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Is Now The Time to Buy Shares of Alexandria Real Estate Equities? – Alexandria Real Estate Equities (ARE)


Alexandria Actual Property Equities Inc (NYSE:ARE) is the biggest workplace actual property funding belief (REIT) within the U.S. by market capitalization and has been among the best performing workplace REITs over the previous 5 years. The corporate was additionally one of many first in its sector to see its share worth get better from the COVID-19 pandemic.

The REIT’s share worth rose over 30% in 2021, closing its all-time excessive of $223.57 on New 12 months’s Eve. This worth acquire is prone to have left many buyers feeling like they missed out on the majority of the upside for this firm, however there are a number of causes to imagine that this REIT nonetheless has loads of progress left in it.

Actual Property Portfolio: The long-term outlook for workplace actual property stays unsure with emptiness charges growing as corporations are shedding unused workplace area. Nonetheless, there’s a rising demand for workplace area amongst sure industries, akin to life sciences and expertise, that are the industries that make up the majority of Alexandria Actual Property’s tenants.

70% of the REIT’s annual rental revenue comes from private and non-private biotechnology, pharmaceutical and life sciences corporations. One other 10% is from mega cap and huge cap expertise corporations.

FFO per Share Development: Whereas the corporate’s share worth has been steadily climbing over the previous a number of years, its funds from operations (FFO) per share has been climbing at a good sooner charge. This has created an much more enticing valuation, even priced at above $200 per share.


Supply: YCharts

Current Value Drop: The corporate’s share worth fell roughly 7% final week after it introduced a public providing of seven million shares of frequent inventory. A worth drop like that is frequent after a inventory providing is introduced contemplating shares are being diluted.

Nonetheless, there’s an enormous distinction between a REIT promoting shares to cowl bills and maintain itself out of bother versus one elevating capital to fund progress, which is what Alexandria Actual Property seems to be doing on this case.

The corporate at present has 7.7 million sq. toes of improvement initiatives in its pipeline, together with Moderna Inc’s (NASDAQ:MRNA) new 462,100 sq. foot headquarters and core R&D operations. These new developments are anticipated so as to add one other $615 million in annual rental revenue to Alexandria Actual Property’s income and be accretive to its FFO per share.

The current worth dip could also be a chance to seize some extra upside from a confirmed REIT with loads of progress potential in its future.

Picture: Courtesy of Alexandria Actual Property Equities Inc. 

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