around federal funding policies throughout 2025. The
proposed 15% cap on NIH institutional indirect grant spending, subsequently ruled unlawful by an appellate court, raised
concerns for biomedical research institutions about the ability to recover infrastructure and operating costs, which
materially constrained incremental real estate demand among certain federally supported entities.
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In April 2026, the Trump administration discontinued its legal effort to implement the proposed 15% cap on NIH indirect
cost reimbursements, allowing the federal court ruling blocking the policy to become final. Existing negotiated
reimbursement rates remain in effect. Accordingly, NIH-funded research institutions continue to operate under the current
reimbursement framework.
Further, government actions aimed at reducing U.S. prescription drug prices have heightened uncertainty regarding future
returns on pharmaceutical and biotechnology investments. This has weighed on risk appetite across the sector and
constrained investment into some areas of research and development. As a result, some tenants have delayed or scaled
back expansion plans, reducing leasing activity and occupancy levels.
At the same time, global competition for life science research has intensified, with certain foreign markets, especially
China, rapidly gaining ground as biotechnology leaders through centralized funding and faster regulatory approval
timelines. Coupled with immigration-related restrictions implemented in the U.S. during 2025 that limit access to
international research talent, these policy actions not only affect current activities but also pose a significant threat to the
long-term viability of the U.S. biomedical industry. The cumulative effect of these developments may significantly reduce
tenant demand for U.S. life science real estate. Refer to “Item 1A. Risk factors” in our annual report on Form 10-K for
additional details.
•Impact on our business. The surge in supply and decrease in demand for life science space have led to industry-wide elevated
vacancy rates, slower leasing activity, pressure on rental rates, higher lease concessions, and increased competition for
tenants. Our operating occupancy declined from 90.9% as of December 31, 2025 to 87.1% as of September 30, 2026, and we
project our operating occupancy to be approximately 87.0% as of December 31, 2026, representing the midpoint of our
guidance range for occupancy percentage in North America as of December 31, 2026.
To remain competitive, we have realized lower rental rate changes on renewed and re-leased spaces and have offered more
tenant improvement allowances or additional tenant concessions, including free rent, to retain existing tenants or attract new
tenants. We project our rental rate on renewed and re-leased spaces to decrease by approximately 5.0% for the year ending
December 31, 2026, representing the midpoint of our guidance range. Furthermore, to maintain long-term tenant relationships
and sustain occupancy levels within our core assets, our existing operating properties may require additional revenue- and
non-revenue-enhancing capital expenditures earlier than typically expected.
The table below reflects a trend of increasing revenue- and non-revenue-enhancing capital expenditures, including tenant
improvement expenditures. The table also presents the trend, on a per RSF basis, of increasing tenant improvement
allowance, leasing commissions, and free rent concessions, and of less favorable changes in rental rates related to our
renewed/re-leased spaces, as well as decreases in our operating occupancy (dollars in thousands, except per RSF amounts):
Revenue- and Non-Revenue- Enhancing Capital Expenditures | Tenant Improvements/ Leasing Commissions per RSF | Free Rent Concessions per Annum (leases executed in trailing 12 months) | Rental Rate Changes (on renewed/ re-leased spaces) | Operating Occupancy (as of each period end) | |||||
2024 | $273,377 | $46.89 | 0.7 months | 16.9% | 94.6% | ||||
2025 | $324,293 | $55.34 | 1.5 months | 7.0% | 90.9% | ||||
Nine months ended September 30, 2026 | $430,365 | $46.45 | 2.0 months | (5.1)% | 87.1% | ||||
Midpoint of 2026 guidance range | $510,000 | N/A | (5.0)% | 87.0% | |||||
Additionally, we have key lease expirations with expected downtime in 2027 aggregating 1.4 million RSF as of September 30,
2026 with a weighted-average lease expiration date of March 2027. These spaces are expected to become vacant at lease
expiration and re-leased to new tenants. We expect downtime on the 1.4 million RSF to be approximately 9 to 24 months on a
weighted-average basis. In addition, we have identified 717,546 RSF of key lease expirations in 2028 that are expected to
have downtime of approximately 9 to 24 months on a weighted-average basis. Considering elevated laboratory supply, there
can be no assurance that we will be able to re-lease some or all of this space on acceptable terms, without significant capital
expenditures, or within anticipated time frames, even at reduced rates.
As of September 30, 2026, we anticipate that 905,582 RSF of our projects undergoing construction will be placed into service
from October 1, 2026 through 2028 and will generate $85 million in future incremental annual net operating income. These
projects are 77% leased or under lease negotiations as of September 30, 2026. Furthermore, we have an additional 667,002
RSF of projects under evaluation which are 8% leased or under lease negotiations. For these projects, we are evaluating the
business and financial strategy, including continuing construction, repositioning for advanced technology or other non-
laboratory use, selling, or pausing development or redevelopment. If we decide to sell or pause, such actions could negatively
impact our FFO and operating metrics. Alternatively, if we decide to invest limited capital, we may place some or all of these
projects into operation, which could temporarily reduce our operating occupancy until the projects are leased and occupied.
Landlord-funded tenant improvement allowances have increased significantly for first-generation space, including development
and redevelopment projects, with most space in shell condition requiring landlords to fund the full build-out cost. This trend
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places additional pressure on projected returns and overall economics, and further challenges our ability to attract and secure
tenants for the remaining unleased RSF related to these projects at the expected rates, or at all, which could result in a
shortfall or delay in the commencement of the projected incremental annual net operating income.
Unfavorable macroeconomic and capital market conditions may continue to adversely affect the value of our real estate and
non-real estate portfolios, which could result in additional significant impairments and may impact our ability to raise capital
efficiently to further our business objectives.
The effective execution of our development and redevelopment activities is contingent on access to the capital required to fund
these projects. We expect construction spending in 2026 to aggregate $1.75 billion at the midpoint of our 2026 guidance
range. This includes significant remaining construction costs to complete our active pipeline and anticipated increases in both
revenue- and non-revenue-enhancing capital expenditures in our operating portfolio. As a result, our capital plan and leverage
management strategy have increased our reliance on real estate dispositions and sales of partial interests to generate capital.
However, current real estate market conditions, including lower property valuations, increased capitalization rates, and higher
short-term and long-term interest rates, will likely adversely affect the timing and pricing of such transactions.
For 2027, we are continuing to apply a disciplined approach to reduce construction spending and expect construction spending
in 2027 will be primarily comprised of (i) revenue- and non-revenue-enhancing capital expenditures primarily to support the
leasing of vacant space and renewals and re-leasing of space at our operating properties and (ii) amounts required to
complete our development and redevelopment projects that are expected to stabilize through 2028 and are 77% leased/
negotiating.
•Lower property valuations and increased capitalization rates. A portion of our projected construction spending and other uses
of capital is expected to be funded through dispositions, sales of partial interests, and other capital sources (including junior
subordinated notes). Real estate investments are generally less liquid than many other investment types, which can present
challenges in selling our properties in a timely manner or at desirable prices, especially in an environment of oversupply and
high interest rates.
In addition to the factors discussed above specifically affecting demand for life science space, broader real estate demand has
also been impacted by macroeconomic conditions, particularly elevated interest rates. Following the onset of the COVID-19
pandemic, the U.S. Federal Reserve reduced the federal funds target range to 0%–0.25% in March 2020 and maintained that
near-zero range until March 2022. To address inflation concerns, the U.S. Federal Reserve then increased the target range
rapidly, reaching 5.25%–5.50% in July 2023, where it remained for an extended period. Although the U.S. Federal Reserve
reduced the federal funds target range to 4.25%–4.50% during 2024 and further to 3.50%–3.75% during 2025, interest rates
remain elevated. In September 2026, the U.S. Federal Reserve increased the target range to 3.75%–4.00%. Due to a variety
of factors, the yield on the 10-year U.S. Treasury note increased significantly in October 2026, exceeding 5% and reaching its
highest level since 2002. This continues to limit access to debt and/or equity financing for prospective buyers of real estate
assets. All other aspects being equal, such challenges for buyers contribute to an excess of properties available for sale, which
exerts downward pressure on property valuations and elevates capitalization rates, adversely impacting the sales proceeds we
can generate from our real estate asset sales.
The oversupply of life science real estate assets, discussed above, combined with high interest rates and reduced market
liquidity, has contributed to a prolonged period of lower property valuations and higher capitalization rates, resulting in
significant real estate impairments and making it more challenging to execute asset sales within the expected timelines and at
favorable pricing. In 2026, we expect to complete dispositions and sales of partial interests of approximately $1.90 billion at the
midpoint of our 2026 guidance range. However, we may not be able to achieve this and/or other targets disclosed in our 2026
guidance as a result of the uncertainties discussed in this section as well as in “Item 1A. Risk factors” in Part I of our annual
report on Form 10-K for the year ended December 31, 2025.
The table below presents trends in total dispositions and impairments of real estate and capitalization rates associated with
dispositions and sales of partial interests in our real estate assets over the last several years (dollars in thousands), partly
attributable to the quality of core and non-core assets sold during each period.
Aggregate Sales Price of Dispositions and Sales of Partial Interests | Impairment of Real Estate | Capitalization Rates(1) | Capitalization Rates (Cash Basis)(1) | ||||||
2024 | $1,382,453 | $223,068 | 7.7% | 6.5% | |||||
2025 | $1,813,778 | $2,202,818 | 7.7% | (2) | 7.5% | (2) | |||
Nine months ended September 30, 2026 | $241,750 | $865,873 | N/A | ||||||
Midpoint of 2026 guidance range | $1,900,000 | (3) | |||||||
(1)Capitalization rates are calculated only for stabilized operating assets sold. Refer to “Capitalization rates” under “Definitions and reconciliations” for additional
information.
(2)Represents the weighted-average capitalization rate for stabilized operating assets sold in 2025, which accounted for only 20% of the aggregate sales price
of dispositions and sales of partial interests in 2025.
(3)We are not able to forecast impairments or capitalization rates for future periods without unreasonable effort due to the inherent difficulty of forecasting the
timing and amount of transactions that depend on market conditions outside of our control.
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For additional information about our dispositions and real estate impairments recognized during the three and nine months
ended September 30, 2026, refer to “Sales of real estate assets and impairment of real estate” in Note 3 – “Investments in real
estate” to our unaudited consolidated financial statements in Item 1.
For 2026, we have established a disposition and joint venture program aggregating approximately $1.90 billion at the midpoint
of our 2026 guidance range for dispositions and sales of partial interests. We may utilize multiple sources of capital, including
land and non-core dispositions, sales of partial interests, and the issuance of $1.00 billion junior subordinated notes offering
completed during the three months ended September 30, 2026, to fund (i) construction focused on highly leased
developments and lease-up of vacant space, and (ii) repayment of senior unsecured debt sufficient to achieve our net debt
and preferred stock to Adjusted EBITDA – fourth quarter of 2026 annualized target of 5.6x to 6.2x. We continue to evaluate
available alternatives and expect to execute on cost-efficient sources of capital under prevailing market conditions. We do not
anticipate the issuance of any common equity during the year ending December 31, 2026.
In 2026, we are committed to dispose of certain assets classified as held for sale with an aggregate book value of
$702.8 million as of September 30, 2026. To achieve the midpoint of our 2026 guidance range of $1.90 billion for dispositions
and sales of partial interests, we continue to evaluate a broad range of opportunities, including non-core operating properties,
both stabilized and unstabilized, and land parcels.
Under GAAP, real estate assets are evaluated for impairment upon an indication of potential impairment:
•For real estate assets held and used, impairments are recognized if the sum of expected future undiscounted cash
flows, including estimated proceeds from eventual disposition, is less than the carrying amount. In such cases, the
carrying amount is reduced to estimated fair value.
•For real estate assets held for sale, impairments are recognized if fair value less costs to sell is less than the carrying
amount.
•In evaluating potential disposition targets that do not meet the criteria for held for sale classification, we apply a
probability-weighted approach, and in each case, no impairment charge is currently required.
If circumstances change, including changes in expected cash flows, capitalization rates, or market conditions, we may incur
additional material real estate impairments in 2026. For additional information on accounting for real estate impairments, refer
to “Impairment of long-lived assets” in Note 2 – “Summary of significant accounting policies” to our unaudited consolidated
financial statements in Item 1.
We are focused on our large-scale non-core disposition program in 2026, although some of these dispositions could close in
2027. As of September 30, 2026, 80% of our annual rental revenue is from our Megacampus platform, and we expect this
percentage to continue to grow over time, in part through our disposition program.
•Increased cost and limited availability of capital. Our 2026 guidance assumes a reduction of our outstanding unsecured debt
by approximately $675.0 million, at the midpoint of our 2026 guidance range.
•In August 2026, we completed a public offering of $1.0 billion aggregate principal amount of 7.250% junior
subordinated notes due 2057. The notes will initially bear interest at 7.250% per year through, but excluding,
February 15, 2032. Thereafter, the interest rate will reset every five years to the five-year U.S. Treasury rate plus
2.889%, subject to a minimum interest rate of 7.250%. We may elect to defer interest payments for up to five
consecutive years, subject to the terms of the notes, including certain restrictions on paying dividends and
repurchasing equity. We may also redeem at 100% of principal plus accrued and unpaid interest during the period
beginning November 17, 2031 and ending on February 15, 2032, and thereafter on any interest payment date. This
issuance supports our capital structure and deleveraging objectives while receiving 50% equity treatment from key
rating agencies.
•In February 2026, we completed tender offers to repurchase an aggregate debt principal amount of $1.33 billion
across a portion of our outstanding 4.00% Senior Notes due 2050, 3.00% Senior Notes due 2051, and 3.55% Senior
Notes due 2052. The tender offers were completed at an average discount of approximately 28%, for a total cash
payment of $952.2 million, resulting in the extinguishment of approximately $380 million of debt. We funded the
$952.2 million payment through the issuance of $750.0 million of 5.25% unsecured senior notes due 2036 and
approximately $200 million of short-term borrowings under our commercial paper program.
•In January 2026 and April 2026, we repaid, upon maturity, $300.0 million of 4.30% unsecured senior notes and
$350.0 million of 3.80% unsecured senior notes, respectively. These repayments, aggregating $650 million, were
temporarily funded through borrowings under our commercial paper program.
Achievement of our targeted $675.0 million net unsecured debt reduction remains dependent on our ability to generate
proceeds during 2026 from planned real estate dispositions and sales of partial interests.
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These expectations assume our ability to execute these transactions on acceptable terms. If we are unable to sell real estate
assets at our targeted prices or within our expected timeframes, we may need to reduce the projected amount of debt
repayment, delay the timing of such repayment, and/or increase our reliance on additional debt financing to fund the
approximately $1.75 billion of construction spending, based on the midpoint of our 2026 guidance range. Elevated interest
rates may result in debt financing options that are costlier, less accessible, or even unavailable, potentially limiting our ability to
complete our development and redevelopment projects on schedule and thereby delaying our expected incremental annual
net operating income generation.
The table below reflects interest rates related to unsecured senior notes payable and junior subordinated notes payable that
we have issued over the last several years and in 2026 (dollars in thousands). There is no assurance that high debt costs will
not continue into the future.
Unsecured Senior Notes Payable Issued | Junior Subordinated Notes Payable Issued | Interest Rate(1) | ||||
2024 | $1,000,000 | $— | 5.57% | |||
2025 | $550,000 | $— | 5.66% | |||
February 2026 issuance | $750,000 | $— | 5.41% | |||
August 2026 issuance | $— | $1,000,000 | 7.37% | |||
(1)Includes amortization of loan fees, amortization of debt premiums (discounts), and other bank fees.
•Capitalized Interest.
The table below presents gross interest expense, capitalized interest, and interest expense (in thousands):
Gross Interest Expense | Capitalized Interest | Interest Expense | ||||
2024 | $516,799 | $(330,961) | $185,838 | |||
2025 | $557,122 | $(330,424) | $226,698 | |||
Nine months ended September 30, 2026 | $415,225 | $(206,612) | $208,613 | |||
Midpoint of 2026 guidance range | $520,000 | $(240,000) | $280,000 |
For 2026, we expect capitalized interest of approximately $240 million at the midpoint of our guidance range. The decrease
compared to 2025 reflects our actions taken in response to the market conditions, including re-evaluating certain projects,
ceasing or pausing certain pre-construction activities on land and uncommitted projects to conserve capital, and disposing of
certain assets. As a result, we expect our interest expense to increase to approximately $280 million (at the midpoint of our
2026 guidance range) in 2026 from $226.7 million in 2025. Continued macroeconomic and capital market pressures may
necessitate further reevaluation of our plans, including temporary suspension of our construction projects, delay of future
projects, or the sale of non-income-producing assets, which could further reduce our capitalized interest and increase interest
expense.
•Volatility in the valuation of non-real estate investments. We hold strategic investments in publicly traded companies and
privately held entities primarily involved in the life science industry. These investments are subject to market- and sector-
specific risks that can substantially affect their valuation. Like many other industries, the life science industry is susceptible to
macroeconomic challenges, such as ongoing economic and geopolitical uncertainty and a tighter capital environment. These
factors may lead to increased volatility in the valuation of our non-real estate investments.
In such an environment, distributions from our investments—which we may receive as dividends, as liquidation distributions
from our investments in limited partnerships, or as a result of mergers and acquisitions involving our privately held investees—
may be limited and could result in lower realized gains. Gross unrealized gains related to our non-real estate investments held
as of September 30, 2026, December 31, 2025, and December 31, 2024 aggregated to $322.4 million, $184.4 million, and
$228.1 million, respectively. These unrealized amounts are subject to market fluctuations and may not ultimately be realized.
We may not receive distributions from our investments or may face difficulties in monetizing our non-real estate investments at
optimal prices. There can be no assurance that we will be able to realize gains in the future. In periods with limited or no
realized gains, our FFO per share, as adjusted, may be adversely affected.
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For the nine months ended September 30, 2026, we recognized $44.5 million in realized gains on non-real estate investments
and are projecting realized gains of $65 million in 2026 at the midpoint of our guidance range. During the nine months ended
September 30, 2026, we also recognized impairment charges and unrealized gains that reflect continued valuation pressures.
The table below presents components of investment income (losses) on our non-real estate investments (in thousands):
Realized Gains | Significant Realized Losses | Impairments | Unrealized (Losses) Gains | Investment (Losses) Income | ||||||
2024 | $117,214 | $— | $(58,090) | $(112,246) | $(53,122) | |||||
2025 | $115,722 | $(103,329) | $(95,716) | $26,980 | $(56,343) | |||||
Nine months ended September 30, 2026 | $44,497 | $— | $(35,026) | $143,164 | $152,635 | |||||
Midpoint of 2026 guidance range | $65,000 | N/A(1) | ||||||||
(1)We are not able to forecast investment income (losses) of future periods without unreasonable effort and therefore do not provide the information on a
forward-looking basis. This is due to the inherent difficulty of forecasting the timing and/or amount of items that depend on market conditions outside of our
control.
Unfavorable market conditions could also lead to additional impairments of our investments in privately held entities that do not
report NAV per share, as well as other‑than‑temporary impairments of our non‑real estate investments accounted for under the
equity method.
The realization of any of the foregoing risks could continue to have material adverse impacts on our revenues and operating
performance, including, but not limited to, our income from rentals, net operating income, results of operations, funds from operations,
operating margins, initial stabilized yields (unlevered) on new or existing construction projects, occupancy, rental rates, EPS, FFO per
share, FFO per share, as adjusted, and net cash provided by operating activities, as adjusted. These impacts have adversely affected,
and could continue to adversely affect, our Adjusted EBITDA, which in turn may continue to negatively impact our key metrics such as
Adjusted EBITDA margin, net debt and preferred stock to Adjusted EBITDA, and fixed-charge coverage ratios. This may also impact
our credit ratings and credit rating outlooks. To preserve liquidity and mitigate an increase to our net debt and preferred stock to
Adjusted EBITDA ratio resulting from declines in Adjusted EBITDA, we may seek additional capital by pursuing additional sales of real
estate and non-real estate investments, or through equity offerings, which could be dilutive to existing stockholders. A reduction in
earnings and/or net cash provided by operating activities, as adjusted, could potentially necessitate or make advisable a reduction in
our dividends per share, as determined by our board of directors. Any of the foregoing could further negatively affect our business and
the market value of our common stock.
•Mitigating factors:
•Reinforcing the Megacampus platform as our core growth engine. We believe our Megacampus strategy represents
our most powerful competitive advantage in an oversupplied life science real estate market. Our Megacampus
ecosystems are large-scale environments designed to meet the evolving needs of the world’s leading scientific and
technological organizations, located in life science innovation hubs in close proximity to top academic and medical
research institutions. This proximity is a key driver of tenant demand. These campuses are used in two distinct ways: (i) to
house the research operations of our tenants, and (ii) to recruit and retain the best talent available from a limited pool,
which underscores why their scale, strategic design, and location are critical. With our Megacampus ecosystems, we aim
to provide a superior set of amenities, services, and access to transit. With inspiring design and people-centric amenities,
we believe these campuses enhance our tenants’ confidence in using these spaces as effective recruiting tools. In
contrast, we believe that a significant amount of the competitive supply in the market today consists of isolated facilities
that provide operational space but lack the scale and strategic design that our Megacampus ecosystems deliver.
Our Megacampus ecosystems, which offer both high visibility and a clear path for growth, are designed for scalability to
accommodate our tenants’ growth. Our future development and redevelopment projects aggregate 19.5 million RSF as of
September 30, 2026, of which 80% is concentrated within our Megacampus ecosystems. Their strategic locations and
path for growth serve as powerful incentives for tenants to lease space from us.
We believe our Megacampus strategy has enabled us to capture a greater share of available leasing demand relative to
competitors in our core life science markets, even as overall supply has increased. The strength of this strategy is
reflected in the 2026 performance metrics below, achieved despite challenging macroeconomic, regulatory, policy, and
geopolitical environments:
•Our occupancy of 87.1% as of September 30, 2026:
•Additional 3.7% occupancy is expected from 1.3 million RSF (3.7% of total operating RSF) of leased space that
was temporarily vacant as of September 30, 2026. These spaces are expected to become occupied upon
completion of building and/or tenant improvements, with a weighted‑average expected occupancy date of June
2027, and are expected to generate annual rental revenue of approximately $52 million upon lease
commencement. We expect 32% of the total 1.3 million RSF to be occupied by December 31, 2026.
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•During the nine months ended September 30, 2026, we placed into service development and redevelopment projects
aggregating 1.1 million RSF that are 87% occupied in various submarkets and delivered incremental annual net
operating income of $98 million.
•Expected incremental annual net operating income from projects anticipated to be placed into service by the end of
2028:
•$24 million from 2027 deliveries.
•$61 million from 2028 deliveries.
•Strength of our brand. As a recognized leader in the life science and real estate sectors, Alexandria has successfully
built a diverse and high-quality tenant base. Over the past three decades, we have fostered long-standing relationships
and strategic partnerships with our tenants, which have enabled us to maintain strong occupancy levels and leasing
volume, generate growth in net operating income and cash flows, and effectively navigate various economic cycles. Key
indicators of our brand strength include the following:
•As of September 30, 2026, 74% of our leasing activity during the last twelve months was from our existing tenant
base.
•As of September 30, 2026, 84% of our top 20 tenant annual rental revenue was derived from investment-grade or
publicly traded large cap companies.
•Our tenant collections have remained consistently high, averaging 99.9% from the beginning of 2021 to
September 30, 2026.
•Prudent financial management. Our strong and flexible balance sheet and prudent balance sheet management are key
factors in our ability to navigate macroeconomic uncertainties and capitalize on new opportunities. The strength of our
financial position is highlighted by several key indicators:
•Our significant liquidity of $4.56 billion as of September 30, 2026 provides us the flexibility to address our operational
needs and to pursue strategic opportunities.
•We expect to fund a large portion of our capital requirements through the following sources in 2026:
•$525 million in net cash provided by operating activities, as adjusted, at the midpoint of our 2026 guidance range.
•$105.0 million in capital contributions to fund construction expected from our existing consolidated real estate
joint venture partners from October 1, 2026 through 2027 and beyond.
•$1.90 billion from real estate dispositions and sales of partial interests at the midpoint of our 2026 guidance
range.
•Issuance of $1.00 billion of 7.250% Series A fixed-to-fixed reset rate junior subordinated notes due 2057, which
was completed in August 2026.
•As of September 30, 2026, our credit ratings from S&P Global Ratings and Moody’s Ratings were BBB+ and Baa2,
respectively, which rank in the top 20% among all publicly traded U.S. REITs.
•Net debt and preferred stock to Adjusted EBITDA ratio target: 5.6x to 6.2x for the fourth quarter of 2026, annualized.
•As of September 30, 2026, our fixed-rate debt represents 91.5% of our total debt, which provides predictability in debt
servicing costs. Since 2022, our quarter-end fixed-rate debt has averaged 95.5%.
•Our debt maturity schedule is well laddered, which provides us with financial flexibility and reduces short-term
refinancing risks. As of September 30, 2026, only 6% of our debt matures through 2028.
•As of September 30, 2026, the weighted-average remaining term of our debt is 11.6 years, which is the longest
among S&P 500 REITs, and demonstrates our strategic approach to debt management and our focus on maintaining
manageable annual debt maturities.
•Operational excellence of our team. Alexandria focuses on operational excellence in the direct asset management and
operations of our Labspace® asset base. Our asset management and operations team is composed of highly experienced,
educated, and professionally credentialed facilities specialists. This expertise, essential in ensuring a secure and efficient
environment for groundbreaking scientific research, has been cultivated and maintained over many years.
The demanding nature of laboratory-based scientific research requires strict adherence to safety standards set by local,
state, and federal regulatory bodies. Key compliance aspects include good manufacturing practices (“GMP”) and Clinical
Laboratory Improvement Amendments (“CLIA”) certifications, adherence to national biosafety level guidelines, proper
permitting and handling of hazardous waste generation and chemical storage, maintenance of safety stations, effective
management of ultra-low temperature freezers, and careful licensing and management of radioactive materials.
•Other mitigating factors
•Improvement in office market. The increase in demand for premium office space since 2024, primarily driven by the
technology sector, particularly companies focused on AI, absorbed some of the market’s supply that was previously
anticipated for life science use and is now being repositioned back into office space. High ceilings, improved
ventilation systems, and abundant natural light, which are all features of life science real estate, have become highly
desirable, appealing to office and advanced technology tenants. We expect this trend may lead to the exit from the
life science sector of inexperienced life science real estate developers and expedite the resolution of the oversupply
impacting the sector.
64
•Proactive reduction in capital spending and funding needs. To address higher capital costs and slower market
absorption, we implemented a disciplined reduction in construction spending. Based on the midpoint of our 2026
guidance range, our average annual construction spending is expected to decrease to approximately $1.74 billion for
2024–2026, representing a reduction of approximately $1.02 billion, or 37%, compared to the 2021–2023 average.
