It has been about a month since the last earnings report for Alexandria Real Estate Equities (ARE). Shares have added about 1.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Alexandria Real Estate Equities due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Alexandria Q1 FFO & Revenues Top Estimates on High NOI
Alexandria reported first-quarter 2019 FFO as adjusted of $1.71 per share, beating the Zacks Consensus Estimate of $1.68. The figure also improved from the year-ago quarter’s reported tally of $1.68.
Further, quarterly revenues of $358.8 million outpaced the Zacks Consensus Estimate of $348.1 million. Revenues jumped 12.1% year over year.
Results reflect decent internal and external growth. Particularly, the company witnessed impressive rental rate growth of 24.3% on a cash basis in the first quarter. This indicates the highest quarterly cash rental rate growth over the past 10 years.
Behind the Headline Numbers
Alexandria’s total leasing activity aggregated to 1,248,972 rentable square feet (RSF) of space during the March-end quarter.
On a year-over-year basis, same-property NOI grew 2.3%. It climbed 10.2% on a cash basis. Occupancy of operating properties in North America remained high at 97.2%.
As of first-quarter 2019, investment-grade or large-cap tenants accounted for 50% of annual rental revenues in effect. Furthermore, 77% of the annual rental revenues are from Class A properties in AAA locations.
Notably, during the January-March quarter, the company acquired 10 properties, for $383 million, in key submarkets.
Alexandria exited first-quarter 2019 with cash and cash equivalents of $261.4 million, up from $234.2 million reported at the end of the previous quarter. The company had $2.7 billion of liquidity as of the end of the reported quarter.
Alexandria revised its guidance for adjusted FFO per share for 2019 to $6.90-$7 from the prior outlook of $6.85-$7.05. This is backed by expectations for occupancy in North America (as of Dec 31, 2019) in the band of 97.7-98.3%, rental rate increases for lease renewals, and re-leasing of space of 26-29%, and same-property NOI growth of 1-3%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month.
Currently, Alexandria Real Estate Equities has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Alexandria Real Estate Equities has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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