Yahoo Finance Alexandria (ARE) Secures Lease at its Mega Campus in San Diego
Alexandria Real Estate Equities, Inc. ARE recently clinched a new 10-year lease with a pharmaceutical company for 127,382 rentable square feet (RSF) at 10075 Barnes Canyon Road on the SD Tech by Alexandria mega campus in the Sorrento Mesa submarket of San Diego. With the execution of this lease, the tenant has increased its San Diego footprint by nearly 53%.
Strategically designed to attract tenants and retain and motivate top talent, this mega campus offers a unique range of customized amenities. These amenities consist of various dining options, a health and wellness center, premier meeting and conference areas, a spacious lawn and a central park spanning seven acres.
With the securing of this anchor lease, the 253,079 RSF Class A+ development is now 70% leased prior to its scheduled completion in 2025. Moreover, Alexandria's 1.2 million RSF pipeline of under-construction mega campus development projects in San Diego is now 94% leased, reflecting the advantages of its mega campus platform and leading life science industry brand.
Since June 1994, Alexandria has been actively involved in the San Diego region, playing a pivotal role in the region’s growth and transformation into one of the nation's top life science clusters. Over the past three decades, Alexandria has strategically concentrated on aggregating high-quality assets into well-located mega campuses such as SD Tech while also building reliable relationships with the life science community. As a result, the company has solidified its dominant position in the heart of the San Diego Science Sector, comprising Torrey Pines, University Town Center and Sorrento submarkets.
Alexandria's irreplicable asset base in San Diego, as of Mar 31, 2024, comprised 14.3 million RSF, with 7.8 million RSF currently in operation that is 95.2% occupied, outperforming market occupancy.
Alexandria caters to a diversified tenant base comprising high-quality companies, ranging from multinational pharmaceutical companies, public and private biotechnology companies, manufacturers of complex medicines and top-tier investment-grade companies and institutions, as well as technology entities.
Alexandria’s total leasing activity aggregated 1.1 million RSF of space in the first quarter of 2024, reflecting healthy demand for its high-quality office/laboratory space. As of Mar 31, 2024, mega campuses accounted for 74% of the annual rental revenues in effect, and investment-grade or publicly traded large-cap tenants accounted for 52% of the annual rental revenues in effect.
The weighted average remaining lease term of all tenants is 7.5 years as of Mar 31, 2024, increasing from 7.4 years at the end of the prior quarter. For Alexandria’s top 20 tenants, it is 9.7 years, increasing from 9.6 years as of the end of the prior quarter. Given the healthy demand for its premium assets, this upbeat trend is likely to continue in the upcoming period. This ensures steady rental revenues over the long term.
Over the past year, shares of this Zacks Rank #3 (Hold) company have gained 0.3% compared with the industry's upside of 1.9%.
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Stocks to Consider
Some better-ranked stocks from the broader REIT sector are Americold Realty Trust COLD and Lamar Advertising LAMR, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for COLD’s 2024 FFO per share has increased 1.3% upward over the past week to 78 cents.
The Zacks Consensus Estimate for LAMR’s current-year FFO per share has moved 5.9% northward in the past two months to $1.44.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.
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