Our 2026 construction spending is primarily focused on:
•Leasing vacant space at operating properties
•Completing active committed construction projects
•Limiting future pipeline pre-construction activity
This strategy supports a more cost-efficient capital plan while preserving flexibility for future growth opportunities.
•Decrease in general and administrative expenses. Over the past several years, we have implemented comprehensive
measures to reduce our expenditures across our organization, including our general and administrative expenses,
through a variety of cost-control and efficiency initiatives, including, but not limited to:
•Personnel-related matters, including:
•Reduction in headcount over the last two years.
•Restructuring of various compensation plans.
•Streamlining of business processes:
•Implementation of systems upgrades, process improvements, and smarter technology.
•Renegotiation of contracts related to legal, technology, and operational support services, and
elimination of redundancies through better alignment and consolidation of roles.
As a result, we have achieved the following outcomes:
•We expect $76 million of cumulative savings in 2025 and 2026 (based upon the midpoint of our guidance
range for 2026 general and administrative expenses), compared to 2024.
•For the trailing twelve months ended September 30, 2026, our general and administrative expenses were
7.5% of net operating income, approximately half the 2023–2025 average of other S&P 500 REITs.
We believe the mitigating factors discussed above will help us manage prolonged market volatility while maintaining the
flexibility to act on strategic opportunities. Through disciplined execution of non-core asset recycling, targeted capital
allocation, continued focus on our Megacampus platform, moderated construction spending, and preservation of balance sheet
strength, we are building a resilient platform designed to deliver sustainable future growth and value creation across multiple
cycles. We believe these actions position us to emerge from the current cycle in a position of strength.
65
Operating summary
Same Property Performance: Net Operating Income Changes | ||||
Occupancy of Operating Properties | ||||
(1)
(1)
Refer to “Same properties” and “Definitions and reconciliations” in Item 2 for additional details. “Definitions and reconciliations” contains the definitions of “Adjusted EBITDA,”
“Fixed-charge coverage ratio,” “Net debt and preferred stock to Adjusted EBITDA,” and “Net operating income” and their respective reconciliations from the most directly
comparable financial measures presented in accordance with GAAP.
(1)Refer to footnote 1 under “Same properties” in Item 2 for additional details.
66
Rental Rate Changes: Renewed/Re-leased Space | ||||
Favorable Lease Structure(1) | ||||
Strategic Lease Structure by Owner and Operator of Collaborative Megacampus Ecosystems | ||||
Increasing cash flows | ||||
Percentage of leases containing annual rent escalations | 97% | |||
Stable cash flows | ||||
Percentage of triple net leases | 91% | |||
Lower capex burden | ||||
Percentage of leases providing for the recapture of capital expenditures | 91% | |||
Margins(2) | ||||
Operating | Adjusted EBITDA | |||
66% | 65% | |||
(1)Percentages calculated based on our annual rental revenue in effect as of September 30, 2026.
(2)For the three months ended September 30, 2026.
67
Stable Cash Flows From Our High-Quality and Diverse Tenants
(1)
(2)
(3)
Percentage of ARE’s Annual Rental Revenue
Investment-Grade or Publicly Traded Large Cap Tenants | ||||
57% | 84% | |||
of ARE’s Total Annual Rental Revenue | of ARE’s Top 20 Tenant Annual Rental Revenue | |||
Weighted Average Remaining Term(4) | ||||
7.7 Years | 10 Years | |||
All Tenants | Top 20 Tenants | |||
As of September 30, 2026. Annual rental revenue represents amounts in effect as of September 30, 2026. Refer to “Definitions and reconciliations” in Item 2 for additional
information.
(1)Represents the percentage of our annual rental revenue generated by professional services, finance, construction/real estate companies, and retail-related tenants.
(2)89% of our annual rental revenue from advanced technologies tenants is from investment-grade or publicly traded large cap tenants.
(3)80% of our annual rental revenue from biomedical institutions is from investment-grade or publicly traded large cap tenants.
(4)Represents the weighted-average remaining term based on annual rental revenue in effect as of September 30, 2026.
68
Leasing activity
The following table summarizes our leasing activity at our properties:
Three Months Ended | Nine Months Ended | Year Ended | |||||||||||||
September 30, 2026 | September 30, 2026 | December 31, 2025 | |||||||||||||
(Dollars per RSF) | Including Straight-Line Rent | Cash Basis | Including Straight-Line Rent | Cash Basis | Including Straight-Line Rent | Cash Basis | |||||||||
Leasing activity: | |||||||||||||||
Renewed/re-leased space(1) | |||||||||||||||
Rental rate changes | (2.4)% | (3.3)% | (5.1)% | (6.9)% | 7.0% | 3.5% | |||||||||
New rates | $49.15 | $47.59 | $45.71 | $46.71 | $52.71 | $53.66 | |||||||||
Expiring rates | $50.34 | $49.21 | $48.18 | $50.19 | $49.27 | $51.87 | |||||||||
RSF | 785,069 | 1,806,754 | 2,543,473 | ||||||||||||
Tenant improvements/leasing commissions | $40.64 | $46.45 | $55.34 | ||||||||||||
Weighted-average lease term | 11.2 years | 9.7 years | 9.0 years | ||||||||||||
Previously vacant/developed/ redeveloped space leased | |||||||||||||||
New rates | $58.33 | $58.60 | $48.30 | $48.32 | $72.30 | (2) | $67.56 | (2) | |||||||
Previously vacant RSF | 450,961 | (3) | 928,843 | 944,362 | |||||||||||
Developed/redeveloped RSF(4) | — | (3) | 186,706 | 704,821 | (2) | ||||||||||
Weighted-average lease term | 11.9 years | 12.2 years | 13.8 years | ||||||||||||
Leasing activity summary (totals): | |||||||||||||||
New rates | $52.50 | $51.61 | $46.70 | $47.33 | $60.42 | $59.13 | |||||||||
RSF | 1,236,030 | 2,922,303 | 4,192,656 | ||||||||||||
Weighted-average lease term | 11.5 years | 10.9 years | 11.9 years | ||||||||||||
Lease expirations(1) | |||||||||||||||
Expiring rates | $52.13 | $54.53 | $53.30 | $57.21 | $54.22 | $55.56 | |||||||||
RSF | 1,102,282 | (5) | 3,612,133 | 4,460,081 | |||||||||||
Leasing activity includes 100% of results for properties in which we have an investment.
(1)Excludes month-to-month leases aggregating 272,378 RSF and 58,516 RSF as of September 30, 2026 and December 31, 2025, respectively. During the trailing twelve
months ended September 30, 2026, we granted free rent concessions averaging 2.0 months per annum. This includes a lease concession for a 20-year lease with a non-
life science tenant in the Research Triangle market executed during the three months ended September 30, 2026. Excluding this lease, free rent concessions were 1.1
months per annum.
(2)Includes the largest life science lease in company history, executed in July 2025 with Novartis AG. The 16-year expansion build-to-suit lease aggregates 466,598
RSF and is located at the Campus Point by Alexandria Megacampus in our University Town Center submarket. Excluding this lease, previously vacant/developed/
redeveloped rental rates would have been $58.31 and $58.70 (cash basis) and development/redevelopment leasing volume would have been 238,223 RSF, for the
year ended December 31, 2025.
(3)During the three months ended September 30, 2026, we executed leases of 66,859 RSF and have additional leases under negotiation of 100,684 RSF for advanced
technology use at our project at 311 Arsenal Street in our Greater Boston market, all of which will be reflected as leasing of previously vacant space. This activity
enabled us to pivot the redevelopment project to a lower-cost advanced technology use, reducing future potential construction spend by approximately $220 million.
As a result of this leasing progress, the entire project aggregating 339,020 RSF was reclassified from redevelopment to operating as of September 30, 2026.
(4)Refer to “New Class A/A+ development and redevelopment properties: summary of pipeline” in Item 2 for additional information, including total project costs.
(5)Includes previously disclosed key lease expirations aggregating 282,878 RSF that became vacant during the three months ended September 30, 2026, with a
weighted-average lease expiration date of August 2026.
69
Contractual lease expirations
The following tables summarize the contractual lease expirations as of September 30, 2026:
Year | RSF | Percentage of Occupied RSF | Annual Rental Revenue (per RSF)(1) | Percentage of Annual Rental Revenue | ||||||||||||||
2026 | (2) | 481,770 | 1.6% | $39.19 | 1.0% | |||||||||||||
2027 | 3,054,723 | 9.9% | $57.27 | 9.4% | ||||||||||||||
2028 | 3,701,167 | (3) | 12.0% | $50.94 | 10.1% | |||||||||||||
2029 | 2,150,332 | 7.0% | $41.53 | 4.8% | ||||||||||||||
2030 | 2,653,670 | 8.6% | $43.44 | 6.2% | ||||||||||||||
2031 | 3,510,598 | 11.4% | $53.88 | 10.1% | ||||||||||||||
2032 | 1,067,200 | 3.5% | $56.34 | 3.2% | ||||||||||||||
2033 | 2,400,457 | 7.8% | $46.43 | 6.0% | ||||||||||||||
2034 | 2,627,230 | 8.6% | $65.93 | 9.3% | ||||||||||||||
2035 | 1,158,790 | 3.8% | $55.45 | 3.4% | ||||||||||||||
Thereafter | 7,916,798 | 25.8% | $85.89 | 36.5% | ||||||||||||||
Market | 2026 Contractual Lease Expirations (in RSF) | Annual Rental Revenue (per RSF)(1) | 2027 Contractual Lease Expirations (in RSF) | Annual Rental Revenue (per RSF)(1) | ||||||||||||||||||||
Leased | Negotiating | Early Tenant Discussions | Marketing/ Remaining | Total(2) | Leased | Negotiating | Early Tenant Discussions | Marketing/ Remaining | Total | |||||||||||||||
Greater Boston | 93,181 | — | — | 37,384 | 130,565 | $29.94 | 90,664 | — | 24,259 | 112,178 | 227,101 | $44.93 | ||||||||||||
San Diego | — | 49,603 | 5,520 | 10,274 | 65,397 | 62.16 | — | 141,838 | 82,641 | 136,502 | 360,981 | 41.97 | ||||||||||||
San Francisco Bay Area | 12,719 | — | 2,927 | — | 15,646 | 22.45 | 32,944 | 40,996 | 24,694 | 68,536 | 167,170 | 78.12 | ||||||||||||
Seattle | 25,552 | 12,335 | — | 5,692 | 43,579 | 40.59 | 18,205 | 116,459 | 153,984 | 38,241 | 326,889 | 33.02 | ||||||||||||
Maryland | — | — | — | 2,796 | 2,796 | 14.95 | — | 35,465 | 25,766 | 103,250 | 164,481 | 30.28 | ||||||||||||
Research Triangle | 13,385 | 5,506 | — | 2,690 | 21,581 | 25.94 | 43,238 | 14,870 | 140,150 | 46,314 | 244,572 | 34.56 | ||||||||||||
New York City | — | — | — | 33,634 | 33,634 | 113.67 | — | 72,428 | 5,894 | 26,332 | 104,654 | 96.32 | ||||||||||||
Texas | — | — | — | — | — | — | — | — | — | 26,160 | 26,160 | 27.74 | ||||||||||||
Non-cluster/other markets | — | — | — | — | — | — | — | — | — | 54,755 | 54,755 | 15.21 | ||||||||||||
Subtotal | 144,837 | 67,444 | 8,447 | 92,470 | 313,198 | 46.37 | 185,051 | 422,056 | 457,388 | 612,268 | 1,676,763 | 44.36 | ||||||||||||
Key lease expirations with expected downtime | — | 12,801 | 77,775 | 77,996 | 168,572 | 25.86 | — | 305,643 | 521,300 | 551,017 | 1,377,960 | (3) | 72.92 | |||||||||||
Total | 144,837 | 80,245 | 86,222 | 170,466 | 481,770 | $39.19 | 185,051 | 727,699 | 978,688 | 1,163,285 | 3,054,723 | $57.27 | ||||||||||||
Percentage of expiring leases | 30% | 17% | 18% | 35% | 100% | 6% | 24% | 32% | 38% | 100% | ||||||||||||||
Contractual lease expirations for properties classified as held for sale as of September 30, 2026 are excluded from the information on this page.
(1)Amounts in effect as of September 30, 2026.
(2)Excludes month-to-month leases aggregating 272,378 RSF as of September 30, 2026. Refer to “Leasing activity” in Item 2 for additional details.
(3)See tables below for additional details.
(4)Includes 317,385 RSF of key lease expirations from Bristol Myers Squibb across four properties, generating $24.0 million of annual rental revenue with a weighted-average expiration date of April 2027. Upon lease expiration, Bristol Myers
Squibb is expected to relocate to 4135 Campus Point Court, a 426,927 RSF R&D facility delivered in June 2026. We expect the vacated space to experience a period of downtime and are currently under negotiation for 190,085 RSF.
(5)Refer to the footnote for Novartis AG under "Top 20 tenants" in Item 2 for additional details.
2027 Key Lease Expirations with Expected Downtime | 2028 Key Lease Expirations with Expected Downtime | |||||||||||||
Total | Annual Rental Revenue(1) | Weighted Average Expiration Date | Weighted Average Expected Downtime | Total | Annual Rental Revenue(1) | Weighted Average Expiration Date | Weighted Average Expected Downtime | |||||||
1,377,960 RSF | $100.5M | March 2027 | 9 to 24 months | 717,546 RSF | $60.4M | April 2028 | 9 to 24 months | |||||||
Reason for Expected Downtime (Based on RSF) | Reason for Expected Downtime (Based on RSF) | ||||||||||
Relocation to Other ARE Properties(4) | Leases at Assets Originally Acquired for Redevelopment | Other |
Relocation to Other ARE Properties | Leases at Assets Originally Acquired for Redevelopment | 100 Technology Square(5) | Other |
Current Leasing Status (Based on RSF) | Current Leasing Status (Based on RSF) | ||||||||||
Negotiating | Early Tenant Discussions | Marketing/Remaining |
Early Tenant Discussions | Marketing/Remaining |
70
Contractual lease expirations (continued)
The following table summarizes our key contractual lease expirations in 2027 as of September 30, 2026 (dollars in thousands):
Expiration Date | Annual Rental Revenue | RSF | |||||||||||
Campus | Negotiating | Early Tenant Discussions | Marketing/ Remaining | Total | |||||||||
Campus Point by Alexandria/San Diego – University Town Center | March 2027 | $18,776 | 190,085 | — | 61,775 | 251,860 | (1) | ||||||
Alexandria Center® for Life Science – Waltham/Greater Boston – Route 128 | January 2027 | 27,045 | — | 232,902 | — | 232,902 | (2) | ||||||
Alexandria Center® for Advanced Technologies – South San Francisco/San Francisco Bay Area – South San Francisco | January 2027 | 8,805 | — | — | 129,501 | 129,501 | |||||||
199 East Blaine Street/Seattle – Lake Union | June 2027 | 7,177 | — | 66,464 | 43,505 | 109,969 | |||||||
Sequence District by Alexandria/San Diego – Sorrento Mesa | January 2027 | 3,282 | 90,000 | — | — | 90,000 | (2) | ||||||
Alexandria Center® for Advanced Technologies – South Lake Union/Seattle – Lake Union | March 2027 | 4,089 | — | 50,946 | 32,144 | 83,090 | (2) | ||||||
3033 Science Park Road/San Diego – Torrey Pines | March 2027 | 5,258 | — | — | 65,525 | 65,525 | (1) | ||||||
Alexandria Technology Square®/Greater Boston – Cambridge/Inner Suburbs | January 2027 | 5,652 | — | 37,960 | 22,951 | 60,911 | (1) | ||||||
ARE Torrey Ridge/San Diego – Torrey Pines | March 2027 | 2,889 | — | — | 59,248 | 59,248 | |||||||
The Arsenal on the Charles/Greater Boston – Cambridge/Inner Suburbs | February 2027 | 4,732 | — | 54,109 | — | 54,109 | (1) | ||||||
Alexandria Center® for Advanced Technologies – Canyon Park/Seattle – Bothell | July 2027 | 1,725 | — | — | 50,297 | 50,297 | (2) | ||||||
Alexandria Center® for Life Science – Shady Grove/Maryland – Rockville | January 2027 | 1,599 | — | — | 48,500 | 48,500 | (1) | ||||||
10970 Alexandria Way/San Diego – Torrey Pines | November 2027 | 2,675 | — | — | 36,172 | 36,172 | |||||||
Other | Various | 6,781 | 25,558 | 78,919 | 1,399 | 105,876 | |||||||
March 2027 | (3) | $100,485 | 305,643 | 521,300 | 551,017 | 1,377,960 | |||||||
22% | 38% | 40% | |||||||||||
(1)Relocation to other ARE properties.
(2)Leases at assets originally acquired for redevelopment or repositioning.
(3)Represents the weighted-average expiration date based on annual rental revenue as of September 30, 2026.
71
Top 20 tenants
84% of Top 20 Tenant 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 greater than
8.6% of our annual rental revenue in effect as of September 30, 2026. The following table sets forth information regarding leases with our
20 largest tenants in North America based upon annual rental revenue in effect as of September 30, 2026 (dollars in thousands, except
average market cap amounts):
Remaining Lease Term(1) (in Years) | Aggregate RSF | Annual Rental Revenue(1) | Percentage of Annual Rental Revenue(1) | Investment-Grade Credit Ratings | Average Market Cap (in billions) | |||||||||||||||||||
Tenant | Moody’s | S&P | ||||||||||||||||||||||
1 | Bristol Myers Squibb Company | 8.3 | 1,654,290 | $ | 162,062 | 8.6% | A2 | A | $115.74 | |||||||||||||||
2 | Eli Lilly and Company | 8.7 | 1,054,241 | 92,120 | 4.9 | Aa3 | AA- | $985.81 | ||||||||||||||||
3 | Moderna, Inc. | 12.2 | 462,100 | 71,445 | 3.8 | — | — | $23.15 | ||||||||||||||||
4 | AstraZeneca PLC | 5.5 | 611,326 | 56,683 | (2) | 3.0 | A1 | A+ | $280.03 | |||||||||||||||
5 | Takeda Pharmaceutical Company Limited | 10.1 | 386,111 | 41,673 | 2.2 | Baa1 | BBB+ | $52.65 | ||||||||||||||||
6 | Eikon Therapeutics, Inc.(3) | 12.8 | 299,638 | 38,907 | 2.1 | — | — | $0.59 | ||||||||||||||||
7 | Intellia Therapeutics, Inc.(4) | 6.9 | 283,272 | 35,090 | 1.9 | — | — | $1.64 | ||||||||||||||||
8 | Illumina, Inc. | 5.1 | 792,687 | 29,977 | 1.6 | Baa3 | BBB | $23.02 | ||||||||||||||||
9 | United States Government | 3.9 | 414,499 | 29,435 | (5) | 1.6 | Aaa | AA+ | $— | |||||||||||||||
10 | Novo Nordisk A/S | 11.3 | 262,382 | 28,876 | 1.5 | Aa3 | AA | $209.80 | ||||||||||||||||
11 | Uber Technologies, Inc. | 56.0 | (6) | 1,009,188 | 27,879 | 1.5 | Baa1 | BBB+ | $161.24 | |||||||||||||||
12 | Boston Children's Hospital | 14.0 | 309,231 | 26,294 | 1.4 | Aa2 | AA | $— | ||||||||||||||||
13 | Novartis AG | 1.7 | (7) | 321,743 | 25,111 | 1.3 | Aa3 | AA- | $303.20 | |||||||||||||||
14 | Sanofi | 4.3 | 267,278 | 22,045 | 1.2 | Aa3 | AA | $112.32 | ||||||||||||||||
15 | New York University | 5.8 | 218,983 | 21,073 | 1.1 | Aa2 | AA- | $— | ||||||||||||||||
16 | Massachusetts Institute of Technology | 3.3 | 242,428 | 20,529 | 1.1 | Aaa | AAA | $— | ||||||||||||||||
17 | Merck & Co., Inc. | 7.6 | 300,930 | 18,895 | 1.0 | Aa3 | A+ | $287.66 | ||||||||||||||||
18 | Vaxcyte, Inc. | 8.3 | 230,755 | 18,656 | 1.0 | — | — | $7.45 | ||||||||||||||||
19 | Charles River Laboratories, Inc. | 9.1 | 189,549 | 18,467 | 1.0 | — | — | $9.85 | ||||||||||||||||
20 | Altos Labs, Inc.(8) | 14.5 | 158,990 | 18,408 | 1.0 | — | — | $— | ||||||||||||||||
Total/weighted-average | 10.0 | (6) | 9,469,621 | $ | 803,625 | 42.8% | ||||||||||||||||||
Annual rental revenue and RSF include 100% of each property managed by us. Refer to “Annual rental revenue” and “Investment-grade or publicly traded large cap tenants”
under “Definitions and reconciliations” in Item 2 for additional details, including our methodology of calculating annual rental revenue from unconsolidated real estate joint
ventures and average market capitalization, respectively.
(1)Based on annual rental revenue in effect as of September 30, 2026.
(2)Of the $56.7 million of annual rental revenue generated by this tenant, $27.0 million relates to a 232,902 RSF lease at our Alexandria Center® for Life Science – Waltham
Megacampus, which expires in the first quarter of 2027. This lease is included in the 1.4 million RSF of 2027 key lease expirations with expected downtime disclosed under
“Contractual lease expirations” in Item 2. We do not expect the tenant to renew its lease and are actively marketing the space.
(3)Eikon Therapeutics, Inc. is a public biotechnology company led by Roger Perlmutter, a biopharmaceutical executive who previously served as an executive vice president
of Merck & Co., Inc. As of June 30, 2026, the company held $531 million in cash and marketable securities.
(4)Intellia Therapeutics, Inc. is an established, publicly traded clinical-stage biotechnology company focused on CRISPR-based gene-editing therapies. The company reported
positive Phase 3 clinical results in 2026 and reported cash, cash equivalents and marketable securities of $628.4 million as of June 30, 2026. Additionally, on September 4,
2026, the company announced it secured a non-dilutive senior secured term loan facility for up to $400 million.
(5)Includes leases, which are not subject to annual appropriations, with governmental entities such as the NIH and the General Services Administration. Approximately 2% of
the annual rental revenue derived from our leases with the United States Government is cancelable prior to the lease expiration date.
(6)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) in our Mission Bay submarket 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. Excluding these ground leases, the weighted-average remaining lease term for our top 20 tenants was 8.4 years as of September 30, 2026.
(7)Includes one direct lease at 100 Technology Square at Alexandria Technology Square® Megacampus in our Cambridge submarket aggregating 255,441 RSF, which
generates annualized rental revenue of $21.0 million and expires in March 2028. The tenant has leased the building since 2002 and has subsequently expanded and
consolidated its operations in Cambridge into a larger footprint. As a result, we do not expect the tenant to renew its lease upon expiration. We are actively marketing the
space for re-leasing and expect significant downtime following lease expiration to upgrade and re-lease the space.
(8)Altos Labs, Inc. is a private biotechnology company led by Hal Barron, M.D., former GlaxoSmithKline Chief Scientific Officer and President, R&D. Altos Labs launched with
$3.0 billion in private funding in 2022, and is backed by a group of prominent investors.
72
Locations of properties
Our properties are strategically located in AAA life science and advanced technology innovation cluster markets. The following
table sets forth the total RSF, number of properties, and annual rental revenue in effect as of September 30, 2026 in each of our
markets in North America (dollars in thousands, except per RSF amounts):
RSF | Number of Properties | Annual Rental Revenue | ||||||||||||||||
Market | Operating | Development | Redevelopment | Total | % of Total | Total | % of Total | Per RSF | ||||||||||
Greater Boston | 10,338,586 | — | 600,652 | 10,939,238 | 28% | 63 | $740,938 | 39% | $88.46 | |||||||||
San Diego | 6,419,662 | 466,598 | — | 6,886,260 | 18 | 55 | 341,035 | 18 | 59.23 | |||||||||
San Francisco Bay Area | 5,469,953 | 212,657 | 50,377 | 5,732,987 | 16 | 39 | 300,013 | 17 | 70.79 | |||||||||
Seattle | 2,900,871 | 175,950 | — | 3,076,821 | 8 | 39 | 115,007 | 6 | 43.74 | |||||||||
Maryland | 3,676,755 | — | — | 3,676,755 | 10 | 47 | 151,322 | 8 | 45.77 | |||||||||
Research Triangle | 3,436,285 | — | — | 3,436,285 | 9 | 36 | 86,341 | 5 | 26.59 | |||||||||
New York City | 727,674 | — | — | 727,674 | 2 | 2 | 65,575 | 3 | 93.24 | |||||||||
Texas | 1,651,094 | — | 66,350 | 1,717,444 | 4 | 13 | 41,539 | 2 | 29.50 | |||||||||
Non-cluster/other markets/ Canada | 954,935 | (1) | — | — | 954,935 | 2 | 16 | 21,981 | 1 | 29.49 | ||||||||
Properties held for sale | 965,557 | 339,668 | — | 1,305,225 | 3 | 18 | 21,775 | 1 | 40.90 | |||||||||
36,541,372 | 1,194,873 | 717,379 | 38,453,624 | 100% | 328 | $1,885,526 | 100% | $60.93 | ||||||||||
1,912,252 | ||||||||||||||||||
Summary of occupancy percentages in North America
The following table sets forth the occupancy percentages for our operating properties and our operating and redevelopment
properties in each of our North America markets, excluding properties held for sale, as of the following dates:
Operating Properties | Operating and Redevelopment Properties | |||||||||||
Market | 9/30/26 | 6/30/26 | 9/30/25 | 9/30/26 | 6/30/26 | 9/30/25 | ||||||
Greater Boston | 81.0% | (2) | 83.0% | 86.8% | 76.6% | 73.7% | 73.6% | |||||
San Diego | 89.7 | 89.9 | 95.2 | 89.7 | 89.9 | 95.2 | ||||||
San Francisco Bay Area | 87.1 | 83.1 | 90.4 | 86.3 | 81.9 | 86.4 | ||||||
Seattle | 90.6 | 87.7 | 90.1 | 90.6 | 87.7 | 90.1 | ||||||
Maryland | 91.5 | 91.5 | 93.9 | 91.5 | 91.5 | 93.9 | ||||||
Research Triangle | 94.5 | 93.9 | 94.9 | 94.5 | 93.9 | 94.9 | ||||||
New York City | 96.6 | 95.5 | 98.3 | 96.6 | 95.5 | 98.3 | ||||||
Texas | 85.3 | 85.3 | 79.9 | 82.0 | 82.0 | 76.5 | ||||||
Subtotal | 87.4 | 87.1 | 90.8 | 85.6 | 83.8 | 85.9 | ||||||
Non-cluster/other markets/ Canada | 78.0 | 54.1 | 85.2 | 78.0 | 54.1 | 81.7 | ||||||
87.1% | (3) | 86.9% | 90.6% | 85.4% | 83.6% | 85.8% | ||||||
(1)Includes 779,842 RSF and $14.9 million of annual rental revenue located in Canada.
