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Alexandria (ARE) Beats on Q3 FFO & Revenues, Revises View
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Alexandria Real Estate Equities, Inc. (ARE - Free Report) reported third-quarter 2022 adjusted funds from operations (FFO) per share of $2.13, surpassing the Zacks Consensus Estimate by a cent. The reported figure also compared favorably with the year-ago quarter’s $1.95.
Results reflect decent leasing activity and rental rate growth during the quarter. Year-over-year improvement in the top line was noticeable.
Total revenues of $659.9 million in the quarter outpaced the consensus estimate mark of $638.8 million. The figure increased 20.5% from the prior-year quarter’s $547.8 million.
Behind the Headlines
Reflecting robust demand for its high-quality office/laboratory space, Alexandria’s total leasing activity aggregated 1.7 million rentable square feet (RSF) of space during the third quarter. Lease renewals and re-leasing of space amounted to 1.1 million RSF. The leasing of development and redevelopment space was 0.3 million RSF.
Alexandria registered rental rate growth of 27.1% during the reported quarter. On a cash basis, the rental rate increased 22.6%.
On a year-over-year basis, same-property net operating income (NOI) was up 5.1%. It climbed 10.6% on a cash basis. Occupancy of operating properties in North America remained high at 94.3%.
During third-quarter 2022, investment-grade or publicly-traded large-cap tenants accounted for 49% of the annual rental revenues in effect. Weighted-average remaining lease term of all tenants is 7.2 years. For Alexandria’s top 20 tenants, it is 9.7 years.
As of Sep 30, 2022, the tenant receivables balance was $7.8 million.
During the reported quarter, Alexandria completed acquisitions in its key life-science cluster submarkets totaling 1.2 million RSF of value-creation opportunities for a total price of $316.7 million. Also, Alexandria placed into service development and redevelopment projects totaling 332,961 RSF across multiple submarkets that resulted in $30 million of incremental NOI.
During the three months ended Sep 30, 2022, ARE completed partial interest sale and dispositions worth $960.4 million.
Liquidity
Alexandria exited third-quarter 2022 with cash and cash equivalents of $533.8 million, up from $420.3 million as of Jun 30, 2022. It had $6.4 billion of liquidity at the end of the reported quarter.
The net debt and preferred stock to adjusted EBITDA was 5.4X, and the fixed-charge coverage was 4.9X in the third quarter on an annualized basis. As of the September-quarter end, ARE had no debt maturities before 2025, and its weighted-average remaining term was 13.2 years.
As of Sep 30, 2022, the company’s remaining aggregate amount available under its at-the-market (ATM) program for future sales of common stock was $246.6 million.
Revised 2022 Outlook
Alexandria narrowed its 2022 guidance for adjusted FFO per share. It now projects the same to lie in the range of $8.40 to $8.42 from $8.38 to $8.44 estimated earlier. The mid-point was unchanged at $8.41. The Zacks Consensus Estimate for the FFO per share is currently pegged at $8.42.
ARE maintained the guidance for same-property NOI growth at 6-8% and rental rate increases for lease renewals and re-leasing of space at 30-35%. However, it lowered its guidance for occupancy in North America (as of Dec 31, 2022) in the band of 95.0-95.6% from 95.2-95.8% guided earlier.
We now look forward to the earnings releases of other REITs like SBA Communications (SBAC - Free Report) , slated to report on Oct 27. The same for Extra Space Storage (EXR - Free Report) and Public Storage (PSA - Free Report) is scheduled on Nov 1.
The Zacks Consensus Estimate for SBA Communications’ third-quarter 2022 FFO per share is pegged at $3.04, suggesting a year-over-year increase of 12.2%. SBAC currently carries a Zacks Rank #3.
The Zacks Consensus Estimate for Extra Space Storage’s third-quarter 2022 FFO per share stands at $2.18, indicating a year-over-year increase of 17.8%. EXR currently has a Zacks Rank #3.
