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Alexandria Infuses Capital

Zacks Equity Research

Alexandria Real Estate Equities, Inc. (ARE) – a real estate investment trust (:REIT) – recently announced an equity offering of 6 million shares to repay debt. The company also decided to provide a 30-day option to the underwriters to buy an additional 0.9 million shares, to cover any over-allotments.

In particular, Alexandria Real Estate expects to use proceeds generated from this offering to lower its outstanding debt level under its unsecured senior line of credit.  This would enable the company to borrow fund as required in future under the unsecured senior line of credit. Alexandria Real Estate would use such funds to finance proposed strategic initiatives such as portfolio purchases, debt repayment and other corporate purposes.

Citigroup, Inc. (C), BofA Merrill Lynch of Bank of America Corporation (BAC) and J.P. Morgan of JPMorgan Chase & Co. (JPM) have acted as joint book-running managers for the public offering.

This offering will enable Alexandria Real Estate to attain financial flexibility and will position it favorably to pursue investment opportunities and acquisitions, which will consequently go a long way in enhancing top-line growth.

On Apr 29, 2013, Alexandria Real Estate reported first-quarter 2013 results with AFFO (Adjusted funds from operations) of $1.08 per share, missing the Zacks Consensus Estimate by 3 cents. However, this was higher than the year-ago figure of $1.02 by 6%. As of Mar 31, 2013, the company had cash and cash equivalents worth $87.0 million, up from $77.4 million as of Mar 31, 2012.

Pasadena, CA-based Alexandria Real Estate is a major owner and leading life science real estate company, focused chiefly on science-driven cluster development through the ownership, operation, management and selective acquisition, as well as development and redevelopment of properties containing life science laboratory space.

Currently, Alexandria carries a Zacks Rank #3 (Hold).

Note: FFO, a widely used metric to gauge the performance of REITs, are obtained after adding depreciation and amortization and other non-cash expenses to net income.

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