ALEXANDRIA REAL ESTATE EQUITIES, INC. (ARE) FY 2024 MD&A

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.

Continued operational excellence and solid results amid challenging macroeconomic environment

Continued solid leasing volume and rental rate increases

•Continued solid leasing volume aggregating 5.1 million RSF for the year ended December 31, 2024, up 19% compared to our

2014–2020 average of 4.3 million RSF.

•Rental rate increases on lease renewals and re-leasing of space were 16.9% and 7.2% (cash basis) for the year ended

December 31, 2024.

•84% of our leasing activity during the last twelve months was generated from our existing tenant base.

•Tenant improvements and leasing commissions on renewed and re-leased space executed during the year ended December

31, 2024 represented only 8.4% of total lease term rents, the second lowest percentage of total lease term rents in the past

five years.

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Continued solid net operating income and internal growth

•Total revenues of $3.1 billion, up 8.0%, for the year ended December 31, 2024, compared to $2.9 billion for the year ended

December 31, 2023.

•Net operating income (cash basis) of $2.0 billion for the year ended December 31, 2024, up $176.9 million, or 9.8%, compared

to the year ended December 31, 2023.

•Same property net operating income growth of 1.2% and 4.6% (cash basis) for the year ended December 31, 2024, compared

to the year ended December 31, 2023.

•97% of our leases contain contractual annual rent escalations approximating 3%.

Continued rigorous focus on management of general and administrative costs

•General and administrative expenses as a percentage of net operating income of 7.6% for the year ended

December 31, 2024, compared to 9.8% for the year ended December 31, 2023.

•We expect general and administrative cost savings of approximately $32 million in 2025, based on the midpoint of our

guidance, compared to 2024, from a variety of cost-control and efficiency initiatives, including:

•Personnel-related matters: reduction in headcount over the last two years and restructuring of compensation plans.

•Streamlining of business processes: systems upgrades, process improvements, and cost reduction in legal, technology,

and operational support services.

Attractive dividend strategy to share net cash flows from operating activities with stockholders while retaining a significant portion for

reinvestment

•Common stock dividend declared for the three months ended December 31, 2024 of $1.32 per common share, aggregating

$5.19 per common share for the year ended December 31, 2024, up 23 cents, or 5%, over the year ended December 31,

2023.

•Dividend yield of 5.4% as of December 31, 2024.

•Dividend payout ratio of 55% for the three months ended December 31, 2024.

•Average annual dividend per-share growth of 5.4% from 2020 to 2024.

•Significant net cash flows from operating activities after dividends retained for reinvestment aggregating $2.2 billion for the

years ended December 31, 2019 through 2024.

Strong execution of Alexandria’s 2024 capital strategy

Our 2024 capital plan included $1.4 billion in funding from strategic dispositions that focused on a portfolio of diversified

assets, of which $1.1 billion was completed during the three months ended December 31, 2024. Refer to “Dispositions” in Item 2 in this

annual report Form 10-K for additional details.

As of the date of this report, our share of pending dispositions subject to negotiations aggregated $539.5 million. These

transactions represent approximately 32% of the $1.7 billion midpoint of our 2025 guidance range for dispositions and sales of partial

interests.

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External growth and investments in real estate

Alexandria’s development and redevelopment pipeline delivered incremental annual net operating income of $55 million and

$118 million, commencing during the three months and year ended December 31, 2024, respectively, and is expected to deliver

incremental annual net operating income aggregating $395 million by the second quarter of 2028.

•During the three months ended December 31, 2024, we placed into service Megacampus development and redevelopment

projects aggregating 602,593 RSF that are 98% occupied across multiple submarkets and delivered incremental annual net

operating income of $55 million. Key deliveries during the three months ended December 31, 2024 include:

•171,102 RSF at 4155 Campus Point Court located on the Campus Point by Alexandria Megacampus in our University

Town Center submarket;

•139,984 RSF at 840 Winter Street located on the Alexandria Center® for Life Science – Waltham Megacampus in our

Route 128 submarket; and

•93,492 RSF at 10935, 10945, and 10955 Alexandria Way located on the One Alexandria Square Megacampus in our

Torrey Pines submarket.

•Annual net operating income (cash basis) is expected to increase by $70 million upon the burn-off of initial free rent, with a

weighted-average burn-off period of approximately three months, from recently delivered projects.

•68% of RSF in our total development and redevelopment pipeline is within our Megacampus ecosystems.

(1)Includes (i) 461,101 RSF that is expected to stabilize through 2025 and is 89% leased/negotiating and (ii) expected partial deliveries through fourth quarter of 2025

from projects expected to stabilize in 2026 and beyond. Refer to the initial and stabilized occupancy years under “New Class A/A+ development and

redevelopment properties: current projects” in Item 2 for additional information.

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Trends that may affect our future results

In 2024, we identified key market trends and uncertainties that had or may have a negative effect on our business. Although

we have mitigating strategies to minimize the risks posed by these trends and uncertainties, there can be no assurance that these

measures will be successful in preventing material impacts on our future results of operations, financial position, and cash flows. Refer

to “Item 1A. Risk factors” in this annual report on Form 10-K for discussion of additional risks we face.

•New competitive supply may exert pressure on our rental rates and adversely affect our operating results. During and

after the COVID-19 pandemic, the shift toward hybrid and remote work arrangements has led certain office and other real

estate companies to repurpose their underutilized office spaces into laboratory facilities. Our success and the success of other

laboratory operators have prompted and may continue to prompt new and existing life science developers to commence

speculative redevelopment and/or development projects in anticipation of demand for laboratory facilities. These conversion

and speculative development projects contributed to a significant influx of new laboratory properties in key markets such as

Boston, San Diego, and San Francisco, heightening competitive pressures and diluting pricing power in certain submarkets.

The increase in the supply of laboratory properties may persist in the near future, potentially intensifying competition and

continuing to exert downward pressure on rental and occupancy rates. Our rental rates for renewed/re-leased space increased

by 16.9%, 29.4%, and 31.0% during years ended December 31, 2024, 2023, and 2022, respectively, and we expect an

increase of 9.0% to 17.0% in 2025. However, to remain competitive, retain existing tenants, or attract new tenants, we may

need to reduce our future rental rates below these projections and/or offer more tenant improvement allowances or additional

tenant concessions, including free rent. The table below reflects a trend of increasing tenant improvement and leasing

commissions per RSF and free rent related to our renewed/re-leased space:

As of December 31, 2024, we anticipate that 4.4 million RSF of projects undergoing construction, which are expected to be

placed into service from 2025 through the second quarter of 2028, and will generate $395 million in future incremental annual

net operating income. These RSF are 45% leased or under lease negotiations as of December 31, 2024. The realization of the

aforementioned risks could hinder our ability to secure tenants for the remaining unleased RSF related to these projects at the

expected rates, or at all, potentially leading to a shortfall in or delays in the commencement of the projected incremental

annual net operating income.

•Unfavorable capital markets and overall macroeconomic environment negatively impacting the value of our real

estate and non-real estate portfolios may limit our ability to raise capital to further our business objectives.

The effective execution of our development and redevelopment activities is contingent upon our access to the required capital.

In 2025, we expect to incur from $1.5 billion to $2.1 billion in construction spending.

•Lower property valuations and increased capitalization rates. A portion of our projected construction and acquisition

spending is expected to be funded through dispositions and sales of partial interests in core 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 timely or at desirable prices, particularly in an economic climate marked by ongoing uncertainties

around inflation and interest rates, in addition to those related to oversupply.

Although the U.S. Federal Reserve lowered the federal funds target range during 2024 to 4.25%–4.50% from 5.25%–

5.50% at the end of 2023, interest rates remain elevated. This could continue to limit access to debt and/or equity

financing for the prospective buyers of our real estate assets, potentially eliminating their participation in the market or

forcing them to seek more expensive alternative funding options. Such challenges for buyers could lead to a rise in

properties available for sale, and could exert downward pressure on property valuations and elevate capitalization rates,

potentially adversely impacting the sales proceeds we expect from our real estate asset sales in 2025.

The new supply, discussed above, combined with high interest rates and reduced market liquidity, may result in a

prolonged period of lower property valuations and higher capitalization rates, potentially leading to significant additional

real estate impairments. In 2024, these market conditions made it challenging to execute asset sales at anticipated

valuations within expected timelines. For more information about our sales of real estate, refer to “Sales of real estate

assets and impairment charges” in Note 3 – “Investments in real estate” to our consolidated financial statements in Item

15 in this annual report on Form 10-K. In 2025, we expect to complete dispositions and sales of partial interests from $1.2

billion to $2.2 billion. However, we may not be able to achieve this and/or other targets disclosed in our 2025 guidance as

a result of the uncertainties discussed in this section as well as in “Item 1A. Risk factors” in this annual report on Form 10-

K.

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The table below presents total dispositions, gain on sales of real estate, consideration in excess of book value, real estate

impairment, and a trend of increasing capitalization rates associated with dispositions and sales of partial interests in our

real estate assets in 2022, 2023, and 2024 (dollars in thousands). While the increase in capitalization rates presented in

the table can partly be attributed to the quality of core and non-core assets we sold during each period, capitalization rates

in general have increased in recent years, and there is no assurance that this upward trend will stabilize or reverse in the

future.

(1)Capitalization rates are calculated only for stabilized operating assets sold. Refer to “Capitalization rates” under “Definitions and reconciliations” in Item

7 for additional information.

•Increased cost and limited availability of capital. In 2025, we expect to issue approximately $600 million of unsecured

bonds, primarily to refinance our $600 million bonds maturing in April 2025. However, should we encounter difficulties in

selling our real estate assets at our targeted prices, we may need to increase our reliance on debt financing to fund our

construction projects, which are projected to aggregate approximately $1.8 billion based on the midpoint of our 2025

guidance.

In addition, our uses of capital include ground lease prepayments aggregating $270.0 million. In July 2024, we executed

an amendment to our existing ground lease agreement at the Alexandria Technology Square® Megacampus in our

Cambridge submarket to extend the term of the ground lease by 24 years to 2088. The amendment requires that we

prepay our entire rent obligation for the extended lease term aggregating $270.0 million in two equal installments. During

the three months ended December 31, 2024, we made the first installment payment of $135.0 million, followed by the

second installment payment of $135.0 million on January 14, 2025. We believe the lease extension significantly enhances

the long-term value of our investment in this critical Megacampus. However, the rent prepayment under this ground lease

also significantly impacted earnings due to the elevated cost of capital.

If the current high interest rate environment persists or worsens, the debt funding option could become costlier, less

accessible, or even unavailable, potentially limiting our ability to complete our development projects on schedule and

thereby delaying our expected incremental annual net operating income generation and negatively affecting our business.

The table below reflects a trend of increasing interest rates related to our unsecured senior notes payable issued in 2022,

2023, and 2024 (dollars in thousands). There is no assurance that this trend of increasing debt costs will not continue into

the future.

(1)Includes amortization of loan fees, amortization of debt premiums (discounts), and other bank fees.

•Capitalized interest. In 2025, our capitalized interest is expected to range from $340 million to $370 million and interest

expense from $165 million to $195 million. Our strategic focus is on prioritizing the completion of our highly leased

projects under construction. Additionally, we invest in our future pipeline with the goals of enhancing value and reducing

the timeline to allow for vertical construction. This is in response to our expectation of increased future demand for these

projects and is reflected in our expectation for capitalized interest. Refer to “Capitalized interest” under “Definitions and

reconciliations” in Item 7 in this annual report on Form 10-K for additional information.