(2)Decline in occupancy was primarily due to 339,020 RSF at our 311 Arsenal Street redevelopment project in our Greater Boston market being placed back into operation
following the execution of leases aggregating 66,859 RSF, with additional leases aggregating 100,684 RSF under negotiation for advanced technology use as of
September 30, 2026. This activity enables us to pivot the redevelopment project to a lower-cost advanced technology use, reducing future construction spend by
approximately $220 million.
(3)Excludes leases aggregating 1.3 million RSF, or 3.7% of total operating RSF, executed as of September 30, 2026 and expected to be occupied upon completion of
building and/or tenant improvements. The weighted-average expected occupancy date is approximately June 2027, with expected annual rental revenue of
approximately $52 million. We expect 32% of the total RSF to be occupied by December 31, 2026.
73
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/A+ properties, and property enhancements identified during the underwriting of certain acquired properties, primarily located in
collaborative Megacampus ecosystems in AAA life science and advanced technology innovation clusters. These projects are focused
on providing high-quality, generic, and reusable spaces that meet the real estate requirements of a wide range of tenants. Upon
completion, each development or redevelopment 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 may result in higher occupancy levels, longer lease terms, higher rental income, higher returns, and greater long-term
asset value. Our pre-construction activities are undertaken in order to prepare the property for its intended use and include entitlements,
permitting, design, site work, and other activities preceding commencement of construction of aboveground building improvements.
Our investments in real estate consisted of the following as of September 30, 2026 (dollars in thousands):
Development and Redevelopment | |||||||||||
Under Construction | |||||||||||
Operating | 2027–2028 Stabilization | Evaluating Business and Financial Strategy | Future | Subtotal | Total | ||||||
Square footage | |||||||||||
Operating | 35,575,815 | — | — | — | — | 35,575,815 | |||||
Future Class A/A+ development and redevelopment properties | — | 905,582 | 667,002 | 18,912,303 | 20,484,887 | 20,484,887 | |||||
Future development and redevelopment square feet currently included in rental properties(1) | — | — | — | (935,031) | (935,031) | (935,031) | |||||
Total square footage, excluding properties held for sale | 35,575,815 | 905,582 | 667,002 | 17,977,272 | 19,549,856 | 55,125,671 | |||||
Properties held for sale | 965,557 | — | 339,668 | 2,079,925 | 2,419,593 | 3,385,150 | |||||
Total square footage | 36,541,372 | 905,582 | 1,006,670 | 20,057,197 | 21,969,449 | 58,510,821 | |||||
Investments in real estate | |||||||||||
Gross book value as of September 30, 2026(2) | $30,198,713 | $670,176 | $611,311 | $3,826,180 | $5,107,667 | (3) | $35,306,380 | ||||
Properties held for sale | 459,477 | — | 238,232 | 241,902 | 480,134 | 939,611 | |||||
Total gross investment in real estate, excluding properties held for sale | $29,739,236 | $670,176 | $373,079 | $3,584,278 | $4,627,533 | $34,366,769 | |||||
20%
17%
Development/ Redevelopment Under Construction |
Land/Future Development |
11% to 16%
12%
Non-Income-Producing Assets(4) as a Percentage of Gross Assets
(1)Refer to “Investments in real estate” under “Definitions and reconciliations” in Item 2 for additional details, including future development and redevelopment square feet
currently included in rental properties.
(2)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 sheet.
(3)Our share of investment in our development and redevelopment pipeline as of September 30, 2026 is $4.63 billion.
(4)Excludes land and development parcels classified as held for sale which represented approximately 1% of total non-income-producing assets as of September 30, 2026,
compared with approximately 1% as of December 31, 2025 and 2024.
74
Dispositions and sales of partial interests
The following table summarizes our 2026 sources of capital activity during the nine months ended September 30, 2026 and through the date of this report, and projections for the
remainder of 2026 (dollars in thousands):
Interest Sold | Square Footage | Price (Our Share) | |||||||||||
Property | Submarket/Market | Date of Transaction | Operating | Future Development | |||||||||
Completed during the six months ended June 30, 2026 | $7,350 | ||||||||||||
Non-core and land dispositions completed during the three months ended September 30, 2026: | |||||||||||||
3825 and 3875 Fabian Way(1) | Palo Alto/San Francisco Bay Area | 7/14/26 | 100% | 228,000 | 250,000 | 163,000 | |||||||
One Hampshire Street(2) | Cambridge/Greater Boston | 8/21/26 | 100% | 104,956 | — | 44,900 | |||||||
3911, 3931, 4025, 4031, 4045, and 4075 Sorrento Valley Boulevard(3) | Sorrento Valley/San Diego | 9/23/26 | 100% | 95,814 | 144,000 | 26,500 | |||||||
Dispositions completed during the three months ended September 30, 2026 | 234,400 | (4) | |||||||||||
Total dispositions completed during the nine months ended September 30, 2026 | 241,750 | ||||||||||||
Completed in October 2026: | |||||||||||||
Sales of partial interests: | |||||||||||||
Campus Point by Alexandria(5) | University Town Center/San Diego | 10/23/26 | (5) | 1,586,697 | 366,816 | 475,000 | |||||||
Total completed 2026 dispositions and sales of partial interests as of October 26, 2026 | 716,750 | ||||||||||||
Our share of pending dispositions and sales of partial interests subject to: | |||||||||||||
Non-refundable deposits | 355,400 | ||||||||||||
Signed letters of intent and/or purchase and sale agreement late-stage negotiations | 1,547,850 | ||||||||||||
2,620,000 | |||||||||||||
Proceeds from dispositions and sales of partial interests in excess of 2026 guidance midpoint which may be deferred into 2027(6) | (720,000) | ||||||||||||
2026 guidance midpoint for dispositions and sales of partial interests | $1,900,000 | ||||||||||||
2026 guidance range for dispositions and sales of partial interests | $1,100,000 – $2,700,000 | ||||||||||||
Weighted-average projected completion date of 2026 dispositions and sales of partial interests | November 2026 | (7) | |||||||||||
(1)Represents one future development project aggregating 250,000 SF at 3825 Fabian Way and one fully leased operating building aggregating 228,000 RSF at 3875 Fabian Way in our Palo Alto submarket. These assets were acquired in
2019 with the intent to develop them for life science use. However, due to the project’s macroeconomic outlook, the assets no longer aligned with our strategy and were sold to a residential developer.
(2)Represents one vacant office property that was originally acquired with the intent to redevelop for life science use and expand our Megacampus ecosystem. The asset was sold due to the macroeconomic outlook for the project and the
significant capital required to redevelop and lease the property.
(3)Represents five operating properties, primarily comprising non-laboratory space, and one land parcel. As of June 30, 2026, these operating properties were 30% occupied with a weighted-average lease term of 2.4 years and were sold due
to the significant capital that would have been required to convert these properties through redevelopment for laboratory use and their misalignment with our Megacampus strategy.
(4)Our share of dispositions completed during the three months ended September 30, 2026 had annual net operating income of $4.4 million (based on the three months ended June 30, 2026, annualized) with a weighted-average disposition
date of July 29, 2026.
(5)Refer to Note 4 – “Consolidated and unconsolidated real estate joint ventures” to our unaudited consolidated financial statements in Item 1 for additional details.
(6)Refer to “Key sources and uses of capital” under “Projected results” in Item 2 for additional details.
(7)Including the impact of the $1.0 billion junior subordinated notes issued during the three months ended September 30, 2026, the weighted-average projected completion date of these sources of capital is expected to be October 2026.
75
New Class A/A+ development and redevelopment properties: recent deliveries
99 Coolidge Avenue | 50 and 60 Sylvan Road(1) | 4135 Campus Point Court | ||
Megacampus: 480 Arsenal Way, 446, 458, and 500 Arsenal Street, and 99 Coolidge Avenue | Megacampus: Alexandria Center® for Life Science – Waltham | Megacampus: Campus Point by Alexandria | ||
320,809 RSF | 268,992 RSF | 426,927 RSF | ||
84% Occupancy | 88% Occupancy | 100% Occupancy | ||
 |  |  |
10075 Barnes Canyon Road | 269 East Grand Avenue | 701 Dexter Avenue North | ||
Megacampus: SD Tech by Alexandria | Megacampus: Alexandria Center® for Advanced Technologies – South San Francisco | Megacampus: Alexandria Center® for Advanced Technologies – South Lake Union | ||
253,079 RSF | 33,780 RSF | 51,627 RSF | ||
80% Occupancy | 100% Occupancy | 100% Occupancy | ||
 |  |  |
(1)Image represents 60 Sylvan Road on the Alexandria Center® for Life Science – Waltham Megacampus.
76
New Class A/A+ development and redevelopment properties: recent deliveries (continued)
Incremental Annual Net Operating Income Generated From YTD 3Q26 Deliveries
Aggregated $98 million(1), Including $40 million in 3Q26
The following table presents development and redevelopment of new Class A/A+ projects placed into service during the nine months ended September 30, 2026 (dollars in
thousands):
Property/Market/Submarket | 3Q26 Delivery Date(3) | Our Ownership Interest | RSF Placed in Service | Occupancy Percentage(4) | Total Project | Unlevered Yields(2) | ||||||||||||||||||||||||
Prior to 1/1/26 | 1Q26 | 2Q26 | 3Q26 | Total | Initial Stabilized | Initial Stabilized (Cash Basis) | ||||||||||||||||||||||||
RSF | Investment | |||||||||||||||||||||||||||||
Development projects | ||||||||||||||||||||||||||||||
99 Coolidge Avenue/Greater Boston/Cambridge/ Inner Suburbs | 8/11/26 | 100% | 129,413 | 16,734 | — | 174,662 | 320,809 | 84% | 320,809 | $446,000 | 5.8% | 6.8% | ||||||||||||||||||
4135 Campus Point Court/San Diego/University Town Center | N/A | 59.3% | — | — | 426,927 | — | 426,927 | 100% | 426,927 | $524,000 | 10.8% | 6.2% | ||||||||||||||||||
10075 Barnes Canyon Road/San Diego/Sorrento Mesa | N/A | 50.0% | 171,469 | 81,610 | — | — | 253,079 | 80% | 253,079 | $314,000 | 5.5% | 5.7% | ||||||||||||||||||
701 Dexter Avenue North/Seattle/Lake Union | 7/9/26 | 100% | — | — | — | 51,627 | 51,627 | 100% | 227,577 | TBD | ||||||||||||||||||||
Redevelopment projects | ||||||||||||||||||||||||||||||
50 and 60 Sylvan Road/Greater Boston/Route 128 | 9/1/26 | 100% | — | — | — | 268,992 | 268,992 | 88% | 268,992 | $432,000 | 6.3% | 4.1% | (5) | |||||||||||||||||
269 East Grand Avenue/San Francisco Bay Area/ South San Francisco | 8/21/26 | 100% | — | — | — | 33,780 | 33,780 | 100% | 84,157 | TBD | ||||||||||||||||||||
8800 Technology Forest Place/Texas/Greater Houston | N/A | 100% | 50,094 | 6,948 | — | — | 57,042 | 100% | 123,392 | $112,000 | 6.3% | 6.0% | ||||||||||||||||||
Weighted average/total | 8/20/26 | 350,976 | 105,292 | 426,927 | 529,061 | 1,412,256 | 1,704,933 | |||||||||||||||||||||||
(1)Excludes future incremental annual net operating income from recently delivered spaces aggregating 134,767 RSF that were vacant and/or unleased at delivery.
(2)The delivered leases contain effective annual rent escalations of 3%, which are expected to contribute to growth in net operating income (cash basis) over the respective lease term.
(3)Represents the average delivery date for deliveries that occurred during the three months ended September 30, 2026, weighted by annual rental revenue.
(4)Occupancy reflects total operating RSF placed in service as of each respective delivery date when the space was placed into service. Subsequent occupancy changes are not reflected.
(5)The lease with Novo Nordisk, an investment-grade tenant, was executed in a highly competitive leasing environment and provides strong long-term value through a 15-year term and 3% annual rent escalations. The lower cash yield
relative to the original underwriting is primarily driven by higher development costs and lower rental assumptions than initially forecasted due to market changes.
77
New Class A/A+ development and redevelopment properties: under construction
10200 Campus Point Drive | 1450 Owens Street | |
Megacampus: Campus Point by Alexandria | Megacampus: Alexandria Center® for Science and Technology – Mission Bay | |
466,598 RSF | 212,657 RSF | |
100% Leased | 51% Leased/Negotiating | |
 |  |
269 East Grand Avenue | 701 Dexter Avenue North | |
Megacampus: Alexandria Center® for Advanced Technologies – South San Francisco | Megacampus: Alexandria Center® for Advanced Technologies – South Lake Union | |
50,377 RSF | 175,950 RSF | |
40% Leased/Negotiating | 69% Leased/Negotiating | |
| |
78
New Class A/A+ development and redevelopment properties: under construction
The following tables set forth a summary of our new Class A/A+ development and redevelopment properties under construction as of September 30, 2026 (dollars in thousands):
Property | Market/Submarket | Square Footage | Percentage | Occupancy(1) | ||||||||||||||||||
Dev/ Redev | In Service | CIP | Total | Leased | Leased/ Negotiating | Initial | Stabilized | |||||||||||||||
Under construction | ||||||||||||||||||||||
2027–2028 stabilization | ||||||||||||||||||||||
10200 Campus Point Drive(2) | San Diego/University Town Center | Dev | — | 466,598 | 466,598 | 100% | 100% | 4Q28 | 4Q28 | |||||||||||||
1450 Owens Street | San Francisco Bay Area/Mission Bay | Dev | — | 212,657 | 212,657 | 51 | 51 | 2Q27 | 2028 | |||||||||||||
269 East Grand Avenue | San Francisco Bay Area/South San Francisco | Redev | 33,780 | 50,377 | 84,157 | 40 | 40 | 3Q26 | 2H27 | |||||||||||||
701 Dexter Avenue North | Seattle/Lake Union | Dev | 51,627 | 175,950 | 227,577 | 34 | 69 | 3Q26 | 2028 | |||||||||||||
85,407 | 905,582 | 990,989 | 69% | 77% | ||||||||||||||||||
Evaluating business and financial strategy; earliest potential lab delivery in 2028(3)(4) | ||||||||||||||||||||||
40 Sylvan Road | Greater Boston/Route 128 | Redev | — | 329,049 | 329,049 | —% | —% | |||||||||||||||
3000 Minuteman Road | Greater Boston/Other | Redev | — | 271,603 | 271,603 | — | — | |||||||||||||||
8800 Technology Forest Place | Texas/Greater Houston | Redev | 57,042 | 66,350 | 123,392 | 46 | 46 | |||||||||||||||
57,042 | 667,002 | 724,044 | 8% | 8% | ||||||||||||||||||
Our Ownership Interest | At 100% | Unlevered Yields | |||||||||||||||||||
Property | Market/Submarket | In Service | CIP | Cost to Complete | Total at Completion | Initial Stabilized | Initial Stabilized (Cash Basis) | ||||||||||||||
Under construction | |||||||||||||||||||||
2027–2028 stabilization(5) | |||||||||||||||||||||
10200 Campus Point Drive(2) | San Diego/University Town Center | 59.3% | $— | $106,862 | $553,138 | $660,000 | 7.3% | 6.5% | |||||||||||||
1450 Owens Street | San Francisco Bay Area/Mission Bay | 25.0% | — | 263,855 | TBD | ||||||||||||||||
269 East Grand Avenue | San Francisco Bay Area/South San Francisco | 100% | 49,793 | 53,299 | |||||||||||||||||
701 Dexter Avenue North | Seattle/Lake Union | 100% | 96,398 | 246,160 | |||||||||||||||||
$146,191 | $670,176 | $780,000 | (6) | $1,590,000 | (6) | ||||||||||||||||
Our share of investment(6)(7) | $150,000 | $420,000 | $500,000 | (6) | $1,070,000 | (6) | |||||||||||||||
Evaluating business and financial strategy; earliest potential lab delivery in 2028(3)(4) | |||||||||||||||||||||
40 Sylvan Road | Greater Boston/Route 128 | 100% | $— | $233,594 | TBD | ||||||||||||||||
3000 Minuteman Road | Greater Boston/Other | 100% | — | 97,248 | |||||||||||||||||
8800 Technology Forest Place | Texas/Greater Houston | 100% | 65,640 | 42,237 | |||||||||||||||||
$65,640 | $373,079 | ||||||||||||||||||||
Refer to “Initial stabilized yield (unlevered)” under “Definitions and reconciliations” in Item 2 for additional information.
(1)Initial occupancy dates are subject to leasing and/or market conditions. Stabilized occupancy may vary depending on single tenancy versus multi-tenancy. Multi-tenant projects may increase in occupancy over time.
(2)Represents a single-tenant project that expands the existing Campus Point by Alexandria Megacampus, where we have a 59.3% ownership interest as of September 30, 2026. The project is fully leased to Novartis AG with 3% annual rent
escalations. The tenant currently occupies a building within the Megacampus aggregating 52,853 RSF that generated annual rental revenue of $4.1 million as of September 30, 2026. The tenant is expected to vacate this building during
2028. We expect to fund the majority of future construction costs at the Megacampus. Refer to “Dispositions and sales of partial interests” in Item 2 for additional information.
(3)We are evaluating multiple options, including whether to continue construction of laboratory improvements, pause construction, pursue lower-investment construction alternatives (including a pivot to advanced technology use), or pursue a
disposition, based upon future leasing interest. Under a lower-investment scenario, we would expect lower rent and tenant improvement requirements, and we would evaluate whether all or a portion of the property would be placed back
into operation. We would also expect stabilized yields under such alternatives to be lower than our initial underwriting assumptions. If we elect to continue to pursue construction of laboratory improvements for these projects, the earliest
deliveries of these projects are in 2028.
(4)As of June 30, 2026, 311 Arsenal Street and 421 Park Drive in our Greater Boston market were included in projects for which we were evaluating our business and financial strategy. During the three months ended September 30, 2026, we
reclassified the 339,020 RSF redevelopment project at 311 Arsenal Street to operating following the execution of leases aggregating 66,859 RSF, with additional leases aggregating 100,684 RSF under negotiation for advanced technology
use, which is expected to reduce future potential construction spending by approximately $220 million. We also entered into a purchase and sale agreement with an institutional user for the sale of 339,668 RSF at 421 Park Drive,
representing substantially all of our development project at this location. This portion of the project was classified as held for sale as of September 30, 2026. The transaction is anticipated to close in the fourth quarter of 2026 and is
expected to reduce future potential construction spending by approximately $136 million.
(5)We expect to provide total estimated costs and related yields for each project over the next several quarters.
(6)Represents dollar amount rounded to the nearest $10 million and includes preliminary estimated amounts for projects listed as TBD.
(7)Represents our share of investment based on our current ownership percentage upon completion of development or redevelopment projects, and will be adjusted as our ownership percentage increases at the Campus Point project.
79
New Class A/A+ development and redevelopment properties: summary of pipeline
80% of Our Total Development and Redevelopment Pipeline RSF
Is Within Our Megacampus Ecosystems
The following table summarizes the key information for all our development and redevelopment projects in North America as of September 30, 2026 (dollars in thousands):
Market Property | Submarket | Our Ownership Interest | Book Value | Development and Redevelopment Square Footage | ||||||||||
Under Construction | Future | Total(1) | ||||||||||||
Greater Boston | ||||||||||||||
Megacampus: Alexandria Center® for Life Science – Waltham | Route 128 | 100% | $300,320 | 329,049 | 515,000 | 844,049 | ||||||||
40 Sylvan Road and 35 Gatehouse Drive | ||||||||||||||
Megacampus: 30, 200, and 3000 Minuteman Road | Other | 100% | 115,366 | 271,603 | 350,000 | 621,603 | ||||||||
3000 Minuteman Road | ||||||||||||||
Megacampus: 480 Arsenal Way, 446, 458, and 500 Arsenal Street, and 99 Coolidge Avenue | Cambridge/Inner Suburbs | 100% | 25,123 | — | 560,000 | 560,000 | ||||||||
446, 458, and 500 Arsenal Street | ||||||||||||||
Megacampus: Alexandria Center® at Kendall Square | Cambridge | 100% | 49,415 | — | 174,500 | 174,500 | ||||||||
100 Edwin H. Land Boulevard | ||||||||||||||
Megacampus: Alexandria Technology Square® | Cambridge | 100% | 9,176 | — | 100,000 | 100,000 | ||||||||
10 Necco Street | Seaport Innovation District | 100% | 107,225 | — | 175,000 | 175,000 | ||||||||
215 Presidential Way | Route 128 | 100% | 6,816 | — | 112,000 | 112,000 | ||||||||
Other development and redevelopment projects | 100% | 182,944 | — | 774,157 | 774,157 | |||||||||
$796,385 | 600,652 | 2,760,657 | 3,361,309 | |||||||||||
Refer to “Megacampus” under “Definitions and reconciliations” in Item 2 for additional information. (1)Represents total square footage upon completion of development or redevelopment of one or more new Class A/A+ properties. Square footage presented includes the RSF of buildings currently in operation at properties that also have future development or redevelopment opportunities. Upon expiration of existing in-place leases, we intend to demolish or redevelop the existing property subject to market conditions and leasing. Refer to “Investments in real estate” under “Definitions and reconciliations” in Item 2 for additional information, including development and redevelopment square feet currently included in rental properties. | ||||||||||||||
80
New Class A/A+ development and redevelopment properties: summary of pipeline (continued)
Market Property | Submarket | Our Ownership Interest | Book Value | Development and Redevelopment Square Footage | ||||||||||
Under Construction | Future | Total(1) | ||||||||||||
San Diego | ||||||||||||||
Megacampus: Campus Point by Alexandria | University Town Center | 59.3% | (2) | $288,339 | 466,598 | 866,816 | 1,333,414 | |||||||
10010(3), 10140(3), and 10200 Campus Point Drive and 4165, 4224, and 4275(3) Campus Point Court | ||||||||||||||
11255 and 11355 North Torrey Pines Road | Torrey Pines | 100% | 168,945 | — | 215,000 | 215,000 | ||||||||
Megacampus: One Alexandria Square | Torrey Pines | 100% | 71,391 | — | 125,280 | 125,280 | ||||||||
10975 and 10995 Torreyana Road | ||||||||||||||
Megacampus: 5200 Illumina Way | University Town Center | 51.0% | 17,939 | — | 451,832 | 451,832 | ||||||||
9625 Towne Centre Drive | University Town Center | 30.0% | 859 | — | 100,000 | 100,000 | ||||||||
Megacampus: Sequence District by Alexandria | Sorrento Mesa | 100% | 51,110 | — | 1,661,915 | 1,661,915 | ||||||||
6290, 6310, 6340, 6350, and 6450 Sequence Drive | ||||||||||||||
Megacampus: SD Tech by Alexandria | Sorrento Mesa | 50.0% | 144,675 | — | 493,845 | 493,845 | ||||||||
9805 Scranton Road and 10065 Barnes Canyon Road | ||||||||||||||
Other development and redevelopment projects | (4) | — | — | 50,000 | 50,000 | |||||||||
743,258 | 466,598 | 3,964,688 | 4,431,286 | |||||||||||
San Francisco Bay Area | ||||||||||||||
Megacampus: Alexandria Center® for Science and Technology – Mission Bay | Mission Bay | 25.0% | 263,855 | 212,657 | — | 212,657 | ||||||||
1450 Owens Street | ||||||||||||||
Megacampus: Alexandria Center® for Advanced Technologies – South San Francisco | South San Francisco | 100% | 59,954 | 50,377 | 90,000 | 140,377 | ||||||||
211(4) and 269 East Grand Avenue | ||||||||||||||
Megacampus: Alexandria Center® for Advanced Technologies – Tanforan | South San Francisco | 100% | 471,396 | — | 1,930,000 | 1,930,000 | ||||||||
1122, 1150, and 1178 El Camino Real | ||||||||||||||
Alexandria Center® for Life Science – Millbrae | South San Francisco | 48.6% | 164,771 | — | 348,401 | 348,401 | ||||||||
201 and 231 Adrian Road and 30 Rollins Road | ||||||||||||||
Megacampus: Alexandria Center® for Life Science – San Carlos | San Carlos | 100% | 510,128 | — | 1,497,830 | 1,497,830 | ||||||||
960 Industrial Road, 987 and 1075 Commercial Street, and 888 Bransten Road | ||||||||||||||
$1,470,104 | 263,034 | 3,866,231 | 4,129,265 | |||||||||||
Refer to “Megacampus” under “Definitions and reconciliations” in Item 2 for additional details. (1)Represents total square footage upon completion of development or redevelopment of one or more new Class A/A+ properties. Square footage presented includes the RSF of buildings currently in operation at properties that also have future development or redevelopment opportunities. Upon expiration of existing in-place leases, we intend to demolish or redevelop the existing property subject to market conditions and leasing. Refer to “Investments in real estate” under “Definitions and reconciliations” in Item 2 for additional details, including development and redevelopment square feet currently included in rental properties. (2)In October 2026, we completed a partial sale of our interest in this joint venture for $475.0 million, which reduced our interest to approximately 30%. We expect to fund the majority of future construction costs at the Megacampus, which is expected to increase our ownership interest over time to over 50%. Refer to Note 4 – “Consolidated and unconsolidated real estate joint ventures” to our unaudited consolidated financial statements in Item 1 for additional details. (3)We have a 100% interest in this property. (4)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 in Item 1 for additional details. | ||||||||||||||
81
New Class A/A+ development and redevelopment properties: summary of pipeline (continued)
Market Property | Submarket | Our Ownership Interest | Book Value | Development and Redevelopment Square Footage | ||||||||||
Under Construction | Future | Total(1) | ||||||||||||
Seattle | ||||||||||||||
Megacampus: Alexandria Center® for Advanced Technologies – South Lake Union | Lake Union | (2) | $548,166 | 175,950 | 1,057,400 | 1,233,350 | ||||||||
601 and 701 Dexter Avenue North and 800 Mercer Street | ||||||||||||||
1010 4th Avenue South | SoDo | 100% | 64,353 | — | 544,825 | 544,825 | ||||||||
410 West Harrison Street | Elliott Bay | 100% | 27,147 | — | 91,000 | 91,000 | ||||||||
Megacampus: Alexandria Center® for Advanced Technologies – Canyon Park | Bothell | 100% | 20,823 | — | 230,000 | 230,000 | ||||||||
21660 20th Avenue Southeast | ||||||||||||||
Other development and redevelopment projects | 100% | 161,663 | — | 706,087 | 706,087 | |||||||||
822,152 | 175,950 | 2,629,312 | 2,805,262 | |||||||||||
Maryland | ||||||||||||||
Megacampus: Alexandria Center® for Life Science – Shady Grove | Rockville | 100% | 25,968 | — | 296,000 | 296,000 | ||||||||
9830 Darnestown Road | ||||||||||||||
25,968 | — | 296,000 | 296,000 | |||||||||||
Research Triangle | ||||||||||||||
Megacampus: Alexandria Center® for Life Science – Durham | Research Triangle | 100% | 170,969 | — | 2,060,000 | 2,060,000 | ||||||||
Megacampus: Alexandria Center® for Advanced Technologies and AgTech – Research Triangle | Research Triangle | 100% | 118,275 | — | 1,170,000 | 1,170,000 | ||||||||
4 and 12 Davis Drive | ||||||||||||||
Megacampus: Alexandria Center® for Sustainable Technologies | Research Triangle | 100% | 57,656 | — | 750,000 | 750,000 | ||||||||
120 TW Alexander Drive, 2752 East NC Highway 54, and 10 South Triangle Drive | ||||||||||||||
Other development and redevelopment projects | 100% | 1,647 | — | 25,000 | 25,000 | |||||||||
348,547 | — | 4,005,000 | 4,005,000 | |||||||||||
New York City | ||||||||||||||
Megacampus: Alexandria Center® for Life Science – New York City | New York City | 100% | 185,936 | — | 550,000 | (3) | 550,000 | |||||||
$185,936 | — | 550,000 | 550,000 | |||||||||||
Refer to “Megacampus” under “Definitions and reconciliations” in Item 2 for additional information. (1)Represents total square footage upon completion of development or redevelopment of one or more new Class A/A+ properties. Square footage presented includes the RSF of buildings currently in operation at properties that also have future development or redevelopment opportunities. Upon expiration of existing in-place leases, we intend to demolish or redevelop the existing property. Refer to “Investments in real estate” under “Definitions and reconciliations” for additional details, including development and redevelopment square feet currently included in rental properties. (2)We have a 100% interest in 601 and 701 Dexter Avenue North aggregating 364,350 RSF and a 60.0% interest in the future development project at 800 Mercer Street aggregating 869,000 RSF. (3)In 2024, we filed a lawsuit against the New York City Health + Hospitals Corporation and the New York City Economic Development Corporation for fraud and breach of contract concerning our option to ground lease a land parcel to develop a future world-class life science building within the Alexandria Center® for Life Science – New York City Megacampus. Refer to “Other” in Note 3 – “Investments in real estate” to our unaudited consolidated financial statements for additional information. | ||||||||||||||
82
New Class A/A+ development and redevelopment properties: summary of pipeline (continued)
Market Property | Submarket | Our Ownership Interest | Book Value | Development and Redevelopment Square Footage | ||||||||||
Under Construction | Future | Total(1) | ||||||||||||
Texas | ||||||||||||||
Alexandria Center® for Advanced Technologies at The Woodlands | Greater Houston | 100% | $45,351 | 66,350 | 116,405 | 182,755 | ||||||||
8800 Technology Forest Place | ||||||||||||||
1001 Trinity Street and 1020 Red River Street | Austin | 100% | 142,328 | — | 250,010 | 250,010 | ||||||||
Other development and redevelopment projects | 100% | — | — | — | — | |||||||||
187,679 | 66,350 | 366,415 | 432,765 | |||||||||||
Other development and redevelopment projects | 100% | 47,504 | — | 474,000 | 474,000 | |||||||||
Total pipeline as of September 30, 2026, excluding properties held for sale | 4,627,533 | 1,572,584 | 18,912,303 | 20,484,887 | ||||||||||
Properties held for sale | 480,134 | 339,668 | 2,079,925 | 2,419,593 | ||||||||||
Total pipeline as of September 30, 2026 | $5,107,667 | (2) | 1,912,252 | 20,992,228 | 22,904,480 | |||||||||
Refer to “Megacampus” under “Definitions and reconciliations” in Item 2 for additional information.
