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Alexandria (ARE) Boosts Asset Recycling Strategy With $86M Sale
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Alexandria Real Estate Equities, Inc. (ARE - Free Report) announced the sale of its fully leased property at 11119 North Torrey Pines Road in its San Diego cluster to DivcoWest. This 72,506 rentable-square-foot (RSF) single-tenant property was sold for $86 million at a notable capitalization rate of 4.6%, underscoring the value of Alexandria's strategic asset recycling strategy.
The sale marks the culmination of a successful redevelopment project. The property, purchased in 2007, was transformed into a Class A laboratory facility. The transaction adds to Alexandria's robust track record of value harvesting and recycling assets to fuel its value-creation development ventures.
With a highly leased pipeline of 6.7 million RSF of current and near-term projects as of Mar 31, 2023, the company expects to generate more than $610 million of annual incremental net operating income, mainly starting from second-quarter 2023 through first-quarter 2026. This stand-alone asset sale supports its focus on aggregating mega campuses, setting the stage for new Class A life science campus assets.
According to Peter M. Moglia, CEO of Alexandria, "This sale also underscores our ability to monetize our investments at significant profit margins, even in challenging times, and enables the funding of the next generation of Class A life science campus assets.”
Looking at the bigger picture, Alexandria is targeting $1.5 billion in dispositions and sales of partial interests in 2023, with roughly $865 million in transactions already completed or subject to signed letters of intent or purchase and sales agreements as of Apr 24, 2023. This strategy obviates the need for common equity issuance in 2023, further strengthening the company's financial standing.
In summary, Alexandria's successful $86 million sale demonstrates its strategic asset recycling prowess by capitalizing on the high demand and valuation for its high-quality life science real estate assets. This transaction solidifies its status in the life science real estate niche and underscores its ability to extract value even in tough times. This prudent approach also affirms its commitment to growth and innovation, further strengthening its position in the market. However, a high interest rate remains a concern.
Reflecting broader market concerns, shares of this Zacks Rank #3 (Hold) company have lost 23.3% in the past six months compared with the industry’s fall of 6.3%.
The Zacks Consensus Estimate for Rexford Industrial Realty’s current-year funds from operations (FFO) per share has been revised marginally north over the past month to $2.19. This indicates an 11.7% increase year over year.
The Zacks Consensus Estimate for Americold Realty Trust’s 2023 FFO per share is pegged at $1.19, which suggests a 7.2% increase year over year.
Note: Anything related to earnings presented in this write-up represents FFO — a widely used metric to gauge the performance of REITs.
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Alexandria (ARE) Boosts Asset Recycling Strategy With $86M Sale
Alexandria Real Estate Equities, Inc. (ARE - Free Report) announced the sale of its fully leased property at 11119 North Torrey Pines Road in its San Diego cluster to DivcoWest. This 72,506 rentable-square-foot (RSF) single-tenant property was sold for $86 million at a notable capitalization rate of 4.6%, underscoring the value of Alexandria's strategic asset recycling strategy.
The sale marks the culmination of a successful redevelopment project. The property, purchased in 2007, was transformed into a Class A laboratory facility. The transaction adds to Alexandria's robust track record of value harvesting and recycling assets to fuel its value-creation development ventures.
With a highly leased pipeline of 6.7 million RSF of current and near-term projects as of Mar 31, 2023, the company expects to generate more than $610 million of annual incremental net operating income, mainly starting from second-quarter 2023 through first-quarter 2026. This stand-alone asset sale supports its focus on aggregating mega campuses, setting the stage for new Class A life science campus assets.
According to Peter M. Moglia, CEO of Alexandria, "This sale also underscores our ability to monetize our investments at significant profit margins, even in challenging times, and enables the funding of the next generation of Class A life science campus assets.”
Looking at the bigger picture, Alexandria is targeting $1.5 billion in dispositions and sales of partial interests in 2023, with roughly $865 million in transactions already completed or subject to signed letters of intent or purchase and sales agreements as of Apr 24, 2023. This strategy obviates the need for common equity issuance in 2023, further strengthening the company's financial standing.
In summary, Alexandria's successful $86 million sale demonstrates its strategic asset recycling prowess by capitalizing on the high demand and valuation for its high-quality life science real estate assets. This transaction solidifies its status in the life science real estate niche and underscores its ability to extract value even in tough times. This prudent approach also affirms its commitment to growth and innovation, further strengthening its position in the market. However, a high interest rate remains a concern.
Reflecting broader market concerns, shares of this Zacks Rank #3 (Hold) company have lost 23.3% in the past six months compared with the industry’s fall of 6.3%.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks from the REIT sector are Rexford Industrial Realty, Inc. (REXR - Free Report) and Americold Realty Trust, Inc. (COLD - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Rexford Industrial Realty’s current-year funds from operations (FFO) per share has been revised marginally north over the past month to $2.19. This indicates an 11.7% increase year over year.
The Zacks Consensus Estimate for Americold Realty Trust’s 2023 FFO per share is pegged at $1.19, which suggests a 7.2% increase year over year.
Note: Anything related to earnings presented in this write-up represents FFO — a widely used metric to gauge the performance of REITs.