Why Is Alexandria Real Estate Equities (ARE) Down 7.6% Since Last Earnings Report?

A month has gone by since the last earnings report for Alexandria Real Estate Equities (ARE). Shares have lost about 7.6% in that time frame, underperforming the S&P 500.

But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Alexandria Real Estate Equities due for a breakout? Well, first let's take a quick look at its most recent earnings report in order to get a better handle on the recent catalysts for Alexandria Real Estate Equities, Inc. before we dive into how investors and analysts have reacted as of late.

Alexandria's Q4 AFFO & Revenues Beat Estimates, Occupancy Decline Y/Y

Alexandria Real Estate Equities reported fourth-quarter 2025 AFFO per share of $2.16, beating the Zacks Consensus Estimate of $2.15. Results reflected decent leasing activity. Total revenues of $754.4 million outpaced the consensus estimate of $738.3 million.

However, AFFO per share compared unfavorably with $2.39 reported in the prior year quarter. Revenues also decreased 4.4% year over year.

The company experienced lower occupancy, negative rental rates and higher interest expenses year over year, which undermined the results to some extent.

Behind the Headlines

Alexandria’s total leasing activity totaled 1.2 million rentable square feet (RSF) of space in the fourth quarter, reflecting healthy demand for its high-quality office/laboratory space. Of this, lease renewals and re-leasing amounted to 821,289 RSF, while leasing of development and redevelopment space totaled 6,279 RSF.

The company registered a negative rental rate of 9.9% during the quarter. On a cash basis, the rental rate decreased 5.2%. As of Dec. 31, 2025, the occupancy of operating properties in North America was 90.9%, up 0.3% from the prior quarter, while decreasing 3.7% from the year-ago quarter. Our estimate for the same was 91.1%.

On a year-over-year basis, same-property NOI decreased 6% and 1.7% on a cash basis.

In the reported quarter, investment-grade or publicly traded large-cap tenants accounted for 53% of the annual rental revenues in effect. The weighted average remaining lease term of all tenants is 7.5 years. For Alexandria’s top 20 tenants, it is 9.7 years. As of Dec. 31, 2025, the tenant receivable balance was $6.7 million.

For the fourth quarter of 2025, Alexandria completed dispositions and sales of partial interests worth $1.47 billion. During the fourth quarter, the company placed into service one development project aggregating 139,979 RSF, which is 100% occupied at 10075 Barnes Canyon Road, delivering $10 million of incremental annual NOI.

However, interest expenses jumped 18% year over year to $65.7 million.

Liquidity

The company exited the fourth quarter with cash and cash equivalents of $549.1 million, down from $579.5 million as of Sept. 30, 2025. It had $5.3 billion of liquidity at the end of the reported quarter.

The net debt and preferred stock to adjusted EBITDA was 5.7X, and the fixed-charge coverage was 3.7X for the fourth quarter of 2025, on an annualized basis. Its weighted average remaining term of debt was 12.1 years, the longest among S&P 500 REITs.

2026 Outlook

Alexandria provided its 2026 AFFO per share guidance in the range of $6.25-$6.55. The Zacks Consensus Estimate for the same is currently pegged at $6.42.

The company expects occupancy of operating properties in North America to be between 87.7% and 89.3%. Rental rate changes for lease renewals and re-leasing of space to be within negative 2% to growth of 6%. Same-property NOI performance is projected in the range of negative 9.5%-7.5%.

Dispositions and sales of partial interests are estimated between $2.1 billion and 3.7 billion.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

Currently, Alexandria Real Estate Equities has a poor Growth Score of F, a score with the same score on the momentum front. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for value investors.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Alexandria Real Estate Equities has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Alexandria Real Estate Equities is part of the Zacks REIT and Equity Trust - Other industry. Over the past month, Prologis (PLD), a stock from the same industry, has gained 9%. The company reported its results for the quarter ended December 2025 more than a month ago.

Prologis reported revenues of $2.09 billion in the last reported quarter, representing a year-over-year change of +8%. EPS of $1.49 for the same period compares with $1.50 a year ago.

Prologis is expected to post earnings of $1.48 per share for the current quarter, representing a year-over-year change of +4.2%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.7%.

Prologis has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.

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This article originally published on Zacks Investment Research (zacks.com).

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