[10-Q] ALEXANDRIA REAL ESTATE EQUITIES, INC. Quarterly Earnings Report
Filing Explained
As of June 30, 2026, held-for-sale assets and impairments reshape the portfolio; borrowings included unsecured senior line and commercial paper.
Form 10-Q is an unaudited quarterly report; this filing places 23 operating properties and 2.0 million square feet of land in held-for-sale status, shifting part of the portfolio toward planned dispositions rather than completed sales.
The filing reports that one Palo Alto transaction covering a 250,000-square-foot development project and a 228,000-rentable-square-foot operating property closed in July 2026 for an aggregate sales price of
At June 30, 2026, the filing reports unsecured senior line-of-credit and commercial-paper borrowings.
A separate uncertainty concerns the Option Parcel: the company says development timing is indeterminate, with
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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 June 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 July 15, 2026, 174,247,570 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 June 30, 2026 and December 31, 2025 ............................................................. | 1 | |
Consolidated Financial Statements for the Three and Six Months Ended June 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 Six Months Ended June 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 ........................................................................................................................................................................ | 49 |
Item 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK ......................................................... | 123 |
Item 4. | CONTROLS AND PROCEDURES ..................................................................................................................................... | 124 |
PART II – OTHER INFORMATION | ||
Item 1. | LEGAL PROCEEDINGS ...................................................................................................................................................... | 125 |
Item 1A. | RISK FACTORS .................................................................................................................................................................... | 125 |
Item 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS ................................................... | 125 |
Item 5. | OTHER INFORMATION ....................................................................................................................................................... | 126 |
Item 6. | EXHIBITS ............................................................................................................................................................................... | 127 |
SIGNATURES ................................................................................................................................................................................................. | 128 | |
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)
June 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 | $ | $ | |
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 June 30, | Six Months Ended June 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) | ( | ( | |||||
Gain on early extinguishment of debt | |||||||
Gain on sales of real estate | |||||||
Net (loss) income | ( | ( | ( | ||||
Net income attributable to noncontrolling interests | ( | ( | ( | ( | |||
Net (loss) income attributable to Alexandria Real Estate Equities, Inc.’s stockholders | ( | ( | ( | ||||
Net income attributable to unvested restricted stock awards | ( | ( | ( | ( | |||
Net (loss) income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders | $( | $( | $ | $( | |||
Net (loss) income 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 June 30, | Six Months Ended June 30, | ||||||
2026 | 2025 | 2026 | 2025 | ||||
Net (loss) income | $( | $( | $ | $( | |||
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) income | ( | ( | ( | ||||
Less: comprehensive income attributable to noncontrolling interests | ( | ( | ( | ( | |||
Comprehensive (loss) income 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 March 31, 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 June 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 March 31, 2025 | $ | $ | $ | $( | $ | $ | $ | |||||||||
Net (loss) income | — | — | — | ( | — | ( | ||||||||||
Total other comprehensive income | — | — | — | — | — | — | ||||||||||
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 June 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 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 earnings in excess of distributions | — | — | ( | — | — | — | ||||||||||
Balance as of June 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 | — | — | ( | — | — | ( | ( | ( | ||||||||
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 June 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) | |||
Six Months Ended June 30, | |||
2026 | 2025 | ||
Operating Activities: | |||
Net income (loss) | $ | $( | |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||
Depreciation and amortization | |||
Impairment of real estate | |||
Gain on sales of real estate | ( | ||
Gain 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) | |||
Six Months Ended June 30, | |||
2026 | 2025 | ||
Financing Activities: | |||
Borrowings under secured note payable | $ | $ | |
Repayments of borrowings under secured notes payable | ( | ||
Proceeds from issuance of unsecured senior notes payable | |||
Repayments of unsecured senior 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 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 | $ | $ | |
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 June 30, 2026, Alexandria has a
total market capitalization of $21.84 billion and an asset base that includes 36.0 million RSF of operating properties and 2.8 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 June 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 (loss) 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 (loss) 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 (loss) 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 (loss) 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
2025 (in thousands):
Three Months Ended June 30, | Six Months Ended June 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 six months ended June 30, 2026, revenues that were subject to the lease accounting standard
aggregated $630.3 million and $1.27 billion, respectively, and represented 95.1 % and 95.4 % of our total revenues. During the three and
six months ended June 30, 2025, revenues that were subject to the lease accounting standard aggregated $724.0 million and
$1.46 billion, respectively, and represented 95.0 % and 95.8 % of our total revenues. Our other income consisted primarily of
management 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 June 30, 2026 and December 31, 2025, our general allowance balance aggregated
$18.8 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 six months ended June 30, 2026 included $12.9 million and $24.3 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 not
deemed to be liabilities as they 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 preclude the agreements
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):
June 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 June 30, 2026, we had 23 operating properties aggregating 1.7 million RSF and land parcels aggregating 2.0 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 June 30, 2026 and December 31, 2025 (in thousands):
June 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)
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 six months ended June 30, 2026 | $ | ||||||||||||
Completed in July 2026: | |||||||||||||
3825 and 3875 Fabian Way | Palo Alto/San Francisco Bay Area | 7/14/26 | |||||||||||
$ | (1) | ||||||||||||
(1)Represents the aggregate contractual sales price of our dispositions, which differs from sales proceeds disclosed in our consolidated statement of cash flows under
“Investing activities” (proceeds from sales of real estate), “Financing activities” (contributions from and sales of noncontrolling interests), and “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.
Impairment of real estate
During the six months ended June 30, 2026, we recognized impairment charges aggregating $228.0 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. We expect to complete the sale within 12 months.
San Diego market
•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 Sorrento Mesa, to its estimated fair value less costs to sell of approximately $43.1
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.
•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 alignment with
our Megacampus strategy, resulting in our decision to monetize these assets and reallocate capital to other projects with
greater value-creation opportunities. We expect to complete the sale 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 $41.3 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 12 months.
25
3.INVESTMENTS IN REAL ESTATE (continued)
•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. 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.
Canada (Non-cluster) market
•Impairment charge of $61.6 million was recognized to reduce the carrying amount of one non-laboratory property aggregating
property met the criteria for classification as held for sale as of June 30, 2026, following our decision to sell the asset and
reallocate the substantial near-term capital that redeveloping the asset would have required toward other projects with greater
value-creation opportunities. We expect to complete the sale within the next 12 months.
In addition, we recognized an impairment charge of $27.8 million in connection with an amendment to the sales agreement for
our Montreal portfolio, reducing its carrying amount to its estimated fair value less costs to sell of approximately $134.5 million.
This portfolio has been classified as held for sale since the fourth quarter of 2025. The disposition of our Canadian portfolio
does not represent a strategic shift that has had, or will have, a major effect on our operations or financial results and,
therefore, does not meet the criteria for classification as discontinued operations.
In determining the carrying amounts of the assets for the impairment analyses, we considered their net book values, estimated
costs to sell, and the effect of approximately $33.0 million of cumulative net foreign currency translation losses recorded in
accumulated other comprehensive income. These losses are expected to be reclassified to earnings upon substantial
completion of the disposition of our Canada assets.
26
3.INVESTMENTS IN REAL ESTATE (continued)
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 $183.0 million as of June 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. 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 $183.0 million as of June 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 June 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 argument before a single justice, the application was denied without
prejudice to determination by a full panel. ARE’s appeal remains pending.
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. The NYS Action remains pending.
27
4.CONSOLIDATED AND UNCONSOLIDATED REAL ESTATE JOINT VENTURES
own, develop, and operate real estate properties. As of June 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)The noncontrolling interest share of our joint venture partner is anticipated to decrease to 25%, as we expect to fund the majority of future construction costs at the
campus until our ownership interest increases to 75%, after which future capital would be contributed pro rata with our partner.
(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.
28
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.
June 30, 2026 | December 31, 2025 | |||
Investments in real estate | $ | $ | ||
Cash and cash equivalents | ||||
Other assets | ||||
Total assets | $ | $ | ||
Secured note 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 | $ | $ |
29
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. None of our consolidated VIEs’ assets have restrictions that limit
their use to settle specific obligations of the VIE. There are no creditors or other partners of our consolidated VIEs that have recourse to
our general credit, and our maximum exposure to our consolidated VIEs is 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 converted into a redeemable noncontrolling interest that accrued a fixed 4.05 % annual
preferred return (“distributions”). In January 2026, the 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.
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 six months ended June 30, 2026 and 2025, we distributed
$112.4 million and $123.6 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 June 30,
2026 and December 31, 2025 (in thousands):
Property | June 30, 2026 | December 31, 2025 | ||
1655 and 1725 Third Street | $ | $ | ||
101 West Dickman Street | ||||
Other | ||||
$ | $ |
Our maximum exposure related to our only unconsolidated VIE, 101 West Dickman Street, is limited to our investment in this
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 June 30, 2026.
(3)The unconsolidated real estate joint venture is in the process of working with prospective lenders to refinance this debt. As of June 30, 2026, our investment in this
unconsolidated real estate joint venture was $9.8 million.
(4)This loan is subject to a SOFR floor of 0.75 %.
30
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 June 30, 2026, we had 336 properties aggregating 36.0 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 June 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 June 30, 2026, our 336 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 66.4 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 6.7 years and 18.3 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 June 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.
31
5.LEASES (continued)
Direct financing and sales-type leases
As of June 30, 2026, we have one direct financing lease agreement, with a net investment balance of $43.0 million, for a
parking structure with a remaining lease term of 66.4 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 June 30, 2026, we also have one sales-type lease for a property in the Seattle market. As of June 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 June 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):
June 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 | $ | $ |
outlined in the table below (in thousands):
Year | Total | |
2026 | $ | |
2027 | ||
2028 | ||
2029 | ||
2030 | ||
Thereafter | ||
Total | $ |
Income from rentals
revenues subject to the lease accounting standard and the revenue recognition accounting standard as shown below (in thousands):
Three Months Ended June 30, | Six Months Ended June 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 | $ | $ | $ | $ | ||||
32
5.LEASES (continued)
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 June 30, 2026, the present value of the remaining contractual payments aggregating $759.4 million under our operating
lease agreements, including our extension options that we are reasonably certain to exercise, was $354.9 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 $689.2 million. As of June 30, 2026, the weighted-average remaining lease term of
operating leases in which we are the lessee was approximately 61 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 June 30, 2026 included leases for 31 of our properties, which accounted for approximately 9 %
of our total number of properties. Excluding one ground lease that expires in 2036 related to one operating property with a net book
value of $3.3 million as of June 30, 2026, 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.
lease liability reflected in our unaudited consolidated balance sheet as of June 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 | $ |
33
5.LEASES (continued)
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 six months ended June 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 $12.2 million and $156.1 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 six months ended June 30, 2026 and 2025, our costs for operating leases in which we are the lessee were
as follows (in thousands):
Three Months Ended June 30, | Six Months Ended June 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):
June 30, 2026 | December 31, 2025 | ||
Cash and cash equivalents | $ | $ | |
Restricted cash: | |||
Development escrows | |||
Security deposits | |||
Other | |||
Total | $ | $ |
34
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 June 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 $397.4 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 (loss) 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 (loss) 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 (loss) 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.
35
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 (loss) 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 $317.6 million for our investments in privately held entities that report NAV. Our
funding commitments expire at various dates over the next 12 years, with a weighted-average expiration of 7.9 years as of June 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 5.5 years as of June 30, 2026.
June 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 | $ | $ | $( | $ | |||
36
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 June 30, 2026 aggregated to a loss of $122.8 million, which consisted of upward adjustments aggregating $58.6 million,
downward adjustments aggregating $11.2 million, and impairments aggregating $170.2 million.
thousands):
Three Months Ended June 30, | Six Months Ended June 30, | |||||||
2026 | 2025 | 2026 | 2025 | |||||
Realized gains (losses) | $ | (1) | $( | $ | (1) | $ | ||
Unrealized gains (losses) | ( | ( | ||||||
Investment income (losses) | $ | (2) | $( | $ | (2) | $( | ||
(1)Consists of realized gains of $10.3 million and $28.5 million, partially offset by impairment charges of $9.0 million and $21.4 million during the three and six months
ended June 30, 2026, respectively.
(2)Investment income of $133.2 million and $128.6 million included $30.2 million and $28.5 million of equity in earnings of our equity method investments during the three
and six months ended June 30, 2026, respectively.
Six Months Ended June 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 (losses) 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.
37
8. OTHER ASSETS
June 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
June 30, 2026 | ||||||||
Weighted-Average | ||||||||
Notes Receivable | Effective Interest Rate | Maturity Date | Balance | December 31, 2025 | ||||
Secured by real estate assets in San Diego | $ | $ | ||||||
Secured by real estate assets in Greater Boston | ||||||||
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 six months ended June 30, 2026, no adjustment to the provision for expected credit losses related to our notes receivable
38
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 June 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 six months ended June 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 June 30, 2026 | $ | $ | $ | $ | ||||
As of December 31, 2025 | $ | $ | $ | $ | ||||
Cross-currency swap agreements: | ||||||||
As of June 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 (loss) 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 June 30, 2026 and
December 31, 2025, the carrying values of investments in privately held entities that report NAV aggregated $636.1 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.
39
9.FAIR VALUE MEASUREMENTS (continued)
Assets and liabilities measured at fair value on a nonrecurring basis
value hierarchy, as of June 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: | ||||||||||
Six months ended June 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: | ||||||||||
Six months ended June 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 June 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 $1.69 billion and $1.50
billion in our unaudited consolidated balance sheets as of June 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 $390.4 million and $413.3 million as of
June 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 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.
40
9.FAIR VALUE MEASUREMENTS (continued)
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):
June 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 | $ | $ | $ | $ | $ | ||||
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
41
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 line of credit and commercial paper program(3) | (3) | (3) | (3) | $ | $ | $ | $ | $ | $ | $ | $( | $ | ||||||||||||
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 debt 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. In July 2026, we executed an agreement to amend our $5.0 billion unsecured senior line of credit. The amendment is expected to become effective in September 2026, upon the satisfaction of
certain conditions. The amendment extends the maturity date from January 22, 2030 to January 22, 2032, including extension options that we control. In addition, the amendment reduces the applicable borrowing rate and eliminates the
existing sustainability-linked pricing adjustments, resulting in an applicable borrowing rate and facility fee of SOFR plus 0.725 % and 0.15 %, respectively, from the currently applicable borrowing rate and facility fee of SOFR plus 0.835 % and
42
10.SECURED AND UNSECURED SENIOR DEBT (continued)
and commercial paper program as of June 30, 2026 (dollars in thousands):
Fixed-Rate Debt | Variable-Rate Debt | Weighted-Average | ||||||||||
Interest | Remaining Term (in years) | |||||||||||
Total | Percentage | Rate(1) | ||||||||||
Unsecured senior notes payable | $ | $ | $ | |||||||||
Unsecured senior line of credit and commercial paper program | (2) | (2) | (3) | |||||||||
Total/weighted average | $ | $ | $ | (3) | ||||||||
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 June 30, 2026, we had no outstanding balance on our unsecured senior line of credit and $1.99 billion of commercial paper notes outstanding.
(3)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 9.2 years. The commercial paper notes sold during the six
months ended June 30, 2026 were issued at a weighted-average yield to maturity of 4.17 % and had a weighted-average maturity term of 15 days.
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.
$5.0 billion unsecured senior line of credit
As of June 30, 2026, our unsecured senior line of credit, which matures in 2030, including extension options under our control,
had aggregate commitments of $5.0 billion, and bore an interest rate of SOFR plus 0.835 %. In addition to the cost of borrowing, the
unsecured senior line of credit is subject to an annual facility fee of 0.14 % based on the aggregate commitments outstanding. Based on
achievement of certain annual sustainability metrics, the interest rate and facility fee rate are also subject to upward or downward
adjustments of up to four basis points with respect to the interest rate and up to one basis point with respect to the facility fee rate.
During the three months ended March 31, 2026, we achieved certain annual sustainability targets, as described in our
unsecured senior line of credit agreement, which reduced the borrowing rate by four basis points for a one-year period to SOFR plus
outstanding balance on our unsecured senior line of credit.
In July 2026, we executed an agreement to amend our $5.0 billion unsecured senior line of credit. The amendment is expected
to become effective in September 2026, upon the satisfaction of certain conditions. The amendment extends the maturity date from
January 22, 2030 to January 22, 2032, including extension options that we control. In addition, the amendment reduces the applicable
borrowing rate and eliminates the existing sustainability-linked pricing adjustments, resulting in an applicable borrowing rate and facility
fee of SOFR plus 0.725 % and 0.15 %, respectively, from the currently applicable borrowing rate and facility fee of SOFR plus 0.835 %
and 0.14 %, respectively. In connection with the amendment, we expect to recognize a loss on early extinguishment of debt of
approximately $3.3 million for the partial write-off of unamortized loan fees.
$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 six
43
10.SECURED AND UNSECURED SENIOR DEBT (continued)
months ended June 30, 2026, the notes were issued at a weighted-average yield to maturity of 4.17 % and had a weighted-average
maturity term of 15 days. As of June 30, 2026, we had $1.99 billion outstanding under our commercial paper program.
Three Months Ended June 30, | Six Months Ended June 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 the swap 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.
The maturity of the swap agreements did not result in the reclassification of amounts previously recognized in accumulated other
comprehensive income to earnings because the related net investment had not been sold or substantially liquidated as of June 30,
2026.
During the three months ended June 30, 2026, we entered into new fixed-to-fixed cross-currency swap agreements
designated as net investment hedges, which were deemed effective on the commencement date and remained highly effective as of
June 30, 2026. As of June 30, 2026, the aggregate notional amount of our outstanding cross-currency swap agreements was CAD
$270.0 million, and the corresponding total USD notional amount was approximately $197.3 million. The new swap agreements mature
on January 29, 2027.
As of June 30, 2026, all of our assets in Canada were designated as held for sale. Unrealized gains or losses related to our
cross-currency swap agreements will be reclassified from accumulated other comprehensive income into net income upon the sale or
substantial liquidation of our real estate investments 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. Comparative information for the impact on the three and six months ended June 30,
2025 is not presented as there were no outstanding cross-currency swap agreements during those periods. Amounts are presented in
USD (in thousands).
Balance Sheet Location | June 30, 2026 | December 31, 2025 | ||
Other assets | $ | $ | ||
Accounts payable, accrued expenses, and other liabilities | $ | $ |
Location in Consolidated Statement of Comprehensive Income | June 30, 2026 | |||||
Three Months Ended | Six Months Ended | |||||
Total unrealized gains recognized in other comprehensive income | Unrealized gains on foreign currency translation, net | $ | $ | |||
Location in Consolidated Statement of Operations | June 30, 2026 | |||||
Three Months Ended | Six Months Ended | |||||
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.
