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Shares of Alexandria Real Estate Equities, Inc. (ARE - Free Report) gained 1.60% in the after-hours trading session on Oct 23 after it reported third-quarter 2023 adjusted funds from operations (AFFO) per share of $2.26, surpassing the Zacks Consensus Estimate of $2.24. The reported figure climbed 6.1% from the year-ago quarter.
Results reflect year-over-year revenue growth, aided by decent leasing activity and solid rental rate growth. ARE also increased the midpoint of its 2023 AFFO per share outlook by 2 cents.
Total revenues of $713.8 million increased 8.2% on a year-over-year basis but missed the consensus estimate of $720.9 million.
Behind the Headlines
Alexandria’s total leasing activity aggregated 867,582 rentable square feet (RSF) of space in the third quarter, reflecting healthy demand for its high-quality office/laboratory space. Of this, lease renewals and re-leasing of space amounted to 396,334 RSF.
The company registered rental rate growth of 28.8% during the quarter. On a cash basis, the rental rate increased 19.7%.
On a year-over-year basis, same-property net operating income (NOI) was up 3.1%. It improved 4.6% on a cash basis. The occupancy of operating properties in North America was 93.7% as of Sep 30, 2023, up from 93.6% in the prior quarter but down from 94.3% in the year-ago quarter.
In the reported quarter, investment-grade or publicly traded large-cap tenants accounted for 49% of the annual rental revenues in effect. The weighted average remaining lease term of all tenants is seven years. For Alexandria’s top 20 tenants, it is 8.9 years.
As of Sep 30, 2023, the tenant receivable balance was $6.9 million.
As of Oct 23, 2023, Alexandria completed acquisitions worth $258.9 million. Also, in the third quarter, the company placed 450,134 RSF into service development and redevelopment projects across multiple submarkets, which resulted in $39 million of incremental annual NOI.
Liquidity
The company exited the third quarter with cash and cash equivalents of $532.4 million, down from $924.4 million as of Jun 30, 2023. It had $5.9 billion of liquidity at the end of the reported quarter.
The net debt and preferred stock to adjusted EBITDA was 5.4X, and the fixed-charge coverage was 4.8X on an annualized basis. As of the third-quarter end, ARE had no debt maturities before 2025, and its weighted-average remaining term was 13.1 years.
As of Sep 30, 2023, the company’s remaining aggregate amount available under its at-the-market program for future sales of common stock was $141.9 million.
Further, in September and October 2023, the company received reaffirmations on its credit ratings of BBB+/Positive and Baa1/Stable from S&P Global Ratings and Moody’s, respectively. These ratings affirmations reflect the scale and quality of ARE’s essential Labspace assets and market leadership.
2023 Guidance Revised
Alexandria revised its 2023 guidance for AFFO per share to $8.97-$8.99 from $8.93-$8.99 estimated earlier. This represents a 2-cent increase at the midpoint to $8.98, driven by the accelerated delivery of Moderna’s new global headquarters at 325 Binney Street (set to be delivered in November 2023) and general and administrative savings after Sep 15, 2023, arising from the resignation of its president and CFO, Dean A. Shigenaga. The Zacks Consensus Estimate for AFFO per share is currently pegged at $8.96.
ARE maintained its guidance for same-property NOI growth at 2-4%, and rental rate increases for lease renewals and re-leasing of space at 28-33%. It also retained its guidance for occupancy in North America (as of Dec 31, 2023) in the band of 94.6-95.6%.
Alexandria currently carries a Zacks Rank #4 (Sell).
Alexandria Real Estate Equities, Inc. Price, Consensus and EPS Surprise
We now look forward to the earnings releases of other REITs like Equinix (EQIX - Free Report) and American Tower (AMT - Free Report) , slated to report on Oct 25 and Oct 26, respectively. Meanwhile, Boston Properties (BXP - Free Report) is scheduled on Nov 1.
The Zacks Consensus Estimate for Equinix’s third-quarter 2023 FFO per share is pegged at $7.79, implying a marginal year-over-year increase. EQIX currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for American Tower’s third-quarter 2023 FFO per share stands at $2.35, indicating a marginal fall year over year. AMT currently has a Zacks Rank #3.
The Zacks Consensus Estimate for Boston Properties’ third-quarter 2023 FFO per share is pegged at $1.85, suggesting a year-over-year fall of 3.14%. BXP currently carries a Zacks Rank #2 (Buy).
