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Consolidated and unconsolidated real estate joint ventures | 9 Months Ended
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Sep. 30, 2023
Equity Method Investments and Joint Ventures [Abstract] |
Consolidated and unconsolidated real estate joint ventures | From time to time, we enter into joint venture agreements through which we own a partial interest in real estate entities that own, develop, and operate real estate properties. As of September 30, 2023, our real estate joint ventures held the following properties:
| Property |  | Market |  | Submarket |  | Our Ownership Interest(1)
Consolidated real estate joint ventures(2): |  |  |  |  |  |  |  |
| 50 and 60 Binney Street |  | Greater Boston |  | Cambridge/Inner Suburbs |  |  | 34.0 | % |
| 75/125 Binney Street |  | Greater Boston |  | Cambridge/Inner Suburbs |  |  | 40.0 | % |
| 100 and 225 Binney Street and 300 Third Street |  | Greater Boston |  | Cambridge/Inner Suburbs |  |  | 30.0 | % |
| 99 Coolidge Avenue |  | Greater Boston |  | Cambridge/Inner Suburbs |  |  | 75.0 | % |
| 15 Necco Street |  | Greater Boston |  | Seaport Innovation District |  |  | 60.3 | % | (3)
| Other joint venture |  | Greater Boston |  | – |  |  | 61.0 | % |
| Alexandria Center® for Science and Technology – Mission Bay(4) |  | San Francisco Bay Area |  | Mission Bay |  |  | 25.0 | % |
| 1450 Owens Street |  | San Francisco Bay Area |  | Mission Bay |  |  | 42.8 | % | (5)
| 601, 611, 651, 681, 685, and 701 Gateway Boulevard |  | San Francisco Bay Area |  | South San Francisco |  |  | 50.0 | % |
| 751 Gateway Boulevard |  | San Francisco Bay Area |  | South San Francisco |  |  | 51.0 | % |
| 211 and 213 East Grand Avenue |  | San Francisco Bay Area |  | South San Francisco |  |  | 30.0 | % |
| 500 Forbes Boulevard |  | San Francisco Bay Area |  | South San Francisco |  |  | 10.0 | % |
| Alexandria Center® for Life Science – Millbrae |  | San Francisco Bay Area |  | South San Francisco |  |  | 46.7 | % |
| 3215 Merryfield Row |  | San Diego |  | Torrey Pines |  |  | 30.0 | % |
| Campus Point by Alexandria(6) |  | San Diego |  | University Town Center |  |  | 55.0 | % |
| 5200 Illumina Way |  | San Diego |  | University Town Center |  |  | 51.0 | % |
| 9625 Towne Centre Drive |  | San Diego |  | University Town Center |  |  | 30.0 | % |
| SD Tech by Alexandria(7) |  | San Diego |  | Sorrento Mesa |  |  | 50.0 | % |
| Pacific Technology Park |  | San Diego |  | Sorrento Mesa |  |  | 50.0 | % |
| Summers Ridge Science Park(8) |  | San Diego |  | Sorrento Mesa |  |  | 30.0 | % |
| 1201 and 1208 Eastlake Avenue East and 199 East Blaine Street |  | Seattle |  | Lake Union |  |  | 30.0 | % |
| 400 Dexter Avenue North |  | Seattle |  | Lake Union |  |  | 30.0 | % |
| 800 Mercer Street |  | Seattle |  | Lake Union |  |  | 60.0 | % |
Unconsolidated real estate joint ventures(2): |  |  |  |  |  |  |  |
| 1655 and 1725 Third Street |  | San Francisco Bay Area |  | Mission Bay |  |  | 10.0 | % |
| 1401/1413 Research Boulevard |  | Maryland |  | Rockville |  |  | 65.0 | % | (9)
| 1450 Research Boulevard |  | Maryland |  | Rockville |  |  | 73.2 | % | (9)
| 101 West Dickman Street |  | Maryland |  | Beltsville |  |  | 57.9 | % | (9)
(1)Refer to the table on the next page that shows the categorization of our joint ventures under the consolidation framework. (2)In addition to the real estate joint ventures listed, various partners hold insignificant noncontrolling interests in three other consolidated real estate joint ventures in North America and we hold an interest in one other insignificant unconsolidated real estate joint venture in North America. (3)Our ownership interest is expected to decline to 57% as one of our joint venture partners contributes the remaining costs to complete the project over time. (4)Includes 409 and 499 Illinois Street, 1500 and 1700 Owens Street, and 455 Mission Bay Boulevard South. (5)The noncontrolling interest share of our joint venture partner is anticipated to increase to 75% as our partner contributes the remaining cost to complete the project over time. (6)Includes 10210, 10260, 10290, and 10300 Campus Point Drive and 4110, 4135, 4155, 4161, 4224, and 4242 Campus Point Court. (7)Includes 9605, 9645, 9675, 9685, 9725, 9735, 