Consolidated and unconsolidated real estate joint ventures (Notes)

12 Months Ended

Dec. 31, 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 December 31, 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		56.7	%
	Other joint venture	Greater Boston	–		61.2	%	(4)
	Alexandria Center® for Science and Technology – Mission Bay(3)	San Francisco Bay Area	Mission Bay		25.0	%
	1450 Owens Street	San Francisco Bay Area	Mission Bay		40.6	%	(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		47.1	%
	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)Includes 409 and 499 Illinois Street, 1500 and 1700 Owens Street, and 455 Mission Bay Boulevard South.

(4)Refer to the discussion below and to Note 11 – “Accounts payable, accrued expenses, and other liabilities” and Note 19 – “Subsequent events” to our consolidated financial statements for additional information.

(5)The noncontrolling interest share of our joint venture partner is anticipated to increase to 75% as our partner contributes construction funding to the project over time.

(6)Includes 10210, 10260, 10290, and 10300 Campus Point Drive and 4110, 4135, 4155, 4161, 4165, 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 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 of accounting 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 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 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 year ended December 31, 2023, refer to the “Sales of real estate assets and impairment charges” section in Note 3 – “Investments in real estate” to our consolidated financial statements.

15 Necco Street

As of March 31, 2023, our investment in 15 Necco Street, a development project 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% was 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 38.8% 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 had the option to require us to redeem $35.3 million of its ownership interest at its contributed value, which our partner exercised in December 2023. We completed the redemption in January 2024.

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 December 31, 2023 and 2022 (in thousands):


	December 31,
	2023			2022
Investments in real estate	$	8,032,315		$	6,771,842
Cash and cash equivalents	306,475			246,931
Other assets	728,390			684,487
Total assets	$	9,067,180		$	7,703,260

Secured notes payable	$	119,042		$	58,396
Other liabilities	608,665			430,615
Mandatorily redeemable noncontrolling interest	35,250		(1)	—
Total liabilities	762,957			489,011
Redeemable noncontrolling interests	6,868			—
Alexandria Real Estate Equities, Inc.’s share of equity	4,162,017			3,513,001
Noncontrolling interests’ share of equity	4,135,338			3,701,248
Total liabilities and equity	$	9,067,180		$	7,703,260

(1)Related to the acquisition of our partner’s partial noncontrolling interest in one of our real estate joint ventures, which was paid in full on January 12, 2024. Refer to Note 19 – “Subsequent events” and Note 11 – “Accounts payable, accrued expenses, and other liabilities” to our consolidated financial statements for additional information.

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 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 the 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 December 31, 2023 and 2022 (in thousands):


	December 31,
Property	2023		2022
1655 and 1725 Third Street	$	11,718	$	12,996
1450 Research Boulevard	6,041		5,625
101 West Dickman Street	9,290		8,678
Other	10,731		11,136
	$	37,780	$	38,435

The following table presents key terms related to our unconsolidated real estate joint ventures’ secured loans as of December 31, 2023 (dollars in thousands):


							At 100%				Our Share
Unconsolidated Joint Venture	Maturity Date		Stated Rate		Interest Rate(1)		Aggregate Commitment		Debt Balance(2)
1401/1413 Research Boulevard		12/23/24	2.70%			3.31%	$	28,500	$	28,331	65.0%
1655 and 1725 Third Street		3/10/25	4.50%			4.57%	600,000		599,505		10.0%
101 West Dickman Street		11/10/26	SOFR + 1.95%	(3)		7.38%	26,750		14,762		57.9%
1450 Research Boulevard		12/10/26	SOFR + 1.95%	(3)		7.44%	13,000		8,280		73.2%
							$	668,250	$	650,878

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

(2)Represents outstanding principal, net of unamortized deferred financing costs, as of December 31, 2023.

(3)This loan is subject to a fixed SOFR floor of 0.75%.