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Alexandria's (ARE) Q3 AFFO Tops on Rent Growth, '23 View Revised
Shares of Alexandria Real Estate Equities, Inc. (ARE - Free Report) gained 1.60% in the after-hours trading session on Oct 23 after it reported third-quarter 2023 adjusted funds from operations (AFFO) per share of $2.26, surpassing the Zacks Consensus Estimate of $2.24. The reported figure climbed 6.1% from the year-ago quarter.
Results reflect year-over-year revenue growth, aided by decent leasing activity and solid rental rate growth. ARE also increased the midpoint of its 2023 AFFO per share outlook by 2 cents.
Total revenues of $713.8 million increased 8.2% on a year-over-year basis but missed the consensus estimate of $720.9 million.
Behind the Headlines
Alexandria’s total leasing activity aggregated 867,582 rentable square feet (RSF) of space in the third quarter, reflecting healthy demand for its high-quality office/laboratory space. Of this, lease renewals and re-leasing of space amounted to 396,334 RSF.
The company registered rental rate growth of 28.8% during the quarter. On a cash basis, the rental rate increased 19.7%.
On a year-over-year basis, same-property net operating income (NOI) was up 3.1%. It improved 4.6% on a cash basis. The occupancy of operating properties in North America was 93.7% as of Sep 30, 2023, up from 93.6% in the prior quarter but down from 94.3% in the year-ago quarter.
In the reported quarter, investment-grade or publicly traded large-cap tenants accounted for 49% of the annual rental revenues in effect. The weighted average remaining lease term of all tenants is seven years. For Alexandria’s top 20 tenants, it is 8.9 years.
As of Sep 30, 2023, the tenant receivable balance was $6.9 million.
As of Oct 23, 2023, Alexandria completed acquisitions worth $258.9 million. Also, in the third quarter, the company placed 450,134 RSF into service development and redevelopment projects across multiple submarkets, which resulted in $39 million of incremental annual NOI.
Liquidity
The company exited the third quarter with cash and cash equivalents of $532.4 million, down from $924.4 million as of Jun 30, 2023. It had $5.9 billion of liquidity at the end of the reported quarter.
The net debt and preferred stock to adjusted EBITDA was 5.4X, and the fixed-charge coverage was 4.8X on an annualized basis. As of the third-quarter end, ARE had no debt maturities before 2025, and its weighted-average remaining term was 13.1 years.
As of Sep 30, 2023, the company’s remaining aggregate amount available under its at-the-market program for future sales of common stock was $141.9 million.
Further, in September and October 2023, the company received reaffirmations on its credit ratings of BBB+/Positive and Baa1/Stable from S&P Global Ratings and Moody’s, respectively. These ratings affirmations reflect the scale and quality of ARE’s essential Labspace assets and market leadership.
2023 Guidance Revised
Alexandria revised its 2023 guidance for AFFO per share to $8.97-$8.99 from $8.93-$8.99 estimated earlier. This represents a 2-cent increase at the midpoint to $8.98, driven by the accelerated delivery of Moderna’s new global headquarters at 325 Binney Street (set to be delivered in November 2023) and general and administrative savings after Sep 15, 2023, arising from the resignation of its president and CFO, Dean A. Shigenaga. The Zacks Consensus Estimate for AFFO per share is currently pegged at $8.96.
ARE maintained its guidance for same-property NOI growth at 2-4%, and rental rate increases for lease renewals and re-leasing of space at 28-33%. It also retained its guidance for occupancy in North America (as of Dec 31, 2023) in the band of 94.6-95.6%.
Alexandria currently carries a Zacks Rank #4 (Sell).
Alexandria Real Estate Equities, Inc. Price, Consensus and EPS Surprise
Alexandria Real Estate Equities, Inc. price-consensus-eps-surprise-chart | Alexandria Real Estate Equities, Inc. Quote
Upcoming Earnings Releases
We now look forward to the earnings releases of other REITs like Equinix (EQIX - Free Report) and American Tower (AMT - Free Report) , slated to report on Oct 25 and Oct 26, respectively. Meanwhile, Boston Properties (BXP - Free Report) is scheduled on Nov 1.
The Zacks Consensus Estimate for Equinix’s third-quarter 2023 FFO per share is pegged at $7.79, implying a marginal year-over-year increase. EQIX currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for American Tower’s third-quarter 2023 FFO per share stands at $2.35, indicating a marginal fall year over year. AMT currently has a Zacks Rank #3.
The Zacks Consensus Estimate for Boston Properties’ third-quarter 2023 FFO per share is pegged at $1.85, suggesting a year-over-year fall of 3.14%. BXP currently carries a Zacks Rank #2 (Buy).
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.