Alexandria Real Estate Equities Facing Increasing Earnings Headwinds, BofA Says

MT Newswires Live11-13 23:33

Alexandria Real Estate Equities (ARE) will likely see growing earnings headwinds in 2027 and 2028 as better leasing activity is unlikely to offset near-term vacancies and tenant wind-downs, BofA Securities said in a note Friday.

The company saw improved leasing activity in the last two quarters, but about 40% of 2027 expirations is expected to "go dark, with a March weighted average expiration and 9-24 months of downtime," the note said.

Despite 60% seeing active tenant interest, lease start timing will likely be an earnings headwinds, BofA said, adding it now expects 2027 average occupancy to declined 353 basis points year on year to 83.7%.

Meanwhile, tenant credit is an "additional occupancy and earnings risk," BofA said, adding the 2026 outlook now includes a $30 million to $35 million FFO decrease due to potential tenant wind-downs, up from $25 million to $30 million in Q2.

BofA highlighted Alexandria also expects at least a similar level of FFO reduction in 2027.

BoFA downgraded the company to underperform from neutral and lowered its price target to $45 from $55.

Price: 43.31, Change: -0.99, Percent Change: -2.25

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