(1)Total square footage includes 935,031 RSF of buildings currently in operation that we expect to demolish or redevelop and commence future construction subject to market conditions and leasing. Refer to “Investments in real estate” under
“Definitions and reconciliations” in Item 2 for additional details, including development and redevelopment square feet currently included in rental properties.
(2)Includes $1.04 billion of projects that are currently under construction.
83
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
“Same property comparisons” under “Definitions and reconciliations” in Item 2. The following table presents information regarding our
Same Properties for the three and nine months ended September 30, 2026:
September 30, 2026 | |||||
Three Months Ended | Nine Months Ended | ||||
Percentage change in net operating income over comparable period from prior year | (6.7)% | (1) | (9.2)% | (1) | |
Percentage change in net operating income (cash basis) over comparable period from prior year | (2.8)% | (1) | (8.4)% | (1) | |
Operating margin | 66% | 66% | |||
Number of Same Properties | 288 | 284 | |||
RSF | 32,250,516 | 31,629,122 | |||
Occupancy – current-period average | 88.1% | 88.6% | |||
Occupancy – same-period prior-year average | 91.7% | 92.8% | |||
(1)The decline was due to a decrease in same property occupancy, primarily driven by previously disclosed key lease expirations with expected downtime aggregating
282,878 RSF and 1.2 million RSF in the three and nine months ended September 30, 2026, respectively, with weighted-average lease expiration dates of August 2026
and April 2026, respectively.
The following table reconciles the number of Same Properties to total properties for the nine months ended
September 30, 2026:
Development and redevelopment – under construction | Properties | |
1450 Owens Street | 1 | |
701 Dexter Avenue North | 1 | |
10200 Campus Point Drive | 1 | |
40 Sylvan Road | 1 | |
269 East Grand Avenue | 1 | |
8800 Technology Forest Place | 1 | |
3000 Minuteman Road Building 4 | 1 | |
7 | ||
Development and redevelopment – placed into service or reclassified into operating after January 1, 2025 | ||
230 Harriet Tubman Way | 1 | |
500 North Beacon Street and 4 Kingsbury Avenue | 2 | |
10935, 10945, and 10955 Alexandria Way | 3 | |
10075 Barnes Canyon Road | 1 | |
4135 Campus Point Court | 1 | |
99 Coolidge Avenue | 1 | |
50 and 60 Sylvan Road | 2 | |
311 Arsenal Street | 1 | |
3000 Minuteman Road Building 3 | 1 | |
421 Park Drive | 1 | |
14 | ||
Acquisitions after January 1, 2025 | ||
Other | 2 | |
2 | ||
Unconsolidated real estate JVs | 3 | |
Properties held for sale | 18 | |
Total properties excluded from Same Properties | 44 | |
Same Properties | 284 | |
Total properties as of September 30, 2026 | 328 |
84
Comparison of results for the three months ended September 30, 2026 to the three months ended September 30, 2025
The following table presents a comparison of the components of net operating income for our Same Properties and Non-Same
Properties for the three months ended September 30, 2026, compared to the three months ended September 30, 2025 (dollars in
thousands). Refer to “Definitions and reconciliations” in Item 2 for definitions of “Tenant recoveries” and “Net operating income” and
their reconciliations from the most directly comparable financial measures presented in accordance with GAAP, income from rentals and
net income, respectively.
Three Months Ended September 30, | |||||||||
2026 | 2025 | $ Change | % Change | ||||||
Income from rentals: | |||||||||
Same Properties | $432,586 | $454,624 | $(22,038) | (4.8)% | |||||
Non-Same Properties | 48,762 | 86,446 | (37,684) | (43.6) | |||||
Rental revenues | 481,348 | 541,070 | (59,722) | (11.0) | |||||
Same Properties | 167,825 | 175,145 | (7,320) | (4.2) | |||||
Non-Same Properties | 4,445 | 19,634 | (15,189) | (77.4) | |||||
Tenant recoveries | 172,270 | 194,779 | (22,509) | (11.6) | |||||
Income from rentals | 653,618 | 735,849 | (82,231) | (11.2) | |||||
Same Properties | — | — | — | — | |||||
Non-Same Properties | 17,564 | 16,095 | 1,469 | 9.1 | |||||
Other income | 17,564 | 16,095 | 1,469 | 9.1 | |||||
Same Properties | 600,411 | 629,769 | (29,358) | (4.7) | |||||
Non-Same Properties | 70,771 | 122,175 | (51,404) | (42.1) | |||||
Total revenues | 671,182 | 751,944 | (80,762) | (10.7) | |||||
Same Properties | 205,923 | 207,133 | (1,210) | (0.6) | |||||
Non-Same Properties | 22,008 | 32,101 | (10,093) | (31.4) | |||||
Rental operations | 227,931 | 239,234 | (11,303) | (4.7) | |||||
Same Properties | 394,488 | 422,636 | (28,148) | (6.7) | |||||
Non-Same Properties | 48,763 | 90,074 | (41,311) | (45.9) | |||||
Net operating income | $443,251 | $512,710 | $(69,459) | (13.5)% | |||||
Net operating income – Same Properties | $394,488 | $422,636 | $(28,148) | (6.7)% | |||||
Straight-line rent revenue | 480 | (19,711) | 20,191 | (102.4) | |||||
Amortization of acquired below-market leases and deferred revenue related to tenant-funded and -built landlord improvements | (13,938) | (10,945) | (2,993) | 27.3 | |||||
Net operating income – Same Properties (cash basis) | $381,030 | $391,980 | $(10,950) | (2.8)% | |||||
85
Income from rentals
Total income from rentals for the three months ended September 30, 2026 decreased by $82.2 million, or 11.2%, to
$653.6 million, compared to $735.8 million for the three months ended September 30, 2025. The components of this change are
discussed below.
Rental revenues
Total rental revenues for the three months ended September 30, 2026 decreased by $59.7 million, or 11.0%, to $481.3 million,
compared to $541.1 million for the three months ended September 30, 2025. The decrease was primarily attributable to the factors
discussed below.
Same Properties’ rental revenues for the three months ended September 30, 2026 decreased by $22.0 million, or 4.8%, to
$432.6 million, compared to $454.6 million for the three months ended September 30, 2025. This decrease is primarily attributable to a
decrease in Same Properties’ average occupancy to 88.1% for the three months ended September 30, 2026 from 91.7% for the three
months ended September 30, 2025, and reflects the impact of previously disclosed key lease expirations aggregating 282,878 RSF and
1.2 million RSF in the three and nine months ended September 30, 2026, respectively, with weighted-average lease expiration dates of
August 2026 and April 2026, respectively.
Non-Same Properties’ rental revenues for the three months ended September 30, 2026 decreased by $37.7 million, or 43.6%,
to $48.8 million, compared to $86.4 million for the three months ended September 30, 2025, primarily due to the real estate dispositions
completed after July 1, 2025.
Tenant recoveries
Tenant recoveries for the three months ended September 30, 2026 decreased by $22.5 million, or 11.6%, to $172.3 million,
compared to $194.8 million for the three months ended September 30, 2025.
Same Properties’ tenant recoveries for the three months ended September 30, 2026 decreased by $7.3 million, or 4.2%, to
$167.8 million compared to $175.1 million for the three months ended September 30, 2025, primarily due to the decrease in Same
Property occupancy to 88.1% for the three months ended September 30, 2026, from 91.7% for the three months ended September 30,
2025, which reduced the proportion of expenses recoverable from tenants. As of September 30, 2026, 91% of our leases (on an annual
rental revenue basis) were triple net leases, which require tenants to pay substantially all real estate taxes, insurance, utilities, repairs
and maintenance, common area expenses, and other operating expenses (including increases thereto) in addition to base rent.
Non-Same Properties’ tenant recoveries for the three months ended September 30, 2026 decreased by $15.2 million, or
77.4%, to $4.4 million compared to $19.6 million for the three months ended September 30, 2025, primarily due to the dispositions of
real estate since July 1, 2025.
Rental operations
Total rental operating expenses for the three months ended September 30, 2026 decreased by $11.3 million, or 4.7%, to
$227.9 million, compared to $239.2 million for the three months ended September 30, 2025.
Same Properties’ rental operating expenses decreased by $1.2 million, or 0.6%, to $205.9 million during the three months
ended September 30, 2026, compared to $207.1 million for the three months ended September 30, 2025, primarily driven by a
decrease of $3.6 million in repairs and maintenance costs due to lower Same Properties’ average occupancy, partially offset by an
increase in property tax expense primarily resulting from the property tax rate increases in Boston and Cambridge in our Greater Boston
market.
Non-Same Properties’ rental operating expenses decreased by $10.1 million primarily due to real estate dispositions
completed since July 1, 2025.
86
General and administrative expenses
General and administrative expenses for the three months ended September 30, 2026 increased by $11.7 million, or 40.0%, to
$40.9 million, compared to $29.2 million for the three months ended September 30, 2025. The increase primarily reflects the timing of
the restructuring of compensation plans and other cost-control and efficiency initiatives during the three months ended September 30,
2025.
Notwithstanding this increase compared to the three months ended September 30, 2025, general and administrative expenses
for the three months ended September 30, 2026 decreased by $3.0 million, or 6.9%, compared to $43.9 million for the three months
ended September 30, 2024. The decrease relative to 2024 reflects the continued benefit from cost-efficiency initiatives implemented in
prior years. The increase relative to 2025 primarily reflects the expected return of a portion of the cost reductions achieved in 2025 that
were temporary in nature, while approximately half of the cost reductions achieved in 2025 have continued into 2026 and are expected
to continue through the remainder of 2026. We continue to expect approximately $76 million of cumulative general and administrative
expense savings in 2025 and 2026 compared to 2024 based on the midpoint of our 2026 guidance range.
As a percentage of net operating income, our general and administrative expenses for the trailing twelve months ended
September 30, 2026 and 2025 were 7.5% and 5.7%, respectively.
Depreciation and amortization
Depreciation and amortization expense for the three months ended September 30, 2026 decreased by $35.8 million, or 10.5%,
to $304.4 million, compared to $340.2 million for the three months ended September 30, 2025. The decrease was primarily a result of
real estate dispositions since July 1, 2025.
Impairment of real estate
During the three months ended September 30, 2026, we recognized impairment charges aggregating $637.9 million, classified
in impairment of real estate in our consolidated statement of operations. For additional information, refer to “Sales of real estate assets
and impairment of real estate” in Note 3 – “Investments in real estate” to our unaudited consolidated financial statements in Item 1.
During the three months ended September 30, 2025, we recognized real estate impairment charges aggregating
$323.9 million, primarily related to three operating properties in our Greater Boston, Research Triangle, and New York City markets and
land parcels in our San Diego market that met the criteria for classification as held for sale.
Interest expense
Interest expense for the three months ended September 30, 2026 and 2025 consisted of the following (dollars in thousands):
Three Months Ended September 30, | ||||||
Component | 2026 | 2025 | Change | |||
Gross interest | $142,609 | $140,943 | $1,666 | |||
Capitalized interest | (62,922) | (86,091) | 23,169 | |||
Interest expense | $79,687 | $54,852 | $24,835 | |||
Average debt balance outstanding(1) | $12,860,229 | $13,512,336 | $(652,107) | |||
Weighted-average annual interest rate(2) | 4.4% | 4.2% | 0.2% | |||
(1)Represents the average debt balance outstanding during the respective periods.
(2)Represents annualized total interest incurred divided by the average debt balance outstanding during the respective periods.
87
The net change in interest expense during the three months ended September 30, 2026, compared to the three months ended
September 30, 2025, resulted from the following (dollars in thousands):
Component | Interest Rate(1) | Effective Date | Change | |||||
Increases in interest incurred due to: | ||||||||
Issuances of debt: | ||||||||
$750 million of unsecured senior notes payable due 2036 | 5.41% | February 2026 | $9,892 | |||||
$1.0 billion of unsecured junior subordinated notes payable due 2057 | 7.37% | August 2026 | 8,056 | |||||
Higher average outstanding balances under commercial paper program and/or unsecured senior line of credit | 2,803 | |||||||
Total increases | 20,751 | |||||||
Decreases in interest incurred due to: | ||||||||
Repayments of debt: | ||||||||
$300 million of unsecured senior notes payable due 2026 | 4.50% | January 2026 | (3,260) | |||||
$350 million of unsecured senior notes payable due 2026 | 3.96% | April 2026 | (3,341) | |||||
Secured notes payable | 7.18% | August 2025 | (928) | |||||
Partial repurchases of debt: | ||||||||
Repaid $525 million of $1.0 billion of unsecured senior notes payable due 2052 | 3.70% | February 2026 | (4,667) | |||||
Repaid $498 million of $850 million of unsecured senior notes payable due 2051 | 3.16% | February 2026 | (3,744) | |||||
Repaid $309 million of $700 million of unsecured senior notes payable due 2050 | 3.95% | February 2026 | (3,050) | |||||
Other decrease in interest | (95) | |||||||
Total decreases | (19,085) | |||||||
Change in gross interest | 1,666 | |||||||
Decrease in capitalized interest | 23,169 | |||||||
Total change in interest expense | $24,835 | |||||||
(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.
Investment income
During the three months ended September 30, 2026, we recognized investment income aggregating $24.0 million, which
consisted of $16.0 million of realized gains, $21.6 million of unrealized gains, and $13.6 million of impairment charges.
During the three months ended September 30, 2025, we recognized investment income aggregating $28.2 million, which
consisted of $34.8 million of realized gains, $18.5 million of unrealized gains, and $25.1 million of impairment charges.
For more information about our investments, refer to Note 7 – “Investments” and “Investments” in Note 2 – “Summary of
significant accounting policies” to our unaudited consolidated financial statements in Item 1.
Loss on early extinguishment of debt
During the three months ended September 30, 2026, we recognized a loss on early extinguishment of debt aggregating $3.3
million related to the partial write-off of unamortized loan fees in connection with the amendment and restatement of our unsecured
senior line of credit.
Gain on sales of real estate
During the three months ended September 30, 2026, no gain on sales of real estate was recognized. During the three months
ended September 30, 2025, we recognized a $9.4 million gain related to the disposition of our controlling interest in a consolidated joint
venture that owns Pacific Technology Park in our Sorrento Mesa submarket. The gain was classified in gain on sales of real estate
within our consolidated statement of operations for the three months ended September 30, 2025.
Other comprehensive loss
Total other comprehensive loss for the three months ended September 30, 2026 aggregating $664 thousand primarily related
to foreign currency translation losses related to our operations in Canada, resulting from the weakening of the Canadian dollar relative
to the U.S. dollar during this period. Refer to Note 11 – “Hedge Agreements” to our unaudited consolidated financial statements in Item
1 for additional information.
Total other comprehensive loss of $4.8 million for the three months ended September 30, 2025 was primarily due to unrealized
foreign currency translation loss of $7.8 million related to our operations in Canada, partially offset by $3.0 million of unrealized gains
related to the change in the fair value of our cross-currency swap agreements, resulting from the CAD’s weakening since the execution
of these agreements on July 29, 2025 through September 30, 2025.
88
Comparison of results for the nine months ended September 30, 2026 to the nine months ended September 30, 2025
The following table presents a comparison of the components of net operating income for our Same Properties and Non-Same
Properties for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025 (dollars in
thousands). Refer to “Definitions and reconciliations” in Item 2 for definitions of “Tenant recoveries” and “Net operating income” and
their reconciliations from the most directly comparable financial measures presented in accordance with GAAP, income from rentals and
net income, respectively.
Nine Months Ended September 30, | |||||||||
2026 | 2025 | $ Change | % Change | ||||||
Income from rentals: | |||||||||
Same Properties | $1,268,273 | $1,361,022 | $(92,749) | (6.8)% | |||||
Non-Same Properties | 174,450 | 285,537 | (111,087) | (38.9) | |||||
Rental revenues | 1,442,723 | 1,646,559 | (203,836) | (12.4) | |||||
Same Properties | 478,425 | 498,454 | (20,029) | (4.0) | |||||
Non-Same Properties | 28,693 | 71,290 | (42,597) | (59.8) | |||||
Tenant recoveries | 507,118 | 569,744 | (62,626) | (11.0) | |||||
Income from rentals | 1,949,841 | 2,216,303 | (266,462) | (12.0) | |||||
Same Properties | — | — | — | — | |||||
Non-Same Properties | 55,147 | 55,839 | (692) | (1.2) | |||||
Other income | 55,147 | 55,839 | (692) | (1.2) | |||||
Same Properties | 1,746,698 | 1,859,476 | (112,778) | (6.1) | |||||
Non-Same Properties | 258,290 | 412,666 | (154,376) | (37.4) | |||||
Total revenues | 2,004,988 | 2,272,142 | (267,154) | (11.8) | |||||
Same Properties | 600,620 | 597,930 | 2,690 | 0.4 | |||||
Non-Same Properties | 58,789 | 92,132 | (33,343) | (36.2) | |||||
Rental operations | 659,409 | 690,062 | (30,653) | (4.4) | |||||
Same Properties | 1,146,078 | 1,261,546 | (115,468) | (9.2) | |||||
Non-Same Properties | 199,501 | 320,534 | (121,033) | (37.8) | |||||
Net operating income | $1,345,579 | $1,582,080 | $(236,501) | (14.9)% | |||||
Net operating income – Same Properties | $1,146,078 | $1,261,546 | $(115,468) | (9.2)% | |||||
Straight-line rent revenue | (16,915) | (35,696) | 18,781 | (52.6) | |||||
Amortization of acquired below-market leases and deferred revenue related to tenant-funded and -built landlord improvements | (36,925) | (32,826) | (4,099) | 12.5 | |||||
Net operating income – Same Properties (cash basis) | $1,092,238 | $1,193,024 | $(100,786) | (8.4)% | |||||
89
Income from rentals
Total income from rentals for the nine months ended September 30, 2026 decreased by $266.5 million, or 12.0%, to
$1.95 billion, compared to $2.22 billion for the nine months ended September 30, 2025, due to a decrease in rental revenues, as
discussed below.
Rental revenues
Total rental revenues for the nine months ended September 30, 2026 decreased by $203.8 million, or 12.4%, to $1.44 billion,
compared to $1.65 billion for the nine months ended September 30, 2025. The decrease was primarily attributable to the factors
discussed below.
Same Properties’ rental revenues for the nine months ended September 30, 2026 decreased by $92.7 million, or 6.8%, to
$1.27 billion, compared to $1.36 billion for the nine months ended September 30, 2025. This decrease primarily reflects a decrease in
Same Properties’ average occupancy to 88.6% for the nine months ended September 30, 2026 from 92.8% for the nine months ended
September 30, 2025, primarily driven by previously disclosed key lease expirations aggregating 282,878 RSF and 1.2 million RSF in the
three and nine months ended September 30, 2026, respectively, with weighted-average lease expiration dates of August 2026 and April
2026, respectively.
Non-Same Properties’ rental revenues for the nine months ended September 30, 2026 decreased by $111.1 million, or 38.9%,
to $174.5 million, compared to $285.5 million for the nine months ended September 30, 2025, primarily due to the dispositions of real
estate since January 1, 2025.
Tenant recoveries
Tenant recoveries for the nine months ended September 30, 2026 decreased by $62.6 million, or 11.0%, to $507.1 million,
compared to $569.7 million for the nine months ended September 30, 2025.
Same Properties’ tenant recoveries for the nine months ended September 30, 2026 decreased by $20.0 million, or 4.0%, to
$478.4 million, compared to $498.5 million for the nine months ended September 30, 2025. The decrease described above in Same
Properties’ tenant recoveries resulted from a decrease in Same Properties’ average occupancy. As of September 30, 2026, 91% of our
leases (on an annual rental revenue basis) were triple net leases, which require tenants to pay substantially all real estate taxes,
insurance, utilities, repairs and maintenance, common area expenses, and other operating expenses (including increases thereto) in
addition to base rent.
Non-Same Properties’ tenant recoveries for the nine months ended September 30, 2026 decreased by $42.6 million, or 59.8%,
to $28.7 million, compared to $71.3 million for the nine months ended September 30, 2025, primarily due to the dispositions of real
estate since January 1, 2025.
Rental operations
Total rental operating expenses for the nine months ended September 30, 2026 decreased by $30.7 million, or 4.4%, to
$659.4 million, compared to $690.1 million for the nine months ended September 30, 2025. Non-Same Properties’ rental operating
expenses decreased by $33.3 million primarily as a result of dispositions of real estate assets since January 1, 2025.
Same Properties’ rental operating expenses increased by $2.7 million, or 0.4%, to $600.6 million during the nine months ended
September 30, 2026, compared to $597.9 million for the nine months ended September 30, 2025, primarily attributable to an increase
of $9.8 million in property tax expense resulting from the property tax rate increases in Boston and Cambridge in our Greater Boston
market. The increase was offset primarily by a decrease of $7.3 million in repairs and maintenance costs resulting from the lower Same
Properties’ average occupancy.
General and administrative expenses
General and administrative expenses for the nine months ended September 30, 2026 increased by $23.4 million, or 26.3%, to
$112.5 million, compared to $89.0 million for the nine months ended September 30, 2025. The increase primarily reflects the timing of
the restructuring of compensation plans and other cost-control and efficiency initiatives during the nine months ended September 30,
2025.
Notwithstanding this increase compared to the nine months ended September 30, 2025, general and administrative expenses
for the nine months ended September 30, 2026 decreased by $23.2 million, or 17%, compared to $135.6 million for the nine months
ended September 30, 2024. The decrease relative to 2024 reflects the continued benefit from cost-efficiency initiatives implemented in
prior years. The increase relative to 2025 primarily reflects the expected return of a portion of the cost reductions achieved in 2025 that
were temporary in nature, while approximately half of the cost reductions achieved in 2025 have continued into 2026 and are expected
to continue through the remainder of 2026. We continue to expect approximately $76 million of cumulative general and administrative
expense savings in 2025 and 2026 compared to 2024 based on the midpoint of our 2026 guidance range.
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As a percentage of net operating income, our general and administrative expenses for the trailing twelve months ended
September 30, 2026 and 2025 were 7.5% and 5.7%, respectively.
Depreciation and amortization
Depreciation and amortization expense for the nine months ended September 30, 2026 decreased by $114.2 million, or 11.1%,
to $914.2 million, compared to $1.03 billion for the nine months ended September 30, 2025. The decrease was primarily a result of real
estate dispositions since January 1, 2025.
Impairment of real estate
During the nine months ended September 30, 2026, we recognized impairment charges aggregating $865.9 million, classified
in impairment of real estate in our consolidated statement of operations. For additional information, refer to “Sales of real estate assets
and impairment of real estate” in Note 3 – “Investments in real estate” to our unaudited consolidated financial statements in Item 1.
During the nine months ended September 30, 2025, we recognized real estate impairment charges aggregating $485.6 million,
which primarily related to (i) a ground lease entered into in 2021 for a future development site in our San Francisco Bay Area market, (ii)
three operating properties in our San Diego market and land parcels in our non-cluster market that met the criteria for classification as
held for sale, and (iii) three operating properties in our Greater Boston, Research Triangle, and New York City markets and land parcels
in our San Diego market that met the criteria for classification as held for sale.
Interest expense
Interest expense for the nine months ended September 30, 2026 and 2025 consisted of the following (dollars in thousands):
Nine Months Ended September 30, | ||||||
Component | 2026 | 2025 | Change | |||
Gross interest | $415,225 | $409,603 | $5,622 | |||
Capitalized interest | (206,612) | (248,579) | 41,967 | |||
Interest expense | $208,613 | $161,024 | $47,589 | |||
Average debt balance outstanding(1) | $12,947,130 | $13,200,441 | $(253,311) | |||
Weighted-average annual interest rate(2) | 4.3% | 4.1% | 0.2% | |||
(1)Represents the average debt balance outstanding during the respective periods.
