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Alexandria's (ARE) Q2 FFO In Line, Rental Rates Rise Y/Y
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Alexandria Real Estate Equities, Inc. (ARE - Free Report) delivered second-quarter 2020 funds from operations (FFO) as adjusted of $1.81 per share, up 4.6% from the year-ago quarter’s $1.73. The reported figure came in line with the Zacks Consensus Estimate.
This improvement resulted from year-over-year top-line growth of 16.9% to $437 million. The company witnessed continued strong leasing activity and rental rate growth during the quarter.
The company also updated its full-year outlook in the wake of the coronavirus pandemic and the prevailing market conditions.
It also apprised of its accounts receivable balance as of Jul 24, 2020, with 99% of the July rent collected. Alexandria’s tenant receivables balance stands at $7.2 million as of Jun 30, 2020, marking the lowest since 2012.
The company has increased its construction-spend forecast for 2020 from $960 million to $1.35 billion. The expected acquisitions for the year have also been increased from $650 million to $1.3 billion.
Behind the Headline Numbers
Alexandria’s total leasing activity aggregated to 1.1 million rentable square feet (RSF) of space during the June-end quarter. Lease renewals and re-leasing of space amounted to 699,130 RSF.
On a year-over-year basis, same-property NOI was up 0.6%. It climbed 2.5% on a cash basis. Occupancy of operating properties in North America remained high at 97.1%. The company registered decent rental rate growth of 37.2% in the reported quarter. On a cash basis, rental rate increased 15%.
As of second-quarter 2020, investment-grade or publicly-traded large-cap tenants accounted for 51% of annual rental revenues in effect. Furthermore, 74% of the annual rental revenues are from Class A properties in AAA locations. Weighted-average remaining lease term of all tenants is 7.8 years. For the company’s top 20 tenants, it is 11.2 years.
During the April-June period, the company completed the acquisitions of four properties for a total of $215.3 million. These acquisitions comprise 1.6 million RSF, including 1.4 million RSF of current and future value-creation opportunities.
Liquidity
Alexandria exited the second quarter with cash and cash equivalents of $206.9 million, down from the $445.3 million reported at the end of the previous quarter. The company had $4.2 billion of liquidity as of the end of the reported quarter. Also, it has zero debt maturing until 2023.
Guidance
In light of the pandemic and the turbulent market conditions, the company has revised its FFO per share guidance for 2020 to $7.26-$7.34 from $7.25-$7.35. The Zacks Consensus Estimate for the same is currently pegged at $6.96.
The company’s current-year guidance is backed by expectations for occupancy in North America (as of Jul 27, 2020) in the band of 94.8-95.4%, rental rate increases for lease renewals, and re-leasing of space of 28-31%, and same-property NOI growth of 1-3%.
We now look forward to the earnings releases of other REITs like Duke Realty Corporation , AvalonBay Communities (AVB - Free Report) and MidAmerica Apartment Communities (MAA - Free Report) , slated to report on Jul 29.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
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Alexandria's (ARE) Q2 FFO In Line, Rental Rates Rise Y/Y
Alexandria Real Estate Equities, Inc. (ARE - Free Report) delivered second-quarter 2020 funds from operations (FFO) as adjusted of $1.81 per share, up 4.6% from the year-ago quarter’s $1.73. The reported figure came in line with the Zacks Consensus Estimate.
This improvement resulted from year-over-year top-line growth of 16.9% to $437 million. The company witnessed continued strong leasing activity and rental rate growth during the quarter.
The company also updated its full-year outlook in the wake of the coronavirus pandemic and the prevailing market conditions.
It also apprised of its accounts receivable balance as of Jul 24, 2020, with 99% of the July rent collected. Alexandria’s tenant receivables balance stands at $7.2 million as of Jun 30, 2020, marking the lowest since 2012.
The company has increased its construction-spend forecast for 2020 from $960 million to $1.35 billion. The expected acquisitions for the year have also been increased from $650 million to $1.3 billion.
Behind the Headline Numbers
Alexandria’s total leasing activity aggregated to 1.1 million rentable square feet (RSF) of space during the June-end quarter. Lease renewals and re-leasing of space amounted to 699,130 RSF.
On a year-over-year basis, same-property NOI was up 0.6%. It climbed 2.5% on a cash basis. Occupancy of operating properties in North America remained high at 97.1%. The company registered decent rental rate growth of 37.2% in the reported quarter. On a cash basis, rental rate increased 15%.
As of second-quarter 2020, investment-grade or publicly-traded large-cap tenants accounted for 51% of annual rental revenues in effect. Furthermore, 74% of the annual rental revenues are from Class A properties in AAA locations. Weighted-average remaining lease term of all tenants is 7.8 years. For the company’s top 20 tenants, it is 11.2 years.
During the April-June period, the company completed the acquisitions of four properties for a total of $215.3 million. These acquisitions comprise 1.6 million RSF, including 1.4 million RSF of current and future value-creation opportunities.
Liquidity
Alexandria exited the second quarter with cash and cash equivalents of $206.9 million, down from the $445.3 million reported at the end of the previous quarter. The company had $4.2 billion of liquidity as of the end of the reported quarter. Also, it has zero debt maturing until 2023.
Guidance
In light of the pandemic and the turbulent market conditions, the company has revised its FFO per share guidance for 2020 to $7.26-$7.34 from $7.25-$7.35. The Zacks Consensus Estimate for the same is currently pegged at $6.96.
The company’s current-year guidance is backed by expectations for occupancy in North America (as of Jul 27, 2020) in the band of 94.8-95.4%, rental rate increases for lease renewals, and re-leasing of space of 28-31%, and same-property NOI growth of 1-3%.
Alexandria currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Alexandria Real Estate Equities, Inc. Price and EPS Surprise
Alexandria Real Estate Equities, Inc. price-eps-surprise | Alexandria Real Estate Equities, Inc. Quote
We now look forward to the earnings releases of other REITs like Duke Realty Corporation , AvalonBay Communities (AVB - Free Report) and MidAmerica Apartment Communities (MAA - Free Report) , slated to report on Jul 29.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>