ALEXANDRIA REAL ESTATE EQUITIES, INC. (ARE)

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.

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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.

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Executive summary

Operating results

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

(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.

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.

We expect to allocate this capital as follows (based on guidance midpoints):

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our consolidated financial statements and notes thereto under

“Item 15. Exhibits and financial statement schedules” in this annual report on Form 10-K. Forward-looking statements involve inherent

risks and uncertainties regarding events, conditions, and financial trends that may affect our future plans of operations, business

strategy, results of operations, and financial position. A number of important factors could cause actual results to differ materially from

those included within or contemplated by such forward-looking statements, including, but not limited to, those described within this “Item

7. Management’s discussion and analysis of financial condition and results of operations” in this annual report on Form 10-K. We do not

undertake any responsibility to update any of these factors or to announce publicly any revisions to any of the forward-looking

statements contained in this or any other document, whether as a result of new information, future events, or otherwise.

As used in this annual report on Form 10-K, references to the “Company,” “Alexandria,” “ARE,” “we,” “us,” and “our” refer to

Alexandria Real Estate Equities, Inc. and its consolidated subsidiaries.

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Executive summary

Operating results

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” and to the tabular presentation of these items

in “Results of operations” in Item 7 in this annual report on Form 10-K.

A best-in-class REIT with a high-quality, diverse tenant base, strong margins, and long lease terms

Solid leasing volume

•Leasing volume aggregating 4.2 million RSF for the year ended December 31, 2025.

•Leasing of previously vacant space aggregating 393,376 RSF, up 98%, over the quarterly average over the last five

quarters.

•Rental rates on lease renewals and re-leasing of space increased by 7.0% and 3.5% (cash basis) for the year ended

December 31, 2025.

•82% of our leasing activity in 2025 was generated from our existing tenant base.

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Key operating metrics

•Total revenues of $3.03 billion, down 2.9%, for the year ended December 31, 2025, compared to $3.12 billion for the year

ended December 31, 2024. Excluding dispositions completed after January 1, 2024, total revenues would have increased by

2.3% for the year ended December 31, 2025.

•Net operating income (cash basis) of $1.98 billion for the year ended December 31, 2025 increased by $1.7 million, or 0.1%,

compared to the year ended December 31, 2024.

•Change in net operating income (cash basis) includes the impact of operating properties disposed of after January 1,

2024. Excluding these dispositions, net operating income (cash basis) for the year ended December 31, 2025 would have

increased by 6.2% compared to 2024.

•Same property net operating income decreased by 3.5% and increased by 0.9% (cash basis) for the year ended

December 31, 2025, compared to the year ended December 31, 2024.

•92.5% same properties’ average occupancy for the year ended December 31, 2025, compared to 95.2% average

occupancy for the year ended December 31, 2024.

Continued successful management and reduction of general and administrative expenses

•General and administrative expenses as a percentage of net operating income for the year ended December 31, 2025 were

5.6%—the lowest level in the past ten years for the Company and approximately half the average of other S&P 500 REITs. In

2025, we realized cost reductions of $51.3 million, or 30%, compared to the year ended December 31, 2024, primarily from

cost-control and efficiency initiatives. Some of these cost savings are temporary in nature, and we anticipate that

approximately half of the cost reduction achieved in 2025 will continue in 2026.

•Compared to the general and administrative expenses for the year ended December 31, 2024, we expect to achieve a

savings of $76 million of cumulative general and administrative expense in 2025 and 2026 based upon the midpoint of our

guidance range for 2026 general and administrative expenses.

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 December 31, 2025, representing a 45%

reduction from the quarterly dividend declared of $1.32 for the three months ended September 30, 2025.

•The decision to reduce the declared dividend per common share reflects our commitment to maintaining the strength of our

balance sheet, enhancing financial flexibility, and preserving liquidity of approximately $410 million on an annual basis, which

will be used to support our 2026 capital plan.

•Significant net cash flows provided by operating activities after dividends retained for reinvestment aggregating $2.36 billion for

the years ended December 31, 2021 through 2025.

•Dividend yield of 5.9% as of December 31, 2025 and dividend payout ratio of 33% for the three months ended December 31,

2025.

Successful execution of Alexandria’s capital recycling strategy

We exceeded the midpoint of our 2025 guidance for dispositions and sales of partial interests by completing $1.81 billion of

funding, primarily from sales of non-core assets and land, as well as sales to owner/users. During the three months ended December

31, 2025, we completed $1.47 billion of dispositions. As of December 31, 2025, the book value of our real estate assets designated as

held for sale aggregated $581.7 million. We expect to sell these assets in 2026. Refer to “Dispositions and sales of partial interests” in

Item 2 in this annual report Form 10-K for additional details.

(1)Excludes the exchange of partial interests in two consolidated real estate joint ventures, Pacific Technology Park and 199 East Blaine Street, during the three months

ended September 30, 2025.

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Increased occupancy and leasing progress on temporary vacancy

(1)Refer to “Projected results” in item 7 for key considerations on guidance for the three months ending March 31, 2026.

(2)Represents temporary vacancies as of December 31, 2025 aggregating 899,259 RSF, primarily in the Greater Boston, San Francisco Bay Area, and Seattle markets,

that are leased and expected to be occupied upon completion of building and/or tenant improvements. The weighted-average expected delivery date is approximately

August 2026 and the expected annual rental revenue is approximately $52 million.

Reduction of capital spend and funding needs

•During the three months ended December 31, 2025, we reduced future construction funding requirements across our active

pipeline by: i) selling or designating three projects as held for sale and ii) pivoting one project to a lower investment strategy;

enabling us to redeploy future construction savings and sale proceeds into opportunities aligned with our long‑term

Megacampus™ strategy.

•We reduced the overall size of our future construction funding needs on current development and redevelopment projects

by more than $300 million over the next few years.

•3% reduction in non-income-producing assets to 17% as a percentage of gross assets.

•We are evaluating business strategy for four additional projects.

Alexandria’s development and redevelopment pipeline delivered incremental annual net operating income of $10 million, commencing

during the three months ended December 31, 2025, with an additional $97 million of incremental annual net operating income

anticipated to deliver by 4Q26 primarily from projects that are 86% leased/negotiating.

•During the three months ended December 31, 2025, we placed into service one development project aggregating 139,979

RSF that is 100% occupied at 10075 Barnes Canyon Road in our Sorrento Mesa submarket and delivered incremental annual

net operating income of $10 million.

•Annual net operating income (cash basis) from recently delivered projects is expected to increase by $26 million upon the

burn-off of initial free rent, which has a weighted-average remaining period of approximately six months.

•77% of the RSF in our total development and redevelopment pipeline is within our Megacampus ecosystems.

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