Alexandria Real Estate Equities, Inc. (ARE - Free Report) announced that it has 100% pre-leased 100 Binney Street — a ground-up development project — which will provide office/laboratory space to its tenants. The building, spanning 431,000 rentable square feet (RSF) of space, is slated to be delivered in fourth-quarter 2017.
Last month, the company pre-leased 41% of the project, aggregating 175,000 RSF. This included a lease given out to Facebook to rent three floors, spanning 130,000 RSF. Alexandria has a big-box focus with respect to its tenants. Other than Facebook, the 100 Binney Street tenant roster includes some prominent life science and technology names like Bristol-Myers Squibb Company, Foghorn Therapeutics, Sigilon Therapeutics, Tango Therapeutics and TCR2 Therapeutics. The company has leased 208,000 RSF to Bristol-Myers and an aggregate of 90,000 RSF to the other four life-science companies.
Alexandria is an urban office real estate investment trust (REIT), with particular focus on AAA innovation cluster properties concentrated in urban campuses. It owns and manages 6.3 million RSF in Greater Boston, of which approximately 5.0 million RSF lies in the Cambridge market. Robust demand for best-in-class office/laboratory space in this market has resulted in high-absorption rates and accelerated the company’s internal growth.
In order to meet the elevated demand, the company is making diligent efforts to pre-lease 339 Binney Street — a Class A office/laboratory building spanning 164,000 RSF. This property is a ground-up development project located at the Alexandria Center at One Kendall Square campus. One Kendall Square is the company’s third mega campus in Cambridge, spanning 645,000 RSF. This technology and life science campus comprises nine buildings.
With vertical construction beginning soon, 339 Binney Street is scheduled to be delivered in the last quarter of 2018. Similar to 100 Binney Street, this property is expected to be fully pre-leased.
Alexandria had initially developed and modernized cluster campuses, covering more than two million square feet along the Binney Street corridor, in a bid to enhance its portfolio in the area. The company has also undertaken redevelopment programs in these campuses. In fact, it plans to add various amenities at its Alexandria Center campus. The ground floor retail space will be upgraded and prominent restaurants and eateries will also be added.
Moreover, in 2006, it acquired more than one million RSF at Technology Square, which was pivotal for Alexandria Technology Square’s redevelopment. Alexandria Technology Square was the company’s initial Cambridge-based mega campus.
Amid these encouraging efforts, Alexandria’s shares have outperformed its industry, year to date. While the stock has gained 8.4%, the industry has rallied 6% during this period. The Zacks Consensus Estimate for third-quarter 2017 funds from operations (FFO) per share inched up 0.7% to $1.50 in a month’s time.
The stock currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Better-ranked stocks in the REIT space include Seritage Growth Properties (SRG - Free Report) , Getty Realty Corporation (GTY - Free Report) and Communications Sales & Leasing, Inc. (UNIT - Free Report) . While Seritage sports a Zacks Rank #1(Strong Buy), Getty Realty and Communications Sales & Leasing carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Seritage’s 2017 FFO per share estimates inched up 0.5% to $2.01 in a month’s time.
Getty Realty’s FFO per share estimates for 2017 moved up 7.8% to $1.94 over the past 60 days.
Communications Sales & Leasing’s 2017 FFO per share estimates climbed 14.4% to $2.54 in a month’s time.
Note: All EPS numbers presented in this write up represent funds from operations (“FFO”) per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
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