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Here's Why You Should Hold Alexandria (ARE) Stock Right Now
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Alexandria Real Estate Equities, Inc. (ARE - Free Report) focuses on Class A properties concentrated in urban campuses, primarily for the life science and technology entities. These locations are characterized by high barriers to entry, and a limited supply of available space. This highly dynamic setting adds to the productivity and efficiency of the tenants, which in turn, yields steady rental revenues for the company.
As of third-quarter 2020, investment-grade or publicly-traded large-cap tenants accounted for 54% of annual rental revenues in effect. Furthermore, 73% of the annual rental revenues are from Class A properties in AAA locations. Weighted-average remaining lease term of all tenants is 7.7 years.
Alexandria continues to execute and deliver impressive internal growth. During the third quarter, the company registered decent rental rate growth of 39.9%. On a cash basis, rental rate increased 30.9%. Occupancy of operating properties in North America was high at 97.7%. Moreover, the company noted that as of Oct 23, 2020, it collected 99.7% of October rents and tenant recoveries, and 99.7% of third-quarter rents and tenant recoveries.
High demand for Class A properties in AAA locations is boosting occupancy level. The company is witnessing robust demand for space in key life-science markets. In fact, it enjoys a solid 10-year historical occupancy rate of 96% at operating properties in North America. Such high level of occupancy is anticipated to continue in the upcoming quarters as well.
Apart from this, during the July-September period, Alexandria completed the acquisitions of 24 properties for a total of $1.3 billion. These acquisitions comprise 2.2 million RSF space of Alexandria Center for Life Science–Durham, and 1.5 million RSF of future value-creation opportunities.
Also, Alexandria has adequate financial flexibility to cushion and enhance its market position. The company had $3.9 billion of liquidity as of Sep 30, 2020. It also has minimal debt maturing prior to 2024 and a weighted average debt maturity of 10.6 years. Finally, as of the third-quarter end, the company enjoyed investment-grade credit rating of BBB+ and Baa1 as well as a stable outlook from S&P Global Ratings and Moody’s, respectively, rendering favorable access to the debt.
However, Alexandria has an active development and redevelopment pipeline. As of Sep 30, 2020, the company held a portfolio of 47.4 million square feet in North America. This included 31.2 million rentable square feet (RSF) of operating properties. Furthermore, it has 2.8 million RSF of Class A properties going through construction. In addition, the company has 7.2 million RSF of near-term and intermediate-term development and redevelopment projects, and 6.2 million SF of future development projects.
Though this development pipeline is encouraging for long-term growth, it exposes the company to rising construction cost risks and lease-up concerns. Further, it has exposure to Canada and Asia through its subsidiaries, and is, thus, exposed to currency-fluctuation risks, while disruptions in global economy are concerns.
Stocks to Consider
Innovative Industrial Properties, Inc.’s (IIPR - Free Report) funds from operations (FFO) per share estimates for 2020 have been revised upward by 5.8% to $5.11 over the past month. The company carries a Zacks Rank of 2 (Buy), currently.
Extra Space Storage Inc.’s (EXR - Free Report) Zacks Consensus Estimate for 2020 FFO per share has moved up marginally to $5.02 over the past month. The company currently carries a Zacks Rank of 2.
City Office REIT, Inc.’s (CIO - Free Report) Zacks Consensus Estimate for 2020 FFO per share has improved 2.6% to $1.17 in a month’s time. The company holds a Zacks Rank of 2 at present.
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.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.4% per year.
These 7 were selected because of their superior potential for immediate breakout.
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Here's Why You Should Hold Alexandria (ARE) Stock Right Now
Alexandria Real Estate Equities, Inc. (ARE - Free Report) focuses on Class A properties concentrated in urban campuses, primarily for the life science and technology entities. These locations are characterized by high barriers to entry, and a limited supply of available space. This highly dynamic setting adds to the productivity and efficiency of the tenants, which in turn, yields steady rental revenues for the company.
As of third-quarter 2020, investment-grade or publicly-traded large-cap tenants accounted for 54% of annual rental revenues in effect. Furthermore, 73% of the annual rental revenues are from Class A properties in AAA locations. Weighted-average remaining lease term of all tenants is 7.7 years.
Alexandria continues to execute and deliver impressive internal growth. During the third quarter, the company registered decent rental rate growth of 39.9%. On a cash basis, rental rate increased 30.9%. Occupancy of operating properties in North America was high at 97.7%. Moreover, the company noted that as of Oct 23, 2020, it collected 99.7% of October rents and tenant recoveries, and 99.7% of third-quarter rents and tenant recoveries.
High demand for Class A properties in AAA locations is boosting occupancy level. The company is witnessing robust demand for space in key life-science markets. In fact, it enjoys a solid 10-year historical occupancy rate of 96% at operating properties in North America. Such high level of occupancy is anticipated to continue in the upcoming quarters as well.
Apart from this, during the July-September period, Alexandria completed the acquisitions of 24 properties for a total of $1.3 billion. These acquisitions comprise 2.2 million RSF space of Alexandria Center for Life Science–Durham, and 1.5 million RSF of future value-creation opportunities.
Also, Alexandria has adequate financial flexibility to cushion and enhance its market position. The company had $3.9 billion of liquidity as of Sep 30, 2020. It also has minimal debt maturing prior to 2024 and a weighted average debt maturity of 10.6 years. Finally, as of the third-quarter end, the company enjoyed investment-grade credit rating of BBB+ and Baa1 as well as a stable outlook from S&P Global Ratings and Moody’s, respectively, rendering favorable access to the debt.
Shares of this Zacks Rank # 3 (Hold) company have gained 7.4%, outperforming its industry’s rally of 7% over the past six months. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
However, Alexandria has an active development and redevelopment pipeline. As of Sep 30, 2020, the company held a portfolio of 47.4 million square feet in North America. This included 31.2 million rentable square feet (RSF) of operating properties. Furthermore, it has 2.8 million RSF of Class A properties going through construction. In addition, the company has 7.2 million RSF of near-term and intermediate-term development and redevelopment projects, and 6.2 million SF of future development projects.
Though this development pipeline is encouraging for long-term growth, it exposes the company to rising construction cost risks and lease-up concerns. Further, it has exposure to Canada and Asia through its subsidiaries, and is, thus, exposed to currency-fluctuation risks, while disruptions in global economy are concerns.
Stocks to Consider
Innovative Industrial Properties, Inc.’s (IIPR - Free Report) funds from operations (FFO) per share estimates for 2020 have been revised upward by 5.8% to $5.11 over the past month. The company carries a Zacks Rank of 2 (Buy), currently.
Extra Space Storage Inc.’s (EXR - Free Report) Zacks Consensus Estimate for 2020 FFO per share has moved up marginally to $5.02 over the past month. The company currently carries a Zacks Rank of 2.
City Office REIT, Inc.’s (CIO - Free Report) Zacks Consensus Estimate for 2020 FFO per share has improved 2.6% to $1.17 in a month’s time. The company holds a Zacks Rank of 2 at present.
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.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.4% per year.
These 7 were selected because of their superior potential for immediate breakout.
See these time-sensitive tickers now >>