Alexandria Real Estate: Update On A Battleground Stock

Dear Landlords,

I want to extend a warm welcome to all our new members! We recommend that you start by reading our Welcome Letter by clicking here. It explains why we invest in real estate through REITs and how to get started.

As a reminder, our most recent "Portfolio Review" was shared with the members of High Yield Landlord on February 4th, 2025, and you can read it by clicking here.

You can also access our three portfolios via Google Sheets by clicking here.

New members can start researching positions marked as Strong Buy and Buy while taking into account the corresponding risk ratings.

If you have any questions or need assistance, please let us know.

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Alexandria Q4 Earnings: Update On A Battleground Stock

Alexandria Real Estate Equities (ARE) has been a major battleground stock in REIT-land.

The stock is down ~50% over the last three years, and this weakness has been the blood in the water to attract a high-profile short from activist investor Jonathan Litt. Though short interest in ARE had been falling for most of the last year, it recently began to spike again:

Data by YCharts

There's no denying that the short-sellers have been technically correct in their call thus far. ARE's stock price has fallen considerably, and to remind readers of the obvious, we here at High Yield Landlord do not have the ability to consistently time the bottom of any selloff. In hindsight, we bought in too early as we often do.

But we are fundamental investors. If the only important information about a company was its stock price, then we would have no value to add.

In our view, the long-term investment thesis for ARE has not changed. Today, at a price-to-FFO of about 10x and a price-to-AFFO of about 12.5x, ARE is cheaper than anytime in its history outside of the Great Financial Crisis. Back then, the company was more heavily leveraged and owned a lower-quality portfolio. Adjusted for that, ARE is actually even cheaper today:

Data by YCharts

While we can't time the bottom nor predict how long exactly ARE's fundamental challenges will persist, we remain confident in its enduring quality and competitive advantages within life science real estate.

Here are some reminders of our thesis: