Consolidated and unconsolidated real estate joint ventures

3 Months Ended

Mar. 31, 2024

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 March 31, 2024, 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	%
	285, 299, 307, and 345 Dorchester Avenue	Greater Boston	Seaport Innovation District		60.0	%
	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		27.2	%	(4)
	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		47.4	%
	3215 Merryfield Row	San Diego	Torrey Pines		30.0	%
	Campus Point by Alexandria(5)	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(6)	San Diego	Sorrento Mesa		50.0	%
	Pacific Technology Park	San Diego	Sorrento Mesa		50.0	%
	Summers Ridge Science Park(7)	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	%	(8)
	1450 Research Boulevard	Maryland	Rockville		73.2	%	(8)
	101 West Dickman Street	Maryland	Beltsville		57.9	%	(8)

(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 four 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)During the three months ended March 31, 2024, our equity ownership decreased from 40.6% to 27.2% 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, 9685, 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)Represents a joint venture with a local real estate operator in which our joint venture partner manages the day-to-day activities that significantly affect the economic performance of the joint venture.

Our consolidation policy is described under “Consolidation” in Note 2 – “Summary of significant accounting policies” to our unaudited consolidated financial statements. Consolidation accounting is highly technical, but its framework is primarily based on the controlling financial interests and benefits of the joint ventures. We generally consolidate a joint venture that is a legal entity 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

285, 299, 307, and 345 Dorchester Avenue

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 four 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.

Formation of consolidated real estate joint ventures

We evaluated each of our real estate joint ventures described below under the consolidation framework outlined above and further detailed in “Consolidation” in Note 2 – “Summary of significant accounting policies” to our unaudited consolidated financial statements.

Refer to “Consolidation” 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 three months ended March 31, 2024, refer to “Sales of real estate assets” in Note 3 – “Investments in real estate” to our unaudited consolidated financial statements.

285, 299, 307, and 345 Dorchester Avenue

During the three months ended March 31, 2024, we formed real estate joint ventures to develop a life science mega campus.

We contributed $155.3 million to these real estate joint ventures, and our partner’s share of contributed real estate assets aggregated $103.5 million. As of March 31, 2024, these joint ventures own four land parcels at 285, 299, 307, and 345 Dorchester Avenue in our Seaport Innovation District submarket, with future development opportunities aggregating 1.0 million SF.

As of March 31, 2024, we have a 60% ownership interest in the joint ventures. We determined that we had control over these real estate joint ventures, and we therefore consolidate the associated real estate assets.

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 March 31, 2024 and December 31, 2023 (in thousands):


	March 31, 2024		December 31, 2023
Investments in real estate	$	8,487,213	$	8,032,315
Cash and cash equivalents	228,462		306,475
Other assets	777,416		728,390
Total assets	$	9,493,091	$	9,067,180

Secured notes payable	$	129,431	$	119,042
Other liabilities	593,166		608,665
Mandatorily redeemable noncontrolling interest	—		35,250
Total liabilities	722,597		762,957
Redeemable noncontrolling interests	7,008		6,868
Alexandria Real Estate Equities, Inc.’s share of equity	4,436,783		4,162,017
Noncontrolling interests’ share of equity	4,326,703		4,135,338
Total liabilities and equity	$	9,493,091	$	9,067,180

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. Refer to Note 10 – “Secured and unsecured senior debt” to our unaudited consolidated financial statements for additional information.

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 March 31, 2024 and December 31, 2023 (in thousands):


Property	March 31, 2024		December 31, 2023
1655 and 1725 Third Street	$	11,471	$	11,718
1450 Research Boulevard	9,055		6,041
101 West Dickman Street	9,473		9,290
Other	10,637		10,731
	$	40,636	$	37,780

The following table presents key terms related to our unconsolidated real estate joint ventures’ secured loans as of March 31, 2024 (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	$	28,374	65.0%
1655 and 1725 Third Street		3/10/25	4.50%		4.57%	600,000		599,612		10.0%
101 West Dickman Street		11/10/26	SOFR+1.95%	(3)	7.37%	26,750		17,749		57.9%
1450 Research Boulevard		12/10/26	SOFR+1.95%	(3)	7.43%	13,000		8,509		73.2%
						$	668,250	$	654,244

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

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

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