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Alexandria Real Estate Equities Inc. ARE is scheduled to release its first-quarter 2025 results on April 28, after the closing bell. Its quarterly results are likely to reflect a decline in revenues and funds from operations (FFO) per share.
In the last reported quarter, this Pasadena, CA-based life science real estate investment trust (REIT), focusing on collaborative life science, agtech and technology campuses in AAA innovation cluster locations, met the Zacks Consensus Estimate in terms of adjusted FFO per share. ARE’s performance in the quarter 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 has a decent surprise history. Over the preceding four quarters, its adjusted FFO per share surpassed the Zacks Consensus Estimate on two occasions, met once and missed in the remaining period, with the average beat being 0.54%. This is depicted in the graph below:
Alexandria Real Estate Equities, Inc. Price and EPS Surprise
Alexandria Real Estate Equities, Inc. price-eps-surprise | Alexandria Real Estate Equities, Inc. Quote
Factors at Play for ARE
ARE’s premium portfolio of Class A/A+ properties in the high-barrier-to-entry markets of the United States is well-positioned to benefit amid rising demand for life science assets due to the increasing need for drug research and innovation.
However, high interest expenses are likely to have been a spoilsport for Alexandria during the to-be-reported quarter. The company has a substantial debt burden, and its total debt as of Dec. 31, 2024, was approximately $12.69 billion.
Also, the increase in the supply of laboratory properties has intensified competition and may have negatively impacted occupancy rates.
Projections for ARE
The Zacks Consensus Estimate for Alexandria’s quarterly revenues currently stands at $758.5 million, suggesting a decrease of 1.38% from the prior-year period’s reported figure.
For the first quarter of 2025, our estimate indicates a 2.7% decrease in rental income and a 17% increase in Alexandria’s interest expenses on a year-over-year basis. Also, we expect the company’s occupancy of operating properties in North America to decrease 80 basis points year over year to 93.8%.
Alexandria’s activities in the to-be-reported quarter were inadequate to garner analysts’ confidence. The Zacks Consensus Estimate for the quarterly adjusted FFO per share has moved down marginally to $2.28 over the past month. Moreover, the figure suggests a 2.98% decrease from the year-ago quarter’s tally. (See the Zacks Earnings Calendar to stay ahead of market-making news.)