ALEXANDRIA REAL ESTATE EQUITIES, INC.
For the period ended Dec 31, 2025. Filed Jan 26, 2026.
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FY2025 · Filed Jan 26, 2026
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Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Alexandria Real Estate Equities, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Alexandria Real Estate Equities, Inc. (the Company) as of
December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income, changes in stockholders’
equity and noncontrolling interests and cash flows for each of the three years in the period ended December 31, 2025, and the related
notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial
statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the
Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period
ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB),
the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control –
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our
report dated January 26, 2026 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the
Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations
of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used
and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe
that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was
communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material
to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the
critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by
communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures
to which it relates.
Impairment of investments in real estate
| Description of the Matter | At December 31, 2025, the carrying value of the Company’s investments in real estate was $28.7 billion including $556.7 million of investments in real estate held for sale. For the year ended December 31, 2025, the impairment of real estate was $2.2 billion. As discussed in Note 2 to the consolidated financial statements, the Company reviews current activities and changes in the business conditions of its investment in real estate to determine the existence of any triggering events or impairment indicators requiring an impairment analysis. If triggering events or impairment indicators are identified, the Company will review an estimate of the future undiscounted cash flows of the particular investment in real estate which will include a probability-weighted approach if multiple outcomes are under consideration. Impairment is recognized to reduce the carrying amount of a particular long-lived asset to be held and used to its estimated fair value when the estimate of future undiscounted cash flows for that asset is less than its carrying amount. When a long-lived asset is classified as held for sale, an impairment charge is recognized if the carrying amount of the asset exceeds its fair value less cost to sell.Auditing the Company’s evaluation of whether its investments in real estate to be held and used are recoverable was complex and involved a high degree of subjectivity in evaluating management’s key assumptions used in estimating the undiscounted future cash flows including projected rental rates, exit capitalization rates, construction costs for projects under development and probability-weighting multiple scenarios under consideration, as they were based on assumptions about construction costs, available market information, current and historical operating results, known trends and current market/economic conditions that may affect the asset, and management’s assumptions about the use of the asset. Further, auditing the measurement of the impairment charges recognized for investments in real estate held for sale was complex and involved a high degree of subjectivity in evaluating management’s estimates of certain assets’ fair values less costs to sell, which were based on valuations provided by third-party real estate brokers or management’s conclusion on fair value based on recent comparable transactions. |
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| How we Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design, and tested the operating effectiveness of the Company’s controls over the Company’s investments in real estate impairment assessment process. For example, we tested controls over management’s process for estimating and evaluating the assumptions used in the calculations of the future undiscounted cash flows for investments in real estate where impairment indicators existed as well as controls related to management’s development of the fair value estimates for investments in real estate held for sale.In auditing the Company’s undiscounted future cash flows for investments in real estate to be held and used with identified indicators of impairment and measurement of impairment charges recognized for investments in real estate held for sale, we performed audit procedures over the Company’s estimation of these assets’ future cash flows or fair values, and for a sample of real estate assets, we involved a valuation specialist to assist in our assessment. For example, we compared fair value estimates and significant assumptions used to estimate future cash flows to the Company’s historical accounting records or to available market data. We also tested the mathematical accuracy of management’s forecasted cash flows. Additionally, for certain assumptions, we assessed management’s sensitivity analyses in addition to performing our own sensitivity analyses to evaluate the changes in the cash flows of the investments in real estate that would result from changes in the assumptions. |
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 1994.
Los Angeles, California
January 26, 2026
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