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Alexandria (ARE) to Post Q2 Earnings: What's in the Cards?
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Alexandria Real Estate Equities Inc. (ARE - Free Report) is scheduled to release second-quarter 2023 results on Jul 24 after the closing bell. Its quarterly results are likely to reflect growth in revenues and funds from operations (FFO) per share.
In the last reported quarter, this Pasadena, CA-based life science real estate investment trust (REIT), focusing on collaborative life science, agtech and technology campuses in AAA innovation cluster locations, delivered a surprise of 1.86% in terms of adjusted FFO per share. ARE’s performance in the quarter was mainly driven by decent leasing activity and rental rate growth.
Alexandria has a decent surprise history. Over the preceding four quarters, its adjusted FFO per share surpassed the Zacks Consensus Estimate on each occasion, the average beat being 1.19%. This is depicted in the graph below:
Alexandria Real Estate Equities, Inc. Price and EPS Surprise
The demand for life-science assets has been booming on the back of drug research and innovation. As a result, Alexandria, which has Class A properties in some of the key high-barrier-to-entry markets of the United States, is expected to have witnessed robust demand for its life-science assets during the second quarter, driving healthy leasing and re-leasing activity.
In addition to the advantageous locations of the company’s properties, these markets have an inherently limited supply. This is likely to have aided occupancy levels to remain high at ARE’s properties. For the quarter to be reported, we expect same-store occupancy at 94.9%.
Alexandria’s diverse and creditworthy tenant base, which includes many industry bellwethers, is anticipated to have led to impressive rent collections in the to-be-reported quarter. We estimate ARE’s rental income to grow 7.6% year over year for the second quarter.
The Zacks Consensus Estimate for Alexandria’s quarterly revenues currently stands at $697.9 million, suggesting an increase of 8.4% from the prior-year period’s reported figure.
ARE is expected to have continued with its development and redevelopment activities in the second quarter, aiding net operating income growth. Further, its solid balance sheet position is likely to have supported its development pipeline as well.
However, the company’s activities in the to-be-reported quarter were inadequate to garner analysts’ confidence. The Zacks Consensus Estimate for the quarterly FFO per share has been unchanged at $2.20 over the past two months. Nonetheless, the figure suggests a 4.8% increase from the year-ago quarter’s tally.
Q2 Developments
In April, Alexandria transferred a partial interest in 15 Necco Street, a 345,995 rentable square feet (RSF) Class A property presently under construction, to a U.S. affiliate of Mori Trust Co., Ltd. The proceeds from the transaction will be used to fund the development of the property located in the Seaport Innovation District submarket of Greater Boston. The delivery is anticipated to take place in late 2023.
In May, it sold 11119 North Torrey Pines Road, a fully leased 72,506 RSF single-tenant property, in its San Diego cluster to DivcoWest for $86 million.
Further, in June, the company disposed of five non-core, non-mega campus properties encompassing 428,663 RSF in Greater Boston to affiliates of TPG Real Estate Partners for $365 million or an average sales price of $852 per RSF.
In the same month, Alexandria and its former real estate joint venture (JV) partner concluded the recapitalization of 9625 Towne Centre Drive and divested 70% of their interest in the property. The transaction was valued at $160.5 million or $981 per RSF. ARE gained $32.3 million as its share from the sales price and a value-creation margin of 88%, making the move a strategic fit.
Notably, from the beginning of 2023 through Jun 20, 2023, the company completed or signed letters of intent or purchase and sale agreements for pending transactions totaling $884 million, achieving 58% of its 2023 capital plan.
What Our Quantitative Model Predicts
Our proven model does not conclusively predict an FFO beat for Alexandria this time. The right combination of two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — increases the odds of a beat. However, that is not the case here.
Earnings ESP: Alexandria has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here are some stocks that are worth considering from the REIT sector, as our model shows that these have the right combination of elements to deliver a surprise this reporting cycle:
EastGroup Properties (EGP - Free Report) is scheduled to report quarterly figures on Jul 25. EGP has an Earnings ESP of +1.22% and a Zacks Rank #2 (Buy) currently.
W.P. Carey (WPC - Free Report) is slated to report quarterly numbers on Jul 28. WPC has an Earnings ESP of +1.13% and carries a Zacks Rank #2 presently.
Hudson Pacific Properties (HPP - Free Report) is slated to release second-quarter earnings on Aug 1. HPP has an Earnings ESP of +4.35% and a Zacks Rank #3 at present.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Alexandria (ARE) to Post Q2 Earnings: What's in the Cards?
