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Shares of Alexandria Real Estate Equities, Inc. (ARE - Free Report) witnessed a marginal decline in the after-hours trading session on Jan 29 after it reported fourth-quarter 2023 adjusted funds from operations (AFFO) per share of $2.28, missing the Zacks Consensus Estimate by a penny. However, the reported figure climbed 6.5% from the year-ago quarter.
Results reflect lower-than-anticipated AFFO per share. However, a rise in revenues, aided by decent leasing activity and rental rate growth, supports the results to some extent. ARE also issued its 2024 outlook.
Total revenues of $757.2 million increased 13% on a year-over-year basis, which outpaced the consensus estimate of $739.3 million.
For the full-year 2023, adjusted FFO per share came in at $8.97, higher than the prior-year tally of $8.42 and in line with the Zacks Consensus Estimate. This was backed by 11.5% growth in total revenues to $2.89 billion.
Behind the Headlines
Alexandria’s total leasing activity aggregated 889,737 rentable square feet (RSF) of space in the fourth quarter, reflecting healthy demand for its high-quality office/laboratory space. Of this, lease renewals and re-leasing of space amounted to 477,142 RSF.
The company registered rental rate growth of 9.2% during the quarter. On a cash basis, the rental rate increased 5.5%.
On a year-over-year basis, same-property net operating income (NOI) increased 0.7%. It improved 0.8% on a cash basis. The occupancy of operating properties in North America was 94.6% as of Dec 31, 2023, up from 93.7% in the prior quarter but down from 94.8% in the year-ago quarter.
In the reported quarter, investment-grade or publicly traded large-cap tenants accounted for 52% of the annual rental revenues in effect. The weighted average remaining lease term of all tenants is 7.4 years. For Alexandria’s top 20 tenants, it is 9.6 years.
As of Dec 31, 2023, the tenant receivable balance was $8.2 million.
For 2023, Alexandria completed acquisitions worth $258.9 million. Also, in the fourth quarter, the company placed 1,228,604 RSF into service development and redevelopment projects across multiple submarkets, which resulted in $145 million of incremental annual NOI.
Liquidity
The company exited the fourth quarter with cash and cash equivalents of $618.2 million, up from $532.4 million as of Sep 30, 2023. It had $5.8 billion of liquidity at the end of the reported quarter.
The net debt and preferred stock to adjusted EBITDA was 5.1X, and the fixed-charge coverage was 4.5X on an annualized basis. As of the fourth-quarter end, ARE had no debt maturities before 2025 and its weighted average remaining term was 12.8 years.
2024 Guidance
Alexandria also issued 2024 guidance, projecting the adjusted FFO per share in the range of $9.37-$9.57, with the mid-point being $9.47. The Zacks Consensus Estimate for the same is currently pinned at $9.43.
Alexandria’s current-year expectations are backed by anticipations for occupancy in North America (as of Dec 31, 2024) in the band of 94.6-95.6%, rental rate increases for lease renewals, re-leasing of space of 11-19% and same-property NOI growth of 0.5-2.5%.
Alexandria currently carries a Zacks Rank #3 (Hold).
Alexandria Real Estate Equities, Inc. Price, Consensus and EPS Surprise
We now look forward to the earnings releases of other REITs like Healthpeak Properties and Welltower (WELL - Free Report) , slated to report on Feb 6 and Feb 13, respectively. Meanwhile, Ventas (VTR - Free Report) is scheduled for Feb 14.
The Zacks Consensus Estimate for Welltower’s fourth-quarter 2023 FFO per share is pegged at 94 cents, suggesting a year-over-year gain of 13.3%. WELL currently carries a Zacks Rank #3.
The Zacks Consensus Estimate for Ventas’ fourth-quarter 2023 FFO per share stands at 76 cents, indicating a 4.1% rise year over year. VTR currently has a Zacks Rank #2 (Buy).