44
12. ACCOUNTS PAYABLE, ACCRUED EXPENSES, AND OTHER LIABILITIES
2026 and December 31, 2025 (in thousands):
June 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 June 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 June 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.
45
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 June 30, 2026, no forward equity
sales agreements were outstanding.
months ended June 30, 2026 and 2025 (in thousands, except per share amounts):
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2026 | 2025 | 2026 | 2025 | ||||
Net (loss) income | $( | $( | $ | $( | |||
Net income attributable to noncontrolling interests | ( | ( | ( | ( | |||
Net income attributable to unvested RSAs with nonforfeitable dividends | ( | ( | ( | ( | |||
Numerator for basic and diluted EPS – net (loss) income 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) income per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders: | |||||||
Basic | $( | $( | $ | $( | |||
Diluted | $( | $( | $ | $( | |||
46
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 six months ended June 30, 2026, we had no activity under our ATM program. As of June 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.
Accumulated other comprehensive loss
The change in accumulated other comprehensive loss attributable to Alexandria Real Estate Equities, Inc.’s stockholders for
the six months ended June 30, 2026 was due to net unrealized losses of $3.6 million, and included $11.7 million of unrealized foreign
currency translation losses related to our operations in Canada, partially offset by $8.1 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 170.7 million shares were issued and
outstanding as of June 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 June 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 June 30, 2026.
47
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.
2026 and 2025 (in thousands):
Three Months Ended June 30, | Six Months Ended June 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.
48
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 June 30, | Six Months Ended June 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) | ( | ( | |||||
Gain on early extinguishment of debt | |||||||
Gain on sales of real estate | |||||||
Consolidated net (loss) income | $( | $( | $ | $( | |||
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.
June 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
Sales of real estate assets in July 2026
In July 2026, we completed the disposition of one 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, for an aggregate sales price of
$163.0 million, with no gain or loss recognized.
Refer to Note 3 – “Investments in real estate” to our unaudited consolidated financial statements for additional information.
49
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.
50
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 June 30, 2026, Alexandria has a total market capitalization of
$21.84 billion and an asset base that includes 36.0 million RSF of operating properties and 2.8 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 June 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
•75% 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.
51
Executive summary
Operating results
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2026 | 2025 | 2026 | 2025 | ||||
Net (loss) income attributable to Alexandria’s common stockholders – diluted: | |||||||
In millions | $(73.7) | $(109.6) | $286.7 | $(121.2) | |||
Per share | $(0.43) | $(0.64) | $1.68 | $(0.71) | |||
Funds from operations attributable to Alexandria’s common stockholders – diluted, as adjusted: | |||||||
In millions | $296.1 | $396.4 | $592.0 | $788.4 | |||
Per share | $1.73 | $2.33 | $3.46 | $4.63 | |||
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 June 30, 2026, unless stated otherwise) | |||
Occupancy of operating properties | 86.9% | ||
Occupancy of operating properties, including executed leases with future occupancy | 90.9% | ||
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 | 69% | ||
Adjusted EBITDA margin | 67% | ||
Percentage of leases containing annual rent escalations | 97% | ||
Weighted-average remaining lease term: | |||
Top 20 tenants | 10.0 | years | |
All tenants | 7.7 | years | |
Strong tenant collections(1): | |||
Rents and receivables for the three months ended June 30, 2026, collected as of the date of this report | 99.9% |
(1)Refer to “Tenant collections” under “Definitions and reconciliations” for additional details.
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 June 30, 2026)
•Net debt and preferred stock to Adjusted EBITDA of 7.0x and fixed-charge coverage ratio of 3.3x for the three months ended
June 30, 2026 annualized; the respective targets for the three months ending December 31, 2026, annualized, are 5.6x–6.2x
and 3.6x–4.1x.
•We expect improvement in our quarter-annualized net debt and preferred stock to Adjusted EBITDA ratio in the second
half of 2026 as we complete dispositions, sales of partial interests, and other capital sources.
•Significant liquidity of $3.60 billion and extension of our $5.0 billion unsecured senior line of credit to 2032.
•Only 6% of our total debt matures through 2028.
•9.7-year weighted-average remaining debt term, the longest among S&P 500 REITs.
•Total debt and preferred stock to gross assets of 31%.
•Intermediate-term goal for leverage: mid-5x range.
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Solid leasing volume exceeding 1.0 million RSF during the three months ended June 30, 2026
•Total leasing volume surpassed 1.0 million RSF during the three months ended June 30, 2026, increasing 60% from the three
months ended March 31, 2026 and exceeding the average quarterly leasing volume for the period from the second quarter of
2025 through the first quarter of 2026 of 952,365 RSF by approximately 87,000 RSF.
•Includes 397,919 RSF of combined previously vacant and development and redevelopment space; second-highest
amount since the second quarter of 2024, excluding the 466,598 RSF build-to-suit lease signed in the third quarter of
2025.
•75% of our leasing activity during the last twelve months was generated from our existing tenant base.
Three Months Ended | Six Months Ended June 30, 2026 | |||||
June 30, 2026 | March 31, 2026 | |||||
Leasing volume in RSF: | ||||||
Leasing of development and redevelopment space | 68,771 | 117,935 | 186,706 | |||
Leasing of previously vacant space | 329,148 | 148,734 | 477,882 | |||
397,919 | 266,669 | 664,588 | ||||
Lease renewals and re-leasing of space | 640,998 | 380,687 | 1,021,685 | |||
Total leasing volume | 1,038,917 | 647,356 | 1,686,273 | |||
Lease renewals and re-leasing of space: | ||||||
Rental rate changes | (0.7)% | (15.0)% | (7.4)% | |||
Rental rate changes (cash basis) | (4.3)% | (15.8)% | (9.6)% | |||
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 assets, sales of partial interests, and other capital sources.
(in millions) | Sales Price | % | ||
Completed as of the date of this report | $170 | |||
Pending transactions subject to non-refundable deposits, signed letters of intent, and/or sale agreement negotiations | 1,159 | |||
1,329 | 46% | |||
Dispositions, sales of partial interests, and other capital sources in process | 1,100 | 38% | ||
Multiple alternatives under evaluation | 471 | 16% | ||
2026 guidance midpoint for dispositions, sales of partial interests, and other capital sources | $2,900 |
We expect to allocate this capital as follows (based on guidance midpoints):
(in millions) | 2026 Guidance (Midpoint) | |
Construction focused on highly leased developments and lease-up of vacant space | $1,750 | |
Reduction of debt to meet our leverage goal | 1,675 | |
Net cash provided by operating activities, as adjusted | (525) | |
$2,900 |
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Occupancy and leasing progress on temporary vacancy
Operating occupancy as of March 31, 2026 | 87.7% | ||
Key changes in occupancy: | |||
Reclassification of space at 3000 Minuteman Road from redevelopment to operating in 2Q26, fully leased with expected occupancy in 2Q27 | (0.4) | (1) | |
Previously disclosed 2Q26 key lease expirations with expected downtime | (0.8) | ||
Increase in occupancy, primarily due to the commencement of leases during 2Q26 | 0.4 | ||
Operating occupancy as of June 30, 2026 | 86.9 | ||
Vacant space with executed leases and future occupancy | 4.0 | (2) | |
Operating occupancy as of June 30, 2026, including executed leases with future occupancy | 90.9% |
(1)Refer to “Reduction of capital spend and funding needs” within this section for additional details regarding the 159,947 RSF lease executed during the three months
ended June 30, 2026.
(2)Represents executed leases aggregating 1.4 million RSF with occupancy expected upon completion of building and/or tenant improvements. The weighted-average
expected occupancy date is approximately November 2026, with expected annual rental revenue of approximately $69 million. We expect 64% of the total 1.4 million
RSF to be occupied by December 31, 2026. These spaces are located primarily in the Greater Boston, San Diego, and San Francisco Bay Area markets.
Key operating metrics
•Same property net operating income changes
•Decreased by 10.6% and 8.6% (cash basis) for the three months ended June 30, 2026, compared to the three months
ended June 30, 2025.
•Decreased by 11.5% and 11.2% (cash basis) for the six months ended June 30, 2026, compared to the six months ended
June 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 657,492 RSF during the three months ended March 31, 2026 and
260,888 RSF during the three months ended June 30, 2026, with weighted-average lease expiration dates of January
2026 and April 2026, respectively.
•Same properties average occupancy:
•87.1% for the three months ended June 30, 2026, compared to 92.6% same properties average occupancy for the three
months ended June 30, 2025.
•88.2% for the six months ended June 30, 2026, compared to 93.5% same properties average occupancy for the six
months ended June 30, 2025.
Reduction of capital spend and funding needs
•During the three months ended June 30, 2026, we executed a lease aggregating 159,947 RSF with an advanced technology
tenant at our redevelopment project at 3000 Minuteman Road in our Greater Boston market. The lease enables us to pivot a
portion of the redevelopment project from future laboratory and/or biomanufacturing use to a lower-cost advanced technology
use, reducing the project’s expected aggregate construction budget by approximately $80 million. We expect to deliver the
159,947 RSF of leased space in the second quarter of 2027 upon completion of building and tenant improvements.
•As a result, the leased space was reclassified from redevelopment to operating, reducing the redevelopment project from
431,550 RSF as of March 31, 2026 to 271,603 RSF as of June 30, 2026.
•We continue to evaluate the business and financial strategy for five projects aggregating 1.4 million RSF, which may allow us
to further reduce future construction funding requirements within our active pipeline.
•As of June 30, 2026, we executed letters of intent aggregating 108,800 RSF for advanced technology use at our
redevelopment project at 311 Arsenal Street. If we are successful in executing these potential leases, we expect to evaluate
whether all or a portion of this project will be placed back into operation without the need to further redevelop for laboratory
use.
•Non-income-producing assets as of June 30, 2026 are 16% of gross assets, a 4% reduction since December 31, 2024; we are
targeting a range of 11% to 16% by December 31, 2026.
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Alexandria’s development and redevelopment pipeline delivered incremental annual net operating income of $57 million during 2Q26,
with an additional $42 million anticipated to be delivered by 4Q26
•During the three months ended June 30, 2026, we placed into service one development project aggregating 426,927 RSF that
is 100% occupied by Bristol Myers Squibb at 4135 Campus Point Court in our University Town Center submarket and
delivered incremental annual net operating income aggregating $57 million.
•Annual net operating income (cash basis) from recently delivered projects is expected to increase by $40 million upon the
burn-off of initial free rent, which has a weighted-average remaining period of approximately five months.
•79% 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 during six months ended June 30, 2026 | $58 | 532,219 | 91% | ||||
Expected to be placed into service: | |||||||
Second half of 2026 | $42 | (1) | 174,662 | (2) | 84% | (3) | |
Fiscal years 2027 through 2028 | 93 | 1,258,004 | 68% | ||||
$135 | |||||||
(1)Includes expected partial deliveries through 2026 from projects expected to stabilize in 2027–2028, including speculative future leasing that is not yet fully
committed. Refer to the initial and stabilized occupancy years under “New Class A/A+ development and redevelopment properties: under construction” in Item 2 for
additional information.
(2)Represents the RSF of projects expected to stabilize in 2026. Does not include RSF for partial deliveries through 2026 from projects expected to stabilize in 2027–
2028.
(3)Represents the current leased/negotiating percentage of our 174,662 RSF development project that is expected to stabilize in 4Q26.
Continued successful management of general and administrative expenses
•General and administrative expenses for the three months ended June 30, 2026 aggregated $36.9 million, an increase of
$7.7 million, or 26.5%, compared with the three months ended June 30, 2025, but a decrease of $7.8 million, or 17.4%,
compared with the three months ended June 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.
•Compared to 2024, we continue to expect approximately $76 million of cumulative general and administrative expense savings
in 2025 and 2026 (based on the midpoint of our 2026 guidance range).
•For the trailing twelve months ended June 30, 2026, general and administrative expenses represented 6.6% of net operating
income, approximately half the average of other S&P 500 REITs for 2023–2025.
Key capital events
•In July 2026, we executed an agreement to amend our $5.0 billion unsecured senior line of credit. The amendment is expected
to become effective in September 2026, upon the satisfaction of certain conditions. The amendment extends the maturity date
from January 22, 2030 to January 22, 2032, including extension options that we control. In addition, the amendment reduces
the applicable borrowing rate to SOFR plus 0.725% from the currently applicable SOFR plus 0.835%. In connection with the
amendment, we expect to recognize a loss on early extinguishment of debt of approximately $3.3 million related to the partial
write-off of unamortized loan fees during the three months ended September 30, 2026.
•In April 2026, we repaid, upon maturity, $350.0 million of 3.80% unsecured senior notes payable. The repayment was funded
temporarily with borrowings under our commercial paper program, which will be repaid through planned dispositions, sales of
partial interests, and other capital sources included in our 2026 guidance. No gain or loss was incurred in connection with this
repayment.
•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.
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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 June 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, preserving liquidity, and sharing cash flows with our stockholders.
•Significant net cash provided by operating activities, as adjusted, retained for reinvestment aggregating $2.60 billion for the
years ended December 31, 2022 through 2025 and the midpoint of our 2026 guidance range.
•Dividend yield of 5.4% as of June 30, 2026 and dividend payout ratio of 42% for the three months ended June 30, 2026.
Key capital metrics as of or for the three months ended June 30, 2026
•$21.84 billion in total market capitalization.
•$9.02 billion in total equity capitalization.
•Non-real estate investments aggregating $1.69 billion:
•Unrealized gains presented in our consolidated balance sheet were $223.9 million, comprising gross unrealized gains and
losses aggregating $290.5 million and $66.6 million, respectively.
•Investment income of $133.2 million for the three months ended June 30, 2026, presented in our consolidated statement of
operations, consisted of $10.3 million of realized gains, $131.9 million of unrealized gains, and $9.0 million of impairment
charges.
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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 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 through the first half of 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 selectively 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 86.9% as of June 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% | ||||
Six months ended June 30, 2026 | $269,067 | $50.92 | 1.5 months | (7.4)% | 86.9% | ||||
Midpoint of 2026 guidance range | $510,000 | N/A | (5.0)% | 87.0% | |||||
Additionally, we have key lease expirations with expected downtime in 2026, primarily in the Greater Boston, San Francisco
Bay Area, and Seattle markets, aggregating 451,450 RSF as of June 30, 2026 with a weighted-average lease expiration date
of August 2026. These spaces are expected to become vacant at lease expiration and re-leased to new tenants. We expect
downtime on the 451,450 RSF to be approximately 12 to 24 months on a weighted-average basis. In addition, we have
identified 1.4 million RSF of key lease expirations in 2027 that are expected to have downtime of approximately 12 to 24
months on a weighted-average basis. Considering elevated new laboratory supply in these markets, 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 June 30, 2026, we anticipate that 1.4 million RSF of our projects undergoing construction will be placed into service from
July 1, 2026 through 2028 and will generate $135 million in future incremental annual net operating income. These projects
are 71% leased or under lease negotiations as of June 30, 2026. Furthermore, we have an additional 1.4 million RSF of
projects under evaluation which are 15% 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.
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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
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 funding for construction spending in 2026 to aggregate $1.75 billion at the midpoint of our 2026
guidance range for construction spending. 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, sales
of partial interests, and other capital sources to generate capital. However, current real estate market conditions, including
lower property valuations and increased capitalization rates, will likely adversely affect the timing and pricing of such
transactions.
•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 in core, land, and
non-core real estate assets. 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.
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 to 3.50%–3.75% during 2025, interest rates remain
elevated. 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, sales of partial interests, and other capital sources of
approximately $2.90 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 total dispositions and a trend of increasing impairments of real estate and capitalization rates
associated with dispositions, sales of partial interests, and other capital sources in our real estate assets over the last several
years (dollars in thousands), which is partly attributable to the quality of core and non-core assets sold during each period.
Aggregate Sales Price of Dispositions, Sales of Partial Interests, and Other Capital Sources | 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) | |||
Six months ended June 30, 2026 | $7,350 | $227,969 | N/A | ||||||
Midpoint of 2026 guidance range | $2,900,000 | (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, sales of partial interests, and other capital sources 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 months ended June
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 with expected sales of approximately $2.90 billion at
the midpoint of our 2026 guidance range for dispositions, sales of partial interests, and other capital sources. We may utilize
multiple sources of capital, including land and non-core dispositions, sales of partial interests, and other capital sources, 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 – 4Q26 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
$555.8 million as of June 30, 2026. To achieve the midpoint of our 2026 guidance range of $2.90 billion for dispositions, sales
of partial interests, and other capital sources, 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 expect to substantially complete our large-scale non-core disposition program in 2026, although some of these
dispositions could close in 2027. As of June 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 senior
debt by approximately $1.68 billion, at the midpoint of our 2026 guidance range.
•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.
Although we repaid a portion of our outstanding unsecured senior debt during 2026, these repayments have been fully
financed through the issuance of new unsecured senior debt. As a result, we have not yet made progress toward our targeted
$1.68 billion net unsecured senior debt reduction. Accordingly, achievement of this target debt reduction remains dependent on
our ability to generate proceeds during 2026 from planned real estate dispositions, sales of partial interests, and other capital
sources.
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.
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The table below reflects interest rates related to unsecured senior notes payable that we have issued over the last several
years and in February 2026 (dollars in thousands). There is no assurance that high debt costs will not continue into the future.
Unsecured Senior Notes Payable Issued | Interest Rate(1) | |||
2024 | $1,000,000 | 5.57% | ||
2025 | $550,000 | 5.66% | ||
February 2026 issuance | $750,000 | 5.41% |
(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 | |||
Six months ended June 30, 2026 | $272,616 | $(143,690) | $128,926 | |||
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 properties, 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 June 30, 2026, December 31, 2025, and December 31, 2024 aggregated to $290.5 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.
For the six months ended June 30, 2026, we recognized $28.5 million in realized gains on non-real estate investments and are
projecting realized gains of $75 million in 2026 at the midpoint of our guidance range. During the six months ended
June 30, 2026, we also recognized impairment charges and unrealized gains that reflect continued valuation pressures. The
table below presents components of investment income (loss) on our non-real estate investments (in thousands):
Realized Gains | Significant Realized Losses | Impairments | Unrealized (Losses) Gains | Investment (Loss) Income | ||||||
2024 | $117,214 | $— | $(58,090) | $(112,246) | $(53,122) | |||||
2025 | $115,722 | $(103,329) | $(95,716) | $26,980 | $(56,343) | |||||
Six months ended June 30, 2026 | $28,490 | $— | $(21,446) | $121,601 | $128,645 | |||||
Midpoint of 2026 guidance range | $75,000 | N/A(1) | ||||||||
(1)We are not able to forecast investment income (loss) 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.
