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ALEXANDRIA REAL ESTATE EQUITIES, INC. (ARE)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025: Revenues $758.2M, net loss per diluted share $(0.07), and FFO per share – diluted, as adjusted $2.30; occupancy fell to 91.7% on 768K RSF known expirations, while leasing stayed solid at 1.03M RSF with 18.5% rent spreads (7.5% cash) .
  • Guidance cut: 2025 FFO per share – as adjusted lowered by $0.07 at the midpoint to $9.26; year-end occupancy and same-property NOI expectations trimmed; capitalized interest down $20M with a $20M offset to interest expense .
  • Balance sheet remains strong: liquidity $5.3B, 12.2 years weighted-average remaining debt term, only 13% of total debt matures through 2027; net debt and preferred to Adjusted EBITDA 5.9x with a ≤5.2x 4Q25 target .
  • Potential stock reaction catalysts: step-down in occupancy and guidance reduction vs. countervailing positives from leasing momentum, development NOI deliveries ($37M), and increased 2025 dispositions midpoint to $1.95B .

What Went Well and What Went Wrong

What Went Well

  • Fifth consecutive quarter with >1M RSF leased; Q1 rent spreads +18.5% (7.5% cash), and 10-year weighted-average lease term; 89% of leasing came from existing tenants .
  • Development/redevelopment execution: 309,494 RSF placed into service (100% leased) delivering incremental annual NOI of $37M; Harriet Tubman Way (285,346 RSF) stabilized yields 7.5% initial (6.2% cash) .
  • Cost discipline: Q1 G&A $30.7M (down 35% Y/Y); trailing-12-month G&A 6.9% of NOI (lowest in a decade); 2025 G&A guidance reduced by $17M to reflect additional savings .

Selected quotes:

  • “Tariffs will not create material dilution to our current pipeline projects.” – Peter Moglia (CEO/CIO) .
  • “Leasing volume continues to be solid… fifth consecutive quarter over 1 million square feet.” – Marc Binda (CFO) .
  • “We updated… 2025 guidance… to reflect an additional $17 million of cost savings.” – Marc Binda .

What Went Wrong

  • Occupancy dropped to 91.7% (from 94.6% at 12/31/24) on known expirations of 768,080 RSF across submarkets; same-property NOI change was (3.1)% GAAP, +5.1% cash; excluding expirations, same-property NOI would have been ~0.1% GAAP and +9.0% cash .
  • 2025 guidance trimmed: FFO as adjusted midpoint cut by $0.07; year-end occupancy target reduced by 70 bps; straight-line rent down $15M; capitalized interest down $20M (and interest expense up $20M) .
  • Investment and impairment headwinds: Q1 investment loss $50.0M (including $68.1M unrealized losses); real estate impairment $32.2M; non-real estate impairment $11.2M .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$791.6 $788.9 $758.2
Net Income per Share – Diluted ($)$0.96 $(0.38) $(0.07)
FFO per Share – Diluted, as Adjusted ($)$2.37 $2.39 $2.30
Operating Margin (%)71% 70% 70%
Adjusted EBITDA Margin (%)70% 72% 71%
Occupancy of Operating Properties – North America (%)94.7% 94.6% 91.7%
Total Leasing Activity (RSF)1,486,097 1,310,999 1,030,553
Rental Rate Change on Renewals/Re-leasing (%)5.1% 18.1% 18.5%
Rental Rate Change (Cash) on Renewals/Re-leasing (%)1.5% 3.3% 7.5%
Weighted-Average Remaining Lease Term (All Tenants, years)7.5 7.5 7.6

KPIs and Credit

KPIQ3 2024Q4 2024Q1 2025
Same-Property NOI Change (YoY, GAAP)+1.5% +0.6% (3.1)%
Same-Property NOI Change (YoY, Cash)+6.5% +6.3% +5.1%
Net Debt & Preferred / Adjusted EBITDA (Quarter Annualized, x)5.5x 5.2x 5.9x
Fixed-Charge Coverage Ratio (Quarter Annualized, x)4.4x 4.3x 4.3x
Liquidity ($B)$5.4B $5.7B $5.3B
Dividend per Share (Quarter)$1.30 $1.32 $1.32
Dividend Payout Ratio (%)55% 55% 57%
Tenant Collections (%)99.9% 99.9% 99.9%

Development / Redevelopment Deliveries

MetricQ3 2024Q4 2024Q1 2025
RSF Placed into Service316,691 602,593 309,494
Incremental Annual NOI ($M)$21 $55 $37

