Alexandria Real Estate Equities, Inc. ARE reported fourth-quarter 2024 adjusted funds from operations (AFFO) per share of $2.39, meeting the Zacks Consensus Estimate. The reported figure outpaced the year-ago quarter’s AFFO per share of $2.28 by 4.8%.

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Results reflected a rise in revenues, aided by decent leasing activity and rental rate growth. However, higher interest expenses year over year undermined the results to some extent. Alexandria provided its 2025 outlook.

Total revenues of $788.9 million increased 4.2% year over year. However, the figure marginally missed the consensus estimate of $789.1 million.

For 2024, the company reported AFFO per share of $9.47, up 5.6% from the previous year. The figure was in line with the Zacks Consensus Estimate. Total revenues of $3.12 billion increased 8% year over year.

Behind the Headlines

Alexandria’s total leasing activity aggregated 1.3 million rentable square feet (RSF) of space in the fourth quarter, reflecting healthy demand for its high-quality office/laboratory space. Of this, lease renewals and re-leasing of space amounted to 1.0 million RSF, while leasing of development and redevelopment space totaled 12,999 RSF.

The company registered rental rate growth of 18.1% during the quarter. On a cash basis, the rental rate increased 3.3%. The occupancy of operating properties in North America was 94.6% as of Dec. 31, 2024, down 10 basis points (bps) from the prior quarter and unchanged from the year-ago quarter.

On a year-over-year basis, same-property net operating income (NOI) increased 0.6%. It improved 6.3% on a cash basis.

In the reported quarter, investment-grade or publicly traded large-cap tenants accounted for 52% 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 9.3 years. As of Dec. 31, 2024, the tenant receivable balance was $6.4 million.

For 2024, Alexandria completed acquisitions worth $249.4 million and dispositions worth $1.38 billion. During the fourth quarter, ARE placed into service development and redevelopment projects aggregating 602,593 RSF, which are 98% occupied across multiple submarkets, delivering $55 million of incremental annual NOI.

However, interest expenses jumped significantly year over year to $55.7 million.

Liquidity

The company exited the fourth quarter with cash and cash equivalents of $552.1 million, down from $562.6 million as of Sept. 30, 2024. It had $5.7 billion of liquidity at the end of the reported quarter.

The net debt and preferred stock to adjusted EBITDA was 5.2x, and the fixed-charge coverage was 4.3x on an annualized basis. Its weighted average remaining term of debt was 12.7 years.

2025 Guidance by ARE

Alexandria provided its 2025 AFFO per share guidance in the range of $9.23-$9.43. The Zacks Consensus Estimate for the same is currently pegged at $9.27.

The company expects occupancy of operating properties in North America to be between 91.6% and 93.2%, with rental rate increases for lease renewals and re-leasing of space of 9-17%. Same-property NOI growth on a cash basis is projected in the range of negative 1%-1%.

Dispositions and sales of partial interests are estimated between $1.2 billion and 2.2 billion. Acquisitions and other opportunistic uses of capital are estimated at $100 million at midpoint.

ARE’s Zacks Rank

Alexandria currently carries a Zacks Rank #4 (Sell).

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 Cousins Properties CUZ and Highwoods Properties HIW,slated to report on Feb. 6 and Feb. 11, respectively.

The Zacks Consensus Estimate for Cousins Properties’ fourth-quarter 2024 FFO per share stands at 68 cents, which indicates 4.6% growth year over year. CUZ currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Highwoods Properties’ fourth-quarter 2024 FFO per share is pegged at 85 cents, which implies a 14.1% year-over-year decrease. HIW 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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