Brief Note on Alexandria Real Estate

Some members have wanted an update on Alexandria Real Estate (ARE), pumped hard by some authors they have been reading. Here is a brief note about that.

Alexandria Real Estate (ARE) is the only REIT focused only on life science properties. Their increasing emphasis over time has been to develop “life-science mega campuses,” where many firms co-exist and can benefit from network effects.

There was a big increase in life-science activity leading up to the pandemic, which boosted it further. In response, many firms tried to do life-science properties.

Many of these represented “stupid supply,” poorly located or otherwise unable to compete for tenants. A lot of them were built on spec. This was especially true in South San Francisco.

It did not help that these projects co-incided with the rapid rise in interest rates, either.

Alexandria is doing OK working through the lull, even as their ability to push rents has been impacted. They also have been using the usual bag of tricks to raise funds and share risks during the difficult times of the moment.

I did a thorough workup on them last February, published on Seeking Alpha. My next one will be sometime in 2025.

But I do have a little bit to say, which may help you navigate the noise. Pretty much everything you need to know is captured in this plot, which has a couple curves I did not show then: