Send me real-time posts from this site at my email
Zacks

Why Should You Add Alexandria (ARE) Stock to Your Portfolio?

Alexandria Real Estate Equities, Inc.’s ARE high-quality, niche assets — life science, technology and agtech properties — in strategic markets have enabled it to enjoy high demand and occupancy. Further, with an impressive investment-grade balance sheet, the company has ample financial flexibility to sail through the pandemic-induced volatility and uncertainties, and withstand any credit crisis.

Over the past month, the Zacks Consensus Estimate for its 2021 funds from operations (FFO) per share has moved 8.7% upward, reflecting analysts’ bullish expectations.

Moreover, shares of this Zacks Rank #2 (Buy) company have rallied 10.7% over the past year as against the industry's decline of 3.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

Given its impressive operating fundamentals, there is room for further share-price appreciation.

Factors That Make Alexandria a Solid Pick

High-quality assets in desirable markets driving occupancy: The company focuses on Class A properties concentrated in key markets, including Greater Boston, San Francisco, New York City, San Diego, Seattle, Maryland and Research Triangle. These locations are characterized by high barriers to entry and a limited supply of available spaces. This is spurring significant demand for its premium spaces and boosting occupancy level. In fact, the company enjoys a solid 10-year historical occupancy rate of 96% at operating properties in North America. Such a high level of occupancy is anticipated to continue in the upcoming quarters as well.

Diverse and high-quality tenants contribute to steady revenues:  The company has a diverse tenant base, consisting of international pharmaceutical, biotech and institutional entities that are relatively independent from the business cycle. As of third-quarter 2020, investment-grade or publicly-traded large-cap tenants accounted for 54% of annual rental revenues in effect. Productive and efficient tenants ensure steady rental revenues for the company.

Continued strong internal growth: During third–quarter 2020, Alexandria continued to record solid internal growth. Its total leasing activity aggregated to 1.2 million rentable square feet (RSF) of space during the September-end quarter. Lease renewals and re-leasing of space amounted to 605,765 RSF. On a year-over-year basis, same-property net operating income (NOI) was up 2.9%. The company registered strong rental rate growth of 39.9% in the reported quarter. Given the healthy environment and demand for its properties, this favorable trend is likely to continue.

Adequate financial flexibility and sustainable dividends: In light of the pandemic, Alexandria has taken measures to enhance its liquidity and sail through these uncertain times. The company had $3.9 billion of liquidity as of the end of the third quarter with minimal debt maturing prior to 2024. Moreover, as of the third-quarter end, the company enjoyed investment-grade credit ratings and a stable outlook from S&P Global Ratings, Fitch and Moody’s, respectively.

With no near-term debt maturities, Alexandria has ample funds to reward its shareholders with dividends. Notably, in December 2020, the company announced a 3% sequential hike in the fourth-quarter cash dividend to $1.09. Earlier, in June, the company had announced a 3% sequential hike in second-quarter dividends to $1.06. Such capital-deployment activities make Alexandria an attractive choice for investors.

Other Stocks to Consider

Extra Space Storage Inc.’s EXR Zacks Consensus Estimate for 2021 FFO per share has moved 7.3% upward to $5.43 over the past two months. The company currently carries a Zacks Rank of 2.

Arbor Realty Trust, Inc.’s ABR FFO per share estimate for 2021 has moved 1.4% upward to$1.43 over the past two month. Further, it carries a Zacks Rank of 2 at present.

City Office REIT, Inc. CIO FFO per share estimate for 2021 has moved 3.1% upward over the past 60 days. The company currently holds a Zacks Rank of 2.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

These Stocks Are Poised to Soar Past the Pandemic

The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.

Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.

See the 5 high-tech stocks now>>


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
 
Alexandria Real Estate Equities, Inc. (ARE): Free Stock Analysis Report
 
Extra Space Storage Inc (EXR): Free Stock Analysis Report
 
Arbor Realty Trust (ABR): Free Stock Analysis Report
 
City Office REIT, Inc. (CIO): Free Stock Analysis Report
 
To read this article on Zacks.com click here.

Welcome! Is it your First time here?

What are you looking for? Select your points of interest to improve your first-time experience:

Apply & Continue