(2)Represents annualized total interest incurred divided by the average debt balance outstanding during the respective periods.
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The net change in interest expense during the nine months ended September 30, 2026, compared to the nine months ended
September 30, 2025, resulted from the following (dollars in thousands):
Component | Interest Rate(1) | Effective Date | Change | |||||
Increases in interest incurred due to: | ||||||||
Issuances of debt: | ||||||||
$750 million of unsecured senior notes payable due 2036 | 5.41% | February 2026 | $23,740 | |||||
$550 million of unsecured senior notes payable due 2035 | 5.66% | February 2025 | 3,545 | |||||
$1.0 billion of unsecured junior subordinated notes payable due 2057 | 7.37% | August 2026 | 8,056 | |||||
Higher average outstanding balances under commercial paper program and/or unsecured senior line of credit | 28,549 | |||||||
Total increases | 63,890 | |||||||
Decreases in interest incurred due to: | ||||||||
Repayments of debt: | ||||||||
$300 million of unsecured senior notes payable due 2026 | 4.50% | January 2026 | (9,267) | |||||
$350 million of unsecured senior notes payable due 2026 | 3.96% | April 2026 | (6,156) | |||||
$600 million of unsecured senior notes payable due 2025 | 3.62% | April 2025 | (6,905) | |||||
Secured notes payable | 7.18% | August 2025 | (6,294) | |||||
Partial repurchases of debt: | ||||||||
Repaid $525 million of $1.0 billion of unsecured senior notes payable due 2052 | 3.70% | February 2026 | (11,871) | |||||
Repaid $498 million of $850 million of unsecured senior notes payable due 2051 | 3.16% | February 2026 | (9,522) | |||||
Repaid $309 million of $700 million of unsecured senior notes payable due 2050 | 3.95% | February 2026 | (7,779) | |||||
Other decrease in interest | (474) | |||||||
Total decreases | (58,268) | |||||||
Change in gross interest | 5,622 | |||||||
Decrease in capitalized interest | 41,967 | |||||||
Total change in interest expense | $47,589 | |||||||
(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.
Investment income (losses)
During the nine months ended September 30, 2026, we recognized investment income aggregating $152.6 million, which
consisted of $44.5 million of realized gains, $143.2 million of unrealized gains, and $35.0 million of impairment charges.
During the nine months ended September 30, 2025, we recognized investment losses aggregating $52.5 million, which
consisted of $94.7 million of realized gains, $71.6 million of unrealized losses, and $75.5 million of impairment charges.
For additional information about our investments, refer to Note 7 – “Investments” to our unaudited consolidated financial
statements in Item 1. For our impairment accounting policy, refer to “Investments” in Note 2 – “Summary of significant accounting
policies” to our unaudited consolidated financial statements in Item 1.
Gain on early extinguishment of debt
During the nine months ended September 30, 2026, we recognized a gain on early extinguishment of debt aggregating $363.1
million, net of the write-off of unamortized debt issuance costs and other transaction-related costs, primarily related to the completion of
the February 2026 tender offers to repurchase $1.33 billion of debt principal across a portion of our outstanding 4.00% Senior Notes
due 2050, 3.00% Senior Notes due 2051, and 3.55% Senior Notes due 2052 for $952.2 million. The gain was partially offset by a loss
on early extinguishment of debt aggregating $3.3 million related to the partial write-off of unamortized loan fees in connection with the
amendment and restatement of our unsecured senior line of credit during the three months ended September 30, 2026.
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Gain on sales of real estate
During the nine months ended September 30, 2026, no gain on sales of real estate was recognized. During the nine months
ended September 30, 2025, we recognized $22.5 million of gains classified in gain on sales of real estate within our consolidated
statement of operations. These gains included $12.7 million recognized during the three months ended March 31, 2025, in connection
with one sales-type lease for an operating property in our Seattle market, and $9.3 million recognized upon the disposition of our
controlling interest in a consolidated joint venture that owns Pacific Technology Park in our Sorrento Mesa submarket. The gains were
classified in gain on sales of real estate within our consolidated statement of operations for the nine months ended September 30,
2025.
Other comprehensive loss
Other comprehensive loss for the nine months ended September 30, 2026 aggregating $4.3 million includes $12.3 million of
foreign currency translation losses related to our operations in Canada, resulting from the weakening of the Canadian dollar relative to
the U.S. dollar during this period, partially offset by $8.0 million of unrealized gains related to the change in the fair value of our cross-
currency swap agreements. Refer to Note 11 – “Hedge Agreements” to our unaudited consolidated financial statements in Item 1 for
additional information.
Total other comprehensive income of $14.0 million for the nine months ended September 30, 2025 was primarily due to
unrealized foreign currency translation income of $11.1 million related to our operations in Canada and $3.0 million of unrealized gains
related to the change in the fair value of our cross-currency swap agreements, resulting from the CAD’s weakening since the execution
of these agreements on July 29, 2025 through September 30, 2025.
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Construction spending
Our construction spending for the nine months ended September 30, 2026 and projected spending for the year ending
December 31, 2026 consisted of the following (in thousands):
Nine Months Ended September 30, 2026 | Projected Midpoint for Year Ending December 31, 2026 | ||||||||
Construction of Class A/A+ properties: | |||||||||
Active construction projects | |||||||||
Development and redevelopment under construction(1) | $ | 1,039,228 | $ | 1,555,000 | |||||
Future pipeline pre-construction | |||||||||
Primarily Megacampus expansion pre-construction work (entitlement, design, and site work) | 140,645 | 210,000 | (2) | ||||||
Revenue- and non-revenue-enhancing capital expenditures(3) | 430,365 | 510,000 | (4) | ||||||
Construction spending (before contributions from noncontrolling interests or tenants) | 1,610,238 | 2,275,000 | |||||||
Contributions from noncontrolling interests (consolidated real estate joint ventures) | (50,727) | (100,000) | (5) | ||||||
Tenant-funded and -built landlord improvements | (405,733) | (425,000) | |||||||
Total construction spending | $ | 1,153,778 | $ | 1,750,000 | |||||
2026 guidance range for construction spending | $1,500,000 – $2,000,000 | ||||||||
(1)Includes smaller conversions to laboratory space through redevelopment.
(2)Approximately 74% represents capitalized costs.
(3)Represents revenue- and non-revenue-enhancing capital expenditures before contributions from noncontrolling interests and tenant-funded and tenant-built landlord
improvements.
(4)The top two revenue- and non-revenue-enhancing capital expenditure projects in 2026 represent approximately 53% of the total spending within this category. The first
project relates to a property located at the Alexandria Center® for Advanced Technologies – South San Francisco Megacampus in our South San Francisco submarket,
which is leased to a new tenant and is undergoing its first major renovation in 12 years. The second project relates to two properties at the Alexandria Technology
Square® Megacampus in our Cambridge submarket, which are undergoing their first major renovation in 16 years.
(5)Represents contractual capital commitments from existing real estate joint venture partners to fund construction.
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 existing consolidated joint ventures to fund
construction through 2027 and beyond (in thousands):
Projected timing | Amount(1) | |
Fourth quarter of 2026 | $49,000 | |
2027 and beyond | 56,000 | |
Total | $105,000 | |
(1)Amounts represent reductions to our consolidated construction spending.
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Capitalization of interest
Our construction spending includes capitalized interest. The table below provides key categories of interest capitalized during
the three months ended September 30, 2026 (in thousands):
Key Categories of Average Real Estate Basis Qualifying for Capitalization | Three Months Ended September 30, 2026 | |
Total(1) | $5,866,853 | |
Projects delivered in 3Q26 or other projects no longer requiring capitalization of interest as of the end of 3Q26(2) | (1,402,235) | |
Projects continuing to qualify for capitalization of interest as of the end of 3Q26 | $4,464,618 | |
Components of average real estate basis of projects continuing to require capitalization of interest as of the end of 3Q26 | ||
Class A/A+ development and redevelopment projects under construction and repositioning projects: | ||
2027–2028 stabilization | $384,632 | |
Repositioning and smaller redevelopment projects(3) | 1,735,127 | |
2,119,759 | ||
Land/future development projects with pre-construction milestones through 2028(4) | 2,344,859 | |
Average real estate basis of projects continuing to qualify for capitalization of interest as of the end of 3Q26 | $4,464,618 | |
4Q26 projected range for average real estate capitalization basis | $3,400,000 – $4,900,000 |
(1)In addition to capitalized interest, we incur other capitalized project costs, including property taxes, insurance, and other costs directly related and essential to the
construction of Class A/A+ properties. If we cease activities necessary to prepare a project for its intended use, related costs are expensed as incurred. Annualized
capitalized operating expenses represent approximately 2% of the total average real estate basis subject to capitalization for the three months ended September 30,
2026.
(2)Primarily includes projects at 421 Park Drive on the Alexandria Center® for Life Science – Fenway Megacampus and Alexandria Stanford Life Science District, both of
which were classified as held for sale as of September 30, 2026, as well as a delivered project at Alexandria Center® for Life Science – Waltham Megacampus during the
three months ended September 30, 2026.
(3)Primarily consists of projects related to our operating assets that generally have shorter periods for which capitalization of interest is required, including executed leases
aggregating 1.3 million RSF as of September 30, 2026, with future occupancy expected after completion of building and/or tenant improvements by June 2027 on a
weighted-average basis. The balance also includes redevelopment projects for which we are evaluating business and financial strategy.
(4)Includes future pipeline projects expected to reach pre-construction milestones, including various phases of entitlement, design, site work, and other activities necessary
to begin aboveground vertical construction, with a weighted-average key construction milestone by 1H28. As projects progress, we will evaluate whether to proceed with
additional pre-construction and/or construction activities based on leasing demand and/or market conditions, pause future investments, or consider potential disposition.
These projects include, among others, future Megacampus development projects at (i) Alexandria Center® for Advanced Technologies – Tanforan, (ii) Alexandria Center®
for Life Science – San Carlos, where we have a letter of intent for approximately 235,600 RSF related to existing industrial buildings that were originally expected to be
demolished to allow for future development, (iii) Alexandria Center® for Life Science – New York City, and (iv) Campus Point by Alexandria, which represent
approximately 52% of the total real estate basis that continues to qualify for capitalization in this category as of September 30, 2026.
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Projected results
Our 2026 guidance includes forward-looking non-GAAP financial measures, such as funds from operations as adjusted, net debt and preferred stock to Adjusted EBITDA –
fourth quarter 2026 annualized, fixed-charge coverage ratio – fourth quarter 2026 annualized, and net cash provided by operating activities, as adjusted, that differ from measures
calculated in accordance with GAAP. These non-GAAP measures are in addition to, and not a substitute for or superior to, financial measures prepared in accordance with GAAP
and should be considered in conjunction with our GAAP financial measures. We are unable to provide corresponding forward-looking GAAP measures or reconciliations to these
non-GAAP measures without unreasonable effort. This is due to the inherent difficulty of forecasting items that depend on market conditions outside of our control, including the
timing of dispositions, capital events, and financing decisions, as well as quarterly and annual components such as gain on sales of real estate, impairments of real estate and non-
real estate investments, and unrealized gains or losses on non-real estate investments. Our attempt to predict these amounts may produce significant but inaccurate estimates,
which would be potentially misleading for our investors. Refer to “Definitions and reconciliations” in Item 2 for additional details about these non-GAAP measures.
Projected 2026 Funds From Operations per Share Attributable to Alexandria’s Common Stockholders – Diluted | As of 10/26/26 | As of 8/3/26 | Key Changes | |||||
Funds from operations per share, as adjusted(1) | $6.38 to $6.42 | $6.35 to $6.45 | No change to the midpoint, range narrowed by 6 cents | |||||
Midpoint | $6.40 | $6.40 | ||||||
Key Credit Metrics Targets | As of 10/26/26 | As of 8/3/26 | Key Changes | |||
Net debt and preferred stock to Adjusted EBITDA – fourth quarter of 2026 annualized | 5.6x to 6.2x | 5.6x to 6.2x | No Change | |||
Fixed-charge coverage ratio – fourth quarter of 2026 annualized | 3.4x to 3.9x | 3.6x to 4.1x | 0.2x reduction(2) |
We expect that our principal liquidity needs for the year ending December 31, 2026 will be satisfied by the following multiple sources of capital, as shown in the table below.
There can be no assurance that our sources and uses of capital will not be materially higher or lower than these expectations.
Key Sources and Uses of Capital (In millions) | As of 10/26/26 | Certain Completed Items | As of 8/3/26 Midpoint | ||||||||
Range | Midpoint | ||||||||||
Sources of capital: | |||||||||||
Net cash provided by operating activities, as adjusted | 475 | 575 | 525 | 525 | |||||||
Dispositions and sales of partial interests | 1,100 | 2,700 | 1,900 | (3) | 2,900 | ||||||
Total sources of capital | $1,575 | $3,275 | $2,425 | $3,425 | |||||||
Uses of capital: | |||||||||||
Construction(4) | $1,500 | $2,000 | $1,750 | $1,750 | |||||||
Reduction in unsecured debt | 75 | 1,275 | $675 | See below | $1,675 | ||||||
Total uses of capital | $1,575 | $3,275 | $2,425 | $3,425 | |||||||
Reduction in unsecured debt (included above): | |||||||||||
Repayment of unsecured senior notes payable with 2026 maturities | $650 | $650 | $650 | $650 | 650 | ||||||
Tender offers for partial principal repayments of unsecured senior notes payable | 952 | 952 | 952 | $952 | 952 | ||||||
Issuance of unsecured senior notes payable | (750) | (750) | (750) | $(750) | (750) | ||||||
Issuance of junior subordinated notes payable(3) | (1,000) | (1,000) | (1,000) | $(1,000) | — | ||||||
Unsecured senior line of credit, commercial paper, and other | 223 | 1,423 | 823 | 823 | |||||||
Reduction in unsecured debt | $75 | $1,275 | $675 | $1,675 | |||||||
(1)Refer to “Funds from operations and funds from operations, as adjusted, attributable to Alexandria Real Estate Equities, Inc.’s common stockholders” under “Definitions and reconciliations” in Item 2 for additional details.
(2)Reduction primarily reflects the $1.00 billion issuance of 7.250% Series A fixed-to-fixed reset rate junior subordinated notes due 2057, as further discussed in footnote 3 below.
(3)In August 2026, we issued $1.00 billion of 7.250% Series A fixed-to-fixed reset rate junior subordinated notes due 2057, allowing us to reduce the midpoint of our 2026 dispositions and sales of partial interests guidance by $1.0
billion. The proceeds from this issuance support our capital structure and deleveraging objectives, and the notes receive 50% equity treatment from key rating agencies for the computation of key credit metrics. We do not
anticipate the issuance of any common equity during 2026. As of October 26, 2026, completed dispositions and sales of partial interests aggregated $716.8 million, our share of pending dispositions and sales of partial interests
subject to non-refundable deposits aggregated $355.4 million and signed letters of intent and/or purchase and sale agreement late-stage negotiations aggregated $1.55 billion. These transactions aggregate approximately $2.62
billion, exceeding the $1.90 billion midpoint of our 2026 guidance and potentially providing advanced funding of our 2027 capital needs, whereby certain dispositions and sales of partial interests may be completed in 2026 with
proceeds deferred or available to be drawn in 2027, subject to timing and market conditions.
(4)We continue to apply a disciplined approach to reduce construction spending for 2027 and seek to prioritize leased projects with high incremental returns. We expect 2027 construction spending to primarily focus on: (i) revenue-
and non-revenue-enhancing capital expenditures, which are expected to represent the majority of spend, approximately half of which is associated with space that is already leased or under lease negotiations, in order to
support the leasing of vacant space and renewals and re-leasing of space at our operating properties and (ii) construction spending required to complete our development and redevelopment projects that are expected to
stabilize through 2028 and are 77% leased/negotiating.
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The key assumptions behind the sources and uses of capital in the table on the previous page include favorable real estate transaction and capital market environments,
performance of our core operating properties, lease-up and delivery of current and future development and redevelopment projects, and leasing activity. Our expected sources and
uses of capital are subject to a number of variables and uncertainties, including those discussed as “Forward-looking statements” under Part I, “Item 1A. Risk factors”; and Part II,
“Item 7. Management’s discussion and analysis of financial condition and results of operations” in our annual report on Form 10-K for the year ended December 31, 2025; as well as
under “Trends that may affect our future results” in Part I, “Item 2. Management’s discussion and analysis of financial condition and results of operations” of this quarterly report on
Form 10-Q. To the extent our full-year earnings guidance is updated during the year, we will provide additional disclosure supporting reasons for any significant changes to such
guidance.
Key Assumptions (Dollars in millions) | As of 10/26/26 | As of 8/3/26 | Key Changes to Midpoint | |||||||
Low | High | Low | High | |||||||
Occupancy of operating properties as of December 31, 2026 | 86.2% | 87.8% | 86.2% | 87.8% | No Change | |||||
Same property performance: | ||||||||||
Net operating income changes | (10.5)% | (8.5)% | (10.5)% | (8.5)% | ||||||
Net operating income changes (cash basis) | (10.5)% | (8.5)% | (10.5)% | (8.5)% | ||||||
Lease renewals and re-leasing of space: | ||||||||||
Rental rate changes | (9.0)% | (1.0)% | (9.0)% | (1.0)% | ||||||
Rental rate changes (cash basis) | (15.0)% | (7.0)% | (15.0)% | (7.0)% | ||||||
Straight-line rent revenue | $40 | $70 | $45 | $75 | $5 million reduction(1) | |||||
General and administrative expenses | $134 | $154 | $134 | $154 | No Change | |||||
Capitalization of interest | $220 | $260 | $220 | $260 | ||||||
Interest expense | $260 | $300 | $260 | $300 | No Change(2) | |||||
Realized gains on non-real estate investments(3) | $50 | $80 | $60 | $90 | $10 million reduction(3) | |||||
(1)Reduction driven primarily by write-offs and reserves of deferred rent related to tenant wind-downs. Our 2026 guidance assumes a $30 million to $35 million reduction in funds from operations related to potential tenant wind-
downs, of which approximately $30 million was recognized during the nine months ended September 30, 2026, including approximately $16 million recognized during the three months ended September 30, 2026.
(2)We expect 2026 interest expense to be near the high-end of the range, reflecting, in part, interest expense associated with the $1.0 billion issuance of junior subordinated notes in August 2026.
(3)Represents realized gains and losses included in funds from operations per share – diluted, as adjusted. Excludes unrealized gains and losses and significant gains and impairments realized on non-real estate investments, if
any. The midpoint of our revised guidance range for 2026 realized gains on non-real estate investments was reduced by $10 million, primarily due to certain transactions previously expected to close in 2026 that are now
expected to close in 2027. Refer to “Investments” in Item 2 for additional details.
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Summary of key items that may impact 2026 and 2027 results
1)Potential tenant wind-downs
•Our 2026 guidance includes a $30 million to $35 million reduction in funds from operations for potential tenant wind-downs, of which approximately $30 million was recognized
during the nine months ended September 30, 2026, including approximately $16 million recognized during the three months ended September 30, 2026.
•Based upon current market conditions, we preliminarily estimate at least a similar level of reduction in funds from operations may be necessary in 2027.
•Depending on the timing and magnitude of the specific tenant wind-downs, we anticipate that 2027 occupancy may also be negatively impacted.
2)Development-related other income
•During the nine months ended September 30, 2026, we recognized development fees and other related revenues of approximately $8.0 million, or $11 million annualized, most
of which are expected to cease by the end of 2026 as we complete the respective projects.
3)Development and redevelopment projects under business and financial strategy evaluation
•We have three redevelopment projects for which the business and financial strategies continue to be evaluated, including whether to continue construction of laboratory
improvements, pause construction, pursue lower-investment construction alternatives (including a pivot to advanced technology use), or pursue a disposition. Refer to “New
Class A/A+ development and redevelopment properties: under construction” in Item 2 for additional details.
•If we elect to continue to pursue construction of laboratory improvements for these projects, the earliest deliveries of these projects are in 2028.
•If we elect to pursue lower-investment construction alternatives (including a pivot to advanced technology use), we expect these projects would have lower rental rates and
stabilized yields compared to our initial underwriting. The incremental capital required for alternative-use construction and corresponding rental rates earned are generally
lower than those associated with laboratory improvements.
•During the three months ended September 30, 2026, we have executed leases for 66,859 RSF and have additional leases under negotiation for 100,684 RSF for advanced
technology use at our project at 311 Arsenal Street in The Arsenal on the Charles Megacampus. This activity enables us to pivot the redevelopment project to a lower-cost
alternative use at lower rental rates and stabilized yields than our initial underwriting. Therefore, we placed this project, aggregating 339,020 RSF, into operation during the
three months ended September 30, 2026 and included it in our operating occupancy as of September 30, 2026. Refer to “Leasing activity” in Item 2 for additional details.
•In addition, we entered into a purchase and sale agreement with an institutional user for the sale of our development project at 421 Park Drive on the Alexandria Center® for
Life Science – Fenway Megacampus aggregating 339,668 RSF. The disposition is expected to close during the three months ended December 31, 2026, resulting in
significant sales proceeds and reducing future construction spending by approximately $136 million.
4)Capitalization of interest
•Our average real estate basis capitalized during the three months ended September 30, 2026 was $5.87 billion. As of September 30, 2026, real estate basis that continued to
qualify for capitalization declined to $4.46 billion, primarily driven by the cessation of capitalization on our projects at 421 Park Drive on the Alexandria Center® for Life Science –
Fenway Megacampus and Alexandria Stanford Life Science District, both of which were classified as held for sale as of September 30, 2026, as well as a delivered project at
Alexandria Center® for Life Science – Waltham Megacampus during the three months ended September 30, 2026. During the three months ended December 31, 2026, we
expect average real estate basis capitalized to range from $3.4 billion to $4.9 billion . Refer to “Capitalization of interest” in Item 2 for additional details.
•At each milestone date, we evaluate, on an asset-by-asset basis, whether to (i) proceed with additional pre-construction and/or construction activities based on leasing demand
and/or market conditions, (ii) pause future investments, or (iii) consider potential dispositions or sales of partial interests of these real estate assets. If we cease the activities
necessary to prepare a project for its intended use, costs related to such project, including interest, payroll, property taxes, insurance, and other costs directly related and
essential to the construction of Class A/A+ properties, are expensed as incurred. During the three months ended September 30, 2026, annualized capitalized operating
expenses represented approximately 2% of the total average real estate basis subject to capitalization.
5)2027 Key lease expirations
2027 Key Lease Expirations | ||||||
RSF | Annual Rental Revenue | Weighted-Average Expiration Date | Weighted-Average Downtime | |||
1,377,960 | $100.5 million | March 2027 | 9 to 24 months | |||
•We estimate 1.4 million RSF of leases expiring in 2027, with approximately $100.5 million of annual
rental revenue, will have downtime after lease expiration. These 2027 expirations have a weighted-
average contractual lease expiration date in March 2027 and an expected weighted-average downtime
ranging from 9 to 24 months. Refer to “Contractual lease expirations” in Item 2 for additional details.
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Summary of key items that may impact 2027 and 2028 results
The following key considerations for 2027 and 2028 reflect our preliminary expectations based on current market conditions. These expectations could change materially and
are subject to a variety of factors, including industry, governmental, geopolitical, and macroeconomic conditions, including changes in interest rates, as well as other factors described in
our SEC filings, including our most recent annual report on Form 10-K and any subsequent quarterly reports on Form 10-Q.
1)Operating occupancy
•For the year ending December 31, 2027, we expect average operating occupancy to temporarily decline relative to our projected operating occupancy as of December 31, 2026,
primarily due to expected downtime associated with the 1.4 million RSF 2027 key lease expirations disclosed in “Contractual lease expirations” in Item 2, as well as the potential
for tenant wind-downs.
•For the year ending December 31, 2028, we expect average operating occupancy to improve relative to projected average operating occupancy for the year ending December
31, 2027, driven by the lease-up of temporary vacancy partially offset by approximately 718 thousand RSF of 2028 key lease expirations with expected downtime as disclosed in
“Contractual lease expirations” in Item 2.
2)Same property performance
•For the year ending December 31, 2027, we expect same property net operating income performance to improve compared with the midpoint of our guidance range for 2026 but
remain negative, primarily due to the expected temporary year-over-year decline in average operating occupancy, including the impact of expected downtime associated with 1.4
million RSF of 2027 key lease expirations.
•For the year ending December 31, 2028, we expect same property net operating income performance to improve compared with 2027, primarily driven by operating occupancy
growth and the lease-up of vacant space, subject to leasing and market conditions.
3)Construction Spending
•For 2027, we continue to apply a disciplined approach to reduce construction spending and we seek to prioritize leased projects with high incremental returns. We expect 2027
construction spending to primarily focus on (i) revenue- and non-revenue-enhancing capital expenditures, which are expected to represent the majority of spend, approximately
half of which is associated with space that is leased or under lease negotiations, in order to support the leasing of vacant space and renewals and re-leasing of space at our
operating properties and (ii) construction spending required to complete our development and redevelopment projects that are expected to stabilize through 2028 and are 77%
leased/negotiating as of October 26, 2026.
•For 2028, we expect a further decline in construction spending relative to 2027, primarily driven by lower development and redevelopment spending. Construction spending on
revenue- and non-revenue-enhancing capital expenditures related to our operating portfolio is expected to continue to support the lease-up of temporary vacancy, subject to
leasing and market conditions.
4)Transactional and other capital sources
•For 2027, capital will be required to fund construction spending as we continue to prudently manage our key credit metrics, including net debt and preferred stock to Adjusted
EBITDA ratio. In general, we expect to rely on asset recycling transactions and other sources of cost-effective capital to support the achievement of our 2027 key credit metric
ratios targets, including net debt and preferred stock to Adjusted EBITDA.
•For 2028, if we have growth in Adjusted EBITDA, we may use incremental long-term debt to fund a portion of our capital needs on a leverage neutral basis. In addition, we may
use asset recycling and other sources of cost-effective capital to support the achievement of our 2028 key credit metric ratio targets, including net debt and preferred stock to
Adjusted EBITDA.
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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 in Item 1 for further discussion.