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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 21.3 million RSF as of
June 30, 2026, of which 79% 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 86.9% as of June 30, 2026:
•Outperforms market occupancy levels in our top three markets: Greater Boston, San Diego, and San Francisco
Bay Area.
•Additional 4.0% occupancy is expected from 1.4 million RSF (4.0% of total operating RSF) of leased space that
was temporarily vacant as of June 30, 2026, primarily in our Greater Boston, San Diego, and San Francisco Bay
Area markets. These spaces are expected to become occupied upon completion of building and/or tenant
improvements, with a weighted‑average expected occupancy date of November 2026, and are expected to
generate annual rental revenue of approximately $69 million upon lease commencement.
•During the six months ended June 30, 2026, we placed into service development and redevelopment projects
aggregating 532,219 RSF that are 91% occupied in various submarkets and delivered incremental annual net
operating income of $58 million.
•Expected incremental annual net operating income from projects anticipated to be placed into service from the third
quarter of 2026 to the end of 2028:
•$42 million from deliveries in the second half of 2026.
•$93 million from 2027-2028 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 June 30, 2026, 75% of our leasing activity during the last twelve months was from our existing tenant base.
•As of June 30, 2026, 88% 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 June 30,
2026.
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•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 $3.60 billion as of June 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.
•$104.0 million in capital contributions to fund construction expected from our existing consolidated real estate
joint venture partners from July 1, 2026 through 2027 and beyond.
•$2.90 billion from real estate dispositions, sales of partial interests, and other capital sources at the midpoint of
our 2026 guidance range.
•As of June 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 June 30, 2026, our fixed-rate debt represents 84.4% of our total debt, which provides predictability in debt
servicing costs. Since 2022, our quarter-end fixed-rate debt has averaged 95.7%.
•Our debt maturity schedule is well laddered, which provides us with financial flexibility and reduces short-term
refinancing risks. As of June 30, 2026, only 6% of our debt matures through 2028.
•As of June 30, 2026, the weighted-average remaining term of our debt is 9.7 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. Pro forma for the amended and restated unsecured senior line of credit expected to become
effective in September 2026, our weighted-average remaining debt term would have been 10.0 years.
•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 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 technologies 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.
•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 self-funded 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.
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As a result, we have achieved the following outcomes:
•During the three months ended June 30, 2026, general and administrative expenses aggregated
$36.9 million, a decrease of $5.2 million, or 12%, compared to the quarterly average for 2024.
•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 June 30, 2026, our general and administrative expenses were 6.6% 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.
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Operating summary
Same Property Performance: Net Operating Income Changes | Rental Rate Changes: Renewed/Re-Leased Space | |||||||||
Margins(3) | Favorable Lease Structure(4) | |||||||||
Operating | Adjusted EBITDA | Strategic Lease Structure by Owner and Operator of Collaborative Megacampus Ecosystems | ||||||||
69% | 67% | 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% | |||||||||
Net Debt and Preferred Stock to Adjusted EBITDA(5) | Fixed-Charge Coverage Ratio(5) | |||||||||
(1)
(2)
(1)
(2)
5.6x to 6.2x
3.6x to 4.1x
Mid-5x Range
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.
(2)Refer to footnote 2 under “Leasing activity” in Item 2 for additional details.
(3)For the three months ended June 30, 2026.
(4)Percentages calculated based on our annual rental revenue in effect as of June 30, 2026.
(5)Quarter annualized.
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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 | ||||
88% | 57% | |||
of ARE’s Top 20 Tenant Annual Rental Revenue | of ARE’s Total Annual Rental Revenue | |||
Weighted Average Remaining Term(4) | ||||
10.0 Years | 7.7 Years | |||
of ARE’s Top 20 Tenants | All Tenants | |||
As of June 30, 2026. Annual rental revenue represents amounts in effect as of June 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)83% of our annual rental revenue from advanced technologies tenants is from investment-grade or publicly traded large cap tenants.
(3)81% 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 June 30, 2026.
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Leasing activity
The following table summarizes our leasing activity at our properties:
Three Months Ended | Six Months Ended | Year Ended | |||||||||||||
June 30, 2026 | June 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 | (0.7)% | (4.3)% | (7.4)% | (9.6)% | 7.0% | 3.5% | |||||||||
New rates | $39.03 | (2) | $41.66 | (2) | $43.08 | $46.04 | $52.71 | $53.66 | |||||||
Expiring rates | $39.29 | $43.52 | $46.51 | $50.94 | $49.27 | $51.87 | |||||||||
RSF | 640,998 | 1,021,685 | 2,543,473 | ||||||||||||
Tenant improvements/leasing commissions | $45.57 | (3) | $50.92 | $55.34 | |||||||||||
Weighted-average lease term | 6.8 years | 7.5 years | 9.0 years | ||||||||||||
Previously vacant/developed/ redeveloped space leased | |||||||||||||||
New rates | $33.55 | (2) | $34.13 | (2) | $41.49 | $41.34 | $72.30 | (4) | $67.56 | ||||||
Previously vacant RSF | 329,148 | 477,882 | 944,362 | ||||||||||||
Developed/redeveloped RSF(5) | 68,771 | 186,706 | 704,821 | (4) | |||||||||||
Weighted-average lease term | 9.6 years | 12.4 years | 13.8 years | ||||||||||||
Leasing activity summary (totals): | |||||||||||||||
New rates | $36.93 | $38.77 | $42.45 | $44.19 | $60.42 | $59.13 | |||||||||
RSF | 1,038,917 | 1,686,273 | 4,192,656 | ||||||||||||
Weighted-average lease term | 8.0 years | 10.1 years | 11.9 years | ||||||||||||
Lease expirations(1) | |||||||||||||||
Expiring rates | $50.81 | $53.94 | $53.81 | $58.39 | $54.22 | $55.56 | |||||||||
RSF | 1,169,042 | (6) | 2,509,851 | 4,460,081 | |||||||||||
Leasing activity includes 100% of results for properties in which we have an investment.
(1)Excludes month-to-month leases aggregating 291,724 RSF and 58,516 RSF as of June 30, 2026 and December 31, 2025, respectively. During the trailing twelve months
ended June 30, 2026, we granted free rent concessions averaging 1.5 months per annum.
(2)Leases executed with advanced technology tenants represented 29.2% of our total leasing volume for the three months ended June 30, 2026. Advanced technology
space typically generates lower rental rates, and requires lower capital investment, compared to laboratory space.
(3)Includes the impact of one lease aggregating 81,220 RSF at 10955 Alexandria Way in our Torrey Pines submarket, executed in April 2026 to accommodate the
expansion needs of a growth-stage life science company advancing next-generation therapeutics and to backfill a vacancy from a tenant wind-down. Delivery of the
space is expected in the first quarter of 2027 upon completion of tenant improvements. Excluding this lease, tenant improvements and leasing commissions for the
three months ended June 30, 2026 was $28.60 per RSF.
(4)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.
(5)Refer to “New Class A/A+ development and redevelopment properties: summary of pipeline” in Item 2 for additional information, including total project costs.
(6)Includes previously disclosed key lease expirations aggregating 260,888 RSF that became vacant during the three months ended June 30, 2026, with a weighted-
average lease expiration date of April 2026.
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Contractual lease expirations
The following tables summarize the contractual lease expirations as of June 30, 2026:
Year | RSF | Percentage of Occupied RSF | Annual Rental Revenue (per RSF)(1) | Percentage of Annual Rental Revenue | ||||||||||||||
2026 | (2) | 959,302 | 3.2% | $44.98 | 2.4% | |||||||||||||
2027 | 2,938,215 | 9.9% | $60.39 | 9.8% | ||||||||||||||
2028 | 3,641,986 | 12.3% | $50.48 | 10.2% | ||||||||||||||
2029 | 1,945,145 | 6.6% | $42.34 | 4.6% | ||||||||||||||
2030 | 2,525,229 | 8.5% | $43.24 | 6.0% | ||||||||||||||
2031 | 3,571,099 | 12.1% | $53.19 | 10.5% | ||||||||||||||
2032 | 961,096 | 3.3% | $54.69 | 2.9% | ||||||||||||||
2033 | 2,169,347 | 7.3% | $49.96 | 6.0% | ||||||||||||||
2034 | 2,566,256 | 8.7% | $67.46 | 9.6% | ||||||||||||||
2035 | 1,032,429 | 3.5% | $57.15 | 3.3% | ||||||||||||||
Thereafter | 7,227,517 | 24.6% | $87.19 | 34.7% | ||||||||||||||
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/ Anticipating | Remaining Expiring Leases | Total(2) | Leased | Negotiating/ Anticipating | Remaining Expiring Leases | Total | |||||||||||||||
Greater Boston | 101,347 | 12,190 | 93,849 | 207,386 | $51.56 | 42,458 | — | 106,399 | 148,857 | $66.73 | ||||||||||||
San Diego | — | — | 83,965 | 83,965 | 60.25 | — | — | 383,498 | 383,498 | 42.30 | ||||||||||||
San Francisco Bay Area | 155 | 17,357 | 17,031 | 34,543 | 37.48 | 375 | 15,212 | 180,738 | 196,325 | 72.94 | ||||||||||||
Seattle | 6,193 | 6,276 | 22,291 | 34,760 | 29.37 | 18,205 | 96,573 | 174,346 | 289,124 | 42.21 | ||||||||||||
Maryland | 6,833 | — | 7,696 | 14,529 | 81.74 | — | — | 170,981 | 170,981 | 29.91 | ||||||||||||
Research Triangle | 13,385 | 11,913 | 8,853 | 34,151 | 23.99 | 39,891 | — | 206,807 | 246,698 | 34.64 | ||||||||||||
New York City | — | — | 32,890 | 32,890 | 97.03 | — | — | 98,612 | 98,612 | 98.03 | ||||||||||||
Texas | 65,628 | — | — | 65,628 | 28.77 | — | — | 26,160 | 26,160 | 27.74 | ||||||||||||
Subtotal | 193,541 | 47,736 | 266,575 | 507,852 | 49.34 | 100,929 | 111,785 | 1,347,541 | 1,560,255 | 49.26 | ||||||||||||
Key lease expirations with expected downtime | 31,391 | 192,847 | 227,212 | 451,450 | (3) | 40.10 | — | — | 1,377,960 | 1,377,960 | (3) | 72.92 | ||||||||||
Total | 224,932 | 240,583 | 493,787 | 959,302 | $44.98 | 100,929 | 111,785 | 2,725,501 | 2,938,215 | $60.39 | ||||||||||||
Percentage of expiring leases | 23% | 25% | 52% | 100% | 3% | 4% | 93% | 100% | ||||||||||||||
Contractual lease expirations for properties classified as held for sale as of June 30, 2026 are excluded from the information on this page.
(1)Amounts in effect as of June 30, 2026.
(2)Excludes month-to-month leases aggregating 291,724 RSF as of June 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 in early discussions for 190,085 RSF.
2026 Key Lease Expirations with Expected Downtime | 2027 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 | ||||||||
451,450 RSF | $18.1M | August 2026 | 12 to 24 months | 1,377,960 RSF | $100.5M | March 2027 | 12 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 | Other | ||
Current Leasing Status (Based on RSF) | Current Leasing Status (Based on RSF) | ||||||||||
Leased/Negotiating | Early Discussions | Marketing |
Early Discussions | Marketing |
68
Top 20 tenants
88% 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
8.8% of our annual rental revenue in effect as of June 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 June 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 | 8.5 | 1,653,689 | $ | 161,572 | 8.8% | A2 | A | $107.1 | |||||||||||||||
2 | Eli Lilly and Company | 9.0 | 1,054,241 | 92,202 | 5.0 | Aa3 | AA- | $883.2 | ||||||||||||||||
3 | Moderna, Inc. | 12.4 | 462,100 | 71,571 | 3.9 | — | — | $15.0 | ||||||||||||||||
4 | AstraZeneca PLC | 5.7 | 611,326 | 56,151 | (2) | 3.0 | A1 | A+ | $273.8 | |||||||||||||||
5 | Takeda Pharmaceutical Company Limited | 10.3 | 386,111 | 41,673 | 2.3 | Baa1 | BBB+ | $50.3 | ||||||||||||||||
6 | Eikon Therapeutics, Inc.(3) | 13.0 | 299,638 | 38,907 | 2.1 | — | — | $0.6 | ||||||||||||||||
7 | Illumina, Inc. | 5.3 | 792,687 | 29,977 | 1.6 | Baa3 | BBB | $18.9 | ||||||||||||||||
8 | United States Government | 4.1 | 414,499 | 29,340 | (4) | 1.6 | Aaa | AA+ | $— | |||||||||||||||
9 | Uber Technologies, Inc. | 56.3 | (5) | 1,009,188 | 27,869 | 1.5 | Baa1 | BBB+ | $172.9 | |||||||||||||||
10 | Boston Children's Hospital | 10.7 | 309,231 | 26,294 | 1.4 | Aa2 | AA | $— | ||||||||||||||||
11 | Novartis AG | 1.9 | (6) | 321,743 | 25,111 | 1.4 | Aa3 | AA- | $290.2 | |||||||||||||||
12 | Sanofi | 4.5 | 267,278 | 22,045 | 1.2 | Aa3 | AA | $115.7 | ||||||||||||||||
13 | Alphabet Inc. | 1.9 | 418,600 | 21,837 | 1.2 | Aa2 | AA+ | $3,530.7 | ||||||||||||||||
14 | New York University | 6.1 | 218,983 | 21,073 | 1.1 | Aa2 | AA- | $— | ||||||||||||||||
15 | Massachusetts Institute of Technology | 3.5 | 242,428 | 20,529 | 1.1 | Aaa | AAA | $— | ||||||||||||||||
16 | Merck & Co., Inc. | 7.8 | 300,930 | 18,895 | 1.0 | Aa3 | A+ | $253.5 | ||||||||||||||||
17 | Vaxcyte, Inc. | 8.5 | 230,755 | 18,656 | 1.0 | — | — | $6.4 | ||||||||||||||||
18 | Altos Labs, Inc.(7) | 14.8 | 158,990 | 18,407 | 1.0 | — | — | $— | ||||||||||||||||
19 | Charles River Laboratories, Inc. | 9.3 | 187,418 | 18,061 | 1.0 | — | — | $8.6 | ||||||||||||||||
20 | Amgen Inc. | 9.6 | 309,945 | 17,899 | 1.0 | Baa1 | BBB+ | $175.8 | ||||||||||||||||
Total/weighted-average | 10.0 | (5) | 9,649,780 | $ | 778,069 | 42.2% | ||||||||||||||||||
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 methodologies of calculating annual rental revenue from unconsolidated real estate joint
ventures and average market capitalization, respectively.
(1)Based on total annual rental revenue in effect as of June 30, 2026.
(2)Of the $56.2 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 anticipate 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 March 31, 2026, the company held $512 million in cash and marketable securities.
(4)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 cancellable prior to the lease expiration date.
(5)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 8.3 years as of June 30, 2026.
(6)Includes one 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. We do not expect the tenant to renew the lease and are actively marketing the space for re-lease.
(7)Altos Labs, Inc. is a private biotechnology company led by Hal Barron, M.D., former Chief Scientific Officer and President, R&D at GlaxoSmithKline. Altos Labs launched
with $3.0 billion in private funding in 2022, and is backed by a group of prominent investors.
69
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 June 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 | 9,500,175 | 566,673 | 1,201,425 | 11,268,273 | 29% | 63 | $699,694 | 38% | $88.73 | |||||||||
San Diego | 6,444,923 | 466,598 | — | 6,911,521 | 19 | 56 | 338,631 | 18 | 58.44 | |||||||||
San Francisco Bay Area | 5,861,540 | 212,657 | 84,157 | 6,158,354 | 16 | 51 | 307,239 | 17 | 70.78 | |||||||||
Seattle | 2,846,133 | 227,577 | — | 3,073,710 | 8 | 39 | 111,216 | 6 | 44.58 | |||||||||
Maryland | 3,676,755 | — | — | 3,676,755 | 9 | 47 | 151,419 | 8 | 45.79 | |||||||||
Research Triangle | 3,436,158 | — | — | 3,436,158 | 9 | 36 | 88,834 | 5 | 27.52 | |||||||||
New York City | 727,674 | — | — | 727,674 | 2 | 2 | 65,192 | 4 | 93.85 | |||||||||
Texas | 1,651,094 | — | 66,350 | 1,717,444 | 4 | 13 | 39,944 | 2 | 28.37 | |||||||||
Non-cluster/other markets | 170,429 | — | — | 170,429 | — | 6 | 5,679 | — | 61.58 | |||||||||
Properties held for sale | 1,718,335 | — | — | 1,718,335 | 4 | 23 | 38,554 | 2 | 29.71 | |||||||||
36,033,216 | 1,473,505 | 1,351,932 | 38,858,653 | 100% | 336 | $1,846,402 | 100% | $60.45 | ||||||||||
2,825,437 | ||||||||||||||||||
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 | 6/30/26 | 3/31/26 | 6/30/25 | 6/30/26 | 3/31/26 | 6/30/25 | ||||||
Greater Boston | 83.0% | (1) | 83.8% | 90.1% | 73.7% | 73.1% | 76.7% | |||||
San Diego | 89.9 | 88.4 | 94.8 | 89.9 | 88.4 | 94.8 | ||||||
San Francisco Bay Area | 83.1 | (2) | 87.6 | 88.9 | 81.9 | 86.4 | 85.2 | |||||
Seattle | 87.7 | 87.8 | 90.3 | 87.7 | 87.8 | 90.3 | ||||||
Maryland | 91.5 | 92.3 | 93.9 | 91.5 | 92.3 | 93.9 | ||||||
Research Triangle | 93.9 | 93.8 | 92.8 | 93.9 | 93.8 | 92.8 | ||||||
New York City | 95.5 | 95.8 | 88.9 | 95.5 | 95.8 | 88.9 | ||||||
Texas | 85.3 | 81.8 | 82.1 | 82.0 | 78.7 | 78.9 | ||||||
Subtotal | 87.1 | 87.8 | 91.0 | 83.8 | 84.0 | 86.3 | ||||||
Canada | N/A | N/A | 90.7 | N/A | N/A | 85.8 | ||||||
Non-cluster/other markets | 54.1 | 86.0 | 72.6 | 54.1 | 86.0 | 72.6 | ||||||
86.9% | (3) | 87.7% | 90.8% | 83.6% | 84.1% | 86.2% | ||||||
(1)Decline in occupancy was primarily due to 159,947 RSF at our 3000 Minuteman Road redevelopment project in our Greater Boston market being placed back into
operation following the execution of a lease with an advanced technology tenant during the three months ended June 30, 2026. The lease enables us to pivot a portion
of the redevelopment project from future laboratory use to a lower-cost advanced technology use, reducing the project’s expected aggregate construction budget by
approximately $80 million. We expect to deliver the 159,947 RSF of leased space in the second quarter of 2027 upon completion of building and tenant improvements.
