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Alexandria's (ARE) Q2 FFO Beats, Revenues Rise Y/Y, View Up
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Alexandria Real Estate Equities, Inc. (ARE - Free Report) reported second-quarter 2022 adjusted funds from operations (FFO) per share of $2.10, surpassing the Zacks Consensus Estimate of $2.06. The reported figure also compared favorably with the year-ago quarter’s $1.93.
Alexandria witnessed continued healthy leasing activity and rental rate growth during the quarter.
Total revenues in the quarter were $643.8 million, climbing 26.3% from the prior-year quarter’s $509.6 million.
Behind the Headlines
Reflecting robust demand for its high-quality office/laboratory space, Alexandria’s total leasing activity aggregated 2.3 million rentable square feet (RSF) of space during the second quarter. Lease renewals and re-leasing of space amounted to 1.1 million RSF. The leasing of development and redevelopment space was 0.9 million RSF.
Alexandria registered rental rate growth of 45.4% during the reported quarter. On a cash basis, the rental rate increased 33.9%.
On a year-over-year basis, same-property net operating income (NOI) was up 7.5%. It climbed 10.2% on a cash basis. Occupancy of operating properties in North America remained high at 94.6%.
During second-quarter 2022, investment-grade or publicly-traded large-cap tenants accounted for 50% of the annual rental revenues in effect. Weighted-average remaining lease term of all tenants is 7.1 years. For Alexandria’s top 20 tenants, it is 10.2 years.
As of Jun 30, 2022, the tenant receivables balance was $7.1 million.
During the second quarter, Alexandria completed acquisitions in its key life-science cluster submarkets totaling 1.1 million RSF of future development and redevelopment opportunities for a total price of $280.1 million. Also, Alexandria placed into service development and redevelopment projects totaling 375,394 RSF across multiple submarkets.
During the three months ended Jun 30, 2022, ARE completed partial interest sale and dispositions worth $548.7 million.
Liquidity
Alexandria exited second-quarter 2022 with cash and cash equivalents of $420.3 million, down from $775.1 million as of Mar 31, 2022. It had $5.5 billion of liquidity at the end of the reported quarter.
The net debt and preferred stock to adjusted EBITDA was 5.5X, and the fixed-charge coverage was 5.1X in the second quarter on an annualized basis. As of Jul 25, 2022, ARE had no debt maturities before 2025, and its weighted-average remaining term of debt as of Jun 30, 2022, was 13.6 years.
Raised 2022 Outlook
Alexandria raised its 2022 guidance for adjusted FFO per share by 3 cents at the mid-point, backed by strong same-property performance. It now projects adjusted FFO to lie in the range of $8.38 to $8.44, with the mid-point being $8.41. The Zacks Consensus Estimate for the same is currently pegged at $8.40.
ARE also increased the guidance range for same-property NOI growth from 5.9-7.9% to 6-8%. However, it maintained its guidance for occupancy in North America (as of Dec 31, 2022) in the band of 95.2-95.8% and rental rate increases for lease renewals, re-leasing of space of 30-35%.
We now look forward to the earnings releases of other REITs like Equity Residential (EQR - Free Report) and Highwoods Properties (HIW - Free Report) , slated to report on Jul 26. The same for SBA Communications (SBAC - Free Report) is scheduled on Aug 1.
The Zacks Consensus Estimate for Equity Residential’s second-quarter 2022 FFO per share is pegged at 85 cents, suggesting a year-over-year increase of nearly 9%. EQR currently carries a Zacks Rank #3.
The Zacks Consensus Estimate for Highwoods’ second-quarter 2022 FFO per share stands at 98 cents, indicating a year-over-year increase of 5.4%. HIW currently has a Zacks Rank #3.
The Zacks Consensus Estimate for SBA Communications’ second-quarter 2022 FFO per share is pegged at $2.98, implying a year-over-year increase of 12.9%. SBAC currently carries a Zacks Rank of 3.
