SEC Filings

Alexandria's $1 Billion Hybrid Notes Pay 7.250% And Let It Cut Property-Sale Target By $1.0 Billion

The life science landlord's 10-Q shows a $1.00 billion junior note issue that rating agencies count half as equity, with leverage still above target.

Matteo Parrino Jonathan Ponciano

Matteo Parrino, Jonathan Ponciano

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Alexandria's $1 Billion Hybrid Notes Pay 7.250% And Let It Cut Property-Sale Target By $1.0 Billion

Alexandria Real Estate Equities, a real estate investment trust that owns laboratory and office space for life science tenants, issued $1.00 billion of 7.250% junior subordinated notes in August and used them to cut its 2026 property-sale goal by $1.0 billion, according to its quarterly report filed Monday. Key rating agencies treat half the notes as equity, but leverage still sits above the company's year-end target.

Pricey paper, half counted as equity

The notes are due in 2057 and pay 7.250% through February 15, 2032. After that the rate resets every five years to the five-year Treasury rate plus 2.889%, with a 7.250% floor.

Alexandria can defer interest for up to five consecutive years, though the terms restrict dividends and share repurchases while it does. It can redeem the notes at par starting November 17, 2031.

Rating agencies give the notes 50% equity credit in their leverage and other credit metrics, the company says. The filing puts the effective interest rate on the issue at 7.37%, against 5.41% on the $750 million of senior notes it sold in February.

Sales target falls to $1.90 billion

The midpoint of Alexandria's 2026 guidance for dispositions and partial-interest sales is now $1.90 billion. The prior quarterly filing carried $2.90 billion, and the company ties the $1.0 billion reduction directly to the notes.

In October, Alexandria sold roughly 29% of the Campus Point by Alexandria Megacampus joint venture, a noncontrolling stake, for $475.0 million, leaving it with about 30%. Completed sales and partial-interest sales total $717 million so far, with $355 million in pending deals backed by non-refundable deposits.

Leverage above target as rates climb

Net debt and preferred stock to Adjusted EBITDA ran 6.9x annualized for the third quarter, or 6.6x pro forma for the Campus Point sale. The fourth-quarter target is 5.6x to 6.2x. Adjusted EBITDA margin was 65%.

The company reported a third-quarter net loss attributable to common stockholders of $3.74 per share, including $637.9 million of real estate impairment charges tied to assets held for sale. Operating occupancy fell to 87.1% from 90.9% at the end of 2025.

The filing says the 10-year Treasury yield rose above 5% in October, its highest since 2002. That limits financing for buyers and will likely hurt the timing and pricing of the asset sales the leverage plan depends on.

Alexandria discusses results on a conference call Tuesday, and its December 2 Investor Day is where it has said it will introduce 2027 guidance.

Sources

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