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Alexandria (ARE) to Post Q3 Earnings: What's in the Cards?
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Alexandria Real Estate Equities Inc. (ARE - Free Report) is scheduled to release third-quarter 2023 results on Oct 23 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 1.82% 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 1.16%. This is depicted in the graph below:
Alexandria Real Estate Equities, Inc. Price and EPS Surprise
In the third quarter, with the demand for life-science assets booming due to the increasing need for drug research and innovation, ARE is expected to have benefited from its emphasis on the development of Class A/A+ properties strategically located within AAA innovation cluster regions. These locations are highly appealing to life science, agtech and technology companies seeking tenancy. As a result, ARE is expected to have witnessed healthy demand for its life science assets in the third quarter, driving healthy leasing and re-leasing activity.
In addition to the advantageous locations of the company’s properties, these locations are characterized by high barriers to entry for new landlords, high barriers to exit for tenants and a limited supply of available space. This is likely to have aided occupancy levels to remain high at Alexandria’s properties. For the quarter to be reported, we expect same-store occupancy at 94.2%.
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 7.7% year over year for the third quarter.
The Zacks Consensus Estimate for Alexandria’s quarterly revenues currently stands at $720.9 million, suggesting an increase of 9.25% from the prior-year period’s reported figure.
However, ARE’s substantial active development and redevelopment pipeline, although encouraging for long-term growth, exposes it to the risk of rising construction costs and lease-up concerns amid a macroeconomic slowdown. As of Jun 30, 2023, the company had 5.3 million RSF of Class A/A+ properties undergoing construction. Moreover, it had 9.4 million RSF of near-term and intermediate-term development and redevelopment projects and 19.1 million SF of future development projects.
Moreover, a high interest rate environment is a concern for Alexandria. Elevated rates imply high borrowing costs for the company, affecting its ability to purchase or develop real estate. The company has a substantial debt burden, and its total debt as of Jun 30, 2023 was approximately $11.2 billion.
Alexandria’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 revised a cent downward to $2.24 over the past week. However, the figure suggests a 5.16% increase from the year-ago quarter’s tally.
Here Is What Our Quantitative Model Predicts:
Our proven model does not conclusively predict a surprise in terms of FFO per share for Alexandria this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an FFO beat, which is not the case here.
Alexandria currently carries a Zacks Rank of 4 (Sell) and has an Earnings ESP of -0.31%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks That Warrant a Look
Here are three stocks from the REIT sector — American Tower Corporation (AMT - Free Report) , Extra Space Storage Inc. (EXR - Free Report) and Cousins Properties Incorporated (CUZ - Free Report) — you may want to consider as our model shows that these have the right combination of elements to report a surprise this quarter.
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) to Post Q3 Earnings: What's in the Cards?
Alexandria Real Estate Equities Inc. (ARE - Free Report) is scheduled to release third-quarter 2023 results on Oct 23 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 1.82% 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 1.16%. 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
In the third quarter, with the demand for life-science assets booming due to the increasing need for drug research and innovation, ARE is expected to have benefited from its emphasis on the development of Class A/A+ properties strategically located within AAA innovation cluster regions. These locations are highly appealing to life science, agtech and technology companies seeking tenancy. As a result, ARE is expected to have witnessed healthy demand for its life science assets in the third quarter, driving healthy leasing and re-leasing activity.
In addition to the advantageous locations of the company’s properties, these locations are characterized by high barriers to entry for new landlords, high barriers to exit for tenants and a limited supply of available space. This is likely to have aided occupancy levels to remain high at Alexandria’s properties. For the quarter to be reported, we expect same-store occupancy at 94.2%.
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 7.7% year over year for the third quarter.
The Zacks Consensus Estimate for Alexandria’s quarterly revenues currently stands at $720.9 million, suggesting an increase of 9.25% from the prior-year period’s reported figure.
However, ARE’s substantial active development and redevelopment pipeline, although encouraging for long-term growth, exposes it to the risk of rising construction costs and lease-up concerns amid a macroeconomic slowdown. As of Jun 30, 2023, the company had 5.3 million RSF of Class A/A+ properties undergoing construction. Moreover, it had 9.4 million RSF of near-term and intermediate-term development and redevelopment projects and 19.1 million SF of future development projects.
Moreover, a high interest rate environment is a concern for Alexandria. Elevated rates imply high borrowing costs for the company, affecting its ability to purchase or develop real estate. The company has a substantial debt burden, and its total debt as of Jun 30, 2023 was approximately $11.2 billion.
Alexandria’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 revised a cent downward to $2.24 over the past week. However, the figure suggests a 5.16% increase from the year-ago quarter’s tally.
Here Is What Our Quantitative Model Predicts:
Our proven model does not conclusively predict a surprise in terms of FFO per share for Alexandria this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an FFO beat, which is not the case here.
Alexandria currently carries a Zacks Rank of 4 (Sell) and has an Earnings ESP of -0.31%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks That Warrant a Look
Here are three stocks from the REIT sector — American Tower Corporation (AMT - Free Report) , Extra Space Storage Inc. (EXR - Free Report) and Cousins Properties Incorporated (CUZ - Free Report) — you may want to consider as our model shows that these have the right combination of elements to report a surprise this quarter.
American Tower Corporation is slated to report quarterly numbers on Oct 26. AMT presently has an Earnings ESP of + 0.94% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Extra Space Storage is slated to report quarterly numbers on Nov 7. CCI has an Earnings ESP of +1.17 % and presently carries a Zacks Rank of 3.
Cousins Properties, scheduled to report quarterly numbers on Oct 26, has an Earnings ESP of +0.77% and sports a Zacks Rank of 1.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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.