Consolidated Real Estate Joint Ventures | ||||||||
Property/Market/Submarket | Noncontrolling 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% | 870,641 | ||||||
15 Necco Street/Greater Boston/Seaport Innovation District | 43.3% | 345,996 | ||||||
3215 Merryfield Row/San Diego/Torrey Pines | 70.0% | 170,523 | ||||||
Campus Point by Alexandria/San Diego/University Town Center(1)(2) | 40.7% | (3) | 1,586,697 | |||||
5200 Illumina Way/San Diego/University Town Center | 49.0% | 792,687 | ||||||
9625 Towne Centre Drive/San Diego/University Town Center | 70.0% | 171,001 | ||||||
SD Tech by Alexandria/San Diego/Sorrento Mesa(1)(4) | 50.0% | 1,051,752 | ||||||
Summers Ridge Science Park/San Diego/Sorrento Mesa(5) | 70.0% | 316,531 | ||||||
Alexandria Center® for Science and Technology – Mission Bay/San Francisco Bay Area/ Mission Bay(6) | 75.0% | 551,845 | ||||||
211 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 | 51.4% | 285,346 | ||||||
1201 and 1208 Eastlake Avenue East/Seattle/Lake Union | 70.0% | 206,134 | ||||||
400 Dexter Avenue North/Seattle/Lake Union | 70.0% | 291,355 | ||||||
800 Mercer Street/Seattle/Lake Union(1) | 40.0% | — | ||||||
Unconsolidated Real Estate Joint Ventures | ||||||||
Property/Market/Submarket | Our Ownership Share | Operating RSF at 100% | ||||||
1655 and 1725 Third Street/San Francisco Bay Area/Mission Bay | 10.0% | 586,208 | ||||||
101 West Dickman Street/Maryland/Beltsville | 58.4% | (7) | 135,958 | |||||
Refer to “Joint venture financial information” under “Definitions and reconciliations” in Item 2 for additional information.
(1)Includes properties currently under construction or in our future development and redevelopment pipeline. Refer to “New Class A/A+ development and redevelopment
properties” in Item 2 for additional details.
(2)Includes 10200, 10290, and 10300 Campus Point Drive and 4135, 4155, 4165, 4224, and 4242 Campus Point Court.
(3)In October 2026, we completed a partial sale of our interest in this joint venture for $475.0 million which reduced our interest to approximately 30%. We expect to fund
the majority of future construction costs at the Megacampus, which is expected to reduce the ownership interests of our new joint venture partner and existing joint
venture partner over time to below 20.0% and 30.0%, respectively, and increase our ownership interest to over 50.0%. Refer to Note 4 – “Consolidated and
unconsolidated real estate joint ventures” to our unaudited consolidated financial statements in Item 1 for additional details.
(4)Includes 9605, 9645, 9675, 9725, 9735, 9805, 9808, 9855, and 9868 Scranton Road and 10055, 10065, and 10075 Barnes Canyon Road.
(5)Includes 9965, 9975, 9985, and 9995 Summers Ridge Road.
(6)Includes 1450, 1500, and 1700 Owens Street and 455 Mission Bay Boulevard South.
(7)Represents a joint venture with a local real estate operator in which our joint venture partner manages the day-to-day activities that significantly affect the economic
performance of the joint venture.
100
The following table presents key terms related to our unconsolidated real estate joint ventures’ secured loans as of
September 30, 2026 (dollars in thousands):
As of September 30, 2026 | ||||||||||||||
Maturity Date | Stated Rate | Interest Rate(1) | At 100% | Our Share | ||||||||||
Unconsolidated Joint Venture | Aggregate Commitment | Debt Balance(2) | ||||||||||||
101 West Dickman Street | 10/29/26 | (3) | SOFR+1.95% | (4) | 5.91% | $26,750 | $19,354 | 58.4% | ||||||
1655 and 1725 Third Street | 2/10/35 | 6.37% | 6.44% | 500,000 | 497,138 | 10.0% | ||||||||
$526,750 | $516,492 | |||||||||||||
(1)Includes interest expense and amortization of loan fees.
(2)Represents outstanding principal, net of unamortized deferred financing costs, as of September 30, 2026.
(3)In October 2026, the unconsolidated real estate joint venture refinanced this debt with a new $22.5 million secured note payable bearing interest at SOFR+1.85% and
maturing in October 2030. As of September 30, 2026, our investment in this unconsolidated real estate joint venture was $9.9 million.
(4)This loan is subject to a SOFR floor 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 and nine months ended September 30, 2026 (in thousands):
Noncontrolling Interest Share of Consolidated Real Estate Joint Ventures | Our Share of Unconsolidated Real Estate Joint Ventures | |||||||
September 30, 2026 | September 30, 2026 | |||||||
Three Months Ended | Nine Months Ended | Three Months Ended | Nine Months Ended | |||||
Total revenues | $105,561 | $301,634 | $2,885 | $8,895 | ||||
Rental operations | (33,927) | (97,557) | (940) | (3,092) | ||||
71,634 | 204,077 | 1,945 | 5,803 | |||||
General and administrative | (593) | (1,876) | (23) | (47) | ||||
Interest | (20) | (190) | (989) | (2,990) | ||||
Depreciation and amortization of real estate assets | (32,458) | (93,449) | (858) | (2,577) | ||||
Gain on sale of interest in unconsolidated JV | — | — | — | 152 | ||||
Fixed returns allocated to redeemable noncontrolling interest(1) | 191 | 730 | — | — | ||||
$38,754 | $109,292 | $75 | $341 | |||||
Straight-line rent and below-market lease revenue | $4,909 | $9,034 | $216 | $550 | ||||
Funds from operations(2) | $71,212 | $202,741 | $933 | $2,918 | ||||
Refer to “Joint venture financial information” under “Definitions and reconciliations” in Item 2 for additional details.
(1)Represents an allocation of joint venture earnings to redeemable noncontrolling interest for a property in the San Francisco Bay Area market. This redeemable
noncontrolling interest earns a fixed return on its investment rather than participating in the operating results of the property.
(2)Refer to “Funds from operations and funds from operations, as adjusted, attributable to Alexandria Real Estate Equities, Inc.’s common stockholders” under “Definitions
and reconciliations” in Item 2 for the definition and its reconciliation from the most directly comparable financial measure presented in accordance with GAAP.
As of September 30, 2026 | |||
Noncontrolling Interest Share of Consolidated Real Estate Joint Ventures | Our Share of Unconsolidated Real Estate Joint Ventures | ||
Investments in real estate | $3,363,861 | $85,927 | |
Cash, cash equivalents, and restricted cash | 136,379 | 2,514 | |
Other assets | 403,837 | 10,486 | |
Secured notes payable | — | (61,016) | |
Other liabilities | (292,967) | (9,331) | |
Redeemable noncontrolling interests | (9,119) | — | |
$3,601,991 | $28,580 | ||
During the nine months ended September 30, 2026 and 2025, our consolidated real estate joint ventures distributed an
aggregate of $171.2 million and $186.8 million, respectively, to our joint venture partners. Refer to our consolidated statements of cash
flows and Note 4 – “Consolidated and unconsolidated real estate joint ventures” to our unaudited consolidated financial statements in
Item 1 for additional information.
101
Investments
We hold investments in publicly traded companies and privately held entities primarily involved in the life science industry. The
tables below summarize components of our investment income (losses) and non-real estate investments (in thousands). Refer to Note
7 – “Investments” to our unaudited consolidated financial statements in Item 1 for additional information.
September 30, 2026 | September 30, 2025 | |||||||||||
Three Months Ended | Nine Months Ended | Three Months Ended | Nine Months Ended | |||||||||
Realized gains: | ||||||||||||
Realized gains | $16,007 | $44,497 | $34,785 | $94,650 | ||||||||
Impairment of non-real estate investments | (13,580) | (1) | (35,026) | (25,139) | (75,535) | |||||||
2,427 | 9,471 | 9,646 | 19,115 | |||||||||
Unrealized gains (losses) | 21,563 | (2) | 143,164 | (2) | 18,515 | (3) | (71,568) | (4) | ||||
Investment income (losses) | $23,990 | $152,635 | $28,161 | $(52,453) | ||||||||
September 30, 2026 | December 31, 2025 | |||||||||
Investments | Cost | Unrealized Gains | Unrealized Losses | Carrying Amount | Carrying Amount | |||||
Publicly traded companies | $105,921 | $56,294 | $(24,638) | $137,577 | $94,928 | |||||
Entities that report NAV | 507,978 | 215,565 | (43,100) | 680,443 | 512,376 | |||||
Entities that do not report NAV: | ||||||||||
Entities with observable price changes | 77,062 | 50,568 | (10,785) | 116,845 | 123,238 | |||||
Entities without observable price changes | 406,415 | — | — | 406,415 | 413,324 | |||||
Investments accounted for under the equity method | N/A | N/A | N/A | 394,393 | 357,383 | |||||
September 30, 2026 | $1,097,376 | (5) | $322,427 | $(78,523) | $1,735,673 | $1,501,249 | ||||
December 31, 2025 | $1,010,488 | $184,434 | $(51,056) | $1,501,249 | ||||||
Public/Private Mix (Cost) | Tenant/Non-Tenant Mix (Cost) | |
7%
Public
18%
Tenant
93%
Private
82%
Non-Tenant
(1)Primarily relates to one non-real estate investment in a privately held entity that does not report NAV.
(2)Primarily relates to the increase in the fair value of our investments in privately held entities that report NAV during the three and nine months ended September 30,
2026.
(3)Primarily relates to the increase in fair values of our investments in publicly traded entities and investments in privately held entities that report NAV during the three
months ended September 30, 2025.
(4)Primarily relates to the accounting reclassifications of unrealized gains in prior periods into realized gains upon our realization of investments in publicly traded entities
and privately held entities that report NAV during the nine months ended September 30, 2025.
(5)Represents 2.7% of gross assets as of September 30, 2026. Refer to “Gross assets” under “Definitions and reconciliations” in Item 2 for additional details.
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Liquidity
Liquidity | Limited Outstanding Borrowings and Significant Availability on Unsecured Senior Line of Credit | ||||
$4.6B | (in millions) | ||||
(In millions) | |||||
Availability under our unsecured senior line of credit, net of amounts outstanding under our commercial paper program | $3,908 | ||||
Cash, cash equivalents, and restricted cash | 514 | ||||
Investments in publicly traded companies | 138 | ||||
Liquidity as of September 30, 2026 | $4,560 | ||||
Net Debt and Preferred Stock to Adjusted EBITDA(1) | Fixed Charge Coverage Ratio(1) | ||||
$5,000
$5,000
$5,000
$1,091
$353
<$350
Remaining amounts available for borrowing under our unsecured senior line of credit | Outstanding balance under our unsecured senior line of credit and/or commercial paper program | ||
6.9x
6.6x(2)
5.6x to 6.2x
5.7x
Mid-5x Range
3.4x to 3.9x
3.7x
3.2x
(1)Quarter annualized.
(2)The pro forma amount reflects the October 23, 2026 sale of our partial interest in the Campus Point by Alexandria joint venture for $475.0 million. Refer to Note 4 –
“Consolidated and unconsolidated real estate joint ventures” to our unaudited consolidated financial statements in Item 1 for additional details.
We expect to meet certain long-term liquidity requirements, such as requirements for development, redevelopment, other
construction projects, capital improvements, tenant improvements, property acquisitions, equity repurchases, leasing costs, revenue-
and non-revenue-enhancing capital expenditures, scheduled debt maturities, distributions to noncontrolling interests, and payment of
dividends through net cash provided by operating activities, as adjusted, periodic asset dispositions, 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, as adjusted. We believe that the net cash provided
by operating activities, as adjusted, 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 in Item 1.
103
Over the next several years, our balance sheet, capital structure, and liquidity objectives are as follows:
•Retain net cash provided by operating activities, as adjusted, for investment in development and redevelopment projects
and/or acquisitions;
•Maintain significant balance sheet liquidity;
•Maintain a strong credit profile and relative long-term cost of capital;
•Maintain diverse sources of capital, including sources from net cash provided by operating activities, as adjusted,
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;
•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,
as adjusted;
•Manage a disciplined level of development and redevelopment projects as a percentage of our gross real estate assets;
and
•Maintain high levels of pre-leasing and percentage leased in development and redevelopment projects.
The following table presents the availability under our unsecured senior line of credit, net of amounts outstanding under our
commercial paper program; cash, cash equivalents, and restricted cash; and investments in publicly traded companies as of
September 30, 2026 (in thousands):
Description | Stated Rate | Aggregate Commitments | Outstanding Balance | Remaining Commitments/ Liquidity | ||||
Availability under our unsecured senior line of credit, net of amounts outstanding under our commercial paper program | SOFR+0.725% | $5,000,000 | $1,092,450 | $3,907,550 | ||||
Cash, cash equivalents, and restricted cash | 513,763 | |||||||
Investments in publicly traded companies | 137,577 | |||||||
Liquidity as of September 30, 2026 | $4,558,890 |
Cash, cash equivalents, and restricted cash
As of September 30, 2026 and December 31, 2025, we had $513.8 million and $553.8 million, respectively, of cash, cash
equivalents, and restricted cash. We expect existing cash, cash equivalents, and restricted cash, net cash provided by operating
activities, as adjusted, 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, 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 and any common stock repurchases.
Cash flows
We report and analyze our cash flows based on operating activities, investing activities, and financing activities. The following
table summarizes changes in our cash flows for the nine months ended September 30, 2026 and 2025 (in thousands):
Nine Months Ended September 30, | |||||
2026 | 2025 | Change | |||
Net cash provided by operating activities | $875,410 | $1,101,668 | $(226,258) | ||
Net cash used in investing activities | $(1,165,939) | $(1,437,538) | $271,599 | ||
Net cash provided by financing activities | $251,067 | $360,850 | $(109,783) | ||
104
Operating activities
Cash flows provided by operating activities are primarily dependent upon the occupancy level of our asset base, the rental
rates of our leases, the collectibility of rent and recovery of operating expenses from our tenants, the timing of completion of
development and redevelopment projects, and the timing of acquisitions and dispositions of operating properties. Net cash provided by
operating activities for the nine months ended September 30, 2026 decreased by $226.3 million, or 20.5%, to $0.88 billion, compared to
$1.10 billion for the nine months ended September 30, 2025, primarily reflecting the impact of real estate dispositions completed since
January 1, 2025 and the reduction in occupancy from 94.6% as of December 31, 2024 to 87.1% as of September 30, 2026.
Investing activities
Cash used in investing activities for the nine months ended September 30, 2026 and 2025 consisted of the following (in
thousands):
Nine Months Ended September 30, | Change | ||||
2026 | 2025 | ||||
Sources of cash from investing activities: | |||||
Proceeds from sales of real estate | $236,286 | $227,105 | $9,181 | ||
Sale of interests in unconsolidated real estate joint ventures | 1,917 | — | 1,917 | ||
Sales of and distributions from non-real estate investments | 123,660 | 77,067 | 46,593 | ||
Return of capital from unconsolidated real estate joint ventures | 113 | 458 | (345) | ||
361,976 | 304,630 | 57,346 | |||
Uses of cash for investing activities: | |||||
Additions to real estate | 1,328,092 | 1,538,613 | (210,521) | ||
Investments in unconsolidated real estate joint ventures | 557 | 11,239 | (10,682) | ||
Change in escrow deposits | — | 7,364 | (7,364) | ||
Additions to non-real estate investments | 199,266 | 184,952 | 14,314 | ||
1,527,915 | 1,742,168 | (214,253) | |||
Net cash used in investing activities | $1,165,939 | $1,437,538 | $(271,599) | ||
The change in net cash used in investing activities for the nine months ended September 30, 2026, compared to the nine
months ended September 30, 2025, was primarily due to a decrease in cash used for additions to real estate, and an increased source
of cash from sales of and distributions from non-real estate investments.
105
Financing activities
Cash flows provided by financing activities for the nine months ended September 30, 2026 and 2025 consisted of the following
(in thousands):
Nine Months Ended September 30, | |||||
2026 | 2025 | Change | |||
Borrowings under secured notes payable | $— | $4,031 | $(4,031) | ||
Repayments of borrowings under secured notes payable | (8,892) | (154,212) | 145,320 | ||
Proceeds from issuance of unsecured senior notes payable | 747,592 | 548,532 | 199,060 | ||
Repayments of unsecured senior notes payable | (1,602,203) | (600,000) | (1,002,203) | ||
Proceeds from issuance of junior subordinated notes payable | 1,000,000 | — | 1,000,000 | ||
Proceeds from issuances under commercial paper program | 38,494,264 | 15,378,015 | 23,116,249 | ||
Repayments of borrowings under commercial paper program | (37,755,314) | (13,828,015) | (23,927,299) | ||
Payments of loan fees | (57,893) | (5,307) | (52,586) | ||
Changes related to debt | 817,554 | 1,343,044 | (525,490) | ||
Contributions from and sales of noncontrolling interests | 36,604 | 132,162 | (95,558) | ||
Distributions to noncontrolling interests | (171,248) | (186,725) | 15,477 | ||
Purchases and redemptions of noncontrolling interests | (49,822) | (17,818) | (32,004) | ||
Repurchase of common stock | — | (208,187) | 208,187 | ||
Dividends on common stock | (371,427) | (684,419) | 312,992 | ||
Taxes paid related to net settlement of equity awards | (10,594) | (17,207) | 6,613 | ||
Net cash provided by financing activities | $251,067 | $360,850 | $(109,783) | ||
106
Sources of capital
Net cash provided by operating activities, as adjusted
We expect to retain $475 million to $575 million of net cash provided by operating activities, as adjusted, for the year ending
December 31, 2026. Refer to “Net cash provided by operating activities, as adjusted” under “Definitions and reconciliations” in Item 2 for
the definition and reconciliation from the most directly comparable financial measure presented in accordance with GAAP. For the year
ending December 31, 2026, we expect our recently delivered projects, our development and redevelopment projects expected to be
delivered, and contributions from Same Properties to contribute to income from rentals, net operating income, and cash flows. We
anticipate contractual near-term growth in annual net operating income (cash basis) of $67 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, which has a weighted-
average remaining period of approximately four months. Refer to “Cash flows” in Item 2 for a discussion of cash flows provided by
operating activities for the nine months ended September 30, 2026.
Debt
We expect to fund a portion of our capital needs for 2026 and beyond from issuances under our commercial paper program,
issuances of unsecured senior notes payable, junior subordinated notes, and/or borrowings under our unsecured senior line of credit,
and/or borrowings under secured construction loans.
In September 2026, we amended and restated our $5.0 billion unsecured senior line of credit which, among other changes,
extended the maturity date from January 22, 2030 to January 22, 2032, including extension options that we control. The amendment
also reduced the applicable borrowing rate to SOFR plus 0.725% from SOFR plus 0.835% and eliminated the existing sustainability-
linked pricing adjustments. The facility fee was revised to 0.15% from 0.14%. In connection with the amendment, we recognized a loss
on early extinguishment of debt of approximately $3.3 million for the partial write-off of unamortized loan fees.
As of September 30, 2026, we had no outstanding balance on our unsecured senior line of credit.
Our commercial paper program provides us with the ability to issue up to $2.50 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 back-stopped 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 nine months ended
September 30, 2026 were issued at a weighted-average yield to maturity of 4.19%. As of September 30, 2026, we had $1.09 billion of
commercial paper notes outstanding.
In January 2026 and April 2026, we repaid, upon maturity, $300.0 million of 4.30% unsecured senior notes payable and
$350.0 million of 3.80% unsecured senior notes payable, respectively. These repayments were funded temporarily with borrowings
under our commercial paper program, which will be repaid through planned dispositions and sales of partial interests included in our
2026 guidance. No gain or loss was incurred in connection with these repayments.
In February 2026, we completed tender offers to repurchase an aggregate debt principal amount of $1.33 billion across a
portion of our outstanding 4.00% Senior Notes due 2050, 3.00% Senior Notes due 2051, and 3.55% Senior Notes due 2052. Cash
consideration paid was $952.2 million. The repurchase was primarily funded through the issuance of $750.0 million of 5.25% unsecured
senior notes due 2036, and approximately $200 million of short-term borrowings under our commercial paper program, which we expect
to repay through planned 2026 dispositions and sales of partial interests. In connection with the debt repurchase, we recognized a gain
on early extinguishment of debt aggregating $366.4 million, including the write-off of unamortized debt issuance costs and other
transaction-related costs.
107
In August 2026, we completed a public offering of $1.00 billion aggregate principal amount of 7.250% Series A fixed-to-fixed
reset rate junior subordinated notes due 2057. The notes will initially bear interest at 7.250% per year through, but excluding,
February 15, 2032. Thereafter, the interest rate will reset every five years to the five-year U.S. Treasury rate plus 2.889%, subject to a
minimum interest rate of 7.250%. We may elect to defer interest payments for up to five consecutive years, subject to the terms of the
notes, including certain restrictions on paying dividends and repurchasing equity. The notes may be redeemed at our option in whole or
in part at 100% of principal plus accrued and unpaid interest during the period beginning November 17, 2031 and ending on
February 15, 2032, and thereafter on any interest payment date. The notes may also be redeemed in whole, but not in part, at 100% of
principal plus accrued and unpaid interest upon certain tax events and at 102% of principal plus accrued and unpaid interest upon
certain rating agency events.
The following table presents our average debt outstanding and weighted-average interest rates during the three and nine
months ended September 30, 2026 (dollars in thousands):
Average Debt Outstanding | Weighted-Average Interest Rate | ||||||||
September 30, 2026 | September 30, 2026 | ||||||||
Three Months Ended | Nine Months Ended | Three Months Ended | Nine Months Ended | ||||||
Long-term fixed-rate debt | $11,341,163 | $11,239,142 | 4.15% | 4.04% | |||||
Short-term variable-rate unsecured senior line of credit and commercial paper program debt | 1,915,075 | 1,945,860 | 4.21 | 4.18 | |||||
Blended average interest rate | 13,256,238 | 13,185,002 | 4.16 | 4.06 | |||||
Loan fee amortization and annual facility fee related to unsecured senior line of credit | N/A | N/A | 0.13 | 0.13 | |||||
Total/weighted average | $13,256,238 | $13,185,002 | 4.29% | 4.19% | |||||
Real estate dispositions and sales of partial interests
We expect to continue to focus on the disciplined execution of real estate dispositions and sales of partial interests, which will
provide an important source of capital to fund our development and redevelopment projects and potential opportunistic share
repurchases, and to reduce debt. For the year ending December 31, 2026, we expect real estate dispositions and sales of partial
interests to range from $1.10 billion to $2.70 billion. The amount of asset sales necessary to meet our forecasted sources of capital will
vary depending upon the amount of EBITDA associated with the assets sold. Refer to Note 3 – “Investments in real estate” and Note 4
– “Consolidated and unconsolidated real estate joint ventures,” and Note 14 – “Stockholders’ equity” to our unaudited consolidated
financial statements in Item 1 and to “Dispositions and sales of partial interests” in Item 2 for additional information.
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” in our
annual report on Form 10-K for the year ended December 31, 2025 for additional information about the “prohibited transaction” tax.
Common equity transactions
During the three and nine months ended September 30, 2026, we did not issue any common stock under our ATM program.
As of September 30, 2026, the remaining aggregate amount available under our ATM program for future sales of common stock was
$1.47 billion.
Other sources
As a well-known seasoned issuer, we may, from time to time, issue securities, including preferred stock, subordinated debt,
convertible securities, and other forms of hybrid securities, at our discretion based on our needs and market conditions, including, as
necessary, to balance our use of incremental debt capital and our leverage profile.
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 spending,
and our joint venture partners may also contribute equity into these entities for financing-related activities. From October 1, 2026
through December 31, 2027 and beyond, we expect to receive capital contributions aggregating $105.0 million from existing
consolidated real estate joint venture partners to fund construction. During the year ending December 31, 2026, contributions from
noncontrolling interests from existing joint venture partners are expected to aggregate to approximately $100.0 million at the midpoint of
our guidance range for 2026 construction spending.
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Uses of capital
Construction spending
One of our primary uses of capital relates to the development, redevelopment, pre-construction, and construction of properties.
We currently have projects in our development and redevelopment pipeline aggregating 1.9 million RSF of Class A/A+ properties
undergoing construction. 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/A+ development and redevelopment
properties: under construction” and “Construction spending” in Item 2 for additional 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, classified in investments in real estate in our consolidated balance sheets, aggregated $206.6 million for the nine months
ended September 30, 2026, a decrease from $248.6 million capitalized during the nine months ended September 30, 2025. This
reflects a lower weighted-average capitalized cost basis of $6.58 billion for the nine months ended September 30, 2026, as compared
to $8.18 billion for the nine months ended September 30, 2025.
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 $55.4 million and $69.6 million, and property taxes, insurance
on real estate, and indirect project costs aggregating $98.4 million and $111.7 million during the nine months ended
September 30, 2026 and 2025, respectively.
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, a 10% reduction in development, redevelopment, and construction activities without a
corresponding decrease in indirect project costs, including interest and payroll, would have resulted in an increase in total expenses of
approximately $36.0 million for the nine months ended September 30, 2026.
We use third-party brokers to assist in our leasing activity, who are paid on a contingent basis upon successful leasing. We are
required to capitalize initial direct costs related to successful leasing transactions that result directly from and are essential to the lease
transaction and would not have been incurred had that lease transaction not been successfully executed. During the nine months
ended September 30, 2026, we capitalized total initial direct leasing costs of $61.5 million. Costs that we incur to negotiate or arrange a
lease regardless of its outcome, such as fixed employee compensation, tax, or legal advice to negotiate lease terms, and other costs,
are expensed as incurred.
Dividends
During the nine months ended September 30, 2026 and 2025, we paid common stock dividends of $371.4 million and
$684.4 million, respectively. The decrease of $313.0 million in dividends paid on our common stock for the nine months ended
September 30, 2026, compared to the nine months ended September 30, 2025, was primarily due to a decrease in the related
dividends to $2.16 per common share paid for the nine months ended September 30, 2026 from $3.96 per common share paid during
the nine months ended September 30, 2025.
We have historically funded the payment of our common stock dividends using net cash provided by operating activities. We
expect to continue funding future quarterly common stock dividends from net cash provided by operating activities, which may be
supplemented by proceeds from periodic asset dispositions, issuances of additional debt and/or equity securities, and borrowings under
our unsecured senior line of credit and/or our commercial paper program. Future dividends are at the discretion of our Board and
subject to various considerations, including net income, cash flows, capital requirements, debt covenants, market conditions, dividend
yield, taxable income, payout ratios, and other factors. Accordingly, there can be no assurance that dividends will be maintained at the
current level, or that they will be increased or decreased in the future.
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Unsecured senior notes payable and unsecured senior line of credit
The requirements of, and our actual performance with respect to, the key financial covenants under our unsecured senior
notes payable as of September 30, 2026 were as follows:
Covenant Ratios(1) | Requirement | September 30, 2026 | ||
Total Debt to Total Assets | Less than or equal to 60% | 33% | ||
Secured Debt to Total Assets | Less than or equal to 40% | —% | ||
Consolidated EBITDA(2) to Interest Expense | Greater than or equal to 1.5x | 5.6x | ||
Unencumbered Total Asset Value to Unsecured Debt | Greater than or equal to 150% | 295% |
(1)All covenant ratio titles utilize terms as defined in the respective debt agreements.
(2)The calculation of consolidated EBITDA is based on the definitions contained in our loan agreements and is not directly comparable to the computation of EBITDA as
described in Exchange Act Release No. 47226.