However, the challenging macroeconomic environment, including the elevated supply of laboratory space, higher costs or

unavailability of debt, and challenges in obtaining sufficient proceeds from real estate asset dispositions, as discussed

above, have necessitated and may continue to necessitate a reevaluation of our current plans and lead to a temporary

suspension of our construction projects. This could result in a decline in our 2025 capitalized interest below our current

projections and in a further increase in interest expense recognized in our consolidated statement of operations in 2025.

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The table below presents gross interest expense, capitalized interest, and interest expense during 2022, 2023, and 2024

(in thousands).

•Volatility in 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 uncertainty and a tighter capital environment. These factors may

lead to increased volatility in the valuation of our non-real estate investments.

In such a challenging 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 that lead to

our privately held investees being acquired by other entities — could result in lower realized gains. Moreover, should

market conditions worsen, we may face challenges in selling these securities at optimal prices, potentially disrupting our

capital strategy.

Unfavorable market conditions could also indicate potential impairment of our investments in privately held entities that do

not report NAV per share and lead to the recognition of additional significant non-real estate impairments, lower realized

gains, and higher unrealized losses.

The table below reflects the volatility of our non-real estate investments in 2022, 2023, and 2024 (in thousands):

(1)Includes impairment charges aggregating $58.1 million, $74.6 million, and $20.5 million for the years ended December 31, 2024, 2023, and 2022,

respectively.

The realization of any of the aforementioned risks could have a material adverse impact on our revenues, particularly our

income from rentals, net operating income, our results of operations, funds from operations, operating margins, initial

stabilized yields (unlevered) on new or existing construction projects, occupancy, EPS, FFO per share, our overall

business, and the market value of our common stock.

•Mitigating factors:

•Megacampus strategy: focus on premier Class A/A+ assets in AAA life science innovation cluster locations.

Alexandria has established a high-quality Labspace® asset base predominantly concentrated in markets with high barriers

to entry. Despite a recent increase in the availability of laboratory space, Alexandria is expected to continue to benefit from

our focus on Class A/A+ assets strategically clustered in Megacampus ecosystems in AAA life science innovation cluster

locations in close proximity to top academic and medical research institutions. This proximity is a key driver of tenant

demand. Our Megacampus ecosystems 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 the scale, strategic

design, and placement our Megacampus ecosystems provide are critical.

CEOs of life science companies typically anticipate rapid and exponential growth upon their companies’ achieving

scientific milestones. Our Megacampus ecosystems are designed for scalability, providing opportunities for our tenants to

grow within our Megacampus ecosystems, including through our future developments and redevelopments aggregating

29.5 million RSF, of which 68% is concentrated within our Megacampus ecosystems. The strategic location of our

Megacampus ecosystems, which offer both high visibility and a clear path to growth, serves as a powerful motivator for

tenants to lease space from us.

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Moreover, our tenants recognize that their success is directly linked to their ability to attract and retain personnel to

advance their science. Our Megacampus ecosystems provide a superior set of amenities, services, and access to transit

that offer our tenants valuable optionality. The collaborative, vibrant elements of our Megacampus ecosystems, coupled

with world-class amenities, enhance their confidence in using these spaces as effective recruiting tools. In contrast, a

significant amount of the competitive supply in the market today consists of isolated, one-off buildings. These facilities may

provide operational space, but they fall short in offering the scale and strategic design that our Megacampus ecosystems

deliver.

Consequently, our external growth strategy focuses on the development of new Megacampus ecosystems and the

enhancement of existing ones, serving as our most effective defense against competitive supply. Over the past three

decades, we have established a significant market presence in AAA innovation cluster locations. Our Megacampus

facilities provide a comprehensive solution to life science tenants, one that is challenging to replicate due to the significant

time and capital required to replicate this model. We believe the focus on our Megacampus strategy will continue to

position us favorably compared to potential supply of new competitive laboratory spaces. This strategy is partially

responsible for our 2024 performance metrics listed below, which have been achieved despite the current challenging

macroeconomic environment:

•Our Megacampus properties account for 77% of our total annual rental revenue as of December 31, 2024.

•Strong funds from operations per share – diluted, as adjusted, for 2024 of $9.47.

•Same property net operating income growth of 1.2% and 4.6% (cash basis) for the year ended December 31, 2024.

•Solid occupancy of 94.6% as of December 31, 2024.

•Solid rental rate increases of 16.9% and 7.2% (cash basis) for the year ended December 31, 2024.

•Strong leasing volume aggregating 5.1 million RSF for the year ended December 31, 2024, up 17% compared to our

2023 leasing volume.

•The weighted-average lease term for leases executed during 2024 was 8.9 years; and

•Our projects expected to stabilize in 2025 are 89% leased/negotiating.

•Operational excellence of our team. Alexandria provides and demonstrates operational excellence in direct asset

management and operations of our Labspace® asset base. This high level of performance is crucial in helping to protect

billions of dollars’ worth of intensive infrastructure, specialized equipment, and invaluable tenant research and clinical

assets. 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 practice 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.

Our team is composed of highly experienced, educated, and professionally credentialed facilities specialists. This

expertise is essential in ensuring a secure and efficient environment for groundbreaking scientific research and has been

cultivated and maintained over many years.

•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 longstanding relationships

and strategic partnerships with our tenants, which have enabled us to maintain strong occupancy, leasing, and growth in

net operating income and cash flows and to effectively navigate through various economic cycles. Key indicators of our

brand strength include:

•As of December 31, 2024, 84% of our leasing activity during the last twelve months was generated from our existing

tenant base.

•As of December 31, 2024, 92% of our top 20 tenants annual rental revenue is derived from investment-grade or

large-cap publicly traded companies.

•Solid occupancy of 94.6% as of December 31, 2024; and

•Our tenant collections have remained consistently high over the last four years, averaging 99.8% since the beginning

of 2021 through December 31, 2024.

•Life science fundamentals. We monitor market demand trends, particularly in the life science industry, to optimally align

our property offerings with tenant requirements. The life science industry has shown strong long-term growth, fueled by

multifaceted sources of funding, including private venture capital, biopharma R&D spend, government funding, and

philanthropic support for biomedical innovation. Our focus on high-quality Labspace® assets in prime locations positions

us to effectively capitalize on these ongoing trends:

•The R&D expenditures by U.S. publicly traded life science companies have shown consistent growth since 2014,

nearly doubling in 2023 compared to 2014. As of December 31, 2024, 17 of the top 20 pharma R&D spenders (for the

year 2023) are Alexandria tenants.

•The sector’s growth is further supported by substantial funding life science companies by private-venture capital,

which totaled over $40B in 2024, over 2.5x the capital deployed in 2014.

•FDA approvals of novel medicines continue to accelerate. Novel approvals by the FDA’s CDER division averaged 49

from 2020–2024, over double the average from 2005–2009.

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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 economic uncertainties and capitalize on new opportunities. The strength of our financial

position is highlighted by several key indicators:

•Our significant liquidity of $5.7 billion as of December 31, 2024 provides us the flexibility to address our operational

needs and to pursue growth opportunities.

•We expect to have the ability to self-fund a large portion of our capital requirements through the following sources in

2025:

•$475 million in net cash provided by operating activities after dividends, at the midpoint of our guidance range for

2025.

•$684.1 million in capital contributions to fund construction expected from our existing consolidated real estate

joint venture partners from January 1, 2025 through 2028.

•$1.7 billion from dispositions and sales of partial interests in real estate assets at the midpoint of our guidance

range for 2025.

•As of December 31, 2024, our credit ratings from Moody’s Ratings and S&P Global Ratings were Baa1 and BBB+,

respectively, which continued to rank in the top 10% among all publicly traded U.S. REITs.

•As of December 31, 2024, our fixed-rate debt represents 98.8% of our total debt, which provides predictability in debt

servicing costs. Our fixed rate debt percentage has averaged 98.4% of total debt as of December 31 of each year

since 2020.

•Our debt maturity schedule is well laddered which provides us with financial flexibility and reduces short-term

refinancing risks. As of December 31, 2024, 32% of our debt matures in 2049 or later and only 14% of our debt

matures in the next three years.

•As of December 31, 2024, the weighted-average remaining term of our debt is 12.7 years, demonstrating our

strategic approach to debt management and focus on maintaining manageable annual debt maturities.

•Our net debt and preferred stock to Adjusted EBITDA ratio was 5.2x for the three months ended December 31, 2024

annualized.

•Other mitigating factors

•Improvement in office market. The increase in demand for premium office space in 2024, primarily driven by the tech

sector, particularly companies focused on AI, absorbed some of the market’s previously misguided office-to-lab

conversions, which are now being repurposed back into modern office environments. High ceilings, improved

ventilation systems, and abundant natural light have become highly desirable features, appealing to office tenants.

This trend is expected to lead to the exit from the life science sector of inexperienced life science real estate

developers and expedite the resolution of the oversupply.

•Projected decrease in general and administrative expenses. Over the past few years, we have implemented

comprehensive measures to reduce our expenditures across our organization, including our general and

administrative expenses, which provided savings during the year ended December 31, 2024 compared to the year

ended December 31, 2023, and are expected to provide significant savings in 2025 and beyond. With these

initiatives, we anticipate a reduction in general and administrative expenses of approximately $32 million, or 23%,

during the year ending December 31, 2025, based on the midpoint of our 2025 guidance, compared to the year

ended December 31, 2024. These projected savings are expected to stem from a variety of implemented cost-control

and efficiency initiatives including, but not limited to, the following:

(i)Personnel-related matters, including:

•Reduction in headcount over the last two years.

•Restructuring of various compensation plans.

(ii)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.

These and other changes are projected to generate annual savings of approximately $32 million, or 23%, during the

year ending December 31, 2025, based on the midpoint of our 2025 guidance, compared to the year ended

December 31, 2024, with a significant portion of these savings anticipated to potentially continue beyond 2025. As a

percentage of net operating income, our general and administrative expenses for the trailing twelve months ended

December 31, 2024 and 2023 were 7.6% and 9.8%, respectively.

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Execution of capital strategy

2024 capital strategy

During 2024, we continued to execute many of the long-term components of our capital strategy, as described below.

Maintained access to diverse sources of capital strategically important to our long-term capital structure

•Generated significant net cash flows from operating activities.

•In 2024, we funded $497.8 million of our equity capital needs with net cash flows from operating activities after dividends

and distributions to the company's consolidated real estate joint venture partners, and excluding the impact of changes in

working capital.

•Successfully executed our 2024 capital strategy, driven primarily by strategic dispositions that focused on a portfolio of

diversified assets.

•In 2024, dispositions from real estate generated $1.4 billion of capital for investment into our development and

redevelopment projects.

•In February 2024, we entered into a new ATM common stock offering program that allows us to sell up to an aggregate of

$1.5 billion of our common stock.

•During the three months ended June 30, 2024, we entered into new forward equity sales agreements aggregating

$28 million to sell 230 thousand shares of common stock under our ATM program at an average price per share of

$122.32 (before underwriting discounts).

•During the three months ended December 31, 2024, we settled all outstanding forward equity sales agreements by

issuing 230 thousand shares of common stock at an average price per share of $120.93 and received net proceeds

of $27.8 million, before offering costs.

