Why Is Alexandria Real Estate Equities (ARE) Down 3.8% Since Last Earnings Report?
It has been about a month since the last earnings report for Alexandria Real Estate Equities (ARE). Shares have lost about 3.8% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Alexandria Real Estate Equities due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Alexandria Q4 FFO Beats on Solid Rental Rate Growth
Alexandria Real Estate reported adjusted FFO of $1.97 per share for fourth-quarter 2021, up 7.1% from the year-ago quarter’s $1.84. The figure also surpassed the Zacks Consensus Estimate of $1.96.
This year-over-year improvement resulted from 24.4% year-over-year growth in top-line to $576.9 million. Results reflect decent internal growth.
Alexandria witnessed continued healthy leasing activity and rental rate growth during the quarter.
Behind the Headlines
Reflecting robust demand for its high-quality office/laboratory space, Alexandria’s total leasing activity aggregated to 4.1 million RSF of space during the December-end quarter. Lease renewals and re-leasing of space amounted to 1.95 million RSF. Leasing of development and redevelopment space was 1,795,633 RSF.
Alexandria registered rental rate growth of 35.9% during the reported quarter. On a cash basis, rental rate increased 22.9%.
On a year-over-year basis, same-property NOI was up 5%. It climbed 7.5% on a cash basis. Occupancy of operating properties in North America remained high at 94%.
As of fourth-quarter 2021, investment-grade or publicly-traded large-cap tenants accounted for 51% of the annual rental revenues in effect. Weighted-average remaining lease term of all tenants is 7.5 years. For Alexandria’s top 20 tenants, it is 10.9 years.
During the fourth quarter, Alexandria completed acquisitions in its key life-science cluster submarkets totaling 4.1 million SF, comprising 3.9 million RSF of future development opportunities and 191,879 RSF of operating space for a total price of $1.5 billion, including the previously announced acquisition of One Rogers Street in Cambridge submarket for a purchase price of $849.4 million.
During the reported quarter, Alexandria placed into service development and redevelopment projects totaling 600,768 RSF, which are 100% leased across multiple submarkets.
Liquidity
Alexandria exited fourth-quarter 2021 with cash and cash equivalents of $361.3 million, up from $325.9 million reported at the end of third-quarter 2021. ARE had $5.4 billion of liquidity as of the end of the reported quarter. The net debt and preferred stock to adjusted EBITDA was 5.2Xand the fixed-charge coverage ratio was 5.3X for fourth-quarter 2021 annualized. The company has no debt maturities before 2024 and its weighted-average remaining term of debt as of Dec 31, 2021, is 12.1 years.
Outlook
Alexandria issued its 2022 outlook, expecting FFO per share in the range of $8.26-$8.46, with the mid-point at $8.36. In addition, as of Dec 31, 2021, the tenant receivables balance was $7.4 million.
Alexandria also projected the 2022 adjusted FFO per share in the range of $8.26-$8.46, with the mid-point being $8.36.
Alexandria’s current-year expectations are backed by anticipations for occupancy in North America (as of Dec 31, 2022) in the band of 95.2-95.8%, rental rate increases for lease renewals, re-leasing of space of 30-35% and same-property NOI growth of 5.5-7.5%.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Alexandria Real Estate Equities, Inc. (ARE) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
