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Shares of ARE plummeted 5.29% in the overnight session as investors grew wary about the stock’s future. Results reflect lower occupancy and higher interest expenses, undermining the performance. However, leasing activity and an improved rental rate supported the same to some extent. The company has lowered its 2025 FFO guidance range.
Total revenues of $751.9 million lagged the consensus estimate of $756.2 million. Moreover, the figure decreased 5% year over year.
ARE: Behind the Headlines
Alexandria’s total leasing activity totaled 1.2 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 amounted to 354,367 RSF, while leasing of development and redevelopment space totaled 560,344 RSF.
The company registered rental rate growth of 15.2% during the quarter. On a cash basis, the rental rate increased 6.1%. As of Sept. 30, 2025, the occupancy of operating properties in North America was 90.6%, down 0.2% from the prior quarter and 4.1% from the year-ago quarter. Our estimate for the same was 90.8%.
On a year-over-year basis, same-property net operating income (NOI) decreased 6% and 3.1% on a cash basis. The decline in same-property NOI (cash basis) was due to the disposition of properties after Jan. 1, 2024. Same-property NOI (cash basis) changes, annualized for the three months ended Sept. 30, 2025, excluding the impact of these dispositions, were a 1.2% decrease.
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 9.4 years. As of Sept. 30, 2025, the tenant receivable balance was $6.4 million.
As of Sept. 30, 2025, Alexandria’s share of completed and pending dispositions and sales of partial interests totaled $1.54 billion. During the third quarter, ARE placed into service development projects aggregating 185,517 RSF, which are 89% occupied across multiple submarkets, delivering $16 million of incremental annual NOI.
However, interest expenses jumped 26% year over year to $54.9 million.
ARE’s Liquidity
The company exited the third quarter with cash and cash equivalents of $579.5 million, up from $520.5 million as of June 30, 2025. It had $4.2 billion of liquidity at the end of the reported quarter.
The net debt and preferred stock to adjusted EBITDA was 6.1X, and the fixed-charge coverage was 3.9X on an annualized basis. Its weighted average remaining term of debt was 11.6 years.
ARE’s 2025 Outlook
ARE has lowered its 2025 FFO per share guidance range. The same is now expected to lie between $8.98 and $9.04 from the earlier guided range of $9.16-$9.36, reducing the midpoint by 25 cents to $9.01.
The rationale for revision has been attributed to a 1% reduction in projected 2025 same-property NOI and a 0.9% reduction in projected operating occupancy in North America as of Dec. 31, 2025.
The company pointed out that it is witnessing slower-than-anticipated re-leasing of expiring space and lease-up of vacancy in its operating portfolio owing to the lower demand across the life science industry.
We now look forward to the earnings releases of other REITs like Extra Space Storage (EXR - Free Report) and Essex Property Trust (ESS - Free Report) , slated to report on Oct. 29.
The Zacks Consensus Estimate for Extra Space Storage’s third-quarter 2025 FFO per share stands at $2.06, which indicates a marginal dip year over year. EXR currently has a Zacks Rank #3 (Hold).
The Zacks Consensus Estimate for Essex Property Trust’s third-quarter 2025 FFO per share is pegged at $3.96, which implies a 1.28% year-over-year increase. ESS 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's Q3 AFFO & Revenues Miss Estimates, '25 View Narrowed
Key Takeaways
Alexandria Real Estate Equities, Inc. (ARE - Free Report) reported third-quarter 2025 adjusted funds from operations (AFFO) per share of $2.22, lagging the Zacks Consensus Estimate of $2.31. This compares unfavorably to the AFFO of $2.37 reported in the prior year.
Shares of ARE plummeted 5.29% in the overnight session as investors grew wary about the stock’s future. Results reflect lower occupancy and higher interest expenses, undermining the performance. However, leasing activity and an improved rental rate supported the same to some extent. The company has lowered its 2025 FFO guidance range.
Total revenues of $751.9 million lagged the consensus estimate of $756.2 million. Moreover, the figure decreased 5% year over year.
ARE: Behind the Headlines
Alexandria’s total leasing activity totaled 1.2 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 amounted to 354,367 RSF, while leasing of development and redevelopment space totaled 560,344 RSF.
The company registered rental rate growth of 15.2% during the quarter. On a cash basis, the rental rate increased 6.1%. As of Sept. 30, 2025, the occupancy of operating properties in North America was 90.6%, down 0.2% from the prior quarter and 4.1% from the year-ago quarter. Our estimate for the same was 90.8%.
On a year-over-year basis, same-property net operating income (NOI) decreased 6% and 3.1% on a cash basis. The decline in same-property NOI (cash basis) was due to the disposition of properties after Jan. 1, 2024. Same-property NOI (cash basis) changes, annualized for the three months ended Sept. 30, 2025, excluding the impact of these dispositions, were a 1.2% decrease.
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 9.4 years. As of Sept. 30, 2025, the tenant receivable balance was $6.4 million.
As of Sept. 30, 2025, Alexandria’s share of completed and pending dispositions and sales of partial interests totaled $1.54 billion. During the third quarter, ARE placed into service development projects aggregating 185,517 RSF, which are 89% occupied across multiple submarkets, delivering $16 million of incremental annual NOI.
However, interest expenses jumped 26% year over year to $54.9 million.
ARE’s Liquidity
The company exited the third quarter with cash and cash equivalents of $579.5 million, up from $520.5 million as of June 30, 2025. It had $4.2 billion of liquidity at the end of the reported quarter.
The net debt and preferred stock to adjusted EBITDA was 6.1X, and the fixed-charge coverage was 3.9X on an annualized basis. Its weighted average remaining term of debt was 11.6 years.
ARE’s 2025 Outlook
ARE has lowered its 2025 FFO per share guidance range. The same is now expected to lie between $8.98 and $9.04 from the earlier guided range of $9.16-$9.36, reducing the midpoint by 25 cents to $9.01.
The rationale for revision has been attributed to a 1% reduction in projected 2025 same-property NOI and a 0.9% reduction in projected operating occupancy in North America as of Dec. 31, 2025.
The company pointed out that it is witnessing slower-than-anticipated re-leasing of expiring space and lease-up of vacancy in its operating portfolio owing to the lower demand across the life science industry.
ARE’s Zacks Rank
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 now look forward to the earnings releases of other REITs like Extra Space Storage (EXR - Free Report) and Essex Property Trust (ESS - Free Report) , slated to report on Oct. 29.
The Zacks Consensus Estimate for Extra Space Storage’s third-quarter 2025 FFO per share stands at $2.06, which indicates a marginal dip year over year. EXR currently has a Zacks Rank #3 (Hold).
The Zacks Consensus Estimate for Essex Property Trust’s third-quarter 2025 FFO per share is pegged at $3.96, which implies a 1.28% year-over-year increase. ESS 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.