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Alexandria Sells Asset to Redeploy in Development, Redevelopment Moves
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Shares of Alexandria Real Estate Equities, Inc. (ARE - Free Report) were up more than 2% in Friday’s trading session after the REIT announced the completion of the sale of 1165 Eastlake Avenue East in its Lake Union submarket of Seattle. This was done through an affiliate to the longstanding tenant Fred Hutch Cancer Center (Fred Hutch). The move aligns with the company’s capital recycling strategy.
The sale of the single-tenant Class A+ life science facility, encompassing 100,086 rentable square feet (RSF), was carried out for $150 million. Based on ARE’s cash net operating income (NOI) for the second quarter of 2024 annualized, the capitalization rate was 4.9%. In connection with this transaction, Alexandria formed a strategic joint venture partnership with Fred Hutch through an affiliate. This was for each of 1201 and 1208 Eastlake Avenue East, totaling 206,031 RSF. It involved transferring partial interests from the previous joint venture partner to Fred Hutch. Alexandria's ownership stake in both 1201 and 1208 Eastlake remains steady at 30%.
Alexandria will reinvest the proceeds from the disposition of 1165 Eastlake into its highly leased development and redevelopment pipeline comprising research and development centers for top life science companies, including Bristol Myers Squibb (BMY - Free Report) and Novo Nordisk. As of June 30, 2024, 5.3 million RSF of Class A/A+ properties undergoing construction and one committed near-term project are expected to deliver incremental annual NOI totaling $480 million by the first quarter of 2028.
The latest move of disposing assets and reinvesting in development and redevelopment efforts seems a strategic fit for Alexandria. For 2024, Alexandria aims at dispositions, sales of partial interests and common equity of $1.55 billion at the midpoint of its guidance range.
Shares of this Zacks Rank #3 (Hold) company have risen 7.6% in the past month, outperforming its industry’s growth of 7.1%.
Image Source: Zacks Investment Research
Alexandria’s Class A properties are situated in North America's AAA innovation cluster locations, with significant market presence in Greater Boston, the San Francisco Bay Area, San Diego, Seattle, Maryland, Research Triangle and New York City. The advantageous locations of its properties have been driving demand, resulting in high occupancy levels.
In the first half of 2024, Alexandria completed acquisitions with development/redevelopment opportunities worth $201.8 million. During the same period, it placed into service development and redevelopment projects totaling 628,427 RSF across multiple submarkets, which resulted in $42 million of incremental annual NOI. With a solid balance sheet position and ample financial flexibility, ARE is well-positioned to capitalize on long-term growth opportunities.
The Zacks Consensus Estimate for Cousins Properties’ 2024 FFO per share has been raised marginally over the past two months to $2.66.
The Zacks Consensus Estimate for Lamar Advertising’s current-year FFO per share has moved marginally north in the past two months to $8.09.
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 Sells Asset to Redeploy in Development, Redevelopment Moves
Shares of Alexandria Real Estate Equities, Inc. (ARE - Free Report) were up more than 2% in Friday’s trading session after the REIT announced the completion of the sale of 1165 Eastlake Avenue East in its Lake Union submarket of Seattle. This was done through an affiliate to the longstanding tenant Fred Hutch Cancer Center (Fred Hutch). The move aligns with the company’s capital recycling strategy.
The sale of the single-tenant Class A+ life science facility, encompassing 100,086 rentable square feet (RSF), was carried out for $150 million. Based on ARE’s cash net operating income (NOI) for the second quarter of 2024 annualized, the capitalization rate was 4.9%. In connection with this transaction, Alexandria formed a strategic joint venture partnership with Fred Hutch through an affiliate. This was for each of 1201 and 1208 Eastlake Avenue East, totaling 206,031 RSF. It involved transferring partial interests from the previous joint venture partner to Fred Hutch. Alexandria's ownership stake in both 1201 and 1208 Eastlake remains steady at 30%.
Alexandria will reinvest the proceeds from the disposition of 1165 Eastlake into its highly leased development and redevelopment pipeline comprising research and development centers for top life science companies, including Bristol Myers Squibb (BMY - Free Report) and Novo Nordisk. As of June 30, 2024, 5.3 million RSF of Class A/A+ properties undergoing construction and one committed near-term project are expected to deliver incremental annual NOI totaling $480 million by the first quarter of 2028.
The latest move of disposing assets and reinvesting in development and redevelopment efforts seems a strategic fit for Alexandria. For 2024, Alexandria aims at dispositions, sales of partial interests and common equity of $1.55 billion at the midpoint of its guidance range.
Shares of this Zacks Rank #3 (Hold) company have risen 7.6% in the past month, outperforming its industry’s growth of 7.1%.
Image Source: Zacks Investment Research
Alexandria’s Class A properties are situated in North America's AAA innovation cluster locations, with significant market presence in Greater Boston, the San Francisco Bay Area, San Diego, Seattle, Maryland, Research Triangle and New York City. The advantageous locations of its properties have been driving demand, resulting in high occupancy levels.
In the first half of 2024, Alexandria completed acquisitions with development/redevelopment opportunities worth $201.8 million. During the same period, it placed into service development and redevelopment projects totaling 628,427 RSF across multiple submarkets, which resulted in $42 million of incremental annual NOI. With a solid balance sheet position and ample financial flexibility, ARE is well-positioned to capitalize on long-term growth opportunities.
Stocks to Consider
Some better-ranked stocks from the REIT sector are Cousins Properties (CUZ - Free Report) and Lamar Advertising (LAMR - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Cousins Properties’ 2024 FFO per share has been raised marginally over the past two months to $2.66.
The Zacks Consensus Estimate for Lamar Advertising’s current-year FFO per share has moved marginally north in the past two months to $8.09.
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.