Alexandria Real Estate Equities, Inc.
Loading chart...
Loading financial statements...
Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .
| Line item |
|---|
| Period ending |
45
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-looking statements
Certain information and statements included in this quarterly report on Form 10-Q, including, without limitation, statements
containing the words “forecast,” “guidance,” “goals,” “projects,” “estimates,” “anticipates,” “believes,” “expects,” “intends,” “may,” “plans,”
“seeks,” “should,” “targets,” or “will,” or the negative of those words or similar words, constitute “forward-looking statements” within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Forward-looking statements involve inherent risks and uncertainties regarding events, conditions, and financial trends that
may affect our future plans of operations, business and financial strategy, results of operations, and financial position. A number of
important factors could cause actual results to differ materially from those included within or contemplated by the forward-looking
statements, including, but not limited to, the following:
•Operating factors, such as a failure to operate our business successfully in comparison to market expectations or in
comparison to our competitors, our inability to obtain capital when desired or refinance debt maturities when desired, and/
or a failure to maintain our status as a REIT for federal tax purposes;
•Market and industry factors, such as adverse developments concerning the life science industry and/or our tenants;
•Government factors, such as any unfavorable effects resulting from federal, state, local, and/or foreign government
policies, laws, and/or funding levels;
•Global factors, such as negative economic, social, political, financial, credit market, banking conditions, and/or regional
armed hostilities; and
•Other factors, such as climate change, cyber intrusions, and/or changes in laws, regulations, and financial accounting
standards.
This list of risks and uncertainties is not exhaustive. Additional information regarding risk factors that may affect us is included
under Part I; “Item 1A. Risk factors”; and “Item 7. Management’s discussion and analysis of financial condition and results of
operations” in our annual report on Form 10-K for the year ended December 31, 2025 and under respective sections in this quarterly
report on Form 10-Q. Readers of this quarterly report on Form 10-Q should also read our other documents filed publicly with the SEC
for further discussion regarding such factors.
46
Overview
We are a Maryland corporation formed in October 1994 that has elected to be taxed as a REIT for federal income tax
purposes. Alexandria Real Estate Equities, Inc. (NYSE: ARE), an S&P 500® company, is a best-in-class, mission-driven life science
REIT making a positive and lasting impact on the world. With our founding in 1994, Alexandria pioneered the life science real estate
niche. Alexandria is the preeminent and longest-tenured owner, operator, and developer of collaborative Megacampus ecosystems in
AAA life science innovation cluster locations, including Greater Boston, the San Francisco Bay Area, San Diego, Seattle, Maryland,
Research Triangle, and New York City. As of March 31, 2026, Alexandria has a total market capitalization of $20.44 billion and an asset
base that includes 35.8 million RSF of operating properties and 3.4 million RSF of Class A/A+ properties undergoing construction.
We develop dynamic Megacampus ecosystems that enable and inspire some of the world’s most brilliant minds and innovative
companies to create life-changing scientific and technological innovations. We believe in the utmost professionalism, humility, and
teamwork. Our tenants include multinational pharmaceutical companies; life science product, service, and device companies; public
and private biotechnology companies; advanced technologies companies; biomedical institutions; U.S. government institutions; and
others. Alexandria has a long-standing and proven track record of developing Class A/A+ properties clustered in highly dynamic and
collaborative Megacampus environments that enhance our tenants’ ability to successfully recruit and retain world-class talent and
inspire productivity, efficiency, creativity, and success. Alexandria also provides strategic capital to transformative life science
companies through our venture capital platform.
As of March 31, 2026:
•Investment-grade or publicly traded large cap tenants represented 55% of our annual rental revenue;
•Approximately 97% of our leases (on an annual rental revenue basis) contained effective annual rent escalations
approximating 3% that were either fixed or indexed based on a consumer price index or other index;
•Approximately 91% of our leases (on an annual rental revenue basis) were triple net leases, which require tenants to pay
substantially all real estate taxes, insurance, utilities, repairs and maintenance, common area expenses, and other
operating expenses (including increases thereto) in addition to base rent;
•Approximately 92% of our leases (on an annual rental revenue basis) provided for the recapture of capital expenditures
(such as HVAC maintenance and/or replacement, roof replacement, and parking lot resurfacing) that we believe would
typically be borne by the landlord in traditional office leases; and
•78% of our leasing activity during the last twelve months was generated from our existing tenant base.