(2)Decline in occupancy since March 31, 2026 was primarily attributable to previously disclosed key lease expirations with expected downtime, including 137,316 RSF of
office space at Alexandria Stanford Life Science District, where we are evaluating a repositioning for advanced technology space, and 71,567 RSF across two properties
in our Palo Alto and South San Francisco submarkets. Of the latter, we have re-leased 17,271 RSF, and are actively marketing the remaining space.
(3)Excludes leases aggregating 1.4 million RSF, or 4.0% of total operating RSF, executed as of June 30, 2026 and expected to be occupied upon completion of building
and/or tenant improvements. The weighted-average expected occupancy date is approximately November 2026, with expected annual rental revenue of approximately
$69 million. We expect 64% of the total RSF to be occupied by December 31, 2026. These spaces are located primarily in the Greater Boston, San Diego, and San
Francisco Bay Area markets.
70
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 June 30, 2026 (dollars in thousands):
Development and Redevelopment | |||||||||||||
Under Construction | |||||||||||||
Operating | 2H26 Stabilization | 2027–2028 Stabilization | Evaluating Business and Financial Strategy | Future | Subtotal | Total | |||||||
Square footage | |||||||||||||
Operating | 34,314,881 | — | — | — | — | — | 34,314,881 | ||||||
Future Class A/A+ development and redevelopment properties | — | 174,662 | 1,258,004 | 1,392,771 | 19,372,303 | 22,197,740 | 22,197,740 | ||||||
Future development and redevelopment square feet currently included in rental properties(1) | — | — | — | — | (947,156) | (947,156) | (947,156) | ||||||
Total square footage, excluding properties held for sale | 34,314,881 | 174,662 | 1,258,004 | 1,392,771 | 18,425,147 | 21,250,584 | 55,565,465 | ||||||
Properties held for sale | 1,718,335 | — | — | — | 2,013,925 | 2,013,925 | 3,732,260 | ||||||
Total square footage | 36,033,216 | 174,662 | 1,258,004 | 1,392,771 | 20,439,072 | 23,264,509 | 59,297,725 | ||||||
Investments in real estate | |||||||||||||
Gross book value as of June 30, 2026(2) | $29,139,650 | $201,882 | $1,195,667 | $1,319,039 | $3,917,800 | $6,634,388 | (3) | $35,774,038 | |||||
Properties held for sale | 455,917 | — | — | — | 188,192 | 188,192 | 644,109 | ||||||
Total gross investment in real estate, excluding properties held for sale | $28,683,733 | $201,882 | $1,195,667 | $1,319,039 | $3,729,608 | $6,446,196 | $35,129,929 | ||||||
20%
17%
Development/ Redevelopment Under Construction |
Land/Future Development |
16%
11% to 16%
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 June 30, 2026 is $6.17 billion.
(4)Excludes properties classified as held for sale. Land parcels classified as held for sale represented approximately 0.5% of total non-income-producing assets as of
June 30, 2026, compared with approximately 1% as of December 31, 2025 and 2024.
71
Dispositions, sales of partial interests, and other capital sources
The following table summarizes our 2026 sources of capital activity during the six months ended June 30, 2026 and through the date of this report, and projections for the remainder
of 2026 (dollars in thousands):
Interest Sold | Square Footage | Capitalization Rate (Cash Basis) | Price (Our Share) | ||||||||||||||||
Property | Submarket/Market | Date of Transaction | Operating | Future Development | Capitalization Rate | ||||||||||||||
Completed during the three and six months ended June 30, 2026 | $7,350 | ||||||||||||||||||
Completed in July 2026: | |||||||||||||||||||
Land: | |||||||||||||||||||
3825 and 3875 Fabian Way(1) | Palo Alto/San Francisco Bay Area | 7/14/26 | 100% | 228,000 | 250,000 | N/A | 163,000 | ||||||||||||
Total completed 2026 dispositions as of August 3, 2026 | 170,350 | ||||||||||||||||||
Our share of pending dispositions and sales of partial interests subject to non-refundable deposits, signed letters of intent, and/or purchase and sale agreement negotiations | 1,158,626 | ||||||||||||||||||
1,328,976 | |||||||||||||||||||
Dispositions, sales of partial interests, and other capital sources in process | 1,100,000 | ||||||||||||||||||
Multiple alternatives under evaluation | 471,024 | ||||||||||||||||||
$2,900,000 | |||||||||||||||||||
2026 guidance range for dispositions, sales of partial interests, and other capital sources(2) | $2,100,000 – $3,700,000 | ||||||||||||||||||
Midpoint | $2,900,000 | ||||||||||||||||||
Weighted-average projected completion date of 2026 dispositions, sales of partial interests, and other capital sources | September 2026 | ||||||||||||||||||
(1)Represents one future development project aggregating 250,000 SF at 3825 Fabian Way and one 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. Based on the annualized results for the three months
ended June 30, 2026, the assets generated approximately $6.2 million of annual net operating income.
(2)For the year ending December 31, 2026, we may utilize multiple sources of capital, including land and non-core dispositions, sales of partial interests, and other capital sources, 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 – 4Q26 annualized target of 5.6x to 6.2x. We continue to evaluate
available alternatives and expect to execute on varied 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.
72
New Class A/A+ development and redevelopment properties
INCREMENTAL ANNUAL NET OPERATING INCOME
GROWTH EXPECTED FROM ALEXANDRIA’S
DEVELOPMENT AND REDEVELOPMENT DELIVERIES
Placed Into Service | Near-Term Deliveries | Intermediate-Term Deliveries | |||||
1H26 | Projected Stabilization: 2H26 | Projected Stabilization: | 2027–2028 | ||||
$58M | $42M | $93M | |||||
91% Occupied | 84% Leased/Negotiating | 68% Leased/Negotiating | |||||
532,219 RSF | 174,662 RSF | 1.3 million RSF | |||||
(2)
(3)
(1)
(4)
(5)
For the definition of “Net operating income” and a reconciliation from the most directly comparable GAAP measure, refer to the “Definitions and reconciliations” in Item 2.
(1)Excludes future incremental annual net operating income from spaces placed into service that were vacant and/or unleased at delivery.
(2)Includes expected partial deliveries through 2026 from projects expected to stabilize in 2027-2028, including speculative future leasing that is not yet fully committed. Our share of incremental annual net operating income from
projects expected to be placed into service primarily commencing through 2026 is projected to be $42 million. Refer to the initial and stabilized occupancy years under “New Class A/A+ development and redevelopment properties:
under construction” in Item 2 for additional details.
(3)Our share of incremental annual net operating income from projects expected to stabilize in 2027-2028 is projected to be $59 million.
(4)Represents the current leased/negotiating percentage of development and redevelopment projects that are expected to stabilize through the end of 2026.
(5)Represents the RSF related to projects expected to stabilize in 2026. Does not include RSF for partial deliveries through 2026 from projects expected to stabilize in 2027-2028.
73
New Class A/A+ development and redevelopment properties: recent deliveries
Incremental Annual Net Operating Income Generated From
1H26 Deliveries Aggregated $58 million
99 Coolidge Avenue | 4135 Campus Point Court | 10075 Barnes Canyon Road | 8800 Technology Forest Place | |||
Greater Boston/ Cambridge/Inner Suburbs | San Diego/ University Town Center | San Diego/Sorrento Mesa | Texas/Greater Houston | |||
146,147 RSF | 426,927 RSF | 253,079 RSF | 57,042 RSF | |||
100% Occupancy | 100% Occupancy | 80% Occupancy | 100% Occupancy | |||
 |  |  |  |
The following table presents development and redevelopment of new Class A/A+ projects placed into service during the six months ended June 30, 2026 (dollars in thousands):
Property/Market/Submarket | 2Q26 Delivery Date(1) | Our Ownership Interest | RSF Placed in Service | Occupancy Percentage(2) | Total Project | Unlevered Yields | ||||||||||||||||||||||
Prior to 1/1/26 | 1Q26 | 2Q26 | Total | Initial Stabilized | Initial Stabilized (Cash Basis) | |||||||||||||||||||||||
RSF | Investment | |||||||||||||||||||||||||||
Development projects | ||||||||||||||||||||||||||||
99 Coolidge Avenue/Greater Boston/Cambridge/Inner Suburbs | N/A | 100% | 129,413 | 16,734 | — | 146,147 | 100% | 320,809 | $444,000 | 6.0% | 6.8% | |||||||||||||||||
4135 Campus Point Court/San Diego/University Town Center | 6/1/26 | 58.2% | — | — | 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 | (3) | — | 253,079 | 80% | 253,079 | 314,000 | 5.5 | 5.7 | ||||||||||||||||
Redevelopment projects | ||||||||||||||||||||||||||||
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 | 6/1/26 | 350,976 | 105,292 | 426,927 | 883,195 | 1,124,207 | $1,394,000 | 7.7% | 6.3% | |||||||||||||||||||
(1)Represents the average delivery date for deliveries that occurred during the three months ended June 30, 2026, weighted by annual rental revenue.
(2)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.
(3)Includes 50,531 RSF that were vacant and/or unleased at delivery.
74
New Class A/A+ development and redevelopment properties: under construction
99 Coolidge Avenue | 50 and 60 Sylvan Road(1) | 10200 Campus Point Drive | ||
Greater Boston/ Cambridge/Inner Suburbs | Greater Boston/Route 128 | San Diego/ University Town Center | ||
174,662 RSF | 267,015 RSF | 466,598 RSF | ||
84% Leased/Negotiating | 74% Leased/Negotiating | 100% Leased | ||
|  |  |
1450 Owens Street | 269 East Grand Avenue | 701 Dexter Avenue North | ||
San Francisco Bay Area/ Mission Bay | San Francisco Bay Area/ South San Francisco | Seattle/Lake Union | ||
212,657 RSF | 84,157 RSF | 227,577 RSF | ||
51% Leased/Negotiating | 40% Leased/Negotiating | 23% Leased/Negotiating | ||
 |  |  |
(1)Image represents 60 Sylvan Road on the Alexandria Center® for Life Science – Waltham Megacampus. The project is expected to capture demand in our Route 128 submarket.
75
New Class A/A+ development and redevelopment properties: under construction (continued)
96% of Development and Redevelopment RSF Under Construction
Is Within our Megacampus Ecosystem
The following tables set forth a summary of our new Class A/A+ development and redevelopment properties under construction as of June 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 | ||||||||||||||||||||||
2H26 stabilization | ||||||||||||||||||||||
99 Coolidge Avenue | Greater Boston/Cambridge/Inner Suburbs | Dev | 146,147 | 174,662 | 320,809 | 84% | 84% | 4Q23 | 4Q26 | |||||||||||||
2027–2028 stabilization | ||||||||||||||||||||||
50 and 60 Sylvan Road | Greater Boston/Route 128 | Redev | — | 267,015 | 267,015 | 74 | 74 | 4Q26 | 2027 | |||||||||||||
10200 Campus Point Drive(2) | San Diego/University Town Center | Dev | — | 466,598 | 466,598 | 100 | 100 | 2028 | 2028 | |||||||||||||
1450 Owens Street | San Francisco Bay Area/Mission Bay | Dev | — | 212,657 | 212,657 | 51 | 51 | 2027 | 2027 | |||||||||||||
269 East Grand Avenue | San Francisco Bay Area/South San Francisco | Redev | — | 84,157 | 84,157 | 40 | 40 | 2H26 | 2027 | |||||||||||||
701 Dexter Avenue North | Seattle/Lake Union | Dev | — | 227,577 | 227,577 | 23 | 23 | 3Q26 | 2027 | |||||||||||||
— | 1,258,004 | 1,258,004 | 68 | 68 | ||||||||||||||||||
Total | 146,147 | 1,432,666 | 1,578,813 | 71% | 71% | |||||||||||||||||
Evaluating business and financial strategy; earliest potential lab delivery in 2028(3) | ||||||||||||||||||||||
311 Arsenal Street | Greater Boston/Cambridge/Inner Suburbs | Redev | 56,904 | 333,758 | 390,662 | 16% | 44% | |||||||||||||||
421 Park Drive | Greater Boston/Fenway | Dev | — | 392,011 | 392,011 | — | — | |||||||||||||||
40 Sylvan Road | Greater Boston/Route 128 | Redev | — | 329,049 | 329,049 | — | — | |||||||||||||||
3000 Minuteman Road | Greater Boston/Other | Redev | — | 271,603 | 271,603 | (4) | — | — | ||||||||||||||
8800 Technology Forest Place | Texas/Greater Houston | Redev | 57,042 | 66,350 | 123,392 | 46 | 46 | |||||||||||||||
113,946 | 1,392,771 | 1,506,717 | 8% | 15% | ||||||||||||||||||
(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 currently have a 58.2% ownership interest. The project is fully leased to Novartis AG that currently occupies one building
within the Megacampus aggregating 52,853 RSF, that generated annual rental revenue of $4.1 million as of June 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 until our ownership interest increases to 75%, after which future capital would be contributed pro rata with our joint venture partner.
(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. If we elect to continue to pursue construction of laboratory improvements for these projects, the earliest deliveries of these projects are in 2028.
(4)The decrease from 431,550 RSF as of March 31, 2026 to 271,603 RSF as of June 30, 2026 for this project reflects 159,947 RSF being placed back into operation from redevelopment following the execution of a lease with an advanced
technology tenant, enabling a pivot of redevelopment strategy from future laboratory use to advanced technology use. As of June 30, 2026, the 159,947 RSF of leased space remains vacant within our operating pool and is expected to be
delivered in the second quarter of 2027 upon completion of building and tenant improvements.
76
New Class A/A+ development and redevelopment properties: under construction (continued)
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 | |||||||||||||||||||||
2H26 stabilization with 84% leased/negotiating | |||||||||||||||||||||
99 Coolidge Avenue | Greater Boston/Cambridge/Inner Suburbs | 100% | $203,414 | $201,882 | $38,704 | $444,000 | 6.0% | 6.8% | |||||||||||||
2027–2028 stabilization with 68% leased/negotiating(1) | |||||||||||||||||||||
50 and 60 Sylvan Road | Greater Boston/Route 128 | 100% | — | 373,082 | TBD | ||||||||||||||||
10200 Campus Point Drive(2) | San Diego/University Town Center | 58.2% | — | 87,875 | 572,125 | 660,000 | 7.3% | 6.5% | |||||||||||||
1450 Owens Street | San Francisco Bay Area/Mission Bay | 25.0% | — | 257,055 | TBD | ||||||||||||||||
269 East Grand Avenue | San Francisco Bay Area/South San Francisco | 100% | — | 143,100 | |||||||||||||||||
701 Dexter Avenue North | Seattle/Lake Union | 100% | — | 334,555 | |||||||||||||||||
— | 1,195,667 | ||||||||||||||||||||
Total | $203,414 | $1,397,549 | $860,000 | (3) | $2,460,000 | (3) | |||||||||||||||
Our share of investment(3)(4) | $200,000 | $1,170,000 | $560,000 | $1,930,000 | |||||||||||||||||
Evaluating business and financial strategy; earliest potential lab delivery in 2028(5) | |||||||||||||||||||||
311 Arsenal Street | Greater Boston/Cambridge/Inner Suburbs | 100% | $28,100 | $318,772 | TBD | ||||||||||||||||
421 Park Drive | Greater Boston/Fenway | 100% | — | 629,367 | |||||||||||||||||
40 Sylvan Road | Greater Boston/Route 128 | 100% | — | 233,255 | |||||||||||||||||
3000 Minuteman Road | Greater Boston/Other | 100% | — | 95,534 | |||||||||||||||||
8800 Technology Forest Place | Texas/Greater Houston | 100% | 65,588 | 42,111 | |||||||||||||||||
$93,688 | $1,319,039 | ||||||||||||||||||||
Refer to “Initial stabilized yield (unlevered)” under “Definitions and reconciliations” in Item 2 for additional information.
(1)We expect to provide total estimated costs and related yields for each project over the next several quarters.
(2)Refer to footnote 2 on the prior page for additional details.
(3)Represents dollar amount rounded to the nearest $10 million and includes preliminary estimated amounts for projects listed as TBD.
(4)Represents our share of investment based on our current ownership percentage upon completion of development or redevelopment projects. Our share of investment will be adjusted as our ownership percentage increases at the Campus
Point project.
(5)Refer to footnote 3 on the prior page for additional details.
