Is Alexandria Real Estate Equities a REIT Worth Buying?

NYSE: ARE | Alexandria Real Estate Equities Inc. News, Ratings, and Charts

ARE – Shares of Alexandria Real Estate (ARE) have dipped in price over the past few months despite the company making several operational advances. In addition, the company’s recent announcement related to its debt financing appears to have compounded investors’ concerns. So, is it worth betting on the stock now? Let’s discuss.

Alexandria Real Estate Equities Inc. (ARE) in Pasadena, Calif., is the first, longest-tenured, and most pioneering owner, operator, and developer solely focused on collaborative life science, technology, and agtech campuses in AAA innovation cluster locations. The stock’s price has retreated by 10% over the past three months and 5.5% over the past month.

In addition, closing yesterday’s trading session at $185.75, the stock is currently trading 17.4% below its 52-week-high of $224.95.

Last month, the company closed a public offering of 7,000,000 shares of common stock at $210.00 per share. The company expects to use the net proceeds to fund pending acquisitions and the construction of highly leased development and redevelopment projects, with any remaining proceeds being used for general working capital and other corporate purposes.

Here’s what could shape ARE’s performance in the near term:

Debt Financing

This month, ARE announced the pricing of a public offering of $800 million of 2.950% senior notes due 2034 and $1 billion of 3.550% senior notes due 2052. The notes will be unsecured obligations of the company and will be entirely and unconditionally guaranteed by Alexandria Real Estate Equities, L.P., the company’s indirectly 100% owned subsidiary. ARE intends to use the net proceeds from the 2.950% senior notes due 2034 for general corporate purposes, which may include reducing the outstanding balance on its unsecured senior line of credit, reducing its outstanding indebtedness under its commercial paper program, repaying other debt, and selective property development, redevelopment, or acquisition.

Premium Valuations

In terms of trailing-12-months Price/Book, the stock is currently trading at 52.11x, which is 28.4% higher than the 40.59x industry average. Also, its 16.66x forward EV/Sales multiple is 42.5% higher than the 11.69x industry average. And ARE’s forward Price/Sales of 12.07x is 75.2% higher than the 6.89x industry average.

POWR Ratings Reflect Uncertainty

ARE has an overall D rating, which equates to Sell in our proprietary POWR Ratings system. The POWR ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight different categories. ARE has a D grade for Value which is justified given the company’s higher-than-industry valuations.

Of the 14 stocks in the D-rated REITs – Office industry, ARE is ranked #13.

Beyond what I’ve stated above, one can view ARE ratings for Growth, Quality, Stability, Sentiment, and Momentum here.

Bottom Line

While the company should benefit from a high inflationary environment, its recent equity and debt financing exhibit its inability to generate sufficient cash flows to fund its operations. This has raised investors’ concerns related to its prospects. In addition, the stock is currently trading below its 50-day and 200-day moving averages of $202.80 and $198.02, respectively, indicating bearish sentiment. So, we think the stock is best avoided now.

How Does Alexandria Real Estate Equities Inc. (ARE) Stack Up Against its Peers?

While ARE has an overall D rating, one might want to consider its industry peers, City Office REIT Inc. (CIO) and Allied Properties Real Estate Investment Trust (APYRF), which have an overall B (Buy) rating.

Want More Great Investing Ideas?

3 Stocks to DOUBLE This Year


ARE shares were unchanged in premarket trading Thursday. Year-to-date, ARE has declined -16.69%, versus a -13.48% rise in the benchmark S&P 500 index during the same period.


About the Author: Pragya Pandey


Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
AREGet RatingGet RatingGet Rating
CIOGet RatingGet RatingGet Rating
APYRFGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com


Does Trump Change Stock Market Outlook?

The rally of the S&P 500 (SPY) after the election gives a sense that investors are happy that Trump was elected. But perhaps there is more to this story than meets the eye. That’s why Steve Reitmeister shares his updated market outlook taking into account the pros and cons of Trumps proposed new policies. This comes with a preview of his top 11 stocks to buy now.

3 Streaming Stocks Benefiting from Cord-Cutting Trends

As streaming continues to dominate the digital entertainment landscape, the global streaming market presents a lucrative investment opportunity. So, it could be ideal to invest in fundamentally solid streaming stocks Netflix (NFLX), Walt Disney (DIS), and Roku (ROKU). Read further...

3 Gold Stocks to Buy as Safe-Haven Demand Grows

Gold is a stable investment now due to its role as a safe-haven asset during economic uncertainty, rising demand, industrial use, and growth, bolstered by central bank purchases and interest rate cuts. Therefore, investors should consider investing in top gold stocks such as Newmont (NEM), Barrick Gold (GOLD), and Agnico Eagle Mines (AEM). Read more...

3 AI Stocks Transforming Industries and Driving Future Growth

With rapid digitalization, rapid adoption, and development, as well as surging demand, the AI market is on the rise. Amid this backdrop, investors could buy fundamentally solid AI stocks NVIDIA Corporation (NVDA), Microsoft (MSFT), and Meta Platforms (META) poised for substantial gains. Continue reading...

Updated Stock Market Expectations

The S&P 500 (SPY) has already reached an impressive goal of hitting 6,000. Yet you can see how much shares are struggling now up against this resistance. Steve Reitmeister shares his views on what comes next for the market and his top 10 stocks to stay on the right side of the action.

Read More Stories

More Alexandria Real Estate Equities Inc. (ARE) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All ARE News