Alexandria Real Estate Equities, Inc.


ARE

reported first-quarter 2022 adjusted funds from operations (FFO) per share of $2.05, surpassing the Zacks Consensus Estimate of $2.00. The reported FFO per share also compared favorably with the year-ago quarter’s $1.91.

Alexandria witnessed continued healthy leasing activity and rental rate growth during the quarter.

Rental revenues in the quarter were $615.1 million. Also, rental revenues climbed 28.2% from the prior-year quarter’s $479.8 million.

Behind the Headlines

Reflecting robust demand for its high-quality office/laboratory space, Alexandria’s total leasing activity aggregated 2.5 million rentable square feet (RSF) of space during the first quarter. Lease renewals and re-leasing of space amounted to 0.8 million RSF. The leasing of development and redevelopment space was 1.4 million RSF.

Alexandria registered rental rate growth of 32.2% during the reported quarter. On a cash basis, the rental rate increased 16.5%.

On a year-over-year basis, same-property NOI was up 7.6%. It climbed 7.3% on a cash basis. Occupancy of operating properties in North America remained high at 94.7%.

During first-quarter 2022, investment-grade or publicly-traded large-cap tenants accounted for 50% of the annual rental revenues in effect. Weighted-average remaining lease term of all tenants is 7.3 years. For Alexandria’s top 20 tenants, it is 10.5 years.

As of Mar 31, 2022, the tenant receivables balance was $7.6 million.

During the first quarter, Alexandria completed acquisitions in its key life-science cluster submarkets totaling 7.3 million SF, comprising 6.9 million RSF of future development and redevelopment opportunities and 451,760 RSF of operating space for a total price of $1.8 billion. Also, Alexandria placed into service development and redevelopment projects totaling 566,665 RSF across multiple submarkets.

Additionally, ARE executed a long-term lease with

Bristol Myers Squibb


BMY

for 426,927 RSF. The lease with Bristol Myers seeks to develop an innovative research hub focused on cancer, immune-mediated and neurodegenerative diseases at the Alexandria Point mega campus in San Diego.

Liquidity

Alexandria exited first-quarter 2022 with cash and cash equivalents of $775.06 million, up from $361.34 million witnessed at the end of 2021. ARE had $5.7 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 5.1X in the first quarter on an annualized basis. As of Apr 25, 2022, ARE had no debt maturities before 2025, and its weighted-average remaining term of debt as of Mar 31, 2022, was 13.8 years.

Outlook

Alexandria also issued 2022 guidance, projecting the adjusted FFO per share in the range of $8.33 to $8.43, with the mid-point being $8.38. The Zacks Consensus Estimate for the same is currently pegged at $8.40.

Alexandria’s current-year expectations are backed by anticipations for occupancy in North America (as of Dec 31, 2022) in the band of 95.2-95.8%, rental rate increases for lease renewals, re-leasing of space of 30-35% and same-property NOI growth of 5.9-7.9%.

Alexandria currently carries a Zacks Rank #2 (Buy). You can see


the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Earnings Releases

We now look forward to the earnings releases of other REITs like

Equinix


EQIX

and

Duke Realty


DRE

slated to report on Apr 27.

The Zacks Consensus Estimate for Equinix’s first-quarter 2022 FFO per share is pegged at $7.19, suggesting an increase of 3.01% from the prior-year period’s reported figure. EQIX currently has a Zacks Rank of 3 (Hold).

The Zacks Consensus Estimate for Duke Realty’s first-quarter 2022 FFO per share is pegged at 44 cents, implying an increase of 12.8% from the year-earlier quarter’s reported figure. DRE 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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