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's (ARE) Q4 AFFO Misses Estimates, '24 View Issued
Shares of Alexandria Real Estate Equities, Inc. (ARE - Free Report) witnessed a marginal decline in the after-hours trading session on Jan 29 after it reported fourth-quarter 2023 adjusted funds from operations (AFFO) per share of $2.28, missing the Zacks Consensus Estimate by a penny. However, the reported figure climbed 6.5% from the year-ago quarter.
Results reflect lower-than-anticipated AFFO per share. However, a rise in revenues, aided by decent leasing activity and rental rate growth, supports the results to some extent. ARE also issued its 2024 outlook.
Total revenues of $757.2 million increased 13% on a year-over-year basis, which outpaced the consensus estimate of $739.3 million.
For the full-year 2023, adjusted FFO per share came in at $8.97, higher than the prior-year tally of $8.42 and in line with the Zacks Consensus Estimate. This was backed by 11.5% growth in total revenues to $2.89 billion.
Behind the Headlines
Alexandria’s total leasing activity aggregated 889,737 rentable square feet (RSF) of space in the fourth quarter, reflecting healthy demand for its high-quality office/laboratory space. Of this, lease renewals and re-leasing of space amounted to 477,142 RSF.
The company registered rental rate growth of 9.2% during the quarter. On a cash basis, the rental rate increased 5.5%.
On a year-over-year basis, same-property net operating income (NOI) increased 0.7%. It improved 0.8% on a cash basis. The occupancy of operating properties in North America was 94.6% as of Dec 31, 2023, up from 93.7% in the prior quarter but down from 94.8% in the year-ago quarter.
In the reported quarter, investment-grade or publicly traded large-cap tenants accounted for 52% of the annual rental revenues in effect. The weighted average remaining lease term of all tenants is 7.4 years. For Alexandria’s top 20 tenants, it is 9.6 years.
As of Dec 31, 2023, the tenant receivable balance was $8.2 million.
For 2023, Alexandria completed acquisitions worth $258.9 million. Also, in the fourth quarter, the company placed 1,228,604 RSF into service development and redevelopment projects across multiple submarkets, which resulted in $145 million of incremental annual NOI.
Liquidity
The company exited the fourth quarter with cash and cash equivalents of $618.2 million, up from $532.4 million as of Sep 30, 2023. It had $5.8 billion of liquidity at the end of the reported quarter.
The net debt and preferred stock to adjusted EBITDA was 5.1X, and the fixed-charge coverage was 4.5X on an annualized basis. As of the fourth-quarter end, ARE had no debt maturities before 2025 and its weighted average remaining term was 12.8 years.
2024 Guidance
Alexandria also issued 2024 guidance, projecting the adjusted FFO per share in the range of $9.37-$9.57, with the mid-point being $9.47. The Zacks Consensus Estimate for the same is currently pinned at $9.43.
Alexandria’s current-year expectations are backed by anticipations for occupancy in North America (as of Dec 31, 2024) in the band of 94.6-95.6%, rental rate increases for lease renewals, re-leasing of space of 11-19% and same-property NOI growth of 0.5-2.5%.
Alexandria currently carries a Zacks Rank #3 (Hold).
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 Healthpeak Properties and Welltower (WELL - Free Report) , slated to report on Feb 6 and Feb 13, respectively. Meanwhile, Ventas (VTR - Free Report) is scheduled for Feb 14.
The Zacks Consensus Estimate for Healthpeak’s fourth-quarter 2023 FFO per share is pegged at 45 cents, implying a 2.3% year-over-year increase. PEAK currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Welltower’s fourth-quarter 2023 FFO per share is pegged at 94 cents, suggesting a year-over-year gain of 13.3%. WELL currently carries a Zacks Rank #3.
The Zacks Consensus Estimate for Ventas’ fourth-quarter 2023 FFO per share stands at 76 cents, indicating a 4.1% rise year over year. VTR currently has a Zacks Rank #2 (Buy).
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.