77
New Class A/A+ development and redevelopment properties: summary of pipeline
79% 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 June 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: The Arsenal on the Charles | Cambridge/Inner Suburbs | 100% | $331,654 | 333,758 | 34,157 | 367,915 | ||||||||
311 Arsenal Street | ||||||||||||||
Megacampus: 480 Arsenal Way and 446, 458, and 500 Arsenal Street, and 99 Coolidge Avenue | Cambridge/Inner Suburbs | 100% | 226,573 | 174,662 | 560,000 | 734,662 | ||||||||
446, 458, and 500 Arsenal Street, and 99 Coolidge Avenue | ||||||||||||||
Megacampus: Alexandria Center® for Life Science – Fenway | Fenway | 100% | 629,367 | 392,011 | — | 392,011 | ||||||||
421 Park Drive | ||||||||||||||
Megacampus: Alexandria Center® for Life Science – Waltham | Route 128 | 100% | 673,010 | 596,064 | 515,000 | 1,111,064 | ||||||||
40, 50, and 60 Sylvan Road, and 35 Gatehouse Drive | ||||||||||||||
Megacampus: 30, 200, and 3000 Minuteman Road | Other | 100% | 113,619 | 271,603 | 350,000 | 621,603 | ||||||||
3000 Minuteman Road | ||||||||||||||
Megacampus: Alexandria Center® at Kendall Square | Cambridge | 100% | 49,411 | — | 174,500 | 174,500 | ||||||||
100 Edwin H. Land Boulevard | ||||||||||||||
Megacampus: Alexandria Technology Square® | Cambridge | 100% | 8,982 | — | 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% | 167,700 | — | 740,000 | 740,000 | |||||||||
$2,314,357 | 1,768,098 | 2,760,657 | 4,528,755 | |||||||||||
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. | ||||||||||||||
78
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 | 58.2% | (2) | $265,441 | 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% | 166,000 | — | 215,000 | 215,000 | ||||||||
Megacampus: One Alexandria Square | Torrey Pines | 100% | 69,959 | — | 125,280 | 125,280 | ||||||||
10975 and 10995 Torreyana Road | ||||||||||||||
Megacampus: 5200 Illumina Way | University Town Center | 51.0% | 17,940 | — | 451,832 | 451,832 | ||||||||
9625 Towne Centre Drive | University Town Center | 30.0% | 852 | — | 100,000 | 100,000 | ||||||||
Megacampus: Sequence District by Alexandria | Sorrento Mesa | 100% | 50,290 | — | 1,661,915 | 1,661,915 | ||||||||
6290, 6310, 6340, 6350, and 6450 Sequence Drive | ||||||||||||||
Megacampus: SD Tech by Alexandria | Sorrento Mesa | 50.0% | 136,170 | — | 493,845 | 493,845 | ||||||||
9805 Scranton Road and 10065 Barnes Canyon Road | ||||||||||||||
Other development and redevelopment projects | (4) | — | — | 50,000 | 50,000 | |||||||||
706,652 | 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% | $257,055 | 212,657 | — | 212,657 | ||||||||
1450 Owens Street | ||||||||||||||
Megacampus: Alexandria Center® for Advanced Technologies – South San Francisco | South San Francisco | 100% | 149,755 | 84,157 | 90,000 | 174,157 | ||||||||
211(4) and 269 East Grand Avenue | ||||||||||||||
Megacampus: Alexandria Center® for Advanced Technologies – Tanforan | South San Francisco | 100% | 462,052 | — | 1,930,000 | 1,930,000 | ||||||||
1122, 1150, and 1178 El Camino Real | ||||||||||||||
Alexandria Center® for Life Science – Millbrae | South San Francisco | 48.6% | 164,583 | — | 348,401 | 348,401 | ||||||||
201 and 231 Adrian Road and 30 Rollins Road | ||||||||||||||
Megacampus: Alexandria Center® for Life Science – San Carlos | San Carlos | 100% | 503,588 | — | 1,497,830 | 1,497,830 | ||||||||
960 Industrial Road, 987 and 1075 Commercial Street, and 888 Bransten Road | ||||||||||||||
2100, 2200, 2300, and 2400 Geng Road | Palo Alto | 100% | 130,290 | — | 240,000 | 240,000 | ||||||||
$1,667,323 | 296,814 | 4,106,231 | 4,403,045 | |||||||||||
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. (2)The noncontrolling interest share of our real estate joint venture partner is anticipated to decrease to 25%, as we expect to fund the majority of future construction costs at the campus until our ownership interest increases to 75%, after which future capital would be contributed pro rata with our partner. (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. | ||||||||||||||
79
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) | $634,437 | 227,577 | 1,057,400 | 1,284,977 | ||||||||
601 and 701 Dexter Avenue North and 800 Mercer Street | ||||||||||||||
1010 4th Avenue South | SoDo | 100% | 64,266 | — | 544,825 | 544,825 | ||||||||
410 West Harrison Street | Elliott Bay | 100% | 26,141 | — | 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% | 159,938 | — | 706,087 | 706,087 | |||||||||
905,605 | 227,577 | 2,629,312 | 2,856,889 | |||||||||||
Maryland | ||||||||||||||
Megacampus: Alexandria Center® for Life Science – Shady Grove | Rockville | 100% | 30,138 | — | 296,000 | 296,000 | ||||||||
9830 Darnestown Road | ||||||||||||||
30,138 | — | 296,000 | 296,000 | |||||||||||
Research Triangle | ||||||||||||||
Megacampus: Alexandria Center® for Life Science – Durham | Research Triangle | 100% | 169,483 | — | 2,060,000 | 2,060,000 | ||||||||
Megacampus: Alexandria Center® for Advanced Technologies and AgTech – Research Triangle | Research Triangle | 100% | 116,137 | — | 1,170,000 | 1,170,000 | ||||||||
4 and 12 Davis Drive | ||||||||||||||
Megacampus: Alexandria Center® for Sustainable Technologies | Research Triangle | 100% | 57,622 | — | 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 | |||||||||
344,889 | — | 4,005,000 | 4,005,000 | |||||||||||
New York City | ||||||||||||||
Megacampus: Alexandria Center® for Life Science – New York City | New York City | 100% | 182,969 | — | 550,000 | (3) | 550,000 | |||||||
$182,969 | — | 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 inherent 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 information, 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 415,977 RSF and a 60.0% interest in the future development project at 800 Mercer Street aggregating 869,000 RSF. (3)During the three months ended September 30, 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. | ||||||||||||||
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) | ||||||||||||
Texas | ||||||||||||||
Alexandria Center® for Advanced Technologies at The Woodlands | Greater Houston | 100% | $45,211 | 66,350 | 116,405 | 182,755 | ||||||||
8800 Technology Forest Place | ||||||||||||||
1001 Trinity Street and 1020 Red River Street | Austin | 100% | 140,035 | — | 250,010 | 250,010 | ||||||||
Other development and redevelopment projects | 100% | 61,513 | — | 344,000 | 344,000 | |||||||||
246,759 | 66,350 | 710,415 | 776,765 | |||||||||||
Other development and redevelopment projects | 100% | 47,504 | — | 350,000 | 350,000 | |||||||||
Total pipeline as of June 30, 2026, excluding properties held for sale | 6,446,196 | 2,825,437 | 19,372,303 | 22,197,740 | ||||||||||
Properties held for sale | 188,192 | — | 2,013,925 | 2,013,925 | ||||||||||
Total pipeline as of June 30, 2026 | $6,634,388 | (2) | 2,825,437 | 21,386,228 | 24,211,665 | |||||||||
Refer to “Megacampus” under “Definitions and reconciliations” in Item 2 for additional information.
(1)Total square footage includes 947,156 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 information, including development and redevelopment square feet currently included in rental properties.
(2)Includes $2.72 billion of projects that are currently under construction.
81
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 six months ended June 30, 2026:
June 30, 2026 | |||||
Three Months Ended | Six Months Ended | ||||
Percentage change in net operating income over comparable period from prior year | (10.6)% | (1) | (11.5)% | (1) | |
Percentage change in net operating income (cash basis) over comparable period from prior year | (8.6)% | (1) | (11.2)% | (1) | |
Operating margin | 68% | 66% | |||
Number of Same Properties | 289 | 288 | |||
RSF | 31,733,905 | 31,448,559 | |||
Occupancy – current-period average | 87.1% | 88.2% | |||
Occupancy – same-period prior-year average | 92.6% | 93.5% | |||
(1)The decline was due to a decrease in same property occupancy, primarily driven by previously disclosed key lease expirations with expected downtime aggregating
657,492 RSF during the three months ended March 31, 2026 and 260,888 RSF during the three months ended June 30, 2026, with weighted-average lease expiration
dates of January 2026 and April 2026, respectively.
The following table reconciles the number of Same Properties to total properties for the six months ended June 30, 2026:
Development and redevelopment – under construction | Properties | |
99 Coolidge Avenue | 1 | |
1450 Owens Street | 1 | |
421 Park Drive | 1 | |
701 Dexter Avenue North | 1 | |
10200 Campus Point Drive | 1 | |
40, 50, and 60 Sylvan Road | 3 | |
269 East Grand Avenue | 1 | |
8800 Technology Forest Place | 1 | |
311 Arsenal Street | 1 | |
3000 Minuteman Road | 1 | |
12 | ||
Development – placed into service 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 | |
8 | ||
Acquisitions after January 1, 2025 | ||
Other | 2 | |
2 | ||
Unconsolidated real estate JVs | 3 | |
Properties held for sale | 23 | |
Total properties excluded from Same Properties | 48 | |
Same Properties | 288 | |
Total properties as of June 30, 2026 | 336 |
82
Comparison of results for the three months ended June 30, 2026 to the three months ended June 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 June 30, 2026, compared to the three months ended June 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 June 30, | |||||||||
2026 | 2025 | $ Change | % Change | ||||||
Income from rentals: | |||||||||
Same Properties | $434,779 | $477,026 | $(42,247) | (8.9)% | |||||
Non-Same Properties | 51,810 | 76,351 | (24,541) | (32.1) | |||||
Rental revenues | 486,589 | 553,377 | (66,788) | (12.1) | |||||
Same Properties | 148,483 | 166,400 | (17,917) | (10.8) | |||||
Non-Same Properties | 8,138 | 17,502 | (9,364) | (53.5) | |||||
Tenant recoveries | 156,621 | 183,902 | (27,281) | (14.8) | |||||
Income from rentals | 643,210 | 737,279 | (94,069) | (12.8) | |||||
Same Properties | — | — | — | — | |||||
Non-Same Properties | 19,574 | 24,761 | (5,187) | (20.9) | |||||
Other income | 19,574 | 24,761 | (5,187) | (20.9) | |||||
Same Properties | 583,262 | 643,426 | (60,164) | (9.4) | |||||
Non-Same Properties | 79,522 | 118,614 | (39,092) | (33.0) | |||||
Total revenues | 662,784 | 762,040 | (99,256) | (13.0) | |||||
Same Properties | 187,351 | 200,594 | (13,243) | (6.6) | |||||
Non-Same Properties | 19,985 | 23,839 | (3,854) | (16.2) | |||||
Rental operations | 207,336 | 224,433 | (17,097) | (7.6) | |||||
Same Properties | 395,911 | 442,832 | (46,921) | (10.6) | |||||
Non-Same Properties | 59,537 | 94,775 | (35,238) | (37.2) | |||||
Net operating income | $455,448 | $537,607 | $(82,159) | (15.3)% | |||||
Net operating income – Same Properties | $395,911 | $442,832 | $(46,921) | (10.6)% | |||||
Straight-line rent revenue | (5,138) | (18,773) | 13,635 | (72.6) | |||||
Amortization of acquired below-market leases and deferred revenue related to tenant-funded and -built landlord improvements | (12,915) | (10,731) | (2,184) | 20.4 | |||||
Net operating income – Same Properties (cash basis) | $377,858 | $413,328 | $(35,470) | (8.6)% | |||||
83
Income from rentals
Total income from rentals for the three months ended June 30, 2026 decreased by $94.1 million, or 12.8%, to $643.2 million,
compared to $737.3 million for the three months ended June 30, 2025. The decrease was primarily attributable to the factors discussed
below.
Rental revenues
Total rental revenues for the three months ended June 30, 2026 decreased by $66.8 million, or 12.1%, to $486.6 million,
compared to $553.4 million for the three months ended June 30, 2025. The decrease was primarily attributable to the factors discussed
below.
Same Properties’ rental revenues for the three months ended June 30, 2026 decreased by $42.2 million, or 8.9%, to
$434.8 million, compared to $477.0 million for the three months ended June 30, 2025. This decrease is primarily attributable to a
decrease in Same Properties’ average occupancy to 87.1% for the three months ended June 30, 2026 from 92.6% for the three months
ended June 30, 2025, and reflects the impact of previously disclosed key lease expirations aggregating 657,492 RSF during the three
months ended March 31, 2026 and 260,888 RSF during the three months ended June 30, 2026, with weighted-average lease expiration
dates of January 2026 and April 2026, respectively.
Non-Same Properties’ rental revenues for the three months ended June 30, 2026 decreased by $24.5 million, or 32.1%, to
$51.8 million, compared to $76.4 million for the three months ended June 30, 2025, primarily due to the real estate dispositions
completed after April 1, 2025.
Tenant recoveries
Tenant recoveries for the three months ended June 30, 2026 decreased by $27.3 million, or 14.8%, to $156.6 million,
compared to $183.9 million for the three months ended June 30, 2025.
Same Properties’ tenant recoveries for the three months ended June 30, 2026 decreased by $17.9 million, or 10.8%, to
$148.5 million compared to $166.4 million for the three months ended June 30, 2025, primarily due to the decrease in Same Property
occupancy to 87.1% as of June 30, 2026, from 92.6% as of June 30, 2025, which reduced the proportion of expenses recoverable from
tenants. As of June 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 June 30, 2026 decreased by $9.4 million, or 53.5%, to
$8.1 million compared to $17.5 million for the three months ended June 30, 2025, primarily due to the dispositions of real estate since
April 1, 2025.
Rental operations
Total rental operating expenses for the three months ended June 30, 2026 decreased by $17.1 million, or 7.6%, to
$207.3 million, compared to $224.4 million for the three months ended June 30, 2025.
Same Properties’ rental operating expenses decreased by $13.2 million, or 6.6%, to $187.4 million during the three months
ended June 30, 2026, compared to $200.6 million for the three months ended June 30, 2025, primarily due to lower occupancy
described above including: (i) $8.2 million lower repairs and maintenance costs, and (ii) $3.5 million decrease in contract services
expenses primarily in the Greater Boston, San Diego, and San Francisco Bay Area markets, as well as (iii) $1.6 million decrease in
property insurance premiums due to lower rates under our new insurance policy.
Non-Same Properties’ rental operating expenses decreased by $3.9 million primarily due to real estate dispositions completed
since April 1, 2025.
84
General and administrative expenses
General and administrative expenses for the three months ended June 30, 2026 increased by $7.7 million, or 26.5%, to
$36.9 million, compared to $29.1 million for the three months ended June 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 June 30, 2025.
Notwithstanding this increase compared to the three months ended June 30, 2025, general and administrative expenses for
the three months ended June 30, 2026 decreased by $7.8 million, or 17.4%, compared to $44.6 million for the three months ended
June 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
June 30, 2026 and 2025 were 6.6% and 6.3%, respectively.
Depreciation and amortization
Depreciation and amortization expense for the three months ended June 30, 2026 decreased by $41.7 million, or 12.1%, to
$304.4 million, compared to $346.1 million for the three months ended June 30, 2025. The decrease was primarily a result of real estate
dispositions since April 1, 2025.
Impairment of real estate
During the three months ended June 30, 2026, we recognized impairment charges aggregating $222.5 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 June 30, 2025, we recognized real estate impairment charges aggregating $129.6 million,
primarily related to 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.
Interest expense
Interest expense for the three months ended June 30, 2026 and 2025 consisted of the following (dollars in thousands):
Three Months Ended June 30, | ||||||
Component | 2026 | 2025 | Change | |||
Gross interest | $138,059 | $137,719 | $340 | |||
Capitalized interest | (73,717) | (82,423) | 8,706 | |||
Interest expense | $64,342 | $55,296 | $9,046 | |||
Average debt balance outstanding(1) | $12,939,811 | $13,269,046 | $(329,235) | |||
Weighted-average annual interest rate(2) | 4.3% | 4.2% | 0.1% | |||
(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 three months ended June 30, 2026, compared to the three months ended June
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 | |||||
Higher average outstanding balances under commercial paper program and/or unsecured senior line of credit | 12,573 | |||||||
Total increases | 22,465 | |||||||
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 | (2,815) | |||||
$600 million of unsecured senior notes payable due 2025 | 3.62% | April 2025 | (1,686) | |||||
Secured notes payable | 7.18% | August 2025 | (2,708) | |||||
Partial repurchases of debt: | ||||||||
Repaid $525 million of $1.0 billion of unsecured senior notes payable due 2052 | 3.70% | February 2026 | (4,666) | |||||
Repaid $498 million of $850 million of unsecured senior notes payable due 2051 | 3.16% | February 2026 | (3,743) | |||||
Repaid $309 million of $700 million of unsecured senior notes payable due 2050 | 3.95% | February 2026 | (3,051) | |||||
Other decrease in interest | (196) | |||||||
Total decreases | (22,125) | |||||||
Change in gross interest | 340 | |||||||
Decrease in capitalized interest | 8,706 | |||||||
Total change in interest expense | $9,046 | |||||||
(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 three months ended June 30, 2026, we recognized investment income aggregating $133.2 million, which consisted
of $10.3 million of realized gains, $131.9 million of unrealized gains, and $9.0 million of impairment charges.
During the three months ended June 30, 2025, we recognized investment loss aggregating $30.6 million, which consisted of
$30.5 million of realized gains, $21.9 million of unrealized losses, and $39.2 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.
Other comprehensive loss
Total other comprehensive loss for the three months ended June 30, 2026 aggregating $2.1 million included $6.8 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 $4.7 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 $18.8 million for the three months ended June 30, 2025 is primarily due to unrealized
foreign currency translation gains related to our operations in Canada.
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Comparison of results for the six months ended June 30, 2026 to the six months ended June 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 six months ended June 30, 2026, compared to the six months ended June 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.
Six Months Ended June 30, | |||||||||
2026 | 2025 | $ Change | % Change | ||||||
Income from rentals: | |||||||||
Same Properties | $855,554 | $940,034 | $(84,480) | (9.0%) | |||||
Non-Same Properties | 105,821 | 165,455 | (59,634) | (36.0) | |||||
Rental revenues | 961,375 | 1,105,489 | (144,114) | (13.0) | |||||
Same Properties | 312,684 | 327,564 | (14,880) | (4.5) | |||||
Non-Same Properties | 22,164 | 47,401 | (25,237) | (53.2) | |||||
Tenant recoveries | 334,848 | 374,965 | (40,117) | (10.7) | |||||
Income from rentals | 1,296,223 | 1,480,454 | (184,231) | (12.4) | |||||
Same Properties | — | — | — | — | |||||
Non-Same Properties | 37,583 | 39,744 | (2,161) | (5.4) | |||||
Other income | 37,583 | 39,744 | (2,161) | (5.4) | |||||
Same Properties | 1,168,238 | 1,267,598 | (99,360) | (7.8) | |||||
Non-Same Properties | 165,568 | 252,600 | (87,032) | (34.5) | |||||
Total revenues | 1,333,806 | 1,520,198 | (186,392) | (12.3) | |||||
Same Properties | 395,913 | 394,692 | 1,221 | 0.3 | |||||
Non-Same Properties | 35,565 | 56,136 | (20,571) | (36.6) | |||||
Rental operations | 431,478 | 450,828 | (19,350) | (4.3) | |||||
Same Properties | 772,325 | 872,906 | (100,581) | (11.5) | |||||
Non-Same Properties | 130,003 | 196,464 | (66,461) | (33.8) | |||||
Net operating income | $902,328 | $1,069,370 | $(167,042) | (15.6%) | |||||
Net operating income – Same Properties | $772,325 | $872,906 | $(100,581) | (11.5%) | |||||
Straight-line rent revenue | (16,624) | (26,420) | 9,796 | (37.1) | |||||
Amortization of acquired below-market leases and deferred revenue related to tenant-funded and -built landlord improvements | (22,677) | (20,999) | (1,678) | 8.0 | |||||
Net operating income – Same Properties (cash basis) | $733,024 | $825,487 | $(92,463) | (11.2%) | |||||
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Income from rentals
Total income from rentals for the six months ended June 30, 2026 decreased by $184.2 million, or 12.4%, to $1.30 billion,
compared to $1.48 billion for the six months ended June 30, 2025, due to a decrease in rental revenues, as discussed below.
Rental revenues
Total rental revenues for the six months ended June 30, 2026 decreased by $144.1 million, or 13.0%, to $1.0 billion, compared
to $1.11 billion for the six months ended June 30, 2025. The decrease was primarily attributable to the factors discussed below.
