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Alexandria Real Estate Equities, Inc. (ARE - Free Report) reported third-quarter 2024 adjusted funds from operations (AFFO) per share of $2.37, missing the Zacks Consensus Estimate by a penny. However, the reported figure outpaced the year-ago quarter’s AFFO per share of $2.26 by 4.9%.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
Results reflected a rise in revenues, aided by decent leasing activity and rental rate growth. Alexandria narrowed its 2024 outlook.
Total revenues of $791.6 million increased 10.9% year over year, which outpaced the consensus estimate of $775.9 million.
Alexandria Real Estate Equities, Inc. Price, Consensus and EPS Surprise
Alexandria’s total leasing activity aggregated 1.5 million rentable square feet (RSF) of space in the third quarter, reflecting healthy demand for its high-quality office/laboratory space.Of this, lease renewals and re-leasing of space amounted to 1,278,857 RSF, while leasing of development and redevelopment space totaled 39,121 RSF.
The company registered rental rate growth of 5.1% during the quarter. On a cash basis, the rental rate increased 1.5%. The occupancy of operating properties in North America was 94.7% as of Sept. 30, 2024, up 10 basis points (bps) from the prior quarter and up 100 bps from the year-ago quarter. The Zacks Consensus Estimate for the same was pegged at 95%.
On a year-over-year basis, same-property net operating income (NOI) increased 1.5%. It improved 6.5% on a cash basis.
In the reported quarter, investment-grade or publicly traded large-cap tenants accounted for 53% of the annual rental revenues in effect. The weighted average remaining lease term of all tenants is 7.5 years. For Alexandria’s top 20 tenants, it is 9.5 years. As of Sept. 30, 2024, the tenant receivable balance was $7 million.
Alexandria completed acquisitions worth $249.4 million from the beginning of the year through Oct. 21, 2024. During the quarter, ARE placed into service development and redevelopment projects aggregating 316,691 RSF, which are fully leased across multiple submarkets, delivering $21 million of incremental annual NOI.
Liquidity
The company exited the third quarter with cash and cash equivalents of $562.6 million, up from $561.0 million as of June 30, 2024. It had $5.4 billion of liquidity at the end of the reported quarter.
The net debt and preferred stock to adjusted EBITDA was 5.5x, and the fixed-charge coverage was 4.4x on an annualized basis. Its weighted average remaining term of debt was 12.6 years.
2024 Guidance
Alexandria narrowed its 2024 guidance, projecting the AFFO per share in the range of $9.45-$9.49, with the midpoint remaining unchanged at $9.47 from the prior guidance of $9.41-$9.53. The Zacks Consensus Estimate is currently pegged at $9.47.
Alexandria’s current-year expectations are backed by anticipations for occupancy in North America in the band of 94.6-95.6% as of Dec. 31, 2024, rental rate increases for lease renewals, re-leasing of space of 11-19% (5-13% cash basis) and same-property NOI growth of 0.5-2.5% (3-5% cash basis).
Alexandria currently carries a Zacks Rank #3 (Hold).
Upcoming Earnings Releases
We now look forward to the earnings releases of other REITs like Cousins Properties (CUZ - Free Report) and Healthpeak Properties, Inc. (DOC - Free Report) , which are slated to report on Oct. 24.
The Zacks Consensus Estimate for Healthpeak Properties’ third-quarter 2024 FFO per share is pegged at 44 cents, which implies a 2.2% year-over-year decrease. DOC currently carries a Zacks Rank #3.
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 Q3 AFFO Misses Estimates, Revenues Increase Y/Y
Alexandria Real Estate Equities, Inc. (ARE - Free Report) reported third-quarter 2024 adjusted funds from operations (AFFO) per share of $2.37, missing the Zacks Consensus Estimate by a penny. However, the reported figure outpaced the year-ago quarter’s AFFO per share of $2.26 by 4.9%.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
Results reflected a rise in revenues, aided by decent leasing activity and rental rate growth. Alexandria narrowed its 2024 outlook.
Total revenues of $791.6 million increased 10.9% year over year, which outpaced the consensus estimate of $775.9 million.
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
Behind the Headlines
Alexandria’s total leasing activity aggregated 1.5 million rentable square feet (RSF) of space in the third quarter, reflecting healthy demand for its high-quality office/laboratory space.Of this, lease renewals and re-leasing of space amounted to 1,278,857 RSF, while leasing of development and redevelopment space totaled 39,121 RSF.
The company registered rental rate growth of 5.1% during the quarter. On a cash basis, the rental rate increased 1.5%. The occupancy of operating properties in North America was 94.7% as of Sept. 30, 2024, up 10 basis points (bps) from the prior quarter and up 100 bps from the year-ago quarter. The Zacks Consensus Estimate for the same was pegged at 95%.
On a year-over-year basis, same-property net operating income (NOI) increased 1.5%. It improved 6.5% on a cash basis.
In the reported quarter, investment-grade or publicly traded large-cap tenants accounted for 53% of the annual rental revenues in effect. The weighted average remaining lease term of all tenants is 7.5 years. For Alexandria’s top 20 tenants, it is 9.5 years. As of Sept. 30, 2024, the tenant receivable balance was $7 million.
Alexandria completed acquisitions worth $249.4 million from the beginning of the year through Oct. 21, 2024. During the quarter, ARE placed into service development and redevelopment projects aggregating 316,691 RSF, which are fully leased across multiple submarkets, delivering $21 million of incremental annual NOI.
Liquidity
The company exited the third quarter with cash and cash equivalents of $562.6 million, up from $561.0 million as of June 30, 2024. It had $5.4 billion of liquidity at the end of the reported quarter.
The net debt and preferred stock to adjusted EBITDA was 5.5x, and the fixed-charge coverage was 4.4x on an annualized basis. Its weighted average remaining term of debt was 12.6 years.
2024 Guidance
Alexandria narrowed its 2024 guidance, projecting the AFFO per share in the range of $9.45-$9.49, with the midpoint remaining unchanged at $9.47 from the prior guidance of $9.41-$9.53. The Zacks Consensus Estimate is currently pegged at $9.47.
Alexandria’s current-year expectations are backed by anticipations for occupancy in North America in the band of 94.6-95.6% as of Dec. 31, 2024, rental rate increases for lease renewals, re-leasing of space of 11-19% (5-13% cash basis) and same-property NOI growth of 0.5-2.5% (3-5% cash basis).
Alexandria currently carries a Zacks Rank #3 (Hold).
Upcoming Earnings Releases
We now look forward to the earnings releases of other REITs like Cousins Properties (CUZ - Free Report) and Healthpeak Properties, Inc. (DOC - Free Report) , which are slated to report on Oct. 24.
The Zacks Consensus Estimate for Cousins Properties’ third-quarter 2024 FFO per share stands at 67 cents, which indicates 3.1% growth year over year. CUZ currently has 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 Healthpeak Properties’ third-quarter 2024 FFO per share is pegged at 44 cents, which implies a 2.2% year-over-year decrease. DOC currently carries a Zacks Rank #3.
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.