A key element of our business and financial strategy is our unique focus on Class A/A+ properties primarily located in
collaborative Megacampus ecosystems in AAA life science innovation clusters. Our Megacampus ecosystems are designed for
optionality and scalability, offering our tenants a clear path to address their growth requirements, including through our future
developments and redevelopments. Strategically located near top academic and medical research institutions and equipped with
curated amenities and services and convenient access to transit, our Megacampus ecosystems are designed to support our tenants in
attracting and retaining top talent and in meeting our tenants’ growth needs, which we believe is a key driver of tenant demand for our
properties. Our strategy also includes drawing upon our deep, broad, and long-standing real estate and life science industry
relationships in order to retain tenants, identify and attract new and leading tenants, and source additional real estate.
47
Executive summary
Operating results
Three Months Ended March 31, | |||
2026 | 2025 | ||
Net income (loss) attributable to Alexandria’s common stockholders – diluted: | |||
In millions | $358.9 | $(11.6) | |
Per share | $2.10 | $(0.07) | |
Funds from operations attributable to Alexandria’s common stockholders – diluted, as adjusted: | |||
In millions | $295.9 | $392.0 | |
Per share | $1.73 | $2.30 | |
For additional information, refer to “Funds from operations and funds from operations, as adjusted, attributable to Alexandria
Real Estate Equities, Inc.’s common stockholders” under “Definitions and reconciliations.”
A best-in-class REIT with a high-quality, diverse tenant base, strong margins, and long lease terms
(As of March 31, 2026, unless stated otherwise) | ||
Occupancy of operating properties | 87.7% | |
Percentage of total annual rental revenue in effect from Megacampus platform | 78% | |
Percentage of total annual rental revenue in effect from investment-grade or publicly traded large cap tenants | 55% | |
Adjusted EBITDA margin for the three months ended March 31, 2026 | 66% | |
Percentage of leases containing annual rent escalations | 97% | |
Weighted-average remaining lease term: | ||
Top 20 tenants | 9.9 | years |
All tenants | 7.5 | years |
Strong tenant collections(1): | ||
Rents and receivables for the three months ended March 31, 2026, collected as of the date of this report | 99.9% |
(1)Refer to “Tenant Collections” under “Definitions and reconciliations” for additional details.
Strong and flexible balance sheet with significant liquidity; top 15% credit rating ranking among all publicly traded U.S. REITs
•Net debt and preferred stock to Adjusted EBITDA of 6.8x and fixed-charge coverage ratio of 3.4x for the three months ended
March 31, 2026 annualized, with targets for the three months ending December 31, 2026 annualized of 5.6x-6.2x and
3.6x-4.1x, respectively.
•We expect improvement in our quarter annualized net debt and preferred stock to Adjusted EBITDA ratio in the second
half of 2026 as we complete dispositions and sales of partial interests.
•As of March 31, 2026:
•Our credit ratings from S&P Global Ratings and Moody’s Ratings were BBB+ and Baa1, respectively, which rank in the top
15% among all publicly traded U.S. REITs.
•Significant liquidity of $4.17 billion, or 3.7x of our debt maturities through 2028.
•Only 9% of our total debt matures through 2028.
•10.0-year weighted-average remaining debt term, the longest among S&P 500 REITs.
•Total debt and preferred stock to gross assets of 31%.
48
Solid leasing of development and redevelopment space
•Leasing volume of 647,356 RSF during the three months ended March 31, 2026.
•Leasing of development and redevelopment space aggregating 117,935 RSF during the three months ended March 31,
2026, up 135% from the prior five quarter average, excluding a build-to-suit lease executed in July 2025 with a long-
standing multinational pharmaceutical tenant.
•From April 1, 2026 through the date of this report, we have executed leases and/or letters of intent aggregating
276,188 RSF related to our development and redevelopment pipeline.
•72% of our leasing activity during the three months ended March 31, 2026 was generated from our existing tenant base.
Three Months Ended March 31, 2026 | |
Leasing activity in RSF: | |
Leasing of development and redevelopment space | 117,935 |
Leasing of previously vacant space | 148,734 |
Lease renewals and re-leasing of space | 380,687 |
647,356 | |
Lease renewals and re-leasing of space: | |
Rental rate increase | (15.0)% |
Rental rate increase (cash basis) | (15.8)% |
•Excluding the impact of one lease aggregating 47,719 RSF at 480 Arsenal Street in our Cambridge/Inner Suburbs submarket,
rental rates for renewed and re-leased space for the three months ended March 31, 2026 would have decreased by 10.1%
and 9.1% (cash basis). The space at 480 Arsenal Street was re-leased to an entertainment studio user to accommodate their
expansion needs and secure a long-term extension. In addition, the reorientation of this building layout provides flexibility to
market the remaining available space to a broader range of user demand.
