Alexandria Real Estate Equities (ARE) Up 5.7% Since Last Earnings Report: Can It Continue?

It has been about a month since the last earnings report for Alexandria Real Estate Equities (ARE). Shares have added about 5.7% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Alexandria Real Estate Equities due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Alexandria's Q2 FFO Beats Estimates on Leasing Momentum, Rental Rates Improve

Alexandria reported second-quarter 2026 FFO, as adjusted, per share of $1.73, beating the Zacks Consensus Estimate of $1.65 by 4.9%. FFO declined 25.8% from $2.33 in the year-ago quarter.

Revenues fell 13% year over year to $662.8 million but surpassed the consensus estimate of $649 million by 2.1%. The results benefited from leasing volume exceeding 1 million rentable square feet, strong tenant collections and continued development deliveries.

Alexandria's Leasing Volume Accelerates in Q2

Alexandria executed leases covering approximately 1 million RSF, up 60% from 647,356 square feet in the preceding quarter. The total also exceeded the second-quarter 2025 through first-quarter 2026 quarterly average of 952,365 RSF by roughly 87,000 RSF.

Lease renewals and re-leasing accounted for 640,998 square feet. Leasing of previously vacant space totaled 329,148 square feet, while development and redevelopment leasing contributed 68,771 square feet. Existing tenants generated 68% of the reported quarter's leasing activity.

Alexandria's Rental Rates Show Improvement

Rental rates on lease renewals and re-leasing of space declined 0.7% during the second quarter, marking a sharp improvement from the 15% decrease recorded in the first quarter of 2026. On a cash basis, rental rates fell 4.3% compared with a 15.8% decline in the prior quarter.

The tenant base continued to support cash-flow visibility. Investment-grade or publicly traded large-cap tenants generated 57% of annual rental revenues. Moreover, 97% of leases contained annual rent escalations, while the weighted-average remaining lease term stood at 7.7 years.

Alexandria's Occupancy Remains Under Pressure

Occupancy of operating properties was 86.9% as of June 30, 2026, down from 87.7% at the end of March 2026. The decline reflected previously disclosed lease expirations and the reclassification of space at 3000 Minuteman Road from redevelopment to operating.

Executed leases covering 1.4 million RSF have not yet commenced. Including this space, occupancy would have been 90.9%. These leases are expected to generate approximately $69 million in annual rental revenues, with a weighted-average future occupancy date of November 2026.

Alexandria's Same-Property NOI Declines

Same-property NOI decreased 10.6% year over year, while same-property NOI on a cash basis declined 8.6%. The drop was due to lower occupancy, primarily reflecting previously disclosed lease expirations with expected downtime.

The company’s operating margin was 69%, while the adjusted EBITDA margin came in at 67%. Interest expense increased 16.4% year over year to $64.3 million, reflecting the impact of debt issued at higher rates and the repayment or repurchase of lower-cost borrowings.

Alexandria Advances Its Development Pipeline

During the second quarter, Alexandria placed into service a 426,927-RSF development project occupied by Bristol Myers Squibb in San Diego. The property generated incremental annual NOI of $57 million.

The company expects projects scheduled for delivery in the second half of 2026 to contribute approximately $42 million in incremental annual NOI.

Alexandria Maintains Strong Liquidity

Alexandria ended the second quarter with $3.60 billion of liquidity and a weighted-average remaining debt term of 9.7 years. Only 6% of total debt matures through 2028. Net debt and preferred stock to adjusted EBITDA was 7.0X, while fixed-charge coverage was 3.3X on a quarter-annualized basis.

The company is targeting a fourth-quarter 2026 annualized leverage ratio of 5.6 to 6.2. Alexandria expects dispositions, partial-interest sales and other capital sources to help improve leverage during the second half of 2026.

Alexandria Narrows Its 2026 FFO Outlook

Alexandria narrowed its 2026 adjusted FFO guidance to $6.35-$6.45 per share from $6.30-$6.50. The midpoint remained unchanged at $6.40, reflecting greater visibility into full-year results. The company maintained its year-end occupancy outlook of 86.2-87.8%. It also continues to expect same-property NOI to decline 8.5-10.5% and rental rates on renewals and re-leasing to decrease 1-9%.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

VGM Scores

At this time, Alexandria Real Estate Equities has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. However, the stock has a grade of B on the value side, putting it in the second quintile for value investors.

Overall, the stock has an aggregate VGM Score of D. 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. Notably, 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 belongs to the Zacks REIT and Equity Trust - Other industry. Another stock from the same industry, Ventas (VTR), has gained 1.3% over the past month. More than a month has passed since the company reported results for the quarter ended June 2026.

Ventas reported revenues of $1.73 billion in the last reported quarter, representing a year-over-year change of +21.7%. EPS of $0.14 for the same period compares with $0.87 a year ago.

Ventas is expected to post earnings of $0.99 per share for the current quarter, representing a year-over-year change of +12.5%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.1%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Ventas. Also, the stock has a VGM Score of D.

Research Chief Names "Single Best Pick to Double"

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Zacks Investment Research