•As of the date of this report, the remaining aggregate amount available for future sales of common stock under our ATM

program was $1.47 billion.

•Achieved significant growth in annualized Adjusted EBITDA of $178.5 million, or 9%, for the three months ended December

31, 2024, compared to the three months ended December 31, 2023, which allowed us to:

•Opportunistically issue, on a leverage-neutral basis, unsecured senior notes payable aggregating $1.0 billion with a

weighted-average interest rate of 5.48% and a weighted-average maturity of 23.1 years; and

•Maintain our net debt and preferred stock to Adjusted EBITDA ratio to 5.2x for the three months ended December 31,

2024, annualized.

Strong and flexible balance sheet with significant liquidity, top 10% credit rating ranking among all publicly traded U.S. REITs

•As of December 31, 2024, our credit ratings from Moody’s Ratings and S&P Global Ratings were Baa1 and BBB+,

respectively, which continued to rank in the top 10% among all publicly traded U.S. REITs.

•Net debt and preferred stock to Adjusted EBITDA of 5.2x and fixed-charge coverage ratio of 4.3x for the three months ended

December 31, 2024, annualized.

•Significant liquidity of $5.7 billion.

•32% of our total debt matures in 2049 and beyond.

•12.7 years weighted-average remaining term of debt.

•Since 2020, an average of 98.4% of our year-end debt balances have been fixed rate.

•Total debt and preferred stock to gross assets of 28%.

•$684.1 million of expected capital contribution commitments from existing consolidated real estate joint venture partners to

fund construction from January 1, 2025 through 2028.

Key capital metrics as of or for the year ended December 31, 2024

•$29.0 billion in total market capitalization.

•$16.8 billion in total equity capitalization.

•Non-real estate investments aggregating $1.5 billion:

•Unrealized gains presented in our consolidated balance sheet were $83.6 million, comprising gross unrealized gains and

losses aggregating $228.1 million and $144.5 million, respectively.

•Investment loss of $53.1 million for the year ended December 31, 2024 presented in our consolidated statement of operations

consisted of $117.2 million of realized gains, $112.2 million of unrealized losses, and $58.1 million of impairment charges.

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2025 capital strategy

During 2025, we intend to continue to execute our capital strategy to further strengthen our credit profile, which will allow us to

further improve our cost of capital and continue our disciplined approach to capital allocation. Consistent with 2024, our capital strategy

for 2025 includes the following elements:

•Allocate capital to Class A/A+ properties located in Megacampus ecosystems in AAA life science innovation clusters.

•Maintain prudent access to diverse sources of capital, which include net cash flows from operating activities after dividends,

incremental leverage-neutral debt supported by growth in Adjusted EBITDA, strategic value harvesting and asset recycling

through real estate disposition and partial interest sales, non-real estate investment sales, sales of equity, joint venture capital,

and other sources of capital.

•Continue to improve our credit profile.

•Maintain commitment to long-term capital to fund growth.

•Prudently ladder debt maturities and manage short-term variable-rate debt.

•Prudently manage non-real estate equity investments to support corporate-level investment strategies.

•Maintain a stable and flexible balance sheet with significant liquidity.

•Consider opportunistic repurchases, in privately negotiated transactions, of our common stock.

The anticipated delivery of significant incremental EBITDA from our development and redevelopment of new Class A/A+

properties is expected to enable us to continue to debt-fund a significant portion of our development and redevelopment projects on a

leverage-neutral basis. We expect to continue to maintain access to diverse sources of capital, including unsecured senior notes

payable and secured construction loans for our development and redevelopment projects from time to time. We expect to continue to

maintain a significant proportion of our net operating income on an unencumbered basis to allow for future flexibility for accessing both

unsecured and secured debt markets, although we expect traditional secured mortgage notes payable will remain a small component of

our capital structure. We intend to supplement our remaining capital needs with net cash flows from operating activities after dividends

and proceeds from real estate asset sales, partial interest sales, and equity capital. For further information, refer to “Projected results,

Sources of capital,” and “Uses of capital” in Item 7 in this annual report on Form 10-K. Our ability to meet our 2025 capital strategy

objectives and expectations will depend in part on capital market conditions, real estate market conditions, and other factors beyond our

control. Accordingly, there can be no assurance that we will be able to achieve these objectives and expectations. Refer to our

discussion of “Forward-looking statements” under Part I and “Item 1A. Risk factors” in this annual report on Form 10-K.

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Operating summary

4.0x to 4.5x

Refer to “Same properties” and “Definitions and reconciliations” in Item 7 for additional details. “Definitions and reconciliations” contains the definitions of “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)For the three months ended December 31, 2024.

(2)Percentages calculated based on our annual rental revenue in effect as of December 31, 2024.

(3)Represents the weighted-average lease term of executed leases based on annual rental revenue for the 10-year period for the years ended December 31, 2015 through

2024.

(4)Quarter annualized.

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Industry and corporate responsibility leadership: catalyzing and leading the way for positive change to benefit human health

and society

•During 2024, we continued to advance our thought leadership and corporate responsibility initiatives and received broad

recognition for our operational excellence in asset management, design, development, leasing, real estate transactions, and

sustainability. Significant strategic efforts and achievements included the following:

•Alexandria was named one of the World’s Most Trustworthy Companies by Newsweek. This significant distinction builds on the

Company’s recognition by the publication as one of America’s Most Trustworthy Companies in 2023 and 2024. Alexandria is

one of only three S&P 500 REITs recognized in the real estate and housing category.

•Alexandria and its executive chairman and founder, Joel S. Marcus, were honored with the inaugural Bisnow Life Sciences

Icon & Influencer Award. This prestigious award highlights Mr. Marcus and the Company’s significant long-term contributions to

and lasting impact on the life science real estate sector and broader life science industry. Mr. Marcus accepted the award on

his own behalf and that of Alexandria at Bisnow’s International Life Sciences & Biotech Conference, where he was also the

keynote speaker.

•To prioritize the mental health crisis, Alexandria, in partnership with former congressman Patrick J. Kennedy and The Kennedy

Forum, held its second Alexandria Summit® on Mental Health in Washington, DC. Alexandria convened a diverse set of key

decision makers, influential life science industry thought leaders, members of Congress, regulatory agency executives, and

other key policymakers to advance the development of novel, effective psychiatric therapies to address vast unmet need.

•Alexandria earned several 2024 local and regional TOBY (The Outstanding Building of the Year) Awards from BOMA (Building

Owners and Managers Association). The TOBY Awards are the commercial real estate industry’s highest recognition honoring

excellence in commercial building management and operations.

•In the BOMA Mid-Atlantic region, 60 Binney Street on the Alexandria Center® at Kendall Square Megacampus won in the Life

Science category; and Building 1400 on the Alexandria Center® at One Kendall Square Megacampus won in the Renovated

Building category.

•In BOMA San Francisco and the Pacific Southwest regions, the Alexandria Center® for Life Science – San Carlos

Megacampus won in the Life Science category.

•In the BOMA Raleigh-Durham region, 8 Davis Drive on the Alexandria Center® for Advanced Technologies and AgTech –

Research Triangle Megacampus won in the Life Science category.

•In our Greater Boston market, 325 Binney Street, a 462,100 RSF development on the Alexandria Center® at One Kendall Square

Megacampus in Cambridge, earned LEED Platinum certification, the highest level of certification under the U.S. Green Building

Council’s Core and Shell rating system. Home to Moderna’s global headquarters and R&D center, the ultra-efficient building is

targeting LEED Zero Energy certification, reduced fossil fuel use through the implementation of a geothermal system, and 100%

renewable electricity, resulting in an estimated 97% reduction of GHG emissions relative to the MA 2020 Stretch Code baseline.

The building’s atrium, which is a light-filled collaboration space with a terraced garden and communal staircase, was celebrated for

design excellence in the Science & Research – Small (under 50,000 SF) category of the 2024 International Interior Design

Association New England (IIDA NE) Design Awards and also received the award program’s top honor, Best in Show.

•Additionally in Greater Boston, Alexandria won two 2023 Commercial Broker Association Achievement Awards: Life Science Deal

of the Year for our lease with Novo Nordisk at 60 Sylvan Road on the Alexandria Center® for Life Science – Waltham Megacampus;

and Investment Sale of the Year – Urban for our strategic sale of partial interest in 15 Necco Street.

•In our San Francisco Bay Area market, Alexandria received a San Francisco Business Times’ 2024 Real Estate Deal of the Year

Award for our lease with CARGO Therapeutics, a clinical-stage biotechnology company, at 835 Industrial Road on this

Megacampus.

•In our San Diego market, Alexandria GradLabs® at 9880 Campus Point Drive, located on the Campus Point by Alexandria

Megacampus in our San Diego market, earned a 2024 International Institute for Sustainable Laboratories (I2SL) Lab Buildings and

Projects Award for Excellence in Energy Efficiency. The state-of-the-art building was designed to operate as a highly energy-

efficient research facility. In 2023, the LEED Platinum certified facility earned an I2SL Labs2Zero pilot Energy Score of 96 out of

100, indicating its operational energy performance is better than 96% of similar facilities.

•In our Seattle market, Alexandria was an honoree in the Water Stewardship category of the Puget Sound Business Journal’s 2024

Environmental and Sustainability Awards and the winner of the Seattle 2030 District’s 2024 Vision Award for Energy in recognition

of our implementation of an innovative energy district at the Alexandria Center® for Life Science – South Lake Union Megacampus

featuring one of the largest wastewater heat recovery systems in North America. This wastewater heat recovery system, which will

provide an alternative energy source to heat our buildings and enhance building resilience and operating performance,

demonstrates our continued focus on reducing GHG emissions in our laboratory facilities.

•In our Maryland market, we were awarded three 2024 NAIOP DC|MD Awards of Excellence for developments and enhancements

on the Alexandria Center® for Life Science – Shady Grove Megacampus: 9810 and 9820 Darnestown Road for Best Life Science

Facility, 9800 Medical Center Drive for Best Amenity Space, and 9950 Medical Center Drive for Best Industrial/Flex.

•In our Research Triangle market, we earned the Top Life Sciences/Laboratory Lease in the Triangle Business Journal’s 2024

SPACE Awards for our lease with Pairwise, a health-focused food and agriculture company, at 110 and 112 TW Alexander Drive on

the Alexandria Center® for Sustainable Technologies Megacampus. The annual SPACE Awards recognize the Research Triangle’s

top commercial real estate developments and transactions.

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•Alexandria received a 2024 Nareit Sustainable Design Impact Award for our groundbreaking approach to utilizing alternative

energy sources such as geothermal energy and wastewater heat recovery systems to reduce operational GHG in

Labspace® development projects in our Greater Boston and Seattle markets.

•Our longstanding sustainability leadership and performance was reinforced by our achievements in the 2024 GRESB Real Estate

Assessment. We received the GRESB Green Star designation for the eighth consecutive year and an “A” disclosure score for the

seventh consecutive year, signifying best-in-class transparency regarding our sustainability practices and reporting.