Key operating metrics
•Total revenues of $671.0 million, down 11.5%, for the three months ended March 31, 2026, compared to $758.2 million for the
three months ended March 31, 2025. Excluding dispositions completed after January 1, 2025, total revenues would have
decreased by 5.1% for the three months ended March 31, 2026 compared to the three months ended March 31, 2025.
•Net operating income (cash basis) of $1.7 billion for the three months ended March 31, 2026, annualized, decreased by
$300.6 million, or 15.2%, compared to the three months ended March 31, 2025, annualized.
•Change in net operating income (cash basis) reflects the impact of operating properties disposed of after January 1, 2025.
Excluding these dispositions, net operating income (cash basis), annualized, for the three months ended March 31, 2026,
would have decreased by 8.9%.
•Same property net operating income decreased by 11.9% and 11.7% (cash basis) for the three months ended March 31, 2026,
compared to the three months ended March 31, 2025.
•The quarter-over-quarter decline was due to a decrease in same property occupancy, primarily driven by the previously
disclosed 2026 key lease expirations aggregating 657,492 RSF that became vacant during the three months ended March
31, 2026, with a weighted-average lease expiration date of January 2026, and by vacancy during the three months ended
December 31, 2025 at one property aggregating 170,618 RSF at Alexandria Center® for Advanced Technologies – South
San Francisco in our South San Francisco submarket. We expect our same property performance to improve in the
second half of 2026, primarily due to changes in same property occupancy, including the anticipated delivery of 1.1 million
RSF of vacant space that was leased but not yet delivered as of March 31, 2026, which has a weighted-average expected
delivery date of approximately September 2026, and is expected to generate annual rental revenue of approximately $68
million.
•Same properties average occupancy for the three months ended March 31, 2026 was 88.9%, compared to 94.0% average
same properties occupancy for the three months ended March 31, 2025.
Continued successful reduction and management of general and administrative expenses
•General and administrative expenses for the three months ended March 31, 2026 aggregated $34.7 million, which represents
a decrease of $7.4 million, or 18%, compared to the quarterly average for 2024. For the trailing twelve months ended
March 31, 2026, general and administrative expenses as a percentage of net operating income were 6.0%, approximately half
the average of other S&P 500 REITs for 2023–2025.
•During the year ended December 31, 2025, we achieved general and administrative expense reduction of $51.3 million, or
30%, compared to the year ended December 31, 2024, primarily as a result of cost-control and efficiency initiatives. Some of
these cost savings were temporary, and we anticipate that approximately half of the cost reduction achieved in 2025 will
continue in 2026.
49
Dividend strategy to share net cash flows from operating activities with stockholders while retaining a significant portion for reinvestment
•Common stock dividend declared of $0.72 per share for the three months ended March 31, 2026, consistent with the
preceding quarter. The declared dividend per common share reflects our commitment to maintaining the strength of our
balance sheet, enhancing financial flexibility, preserving liquidity, and sharing cash flows with our stockholders.
•Significant net cash provided by operating activities, as adjusted, retained for reinvestment aggregating $2.60 billion for the
years ended December 31, 2022 through 2025 and the midpoint of our 2026 guidance range.
•Dividend yield of 6.2% as of March 31, 2026 and dividend payout ratio of 42% for the three months ended March 31, 2026.
Ongoing execution of Alexandria’s capital recycling strategy
We plan to continue funding a significant portion of our capital requirements for the year ending December 31, 2026 through
dispositions of land, non-core assets, and core assets (primarily sales of partial interests).
(dollars in millions) | Sales Price | % |
Completed and pending transactions subject to non-refundable deposits, signed letters of intent, and/or sale agreement negotiations as of the date of this report | $151 | 5% |
Identified and in process | 2,181 | 75% |
Additional projected | 568 | 20% |
2026 guidance midpoint for dispositions and sales of partial interests | $2,900 |
Occupancy and leasing progress on temporary vacancy
Operating occupancy as of December 31, 2025 | 90.9% | |
Reduction in occupancy related to previously disclosed key lease expirations during the three months ended March 31, 2026 | (1.9) | (1) |
Other changes in occupancy | (1.3) | (2) |
Operating occupancy as of March 31, 2026 | 87.7 | |
Vacant space leased but not yet delivered | 3.2 | (3) |
Operating occupancy as of March 31, 2026, including vacant space leased but not yet delivered | 90.9% |
(1)Represents previously disclosed key lease expirations aggregating 657,492 RSF, with a weighted-average lease expiration date of January 2026 and prior annual rental
revenue of approximately $41.6 million. These vacant spaces are currently 48% leased or under negotiation and the remaining 52% is being actively marketed for re-
lease.