The Zacks Consensus Estimate for Public Storage’s third-quarter 2022 FFO per share is pegged at $4.05, implying a year-over-year increase of 18.4%. PSA 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 (ARE) Beats on Q3 FFO & Revenues, Revises View
Alexandria Real Estate Equities, Inc. (ARE - Free Report) reported third-quarter 2022 adjusted funds from operations (FFO) per share of $2.13, surpassing the Zacks Consensus Estimate by a cent. The reported figure also compared favorably with the year-ago quarter’s $1.95.
Results reflect decent leasing activity and rental rate growth during the quarter. Year-over-year improvement in the top line was noticeable.
Total revenues of $659.9 million in the quarter outpaced the consensus estimate mark of $638.8 million. The figure increased 20.5% from the prior-year quarter’s $547.8 million.
Behind the Headlines
Reflecting robust demand for its high-quality office/laboratory space, Alexandria’s total leasing activity aggregated 1.7 million rentable square feet (RSF) of space during the third quarter. Lease renewals and re-leasing of space amounted to 1.1 million RSF. The leasing of development and redevelopment space was 0.3 million RSF.
Alexandria registered rental rate growth of 27.1% during the reported quarter. On a cash basis, the rental rate increased 22.6%.
On a year-over-year basis, same-property net operating income (NOI) was up 5.1%. It climbed 10.6% on a cash basis. Occupancy of operating properties in North America remained high at 94.3%.
During third-quarter 2022, investment-grade or publicly-traded large-cap tenants accounted for 49% of the annual rental revenues in effect. Weighted-average remaining lease term of all tenants is 7.2 years. For Alexandria’s top 20 tenants, it is 9.7 years.
As of Sep 30, 2022, the tenant receivables balance was $7.8 million.
During the reported quarter, Alexandria completed acquisitions in its key life-science cluster submarkets totaling 1.2 million RSF of value-creation opportunities for a total price of $316.7 million. Also, Alexandria placed into service development and redevelopment projects totaling 332,961 RSF across multiple submarkets that resulted in $30 million of incremental NOI.
During the three months ended Sep 30, 2022, ARE completed partial interest sale and dispositions worth $960.4 million.
Liquidity
Alexandria exited third-quarter 2022 with cash and cash equivalents of $533.8 million, up from $420.3 million as of Jun 30, 2022. It had $6.4 billion of liquidity at the end of the reported quarter.
The net debt and preferred stock to adjusted EBITDA was 5.4X, and the fixed-charge coverage was 4.9X in the third quarter on an annualized basis. As of the September-quarter end, ARE had no debt maturities before 2025, and its weighted-average remaining term was 13.2 years.
As of Sep 30, 2022, the company’s remaining aggregate amount available under its at-the-market (ATM) program for future sales of common stock was $246.6 million.
Revised 2022 Outlook
Alexandria narrowed its 2022 guidance for adjusted FFO per share.
It now projects the same to lie in the range of $8.40 to $8.42 from $8.38 to $8.44 estimated earlier. The mid-point was unchanged at $8.41. The Zacks Consensus Estimate for the FFO per share is currently pegged at $8.42.
ARE maintained the guidance for same-property NOI growth at 6-8% and rental rate increases for lease renewals and re-leasing of space at 30-35%. However, it lowered its guidance for occupancy in North America (as of Dec 31, 2022) in the band of 95.0-95.6% from 95.2-95.8% guided earlier.
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 SBA Communications (SBAC - Free Report) , slated to report on Oct 27. The same for Extra Space Storage (EXR - Free Report) and Public Storage (PSA - Free Report) is scheduled on Nov 1.
The Zacks Consensus Estimate for SBA Communications’ third-quarter 2022 FFO per share is pegged at $3.04, suggesting a year-over-year increase of 12.2%. SBAC currently carries a Zacks Rank #3.
The Zacks Consensus Estimate for Extra Space Storage’s third-quarter 2022 FFO per share stands at $2.18, indicating a year-over-year increase of 17.8%. EXR currently has a Zacks Rank #3.
The Zacks Consensus Estimate for Public Storage’s third-quarter 2022 FFO per share is pegged at $4.05, implying a year-over-year increase of 18.4%. PSA 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.