9805, 9808, 9855, and 9868 Scranton Road and 10055, 10065, and 10075 Barnes Canyon Road. (8)Includes 9965, 9975, 9985, and 9995 Summers Ridge Road. (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. Our consolidation policy is described under the “Consolidation” section in Note 2 – “Summary of significant accounting policies” to our unaudited consolidated financial statements. Consolidation accounting is highly technical, but its framework is primarily based on the controlling financial interests and benefits of the joint ventures. We generally consolidate a joint venture that is a legal entity that we control (i.e., we have the power to direct the activities of the joint venture that most significantly affect its economic performance) through contractual rights, regardless of our ownership interest, and where we determine that we have benefits through the allocation of earnings or losses and fees paid to us that could be significant to the joint venture (the “VIE model”). We also generally consolidate joint ventures when we have a controlling financial interest through voting rights and where our voting interest is greater than 50% (the “voting model”). Voting interest differs from ownership interest for some joint ventures. We account for joint ventures that do not meet the consolidation criteria under the equity method by recognizing our share of income and losses. The table below shows the categorization of our real estate joint ventures under the consolidation framework:
Property(1) |  | Consolidation Model |  | Voting Interest |  | Consolidation Analysis |  | Conclusion
50 and 60 Binney Street |  | VIE model |  | Not applicable under VIE model |  |  |  |  | Consolidated
75/125 Binney Street |  | We have:
100 and 225 Binney Street and 300 Third Street |  |  |
99 Coolidge Avenue |  | (i) | The power to direct the activities of the joint venture that most significantly affect its economic performance; and
15 Necco Street |  |
Other joint venture (Greater Boston) |  |
Alexandria Center® for Science and Technology – Mission Bay |  |
1450 Owens Street |  |
601, 611, 651, 681, 685, and 701 Gateway Boulevard |  |
751 Gateway Boulevard |  |  |
211 and 213 East Grand Avenue |  | (ii) | Benefits that can be significant to the joint venture.
500 Forbes Boulevard |
Alexandria Center® for Life Science – Millbrae |  |
3215 Merryfield Row |  |
Campus Point by Alexandria |  |
5200 Illumina Way |  | Therefore, we are the primary beneficiary of each VIE
9625 Towne Centre Drive |
SD Tech by Alexandria |  |
Pacific Technology Park |  |
Summers Ridge Science Park |  |
1201 and 1208 Eastlake Avenue East and 199 East Blaine Street |  |
400 Dexter Avenue North |  |
800 Mercer Street |  |
1401/1413 Research Boulevard |  |  | We do not control the joint venture and are therefore not the primary beneficiary. | Equity method of accounting
1450 Research Boulevard |  |
101 West Dickman Street |
1655 and 1725 Third Street |  | Voting model |  | Does not exceed 50% | Our voting interest is 50% or less. |
(1)In addition to the real estate joint ventures listed, various partners hold insignificant noncontrolling interests in three other consolidated real estate joint ventures in North America and we hold an interest in one other insignificant unconsolidated real estate joint venture in North America. Sales of partial interests We evaluated each of our real estate joint ventures described below under the consolidation framework outlined above and further detailed in the “Consolidation” section of Note 2 – “Summary of significant accounting policies” to our unaudited consolidated financial statements. Upon completion of each partial interest sale, we continued to consolidate each property. Accordingly, we accounted for these sales of partial interests as equity transactions, with the differences between consideration received and the book value of partial interests sold recognized in additional paid-in capital, and no gain or loss recognized in earnings. Refer to the “Consolidation” section in Note 2 – “Summary of significant accounting policies” to our unaudited consolidated financial statements for additional information. For a summary of our completed dispositions of and sales of partial interests in real estate assets during the nine months ended September 30, 2023, refer to the “Sales of real estate assets and impairment charges” section in Note 3 – “Investments in real estate” to our unaudited consolidated financial statements. 