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Alexandria Expands With $26M Buyout in Stanford Research Park

Zacks Equity Research

Alexandria Real Estate Equities ARE recently announced the buyout of 3160 Porter Drive, a 92,000 rentable square feet (RSF) redevelopment project in Stanford Research Park, for $26 million. The transaction highlights the company’s efforts to expand presence in greater Stanford innovation cluster.

Notably, Stanford University selected Alexandria for turning the property into a dynamic innovation center that will promote growth of early- and growth-stage life science companies. This will aid in discovery and development of new treatments and cures.

The site will be home to Alexandria LaunchLabs at Stanford Research Park, which is likely to open in the first half of 2021. The full-service platform will offer member companies with flexible, move-in-ready office/laboratory space, mentorship and access to strategic investment capital through Alexandria’s seed-stage funding model.

Notably, Alexandria has played a significant role in the development of the expansive life science ecosystem in the San Francisco Bay Area. The company started with the buyout of key assets in 1996. Moreover, in 1999, the company acquired its first property in Stanford Research Park.

The company is making concerted efforts to grow the greater Stanford innovation cluster with the integration of life science and technology.  Alexandria’s operating asset base within the greater Stanford innovation cluster comprises 1.1 million RSF. This includes 300,000 RSF of fully leased office/laboratory space in Stanford Research Park.

In this innovation cluster, Alexandria’s life science and technology tenants roster not only includes multinational pharmaceutical companies like Jazz Pharmaceuticals plc, and life science product, service and device companies such as Verb Surgical Inc. but also global technology companies like Alphabet Inc. GOOG and Facebook, Inc. FB, and institutional entities like Stanford University School of Medicine.

Further, Alexandria is well poised to grow through its capability to provide innovative entities with expansion opportunities close to public transportation networks. In fact, the company has an additional 1.6 million RSF of value-creation development projects targeted for delivery through 2022.

To tap opportunities in the life-science and technology real estate market, Alexandria is undertaking development and redevelopment projects. In fact, the company has 1.5 million RSF of Class A properties going through construction, with an estimated initial occupancy in 2019, as well as 9.2 million SF of near-term, intermediate-term and future development and redevelopment projects. The delivery of these new Class A properties in AAA locations is likely to boost the company’s operating performance.

Alexandria currently carries a Zacks Rank #2 (Buy). In the year-to-date period, shares of the company have surged 34.7%, outperforming the industry’s rally of 25.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


 
Other Stock to Consider

Investors can also consider another top-ranked stock in the REIT space like Equity Residential EQR. Equity Residential’s funds from operations (FFO) per share estimate for the current year moved up 0.3% to $3.45 over the past month. Additionally, it has an expected long-term growth rate of 6%.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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