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Climate change

We cannot predict the rate at which climate change will progress. However, the physical effects of climate change may

potentially have a material adverse effect on our properties, operations, and business. For example, most of our properties are located

along the east and west coasts of the U.S. and some of our properties are located in close proximity to shorelines. To the extent that

climate change impacts weather patterns, our markets could experience severe weather, including hurricanes, severe winter storms,

wildfires, droughts, and coastal flooding due to increases in storm intensity and rising sea levels. Over time, these conditions could

result in declining demand for space at our properties, delays in construction and resulting increased construction costs, or our inability

to operate the buildings at all. Climate change and severe weather may also have indirect effects on our business by increasing the

cost of, or decreasing the availability of, property insurance on terms we find acceptable, and by increasing the costs of energy,

maintenance, repair of water and/or wind damage, and snow removal at our properties. We continue to evaluate our asset base for

potential exposure to the following climate-related risks: sea level rise and increases in heavy rain, flood, drought, extreme heat, and

wildfire.

We are monitoring considerations such as shifting market demands and regulation. Numerous states and municipalities have

adopted state and local laws and policies on climate change, including climate disclosures and emission reduction targets impacting the

building sector. For example, the State of California enacted legislation requiring certain companies to disclose GHG and climate-

related financial risk information. Further cities including Boston, Cambridge, New York, and Seattle have passed ordinances that set

limits on GHG emissions associated with building operations. Some municipalities, including the Cities of New York and San Francisco,

have also implemented legislation to eliminate the use of natural gas in new construction projects. Refer to “We face possible risks and

costs associated with the effects of climate change and severe weather” in “Other factors” within “Item 1A. Risk factors” in this annual

report on Form 10-K for additional information.

Our approach to assessing and mitigating physical climate-related risk through our climate resilience roadmap, and transition

risk through our GHG emissions mitigation strategy, are outlined below.

Climate resilience roadmap

We continue to assess potential physical risks associated with climate change, analyze climate data and property damage

losses associated with past weather events, and review the potential for future climate hazards such as water stress, precipitation

flooding, coastal flooding, wildfire, and heat stress. We also consider local climate change vulnerability assessments and resilience

planning efforts. Our climate resilience roadmap uses climate models and scenario analyses to identify potential future hazards at the

building level. Additionally, we conduct physical inspections to further assess resilience at certain properties, as appropriate, and to

determine whether additional mitigation is needed.

In our evaluation of physical risks, Alexandria considers two climate change scenarios for 2030 and 2050: (i) a high-emissions

scenario in which GHG emissions continue to increase with time (RCP 8.5); and (ii) an intermediate scenario in which GHG emissions

level off by 2050 and decline thereafter (RCP 4.5). RCP 8.5 generally predicts more significant future climate hazard impacts than RCP

4.5.

After modeling the potential hazards out to year 2050, we undertake a physical inspection for sites that may have high

exposure to one or more climate hazards. We use this process to assess resilience to current and/or future stresses and to determine

whether additional mitigation is needed.

For a number of buildings, we are implementing augmented emergency preparedness plans and additional operating

procedures that include preparations for potential future events. For certain buildings, mitigation may include nominal capital

improvement work. We may find that other buildings require more significant planning and investment to incorporate more complex

resilience measures. Resilience measures under consideration at some of our properties are described below.

In our operating properties located in areas prone to flooding, we may consider options such as waterproofing the building

envelope up to the projected flood elevation, protecting critical building mechanical equipment, storing temporary flood barriers on site

to be deployed at building entrances prior to a flood event, and installing backflow preventers on stormwater/sewer utilities that

discharge from the building. At several properties, we are currently conducting conceptual studies to evaluate potential options for

consideration.

At a limited number of our operating properties located in areas prone to wildfire, we have begun a multiyear effort

to implement landscaping improvements that include the replacement of fire-prone materials and the installation of fire-resistant

vegetation.

For our development of new Class A/A+ properties, we will aim to design for climate resilience. In 2023, Alexandria

implemented resilient design guidelines to mitigate potential exposures to future climate conditions identified in existing climate models.

In accordance with such guidelines, we will endeavor to design buildings that incorporate materials, systems, and features to

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manage predicted climate hazards and maintain building operability during and after a climate event. As feasible, we will consider

designs that accommodate potential expansion of cooling infrastructure to meet future building needs. In water-scarce areas, we will

consider planting drought-resistant vegetation and equipping buildings to capture, treat, and reuse available water from building

systems and precipitation events where feasible. In areas prone to wildfire, we will consider incorporating brush management practices

into landscape design and installing enhanced air filtration systems to support safe and healthy indoor air.

For acquisitions in our portfolio, we continue to use climate modeling as part of our due diligence in assessing potential risk

and to inform our financial modeling and transactional decisions.

As a part of Alexandria’s risk management program, we maintain all-risk property insurance at the portfolio level, including

properties under development, to help mitigate the risk of extreme weather events and potential impact from losses associated with

natural catastrophes, such as flood, wildfire, and wind events. We leverage our climate mitigation strategy with property insurance

carriers to help reduce our overall cost of risk. However, there can be no assurance that our insurance will cover all our potential losses

and that climate change and severe weather will not have a material adverse effect on our properties, operations, or business. For

additional information on our risk management strategies related to insurance coverage, refer to “Our insurance may not adequately

cover all potential losses” in “Operating factors” in “Item 1A. Risk factors” in this annual report on Form 10-K.

Greenhouse gas emissions mitigation strategy

Our GHG emissions mitigations framework is aligned with the sustainability goals of many of our innovative tenants. Our

framework directly focuses on reducing emissions from our operations through energy efficiency, electrification and use of alternative

energy, and renewable electricity. We indirectly focus on reducing emissions associated with construction activities by engaging with our

supply chain and targeting reductions in embodied carbon through procurement, as described below.

We are continuing to implement strategies to seek to reduce the emissions intensity of our operating assets: (i) we aim to

prioritize the energy efficiency and GHG emissions mitigation in our development projects, including through energy-efficient design,

electrification, and use of alternative energy; (ii) we further seek to reduce energy consumption in our operating asset base by

performing energy audits and by implementing energy conservation measures at certain properties; and (iii) we also continue to

advance our renewable electricity strategy with the recent completion of a large-scale solar farm in June 2024, which is now supplying

renewable power to meet 100% of the Greater Boston region‘s electricity load for Alexandria-paid accounts through a long-term power

purchase agreement based on 2023 consumption levels.

We aim to reduce emissions associated with construction activities. These activities may include such strategies as engaging

with our supply chain and targeting reductions in embodied carbon through procurement. Emissions within our indirect focus will require

significant innovation and cost-effective solutions by the construction industry to develop pathways for substantial emissions reduction.

Board of directors and leadership oversight

The Audit Committee oversees the management of the Company’s financial and other risks, including climate-related risks. At

the management level, Alexandria’s Sustainability Committee, which comprises members of the executive team and senior decision

makers spanning the Company’s real estate development, asset management, risk management, and sustainability teams, leads the

development and execution of our approach to climate-related risk.

Refer to “Item 1A. Risk factors” in this annual report on Form 10-K for discussion of the risks we face from climate change.

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Results of operations

We present a tabular comparison of items, whether gain or loss, that may facilitate a high-level understanding of our results

and provide context for the disclosures included in this annual report on Form 10-K. We believe that such tabular presentation promotes

a better understanding for investors of the corporate-level decisions made and activities performed that significantly affect comparison

of our operating results from period to period. We also believe that this tabular presentation will supplement for investors an

understanding of our disclosures and real estate operating results. Gains or losses on sales of real estate and impairments of assets

classified as held for sale are related to corporate-level decisions to dispose of real estate. Gains or losses on early extinguishment of

debt are related to corporate-level financing decisions focused on our capital structure strategy. Significant realized and unrealized

gains or losses on non-real estate investments, impairments of real estate and non-real estate investments, acceleration of stock

compensation expense due to the resignations of executive officers, and initial and subsequent adjustments to the provision for

expected credit losses on financial instruments are not related to the operating performance of our real estate assets as they result from

strategic, corporate-level non-real estate investment decisions and external market conditions. Impairments of non-real estate

investments are not related to the operating performance of our real estate as they represent the write-down of non-real estate

investments when their fair values decrease below their respective carrying values due to changes in general market or other conditions

outside of our control. Significant items, whether a gain or loss, included in the tabular disclosure for current periods are described in

further detail in Item 7 in this annual report on Form 10-K. Key items included in net income attributable to Alexandria’s common

stockholders for the years ended December 31, 2024 and 2023 and the related per share amounts were as follows (in millions, except

per share amounts):

(1)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” in Item 7.

Refer to Note 3 – “Investments in real estate” and Note 7 – “Investments” to our consolidated financial statements in Item 15

for additional information.

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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 7 in this annual report on Form 10-K. The following table

presents information regarding our Same Properties as of December 31, 2024 and 2023:

The following table reconciles the number of Same Properties to total properties for the year ended December 31, 2024:

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Comparison of results for the year ended December 31, 2024 to the year ended December 31, 2023

The following table presents a comparison of the components of net operating income for our Same Properties and Non-Same

Properties for the year ended December 31, 2024, compared to the year ended December 31, 2023 (dollars in thousands). We provide

a comparison of the results for the year ended December 31, 2023 to the year ended December 31, 2022, including a comparison of

the components of net operating income for our Same Properties and Non-Same Properties for the year ended December 31, 2023,

compared to the year ended December 31, 2022, in “Results of operations” in Item 7 of our annual report on Form 10-K for the year

ended December 31, 2023. Refer to “Definitions and reconciliations” in Item 7 in this annual report on Form 10-K 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.

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Income from rentals

Total income from rentals for the year ended December 31, 2024 increased by $207.3 million, or 7.3%, to $3.0 billion,

compared to $2.8 billion for the year ended December 31, 2023, as a result of increase in rental revenues and tenant recoveries, as

discussed below.

Rental revenues

Total rental revenues for the year ended December 31, 2024 increased by $160.4 million, or 7.5%, to $2.3 billion, compared to

$2.1 billion for the year ended December 31, 2023. The increase was primarily due to an increase in rental revenues from our Non-

Same Properties related to 4.7 million RSF of development and redevelopment projects placed into service subsequent to January 1,

2023 and six operating properties aggregating 824,979 RSF acquired subsequent to January 1, 2023.

Rental revenues from our Same Properties for the year ended December 31, 2024 increased by $45.4 million, or 2.8%, to

$1.7 billion, compared to $1.6 billion for the year ended December 31, 2023, primarily as a result of an increase in rental rates from

lease renewals and re-leasing of space since January 1, 2023, and a 0.3% increase in the occupancy of our Same Properties to 94.2%

for the year ended December 31, 2024 from 93.9% for the year ended December 31, 2023.

Tenant recoveries

Tenant recoveries for the year ended December 31, 2024 increased by $46.9 million, or 6.7%, to $745.4 million, compared to

$698.5 million for the year ended December 31, 2023. This increase was partially from our Non-Same Properties related to our

development and redevelopment projects placed into service and properties acquired subsequent to January 1, 2023, as discussed

above under “Rental revenues.”

Same Properties tenant recoveries for the year ended December 31, 2024 increased by $14.2 million, or 2.4%, to

$612.6 million, compared to $598.4 million for the year ended December 31, 2023, primarily due to higher operating expenses during

the year ended December 31, 2024, as discussed under “Rental operations” below. As of December 31, 2024, 92% 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.

Rental operations

Total rental operating expenses for the year ended December 31, 2024 increased by $50.1 million, or 5.8%, to $909.3 million,

compared to $859.2 million for the year ended December 31, 2023. The increase was primarily due to incremental expenses related to

our Same Properties rental operating expenses, as discussed below.