15 Necco Street As of March 31, 2023, our investment in 15 Necco Street, an active development project aggregating 345,995 RSF located in our Seaport Innovation District submarket, was held in a consolidated real estate joint venture in which 90% was owned by us and 10% owned by our existing joint venture partner. In April 2023, an investor acquired a 20% interest in our 15 Necco Street property, which consisted of an 18% interest sold by us and a 2% interest sold by our existing partner. The sales price of the 18% interest sold by us was $66.1 million, and the $7.8 million difference between the consideration received and the book value of our partial interest sold was recognized as an adjustment to additional paid-in capital. Upon completion of the sale, our ownership interest in the consolidated real estate joint venture was 72% and our existing and new partners’ noncontrolling interests were 8% and 20%, respectively. We expect our new joint venture partner to contribute capital to fund construction of the project over time and to accrete its ownership interest in the joint venture to 37% from 20%. 9625 Towne Centre Drive As of March 31, 2023, our investment in 9625 Towne Centre Drive, aggregating 163,648 RSF located in our University Town Center submarket, was held in a consolidated real estate joint venture in which 50.1% was owned by us and 49.9% was owned by a joint venture partner. In June 2023, an investor acquired a 70% interest in our 9625 Towne Centre Drive property, which consisted of a 20.1% partial interest sold by us and a 49.9% interest sold by our previous joint venture partner, which it had entirely and solely held. The consideration paid was based on an agreed-upon value of $160.5 million for the entire property. Our portion of the sales price for the 20.1% partial interest sold by us was $32.3 million, and the $15.6 million of consideration received in excess of the book value of our partial interest sold was recognized as an adjustment to additional paid-in capital. Upon completion of the sale, our ownership in the joint venture is 30%. Other joint venture During the three months ended March 31, 2023, we acquired two properties and entitlements aggregating 515,000 RSF with development opportunities in our Greater Boston market for a purchase price aggregating $58.9 million. Upon completion of these acquisitions, we formed a real estate joint venture with a local real estate operator that acquired a 39.0% interest in this joint venture in exchange for the contribution of additional entitlements and other pre-construction assets for a total contribution of $37.6 million, including a non-cash contribution aggregating $33.3 million. The entitlements contributed by our partner increased the joint venture’s aggregate development opportunities to 715,000 RSF. Our partner has the option to require us to redeem $35.3 million of its ownership interest at its contributed value beginning in January 2024. As a result, this portion of our partner’s ownership interest is classified in redeemable noncontrolling interests in our unaudited consolidated balance sheet as of September 30, 2023. Refer to Note 14 – “Noncontrolling interests” to our unaudited consolidated financial statements for additional information. Consolidated VIEs’ balance sheet information We, together with joint venture partners, hold interests in real estate joint ventures that we consolidate in our financial statements. These existing joint ventures provide significant equity capital to fund a portion of our future construction spend, and our joint venture partners may also contribute equity into these entities for financing-related activities. The table below aggregates the balance sheet information of our consolidated VIEs as of September 30, 2023 and December 31, 2022 (in thousands):
|  | September 30, 2023 |  | December 31, 2022
Investments in real estate |  | $ | 7,823,076 |  |  | $ | 6,771,842 |
Cash and cash equivalents |  | 288,969 |  |  | 246,931 |
Other assets |  | 718,337 |  |  | 684,487 |
Total assets |  | $ | 8,830,382 |  |  | $ | 7,703,260 |