Alexandria Real Estate Equities Inc. (ARE - Free Report) is scheduled to release second-quarter 2023 results on Jul 24 after the closing bell. Its quarterly results are likely to reflect growth in revenues and funds from operations (FFO) per share.
In the last reported quarter, this Pasadena, CA-based life science real estate investment trust (REIT), focusing on collaborative life science, agtech and technology campuses in AAA innovation cluster locations, delivered a surprise of 1.86% in terms of adjusted FFO per share. ARE’s performance in the quarter was mainly driven by decent leasing activity and rental rate growth.
Alexandria has a decent surprise history. Over the preceding four quarters, its adjusted FFO per share surpassed the Zacks Consensus Estimate on each occasion, the average beat being 1.19%. This is depicted in the graph below:
Alexandria Real Estate Equities, Inc. Price and EPS Surprise
Alexandria Real Estate Equities, Inc. price-eps-surprise | Alexandria Real Estate Equities, Inc. Quote
Factors at Play
The demand for life-science assets has been booming on the back of drug research and innovation. As a result, Alexandria, which has Class A properties in some of the key high-barrier-to-entry markets of the United States, is expected to have witnessed robust demand for its life-science assets during the second quarter, driving healthy leasing and re-leasing activity.
In addition to the advantageous locations of the company’s properties, these markets have an inherently limited supply. This is likely to have aided occupancy levels to remain high at ARE’s properties. For the quarter to be reported, we expect same-store occupancy at 94.9%.
Alexandria’s diverse and creditworthy tenant base, which includes many industry bellwethers, is anticipated to have led to impressive rent collections in the to-be-reported quarter. We estimate ARE’s rental income to grow 7.6% year over year for the second quarter.
The Zacks Consensus Estimate for Alexandria’s quarterly revenues currently stands at $697.9 million, suggesting an increase of 8.4% from the prior-year period’s reported figure.
ARE is expected to have continued with its development and redevelopment activities in the second quarter, aiding net operating income growth. Further, its solid balance sheet position is likely to have supported its development pipeline as well.
However, the company’s activities in the to-be-reported quarter were inadequate to garner analysts’ confidence. The Zacks Consensus Estimate for the quarterly FFO per share has been unchanged at $2.20 over the past two months. Nonetheless, the figure suggests a 4.8% increase from the year-ago quarter’s tally.
Q2 Developments
In April, Alexandria transferred a partial interest in 15 Necco Street, a 345,995 rentable square feet (RSF) Class A property presently under construction, to a U.S. affiliate of Mori Trust Co., Ltd. The proceeds from the transaction will be used to fund the development of the property located in the Seaport Innovation District submarket of Greater Boston. The delivery is anticipated to take place in late 2023.
In May, it sold 11119 North Torrey Pines Road, a fully leased 72,506 RSF single-tenant property, in its San Diego cluster to DivcoWest for $86 million.
Further, in June, the company disposed of five non-core, non-mega campus properties encompassing 428,663 RSF in Greater Boston to affiliates of TPG Real Estate Partners for $365 million or an average sales price of $852 per RSF.
In the same month, Alexandria and its former real estate joint venture (JV) partner concluded the recapitalization of 9625 Towne Centre Drive and divested 70% of their interest in the property. The transaction was valued at $160.5 million or $981 per RSF. ARE gained $32.3 million as its share from the sales price and a value-creation margin of 88%, making the move a strategic fit.
Notably, from the beginning of 2023 through Jun 20, 2023, the company completed or signed letters of intent or purchase and sale agreements for pending transactions totaling $884 million, achieving 58% of its 2023 capital plan.
What Our Quantitative Model Predicts
Our proven model does not conclusively predict an FFO beat for Alexandria this time. The right combination of two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — increases the odds of a beat. However, that is not the case here.
Earnings ESP: Alexandria has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: ARE currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stocks That Warrant a Look
Here are some stocks that are worth considering from the REIT sector, as our model shows that these have the right combination of elements to deliver a surprise this reporting cycle:
EastGroup Properties (EGP - Free Report) is scheduled to report quarterly figures on Jul 25. EGP has an Earnings ESP of +1.22% and a Zacks Rank #2 (Buy) currently.
W.P. Carey (WPC - Free Report) is slated to report quarterly numbers on Jul 28. WPC has an Earnings ESP of +1.13% and carries a Zacks Rank #2 presently.
Hudson Pacific Properties (HPP - Free Report) is slated to release second-quarter earnings on Aug 1. HPP has an Earnings ESP of +4.35% and a Zacks Rank #3 at present.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.