Same Properties rental operating expenses increased by $41.4 million, or 6.0%, to $735.0 million during the year ended

December 31, 2024, compared to $693.6 million for the year ended December 31, 2023, primarily as the result of increases in: (i) costs

related to engineering, security, janitorial and other operating contracts of $9.6 million mainly due to higher rates, (ii) property taxes of

$8.6 million primarily due to increases from reassessments in values, and (iii) utilities expenses of $6.3 million and property insurance of

$1.9 million primarily due to higher rates.

Depreciation and amortization

Depreciation and amortization expense for the year ended December 31, 2024 increased by $108.9 million, or 10.0%, to

$1.2 billion, compared to $1.1 billion for the year ended December 31, 2023. The increase was primarily due to additional depreciation

from development and redevelopment projects placed into service and properties acquired, as discussed above under “Rental

revenues.”

General and administrative expenses

General and administrative expenses for the year ended December 31, 2024 decreased by $31.0 million, or 15.5%, to

$168.4 million, compared to $199.4 million for the year ended December 31, 2023, primarily due to a reduction in compensation costs

including the impact from the resignations of two executive officers in the second half of 2023, and savings stemming from various

efficiency initiatives, including implementation of systems upgrades, process improvements, and smarter technology. As a percentage of

net operating income, our general and administrative expenses for the trailing twelve months ended December 31, 2024 and 2023 were

7.6% and 9.8%, respectively.

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Interest expense

Interest expense for the years ended December 31, 2024 and 2023 consisted of the following (dollars in thousands):

(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 year ended December 31, 2024, compared to the year ended December 31,

2023, resulted from the following (dollars in thousands):

(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.

Impairment of real estate

During the year ended December 31, 2024, we recognized real estate impairment charges aggregating $223.1 million, which

primarily consisted of the following:

•In October 2024, four properties at One Moderna Way in our Route 128 submarket met the criteria for classification as held for

sale when a single tenant, occupying 100% of these properties with a weighted-average remaining lease term of 18 years,

committed to purchasing them. Due to our important long-established relationship with this tenant and the strategic nature of

these properties, there were no other buyers to whom we would be willing to sell these properties. As a result, the sale of these

assets became probable and all criteria for classification as held for sale were met when the tenant’s commitment to acquire

these properties was confirmed in October 2024. Upon meeting the asset held for sale criteria, we recognized an impairment

charge of $40.9 million to reduce the carrying amounts of these properties to the expected sales price less costs to sell. In

December 2024, we completed the sale of these properties for a sales price of $369.4 million, with no incremental gain or loss

recognized.

•In October 2024, five operating properties aggregating 203,223 RSF and land parcels aggregating 1.5 million SF in our

Sorrento Mesa and University Town Center submarkets met the criteria for classification as held for sale. In October 2024,

after meeting all criteria for classification as held for sale, including (i) our commitment to sell these assets, (ii) Board of

Directors’ approval, and (iii) our determination that the sale of each property was probable within one year, we recognized

impairment charges aggregating $65.9 million to reduce the carrying amounts of these properties to the expected aggregate

sales price less costs to sell. Subsequent to October 2024, we had the following additional developments related to these

transactions:

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•In December 2024, based on an executed purchase and sales agreement, we recognized an additional $36.9 million

impairment charge related to three operating properties aggregating 100,831 RSF and land parcels aggregating 1.0

million SF (included in the aforementioned 203,223 RSF and 1.5 million SF, respectively) in our University Town Center

submarket to further reduce the carrying amounts of these properties to their estimated fair values less costs to sell of

approximately $200 million. As of December 31, 2024, these assets were classified as held for sale, and we expect to

complete the sales of these assets within 12 months.

•We continue to hold two operating properties aggregating 102,392 RSF (included in the aforementioned 203,223 RSF) in

our Sorrento Mesa submarket with a carrying amount of $18.2 million as held for sale as of December 31, 2024. We

expect to complete the sale of these properties within 12 months.

•In December 2024, we completed the sale of land parcels aggregating 444,041 SF (included in the 1.5 million SF

discussed above) in our Sorrento Mesa submarket for a sales price of $55.0 million, with no gain or loss recognized in

earnings, to a buyer that is expected to develop residential properties on this site. As part of the transaction, we provided

$25.0 million of seller financing. This note receivable is classified within “Other assets” in our consolidated balance sheet.

Refer to Note 8 – “Other assets” to our consolidated financial statements for additional information.

•During the three months ended December 31, 2024, three properties aggregating 552,513 RSF in our Cambridge submarket

met the criteria for classification as held for sale upon our decision to dispose of them as a result of our determination that they

were not core to our Megacampus strategy due to their size, location, and existing use. Upon meeting the criteria for

classification as held for sale, we recognized an impairment charge of $6.3 million to reduce the carrying amounts of these

properties to their estimated fair values less costs to sell. In December 2024, we completed the sale of these properties for a

sales price of $245.5 million.

•In addition, we recognized impairment charges aggregating $30.8 million primarily consisting of the pre-acquisition costs

related to two potential acquisitions aggregating 1.4 million RSF of future development in our Greater Boston market. We

executed purchase agreements for these potential acquisitions with the total purchase price aggregating $366.8 million in 2020

and 2022 and initially expected to close these acquisitions after 2024. Our intent for each site included the demolition of

existing buildings upon expiration of the existing in-place leases and the development of life science properties. During the

three months ended June 30, 2024, due to the existing macroeconomic environment that negatively impacted the financial

outlook for these projects, we decided to no longer proceed with these acquisitions, resulting in the recognition of impairment

charges.

•In December 2024, we recognized an impairment charge of $13.7 million to reduce the carrying amount of a property

aggregating 45,615 RSF in our Seattle market to its estimated fair value less costs to sell of approximately $8 million, upon

meeting the criteria for classification as held for sale. We expect to sell this project within 12 months.

•In December 2024, we recognized an impairment charge of $6.1 million to reduce the carrying amount of a development

project aggregating 1.4 million SF in our Texas market to its estimated fair value less costs to sell of approximately $70 million,

upon meeting the criteria for classification as held for sale. We expect to sell this project within 12 months.

During the year ended December 31, 2023, we recognized real estate impairment charges aggregating $461.1 million

classified in impairment of real estate in our consolidated statement of operations, which primarily related to properties in non-strategic

locations that are not integral to our Megacampus strategy and were sold or were classified as held for sale as of December 31, 2023.

Investment loss

During the year ended December 31, 2024, we recognized an investment loss aggregating $53.1 million, which consisted of

$117.2 million of realized gains, $112.2 million of unrealized losses, and impairment charges of $58.1 million.

During the year ended December 31, 2023, we recognized an investment loss aggregating $195.4 million, which consisted of

$6.1 million of realized gains and $201.5 million of unrealized losses.

For more information about our investments, refer to Note 7 – “Investments” to our consolidated financial statements in Item

15 in this annual report on Form 10-K. For our impairments accounting policy, refer to “Investments” in Note 2 – “Summary of significant

accounting policies” to our consolidated financial statements in Item 15 in this annual report on Form 10-K.

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Gain on sales of real estate

During the year ended December 31, 2024, we recognized $129.3 million of gains primarily related to the dispositions of seven

real estate assets in our San Diego, Seattle, Maryland, and Research Triangle markets. The gains were classified in gain on sales of

real estate within our consolidated statement of operations for the year ended December 31, 2024.

During the year ended December 31, 2023, we recognized $277.0 million of gains related to the dispositions of 13 real estate

assets. The gains were classified in gain on sales of real estate within our consolidated statement of operations for the year ended

December 31, 2023.

For more information about our sales of real estate, refer to “Sales of real estate assets and impairment charges” in Note 3 –

“Investments in real estate” to our consolidated financial statements in Item 15 in this annual report on Form 10-K.

Other comprehensive loss

Total other comprehensive loss for the year ended December 31, 2024 aggregated $30.4 million, compared to total other

comprehensive income of $4.9 million for the year ended December 31, 2023. The difference is primarily due to the foreign currency

translation related to our operations in Canada.

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Summary of capital expenditures

Our construction spending for the year ended December 31, 2024 and projected spending for the year ending December 31,

2025 consisted of the following (in thousands):

(1)Includes projects under construction aggregating 4.4 million RSF that are expected to generate $395 million in incremental annual net operating income primarily

commencing from the first quarter of 2025 through the second quarter of 2028.

(2)Represents revenue-enhancing and non-revenue-enhancing capital expenditures before contributions from noncontrolling interests and tenant-funded and tenant-built

landlord improvements for the year ending December 31, 2025. Our share of the 2025 revenue-enhancing and non-revenue-enhancing capital expenditures is projected

to be $370 million at the midpoint of our guidance for 2025 construction.

(3)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 2028 (in thousands):

(1)Amounts represent reductions to our consolidated construction spending.

Average real estate basis used for capitalization of interest

Our construction spending includes capitalized interest. The table below provides key categories of interest capitalized during

the year ended December 31, 2024 and projected for the year ending December 31, 2025 (in thousands):

(1)Based upon the midpoint of our guidance range for 2025 capitalization of interest.

(2)Average real estate basis capitalized related to our future pipeline pre-construction activities includes 29% from four key active and future Megacampus development

and redevelopment projects.

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Projected results

We present updated guidance for EPS attributable to Alexandria’s common stockholders – diluted, funds from operations per

share attributable to Alexandria’s common stockholders – diluted, and funds from operations per share attributable to Alexandria’s

common stockholders – diluted, as adjusted, based on our current view of existing market conditions and other assumptions for the

year ending December 31, 2025, as set forth in the tables below. The tables below also provide a reconciliation of EPS attributable to

Alexandria’s common stockholders – diluted, the most directly comparable financial measure presented in accordance with GAAP, to

funds from operations per share and funds from operations per share, as adjusted, non-GAAP measures, and other key assumptions

included in our updated guidance for the year ending December 31, 2025. There can be no assurance that actual amounts will not be

materially higher or lower than these expectations. Refer to our discussion of “Forward-looking statements” included in the beginning of

Part I in this annual report on Form 10-K.

(1)Excludes unrealized gains or losses on non-real estate investments after December 31, 2024 that are required to be recognized in earnings and are excluded from funds

from operations per share, as adjusted.

(2)Refer to “Definitions and reconciliations” in Item 7 for additional information.

(1)Our assumptions presented in the table above are subject to a number of variables and uncertainties, including those discussed as “Forward-looking statements” under

Part I; “Item 1A. Risk factors”; and Item 7. 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.

(2)Represents realized gains and losses included in funds from operations per share – diluted, as adjusted, and excludes significant impairments realized on non-real

estate investments, if any. Refer to Note 7 – “Investments” to our consolidated financial statements in Item 15 for additional details.

(1)Refer to “Definitions and reconciliations” in Item 7 for additional information.

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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 consolidated financial statements in Item 15 in this annual report on Form 10-K for further discussion.

Refer to “Joint venture financial information” under “Definitions and reconciliations” in Item 7 for additional details.

(1)In addition to the consolidated real estate joint ventures listed, various joint venture partners hold insignificant noncontrolling interests in three other real estate joint

ventures in North America.

(2)Represents a property currently under construction or in our development and redevelopment pipeline. Refer to “New Class A/A+ development and redevelopment

properties” in Item 2 for additional details.