In addition, the terms of the indentures, among other things, limit the ability of the Company, Alexandria Real Estate Equities,
L.P., and the Company’s subsidiaries to (i) consummate a merger, or consolidate, or sell all or substantially all of the Company’s assets
and (ii) incur certain secured or unsecured indebtedness.
The requirements of, and our actual performance with respect to, the key financial covenants under our unsecured senior line
of credit as of September 30, 2026 were as follows:
Covenant Ratios(1) | Requirement | September 30, 2026 | ||
Leverage Ratio | Less than or equal to 60.0% | 35.5% | ||
Secured Debt Ratio | Less than or equal to 45.0% | —% | ||
Fixed-Charge Coverage Ratio | Greater than or equal to 1.50x | 2.91x | ||
Unsecured Interest Coverage Ratio | Greater than or equal to 1.75x | 5.84x |
(1)All covenant ratio titles utilize terms as defined in the credit agreement.
In managing our liquidity, we also consider the contractual interest payment obligations associated with our outstanding debt.
Interest payments on our fixed-rate debt are determined based on contractual interest rates, including interest payment dates and
scheduled maturity dates. As of September 30, 2026, 91.5% 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 in Item 1.
Ground lease obligations
Ground lease obligations as of September 30, 2026 included leases for 31 of our properties and accounted for approximately
9% of our total number of properties. Among these 31 properties, 17 properties are subject to ground leases with a weighted-average
remaining lease term of 53 years, including extension options that we are reasonably certain to exercise. These leases are with a single
lessor in our Palo Alto submarket with whom we have extended two ground leases over the past 10 years.
Our remaining 14 properties subject to ground leases are located across multiple submarkets and have remaining lease terms
ranging from approximately 44 to 80 years. The weighted-average remaining lease term of these ground leases is 72 years, including
extension options that we are reasonably certain to exercise.
In many cases, we seek to extend our ground leases well ahead of their scheduled contractual expirations. If we are
successful in extending ground leases, we could see significant up-front or increased recurring future payments to the ground lessor
and/or increased ground lease expense, which may require us to increase our capital funding needs.
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Operating lease agreements
As of September 30, 2026, the remaining contractual payments under ground and office lease agreements in which we are the
lessee aggregated $739.1 million and $15.3 million, respectively. As of September 30, 2026, our operating lease liability, calculated as
the present value of the remaining payments aggregating $754.4 million under our operating lease agreements, including our extension
options that we are reasonably certain to exercise, was $354.0 million and was classified in accounts payable, accrued expenses, and
other liabilities in our consolidated balance sheet. As of September 30, 2026, the weighted-average remaining lease term of operating
leases in which we are the lessee was approximately 60 years, including extension options that we are reasonably certain to exercise,
and the weighted-average discount rate was 4.7%. 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 $686.2 million.
We classify the right-of-use asset in other assets in our consolidated balance sheets. Refer to “Lease accounting” in Note 2 –
“Summary of significant accounting policies” to our unaudited consolidated financial statements in Item 1 for additional information.
Commitments
As of September 30, 2026, remaining aggregate costs under contract for the construction of properties undergoing
development, redevelopment, and improvements under the terms of leases approximated $1.0 billion. We expect payments for these
obligations to occur over one to three years, subject to capital planning adjustments from time to time. We may have the ability to cease
the construction of certain projects, which would result in the reduction of our commitments. In addition, we have letters of credit and
performance obligations aggregating $5.3 million.
We are committed to funding approximately $340.6 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 11 years, with a weighted-average expiration of 7.8 years as of September 30, 2026.
Our former joint venture partner in the Greater Boston market has an option, subject to certain conditions, to obtain a $30.0
million secured loan from us. If exercised, the loan would bear interest at SOFR plus 6.5%, subject to a floor of 9.0%, and a term not to
exceed five years. As of September 30, 2026, the option has not been exercised and is set to expire in July 2027.
In connection with the sale of a property in our San Diego market, we entered into a loan agreement with the buyer under
which we committed to provide up to $165.7 million of financing through December 30, 2029. As of September 30, 2026, $36.4 million
of the commitment remained available to be drawn by the borrower.
In October 2026, in connection with the sale of a partial noncontrolling interest in the joint venture that owns substantially all of
Campus Point by Alexandria Megacampus, the new joint venture partner has a put right exercisable beginning on the seventh
anniversary of the transaction. The put right allows the partner to require us to acquire its interest in exchange for shares of our
common stock, subject to a contractual share issuance limit, or, at our election, for cash, or a combination of cash and shares. Refer to
Note 4 – “Consolidated and unconsolidated real estate joint ventures” to our unaudited consolidated financial statements in Item 1 for
additional details.
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.
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Foreign currency translation gains and losses
The following table presents the change in accumulated other comprehensive loss attributable to Alexandria Real Estate
Equities, Inc.’s stockholders during the nine months ended September 30, 2026 primarily due to the changes in the foreign exchange
rates for our real estate investments in Canada (in thousands). We reclassify unrealized foreign currency translation gains and losses
into net income upon the sale or complete or substantially complete liquidation of the related investments.
Total | ||
Balance as of December 31, 2025 | $(29,395) | |
Other comprehensive loss before reclassifications | (4,273) | |
Reclassification adjustment for gain included in net income | (23) | |
Net other comprehensive loss | (4,296) | |
Balance as of September 30, 2026 | $(33,691) |
Inflation
As of September 30, 2026, approximately 91% of our leases (on an annual rental revenue basis) were triple net leases, which
require tenants to pay substantially all real estate taxes, insurance, utilities, repairs and maintenance, common area expenses, and
other operating expenses (including increases thereto) in addition to base rent. Approximately 97% of our leases (on an annual rental
revenue basis) contained effective annual rent escalations approximating 3% that were either fixed 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 issuing new unsecured senior notes
payable and our variable-rate borrowings, including borrowings under our unsecured senior line of credit and commercial paper
program, and secured loans held by our unconsolidated real estate joint ventures.
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Issuer and guarantor subsidiary summarized financial information
Alexandria Real Estate Equities, Inc. (the “Issuer”) has sold certain debt securities registered under the Securities Act of 1933,
as amended, that are fully and unconditionally guaranteed by Alexandria Real Estate Equities, L.P. (the “LP” or the “Guarantor
Subsidiary”), an indirectly 100% owned subsidiary of the Issuer. The Issuer’s other subsidiaries, including, but not limited to, the
subsidiaries that own substantially all of its real estate (collectively, the “Combined Non-Guarantor Subsidiaries”), will not provide a
guarantee of such securities, including the subsidiaries that are partially or 100% owned by the LP. The following summarized financial
information presents, on a combined basis, balance sheet information as of September 30, 2026 and December 31, 2025, and results
of operations and comprehensive income for the nine months ended September 30, 2026 and year ended December 31, 2025 for the
Issuer and the Guarantor Subsidiary. The information presented below excludes eliminations necessary to arrive at the information on a
consolidated basis. In presenting the summarized financial statements, the equity method of accounting has been applied to (i) the
Issuer’s interests in the Guarantor Subsidiary, (ii) the Guarantor Subsidiary’s interests in the Combined Non-Guarantor Subsidiaries,
and (iii) the Combined Non-Guarantor Subsidiaries’ interests in the Guarantor Subsidiary, where applicable, even though all such
subsidiaries meet the requirements to be consolidated under GAAP. All assets and liabilities have been allocated to the Issuer and the
Guarantor Subsidiary generally based on legal entity ownership.
The following tables present combined summarized financial information as of September 30, 2026 and December 31, 2025
and for the nine months ended September 30, 2026 and year ended December 31, 2025 for the Issuer and Guarantor Subsidiary.
Amounts provided do not represent our total consolidated amounts (in thousands):
September 30, 2026 | December 31, 2025 | |||
Assets: | ||||
Cash, cash equivalents, and restricted cash | $302,383 | $127,100 | ||
Other assets | 213,412 | 173,303 | ||
Total assets | $515,795 | $300,403 | ||
Liabilities: | ||||
Unsecured senior notes payable | $10,820,687 | $12,047,394 | ||
Unsecured senior line of credit and commercial paper | 1,091,166 | 353,161 | ||
Junior subordinated notes payable | 985,143 | — | ||
Other liabilities | 462,507 | 433,707 | ||
Total liabilities | $13,359,503 | $12,834,262 | ||
Nine Months Ended September 30, 2026 | Year Ended December 31, 2025 | |||
Total revenues | $15,675 | $48,748 | ||
Total expenses | (309,550) | (350,655) | ||
Gain on early extinguishment of debt | 363,112 | — | ||
Net income (loss) | 69,237 | (301,907) | ||
Net income attributable to unvested restricted stock awards | (2,603) | (8,417) | ||
Net income (loss) attributable to Alexandria Real Estate Equities, Inc.’s common stockholders | $66,634 | $(310,324) | ||
As of September 30, 2026, all of our 328 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, 2025 for a discussion of our critical accounting
estimates related to recognition of real estate acquired, impairment of long-lived assets, impairment of non-real estate investments, and
monitoring of tenant credit quality.
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Definitions and reconciliations
This section contains additional information on certain non-GAAP financial measures, including reconciliations from the most
directly comparable financial measure calculated and presented in accordance with GAAP 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, impairments of real estate primarily consisting of right-of-use assets and pre-acquisition costs related to
projects that we decided to no longer pursue, gains or losses on early extinguishment of debt, changes in the provision for expected
credit losses on financial instruments, significant termination fees, acceleration of stock compensation expense due to the resignations
of executive officers, 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 with nonforfeitable
dividends 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 with nonforfeitable dividends 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.
We are not able to forecast the net income of future periods without unreasonable effort, and therefore do not provide a
reconciliation for funds from operations on a forward-looking basis. This is due to the inherent difficulty of forecasting the timing and/or
amount of items that depend on market conditions outside of our control, including the timing of dispositions, capital events, and
financing decisions, as well as components such as gain on sales of real estate, unrealized gains or losses on non-real estate
investments, impairments of real estate, impairments of non-real estate investments, and changes in provision for expected credit
losses on financial instruments. Our attempt to predict these amounts may produce significant but inaccurate estimates, which would
potentially be misleading for our investors.
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The following tables present a reconciliation of net income (loss) attributable to Alexandria Real Estate Equities, Inc.’s common
stockholders, the most directly comparable financial measure presented in accordance with GAAP, including our share of amounts from
consolidated and unconsolidated real estate joint ventures, to funds from operations attributable to Alexandria Real Estate Equities,
Inc.’s common stockholders – diluted, and funds from operations attributable to Alexandria Real Estate Equities, Inc.’s common
stockholders – diluted, as adjusted, and the related per share amounts for the three and nine months ended September 30, 2026 and
2025 (in thousands, except per share amounts). Per share amounts may not add due to rounding.
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||
2026 | 2025 | 2026 | 2025 | |||||
Net loss attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – basic and diluted | $(638,452) | $(234,937) | $(351,419) | $(356,147) | ||||
Depreciation and amortization of real estate assets | 302,240 | 338,182 | 907,774 | 1,021,292 | ||||
Noncontrolling share of depreciation and amortization from consolidated real estate JVs | (32,458) | (45,327) | (93,449) | (114,785) | ||||
Our share of depreciation and amortization from unconsolidated real estate JVs | 858 | 852 | 2,577 | 2,848 | ||||
Gain on sales of real estate | — | (9,824) | — | (22,989) | ||||
Impairment of real estate – rental properties and land | 637,904 | (1) | 323,870 | 865,873 | 454,960 | |||
Allocation to unvested restricted stock awards | (1,042) | (1,648) | (7,141) | (3,590) | ||||
Funds from operations attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted(2) | 269,050 | 371,168 | 1,324,215 | 981,589 | ||||
Unrealized (gains) losses on non-real estate investments | (21,563) | (18,515) | (143,164) | 71,568 | ||||
Impairment of non-real estate investments | 13,580 | (3) | 25,139 | 35,026 | 75,535 | |||
Impairment of real estate | — | — | — | 39,343 | ||||
Loss (gain) on early extinguishment of debt | 3,323 | 107 | (363,112) | 107 | ||||
Increase in provision for expected credit losses on financial instruments | — | — | — | 285 | ||||
Allocation to unvested restricted stock awards | 33 | (74) | 3,496 | (2,156) | ||||
Funds from operations attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted, as adjusted | $264,423 | $377,825 | $856,461 | $1,166,271 | ||||
(1)Refer to “Sales of real estate assets and impairment of real estate” in Note 3 – “Investments in real estate” to our unaudited consolidated financial statements in Item 1
for additional information.
(2)Calculated in accordance with standards established by the Nareit Board of Governors.
(3)Primarily relates to one non-real estate investment in a privately held entity that does not report NAV.
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Three Months Ended September 30, | Nine Months Ended September 30, | |||||||
(Per share) | 2026 | 2025 | 2026 | 2025 | ||||
Net loss per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted | $(3.74) | $(1.38) | $(2.06) | $(2.09) | ||||
Depreciation and amortization of real estate assets | 1.58 | 1.73 | 4.77 | 5.34 | ||||
Gain on sales of real estate | — | (0.06) | — | (0.14) | ||||
Impairment of real estate – rental properties and land | 3.74 | 1.90 | 5.07 | 2.67 | ||||
Allocation to unvested restricted stock awards | (0.01) | (0.01) | (0.04) | (0.02) | ||||
Funds from operations per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted | 1.57 | 2.18 | 7.74 | 5.76 | ||||
Unrealized (gains) losses on non-real estate investments | (0.13) | (0.11) | (0.84) | 0.42 | ||||
Impairment of non-real estate investments | 0.08 | 0.15 | 0.20 | 0.45 | ||||
Impairment of real estate | — | — | — | 0.23 | ||||
Loss (gain) on early extinguishment of debt | 0.02 | — | (2.12) | — | ||||
Allocation to unvested restricted stock awards | — | — | 0.02 | (0.01) | ||||
Funds from operations per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted, as adjusted | $1.54 | $2.22 | $5.00 | $6.85 | ||||
Weighted-average shares of common stock outstanding – diluted(1) | ||||||||
Earnings per share – diluted | 170,751 | 170,181 | 170,689 | 170,278 | ||||
Funds from operations – diluted, per share | 171,418 | 170,305 | 171,169 | 170,351 | ||||
Funds from operations – diluted, as adjusted, per share | 171,418 | 170,305 | 171,169 | 170,351 | ||||
(1)Refer to “Weighted-average shares of common stock outstanding – diluted” in this section for additional information.
The following table reconciles net income (loss) to funds from operations for the share of consolidated real estate joint
ventures attributable to noncontrolling interests and our share of unconsolidated real estate joint ventures for the three and nine months
ended September 30, 2026 (in thousands):
Noncontrolling Interest Share of Consolidated Real Estate Joint Ventures | Our Share of Unconsolidated Real Estate Joint Ventures | ||||||
September 30, 2026 | September 30, 2026 | ||||||
Three Months Ended | Nine Months Ended | Three Months Ended | Nine Months Ended | ||||
Net income | $38,754 | $109,292 | $75 | $341 | |||
Depreciation and amortization of real estate assets | 32,458 | 93,449 | 858 | 2,577 | |||
Funds from operations | $71,212 | $202,741 | $933 | $2,918 | |||
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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, changes in provision for expected
credit losses on financial instruments, 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, changes in provision for expected credit losses on financial instruments, 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
investors’ 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.
We are not able to forecast the net income of future periods without unreasonable effort, and therefore do not provide a
reconciliation for Adjusted EBITDA on a forward-looking basis. This is due to the inherent difficulty of forecasting the timing and/or
amount of items that depend on market conditions outside of our control, including the timing of dispositions, capital events, and
financing decisions, as well as quarterly components such as gain on sales of real estate, unrealized gains or losses on non-real estate
investments, impairments of real estate, impairments of non-real estate investments, and changes in provision for expected credit
losses on financial instruments. Our attempt to predict these amounts may produce significant but inaccurate estimates, which would
potentially be misleading for our investors.
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The following table reconciles net income (loss), the most directly comparable financial measure calculated and presented in
accordance with GAAP, to Adjusted EBITDA and calculates the Adjusted EBITDA margin for the three and nine months ended
September 30, 2026 and 2025 (dollars in thousands):
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||
2026 | 2025 | 2026 | 2025 | ||||
Net loss | $(598,932) | $(197,845) | $(239,524) | $(221,372) | |||
Interest expense | 79,687 | 54,852 | 208,613 | 161,024 | |||
Income taxes | 2,609 | 3,737 | 7,679 | 5,902 | |||
Depreciation and amortization | 304,419 | 340,230 | 914,244 | 1,028,415 | |||
Stock compensation expense | 11,953 | 10,293 | 33,131 | 32,887 | |||
Loss (gain) on early extinguishment of debt | 3,323 | 107 | (363,112) | 107 | |||
Gain on sales of real estate | — | (9,366) | — | (22,531) | |||
Unrealized (gains) losses on non-real estate investments | (21,563) | (18,515) | (143,164) | 71,568 | |||
Impairment of non-real estate investments | 13,580 | 25,139 | 35,026 | 75,535 | |||
Impairment of real estate | 637,904 | 323,870 | 865,873 | 485,630 | |||
Increase in provision for expected credit losses on financial instruments | — | — | — | 285 | |||
Adjusted EBITDA | $432,980 | $532,502 | $1,318,766 | $1,617,450 | |||
Total revenues | $671,182 | $751,944 | $2,004,988 | $2,272,142 | |||
Adjusted EBITDA margin | 65% | 71% | 66% | 71% | |||
Advanced technology
Advanced technology space serves tech office and non-life-science users whose operations require building characteristics,
infrastructure, or systems beyond those typically found in traditional office space. Similar to laboratory space, advanced technology
space may require enhanced floor-loading capacity; increased electrical capacity, redundancy, and resilience; greater floor-to-floor
heights or clear heights; enhanced freight and loading access; enhanced security features; and specialized HVAC, exhaust, or other
critical building systems.
Annual rental revenue
Annual rental revenue represents the annualized fixed base rental obligations, calculated in accordance with GAAP. It includes
the amortization of deferred revenue related to tenant-funded and tenant-built landlord improvements for leases in effect as of the end
of the period, related to our operating RSF. Annual rental revenue is presented using 100% of the annual rental revenue from our
consolidated properties and our share of annual rental revenue for our unconsolidated real estate joint ventures. Annual rental revenue
per RSF is computed by dividing annual rental revenue by the sum of 100% of the RSF of our consolidated properties and our share of
the RSF of properties held in unconsolidated real estate joint ventures. As of September 30, 2026, approximately 91% of our leases (on
an annual rental revenue basis) were triple net leases, which require tenants to pay substantially all real estate taxes, insurance,
utilities, repairs and maintenance, common area expenses, and other operating expenses (including increases thereto) in addition to
base rent. Annual rental revenue excludes these operating expenses recovered from our tenants. Amounts recovered from our tenants
related to these operating expenses, along with base rent, are classified in income from rentals in our consolidated statements of
operations.
Capitalization rates
Capitalization rates are calculated based on net operating income and net operating income (cash basis) annualized,
excluding lease termination fees, on stabilized operating assets for the quarter preceding the date on which the property is sold, or
near-term prospective net operating income.
Capitalized interest
We capitalize interest cost as a cost of a project during periods for which activities necessary to develop, redevelop, or
reposition a project for its intended use are ongoing, provided that expenditures for the asset have been made and interest cost has
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been incurred. Activities necessary to develop, redevelop, or reposition a project include pre-construction activities such as
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. If we cease activities necessary to prepare a project for its intended use, interest costs related to such project are expensed
as incurred.
Cash interest
Cash interest is equal to interest expense calculated in accordance with GAAP plus capitalized interest, less amortization of
loan fees, debt premiums (discounts) and interest expense associated with the equity treatment of junior subordinated notes payable.
Refer to “Fixed-charge coverage ratio” in this section for a reconciliation of interest expense, the most directly comparable financial
measure calculated and presented in accordance with GAAP, to cash interest.
Class A/A+ properties and AAA locations
Class A/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. These properties are typically well-located, professionally managed, and well-maintained, offering a
wide range of amenities and featuring premium construction materials and finishes. Class A/A+ properties are generally newer or have
undergone substantial redevelopment and are generally expected to command higher annual rental rates compared to other classes of
similar properties. AAA locations are in close proximity to concentrations of specialized skills, knowledge, institutions, and related
businesses. It is important to note that our definition of property classification may not be directly comparable to other equity REITs.
Credit rating
Represents the credit ratings assigned by S&P Global Ratings or Moody’s Ratings as of September 30, 2026. A credit rating is
not a recommendation to buy, sell, or hold securities and may be subject to revision or withdrawal at any time.
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/A+ properties, as well as property enhancements identified during the underwriting of certain acquired properties. These efforts
are primarily concentrated in collaborative Megacampus ecosystems within AAA life science and advanced technology innovation
clusters, as well as other strategic locations that support innovation and growth. These projects are generally focused on providing high-
quality, generic, and reusable spaces that meet the real estate requirements of a wide range of tenants. Upon completion, each
development or redevelopment 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 laboratory facilities.
Redevelopment projects generally consist of the permanent change in use of acquired office, warehouse, or shell space into facilities
designed for life science innovation or advanced technology. We generally will not commence new development projects for
aboveground construction of new Class A/A+ laboratory space without first securing significant pre-leasing for such space, except when
there is solid market demand for high-quality Class A/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 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/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.
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Dividend payout ratio (common stock)
Dividend payout ratio (common stock) is the ratio of the absolute dollar amount of dividends on our common stock (shares of
common stock outstanding on the respective record dates multiplied by the related dividend per share) to funds from operations
attributable to Alexandria’s common stockholders – diluted, as adjusted.
Dividend yield
Dividend yield for the quarter represents the annualized quarterly dividend per share divided by the closing common stock
price at the end of the quarter.
Fixed-charge coverage ratio
Fixed-charge coverage ratio is a non-GAAP financial measure representing the ratio of Adjusted EBITDA to cash interest and
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. Fixed charges equal interest expense calculated in accordance with GAAP plus capitalized
interest, plus preferred stock dividends, less amortization of loan fees and debt premiums (discounts), and less any portion of interest
expense or preferred stock dividends incurred from any corresponding portion of any hybrid instrument that is treated as equity,
generally consistent with the treatment by key rating agencies, as excluding such amounts provides investors with useful supplemental
information regarding the effect of that equity-credit treatment on our credit profile and fixed-charge coverage.
The following table reconciles interest expense, the most directly comparable financial measure calculated and presented in
accordance with GAAP, to cash interest and computes fixed-charge coverage ratio for the three and nine months ended September 30,
2026 and 2025 (dollars in thousands):
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||
2026 | 2025 | 2026 | 2025 | |||||
Adjusted EBITDA | $432,980 | $532,502 | $1,318,766 | $1,617,450 | ||||
Interest expense | $79,687 | $54,852 | $208,613 | $161,024 | ||||
Capitalized interest | 62,922 | 86,091 | 206,612 | 248,579 | ||||
Amortization of loan fees | (4,422) | (4,505) | (13,267) | (13,811) | ||||
Amortization of debt discounts | (353) | (325) | (1,025) | (1,009) | ||||
Interest expense associated with the equity treatment of junior subordinated notes payable(1) | (4,028) | — | (4,028) | — | ||||
Cash interest and fixed charges | $133,806 | $136,113 | $396,905 | $394,783 | ||||
Fixed-charge coverage ratio: | ||||||||
– period annualized | 3.2x | 3.9x | 3.3x | 4.1x | ||||
– trailing 12 months | 3.4x | 4.1x | 3.4x | 4.1x | ||||
(1)Represents 50% of the interest expense associated with our junior subordinated notes payable, corresponding to the portion of the related amount that key rating
agencies treat as equivalent to a common dividend for credit-analysis purposes.
We are not able to forecast the net income of future periods without unreasonable effort, and therefore do not provide a
reconciliation for fixed-charge coverage ratio on a forward-looking basis. This is due to the inherent difficulty of forecasting the timing
and/or amount of items that depend on market conditions outside of our control, including the timing of dispositions, capital events, and
financing decisions, as well as quarterly components such as gain on sales of real estate, unrealized gains or losses on non-real estate
investments, impairments of real estate, impairments of non-real estate investments, and changes in provision for expected credit
losses on financial instruments. Our attempt to predict these amounts may produce significant but inaccurate estimates, which would
potentially be misleading for our investors.
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Gross assets
Gross assets are calculated as total assets plus accumulated depreciation as of September 30, 2026 and December 31, 2025
(in thousands):
September 30, 2026 | December 31, 2025 | ||
Total assets | $34,051,722 | $34,081,835 | |
Accumulated depreciation | 6,879,381 | 6,127,525 | |
Gross assets | $40,931,103 | $40,209,360 | |
Incremental annual net operating income on development and redevelopment projects
Incremental annual net operating income represents the annualized net operating income expected to be realized upon a
project being placed into service and achieving stabilized occupancy. For projects placed into service during the period, the incremental
annual net operating income disclosed excludes future incremental annual net operating income from space that was vacant or
unleased at delivery. Incremental annual net operating income is calculated as the initial stabilized yield multiplied by the project’s total
cost at completion.
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. For this calculation, we exclude any tenant-funded and tenant-built landlord improvements from our investment in the
property. Our initial stabilized yield excludes the benefit of leverage. Our cash rents related to our development and redevelopment
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, and any amortization of deferred revenue related to tenant-
funded and tenant-built landlord improvements.
•Initial stabilized yield (cash basis) reflects cash rents at the stabilization date after initial rental concessions, if any, have
elapsed and our total cash investment in the property.
Investment-grade or publicly traded large cap tenants
Investment-grade or publicly traded large cap tenants represent tenants that are investment-grade rated or publicly traded
companies with an average daily market capitalization greater than $10 billion for the twelve months ended September 30, 2026, as
reported by Bloomberg Professional Services. Credit ratings from Moody’s Ratings 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
The following table presents our new Class A/A+ development and redevelopment pipeline, excluding properties held for sale,
as a percentage of gross assets and as a percentage of annual rental revenue as of September 30, 2026 (dollars in thousands):
Book Value | Percentage of Gross Assets | |||
Projects under active construction | $1,043,255 | 3% | ||
Future development projects(1) and land parcels primarily located in Megacampuses | 3,584,278 | 9 | ||
Total Class A/A+ development and redevelopment pipeline, excluding properties held for sale | 4,627,533 | 12 | ||
Properties held for sale – land and development parcels | 480,134 | 1 | ||
Total Class A/A+ development and redevelopment pipeline | $5,107,667 | 13% | ||
(1)Includes projects with existing buildings that are generating or can generate operating cash flows. Also includes development rights associated with existing operating
campuses.
