N O T E 1 : B A C K G R O U N D As used in this report, references to the “Company”,“we”,“our” and “us” refer to Alexandria Real Estate Equities, Inc. and its subsidiaries. Alexandria Real Estate Equities, Inc. is a real estate investment trust (“REIT”) formed in 1994.We are engaged primarily in the ownership, operation, management, acquisition, expansion and selective redevelopment and development of properties containing office/laboratory space. We refer to these properties as “life science properties.” Our life science properties are designed and improved for lease primarily to pharmaceutical, biotechnology, life science product, service, biodefense, educational and translational medicine institutions/entities, as well as related government agencies. As of December 31, 2004, our portfolio consisted of 112 properties in nine states with approximately 7.4 million rentable square feet of office/laboratory space, compared to 89 properties in nine states with approximately 5.7 million rentable square feet of office/laboratory space as of December 31, 2003.  The accompanying consolidated financial statements include the accounts of Alexandria Real Estate Equities, Inc. and its subsidiaries.All significant intercompany balances and transactions have been elim- inated.  The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the date of the financial state- ments and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.  Certain prior year amounts have been reclassified to conform to the current year presentation. We consider all highly liquid investments with original maturities of three months or less when pur- chased to be cash equivalents. Accumulated other comprehensive income (loss) consists of the following (in thousands): P 28 Accumulated Other Comprehensive Income (Loss) Cash Equivalents Reclassifications Use of Estimates N O T E 2 : B A S I S O F P R E S E N TAT I O N A N D S U M M A RY O F S I G N I F I C A N T A C C O U N T I N G P O L I C I E S Basis of Presentation N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S Alexandria Real Estate Equities, Inc. and Subsidiaries December 31, 2004 2003 Unrealized gain on marketable securities $15,934 $ 824 Unrealized loss on interest rate swap agreements (2,090) (6,299) $13,844 $ (5,475)