Same Properties’ rental revenues for the six months ended June 30, 2026 decreased by $84.5 million, or 9.0%, to
$855.6 million, compared to $940.0 million for the six months ended June 30, 2025. This decrease primarily reflects a decrease in
Same Properties’ average occupancy to 88.2% for the six months ended June 30, 2026 from 93.5% for the six months ended June 30,
2025, primarily driven by previously disclosed key lease expirations aggregating 657,492 RSF during the three months ended March
31, 2026 and 260,888 RSF during the three months ended June 30, 2026, with weighted-average lease expiration dates of January
2026 and April 2026, respectively.
Non-Same Properties’ rental revenues for the six months ended June 30, 2026 decreased by $59.6 million, or 36.0%, to
$105.8 million, compared to $165.5 million for the six months ended June 30, 2025, primarily due to the dispositions of real estate since
January 1, 2025.
Tenant recoveries
Tenant recoveries for the six months ended June 30, 2026 decreased by $40.1 million, or 10.7%, to $334.8 million, compared
to $375.0 million for the six months ended June 30, 2025.
Same Properties’ tenant recoveries for the six months ended June 30, 2026 decreased by $14.9 million, or 4.5%, to
$312.7 million, compared to $327.6 million for the six months ended June 30, 2025. The decrease described above in Same Properties’
tenant recoveries resulted from a decrease in Same Properties’ average occupancy. As of June 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 six months ended June 30, 2026 decreased by $25.2 million, or 53.2%, to
$22.2 million, compared to $47.4 million for the six months ended June 30, 2025, primarily due to the dispositions of real estate since
January 1, 2025.
Rental operations
Total rental operating expenses for the six months ended June 30, 2026 decreased by $19.4 million, or 4.3%, to $431.5 million,
compared to $450.8 million for the six months ended June 30, 2025. This was primarily due to a decrease in Non-Same Properties’
rental operating expenses of $20.6 million primarily as a result of dispositions of real estate assets since January 1, 2025.
General and administrative expenses
General and administrative expenses for the six months ended June 30, 2026 increased by $11.7 million, or 19.6%, to
$71.5 million, compared to $59.8 million for the six months ended June 30, 2025. The increase primarily reflects the timing of the
restructuring of compensation plans and other cost-control and efficiency initiatives during the six months ended June 30, 2025.
Notwithstanding this increase compared to the six months ended June 30, 2025, general and administrative expenses for the
six months ended June 30, 2026 decreased by $20.1 million, or 22%, compared to $91.7 million for the six months ended June 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
June 30, 2026 and 2025 were 6.6% and 6.3%, respectively.
Depreciation and amortization
Depreciation and amortization expense for the six months ended June 30, 2026 decreased by $78.4 million, or 11.4%, to
$609.8 million, compared to $688.2 million for the six months ended June 30, 2025. The decrease was primarily a result of real estate
dispositions since January 1, 2025.
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Impairment of real estate
During the six months ended June 30, 2026, we recognized impairment charges aggregating $228.0 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 six months ended June 30, 2025, we recognized real estate impairment charges aggregating $161.8 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 and (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.
Interest expense
Interest expense for the six months ended June 30, 2026 and 2025 consisted of the following (dollars in thousands):
Six Months Ended June 30, | ||||||
Component | 2026 | 2025 | Change | |||
Gross interest | $272,616 | $268,660 | $3,956 | |||
Capitalized interest | (143,690) | (162,488) | 18,798 | |||
Interest expense | $128,926 | $106,172 | $22,754 | |||
Average debt balance outstanding(1) | $12,977,608 | $13,035,595 | $(57,987) | |||
Weighted-average annual interest rate(2) | 4.2% | 4.1% | 0.1% | |||
(1)Represents the average debt balance outstanding during the respective periods.
(2)Represents annualized total interest incurred divided by the average debt balance outstanding during the respective periods.
The net change in interest expense during the six months ended June 30, 2026, compared to the six months ended June 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 | $13,848 | |||||
$550 million of unsecured senior notes payable due 2035 | 5.66% | February 2025 | 3,544 | |||||
Higher average outstanding balances under commercial paper program and/or unsecured senior line of credit | 25,747 | |||||||
Total increases | 43,139 | |||||||
Decreases in interest incurred due to: | ||||||||
Repayments of debt: | ||||||||
$300 million of unsecured senior notes payable due 2026 | 4.50% | January 2026 | (6,007) | |||||
$350 million of unsecured senior notes payable due 2026 | 3.96% | April 2026 | (2,815) | |||||
$600 million of unsecured senior notes payable due 2025 | 3.62% | April 2025 | (6,905) | |||||
Secured notes payable | 7.18% | August 2025 | (5,366) | |||||
Partial repurchases of debt: | ||||||||
Repaid $525 million of $1.0 billion of unsecured senior notes payable due 2052 | 3.70% | February 2026 | (7,204) | |||||
Repaid $498 million of $850 million of unsecured senior notes payable due 2051 | 3.16% | February 2026 | (5,779) | |||||
Repaid $309 million of $700 million of unsecured senior notes payable due 2050 | 3.95% | February 2026 | (4,729) | |||||
Other decrease in interest | (378) | |||||||
Total decreases | (39,183) | |||||||
Change in gross interest | 3,956 | |||||||
Decrease in capitalized interest | 18,798 | |||||||
Total change in interest expense | $22,754 | |||||||
(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.
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Investment income (losses)
During the six months ended June 30, 2026, we recognized investment income aggregating $128.6 million, which consisted of
$28.5 million of realized gains, $121.6 million of unrealized gains, and $21.4 million of impairment charges.
During the six months ended June 30, 2025, we recognized investment loss aggregating $80.6 million, which consisted of
$59.9 million of realized gains, $90.1 million of unrealized losses, and $50.4 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 six months ended June 30, 2026, we recognized a gain on early extinguishment of debt aggregating $366.4 million,
net of the write-off of unamortized debt issuance costs and other transaction-related costs, 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.
Other comprehensive loss
Other comprehensive loss for the six months ended June 30, 2026 aggregating $3.6 million includes $11.7 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 $8.1 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 $18.8 million for the six months ended June 30, 2025 was primarily due to unrealized
foreign currency translation income related to our operations in Canada.
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Construction spending
Our construction spending for the six months ended June 30, 2026 and projected spending for the year ending December 31,
2026 consisted of the following (in thousands):
Six Months Ended June 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) | $ | 820,291 | $ | 1,505,000 | |||||
Future pipeline pre-construction | |||||||||
Primarily Megacampus expansion pre-construction work (entitlement, design, and site work) | 102,052 | 210,000 | (2) | ||||||
Revenue- and non-revenue-enhancing capital expenditures(3) | 269,067 | 510,000 | (4) | ||||||
Construction spending (before contributions from noncontrolling interests or tenants) | 1,191,410 | 2,225,000 | |||||||
Contributions from noncontrolling interests (consolidated real estate joint ventures) | (38,325) | (100,000) | (5) | ||||||
Tenant-funded and -built landlord improvements | (371,746) | (375,000) | |||||||
Total construction spending | $ | 781,339 | $ | 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 70% 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 consolidated 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) | |
Second half of 2026 | $62,000 | |
2027 and beyond | 42,000 | |
Total | $104,000 | |
(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 six months ended June 30, 2026 (in thousands):
Average Real Estate Basis Capitalized | ||||
Six Months Ended June 30, 2026 | Weighted Average Delivery/Milestone Date | |||
Construction of Class A/A+ properties: | ||||
Development and redevelopment of projects under construction and repositioning projects: | ||||
2H26 stabilization | $117,693 | October 2026 | ||
2027–2028 stabilization | 799,738 | October 2026 | ||
Evaluating business and financial strategy(1) | 1,243,636 | January 2027 | ||
Repositioning and smaller redevelopment projects(2) | 1,580,601 | N/A | ||
3,741,668 | ||||
Land/future development projects with critical key pre-construction milestones through: | ||||
2026(3) | 765,490 | August 2026 | ||
2027(3) | 719,619 | May 2027 | ||
2028 and beyond(4) | 1,312,919 | N/A | ||
2,798,028 | ||||
Total average real estate basis capitalized, excluding projects delivered or no longer requiring capitalization of interest as of June 30, 2026 | 6,539,696 | |||
Average real estate basis of projects delivered in 1H26 or no longer requiring capitalization of interest as of June 30, 2026 | 403,475 | May 2026 | ||
Total average real estate basis capitalized(5) | $6,943,171 | |||
(1)Includes five projects aggregating 1.4 million RSF for which we are evaluating business and financial strategy. 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. If we choose not to pursue future construction or other activities, capitalized interest and other project costs may no longer qualify for
capitalization. Refer to “New Class A/A+ development and redevelopment properties: under construction” in Item 2 for additional information.
(2)These projects generally have shorter periods for which capitalization of interest is required and consist of a variety of projects related to our operating assets, including
the executed leases aggregating 1.4 million RSF as of June 30, 2026, with future occupancy expected after completion of building and/or tenant improvements by
November 2026 on a weighted-average basis. The average basis subject to capitalization for this category over the last eight quarters was $1.20 billion. Subject to
market conditions, we expect the average real estate basis capitalized for this category to be closer to the historical eight-quarter average over the next few quarters as
we deliver leased spaces, partially offset by new leasing which may require construction.
(3)Includes future pipeline projects that are expected to reach anticipated pre-construction milestones, including various phases of entitlement, design, site work, and other
activities necessary to begin aboveground vertical construction. As projects progress through these activities, 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 for potential disposition.
(4)Includes future Megacampus development projects at Alexandria Center® for Advanced Technologies – Tanforan in our South San Francisco submarket and Alexandria
Center® for Life Science – San Carlos in our San Carlos submarket, which represent approximately 64% of the total average capitalized real estate basis with 2028 and
beyond milestones during the six months ended June 30, 2026. These projects are located at transit-friendly sites with future access to exceptional amenities.
(5)In addition to capitalized interest, we incur additional capitalized project costs, including property taxes, insurance, payroll, 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, costs related to such project are expensed as
incurred. Annualized capitalized operating expenses and payroll represent approximately 2% and 1%, respectively, of the total average real estate basis subject to
capitalization for the six months ended June 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 8/3/26 | As of 4/27/26 | Key Changes | |||||
Funds from operations per share, as adjusted(1) | $6.35 to $6.45 | $6.30 to $6.50 | No change to midpoint; range narrowed by 10 cents(2) | |||||
Midpoint | $6.40 | $6.40 | ||||||
Key Credit Metric Targets | As of 8/3/26 | As of 4/27/26 | 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 | 3.6x to 4.1x | 3.6x to 4.1x |
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 8/3/26 | Certain Completed Items | As of 4/27/26 Midpoint | ||||||||
Range | Midpoint | ||||||||||
Sources of capital: | |||||||||||
Net cash provided by operating activities, as adjusted | 475 | 575 | 525 | 525 | |||||||
Dispositions, sales of partial interests, and other capital sources(3) | 2,100 | 3,700 | 2,900 | (3) | 2,900 | ||||||
Total sources of capital | $2,575 | $4,275 | $3,425 | $3,425 | |||||||
Uses of capital: | |||||||||||
Construction(4)(5) | $1,500 | $2,000 | $1,750 | $1,750 | |||||||
Reduction in unsecured senior debt | 1,075 | 2,275 | $1,675 | See below | $1,675 | ||||||
Total uses of capital | $2,575 | $4,275 | $3,425 | $3,425 | |||||||
Reduction in unsecured senior 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) | ||||||
Unsecured senior line of credit, commercial paper program, and other | 223 | 1,423 | 823 | 823 | |||||||
Reduction in unsecured senior debt | $1,075 | $2,275 | $1,675 | $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)Refer to “2026 and fourth quarter of 2026 funds from operations per share – diluted, as adjusted” in Item 2 for additional details.
(3)For the year ending December 31, 2026, we may utilize multiple sources of capital, including land and non-core dispositions, sales of partial interests, and other capital sources, 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 – 4Q26 annualized target of 5.6x to 6.2x. We continue to
evaluate available alternatives and expect to execute on varied 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. As of the date of this report, completed dispositions aggregated $170.4 million, our share of pending dispositions and sales of partial interests subject to non-refundable deposits, signed letters of intent, or purchase and
sale agreement negotiations aggregated $1.16 billion, and in-process dispositions, sales of partial interests, and other capital sources aggregated $1.10 billion, with the remaining $471.0 million representing multiple alternatives
that we are currently evaluating.
(4)We are currently evaluating our future construction spending estimates for 2027, and a number of factors could cause our preliminary estimates for 2027 to change as we refine our estimates over the next several months. As of
the date of this report, our updated estimate of 2027 construction spending assumes a decline of $100 million to $600 million (relative to the $1.75 billion midpoint of our 2026 guidance range), resulting in an expected range of
$1.15 billion to $1.65 billion, subject to market conditions. The updates to our 2027 construction spending outlook primarily reflect additional leasing activity since the first quarter of 2026, including recently executed leases and
leases currently under negotiation, which has refined our expectations regarding the amount and timing of 2027 construction spending.
(5)We expect 2027 construction spending to primarily focus on: (i) construction spending required to complete our development and redevelopment projects that are expected to stabilize through 2028 and are 71% leased, (ii) five
projects under evaluation which may require significant capital to complete, and (iii) revenue- and non-revenue-enhancing capital expenditures, in order to secure leasing of vacant space and renewals and re-leasing of space at
our operating properties.
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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 8/3/26 | As of 4/27/26 | Key Changes to Midpoint | |||||||
Low | High | Low | High | |||||||
Occupancy of operating properties as of December 31, 2026 | 86.2% | (1) | 87.8% | (1) | 86.2% | 87.8% | No Change | |||
Same property performance: | ||||||||||
Net operating income changes | (10.5)% | (1) | (8.5)% | (1) | (10.5)% | (8.5)% | ||||
Net operating income changes (cash basis) | (10.5)% | (1) | (8.5)% | (1) | (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 | $45 | $75 | $55 | $85 | $10 million reduction(2) | |||||
General and administrative expenses | $134 | $154 | $134 | $154 | No Change | |||||
Capitalization of interest | $220 | $260 | $225 | $265 | $5 million reduction(3) | |||||
Interest expense | $260 | $300 | $240 | $280 | $20 million increase(4) | |||||
Realized gains on non-real estate investments(5) | $60 | $90 | $60 | $90 | No Change | |||||
(1)Our guidance for occupancy of operating properties as of December 31, 2026, and for 2026 same property net operating income changes assumes a benefit of approximately 1% and 2%, respectively, related to a range of
assets with vacancy that could potentially be sold during 2026 and/or qualify for designation as held for sale by December 31, 2026, but that had not yet met such criteria as of June 30, 2026.
(2)Reduction driven primarily by write-offs and reserves of deferred rent related to tenant wind-downs. Our 2026 guidance continues to assume a $25 million to $30 million reduction in funds from operations related to potential
tenant wind-downs, of which approximately $14 million was recognized during the six months ended June 30, 2026, including approximately $8 million recognized during the three months ended June 30, 2026.
(3)Reduction driven primarily by the achievement of certain milestone dates across several projects impacting the fourth quarter of 2026, including a potential decline related to projects for which we are evaluating business and
financial strategies. Refer to the discussion of “2026 and fourth quarter of 2026 funds from operations per share – diluted, as adjusted” and “Capitalization of interest” on the following page, and “Capitalization of interest” in Item
2 for additional details.
(4)Includes: (i) an approximate $15 million increase resulting primarily from a shift of approximately six weeks in the weighted-average projected completion date of our 2026 dispositions, sales of partial interests, and other capital
sources, from August 2026 to September 2026, and (ii) an approximate $5 million increase resulting primarily from the reduction in 2026 capitalization of interest in the fourth quarter of 2026 discussed in the footnote above.
(5)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. Refer to “Investments” in Item 2 for additional details.
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2026 and fourth quarter of 2026 FFO per share – diluted, as adjusted
•On April 27, 2026, we provided a guidance range of $6.30 to $6.50 for projected 2026 funds from operations per share – diluted,
as adjusted. On August 3, 2026, we narrowed this range to $6.35 to $6.45 while maintaining the midpoint of $6.40. Our outlook
$1.40 – $1.50
includes the following assumptions:
•The $6.40 midpoint of the guidance range for 2026 funds from operations per share – diluted, as adjusted, remains
unchanged, as we expect the benefit from the later dispositions, sales of partial interests, and other capital sources to
substantially offset the higher interest expense and lower capitalization of interest for 2026. The narrowed guidance range
reflects additional visibility into our full-year outlook.
•We expect higher funds from operations per share – diluted, as adjusted, than previously assumed for the third quarter of
2026, due to the approximately six-week shift in the weighted-average projected completion date of the dispositions, sales
of partial interests, and other capital sources assumed at the midpoint of our 2026 guidance, from August to September
2026.
•During the fourth quarter of 2026, we expect lower capitalization of interest than previously assumed primarily driven by the
achievement of certain milestone dates across several projects, including a potential decline related to projects for which we
are evaluating business and financial strategies. The lower capitalized interest is expected to result in our funds from
operations per share – diluted, as adjusted, for the fourth quarter of 2026, being at the lower end of our previously provided,
and now reiterated, range of $1.40 to $1.50.
1)Development-related other income
•During the first half of 2026, we recognized development fees and other related revenues of approximately $5.6 million, or $11 million annualized, most of which are expected to cease by the end of
2026 as we complete the respective projects.
2)Development and redevelopment projects under business and financial strategy evaluation
•We have five development and 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), these projects could deliver earlier than 2028. 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 June 30, 2026, we executed a lease with an advanced technology tenant at the 3000 Minuteman Road redevelopment project in our Greater Boston market. This
lease is for a lower-cost alternative use at lower rental rates and stabilized yields than our initial underwriting. Therefore, we placed one building at our 3000 Minuteman Road redevelopment
project, aggregating 159,947 RSF, back into operation this quarter and included it in our operating occupancy as of June 30, 2026. Refer to “Leasing activity” in Item 2 for additional details.
•In addition, we have signed letters of intent at our 311 Arsenal Street redevelopment project for non-laboratory use, including advanced technology uses, aggregating 108,800 RSF. If we are
successful in executing these potential leases for advanced technology use, we expect lower rental rates and stabilized yields than our initial underwriting.
3)Capitalization of interest
•We expect average real estate basis capitalized to decline from $6.94 billion for the first half of 2026 to an updated range of $3.4 billion to $4.9 billion for the fourth quarter of 2026, primarily driven by
the achievement of certain milestone dates across several projects due to deliveries of development and redevelopment projects, deliveries of leased vacant space under construction, and pauses in
construction and pre-construction activities, including a potential decline related to projects for which we are evaluating business and financial strategies. The updated range for the fourth quarter of
2026 represents a $400 million reduction (at the midpoint) from the projected fourth quarter of 2026 range of $3.8 billion to $5.3 billion that was previously disclosed on April 27, 2026. 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 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. Annualized
capitalized operating expenses and payroll represent approximately 2% and 1%, respectively, of the total average real estate basis subject to capitalization for the six months ended June 30, 2026.
