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 5.3%–5.4% year-over-year, and 1H24 FFO per share of $4.71, despite macroeconomic uncertainty and sector headwinds.

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

• Occupancy in North America was stable at 94.6% as of June 30, 2024, with strong leasing activity totaling 1.1M sq ft in Q2 and 2.3M sq ft in the first half.

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

• 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

• Same property NOI growth was 1.5% (3.9% cash basis) for Q2 2024; full-year guidance midpoints remain at 1.5% and 4% (cash).

• Adjusted EBITDA margin was 72% for Q2 2024; FFO payout ratio at 55%; dividend declared for Q2 2024 was $1.30/share, with a 4.4% yield.

• Net debt and preferred stock to Adjusted EBITDA was 5.4x; fixed-charge coverage ratio was 4.5x; total debt and preferred stock to gross assets was 29%.

• Rental rate growth for lease renewals and releasing was 7.4% (3.7% cash) in Q2; full-year outlook is 11%-19% (GAAP) and 5%-13% (cash).

• Investment loss for Q2 2024 was $43.7M, including $33.4M realized gains, $12.8M impairments, and $64.2M unrealized losses.

Outlook and guidance

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

• Projected occupancy in North America at year-end 2024 is 94.6%–95.6%.

• Guidance for dispositions, sales of partial interests, and common equity increased to $1.55B midpoint.

• Expect to fund equity needs with $450M in retained cash flows after dividends in 2024.

• Same property NOI growth (cash basis) projected at 3–5% for 2024.