Secured notes payable |  | $ | 108,491 |  |  | $ | 58,396 |
Other liabilities |  | 604,921 |  |  | 430,615 |
Total liabilities |  | 713,412 |  |  | 489,011 |
Redeemable noncontrolling interests |  | 42,046 |  |  | — |
Alexandria Real Estate Equities, Inc.’s share of equity |  | 4,041,611 |  |  | 3,513,001 |
Noncontrolling interests’ share of equity |  | 4,033,313 |  |  | 3,701,248 |
Total liabilities and equity |  | $ | 8,830,382 |  |  | $ | 7,703,260 |
In determining whether to aggregate the balance sheet information of consolidated VIEs, we considered the similarity of each VIE, including the primary purpose of these entities to own, manage, operate, and lease real estate properties owned by the VIEs, and the similar nature of our involvement in each VIE as a managing member. Due to the similarity of the characteristics, we present the balance sheet information of these entities on an aggregated basis. None of our consolidated VIEs’ assets have restrictions that limit their use to settle specific obligations of the VIE. There are no creditors or other partners of our consolidated VIEs that have recourse to our general credit, and our maximum exposure to our consolidated VIEs is limited to our variable interests in each VIE, except for our 99 Coolidge Avenue real estate joint venture in which the VIE’s secured construction loan is guaranteed by us. For additional information, refer to Note 10 – “Secured and unsecured senior debt” to our unaudited consolidated financial statements. Unconsolidated real estate joint ventures Our maximum exposure to our unconsolidated VIEs is limited to our investment in each VIE, except for our 1450 Research Boulevard and 101 West Dickman Street unconsolidated real estate joint ventures in which we guarantee up to $6.7 million of outstanding balance related to each VIE's secured loan. Our investments in unconsolidated real estate joint ventures, accounted for under the equity method and presented in our consolidated balance sheets consisted of the following as of September 30, 2023 and December 31, 2022 (in thousands):
Property |  | September 30, 2023 |  | December 31, 2022
1655 and 1725 Third Street |  | $ | 11,929 |  |  | $ | 12,996
1450 Research Boulevard |  | 5,935 |  |  | 5,625
101 West Dickman Street |  | 9,006 |  |  | 8,678
Other |  | 10,825 |  |  | 11,136 |
|  | $ | 37,695 |  |  | $ | 38,435 |
The following table presents key terms related to our unconsolidated real estate joint ventures’ secured loans as of September 30, 2023 (dollars in thousands):
|  |  |  |  |  |  |  | Interest Rate(1) |  | At 100% |  | Our Share
Unconsolidated Joint Venture |  | Maturity Date |  | Stated Rate |  |  | Aggregate Commitment |  | Debt Balance(2) |
1401/1413 Research Boulevard |  |  | 12/23/24 |  |  | 2.70% |  | 3.31% |  | $ | 28,500 |  |  | $ | 28,288 |  |  | 65.0%
1655 and 1725 Third Street |  |  | 3/10/25 |  |  | 4.50% |  | 4.57% |  | 600,000 |  |  | 599,399 |  |  | 10.0%
101 West Dickman Street |  |  | 11/10/26 |  |  | SOFR+1.95% | (3) | 7.37% |  | 26,750 |  |  | 13,949 |  |  | 57.9%
1450 Research Boulevard |  |  | 12/10/26 |  |  | SOFR+1.95% | (3) | 7.43% |  | 13,000 |  |  | 7,765 |  |  | 73.2%
|  |  |  |  |  |  |  |  |  | $ | 668,250 |  |  | $ | 649,401 |  |  |
(1)Includes interest expense and amortization of loan fees. (2)Represents outstanding principal, net of unamortized deferred financing costs, as of September 30, 2023. (3)This loan is subject to a fixed SOFR floor rate of 0.75%.

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- Definition The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 323 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 3 -Subparagraph (a)(3) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481687/323-10-50-3 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 323 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 3 -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481687/323-10-50-3 Reference 3: http://www.xbrl.org/2003/role/recommendedDisclosureRef -Topic 323 -SubTopic 740 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481543/323-740-50-2 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Name Accounting Standards Codification -Topic 323 -Publisher FASB -URI https://asc.fasb.org//323/tableOfContent + Details
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