(3)Includes 409 and 499 Illinois Street, 1500 and 1700 Owens Street, and 455 Mission Bay Boulevard South.

(4)During the year ended December 31, 2024, our equity ownership decreased from 40.6% to 25.1% based on continued funding of construction costs by our joint venture

partner and a reallocation of equity to our joint venture partner of $30.2 million from us. The noncontrolling interest share of our joint venture partner is anticipated to

increase to 75% and ours to decrease to 25% as our partner contributes additional equity to fund the construction of the project.

(5)Includes 10210, 10260, 10290, and 10300 Campus Point Drive and 4110, 4135, 4155, 4161, 4165, 4224, and 4242 Campus Point Court.

(6)Includes 9605, 9645, 9675, 9725, 9735, 9805, 9808, 9855, and 9868 Scranton Road and 10055, 10065, and 10075 Barnes Canyon Road.

(7)Includes 9965, 9975, 9985, and 9995 Summers Ridge Road.

(8)In addition to the unconsolidated real estate joint ventures listed, we hold an interest in one insignificant unconsolidated real estate joint venture in North America.

(9)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 December

31, 2024 (dollars in thousands):

(1)Includes interest expense and amortization of loan fees.

(2)Represents outstanding principal, net of unamortized deferred financing costs, as of December 31, 2024.

(3)The unconsolidated real estate joint venture is in the process of refinancing approximately $500 million of this debt with a new secured note payable, which is expected

to close in the first quarter of 2025. The remaining debt balance of approximately $100 million will be repaid through contributions from the joint venture partners. We

expect to contribute our share of approximately $10 million in the first quarter of 2025. As of December 31, 2024, our investment in this unconsolidated real estate joint

venture was $10.6 million.

(4)This loan is subject to a fixed 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 months and year ended December 31, 2024 (in thousands):

Refer to “Joint venture financial information” under “Definitions and reconciliations” in Item 7 for additional details.

(1)Represents an allocation of joint venture earnings to redeemable noncontrolling interests primarily in one property in our South San Francisco submarket. These

redeemable noncontrolling interests earn a fixed return on their investment rather than 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 7 for the definition and its reconciliation from the most directly comparable financial measure presented in accordance with GAAP.

During the years ended December 31, 2024 and 2023, our consolidated real estate joint ventures distributed an aggregate of

$256.7 million and $244.1 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 consolidated financial statements in Item 15 in this annual

report on Form 10-K 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 consolidated financial statements in Item 15 in this annual report on Form 10-K for additional information.

86%

Private

14%

Public

26%

Tenant

74%

Non-Tenant

(1)Consists of realized gains of $32.1 million and $117.2 million, partially offset by impairment charges of $20.3 million and $58.1 million during the three months and year

ended December 31, 2024, respectively.

(2)Consists of realized gains of $80.6 million, offset by impairment charges of $74.6 million during the year ended December 31, 2023.

(3)Consists of unrealized losses of $43.6 million primarily resulting from the decrease in fair values of our investments in publicly traded entities and $36.2 million resulting

from accounting reclassifications of unrealized gains recognized in prior periods into realized gains upon our realization of investments during the three months ended

December 31, 2024.

(4)Primarily relates to the accounting reclassifications of unrealized gains recognized in prior periods into realized gains upon our realization of investments during the

year ended December 31, 2024.

(5)Consists of unrealized losses of $111.6 million primarily resulting from the decrease in the fair value of our investments in privately held entities that report NAV and

$89.9 million resulting from accounting reclassifications of unrealized gains recognized in prior periods into realized gains upon our sales of investments during the year

ended December 31, 2023.

(6)Represents 2.8% of gross assets as of December 31, 2024. Refer to “Gross assets” under “Definitions and reconciliations” in Item 7 for additional details.

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Liquidity

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, non-

revenue-enhancing capital expenditures, scheduled debt maturities, distributions to noncontrolling interests, and payment of dividends,

through net cash provided by operating activities, periodic asset sales, 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. We believe that the net cash provided by operating

activities 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 consolidated financial statements in Item 15 in this annual

report on Form 10-K.

Over the next several years, our balance sheet, capital structure, and liquidity objectives are as follows:

•Retain cash flows from operating activities after payment of dividends and distributions to noncontrolling interests for

investment in development and redevelopment projects and/or acquisitions;

•Maintain significant balance sheet liquidity;

•Improve credit profile and relative long-term cost of capital;

•Maintain diverse sources of capital, including sources from net cash provided by operating activities, 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;

•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; availability under our secured construction loan; and

investments in publicly traded companies as of December 31, 2024 (in thousands):

(1)Represents outstanding principal, net of unamortized deferred financing costs, as of December 31, 2024.

Cash, cash equivalents, and restricted cash

As of December 31, 2024 and 2023, we had $559.8 million and $660.8 million, respectively, of cash, cash equivalents, and

restricted cash. We expect existing cash, cash equivalents, and restricted cash, net cash provided by operating activities, 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, borrowings under our secured construction loans, 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 years ended December 31, 2024 and 2023 (in thousands):

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 year ended December 31, 2024 decreased by $126.0 million to $1.5 billion, compared to $1.6 billion for the

year ended December 31, 2023. The decrease was primarily due to the ground lease prepayment of $135.0 million made in December

2024 for a 24-year lease term extension to our existing ground lease agreement at the Alexandria Technology Square® Megacampus in

our Cambridge submarket.

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Investing activities

Cash used in investing activities for the years ended December 31, 2024 and 2023 consisted of the following (in thousands):

The decrease in net cash used in investing activities for the year ended December 31, 2024, compared to the year ended

December 31, 2023, was primarily due to a decreased use of cash for additions to real estate. Refer to Note 3 – “Investments in real

estate” to our consolidated financial statements in Item 15 in this annual report on Form 10-K for additional information.

Financing activities

Cash flows (used in) provided by financing activities for the years ended December 31, 2024 and 2023 consisted of the

following (in thousands):

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Capital resources

We expect that our principal liquidity needs for the year ending December 31, 2025 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.

(1)As of the date of this report, our share of pending dispositions subject to negotiations aggregated $539.5 million. These transactions represent approximately 32% of the

$1.7 billion midpoint of our 2025 guidance range for dispositions and sales of partial interests.

(2)On December 9, 2024, we announced that our Board of Directors authorized a common stock repurchase program under which we may repurchase up to $500.0 million

of our common stock in the open market, in privately negotiated transactions, or otherwise through December 31, 2025. In January 2025, we repurchased common

stock aggregating $150.0 million at an average price per share of $97.26. As of the date of this report, the approximate value of shares authorized and remaining under

this program was $299.9 million.

(3)Refer to Note 19 – “Subsequent events” to our consolidated financial statements in Item 15 for additional information.

The key assumptions behind the sources and uses of capital in the table above include a 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 “Item 7.

Management’s discussion and analysis of financial condition and results of operations” in this annual report on Form 10-K. We expect to

update our forecast for key sources and uses of capital on a quarterly basis.

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Sources of capital

Net cash provided by operating activities after dividends

We expect to retain $425 million to $525 million of net cash flows from operating activities after payment of common stock

dividends and distributions to noncontrolling interests for the year ending December 31, 2025. For purposes of this calculation, changes

in operating assets and liabilities are excluded as they represent timing differences. For the year ending December 31, 2025, we expect

our recently delivered projects, our development and redevelopment projects expected to be delivered, contributions from Same

Properties, and recently acquired income-producing properties to contribute increases in income from rentals, net operating income,

and cash flows. We anticipate contractual near-term growth in annual net operating income (cash basis) of $70 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 7 in this annual report on Form 10-K for a discussion of cash flows provided by operating activities for the

year ended December 31, 2024.

Debt

We expect to fund a portion of our capital needs for 2025 from issuances under our commercial paper program, issuances of

unsecured senior notes payable, borrowings under our unsecured senior line of credit, and/or borrowings under our secured

construction loan.

As of December 31, 2024, our unsecured senior line of credit had aggregate commitments of $5.0 billion with an interest rate

of SOFR plus 0.855%, and in September 2024, we extended the maturity date from January 22, 2028 to January 22, 2030. In addition

to the cost of borrowing, the unsecured senior line of credit is subject to an annual facility fee of 0.145% 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.

Based on certain sustainability metrics achieved in accordance with the terms of our unsecured senior line of credit

agreement, the borrowing rate was reduced for a one-year period by two basis points to SOFR plus 0.855%, from SOFR plus 0.875%,

and the facility fee was reduced by 0.5 basis point to 0.145% from 0.15%. As of December 31, 2024, we had no outstanding balance on

our unsecured senior line of credit.

Our commercial paper program provides us with the ability to issue up to $2.5 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

backed 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 year ended December 31, 2024 were issued at a weighted-

average yield to maturity of 5.30%. As of December 31, 2024, we had no outstanding balance on our commercial paper program.

In February 2024, we issued $1.0 billion of unsecured senior notes payable with a weighted-average interest rate of 5.48%

and a weighted-average maturity of 23.1 years. The unsecured senior notes consisted of $400.0 million of 5.25% unsecured senior

notes due 2036 and $600.0 million of 5.625% unsecured senior notes due 2054.

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The following table presents our average debt outstanding and weighted-average interest rates during the year ended

December 31, 2024 (dollars in thousands):

Real estate dispositions and sales of partial interests

We expect to continue to focus on the disciplined execution of select sales of real estate. Future sales will provide an important

source of capital to fund a portion of pending and recently completed acquisitions, our development and redevelopment projects, and

opportunistic share repurchases, and also provide significant capital for growth. We may also consider additional sales of partial

interests in core Class A/A+ properties, development projects, and/or land. For the year ending December 31, 2025, we expect real

estate dispositions and sales of partial interests in real estate assets to range from $1.2 billion to $2.2 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,” Note 4 – “Consolidated and unconsolidated real estate joint ventures,” and

Note 15 – “Stockholders’ equity” to our consolidated financial statements in Item 15 and “Dispositions and sales of partial interests” in

Item 2 in this annual report on Form 10-K 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 this

annual report on Form 10-K for additional information about the “prohibited transaction” tax.

Common equity transactions

During the three months ended June 30, 2024, we entered into new forward equity sales agreements aggregating $28 million

to sell 230 thousand shares of common stock under our ATM program at an average price per share of $122.32 (before underwriting

discounts).

During the three months ended December 31, 2024, we settled all outstanding forward equity sales agreements by issuing

230 thousand shares of common stock at an average price per share of $120.93 and received net proceeds of $27.8 million, before

offering costs. As of December 31, 2024, 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 at our discretion based on our needs and market

conditions, including, as necessary, to balance our use of incremental debt capital.

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 spend,

and our joint venture partners may also contribute equity into these entities for financing-related activities. From January 1, 2025

through December 31, 2028, we expect to receive capital contributions aggregating $684.1 million from existing consolidated real estate

joint venture partners to fund construction. During the year ending December 31, 2025, contributions from noncontrolling interests from

existing joint venture partners are expected to aggregate $230.0 million.