(2)Includes i) 139,408 RSF, or 0.4%, resulting from spaces vacated by tenants winding down operations, which are being actively marketed for re-lease and ii) delivery of
50,531 vacant RSF, or 0.2%, at our 10075 Barnes Canyon Road development project located at our SD Tech by Alexandria Megacampus.
(3)Represents temporary vacancies aggregating 1.1 million RSF, primarily in the Greater Boston, San Francisco Bay Area, and Seattle markets, that are leased and
expected to be occupied upon completion of building and/or tenant improvements. The weighted-average expected delivery date is approximately September 2026, with
expected annual rental revenue of approximately $68 million.
Key capital metrics as of or for the three months ended March 31, 2026
•$20.44 billion in total market capitalization.
•$7.92 billion in total equity capitalization.
•Non-real estate investments aggregating $1.54 billion:
•Unrealized gains presented in our consolidated balance sheet were $125.9 million, comprising gross unrealized gains and
losses aggregating $191.5 million and $65.6 million, respectively.
•Investment loss of $4.6 million for the three months ended March 31, 2026 presented in our consolidated statement of
operations consisted of $18.2 million of realized gains, $10.3 million of unrealized losses, and $12.4 million of impairment
charges.
50
Key capital events
•In February 2026, we completed tender offers to repurchase an aggregate debt principal amount of $1.33 billion across a
portion of our outstanding 4.00% Senior Notes due 2050, 3.00% Senior Notes due 2051, and 3.55% Senior Notes due 2052.
Cash consideration paid was $952.2 million. In connection with the debt repurchase, we recognized a gain on early
extinguishment of debt of approximately $366.4 million, including the write-off of unamortized debt issuance costs and other
transaction-related costs.
•We funded the repurchases as follows:
•$750.0 million through the issuance of 5.25% unsecured senior notes due 2036; and
•Approximately $200 million through short-term borrowings under our commercial paper program, which will be repaid
through planned dispositions and sales of partial interests included in our 2026 guidance.
•The repurchase reduced debt and improved leverage by approximately 0.2x.
•This transaction did not have a significant impact to our FFO per share diluted, as adjusted, interest expense, or fixed-
charge coverage ratio.
•Following this transaction, our weighted-average remaining term of debt as of March 31, 2026 is 10.0 years, which
continues to be the longest among S&P 500 REITs.
•In
Recent insider activity
| Date | Insider | Role | Action | Shares | Price | Value |
|---|---|---|---|---|---|---|
| 2026-06-09 | Binda Marc E | CFO & Treasurer | Sell | -2,000 | $54.00 | -$108,000 |
| 2026-05-06 | MARCUS JOEL S | Executive Chairman | Buy | +7,500 ×2 | $46.34 | $347,558 |
| 2026-05-05 | MARCUS JOEL S | Executive Chairman | Buy | +7,500 ×3 | $42.72 | $320,416 |
| 2026-05-04 | MARCUS JOEL S | Executive Chairman | Buy | +10,000 | $41.02 | $410,200 |
| 2026-04-30 | Thomas Gregory Calvin | EVP - CTO | Buy | +3,500 | $41.00 | $143,500 |
Source: SEC Form 4 filings.
Next expected filings
- ~2026-10-26 10-Q expected by 2026-11-11 (in 92 days)
- ~2027-01-25 10-K expected by 2027-03-03 (in 183 days)
- ~2027-04-26 10-Q expected by 2027-05-12 (in 274 days)
- ~2027-07-20 10-Q expected by 2027-08-05 (in 359 days)
Predicted from historical filing cadence; not an SEC commitment.
Recent SEC filings
- 2026-07-09 8-K Material Agreement Entered; Material Financial Obligation
- 2026-04-27 10-Q Quarterly Report
- 2026-04-27 8-K Earnings Release; Financial Statements and Exhibits
- 2026-02-25 8-K Material Agreement Entered; Material Financial Obligation; Financial Statements and Exhibits
- 2026-02-12 8-K Other Events; Financial Statements and Exhibits
- 2026-01-26 10-K Annual Report
- 2026-01-26 8-K Earnings Release; Financial Statements and Exhibits
- 2026-01-12 8-K Officer/Director Change
- 2025-12-08 8-K Officer/Director Change; Other Events; Financial Statements and Exhibits
- 2025-10-27 10-Q Quarterly Report
- 2025-10-27 8-K Earnings Release; Financial Statements and Exhibits
- 2025-07-21 10-Q Quarterly Report
- 2025-07-21 8-K Earnings Release; Financial Statements and Exhibits
- 2025-05-15 8-K Officer/Director Change; Shareholder Vote Results; Financial Statements and Exhibits
- 2025-04-28 10-Q Quarterly Report