Alexandria Real Estate Books $637.9 Million In Impairments, Keeps Its $6.40 Profit Forecast Midpoint
The life science landlord wrote down assets it plans to sell, while third-quarter leasing hit its highest volume since the fourth quarter of 2024.
Alexandria Real Estate Equities, which owns lab and office space for life science tenants, lost $638.5 million attributable to common stockholders in the third quarter, or $3.74 per share, after $637.9 million of write-downs on real estate it has classified as held for sale. The company reported the results Monday and left the midpoint of its 2026 funds-from-operations forecast at $6.40 per share.
Write-downs drive the loss
The quarterly loss compares with a $234.9 million loss a year earlier, or $1.38 per share. For the first nine months, the net loss was $351.4 million, or $2.06 per share, against $356.1 million, or $2.09, a year ago.
The largest impairment, $343.3 million, covers a Fenway development project in Boston that is expected to be sold to an institutional user. Others cover vacant Palo Alto office properties ($135.3 million), San Carlos operating properties ($79.2 million), an Austin land parcel ($50.4 million) and a Palo Alto development project ($41.6 million). The company said each would have required significant capital to complete or convert for laboratory use.
Funds from operations, as adjusted, a standard REIT cash-earnings measure, were $1.54 per share, down from $2.22 a year earlier. For nine months, they were $5.00 per share against $6.85.
Leasing rebounds, occupancy edges up
Total leasing reached 1,236,030 square feet, the highest quarterly volume since the fourth quarter of 2024. It included 450,961 square feet of previously vacant space, the second-highest quarterly amount in company history.
Occupancy of operating properties was 87.1%, up from 86.9% at June 30. Rents on renewed and re-leased space fell 2.4%. Same-property net operating income fell 6.7% from a year earlier.
Alexandria is a REIT with 36.5 million square feet of operating properties, clustered in research hubs including Greater Boston, San Diego, the San Francisco Bay Area and Seattle. It also invests in life science companies through a venture platform.
Guidance narrows, asset sales accelerate
The 2026 adjusted FFO range is now $6.38 to $6.42 per share, narrowed from $6.35 to $6.45 set on August 3. The company lowered its fixed-charge coverage target to 3.4x to 3.9x from 3.6x to 4.1x, mainly because of its $1.0 billion junior subordinated note issuance in August.
In October, Alexandria sold an approximately 29% noncontrolling interest in its Campus Point by Alexandria megacampus in San Diego to a new joint venture partner for $475.0 million. Completed sales total $716.8 million; with pending deals, the company puts the figure at about $2.62 billion, above the $1.90 billion guidance midpoint, so some proceeds may be deferred into 2027.
It also expects the sale of 421 Park Drive to close in the fourth quarter, cutting future construction spending by about $136 million. At 311 Arsenal Street, a pivot to advanced technology use cuts future spending by about $220 million.
Alexandria holds its earnings call Tuesday at 2:00 p.m. ET and plans to introduce 2027 guidance at its Investor Day on December 2.
