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Alexandria Real Estate Equities, Inc. (ARE - Snapshot Report), a real estate investment trust (REIT), has recently increased its quarterly dividend from 51 cents to 53 cents per share. This translates into a 4.0% increase from the prior dividend payout. The dividend is payable on October 15, 2012 to shareholders of record on September 28.
As of June 30, 2012, the company’s funds from operations payout ratio (quarterly common stock dividend divided by quarterly funds from operations), was 49%. Alexandria Real Estate increased its quarterly dividend per share by 8 cents or approximately 18% over the past 15 months.
At the end of second quarter 2012, Alexandria Real Estate had cash and cash equivalents of $80.9 million. The company expects to distribute its excess cash to the shareholders through increased dividend. We believe that the company has enough cash to provide optimum shareholder value.
A steady dividend payout facilitates the long-term strategy of Alexandria Real Estate to provide risk-adjusted returns to its shareholders. Solid dividend payouts are arguably the best enticement for REIT investors as U.S. laws require REITs to distribute 90% of its annual taxable income in the form of dividends to shareholders.
Pasadena, California-based Alexandria Real Estate is a leading life science real estate company, focused principally on science-driven cluster development through the ownership, operation, management and selective acquisition, development and redevelopment of properties containing life science laboratory space.
Alexandria Real Estate currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We also have a long-term Neutral recommendation on the stock. One of its competitors, Liberty Property Trust (LRY - Analyst Report) also holds a Zacks #3 Rank.
Note: Funds from operations, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
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