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The square footage presented in the table below is classified as operating as of September 30, 2026, and excludes properties
classified as held for sale. These lease expirations or vacant space at recently acquired properties represent future opportunities for which
we intend, subject to market conditions and leasing, to commence first-time conversion from non-laboratory space to laboratory space,
or to commence future ground-up development:
Dev/Redev | RSF of Lease Expirations Targeted for Development and Redevelopment | |||||||||
Property/Submarket | 2026 | 2027 | Thereafter(1) | Total | ||||||
Future projects: | ||||||||||
446, 458, and 500 Arsenal Street/Cambridge/Inner Suburbs | Dev | — | — | 116,623 | 116,623 | |||||
Campus Point by Alexandria/University Town Center | Dev | — | — | 96,805 | 96,805 | |||||
Sequence District by Alexandria/Sorrento Mesa | Dev/Redev | — | — | 457,013 | 457,013 | |||||
1150 El Camino Real/South San Francisco | Dev | — | — | 152,000 | 152,000 | |||||
960 Industrial Road/San Carlos | Dev | — | — | 112,590 | 112,590 | |||||
Total | — | — | 935,031 | 935,031 | ||||||
(1)Includes vacant square footage as of September 30, 2026.
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, which 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, to facilitate investors’ 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.
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Megacampus™
A Megacampus ecosystem is a cluster campus that consists of approximately 1 million RSF or greater, including operating,
active development/redevelopment, and land RSF less operating RSF expected to be demolished. The following table reconciles our
annual rental revenue and development and redevelopment pipeline RSF, excluding properties classified as held for sale, as of
September 30, 2026 (dollars in thousands):
Annual Rental Revenue | Development and Redevelopment Pipeline RSF | |||
Megacampus | $1,485,494 | 15,575,865 | ||
Core and non-core | 378,257 | 3,973,991 | ||
Total | $1,863,751 | 19,549,856 | ||
Megacampus as a percentage of annual rental revenue and of total development and redevelopment pipeline RSF | 80% | 80% |
Net cash provided by operating activities, as adjusted
We use net cash provided by operating activities, as adjusted, as a supplemental measure for financial and operational
decision-making, and as a supplemental means of evaluating period-to-period comparisons on a consistent basis. Net cash provided by
operating activities, as adjusted, is calculated as net cash provided by operating activities as shown in our consolidated statements of
cash flows, adjusted for changes in operating assets and liabilities (as they represent timing differences), and reduced by dividends and
distributions to noncontrolling interests (excludes liquidating distributions from asset sales).
We believe net cash provided by operating activities, as adjusted, provides investors with relevant and useful information as it
allows investors to evaluate our operating cash flows on a more consistent basis that excludes period-to-period timing differences in
operating assets and liabilities (working capital) and reflects cash dividends and distributions paid quarterly.
The following table reconciles net cash flows from operating activities, the most directly comparable financial measure
presented in accordance with GAAP, to net cash provided by operating activities, as adjusted:
Nine Months Ended September 30, | ||||
(in thousands) | 2026 | 2025 | ||
Net cash provided by operating activities | $875,410 | 1,101,668 | ||
Changes in operating assets and liabilities | 154,064 | 188,563 | ||
Common stock dividends paid | (371,427) | (684,419) | ||
Distributions to noncontrolling interests | (171,248) | (186,725) | ||
Net cash provided by operating activities, as adjusted | $486,799 | $419,087 | ||
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 for evaluating our balance sheet leverage. Net debt and preferred stock is calculated at the end of the applicable
period and equals total consolidated debt (including secured debt, unsecured senior debt, and junior subordinated debt) plus preferred
stock, less cash, cash equivalents, restricted cash, and the portion of any hybrid instrument included in debt or preferred stock that is
treated as equity, generally consistent with the treatment by key rating agencies, as excluding such amounts provides investors with
useful supplemental information regarding the effect of that equity-credit treatment on our leverage. Refer to “Adjusted EBITDA and
Adjusted EBITDA margin” in this section for further information on the calculation of Adjusted EBITDA.
We are not able to forecast the net income of future periods without unreasonable effort, and therefore do not provide a
reconciliation for net debt and preferred stock to Adjusted EBITDA on a forward-looking basis. This is due to the inherent difficulty of
forecasting the timing and/or amount of items that depend on market conditions outside of our control, including the timing of
dispositions, capital events, and financing decisions, as well as quarterly components such as gain on sales of real estate, unrealized
gains or losses on non-real estate investments, impairments of real estate, impairments of non-real estate investments, and changes in
provision for expected credit losses on financial instruments. Our attempt to predict these amounts may produce significant but
inaccurate estimates, which would potentially be misleading for our investors.
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The following table reconciles debt to net debt and preferred stock and computes the ratio to Adjusted EBITDA as of
September 30, 2026 and December 31, 2025 (dollars in thousands):
September 30, 2026 | December 31, 2025 | ||
Unsecured senior notes payable | $10,820,687 | $12,047,394 | |
Junior subordinated notes payable | 985,143 | — | |
Unsecured senior line of credit and commercial paper | 1,091,166 | 353,161 | |
Unamortized deferred financing costs | 79,954 | 74,314 | |
Cash and cash equivalents | (508,855) | (549,062) | |
Restricted cash | (4,908) | (4,693) | |
Equity treatment of junior subordinated notes payable(1) | (500,000) | — | |
Preferred stock | — | — | |
Net debt and preferred stock | $11,963,187 | $11,921,114 | |
Adjusted EBITDA: | |||
– quarter annualized | $1,731,920 | $2,097,444 | |
– trailing 12 months | $1,843,127 | $2,141,811 | |
Net debt and preferred stock to Adjusted EBITDA: | |||
– quarter annualized | 6.9x | 5.7x | |
– trailing 12 months | 6.5x | 5.6x |
(1)Represents the 50% equity treatment assigned by key rating agencies to the $1.0 billion principal amount of our junior subordinated notes payable.
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Net operating income, net operating income (cash basis), and operating margin
The following table reconciles net income (loss) to net operating income and net operating income (cash basis) and computes
operating margin for the three and nine months ended September 30, 2026 and 2025 (dollars in thousands):
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||
2026 | 2025 | 2026 | 2025 | |||||
Net loss | $(598,932) | $(197,845) | $(239,524) | $(221,372) | ||||
Equity in (earnings) losses of unconsolidated real estate joint ventures | (75) | (201) | (341) | 9,327 | ||||
General and administrative expenses | 40,915 | 29,224 | 112,461 | 89,027 | ||||
Interest expense | 79,687 | 54,852 | 208,613 | 161,024 | ||||
Depreciation and amortization | 304,419 | 340,230 | 914,244 | 1,028,415 | ||||
Impairment of real estate | 637,904 | 323,870 | 865,873 | 485,630 | ||||
Loss (gain) on early extinguishment of debt | 3,323 | 107 | (363,112) | 107 | ||||
Gain on sales of real estate | — | (9,366) | — | (22,531) | ||||
Investment (income) losses | (23,990) | (28,161) | (152,635) | 52,453 | ||||
Net operating income | 443,251 | 512,710 | 1,345,579 | 1,582,080 | ||||
Straight-line rent revenue | (2,466) | (18,821) | (21,229) | (59,380) | ||||
Amortization of deferred revenue related to tenant-funded and -built landlord improvements | (11,992) | (5,455) | (24,881) | (9,507) | ||||
Amortization of acquired below-market leases | (8,233) | (6,456) | (22,229) | (31,874) | ||||
Provision for expected credit losses on financial instruments | — | — | — | 285 | ||||
Net operating income (cash basis) | $420,560 | $481,978 | $1,277,240 | $1,481,604 | ||||
Net operating income (cash basis) – annualized | $1,682,240 | $1,927,912 | $1,702,987 | $1,975,472 | ||||
Net operating income (from above) | $443,251 | $512,710 | $1,345,579 | $1,582,080 | ||||
Total revenues | $671,182 | $751,944 | $2,004,988 | $2,272,142 | ||||
Operating margin | 66% | 68% | 67% | 70% | ||||
Net operating income is a non-GAAP financial measure calculated as net income (loss), 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, amortization of acquired above- and below-market lease revenue,
amortization of deferred revenue related to tenant-funded and tenant-built landlord improvements, and changes in the provision for
expected credit losses on financial instruments 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 and tenant-funded and tenant-built landlord improvements.
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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 for assets held for sale or to their estimated fair value for assets held
and used. These impairments result from investing decisions or a deterioration in market conditions or changes in the intended use of a
property. 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 and changes in provision for expected credit losses on financial instruments, 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, rent, and 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, to facilitate investors’ 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.
We are not able to forecast the net income of future periods without unreasonable effort, and therefore do not provide a
reconciliation for net operating income on a forward-looking basis. This is due to the inherent difficulty of forecasting the timing and/or
amount of items that depend on market conditions outside of our control, including the timing of dispositions, capital events, and
financing decisions, as well as components such as gain on sales of real estate, unrealized gains or losses on non-real estate
investments, impairments of real estate, impairments of non-real estate investments, and changes in provision for expected credit
losses on financial instruments. Our attempt to predict these amounts may produce significant but inaccurate estimates, which would
potentially be misleading for our investors.
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%, excluding RSF at properties classified as held for sale, 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 “Annual rental revenue” in this section.
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 “Same properties” in Item 2 for additional information.
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Stabilized occupancy date
The stabilized occupancy date represents the estimated date on which a development or redevelopment project is expected to
reach occupancy of 95% or greater.
Tenant collections
Tenant collections represent the percentage of recognized rental income billed during the respective quarter that has been
collected as of the date of this report. Rental income from tenants for whom collection is considered not probable is recognized only
upon receipt of cash and, accordingly, is included in this calculation only to the extent recognized and collected.
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 are 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 “Results of operations” in 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 on net income of any significant
variability in components of our operating expenses.
The following table reconciles income from rentals to tenant recoveries for the three and nine months ended September 30,
2026 and 2025 (in thousands):
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||
2026 | 2025 | 2026 | 2025 | |||||
Income from rentals | $653,618 | $735,849 | $1,949,841 | $2,216,303 | ||||
Rental revenues | (481,348) | (541,070) | (1,442,723) | (1,646,559) | ||||
Tenant recoveries | $172,270 | $194,779 | $507,118 | $569,744 | ||||
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Total debt and preferred stock, as adjusted
Total debt and preferred stock, as adjusted, is calculated at the end of the applicable period and equals total consolidated debt
(including secured debt, unsecured senior, and junior subordinated debt) plus preferred stock, less the portion of any hybrid instrument
included in debt or preferred stock that is treated as equity, generally consistent with the treatment by key rating agencies, as excluding
such amounts provides investors with useful supplemental information regarding the effect of that equity-credit treatment on our
leverage.
The following table reconciles total debt and preferred stock, as adjusted (in thousands):
September 30, 2026 | December 31, 2025 | ||
Unsecured senior notes payable | $10,820,687 | $12,047,394 | |
Junior subordinated notes payable | 985,143 | — | |
Unsecured senior line of credit and commercial paper | 1,091,166 | 353,161 | |
Equity treatment of junior subordinated notes payable(1) | (500,000) | — | |
Total debt and preferred stock, as adjusted | $12,396,996 | $12,400,555 |
(1)Represents the 50% equity treatment assigned by key rating agencies to the $1.0 billion principal amount of our junior subordinated notes payable.
Total equity capitalization
Total equity capitalization is equal to the outstanding shares of common stock multiplied by the closing price on the last trading
day at the end of each period presented.
Total market capitalization
Total market capitalization is equal to the sum of total equity capitalization and total debt.
Unencumbered net operating income as a percentage of total net operating income
Unencumbered net operating income as a percentage of total net operating income is a non-GAAP financial measure that we
believe is useful to investors as a performance measure of the results of operations of our unencumbered real estate assets as it
reflects those income and expense items that are incurred at the unencumbered property level. Unencumbered net operating income is
derived from assets classified in continuing operations, which are not subject to any mortgage, deed of trust, lien, or other security
interest, as of the period for which income is presented.
The following table summarizes unencumbered net operating income as a percentage of total net operating income for the
three and nine months ended September 30, 2026 and 2025 (dollars in thousands):
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||
2026 | 2025 | 2026 | 2025 | ||||
Unencumbered net operating income | $443,251 | $512,710 | $1,345,579 | $1,579,167 | |||
Encumbered net operating income | — | — | — | 2,913 | |||
Total net operating income | $443,251 | $512,710 | $1,345,579 | $1,582,080 | |||
Unencumbered net operating income as a percentage of total net operating income | 100.0% | 100.0% | 100.0% | 99.8% | |||
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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 development and redevelopment projects, and for general working
capital purposes. While the Forward Agreements are outstanding, we are required to consider the potential dilutive effect of our Forward
Agreements under the treasury stock method. Under this method, we also include the dilutive effect of unvested restricted stock awards
(“RSAs”) with forfeitable dividends in the calculation of diluted shares. Refer to Note 13 – “Earnings per share” and Note 14 –
“Stockholders’ equity” to our unaudited consolidated financial statements in Item 1 for additional information.
The weighted-average shares of common stock outstanding used in calculating EPS – diluted, funds from operations per
share – diluted, and funds from operations per share – diluted, as adjusted, for the three and nine months ended September 30, 2026
and 2025 are calculated as follows. Also shown are the weighted-average unvested RSAs with nonforfeitable dividends used in
calculating the amounts allocable to these awards pursuant to the two-class method for each of the respective periods presented below
(in thousands):
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||
2026 | 2025 | 2026 | 2025 | ||||
Basic shares for earnings per share | 170,751 | 170,181 | 170,689 | 170,278 | |||
Unvested RSAs with forfeitable dividends | — | — | — | — | |||
Diluted shares for earnings per share | 170,751 | 170,181 | 170,689 | 170,278 | |||
Basic shares for funds from operations per share and funds from operations per share, as adjusted | 170,751 | 170,181 | 170,689 | 170,278 | |||
Unvested RSAs with forfeitable dividends | 667 | 124 | 480 | 73 | |||
Diluted shares for funds from operations per share and funds from operations per share, as adjusted | 171,418 | 170,305 | 171,169 | 170,351 | |||
Weighted-average unvested RSAs with nonforfeitable dividends used in the allocations of net income, funds from operations, and funds from operations, as adjusted | 1,224 | 1,917 | 1,280 | 1,989 | |||
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest rate risk
The primary market risk to which we believe we may be exposed is interest rate risk, which may result from many factors,
including government monetary and tax policies, domestic and international economic and political considerations, and other factors
that are beyond our control.
In order to modify and manage the interest rate characteristics of our outstanding debt and to limit the effects of interest rate
risks on our operations, we may utilize a variety of financial instruments, including interest rate hedge agreements, caps, floors, and
other interest rate exchange contracts. The use of these types of instruments to hedge a portion of our exposure to changes in interest
rates may carry additional risks, such as counterparty credit risk and the legal enforceability of hedge agreements. As of September 30,
2026, we did not have any outstanding interest rate hedge agreements.
Our future earnings and fair values relating to our outstanding debt are primarily dependent upon prevailing market interest
rates. The following tables illustrate the effect of a 1% change in interest rates, assuming a zero percent interest rate floor, on our fixed-
and variable-rate debt as of September 30, 2026 (in thousands):
As of | |||
September 30, 2026 | December 31, 2025 | ||
Annualized effect on future earnings due to variable-rate debt: | |||
Rate increase of 1% | $(4,986) | $(1,259) | |
Rate decrease of 1% | $4,986 | $1,259 | |
Effect on fair value of total consolidated debt: | |||
Rate increase of 1% | $(697,783) | $(746,058) | |
Rate decrease of 1% | $794,148 | $852,698 | |
These amounts are determined by considering the effect of the hypothetical interest rates on our borrowings as of
September 30, 2026 and December 31, 2025. These analyses do not consider the effects of the reduced level of overall economic
activity that could exist in such an environment. Furthermore, in the event of a change of such magnitude, we would consider taking
actions to further mitigate our exposure to the change. Because of the uncertainty of the specific actions that would be taken and their
possible effects, the sensitivity analyses assume no changes in our capital structure.
Equity price risk
We have exposure to equity price market risk because we hold equity investments in publicly traded companies and privately
held entities. All of our investments in actively traded public companies are reflected in our consolidated balance sheets at fair value.
Our investments in privately held entities that report NAV per share are measured at fair value using NAV as a practical expedient to fair
value. Our equity investments in privately held entities that do not report NAV per share are measured at cost less impairments,
adjusted for observable price changes during the period. Changes in fair value of public investments, changes in NAV per share
reported by privately held entities, and observable price changes of privately held entities that do not report NAV per share are
classified as investment income (losses) in our consolidated statements of operations. There is no assurance that future declines in
value will not have a material adverse effect on our future results of operations. The following table illustrates the effect that a 10%
change in the value of our equity investments would have on earnings as of September 30, 2026 and December 31, 2025 (in
thousands):
As of | |||
September 30, 2026 | December 31, 2025 | ||
Equity price risk: | |||
Fair value increase of 10% | $134,128 | $114,387 | |
Fair value decrease of 10% | $(134,128) | $(114,387) | |
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Foreign currency exchange rate risk
We have exposure to foreign currency exchange rate risk related to our operations in Canada. The functional currency of our
Canadian subsidiaries is the Canadian dollar. Gains or losses resulting from the translation of these subsidiaries’ balance sheets and
statements of operations are classified in accumulated other comprehensive income (loss) as a separate component of total equity and
are excluded from net income (loss). Gains or losses will be reflected in our consolidated statements of operations when there is a sale
of our investment in these operations or upon a complete or substantially complete liquidation of the investment. The following tables
illustrate the effect that a 10% change in Canadian dollar exchange rates relative to the USD would have on our potential future
earnings and on the fair value of our net investment in Canadian subsidiaries, based on our current operating assets outside the U.S.
as of September 30, 2026 and December 31, 2025 (in thousands):
As of | |||
September 30, 2026 | December 31, 2025 | ||
Effect on potential future earnings due to foreign currency exchange rate: | |||
Rate increase of 10% | $292 | $182 | |
Rate decrease of 10% | $(292) | $(182) | |
Effect on the fair value of net investment in foreign subsidiaries due to foreign currency exchange rate: | |||
Rate increase of 10% | $35,005 | $35,306 | |
Rate decrease of 10% | $(35,005) | $(35,306) | |
Change in the fair value of cross-currency swap agreements designated as a net investment hedge(1): | |||
Rate increase of 10% (USD weakening) | $(18,232) | $(24,600) | |
Rate decrease of 10% (USD strengthening) | $18,232 | $24,600 | |
(1)Refer to Note 11 – “Hedge agreements” to our unaudited consolidated financial statements for additional information.
Our exposure to market risk elements for the nine months ended September 30, 2026 was consistent with the risk elements
presented above, including the effects of changes in interest rates, equity prices, and foreign currency exchange rates.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures
As of September 30, 2026, we had performed an evaluation, under the supervision of our principal executive officers and
principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. These controls and
procedures have been designed to ensure that information required for disclosure is recorded, processed, summarized, and reported
within the requisite time periods. Based on our evaluation, the principal executive officers and principal financial officer concluded that
our disclosure controls and procedures were effective as of September 30, 2026.
Changes in internal control over financial reporting
There has not been any change in our internal control over financial reporting during the three months ended September 30,
2026 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Stockholder Matters
On November 25, 2025, a securities class action was filed against the Company and certain of its officers and directors in the
United States District Court for the Central District of California. The amended complaint alleged violations of the federal securities laws
based on alleged material misrepresentations and omissions related to the Company’s business performance and real estate
impairment charges. The amended complaint sought damages and other relief on behalf of investors who acquired the Company’s
securities between January 30, 2024 and December 5, 2025. On September 10, 2026, the Court granted defendants’ motion to dismiss
the amended complaint with leave to amend. On October 15, 2026, the plaintiffs filed a second amended complaint.
On February 3, 2026, March 25, 2026, and June 25, 2026, stockholder derivative actions were filed against certain officers and
directors of the Company, with the Company named as a nominal defendant, in the United States District Court for the District of
Maryland and the United States District Court for the Central District of California. The derivative complaints assert claims under the
federal securities laws and state law based on allegations similar to those in the securities class action and seek damages and other
relief on behalf of the Company. The first two derivative actions were stayed on April 8, 2026 and June 23, 2026, respectively, pending
the dismissal of the securities class action with prejudice or the denial of any motion to dismiss in the securities class action.
The Company does not believe the complaints state any meritorious claims and intends to defend these cases vigorously.
At this time, we cannot predict the outcome of these matters or reasonably estimate the amount or range of any possible loss,
if any, and therefore we have not recorded an accrual related to these matters.
Option Parcel Development at Alexandria Center® for Life Science – New York City Campus
Refer to “Other” in Note 3 – “Investments in real estate” to our unaudited consolidated financial statements for information
regarding litigation involving our subsidiary in connection with an option and ground lease for a development parcel at the Alexandria
Center® for Life Science – New York City campus.
ITEM 1A. RISK FACTORS
In addition to the information set forth in this quarterly report on Form 10-Q, one should also carefully review and consider the
information contained in the other reports and periodic filings that we make with the SEC, including, without limitation, the information
contained under the caption “Item 1A. Risk factors” in our annual report on Form 10-K for the year ended December 31, 2025. Those
risk factors could materially affect our business, financial condition, and results of operations. The risks that we describe in our public
filings are not the only risks that we face. Additional risks and uncertainties not currently known to us, or that we presently deem to be
immaterial, also may materially adversely affect our business, financial condition, and results of operations.
There have been no material changes in our risk factors from those disclosed under the caption “Item 1A. Risk factors” in our
annual report on Form 10-K for the year ended December 31, 2025.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Purchases of equity securities
On December 8, 2025, we announced that our Board of Directors authorized a new share repurchase program that allows the
repurchase of shares with an aggregate value of up to $500.0 million through December 31, 2026 in the open market, through privately
negotiated transactions, or otherwise, in accordance with all applicable securities laws and regulations, including Rule 10b-18 of the
Exchange Act. This new program replaced our prior stock repurchase program. As of the date of this report, no repurchases have been
made under the new program and $500.0 million remains available for future share repurchases.
ITEM 5. OTHER INFORMATION
Disclosure of 10b5-1 plans
During the three months ended September 30, 2026, none of our officers or directors adopted or terminated any contract,
instruction, or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of
Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.
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ITEM 6. EXHIBITS
Exhibit Number | Exhibit Title | Incorporated by Reference to: | Date Filed | |||
3.1 | Articles of Amendment and Restatement of the Company, dated May 21, 1997 | Form 10-Q | August 14, 1997 | |||
3.2 | Certificate of Correction of the Company, dated June 20, 1997 | Form 10-Q | August 14, 1997 | |||
3.3 | Articles of Amendment of the Company, effective as of May 10, 2017 | Form 8-K | May 12, 2017 | |||
3.4 | Articles of Amendment of the Company, effective as of May 18, 2022 | Form 8-K | May 19, 2022 | |||
3.5 | Articles Supplementary, dated June 9, 1999, relating to the 9.50% Series A Cumulative Redeemable Preferred Stock | Form 10-Q | August 13, 1999 | |||
3.6 | Articles Supplementary, dated February 10, 2000, relating to the election to be subject to Subtitle 8 of Title 3 of the Maryland General Corporation Law | Form 8-K | February 10, 2000 | |||
3.7 | Articles Supplementary, dated February 10, 2000, relating to the Series A Junior Participating Preferred Stock | Form 8-K | February 10, 2000 | |||
3.8 | Articles Supplementary, dated January 18, 2002, relating to the 9.10% Series B Cumulative Redeemable Preferred Stock | Form 8-A | January 18, 2002 | |||
3.9 | Articles Supplementary, dated June 22, 2004, relating to the 8.375% Series C Cumulative Redeemable Preferred Stock | Form 8-A | June 28, 2004 | |||
3.10 | Articles Supplementary, dated March 25, 2008, relating to the 7.00% Series D Cumulative Convertible Preferred Stock | Form 8-K | March 25, 2008 | |||
3.11 | Articles Supplementary, dated March 12, 2012, relating to the 6.45% Series E Cumulative Redeemable Preferred Stock | Form 8-K | March 14, 2012 | |||
3.12 | Articles Supplementary, effective as of May 10, 2017, relating to Reclassified Preferred Stock | Form 8-K | May 12, 2017 | |||
3.13 | Articles Supplementary, effective as of March 31, 2026, relating to Subtitle 8 of Title 3 of the Maryland General Corporation Law | Form 8-K | March 31, 2026 | |||
3.14 | Amended and Restated Bylaws of the Company (Amended December 6, 2024) | Form 8-K | December 9, 2024 | |||
4.1 | Indenture, dated as of February 13, 2025, among Alexandria Real Estate Equities, Inc., as Issuer, Alexandria Real Estate Equities, L.P., as Guarantor, and U.S. Bank Trust Company, National Association, as Trustee | Form 8-K | February 13, 2025 | |||
4.2 | Supplemental Indenture No. 3, dated as of August 21, 2026, by and among Alexandria Real Estate Equities, Inc., as Issuer, Alexandria Real Estate Equities, L.P., as Guarantor, and U.S. Bank Trust Company, National Association, as Trustee | Form 8-K | August 21, 2026 | |||
4.3 | Form of 7.250% Series A Fixed-to-Fixed Reset Rate Junior Subordinated Notes due 2057 (included in Exhibit 4.2 above) | Form 8-K | August 21, 2026 | |||
10.1 | Fourth Amended and Restated Credit Agreement, dated as of September 24, 2026, among the Company, as Borrower, Alexandria Real Estate Equities, L.P., as a Guarantor, Citibank, N.A., as Administrative Agent, and the lenders and other parties thereto | N/A | Filed herewith | |||
22.1 | List of Guarantor Subsidiaries of the Company | N/A | Filed herewith | |||
31.1 | Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | N/A | Filed herewith | |||
31.2 | Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | N/A | Filed herewith | |||
31.3 | Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | N/A | Filed herewith | |||
32.0 | Certification of Principal Executive Officers and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | N/A | Filed herewith | |||
101.1 | The following materials from the Company’s quarterly report on Form 10-Q for the quarterly period ended September 30, 2026, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of September 30, 2026 and December 31, 2025 (unaudited), (ii) Consolidated Statements of Operations for the three and nine months ended September 30, 2026 and 2025 (unaudited), (iii) Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2026 and 2025 (unaudited), (iv) Consolidated Statements of Changes in Stockholders’ Equity and Noncontrolling Interests for the three and nine months ended September 30, 2026 and 2025 (unaudited), (v) Consolidated Statements of Cash Flows for the nine months ended September 30, 2026 and 2025 (unaudited), and (vi) Notes to Consolidated Financial Statements (unaudited) | N/A | Filed herewith | |||
104 | Cover Page Interactive Data File – the cover page from this Quarterly Report on Form 10-Q for the quarter ended September 30, 2026 is formatted in Inline XBRL and contained in Exhibit 101.1 | N/A | Filed herewith |
133
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, on October 26, 2026.
ALEXANDRIA REAL ESTATE EQUITIES, INC. | |
/s/ Joel S. Marcus | |
Joel S. Marcus Executive Chairman (Principal Executive Officer) | |
/s/ Peter M. Moglia | |
Peter M. Moglia Chief Executive Officer and Chief Investment Officer (Principal Executive Officer) | |
/s/ Marc E. Binda | |
Marc E. Binda Chief Financial Officer and Treasurer (Principal Financial Officer) |