Alexandria Real Estate Equities, Inc. ARE reported first-quarter 2025 adjusted funds from operations (AFFO) per share of $2.30, beating the Zacks Consensus Estimate of $2.28. This compares unfavorably to the AFFO of $2.35 reported in the prior year.

Results reflect decent leasing activity and rental rate growth. However, lower occupancy and higher interest expenses year over year undermined the results to some extent. Alexandria revised its 2025 outlook.

Total revenues of $758.2 million surpassed the consensus estimate of $749.5 million. However, the figure decreased 1.4% year over year.

ARE: Behind the Headlines

Alexandria’s total leasing activity aggregated 1 million rentable square feet (RSF) of space in the first quarter, reflecting healthy demand for its high-quality office/laboratory space. Of this, lease renewals and re-leasing of space amounted to 884,408 RSF, while leasing of development and redevelopment space totaled 6,430 RSF.

The company registered rental rate growth of 18.5% during the quarter. On a cash basis, the rental rate increased 7.5%. The occupancy of operating properties in North America was 91.7% as of March 31, 2025, down 2.9% from the prior quarter and the year-ago quarter.

On a year-over-year basis, same-property net operating income (NOI) decreased 3.1%. It improved 5.1% on a cash basis. The change in same-property NOI was due to lease expirations totaling 768,080 RSF at six properties across four submarkets. Same property NOI increases, excluding the impact of these lease expirations, were 0.1 and 9% on a cash basis.

In the reported quarter, investment-grade or publicly traded large-cap tenants accounted for 51% of the annual rental revenues in effect. The weighted average remaining lease term of all tenants is 7.6 years. For Alexandria’s top 20 tenants, it is 9.6 years. As of March 31, 2025, the tenant receivable balance was $6.9 million.

As of April 28, 2025, Alexandria’s share of completed and pending dispositions and sales of partial interests totaled $608.9 million. During the fourth quarter, ARE placed into service development and redevelopment projects aggregating 309,494 RSF, which are 100% leased across multiple submarkets, delivering $37 million of incremental annual NOI.

However, interest expenses jumped 24.6% year over year to $50.9 million.

ARE’s Liquidity

The company exited the first quarter with cash and cash equivalents of $476.4 million, down from $552.1 million as of Dec. 31, 2024. It had $5.3 billion of liquidity at the end of the reported quarter.

The net debt and preferred stock to adjusted EBITDA was 5.9X, and the fixed-charge coverage was 4.3X on an annualized basis. Its weighted average remaining term of debt was 12.2 years.

Story Continues

2025 Guidance Revision by ARE

Alexandria has revised its 2025 outlook, given the slower-than-anticipated re-leasing of expiring spaces and lease-up of vacancy in its operating portfolio, and development and redevelopment pipeline.

The company lowered its 2025 AFFO per share guidance to the range of $9.16-$9.36 from the earlier guided range of $9.23-$9.43. The Zacks Consensus Estimate is currently pegged at $9.30, which is within the guided range. The FFO midpoint now stands at $9.26, down 7 cents from the $9.33 guided earlier.

The company now expects occupancy of operating properties in North America to be between 90.9% and 92.5%, down from the earlier guided range of 91.6%-93.2%. Same-property NOI growth on a cash basis is projected in the range of negative 1.2%-0.8%.

Dispositions and sales of partial interests are estimated between $1.45 and 2.45 billion. Acquisitions and other opportunistic uses of capital are estimated at $ 208 million at the midpoint.

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 SurpriseAlexandria 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 Ventas VTR and Cousins Properties CUZ,slated to report on April 30 and May 1, respectively. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

The Zacks Consensus Estimate for Ventas’ first-quarter 2025 FFO per share is pegged at 82 cents, which implies a 5.1% year-over-year increase. VTR currently carries a Zacks Rank #2 (Buy).

The Zacks Consensus Estimate for Cousins Properties’ first-quarter 2025 FFO per share stands at 71 cents, which indicates 9.2% growth year over year. CUZ currently has a Zacks Rank #2

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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