Alexandria's Q3 AFFO & Revenues Miss Estimates, '25 View Narrowed

Core Insights - Alexandria Real Estate Equities, Inc. (ARE) reported third-quarter 2025 adjusted funds from operations (AFFO) per share of $2.22, missing the Zacks Consensus Estimate of $2.31 and down from $2.37 in the prior year [1][10] Financial Performance - Total revenues for the quarter were $751.9 million, below the consensus estimate of $756.2 million, and decreased by 5% year over year [2] - The company has lowered its 2025 FFO guidance range to between $8.98 and $9.04, down from the previous range of $9.16-$9.36, with a midpoint reduction of 25 cents to $9.01 [9][10] Leasing Activity - Alexandria's total leasing activity reached 1.2 million rentable square feet (RSF) in the third quarter, indicating healthy demand for its office/laboratory space [3] - Rental rates grew by 15.2% during the quarter, with a cash basis increase of 6.1% [4] Occupancy and NOI - As of September 30, 2025, occupancy of operating properties in North America was 90.6%, a decline of 0.2% from the prior quarter and 4.1% from the year-ago quarter [4] - Same-property net operating income (NOI) decreased by 6% year over year, with a 3.1% decline on a cash basis [5] Tenant and Lease Information - Investment-grade or publicly traded large-cap tenants accounted for 53% of annual rental revenues, with a weighted average remaining lease term of 7.5 years [6] - The tenant receivable balance was $6.4 million as of September 30, 2025 [6] Development and Dispositions - Alexandria's share of completed and pending dispositions and sales of partial interests totaled $1.54 billion [7] - The company placed into service development projects totaling 185,517 RSF, which are 89% occupied, contributing $16 million of incremental annual NOI [7] Liquidity Position - As of September 30, 2025, the company had cash and cash equivalents of $579.5 million, an increase from $520.5 million as of June 30, 2025, and total liquidity of $4.2 billion [8] - The net debt and preferred stock to adjusted EBITDA ratio was 6.1X, with a fixed-charge coverage of 3.9X on an annualized basis [8] Market Outlook - The company cited a 1% reduction in projected 2025 same-property NOI and a 0.9% reduction in projected operating occupancy due to slower-than-anticipated re-leasing and lower demand in the life science industry [11]