Alexandria Real Estate Equities, Inc. (ARE) saw its stock price decline approximately 9% on Tuesday, closing at $41.40 after touching a session low of $39.52. The drop followed the company's first-quarter earnings report, which revealed a significant decline in adjusted funds from operations (FFO) and revenue, despite a sharp increase in net income driven by a debt repurchase gain.
The Pasadena, California-based life-science real estate investment trust reported adjusted FFO of $1.73 per share for the first quarter, down from $2.30 per share in the same period last year. Total revenue fell to $671.0 million, compared to $758.2 million a year earlier, with rental income declining to $653.0 million from $743.2 million. Net income attributable to common stockholders, however, surged to $358.9 million, or $2.10 per diluted share, reversing a loss of $11.6 million, or 7 cents per share, in the prior-year quarter. The profit swing was largely due to a $366.4 million gain from the early repurchase of $1.33 billion in long-term debt for $952.2 million.
Occupancy and Rental Rate Pressures
Investors focused on the company's updated 2026 outlook, which reflected softer assumptions for occupancy and rental rates. Alexandria now projects year-end occupancy of 86.2% to 87.8%, down from a previous range of 87.7% to 89.3%. The company also reduced its expectations for rental-rate changes on renewals and re-leasing, now forecasting a decline of 9% to an increase of 1%. Operating occupancy stood at 87.7% as of March 31, slipping from 90.9% at the end of December, though management noted that already-leased but undelivered space would bring the rate back to 90.9%.
Leasing activity remained active, with 647,356 rentable square feet signed during the quarter, 72% of which came from existing tenants. However, rental rates on renewals and re-leasing fell 15.0% on a straight-line basis and 15.8% on a cash basis, underscoring pricing pressure in the lab space market.
Capital Plan and Analyst Reaction
Asset sales are central to Alexandria's strategy to meet its 2026 capital requirements. The company plans to generate approximately $2.9 billion through the sale of land, non-core holdings, and stakes in core properties. The company also maintained its 2026 adjusted FFO forecast at $6.30 to $6.50 per share, with a midpoint of $6.40.
BNP Paribas Exane lowered its price target on Alexandria to $44 from $50, reiterating an underperform rating. According to MarketBeat, the consensus target among analysts stands at $63.27, with three buy ratings, a dozen holds, and two sells.
Market Context and Risks
The stock's decline contrasted with mixed moves among other real estate names. Healthpeak Properties fell about 1.7%, while BXP gained 1.4% and Ventas rose 2.7% during the same period. Alexandria's 2026 outlook includes a $25 million to $30 million hit to FFO from expected tenant wind-downs, with management cautioning that losses of at least that magnitude could persist into 2026 and beyond.
Alexandria operates life-science real estate in key markets including Greater Boston, the Bay Area, San Diego, Seattle, Maryland, the Research Triangle, and New York City. As of March 31, the company reported 35.8 million rentable square feet in operating properties and 3.4 million rentable square feet of Class A/A+ space under construction.