Alexandria Real Estate Equities (ARE) Q2 2024 earnings summary

Executive summary

• Achieved strong operating and financial performance in Q2 2024, with FFO per share (diluted, as adjusted) of $2.36, up 5.4% year-over-year, and 1H24 FFO per share of $4.71, despite macroeconomic uncertainty and sector headwinds.

• Net income attributable to common stockholders was $42.9M ($0.25/share) for Q2 2024, down from $87.3M ($0.51/share) in Q2 2023; six-month net income was $209.8M ($1.22/share), up from $162.5M ($0.95/share) year-over-year.

• Continued strategic focus on mega campus model, with 74% of annual rental revenue from these assets and a goal to exceed 90% in coming years; 53% of ARR from investment-grade or large cap tenants.

• Maintained high-quality tenant relationships, strong liquidity of $5.6B, and a fortress balance sheet, positioning for future sector recovery.

• Alexandria was added to the Health Care REITS industry under GICS and to the FTSE NAREIT Equity Health Care Index in June 2024.

Financial highlights

• Total revenues for Q2 2024 were $766.7M, up 7.4% year-over-year; 1H24 revenues were $1.54B, up 8.6%.

• Same property NOI growth for Q2 2024 was 1.5% (3.9% cash basis); occupancy was stable at 94.6%.

• Leasing volume reached 1.1M RSF in Q2 and 2.3M RSF for the first half of 2024, with Q2 rental rate increases of 7.4% GAAP and 3.7% cash; first half increases were 26.2% GAAP and 15% cash.

• Adjusted EBITDA margin was 72% for Q2 2024; net debt and preferred stock to Adjusted EBITDA was 5.4x.

• Dividend declared for Q2 2024 was $1.30/share, with a payout ratio of 55% and a yield of 4.4% as of June 30, 2024.

Outlook and guidance

• 2024 FFO per share (diluted, as adjusted) guidance is $9.41–$9.53, with a midpoint of $9.47, representing 5.6% growth; EPS guidance is $2.98–$3.10.

• Occupancy expected to remain 94.6–95.6% at year-end 2024.

• Same property NOI growth (cash basis) projected at 3–5% for 2024; guidance for same property NOI growth remains at 1.5% (4% cash basis) at the midpoints.

• Disposition and equity guidance updated to $1.55B midpoint, reflecting funding for Tech Square ground lease extension.

• Plan to pause future ATM equity issuances for at least the next quarter.