4)Second quarter of 2026 key lease expirations
Key Lease Expirations | |||||||
RSF | Annual Rental Revenue | Weighted-Average Expiration Date | Weighted-Average Downtime | ||||
2026 | 451,450 | $18.1 million | August 2026 | 12 to 24 months | |||
2027 | 1,377,960 | $100.5 million | March 2027 | 12 to 24 months | |||
•We estimate 451 thousand RSF and 1.4 million RSF of leases expiring in 2026 and 2027 with
approximately $18.1 million and $100.5 million of annual rental revenue, respectively, to have downtime
after lease expiration. These 2026 and 2027 expirations have weighted-average contractual lease
expiration dates of August 2026 and March 2027, respectively, and expected weighted-average downtime
of 12 to 24 months. Refer to “Contractual lease expirations” in Item 2 for additional details.
5)Dispositions, sales of partial interests, and other capital sources
We may utilize multiple sources of capital, including land dispositions, non-core dispositions, sales of partial interests, and other capital sources to support the achievement of our leverage ratio targets
beyond 2026, given (i) key lease expirations in 2027 with downtime and the factors previously described that could negatively impact EBITDA, (ii) construction spending required to complete our
development and redevelopment projects that are expected to stabilize through 2028 and are 71% leased, and (iii) revenue- and non-revenue-enhancing capital expenditures required to secure leasing of
vacant space and renewals and re-leasing of space at our operating properties. Refer to footnotes 4 and 5 under “Key sources and uses of capital” on the previous page for additional details.
We expect to introduce 2027 guidance and related key assumptions, and 2027 key sources and uses of capital at our Investor Day on December 2, 2026, consistent with our historical practice.
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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) | 41.8% | (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% | 290,754 | ||||||
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)The noncontrolling interest share of our real estate joint venture partner is anticipated to decrease to 25%, as we expect to fund the majority of future construction costs
at the campus until our ownership interest increases to 75%, after which future capital would be contributed pro rata with our partner. Refer to “New Class A/A+
development and redevelopment properties: under construction” in Item 2 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.
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The following table presents key terms related to our unconsolidated real estate joint ventures’ secured loans as of June 30,
2026 (dollars in thousands):
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) | 5.68% | $26,750 | $19,445 | 58.4% | ||||||
1655 and 1725 Third Street | 2/10/35 | 6.37% | 6.44% | 500,000 | 497,052 | 10.0% | ||||||||
$526,750 | $516,497 | |||||||||||||
(1)Includes interest expense and amortization of loan fees.
(2)Represents outstanding principal, net of unamortized deferred financing costs, as of June 30, 2026.
(3)The unconsolidated real estate joint venture is in the process of working with prospective lenders to refinance this debt. As of June 30, 2026, our investment in this
unconsolidated real estate joint venture was $9.8 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 six months ended June 30, 2026 (in thousands):
Noncontrolling Interest Share of Consolidated Real Estate Joint Ventures | Our Share of Unconsolidated Real Estate Joint Ventures | |||||||
June 30, 2026 | June 30, 2026 | |||||||
Three Months Ended | Six Months Ended | Three Months Ended | Six Months Ended | |||||
Total revenues | $98,861 | $196,073 | $3,004 | $6,010 | ||||
Rental operations | (32,953) | (63,630) | (961) | (2,152) | ||||
65,908 | 132,443 | 2,043 | 3,858 | |||||
General and administrative | (661) | (1,283) | (2) | (24) | ||||
Interest | (107) | (170) | (975) | (2,001) | ||||
Depreciation and amortization of real estate assets | (31,518) | (60,991) | (805) | (1,719) | ||||
Gain on sale of interest in unconsolidated JV | — | — | 152 | 152 | ||||
Fixed returns allocated to redeemable noncontrolling interest(1) | 192 | 539 | — | — | ||||
$33,814 | $70,538 | $413 | $266 | |||||
Straight-line rent and below-market lease revenue | $1,144 | $4,125 | $137 | $334 | ||||
Funds from operations(2) | $65,332 | $131,529 | $1,218 | $1,985 | ||||
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 and does not participate 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 June 30, 2026 | |||
Noncontrolling Interest Share of Consolidated Real Estate Joint Ventures | Our Share of Unconsolidated Real Estate Joint Ventures | ||
Investments in real estate | $3,376,318 | $86,697 | |
Cash, cash equivalents, and restricted cash | 116,812 | 2,559 | |
Other assets | 401,550 | 10,406 | |
Secured notes payable | — | (61,061) | |
Other liabilities | (273,298) | (9,691) | |
Redeemable noncontrolling interests | (9,119) | — | |
$3,612,263 | $28,910 | ||
During the six months ended June 30, 2026 and 2025, our consolidated real estate joint ventures distributed an aggregate of
$111.9 million and $123.6 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.
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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 (loss) and non-real estate investments (in thousands). Refer to Note 7 –
“Investments” to our unaudited consolidated financial statements in Item 1 for additional information.
June 30, 2026 | June 30, 2025 | |||||||||||
Three Months Ended | Six Months Ended | Three Months Ended | Six Months Ended | |||||||||
Realized gains (losses): | ||||||||||||
Realized gains | $10,292 | $28,490 | $30,532 | $59,865 | ||||||||
Impairment of non-real estate investments | (8,998) | (1) | (21,446) | (39,216) | (50,396) | |||||||
1,294 | 7,044 | (8,684) | 9,469 | |||||||||
Unrealized gains (losses) | 131,933 | (2) | 121,601 | (2) | (21,938) | (3) | (90,083) | (3) | ||||
Investment income (losses) | $133,227 | $128,645 | $(30,622) | $(80,614) | ||||||||
June 30, 2026 | December 31, 2025 | |||||||||
Investments | Cost | Unrealized Gains | Unrealized Losses | Carrying Amount | Carrying Amount | |||||
Publicly traded companies | $86,268 | $50,949 | $(14,405) | $122,812 | $94,928 | |||||
Entities that report NAV | 496,043 | 180,952 | (40,937) | 636,058 | 512,376 | |||||
Entities that do not report NAV: | ||||||||||
Entities with observable price changes | 91,621 | 58,568 | (11,210) | 138,979 | 123,238 | |||||
Entities without observable price changes | 390,401 | — | — | 390,401 | 413,324 | |||||
Investments accounted for under the equity method | N/A | N/A | N/A | 397,445 | 357,383 | |||||
June 30, 2026 | $1,064,333 | (4) | $290,469 | $(66,552) | $1,685,695 | $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) | |
6%
Public
17%
Tenant
94%
Private
83%
Non-Tenant
(1)Primarily related to two non-real estate investments in privately held entities that do 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 six months ended June 30, 2026.
(3)Primarily relates to the decrease in fair values and 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 three and six months ended June 30, 2025.
(4)Represents 2.6% of gross assets as of June 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 | ||||
$3.6B | (in millions) | ||||
 | |||||
(In millions) | |||||
Availability under our unsecured senior line of credit, net of amounts outstanding under our commercial paper program | $3,003 | ||||
Cash, cash equivalents, and restricted cash | 475 | ||||
Investments in publicly traded companies | 123 | ||||
Liquidity as of June 30, 2026 | $3,601 | ||||
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.
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.
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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 June 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+0.835% | $5,000,000 | $1,996,859 | $3,003,141 | ||||
Cash, cash equivalents, and restricted cash | 475,139 | |||||||
Investments in publicly traded companies | 122,812 | |||||||
Liquidity as of June 30, 2026 | $3,601,092 |
Cash, cash equivalents, and restricted cash
As of June 30, 2026 and December 31, 2025, we had $475.1 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 six months ended June 30, 2026 and 2025 (in thousands):
Six Months Ended June 30, | |||||
2026 | 2025 | Change | |||
Net cash provided by operating activities | $533,592 | $668,190 | $(134,598) | ||
Net cash used in investing activities | $(994,546) | $(1,029,653) | $35,107 | ||
Net cash provided by financing activities | $382,965 | $330,099 | $52,866 | ||
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 six months ended June 30, 2026 decreased by $134.6 million, or 20.1%, to $533.6 million, compared to
$668.2 million for the six months ended June 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 86.9% as of June 30, 2026.
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Investing activities
Cash used in investing activities for the six months ended June 30, 2026 and 2025 consisted of the following (in thousands):
Six Months Ended June 30, | Change | ||||
2026 | 2025 | ||||
Sources of cash from investing activities: | |||||
Proceeds from sales of real estate | $4,766 | $149,027 | $(144,261) | ||
Sale of interests in unconsolidated real estate joint ventures | 1,917 | — | 1,917 | ||
Sales of and distributions from non-real estate investments | 76,273 | 42,134 | 34,139 | ||
Return of capital from unconsolidated real estate joint ventures | 113 | — | 113 | ||
83,069 | 191,161 | (108,092) | |||
Uses of cash for investing activities: | |||||
Additions to real estate | 949,318 | 1,081,006 | (131,688) | ||
Investments in unconsolidated real estate joint ventures | 557 | 11,055 | (10,498) | ||
Change in escrow deposits | — | 8,108 | (8,108) | ||
Additions to non-real estate investments | 127,740 | 120,645 | 7,095 | ||
1,077,615 | 1,220,814 | (143,199) | |||
Net cash used in investing activities | $994,546 | $1,029,653 | $(35,107) | ||
The change in net cash used in investing activities for the six months ended June 30, 2026, compared to the six months ended
June 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, partially offset by a decrease in proceeds from sales of real estate. Refer to Note 3 –
“Investments in real estate” to our unaudited consolidated financial statements in Item 1 for additional information.
Financing activities
Cash flows provided by financing activities for the six months ended June 30, 2026 and 2025 consisted of the following
(in thousands):
Six Months Ended June 30, | |||||
2026 | 2025 | Change | |||
Borrowings under secured notes payable | $— | $4,029 | $(4,029) | ||
Repayments of borrowings under secured notes payable | (8,892) | — | (8,892) | ||
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 issuances under commercial paper program | 24,727,914 | 8,468,015 | 16,259,899 | ||
Repayments of borrowings under commercial paper program | (23,084,555) | (7,368,015) | (15,716,540) | ||
Payments of loan fees | (8,813) | (5,406) | (3,407) | ||
Changes related to debt | 771,043 | 1,047,155 | (276,112) | ||
Contributions from and sales of noncontrolling interests | 27,636 | 96,055 | (68,419) | ||
Distributions to noncontrolling interests | (111,860) | (123,618) | 11,758 | ||
Purchases and redemptions of noncontrolling interests | (49,822) | (17,818) | (32,004) | ||
Repurchase of common stock | — | (208,187) | 208,187 | ||
Dividends on common stock | (247,594) | (457,217) | 209,623 | ||
Taxes paid related to net settlement of equity awards | (6,438) | (6,271) | (167) | ||
Net cash provided by financing activities | $382,965 | $330,099 | $52,866 | ||
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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 $40 million related to the commencement of
contractual rents on the projects recently placed into service that are near the end of their initial free rent period. Refer to “Cash flows”
in Item 2 for a discussion of cash flows provided by operating activities for the six months ended June 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, and/or borrowings under our unsecured senior line of credit, and/or borrowings under
secured construction loans.
As of June 30, 2026, our unsecured senior line of credit had aggregate commitments of $5.0 billion and bore an interest rate of
SOFR plus 0.835%. In addition to the cost of borrowing, the unsecured senior line of credit is subject to an annual facility fee of 0.14%
based on the aggregate commitments outstanding. Based upon our ability to achieve certain annual sustainability targets, the interest
rate and facility fee rate are also subject to upward or downward adjustments of up to four basis points with respect to the interest rate
and up to one basis point with respect to the facility fee rate.
During the three months ended March 31, 2026, we achieved certain annual sustainability targets, as described in our
unsecured senior line of credit agreement, which reduced the borrowing rate by four basis points for a one-year period to SOFR plus
0.835%, from SOFR plus 0.875%, and reduced the facility fee by one basis point to 0.14% from 0.15%. As of June 30, 2026, we had no
outstanding balance on our unsecured senior line of credit.
In July 2026, we executed an agreement to amend our $5.0 billion unsecured senior line of credit. The amendment is expected
to become effective in September 2026, upon the satisfaction of certain conditions. The amendment extends the maturity date from
January 22, 2030 to January 22, 2032, including extension options that we control. In addition, the amendment reduces the applicable
borrowing rate and eliminates the existing sustainability-linked pricing adjustments, resulting in an applicable borrowing rate and facility
fee of SOFR plus 0.725% and 0.15%, respectively, from the currently applicable borrowing rate and facility fee of SOFR plus 0.835%
and 0.14%, respectively. In connection with the amendment, we expect to recognize a loss on early extinguishment of debt of
approximately $3.3 million related to the partial write-off of unamortized loan fees.
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 six months ended
June 30, 2026 were issued at a weighted-average yield to maturity of 4.17%. As of June 30, 2026, we had $1.99 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, sales of partial interests, and other capital
sources 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, sales of partial interests, and other capital sources. 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.
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The following table presents our average debt outstanding and weighted-average interest rates during the three and six
months ended June 30, 2026 (dollars in thousands):
Average Debt Outstanding | Weighted-Average Interest Rate | ||||||||
June 30, 2026 | June 30, 2026 | ||||||||
Three Months Ended | Six Months Ended | Three Months Ended | Six Months Ended | ||||||
Long-term fixed-rate debt | $10,943,589 | $11,188,132 | 4.02% | 3.98% | |||||
Short-term variable-rate unsecured senior line of credit and commercial paper program debt | 2,186,278 | 1,961,252 | 4.27 | 4.16 | |||||
Blended average interest rate | 13,129,867 | 13,149,384 | 4.06 | 4.01 | |||||
Loan fee amortization and annual facility fee related to unsecured senior line of credit | N/A | N/A | 0.14 | 0.13 | |||||
Total/weighted average | $13,129,867 | $13,149,384 | 4.20% | 4.14% | |||||
Real estate dispositions, sales of partial interests, and other capital sources
We expect to continue to focus on the disciplined execution of real estate dispositions, sales of partial interests, and other
capital sources, 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, sales
of partial interests, and other capital sources to range from $2.10 billion to $3.70 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, sales of partial
interests, and other capital sources” in Item 2 for additional information on our real estate dispositions.
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 six months ended June 30, 2026, we did not issue any common stock under our ATM program. As of
June 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, subordinate 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 July 1, 2026 through
December 31, 2027 and beyond, we expect to receive capital contributions aggregating $104.0 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 up to $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 2.8 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 $143.7 million for the six months ended
June 30, 2026, a decrease from $162.5 million capitalized during the six months ended June 30, 2025. This reflects a lower weighted-
average capitalized cost basis of $6.94 billion for the six months ended June 30, 2026, as compared to $8.07 billion for the six months
ended June 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 $36.3 million and $47.8 million, and property taxes, insurance
on real estate, and indirect project costs aggregating $69.3 million and $73.1 million during the six months ended June 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 $24.9 million for the six months ended June 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 six months ended
June 30, 2026, we capitalized total initial direct leasing costs of $39.2 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 six months ended June 30, 2026 and 2025, we paid common stock dividends of $247.6 million and $457.2 million,
respectively. The decrease of $209.6 million in dividends paid on our common stock for the six months ended June 30, 2026, compared
to the six months ended June 30, 2025, was primarily due to a decrease in the related dividends to $1.44 per common share paid for
the six months ended June 30, 2026 from $2.64 per common share paid during the six months ended June 30, 2025.
We have historically funded the payment of our common stock dividends using net cash provided by operating activities, as
adjusted. 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. We expect to
continue funding future quarterly common stock dividends from net cash provided by operating activities, as adjusted, 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 June 30, 2026 were as follows:
Covenant Ratios(1) | Requirement | June 30, 2026 | ||
Total Debt to Total Assets | Less than or equal to 60% | 32% | ||
Secured Debt to Total Assets | Less than or equal to 40% | —% | ||
Consolidated EBITDA(2) to Interest Expense | Greater than or equal to 1.5x | 7.4x | ||
Unencumbered Total Asset Value to Unsecured Debt | Greater than or equal to 150% | 300% |
(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 June 30, 2026 were as follows:
Covenant Ratios(1) | Requirement | June 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 | 3.07x | ||
Unsecured Interest Coverage Ratio | Greater than or equal to 1.75x | 6.50x |
(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 June 30, 2026, 84.4% 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 June 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 three 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 45 to 80 years. The weighted-average remaining lease term of these ground leases is 73 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 June 30, 2026, the remaining contractual payments under ground and office lease agreements in which we are the
lessee aggregated $743.6 million and $15.8 million, respectively. As of June 30, 2026, our operating lease liability, calculated as the
present value of the remaining payments aggregating $759.4 million under our operating lease agreements, including our extension
options that we are reasonably certain to exercise, was $354.9 million and was classified in accounts payable, accrued expenses, and
other liabilities in our consolidated balance sheet. As of June 30, 2026, the weighted-average remaining lease term of operating leases
in which we are the lessee was approximately 61 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 $689.2 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 June 30, 2026, remaining aggregate costs under contract for the construction of properties undergoing development,
redevelopment, and improvements under the terms of leases approximated $906.7 million. 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 $340.7 million related to our non-real estate investments. These funding
commitments are primarily associated with our investments in privately held entities that report NAV and expire at various dates over
the next 12 years, with a weighted-average expiration of 7.9 years as of June 30, 2026.
Our former joint venture partner in the Greater Boston market has an option, subject to certain conditions, to obtain a
$30 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 June 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 June 30, 2026, $40.7 million of the
commitment remained available to be drawn by the borrower.
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.
106
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 six months ended June 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 substantial liquidation of the related investments.
