Alexandria Real Estate Equities

Alexandria’s competitive edge rests on its concentrated mega-campus strategy in the seven deepest U.S. life science clusters, which combine high barriers to entry with tenant switching costs from specialized build-outs and regulatory fit-outs. Reputation and a deep installed base reinforce a virtuous cycle of tenant retention and expansion.

As of June 30, 2025, 53% of annual rental revenue comes from investment-grade or publicly traded large-cap tenants, and the weighted-average remaining lease term is 7.4 years, supporting long-duration cash flows. 97% of leases have annual escalators, and 91% are triple net, with 92% including capital expenditure recapture, structurally lowering landlord capex and sustaining margins.

Risks to the moat include temporary supply in select submarkets and funding cycles in biotech, but wet-lab needs and campus ecosystems are difficult to virtualize.

Embedded rent escalators and positive leasing spreads provide tangible pricing power. In 2Q25, re-leasing and renewal spreads were approximately 5.5% (6.1% cash), and 97% of leases include annual escalators near 3%. Alexandria’s campus format and limited like-for-like alternatives in AAA clusters enhance negotiating leverage over time.

Headwinds include periods of elevated sublease supply and slower venture funding that can delay leasing decisions, temporarily pressuring occupancy. Overall, the rent-setting mechanism is structurally favorable even through cycles.

Recurrence is strong but not immune to cycles: North America occupancy was 90.8% as of June 30, 2025, reflecting known expirations, yet rises to roughly 92.5% including already-leased space toggling on as tenant improvements complete.

Collections remained near 100% and 84% of the last‑12‑months leasing demand came from existing tenants, supporting visibility. Weighted-average lease term of 7.4 years and a tenant mix skewed to investment-grade or large-cap public companies provide stability.

The core secular trend for life science R&D remains positive, but the near-term outlook includes choppiness in certain submarkets.

The balance sheet is at the upper end of quality among REITs: liquidity of about $4.6B, net debt and preferred to Adjusted EBITDA of 5.9x (2Q25 annualized), fixed-charge coverage of 4.1x, and only 9% of total debt maturing through 2027. Weighted-average remaining debt term is 12 years, and since 2021 ~97% of debt has been fixed at quarter-end, materially reducing rate volatility.

Unsecured covenants were comfortably met as of 2Q25. Credit ratings sit in the top decile among U.S. REITs per company disclosures.

Management is recycling capital and moderating growth to protect the franchise. Dispositions totaled about $1.37B in 2024 and a 2025 plan targets roughly $1.95B of additional asset sales and partial interests, with proceeds funding development and balance sheet strength.

The company authorized a $500M buyback in December 2024 and had repurchased about $200M by late January 2025; in 2Q25, no repurchases were made as priorities shifted to liquidity. The common dividend was maintained at $1.32 per quarter in 2025, with a 1Q25 payout ratio of about 57% vs FFO, conserving cash during a leasing trough.

Venture investment marks can add noise but are non-core.

Founder-led culture with long-tenured leadership. Executive Chairman and founder Joel Marcus and CEO Peter Moglia have stewarded Alexandria through multiple cycles, consistently prioritizing cluster strength, development underwriting discipline, and capital prudence.

The team’s credibility with blue-chip tenants is evidenced by the July 2025 signing of the largest life science lease in company history, a 466,598 RSF, 16‑year build-to-suit at Campus Point. Executive bench depth and long internal tenures lower key-person risk.