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
FFO per Share – Diluted, as AdjustedFY 2025$9.23–$9.43 (Mid: $9.33) $9.16–$9.36 (Mid: $9.26) Lowered $0.07
Occupancy in North America (%)12/31/202591.6–93.2 90.9–92.5 Lowered ~70 bps
Same-Property NOI (GAAP, %)FY 2025(3.0)–(1.0) (3.7)–(1.7) Lowered 70 bps
Same-Property NOI (Cash, %)FY 2025(1.0)–1.0 (1.2)–0.8 Lowered 20 bps
Straight-Line Rent Revenue ($M)FY 2025$111–$131 $96–$116 Lowered $15M
G&A Expenses ($M)FY 2025$129–$144 $112–$127 Lowered $17M
Capitalization of Interest ($M)FY 2025$340–$370 $320–$350 Lowered $20M
Interest Expense ($M)FY 2025$165–$195 $185–$215 Raised $20M
Dispositions & Partial Interests ($B)FY 2025Midpoint $1.70 Midpoint $1.95 Raised $0.25B
Net Debt & Preferred / Adj. EBITDA (x)4Q25 Annualized≤5.2x ≤5.2x Maintained
Fixed-Charge Coverage (x)4Q25 Annualized4.0–4.5x 4.0–4.5x Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024)Previous Mentions (Q4 2024)Current Period (Q1 2025)Trend
Tariffs / MacroNot a focal point Limited macro commentary Management expects tariffs to have immaterial impact on yields; high rates and budget/tax uncertainty noted Heightened macro focus
Competitive SupplyPipeline deliveries and stabilization mix 2024 deliveries and near-term plan Supply peaked in 2024; far fewer additions in 2025–2026 with varying pre-lease levels by market Easing supply backdrop
AI / Technology TenantsN/AN/AAI platforms (e.g., Mission Bay demand), high-quality tenants paying significant rents (Biogen Cambridge lease economics cited) Emerging driver
Onshoring / BiomanufacturingN/AN/ATailwinds from U.S. onshoring and biomanufacturing; Research Triangle positioned well Positive
Regulatory Bodies (NIH/FDA)N/AN/AExtensive commentary on NIH restructuring and FDA process; demand/approvals continuing Elevated discussion
Capital RecyclingPending/closed dispositions and rationale $1.367B of 2024 dispositions; 2025 plan 2025 completed/pending $609M; dispositions midpoint raised; buyers include residential developers, owner/users, PE Ongoing acceleration
Leasing Momentum1.49M RSF; rent spreads modest with one tech lease effect 1.31M RSF; rent spreads elevated 1.03M RSF; rent spreads strong; 5th straight quarter >1M RSF Consistent strength

Management Commentary

  • “We have the longest weighted average remaining debt term among all S&P 500 REITs at 2x the average.” – Joel Marcus .
  • “Tariffs will not create material dilution to our current pipeline projects… for every 10% tariff on such materials, yields would decline by 2.5–3.5 bps.” – Peter Moglia .
  • “Leasing volume continues to be solid… we dominate core submarkets… with 89% of leasing from existing tenants.” – Marc Binda .
  • “Public biotech had a strong quarter at 27% of Life Science leasing… Intellia lease at 400 Tech Square.” – Hallie Kuhn .

Q&A Highlights

  • Guidance approach: Not “best” or “worst” case—management’s best estimate with current facts; occupancy guide trimmed given slower re-leasing .
  • Venture/private biotech demand: Venture funds remain well-capitalized; deployment conservative but ongoing; leasing pacing viewed as sustainable for strong teams .
  • Capitalized interest: Reduced $20M mainly on future land bank; some active projects may pause capitalization pending tenant fit-outs .
  • Dispositions buyer pool: Residential developers (for land), owner/users, private equity, sovereign interest; potential JV/ground-lease opportunities on mega campuses .
  • Occupancy trajectory: Large expirations concentrated in Q1 will take time to re-lease; alternative uses (incl. AI) may backfill some spaces sooner than expected .

Estimates Context

  • S&P Global consensus for Q1 2025 specific EPS/Revenue was not available in our dataset; near-term consensus for ARE indicates: Q3 2025 Primary EPS 0.535*, FFO per share (REIT) 2.310*, and Revenue $754.4M*, with 7 EPS and 7 revenue estimates; Q4 2025 EPS 0.254* and Revenue $746.3M* (5–6 estimates); Q1 2026 EPS 0.266* and Revenue $720.7M* (2–4 estimates).*
    Values retrieved from S&P Global [GetEstimates].
MetricQ3 2025Q4 2025Q1 2026
Primary EPS Consensus Mean ($)0.535*0.254*0.266*
FFO / Share (REIT) Consensus Mean ($)2.310*2.146*1.893*
Revenue Consensus Mean ($USD)754,358,240*746,310,750*720,665,020*
Primary EPS – # of Estimates7*5*2*
Revenue – # of Estimates7*6*4*

Key Takeaways for Investors

  • Near-term optics are mixed: occupancy stepped down on known move-outs and 2025 guidance was trimmed, but leasing momentum, rent spreads, and development NOI deliveries remain healthy .
  • Balance sheet and liquidity underpin optionality: $5.3B liquidity, 12.2-year average debt term, limited near-term maturities, and 4Q25 leverage target ≤5.2x provide downside protection .
  • Capital recycling advancing: 2025 dispositions midpoint raised to $1.95B with broad buyer interest (residential developers, owner/users, PE), supporting funding without common equity .
  • Cost discipline is a real driver: G&A guidance cut by $17M; trailing G&A/NOI at decade lows—sustained savings cushion earnings amid slower lease-up .
  • Development risk manageable: Management expects tariffs to be immaterial to yields; competitive supply has peaked with high pre-leasing in key markets .
  • Watch catalysts: resolution of larger vacancies and re-leasing timelines, biomanufacturing/onshoring tailwinds, AI/tech tenant demand in Mission Bay/Cambridge, and progress toward 4Q25 leverage targets .
  • Trading implications: near-term sentiment likely tied to occupancy trajectory and guidance credibility; medium-term thesis hinges on mega campus dominance, tenant quality, and embedded development NOI .

Management and data references: Press release and supplemental (8‑K Item 2.02) dated April 28, 2025 ; Earnings call transcript April 29, 2025 ; Q4 2024 press release Jan 27, 2025 ; Q3 2024 press release Oct 21, 2024 .