Total | ||
Balance as of December 31, 2025 | $(29,395) | |
Other comprehensive loss before reclassifications | (3,609) | |
Reclassification adjustment for gain included in net income | (23) | |
Net other comprehensive loss | (3,632) | |
Balance as of June 30, 2026 | $(33,027) |
Inflation
As of June 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 June 30, 2026 and December 31, 2025, and results of
operations and comprehensive income for the six months ended June 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 June 30, 2026 and December 31, 2025 and for
the six months ended June 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):
June 30, 2026 | December 31, 2025 | |||
Assets: | ||||
Cash, cash equivalents, and restricted cash | $52,659 | $127,100 | ||
Other assets | 189,537 | 173,303 | ||
Total assets | $242,196 | $300,403 | ||
Liabilities: | ||||
Unsecured senior notes payable | $10,818,366 | $12,047,394 | ||
Unsecured senior line of credit and commercial paper | 1,994,508 | 353,161 | ||
Other liabilities | 424,614 | 433,707 | ||
Total liabilities | $13,237,488 | $12,834,262 | ||
Six Months Ended June 30, 2026 | Year Ended December 31, 2025 | |||
Total revenues | $11,365 | $48,748 | ||
Total expenses | (188,808) | (350,655) | ||
Gain on early extinguishment of debt | 366,435 | — | ||
Net income (loss) | 188,992 | (301,907) | ||
Net income attributable to unvested restricted stock awards | (2,149) | (8,417) | ||
Net income (loss) attributable to Alexandria Real Estate Equities, Inc.’s common stockholders | $186,843 | $(310,324) | ||
As of June 30, 2026, 326 of our 336 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 six months ended June 30, 2026 and 2025 (in
thousands, except per share amounts). Per share amounts may not add due to rounding.
Three Months Ended June 30, | Six Months Ended June 30, | |||||||
2026 | 2025 | 2026 | 2025 | |||||
Net (loss) income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – basic and diluted | $(73,691) | $(109,611) | $286,721 | $(121,210) | ||||
Depreciation and amortization of real estate assets | 302,238 | 343,729 | 605,534 | 683,110 | ||||
Noncontrolling share of depreciation and amortization from consolidated real estate JVs | (31,518) | (36,047) | (60,991) | (69,458) | ||||
Our share of depreciation and amortization from unconsolidated real estate JVs | 805 | 942 | 1,719 | 1,996 | ||||
Gain on sales of real estate | — | — | — | (13,165) | ||||
Impairment of real estate – rental properties and land | 222,470 | (1) | 131,090 | 227,969 | 131,090 | |||
Allocation to unvested restricted stock awards | (2,201) | (1,222) | (5,877) | (1,916) | ||||
Funds from operations attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted(2) | 418,103 | 328,881 | 1,055,075 | 610,447 | ||||
Unrealized (gains) losses on non-real estate investments | (131,933) | 21,938 | (121,601) | 90,083 | ||||
Impairment of non-real estate investments | 8,998 | (3) | 39,216 | 21,446 | 50,396 | |||
Impairment of real estate | — | 7,189 | — | 39,343 | ||||
Gain on early extinguishment of debt | — | — | (366,435) | — | ||||
Increase in provision for expected credit losses on financial instruments | — | — | — | 285 | ||||
Allocation to unvested restricted stock awards | 909 | (794) | 3,541 | (2,116) | ||||
Funds from operations attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted, as adjusted | $296,077 | $396,430 | $592,026 | $788,438 | ||||
(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 related to two non-real estate investments in privately held entities that do not report NAV.
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Three Months Ended June 30, | Six Months Ended June 30, | |||||||
(Per share) | 2026 | 2025 | 2026 | 2025 | ||||
Net (loss) income per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted | $(0.43) | $(0.64) | $1.68 | $(0.71) | ||||
Depreciation and amortization of real estate assets | 1.59 | 1.81 | 3.19 | 3.61 | ||||
Gain on sales of real estate | — | — | — | (0.08) | ||||
Impairment of real estate – rental properties and land | 1.30 | 0.77 | 1.33 | 0.77 | ||||
Allocation to unvested restricted stock awards | (0.02) | (0.01) | (0.03) | (0.01) | ||||
Funds from operations per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted | 2.44 | 1.93 | 6.17 | 3.58 | ||||
Unrealized (gains) losses on non-real estate investments | (0.77) | 0.13 | (0.71) | 0.53 | ||||
Impairment of non-real estate investments | 0.05 | 0.23 | 0.13 | 0.30 | ||||
Impairment of real estate | — | 0.04 | — | 0.23 | ||||
Gain on early extinguishment of debt | — | — | (2.14) | — | ||||
Allocation to unvested restricted stock awards | 0.01 | — | 0.01 | (0.01) | ||||
Funds from operations per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted, as adjusted | $1.73 | $2.33 | $3.46 | $4.63 | ||||
Weighted-average shares of common stock outstanding – diluted(1) | ||||||||
Earnings per share – diluted | 170,718 | 170,135 | 171,040 | 170,328 | ||||
Funds from operations – diluted, per share | 171,210 | 170,192 | 171,040 | 170,390 | ||||
Funds from operations – diluted, as adjusted, per share | 171,210 | 170,192 | 171,040 | 170,390 | ||||
(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 six months
ended June 30, 2026 (in thousands):
Noncontrolling Interest Share of Consolidated Real Estate Joint Ventures | Our Share of Unconsolidated Real Estate Joint Ventures | ||||||
June 30, 2026 | June 30, 2026 | ||||||
Three Months Ended | Six Months Ended | Three Months Ended | Six Months Ended | ||||
Net income | $33,814 | $70,538 | $413 | $266 | |||
Depreciation and amortization of real estate assets | 31,518 | 60,991 | 805 | 1,719 | |||
Funds from operations | $65,332 | $131,529 | $1,218 | $1,985 | |||
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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 six months ended June 30,
2026 and 2025 (dollars in thousands):
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2026 | 2025 | 2026 | 2025 | ||||
Net (loss) income | $(38,969) | $(62,189) | $359,408 | $(23,527) | |||
Interest expense | 64,342 | 55,296 | 128,926 | 106,172 | |||
Income taxes | 1,845 | 1,020 | 5,070 | 2,165 | |||
Depreciation and amortization | 304,384 | 346,123 | 609,825 | 688,185 | |||
Stock compensation expense | 10,146 | 12,530 | 21,178 | 22,594 | |||
Gain on early extinguishment of debt | — | — | (366,435) | — | |||
Gain on sales of real estate | — | — | — | (13,165) | |||
Unrealized (gains) losses on non-real estate investments | (131,933) | 21,938 | (121,601) | 90,083 | |||
Impairment of real estate | 222,470 | 129,606 | 227,969 | 161,760 | |||
Impairment of non-real estate investments | 8,998 | 39,216 | 21,446 | 50,396 | |||
Increase in provision for expected credit losses on financial instruments | — | — | — | 285 | |||
Adjusted EBITDA | $441,283 | $543,540 | $885,786 | $1,084,948 | |||
Total revenues | $662,784 | $762,040 | $1,333,806 | $1,520,198 | |||
Adjusted EBITDA margin | 67% | 71% | 66% | 71% | |||
Advanced technology
Advanced technology space serves tech office and non-life-science uses of real estate by 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 June 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
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
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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 and debt premiums (discounts). 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 June 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.
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 six months ended June 30, 2026
and 2025 (dollars in thousands):
Three Months Ended June 30, | Six Months Ended June 30, | |||||||
2026 | 2025 | 2026 | 2025 | |||||
Adjusted EBITDA | $441,283 | $543,540 | $885,786 | $1,084,948 | ||||
Interest expense | $64,342 | $55,296 | $128,926 | $106,172 | ||||
Capitalized interest | 73,717 | 82,423 | 143,690 | 162,488 | ||||
Amortization of loan fees | (4,417) | (4,615) | (8,845) | (9,306) | ||||
Amortization of debt discounts | (352) | (335) | (672) | (684) | ||||
Cash interest and fixed charges | $133,290 | $132,769 | $263,099 | $258,670 | ||||
Fixed-charge coverage ratio: | ||||||||
– period annualized | 3.3x | 4.1x | 3.4x | 4.2x | ||||
– trailing 12 months | 3.6x | 4.3x | 3.6x | 4.3x | ||||
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 June 30, 2026 and December 31, 2025 (in
thousands):
June 30, 2026 | December 31, 2025 | ||
Total assets | $34,632,226 | $34,081,835 | |
Accumulated depreciation | 6,648,143 | 6,127,525 | |
Gross assets | $41,280,369 | $40,209,360 | |
Incremental annual net operating income on development and redevelopment projects
Incremental annual net operating income represents the amount of net operating income, on an annualized basis, expected to
be realized upon a project being placed into service and achieving full occupancy. 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 June 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 June 30, 2026 (dollars in thousands):
Book Value | Percentage of Gross Assets | |||
Projects under active construction | $2,716,588 | 7% | ||
Future development projects(1) and land parcels primarily located in Megacampuses | 3,729,608 | 9 | ||
Total Class A/A+ development and redevelopment pipeline, excluding properties held for sale | 6,446,196 | 16 | ||
Properties held for sale – land parcels | 188,192 | — | ||
Total Class A/A+ development and redevelopment pipeline | $6,634,388 | 16% | ||
(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 June 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 | |||||
2100 Geng Road/Palo Alto | Dev | — | — | 12,125 | 12,125 | |||||
960 Industrial Road/San Carlos | Dev | — | — | 112,590 | 112,590 | |||||
Total | — | — | 947,156 | 947,156 | ||||||
(1)Includes vacant square footage as of June 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 June 30, 2026 (dollars in thousands):
Annual Rental Revenue | Development and Redevelopment Pipeline RSF | |||
Megacampus | $1,444,106 | 16,828,718 | ||
Core and non-core | 363,742 | 4,421,866 | ||
Total | $1,807,848 | 21,250,584 | ||
Megacampus as a percentage of annual rental revenue and of total development and redevelopment pipeline RSF | 80% | 79% |
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:
Six Months Ended June 30, | ||||
(in thousands) | 2026 | 2025 | ||
Net cash provided by operating activities | $533,592 | 668,190 | ||
Decreases in operating assets and liabilities | 166,799 | 203,101 | ||
Common stock dividends paid | (247,594) | (457,217) | ||
Distributions to noncontrolling interests | (111,860) | (123,618) | ||
Net cash provided by operating activities, as adjusted | $340,937 | $290,456 | ||
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 unsecured senior and secured 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. 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 June 30,
2026 and December 31, 2025 (dollars in thousands):
June 30, 2026 | December 31, 2025 | ||
Unsecured senior notes payable | $10,818,366 | $12,047,394 | |
Unsecured senior line of credit and commercial paper | 1,994,508 | 353,161 | |
Unamortized deferred financing costs | 67,066 | 74,314 | |
Cash and cash equivalents | (470,449) | (549,062) | |
Restricted cash | (4,690) | (4,693) | |
Preferred stock | — | — | |
Net debt and preferred stock | $12,404,801 | $11,921,114 | |
Adjusted EBITDA: | |||
– quarter annualized | $1,765,132 | $2,097,444 | |
– trailing 12 months | $1,942,649 | $2,141,811 | |
Net debt and preferred stock to Adjusted EBITDA: | |||
– quarter annualized | 7.0x | 5.7x | |
– trailing 12 months | 6.4x | 5.6x |
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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 six months ended June 30, 2026 and 2025 (dollars in thousands):
Three Months Ended June 30, | Six Months Ended June 30, | |||||||
2026 | 2025 | 2026 | 2025 | |||||
Net (loss) income | $(38,969) | $(62,189) | $359,408 | $(23,527) | ||||
Equity in (earnings) losses of unconsolidated real estate joint ventures | (413) | 9,021 | (266) | 9,528 | ||||
General and administrative expenses | 36,861 | 29,128 | 71,546 | 59,803 | ||||
Interest expense | 64,342 | 55,296 | 128,926 | 106,172 | ||||
Depreciation and amortization | 304,384 | 346,123 | 609,825 | 688,185 | ||||
Impairment of real estate | 222,470 | 129,606 | 227,969 | 161,760 | ||||
Gain on early extinguishment of debt | — | — | (366,435) | — | ||||
Gain on sales of real estate | — | — | — | (13,165) | ||||
Investment (income) loss | (133,227) | 30,622 | (128,645) | 80,614 | ||||
Net operating income | 455,448 | 537,607 | 902,328 | 1,069,370 | ||||
Straight-line rent revenue | (901) | (18,536) | (18,763) | (40,559) | ||||
Amortization of deferred revenue related to tenant-funded and -built landlord improvements | (7,484) | (2,401) | (12,889) | (4,052) | ||||
Amortization of acquired below-market leases | (8,381) | (10,196) | (13,996) | (25,418) | ||||
Provision for expected credit losses on financial instruments | — | — | — | 285 | ||||
Net operating income (cash basis) | $438,682 | $506,474 | $856,680 | $999,626 | ||||
Net operating income (cash basis) – annualized | $1,754,728 | $2,025,896 | $1,713,360 | $1,999,252 | ||||
Net operating income (from above) | $455,448 | $537,607 | $902,328 | $1,069,370 | ||||
Total revenues | $662,784 | $762,040 | $1,333,806 | $1,520,198 | ||||
Operating margin | 69% | 71% | 68% | 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. These impairments result from investing decisions or a deterioration
in market conditions. We also exclude realized and unrealized investment gain or loss, which results from investment decisions that
occur at the corporate level related to non-real estate investments in publicly traded companies and certain privately held entities.
Therefore, we do not consider these activities to be an indication of operating performance of our real estate assets at the property
level. Our calculation of net operating income also excludes charges incurred from changes in certain financing decisions, such as
losses on early extinguishment of debt 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 six months ended June 30, 2026 and
2025 (in thousands):
Three Months Ended June 30, | Six Months Ended June 30, | |||||||
2026 | 2025 | 2026 | 2025 | |||||
Income from rentals | $643,210 | $737,279 | $1,296,223 | $1,480,454 | ||||
Rental revenues | (486,589) | (553,377) | (961,375) | (1,105,489) | ||||
Tenant recoveries | $156,621 | $183,902 | $334,848 | $374,965 | ||||
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.
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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 six months ended June 30, 2026 and 2025 (dollars in thousands):
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2026 | 2025 | 2026 | 2025 | ||||
Unencumbered net operating income | $455,448 | $535,766 | $902,328 | $1,066,457 | |||
Encumbered net operating income | — | 1,841 | — | 2,913 | |||
Total net operating income | $455,448 | $537,607 | $902,328 | $1,069,370 | |||
Unencumbered net operating income as a percentage of total net operating income | 100.0% | 99.7% | 100.0% | 99.7% | |||
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 six months ended June 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 June 30, | Six Months Ended June 30, | ||||||
2026 | 2025 | 2026 | 2025 | ||||
Basic shares for earnings per share | 170,718 | 170,135 | 170,658 | 170,328 | |||
Unvested RSAs with forfeitable dividends | — | — | 382 | — | |||
Diluted shares for earnings per share | 170,718 | 170,135 | 171,040 | 170,328 | |||
Basic shares for funds from operations per share and funds from operations per share, as adjusted | 170,718 | 170,135 | 170,658 | 170,328 | |||
Unvested RSAs with forfeitable dividends | 492 | 57 | 382 | 62 | |||
Diluted shares for funds from operations per share and funds from operations per share, as adjusted | 171,210 | 170,192 | 171,040 | 170,390 | |||
Weighted-average unvested RSAs with nonforfeitable dividends used in the allocations of net income, funds from operations, and funds from operations, as adjusted | 1,276 | 1,998 | 1,308 | 2,025 | |||
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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 June 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 prevalent 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 June 30, 2026 (in thousands):
As of | |||
June 30, 2026 | December 31, 2025 | ||
Annualized effect on future earnings due to variable-rate debt: | |||
Rate increase of 1% | $(7,496) | $(1,259) | |
Rate decrease of 1% | $7,496 | $1,259 | |
Effect on fair value of total consolidated debt: | |||
Rate increase of 1% | $(654,859) | $(746,058) | |
Rate decrease of 1% | $738,814 | $852,698 | |
These amounts are determined by considering the effect of the hypothetical interest rates on our borrowings as of June 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 (loss) 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 June 30, 2026 and December 31, 2025 (in thousands):
As of | |||
June 30, 2026 | December 31, 2025 | ||
Equity price risk: | |||
Fair value increase of 10% | $128,825 | $114,387 | |
Fair value decrease of 10% | $(128,825) | $(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
or partial 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 June 30, 2026 and December 31, 2025 (in thousands):
As of | |||
June 30, 2026 | December 31, 2025 | ||
Effect on potential future earnings due to foreign currency exchange rate: | |||
Rate increase of 10% | $348 | $182 | |
Rate decrease of 10% | $(348) | $(182) | |
Effect on the fair value of net investment in foreign subsidiaries due to foreign currency exchange rate: | |||
Rate increase of 10% | $34,763 | $35,306 | |
Rate decrease of 10% | $(34,763) | $(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) | $(18,800) | $(24,600) | |
Rate decrease of 10% (USD strengthening) | $18,800 | $24,600 | |
(1)Refer to Note 11 – “Hedge agreements” to our unaudited consolidated financial statements for additional information.
The sensitivity analyses assume a parallel shift of all foreign currency exchange rates with respect to the U.S. dollar; however,
foreign currency exchange rates do not typically move in such a manner, and actual results may differ materially.
Our exposure to market risk elements for the six months ended June 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 June 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 June 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 June 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 operative complaint alleges 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 complaint seeks damages and other relief on behalf of investors who acquired the Company’s securities
between January 30, 2024 and December 5, 2025. The defendants moved to dismiss the action on May 20, 2026.
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
resolution 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.
126
ITEM 5. OTHER INFORMATION
Disclosure of 10b5-1 plans
that he had previously adopted in December 2025 for the sale from time to time of up to 23,368 shares of common stock. The trading
arrangement was intended to satisfy the affirmative defense conditions of Securities Exchange Act Rule 10b5-1(c) and was scheduled
Rule 10b5-1 trading arrangement that she had previously adopted in December 2025 for the sale from time to time of up to 2,574
shares of common stock. The trading arrangement was intended to satisfy the affirmative defense conditions of Securities Exchange
Act Rule 10b5-1(c) and was scheduled to expire on October 16, 2026 .
On June 25, 2026 , Hart Cole , our Co-President & Co-Regional Market Director – Seattle , terminated a Rule 10b5-1 trading
arrangement that he had previously adopted in December 2025 for the sale from time to time of up to 20,000 shares of common stock.
The trading arrangement was intended to satisfy the affirmative defense conditions of Securities Exchange Act Rule 10b5-1(c) and was
scheduled to expire on January 29, 2027 .
During the three months ended June 30, 2026, no other 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.
127
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 | |||
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 June 30, 2026, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of June 30, 2026 and December 31, 2025 (unaudited), (ii) Consolidated Statements of Operations for the three and six months ended June 30, 2026 and 2025 (unaudited), (iii) Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2026 and 2025 (unaudited), (iv) Consolidated Statements of Changes in Stockholders’ Equity and Noncontrolling Interests for the three and six months ended June 30, 2026 and 2025 (unaudited), (v) Consolidated Statements of Cash Flows for the six months ended June 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 June 30, 2026 is formatted in Inline XBRL and contained in Exhibit 101.1 | N/A | Filed herewith |
(*) Incorporated by reference.
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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 August 3, 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) |