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Alexandria Prices Upsized Public Offering of 3,850,000 Shares

Zacks Equity Research

Alexandria Real Estate Equities, Inc. ARE recently priced an upsized public offering of 3,850,000 common shares at a price of $145.00 per share. The underwriters have been granted a 30-day option to purchase up to an additional 577,500 common shares.

The offering, subject to fulfillment of customary closing conditions, is expected to close on Jun 25, 2019.

This offering is in connection to forward sale agreements, per which the forward purchasers are likely to borrow and sell 3,850,000 shares to the underwriters. Subject to Alexandria’s right to elect cash or net share settlement, the company projects to deliver the shares no later than Jun 26, 2020, in exchange for cash proceeds amounting to the applicable forward sale price. However, the company will not receive any proceeds through forward sales in the initial phase. 

The common stock offering will boost the company's financial flexibility and help meet its financial obligations efficiently. Moreover, it provides ample scope for deploying capital for long-term growth opportunities and rewarding higher returns to stockholders, at the same time.

Furthermore, a forward sale arrangement will enable the company to lock in the price of such shares at the time of offering pricing, while at the same time delaying share issuance and the receipt of net proceeds until a funding requirement has occurred.

Net proceeds from the offering will be used to fund pending acquisition, while the remaining proceeds will be used for general working capital needs and other corporate purposes. This may include reducing any outstanding balance on the company's unsecured senior line of credit.

Over the past six months, shares of this Zacks Rank #2 (Buy) company have rallied 36%, outperforming the industry’s growth of 29.5%.

Other Key Picks

Investors can also consider some better-ranked stocks from the same space like Host Hotels & Resorts, Inc. HST, Lamar Advertising Company LAMR and PS Business Parks, Inc. PSB, carrying a Zacks Rank of 2, currently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Host Hotels & Resorts’ funds from operations (FFO) per share estimates for 2019 moved marginally north to $1.82 over the past month.

Lamar Advertising’s FFO per share estimates for the ongoing year have been revised slightly upward to $5.83 in 30 days’ time.

PS Business Parks’ current-year FFO per share estimate moved up marginally to $6.71 in the past week.

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