Alexandria Real Estate Equities Inc. ARE is scheduled to release its second-quarter 2025 results on July 21, 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, beat the Zacks Consensus Estimate in terms of adjusted FFO per share by 2 cents. ARE’s performance in the quarter reflected decent leasing activity and rental rate growth. However, lower occupancy and 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 0.33%. This is depicted in the graph below:
Alexandria Real Estate Equities, Inc. Price and EPS Surprise
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 and Projections for ARE
ARE owns a premium portfolio of Class A/A+ properties in the high-barrier-to-entry markets of the United States. However, it has a vast development pipeline. This exposes the company to the risk of lease-up concerns.
The slow re-leasing of expiring spaces and lease-up vacancy in its operating portfolio is likely to have adversely impacted its occupancy level in the quarter under consideration, affecting its revenue and rental income growth.
The Zacks Consensus Estimate for Alexandria’s quarterly revenues currently stands at $750.7 million, suggesting a decrease of 2.1% from the prior-year period’s reported figure.
Further, for the second quarter of 2025, our estimate indicates a 1.7% decline in rental income and a 13% decrease in same-store net operating income. Also, we expect the occupancy rate to decline by 0.7% for the upcoming quarter.
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 $2.29 over the past month. Moreover, the figure suggests a 2.97% decrease from the year-ago quarter’s tally. (See the Zacks Earnings Calendar to stay ahead of market-making news.)
What Our Quantitative Model Predicts for ARE
Our proven model does not conclusively predict a surprise in terms of FFO per share for Alexandria this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an FFO beat, which is not the case here.
Story ContinuesAlexandria currently has an Earnings ESP of 0.00% and carries a Zacks Rank #5 (Strong Sell).
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks That Warrant a Look
Here are two stocks from the broader REIT sector — Digital Realty Trust DLR and Highwoods Properties HIW— that you may want to consider, as our model shows that these have the right combination of elements to report a surprise this quarter.
Digital Realty Trust, scheduled to report quarterly numbers on July 24, has an Earnings ESP of +1.09% and carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Highwoods Properties, slated to release quarterly numbers on July 29, has an Earnings ESP of +1.18% and carries a Zacks Rank of 3 at present.
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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Highwoods Properties, Inc. (HIW) : Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).
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