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Uses of capital

Summary of capital expenditures

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 4.4 million RSF of Class A/A+ properties

undergoing construction and 1.9 million RSF of priority anticipated development and redevelopment projects. 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: current projects” in Item 2 and

“Summary of capital expenditures” in Item 7 in this annual report on Form 10-K for more 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 for the years ended December 31, 2024 and 2023 of $331.0 million and $364.0 million, respectively, was classified in

investments in real estate in our consolidated balance sheets. The decrease in capitalized interest was related to a lower weighted-

average capitalized cost basis of $8.1 billion for the year ended December 31, 2024, as compared to $9.5 billion for the year ended

December 31, 2023, partially offset by an increase in weighted-average interest rate used to capitalize interest to 3.97% for the year

ended December 31, 2024 from 3.79% for the year ended December 31, 2023.

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 $100.9 million and $108.4 million, and property taxes,

insurance on real estate and indirect project costs aggregating $132.3 million and $129.1 million during the years ended December 31,

2024 and 2023, respectively.

The decrease in our capitalized costs for the year ended December 31, 2024, compared to the same period in 2023, was

primarily driven by a reduction in the average real estate basis of our development and redevelopment pipeline following significant

deliveries in 2023, most of which were placed into service during the fourth quarter of 2023. 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, had we experienced a 10% reduction in development, redevelopment, and construction

activities without a corresponding decrease in indirect project costs, including interest and payroll, total expenses would have increased

by approximately $56.4 million for the year ended December 31, 2024.

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 year ended

December 31, 2024, we capitalized total initial direct leasing costs of $91.8 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.

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Real estate acquisitions and common stock repurchase program

On December 9, 2024, we announced that our Board of Directors authorized a common stock repurchase program under

which we may repurchase up to $500.0 million of our common stock in the open market, in privately negotiated transactions, or

otherwise through December 31, 2025. Share repurchases are expected to be funded on a leverage-neutral basis with net cash

provided by operating activities after dividends and proceeds from dispositions and sales of partial interests.

•In December 2024, we repurchased 496,276 shares of common stock.

•From January 1, 2025 through January 27, 2025, we repurchased 1.5 million shares of additional common stock.

•As of the date of this report, cumulative repurchases under the program aggregated $200.1 million and 2.0 million shares of

common stock at an average price per share of $98.16.

•As of the date of this report, the approximate value of shares authorized and remaining under this program was $299.9 million.

For the year ending December 31, 2025, we expect real estate acquisitions and common stock repurchases to range from $—

to $200 million. Refer to “Acquisitions” in Note 3 – “Investments in real estate” and to Note 4 – “Consolidated and unconsolidated real

estate joint ventures” to our consolidated financial statements in Item 15 and “Acquisitions” in Item 2 in this annual report on Form 10-K

for information on our acquisitions.

Dividends

During the years ended December 31, 2024 and 2023, we paid common stock dividends of $898.6 million and $847.5 million,

respectively. The increase of $51.1 million in dividends paid on our common stock during the year ended December 31, 2024,

compared to the year ended December 31, 2023, was primarily due to an increase in the number of common shares outstanding

subsequent to January 1, 2023 as a result of settled forward equity sales agreements, and an increase in the related dividends to $5.14

per common share paid during the year ended December 31, 2024 from $4.90 per common share paid during the year ended

December 31, 2023.

Secured notes payable

Secured notes payable as of December 31, 2024 consisted of three notes secured by two properties. Our secured notes

payable typically require monthly payments of principal and interest and had a weighted-average interest rate of approximately 7.51%.

As of December 31, 2024, the total book value of our investments in real estate securing debt was approximately $368.2 million. As of

December 31, 2024, our secured notes payable, including unamortized discounts and deferred financing costs, comprised

approximately $587 thousand and $149.3 million of fixed-rate debt and unhedged variable-rate debt, respectively.

As of December 31, 2024, our unconsolidated real estate joint venture in which we hold a 10% ownership interest, located at

1655 and 1725 Third Street in our Mission Bay submarket, has a $600.0 million secured loan outstanding maturing on March 10, 2025.

The unconsolidated real estate joint venture is in the process of refinancing approximately $500 million of this debt with a new secured

note payable, which is expected to close in the first quarter of 2025. The remaining debt balance of approximately $100 million will be

repaid through contributions from the unconsolidated joint venture partners. We expect to contribute our share of approximately $10

million in the first quarter of 2025.

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 December 31, 2024 were as follows:

(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.

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The requirements of, and our actual performance with respect to, the key financial covenants under our unsecured senior line

of credit as of December 31, 2024 were as follows:

(1)All covenant ratio titles utilize terms as defined in the credit agreement.

Estimated interest payments

Estimated interest payments on our fixed-rate debt are calculated based upon contractual interest rates, including interest

payment dates and scheduled maturity dates. As of December 31, 2024, 98.8% of our debt was fixed-rate debt. For additional

information regarding our debt, refer to Note 10 – “Secured and unsecured senior debt” to our consolidated financial statements in

Item 15 in this annual report on Form 10-K.

Ground lease obligations

Ground lease obligations as of December 31, 2024 included leases for 32 of our properties and accounted for approximately

8% of our total number of properties. Among these 32 properties, 17 properties are subject to ground leases with a weighted-average

remaining lease term of 41 years, including extension options that we are reasonably certain to exercise. These leases are with a single

lessor in our Greater Stanford submarket with whom we have extended three ground leases over the past 10 years.

Our remaining 15 properties subject to ground leases are located across multiple submarkets and have remaining lease terms

ranging from approximately 46 to 82 years. The weighted-average remaining lease term of these ground leases is 71 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.

Operating lease agreements

As of December 31, 2024, the remaining contractual payments under ground and office lease agreements in which we are the

lessee aggregated $925.0 million and $24.4 million, respectively. As of December 31, 2024, our operating lease liability, calculated as

the present value of the remaining payments aggregating $949.4 million under our operating lease agreements, including our extension

options that we are reasonably certain to exercise, was $507.1 million, which was classified in accounts payable, accrued expenses,

and other liabilities in our consolidated balance sheet. As of December 31, 2024, the weighted-average remaining lease term of

operating leases in which we are the lessee was approximately 56 years, including extension options that we are reasonably certain to

exercise, and the weighted-average discount rate was 4.9%. 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

$764.5 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 consolidated financial statements in Item 15 in this annual report on

Form 10-K for additional information.

Included in the aforementioned December 31, 2024 balances is the ground lease recorded in July 2024 upon our execution of

an amendment to our existing ground lease agreement at the Alexandria Technology Square®  Megacampus aggregating

1.2 million RSF in our Cambridge submarket, which extended the term by 24 years from January 1, 2065 to December 31, 2088. The

amendment required that we prepay our entire rent obligation for the extended lease term aggregating $270.0 million in two equal

installments during the fourth quarter of 2024 and the first quarter of 2025. During the three months ended December 31, 2024, we

made the first installment payment aggregating $135.0 million. As of December 31, 2024, the second installment payment aggregating

$135.0 million remained outstanding and was paid on January 14, 2025. Alexandria Technology Square® is a foundational Megacampus

in the heart of the global life science ecosystem in Cambridge and is the Greater Boston base of operations of key strategic tenants

such as GlaxoSmithKline plc, Novartis AG, Massachusetts Institute of Technology, and Mass General Brigham. Securing this ground

lease through December 2088 significantly enhances the long-term value of our investment in this critical Megacampus.

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Commitments

As of December 31, 2024, remaining aggregate costs under contract for the construction of properties undergoing

development, redevelopment, and improvements under the terms of leases approximated $1.0 billion. We expect payments for these

obligations to occur over one to three years, subject to capital planning adjustments from time to time. We may have the ability to cease

the construction of certain projects, which would result in the reduction of our commitments. In addition, we have letters of credit and

performance obligations aggregating $29.5 million.

We are committed to funding approximately $399.2 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 8.2 years as of December 31, 2024.

As of December 31, 2024, the second installment payment related to the amendment of our existing ground lease agreement

at the Alexandria Technology Square® Megacampus aggregating $135.0 million remained outstanding and was paid on January 14,

2025. Refer to “Operating lease agreements” above for additional details.

Exposure to environmental liabilities

In connection with the acquisition of all of our properties, we have obtained Phase I environmental assessments to ascertain

the existence of any environmental liabilities or other issues. The Phase I environmental assessments of our properties have not

revealed any environmental liabilities that we believe would have a material adverse effect on our financial condition or results of

operations taken as a whole, nor are we aware of any material environmental liabilities that have occurred since the Phase I

environmental assessments were completed. In addition, we carry a policy of pollution legal liability insurance covering exposure to

certain environmental losses at substantially all of our properties.

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 year ended December 31, 2024 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 as we dispose of these holdings.

(1)Primarily relates to the completion of the sale of one property in our Canada market during the three months ended December 31, 2024 and substantial liquidation of the

associated foreign entity.

Inflation

As of December 31, 2024, approximately 92% 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 our variable-rate borrowings,

including borrowings under our unsecured senior line of credit and commercial paper program, issuances of unsecured senior notes

payable, and borrowings under our secured construction loans, and secured loans held by our unconsolidated real estate joint ventures.

In addition, refer to “Item 1A. Risk factors” in this annual report on Form 10-K for a discussion about risks that inflation directly

or indirectly may pose to our business.

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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 December 31, 2024 and 2023, and results of operations and

comprehensive income for the years ended December 31, 2024 and 2023 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 December 31, 2024 and 2023 and for the years

ended December 31, 2024 and 2023 for the Issuer and Guarantor Subsidiary. Amounts provided do not represent our total consolidated

amounts (in thousands):

As of December 31, 2024, 376 of our 391 properties were held indirectly by the REIT’s wholly owned consolidated subsidiary,

Alexandria Real Estate Equities, L.P.

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Critical accounting estimates

Our consolidated financial statements have been prepared in accordance with GAAP. The preparation of these financial

statements in conformity with GAAP requires us to make estimates, judgments, and assumptions that affect the reported amounts of

assets, liabilities, revenues, and expenses. We base these estimates, judgments, and assumptions on historical experience, current

trends, and various other factors that we believe to be reasonable under the circumstances.

We continually evaluate the estimates, judgments, and assumptions we use to prepare our consolidated financial statements.

Changes in estimates, judgments, or assumptions could affect our financial position and our results of operations, which are used by

our stockholders, potential investors, industry analysts, and lenders in their evaluation of our performance.

Our critical accounting estimates are defined as accounting estimates or assumptions made in accordance with GAAP, which

involve a significant level of estimation uncertainty or subjectivity and have had or are reasonably likely to have a material impact on our

financial condition or results of operations. Our significant accounting policies, which utilize these critical accounting estimates, are

described in Note 2 – “Summary of significant accounting policies” to our consolidated financial statements in Item 15 in this annual

report on Form 10-K. Our critical accounting estimates are described below.

Recognition of real estate acquired

Generally, our acquisitions of real estate or in-substance real estate are accounted for as asset acquisitions and not business

combinations 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 requires that the acquisition

consideration (including acquisition costs) be 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.

We assess the relative fair values of tangible and intangible assets and liabilities based on:

(i)Available comparable market information;

(ii)Estimated replacement costs; or

(iii)Discounted cash flow analysis/estimated net operating income and capitalization rates.

In certain instances, we may use multiple valuation techniques and estimate fair values based on an average of multiple

valuation results. We exercise judgement to determine key assumptions used in each valuation technique. For example, to estimate

future cash flows in the discounted cash flow analysis, we are required to use judgment and make a number of assumptions, including

those related to projected growth in rental rates and operating expenses, and anticipated trends and market/economic conditions. The

use of different assumptions in the discounted cash flow analysis can affect the amount of consideration allocated to the acquired

depreciable/amortizable asset, which in turn can impact our net income due to the recognition of the related depreciation/amortization

expense in our consolidated statements of operations.

