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Alexandria's (ARE) FFO & Revenues Surpass Estimates in Q2
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Alexandria Real Estate Equities, Inc. (ARE - Free Report) reported second-quarter 2023 adjusted funds from operations (AFFO) per share of $2.24, surpassing the Zacks Consensus Estimate of $2.20. The reported figure climbed 6.7% from the year-ago quarter’s tally.
Results reflect better-than-expected revenues on healthy leasing activity and solid rental rate growth.
Total revenues of $713.9 million in the quarter outpaced the consensus estimate of $699.2 million. The figure increased 10.9% from the prior-year quarter’s $643.8 million.
Behind the Headlines
Alexandria’s total leasing activity aggregated 1.3 million rentable square feet (RSF) of space in the second quarter, reflecting robust demand for its high-quality office/laboratory space. Lease renewals and re-leasing of space amounted to 1.1 million RSF.
The company registered rental rate growth of 16.6% during the reported quarter. On a cash basis, the rental rate increased 8.3%.
On a year-over-year basis, same-property net operating income (NOI) was up 3%. It improved 4.9% on a cash basis. The occupancy of operating properties in North America was 93.6%, down from 94.6% in the prior-year quarter.
In the reported quarter, investment-grade or publicly-traded large-cap tenants accounted for 49% of the annual rental revenues in effect. The weighted average remaining lease term of all tenants is 7.2 years. For Alexandria’s top 20 tenants, it is 9.4 years.
As of Jun 30, 2023, the tenant receivable balance was $7 million.
As of Jul 24, 2023, Alexandria completed acquisitions of $235.4 million. Also, the company placed 387,076 RSF into service development and redevelopment projects across multiple submarkets, which resulted in $58 million of incremental annual NOI.
Liquidity
The company exited second-quarter 2023 with cash and cash equivalents of $924.4 million, down from $1.3 billion as of Mar 31, 2023. It had $6.3 billion of liquidity at the end of the reported quarter.
The net debt and preferred stock to adjusted EBITDA was 5.2X, and the fixed-charge coverage was 4.7X in the second quarter on an annualized basis. As of the second-quarter end, ARE had no debt maturities before 2025, and its weighted-average remaining term was 13.4 years.
As of Jun 30, 2023, the company’s remaining aggregate amount available under its at-the-market program for future sales of common stock was $141.9 million.
Revised 2023 Guidance
Alexandria narrowed its 2023 guidance for AFFO per share.
It now projects the same to be in the range of $8.93-$8.99, which narrowed 4 cents from the $8.91-$9.01 estimated earlier. The mid-point remains unchanged at $8.96. The Zacks Consensus Estimate for FFO per share is currently pegged at $8.96, which lies within the guided range.
ARE maintained its guidance for same-property NOI growth at 2-4%, and rental rate increases for lease renewals and re-leasing of space at 28-33%. It also maintained its guidance for occupancy in North America (as of Dec 31, 2023) in the band of 94.6-95.6%.
We are looking forward to the earnings releases of other REITs like SBA Communications (SBAC - Free Report) and Host Hotels & Resorts (HST - Free Report) , which are slated to report their results on Jul 31 and Aug 3, respectively.
The Zacks Consensus Estimate for SBA Communications’ second-quarter 2023 FFO per share is pegged at $3.14, suggesting year-over-year growth of 2.3%. SBAC currently carries a Zacks Rank #3.
The Zacks Consensus Estimate for Host Hotels & Resorts’ first-quarter 2023 FFO per share is pegged at 56 cents, implying a year-over-year decrease of 3.5%. HST currently carries a Zacks Rank of #3.
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's (ARE) FFO & Revenues Surpass Estimates in Q2
Alexandria Real Estate Equities, Inc. (ARE - Free Report) reported second-quarter 2023 adjusted funds from operations (AFFO) per share of $2.24, surpassing the Zacks Consensus Estimate of $2.20. The reported figure climbed 6.7% from the year-ago quarter’s tally.
Results reflect better-than-expected revenues on healthy leasing activity and solid rental rate growth.
Total revenues of $713.9 million in the quarter outpaced the consensus estimate of $699.2 million. The figure increased 10.9% from the prior-year quarter’s $643.8 million.
Behind the Headlines
Alexandria’s total leasing activity aggregated 1.3 million rentable square feet (RSF) of space in the second quarter, reflecting robust demand for its high-quality office/laboratory space. Lease renewals and re-leasing of space amounted to 1.1 million RSF.
The company registered rental rate growth of 16.6% during the reported quarter. On a cash basis, the rental rate increased 8.3%.
On a year-over-year basis, same-property net operating income (NOI) was up 3%. It improved 4.9% on a cash basis. The occupancy of operating properties in North America was 93.6%, down from 94.6% in the prior-year quarter.
In the reported quarter, investment-grade or publicly-traded large-cap tenants accounted for 49% of the annual rental revenues in effect. The weighted average remaining lease term of all tenants is 7.2 years. For Alexandria’s top 20 tenants, it is 9.4 years.
As of Jun 30, 2023, the tenant receivable balance was $7 million.
As of Jul 24, 2023, Alexandria completed acquisitions of $235.4 million. Also, the company placed 387,076 RSF into service development and redevelopment projects across multiple submarkets, which resulted in $58 million of incremental annual NOI.
Liquidity
The company exited second-quarter 2023 with cash and cash equivalents of $924.4 million, down from $1.3 billion as of Mar 31, 2023. It had $6.3 billion of liquidity at the end of the reported quarter.
The net debt and preferred stock to adjusted EBITDA was 5.2X, and the fixed-charge coverage was 4.7X in the second quarter on an annualized basis. As of the second-quarter end, ARE had no debt maturities before 2025, and its weighted-average remaining term was 13.4 years.
As of Jun 30, 2023, the company’s remaining aggregate amount available under its at-the-market program for future sales of common stock was $141.9 million.
Revised 2023 Guidance
Alexandria narrowed its 2023 guidance for AFFO per share.
It now projects the same to be in the range of $8.93-$8.99, which narrowed 4 cents from the $8.91-$9.01 estimated earlier. The mid-point remains unchanged at $8.96. The Zacks Consensus Estimate for FFO per share is currently pegged at $8.96, which lies within the guided range.
ARE maintained its guidance for same-property NOI growth at 2-4%, and rental rate increases for lease renewals and re-leasing of space at 28-33%. It also maintained its guidance for occupancy in North America (as of Dec 31, 2023) in the band of 94.6-95.6%.
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 are looking forward to the earnings releases of other REITs like SBA Communications (SBAC - Free Report) and Host Hotels & Resorts (HST - Free Report) , which are slated to report their results on Jul 31 and Aug 3, respectively.
The Zacks Consensus Estimate for SBA Communications’ second-quarter 2023 FFO per share is pegged at $3.14, suggesting year-over-year growth of 2.3%. SBAC currently carries a Zacks Rank #3.
The Zacks Consensus Estimate for Host Hotels & Resorts’ first-quarter 2023 FFO per share is pegged at 56 cents, implying a year-over-year decrease of 3.5%. HST currently carries a Zacks Rank of #3.
Note: Anything related to earnings presented in this write-up represents FFO — a widely used metric to gauge the performance of REITs.