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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Alexandria's (ARE) Q2 FFO Beats, Revenues Rise Y/Y, View Up
Alexandria Real Estate Equities, Inc. (ARE - Free Report) reported second-quarter 2022 adjusted funds from operations (FFO) per share of $2.10, surpassing the Zacks Consensus Estimate of $2.06. The reported figure also compared favorably with the year-ago quarter’s $1.93.
Alexandria witnessed continued healthy leasing activity and rental rate growth during the quarter.
Total revenues in the quarter were $643.8 million, climbing 26.3% from the prior-year quarter’s $509.6 million.
Behind the Headlines
Reflecting robust demand for its high-quality office/laboratory space, Alexandria’s total leasing activity aggregated 2.3 million rentable square feet (RSF) of space during the second quarter. Lease renewals and re-leasing of space amounted to 1.1 million RSF. The leasing of development and redevelopment space was 0.9 million RSF.
Alexandria registered rental rate growth of 45.4% during the reported quarter. On a cash basis, the rental rate increased 33.9%.
On a year-over-year basis, same-property net operating income (NOI) was up 7.5%. It climbed 10.2% on a cash basis. Occupancy of operating properties in North America remained high at 94.6%.
During second-quarter 2022, investment-grade or publicly-traded large-cap tenants accounted for 50% of the annual rental revenues in effect. Weighted-average remaining lease term of all tenants is 7.1 years. For Alexandria’s top 20 tenants, it is 10.2 years.
As of Jun 30, 2022, the tenant receivables balance was $7.1 million.
During the second quarter, Alexandria completed acquisitions in its key life-science cluster submarkets totaling 1.1 million RSF of future development and redevelopment opportunities for a total price of $280.1 million. Also, Alexandria placed into service development and redevelopment projects totaling 375,394 RSF across multiple submarkets.
During the three months ended Jun 30, 2022, ARE completed partial interest sale and dispositions worth $548.7 million.
Liquidity
Alexandria exited second-quarter 2022 with cash and cash equivalents of $420.3 million, down from $775.1 million as of Mar 31, 2022. It had $5.5 billion of liquidity at the end of the reported quarter.
The net debt and preferred stock to adjusted EBITDA was 5.5X, and the fixed-charge coverage was 5.1X in the second quarter on an annualized basis. As of Jul 25, 2022, ARE had no debt maturities before 2025, and its weighted-average remaining term of debt as of Jun 30, 2022, was 13.6 years.
Raised 2022 Outlook
Alexandria raised its 2022 guidance for adjusted FFO per share by 3 cents at the mid-point, backed by strong same-property performance. It now projects adjusted FFO to lie in the range of $8.38 to $8.44, with the mid-point being $8.41. The Zacks Consensus Estimate for the same is currently pegged at $8.40.
ARE also increased the guidance range for same-property NOI growth from 5.9-7.9% to 6-8%. However, it maintained its guidance for occupancy in North America (as of Dec 31, 2022) in the band of 95.2-95.8% and rental rate increases for lease renewals, re-leasing of space of 30-35%.
Alexandria currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Alexandria Real Estate Equities, Inc. Price, Consensus and EPS Surprise
Alexandria Real Estate Equities, Inc. price-consensus-eps-surprise-chart | Alexandria Real Estate Equities, Inc. Quote
Upcoming Earnings Releases
We now look forward to the earnings releases of other REITs like Equity Residential (EQR - Free Report) and Highwoods Properties (HIW - Free Report) , slated to report on Jul 26. The same for SBA Communications (SBAC - Free Report) is scheduled on Aug 1.
The Zacks Consensus Estimate for Equity Residential’s second-quarter 2022 FFO per share is pegged at 85 cents, suggesting a year-over-year increase of nearly 9%. EQR currently carries a Zacks Rank #3.
The Zacks Consensus Estimate for Highwoods’ second-quarter 2022 FFO per share stands at 98 cents, indicating a year-over-year increase of 5.4%. HIW currently has a Zacks Rank #3.
The Zacks Consensus Estimate for SBA Communications’ second-quarter 2022 FFO per share is pegged at $2.98, implying a year-over-year increase of 12.9%. SBAC currently carries a Zacks Rank of 3.
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.