We completed acquisitions of two properties for a total purchase price of $249.4 million during the year ended December 31,

2024. These transactions were accounted for as asset acquisitions, and the purchase price of each was allocated based on the relative

fair values of the assets acquired and liabilities assumed. Refer to “Investments in real estate” in Note 2 – “Summary of significant

accounting policies” to our consolidated financial statements in Item 15 in this annual report on Form 10-K for additional information.

Impairment of long-lived assets

Impairment of real estate assets classified as held for sale

A property is classified as held for sale when all of the accounting criteria for a plan of sale have been met. These criteria are

described in “Investments in real estate” in Note 2 – “Summary of significant accounting policies” to our consolidated financial

statements in Item 15 in this annual report on Form 10-K. Upon classification as held for sale, we recognize an impairment charge, if

necessary, to lower the carrying amount of the real estate asset to its estimated fair value less cost to sell. The determination of fair

value can involve significant judgments and assumptions. We develop key assumptions based on the following available factors: (i)

contractual sales price, (ii) preliminary non-binding letters of intent, or (iii) other available comparable market information. If this

information is not available, we use estimated replacement costs or estimated cash flow projections that utilize estimated discount and

capitalization rates. These estimates are subject to uncertainty and therefore require significant judgment by us. We review all assets

held for sale each reporting period to determine whether the existing carrying amounts are fully recoverable in comparison to their

estimated fair values less costs to sell. Subsequently, as a result of our quarterly assessment, we may recognize an incremental

impairment charge for any decrease in the asset’s fair value less cost to sell. Conversely, we may recognize a gain for a subsequent

increase in fair value less cost to sell, limited to the cumulative net loss previously recognized.

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Impairment of other long-lived assets

For each reporting period, we review current activities and changes in the business conditions of all of our long-lived assets,

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, 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, 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, including our rental properties, CIP, land held for

development, and intangibles, 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, exit capitalization rates, and construction costs for projects under

development, which are based on available market information, current and historical operating results, known trends, current market/

economic conditions that may affect the property, 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 to its

estimated fair value. If an impairment loss is not required to be recognized, the recognition of depreciation or amortization is adjusted

prospectively, as necessary, to reduce the carrying amount of the real estate to its estimated disposition value over the remaining period

that the asset is expected to be held and used. We may also adjust depreciation of properties that are expected to be disposed of or

redeveloped prior to the end of their useful lives.

The evaluation for impairment and calculation of the carrying amount of a long-lived asset to be held and used involves

consideration of factors and calculations that are different than the estimate of fair value of assets classified as held for sale. 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.

Impairment of non-real estate investments

We hold strategic investments in publicly traded companies and privately held entities primarily involved in the life science

industry. As a REIT, we generally limit our ownership percentage in the voting stock of each individual entity to less than 10%.

Our investments in privately held entities that do not report NAV per share require our evaluation for impairment when changes

in these entities’ conditions may indicate that an impairment exists. We closely monitor these investments throughout the year 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. We evaluate these investees 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 to 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 loss in an amount equal to the investment’s carrying

value in excess of its estimated fair value. As of each December 31, 2024, 2023, and 2022, the carrying amounts of our investments in

privately held entities that do not report NAV per share accounted for 2%, 1%, and 2% of our total assets and aggregated

$575.2 million, $542.9 million, and $582.7 million, respectively. During the years ended December 31, 2024, 2023, and 2022, we

recognized impairment charges aggregating 10%, 14%, and 4%, respectively, of the carrying amounts of our investments in privately

held entities that do not report NAV.

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Monitoring of tenant credit quality

We monitor, on an ongoing basis, 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 industries in which they conduct business, and (iv) monitoring the timeliness of lease

payments. We have a team of employees who, among them, have an extensive educational background or experience in biology,

chemistry, industrial biotechnology, agtech, and the life science industry, as well as knowledge in finance. This team is responsible for

timely assessment, monitoring, and communication of our tenants’ credit quality and any material changes therein. During the years

ended December 31, 2024, 2023, and 2022, specific write-offs and increases to our general allowance related to deferred rent balances

of tenants recognized in our consolidated statements of operations have not exceeded 0.8% of our income from rentals for each

respective year. For additional information, refer to “Monitoring of tenant credit quality” in Note 2 – “Summary of significant accounting

policies” to our consolidated financial statements in Item 15 in this annual report on Form 10-K for additional information.

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Definitions and reconciliations

This section contains additional information on certain non-GAAP financial measures including reconciliations to 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 annual report on Form 10-K.

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, impairment of real estate primarily consisting of pre-acquisition costs incurred in connection with acquisitions

we decided to no longer pursue, gains or losses on early extinguishment of debt, 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 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 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.

The following table reconciles net income 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 months and year ended

December 31, 2024 (in thousands):

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The following tables present a reconciliation of net income 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 years ended December 31, 2024, 2023, and 2022 (in

thousands, except per share amounts). Per share amounts may not add due to rounding.

(1)Includes our share of gain on real estate from one unconsolidated real estate joint venture and one consolidated real estate joint venture. Refer to Note 4 –

“Consolidated and unconsolidated real estate joint ventures” to our consolidated financial statements in Item 15 for additional information.

(2)Refer to “Sales of real estate assets and impairment charges” in Note 3 – “Investments in real estate” to our consolidated financial statements in Item 15 for additional

information.

(3)Calculated in accordance with standards established by the Nareit Board of Governors.

(4)Primarily related to five non-real estate investments in privately held entities that do not report NAV. Refer to Note 7 – “Investments” to our consolidated financial

statements in Item 15 for additional information.

(5)Represents an adjustment to the provision for expected credit losses for a direct financing lease, as well as the initial recognition of a provision for expected credit losses

for two notes receivable issued in connection with dispositions completed during the three months ended December 31, 2024. Refer to Note 5 – “Leases” and Note 8 –

“Other assets” to our consolidated financial statements in Item 15 for additional information.

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(1)Refer to “Weighted-average shares of common stock outstanding – diluted” in this section for additional information.

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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, 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, 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 for

investors a comparison of our business activities across periods without the volatility resulting from market forces outside of our control.

Adjusted EBITDA has limitations as a measure of our performance. Adjusted EBITDA does not reflect our historical expenditures or

future requirements for capital expenditures or contractual commitments. While Adjusted EBITDA is a relevant measure of performance,

it does not represent net income (loss) or cash flows from operations calculated and presented in accordance with GAAP, and it should

not be considered as an alternative to those indicators in evaluating performance or liquidity.

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, impairment of real estate, impairment of non-real estate investments, and provision for expected credit losses on financial

instruments. Our attempt to predict these amounts may produce significant but inaccurate estimates, which would be potentially

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 months and years ended

December 31, 2024 and 2023 (dollars in thousands):

Annual rental revenue

Annual rental revenue represents the annualized fixed base rental obligations, calculated in accordance with GAAP, including

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 December 31, 2024, approximately 92% 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

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

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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.

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 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 consist of the permanent change in use of acquired office, warehouse, or shell space into laboratory space.

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.

Priority anticipated projects are those most likely to commence future ground-up development or first-time conversion from

non-laboratory space to laboratory space prior to our other future projects, pending market conditions and leasing negotiations.

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.

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.

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Dividend yield

Dividend yield for the quarter represents the annualized quarter dividend 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. Cash interest is equal to interest expense calculated in accordance with GAAP plus

capitalized interest, less amortization of loan fees and debt premiums (discounts).

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 months and years ended December 31,

2024 and 2023 (dollars in thousands):

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, impairment of real estate, impairment of non-real estate investments, and provision for expected credit losses on financial

instruments. Our attempt to predict these amounts may produce significant but inaccurate estimates, which would be potentially

misleading for our investors.

Gross assets

Gross assets are calculated as total assets plus accumulated depreciation as of December 31, 2024 and 2023 (in thousands):

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Incremental annual net operating income on development and redevelopment projects

Incremental annual net operating income represents the amount of net operating income, on an annual 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 December 31, 2024, 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 December 31, 2024 (dollars in thousands):

(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 December 31, 2024. These lease expirations

or vacant space at recently acquired properties represent future opportunities for which we have the intent, 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:

(1)Includes vacant square footage as of December 31, 2024.

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, and 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.

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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 in order to facilitate for investors a 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.

Megacampus™

A Megacampus ecosystem is a cluster campus that consist of approximately 1 million RSF or more, 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 as of December 31, 2024 (dollars in thousands):

Net cash provided by operating activities after dividends

Net cash provided by operating activities after dividends includes the deduction for distributions to noncontrolling interests. For

purposes of this calculation, changes in operating assets and liabilities are excluded as they represent timing differences.

Net debt 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 of evaluating our balance sheet leverage. Net debt and preferred stock is equal to the sum of total consolidated

debt less cash, cash equivalents, and restricted cash, plus preferred stock outstanding as of the end of the period. 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, impairment of real estate, impairment of non-real estate investments, and provision for

expected credit losses on financial instruments. Our attempt to predict these amounts may produce significant but inaccurate estimates,

which would be potentially 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

December 31, 2024 and 2023 (dollars in thousands):

Net operating income, net operating income (cash basis), and operating margin

The following table reconciles net income to net operating income and net operating income (cash basis) and computes

operating margin for the years ended December 31, 2024, 2023, and 2022 (dollars in thousands):

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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 provision for expected credit

losses on financial instruments adjustments required by GAAP. We believe that net operating income on a cash basis is helpful to

investors as an additional measure of operating performance because it eliminates straight-line rent revenue and the amortization of

acquired above- and below-market leases and tenant-funded and tenant-built landlord improvements.

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 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 in order to facilitate for investors a 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.

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.

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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 7 in this annual report on

Form 10-K for additional information.

Stabilized occupancy date

The stabilized occupancy date represents the estimated date on which the project is expected to reach occupancy of 95% or

greater.

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 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 7 in this annual report on Form 10-K 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

to net income for any significant variability to components of our operating expenses.

The following table reconciles income from rentals to tenant recoveries for the years ended December 31, 2024, 2023, and

2022 (in thousands):

Total equity capitalization

Total equity capitalization is equal to the outstanding shares of common stock multiplied by the closing price on the last trading

day at the end of each period presented.

Total market capitalization

Total market capitalization is equal to the sum of total equity capitalization and total debt.

Unencumbered net operating income as a percentage of total net operating income

Unencumbered net operating income as a percentage of total net operating income is a non-GAAP financial measure that we

believe is useful to investors as a performance measure of the results of operations of our unencumbered real estate assets as it

reflects those income and expense items that are incurred at the unencumbered property level. Unencumbered net operating income is

derived from assets classified in continuing operations, which are not subject to any mortgage, deed of trust, lien, or other security

interest, as of the period for which income is presented.

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The following table summarizes unencumbered net operating income as a percentage of total net operating income for the

years ended December 31, 2024, 2023, and 2022 (dollars in thousands):

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 rights to dividends in the calculation of diluted shares. Refer to Note 12 – “Earnings per share” and Note 15 –

“Stockholders’ equity” to our consolidated financial statements in Item 15 in this annual report on Form 10-K 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 years ended December 31, 2024, 2023, and 2022

are calculated as follows. Also shown are the weighted-average unvested RSAs with nonforfeitable rights to 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):

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