We use cookies to improve your experience, analyze site usage, and show relevant ads. Go to our Privacy Policy for details.
The call presented a balanced picture: solid corporate-level strengths (strong liquidity, long debt duration, active disposition pipeline, dominant market share in core markets, G&A reductions, and maintained full-year FFO midpoint) contrasted with meaningful near-term operational pressures (drop in occupancy, a double-digit same-property NOI decline, rental-rate pressure on renewals, elevated lease expirations and vacancy headwinds, and dependence on dispositions to reduce leverage). Management articulated clear mitigations (leasing momentum on development/redevelopment, JV/disposition flexibility, and capital/expense discipline) but multiple near-term execution and market risks remain.
Management reaffirmed 2026 FFO per share (diluted, as adjusted) midpoint of $6.40 while tightening the range and narrowed 4Q‑26 FFO guidance to $1.40–$1.50 (midpoint $1.45); 1Q FFO per share diluted as adjusted was $1.73. Company ended 1Q occupancy at 87.7% (down 320 bps), updated year‑end 2026 occupancy midpoint to 87% (from 88.5%, -1.5%), and lowered same‑property NOI midpoint to down 9.5% (from down 8.5%, -1%). Leasing totaled 647,000 sq ft in 1Q with 118,000 sq ft executed and 276,000 sq ft in LOIs (394,000 sq ft total development/redev activity), 1.1M sq ft of previously vacant space is leased for average September delivery, and management expects ~900,000 sq ft of leasing in Q2. Capitalized interest was $70M in 1Q (down ~$12M q/q) and guidance was reduced ~$5M at the midpoint; realized investment gains guidance remains $60M–$90M (1Q realized gains $18M). Balance sheet metrics: $4.2B liquidity, corporate ratings in top 15% of U.S. REITs, longest average remaining debt maturity (~10 years), current quarterly‑annualized net debt/adjusted EBITDA ~6.8x (expected to fall to a 4Q target of 5.6–6.2x), dispositions/sales of partial interest midpoint $2.9B (≈80% pending/identified), G&A guidance $134M–$154M for 2026 (midpoint ≈$144M, ~14% savings vs 2024; combined 2025–26 savings ~$76M), trailing 12‑month G&A as % of NOI 6% (vs ~14.3% S&P REIT avg.), 1.9M sq ft under construction (77% leased, ~600k stabilizing in 2026 at 93% leased) and 1.6M sq ft (5 projects) under evaluation with ~$567M land basis and ~$1.3B of projects having 2027 milestones.
FFO per share diluted as adjusted of $1.73 for 1Q 2026; reaffirmed full-year 2026 midpoint guidance of $6.40 per share (range tightened). Fourth quarter 2026 guidance refined to $1.40–$1.50 (midpoint $1.45), representing only a $0.05 reduction from prior midpoint assumptions.
Tremendous liquidity of $4.2 billion; longest average remaining debt maturity among S&P 500 REITs at 10 years. Realized $366 million gain from an unsecured bond tender that reduced overall debt. Reiterated 4Q 2026 net debt / annualized adjusted EBITDA target of 5.6–6.2x (expect leverage to decline in H2 2026).
Large-scale dispositions and sales of partial interest plan centered on $2.9 billion midpoint for 2026 dispositions and sales; ~80% of the $2.9 billion midpoint is pending or identified and in process. Plan assumes 10–25% land and 75–90% core/noncore/JV mix.
Development and redevelopment leasing and LOIs aggregated ~394,000 sq ft (118,000 sq ft executed; 276,000 sq ft signed LOIs). Cumulative leasing of vacant space of 1.1 million sq ft expected to deliver on average in September. Q2 early activity suggests an uptick to ~900,000 sq ft of expected leasing volume.
Demonstrated leasing outperformance in largest markets: Greater Boston captured ~20% of total leases (153% of Alexandria's market share), SF Bay ~30% (253% of market share), San Diego ~67% (208% of market share). Mega campuses represent 78% of total ARR.
55% of annual rental revenue (ARR) from investment-grade or publicly traded large-cap tenants; top 20 tenants ~80% investment grade/large-cap with nearly a 10-year weighted average lease term for top 20. Rent steps approaching ~3% on 97% of leases; adjusted EBITDA margin of 66% for 1Q 2026.
G&A savings of $7.4 million compared with 2024 quarterly average; on track to achieve 2026 G&A guidance of $134–$154 million (around 14% savings at midpoint vs 2024). Combined 2025–2026 G&A savings expected ~ $76 million vs 2024.
1.9 million sq ft of projects under construction (77% leased), including ~600,000 sq ft expected to stabilize in 2026 (93% leased). 1.6 million sq ft across five projects under evaluation for business/financial strategy with milestones into 2027.
Disposition of 409/499 Illinois Street in Mission Bay closed at $1,645 per sq ft — the highest ever achieved for a lab asset in San Francisco — demonstrating strong pricing for high-quality life science assets (asset was 40% occupied).
Good day, and welcome to the Alexandria Real Estate Equities' First Quarter 2026 Conference Call. [Operator Instructions] Please note, today's event is being recorded. I'd now like to turn the conference over to Paula Schwartz with Investor Relations. Please go ahead.
Thank you, and good afternoon, everyone. This conference call contains forward-looking statements within the meaning of the federal securities laws. The company's actual results might differ materially from those projected in the forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained in the company's periodic reports filed with the Securities and Exchange Commission. And now I'd like to turn the call over to Joel Marcus, Executive Chairman and Founder. Please go ahead, Joel.
Thank you, Paula, and welcome, everybody, to our first quarter earnings call. With me today are Marc, Peter and Jenna. First of all, as I always do, I want to say a thank you to our remarkable family team for their awesome efforts during a tough first quarter operating environment. And as they know well, we are motivated each and every day by our solemn mission to enable this precious life science industry, one of the most treasured and innovative industries on the face of the planet to discover and bring to patients life-saving and life-changing therapies. And how many of us, friends, loved ones still suffer from the likes of Parkinson's, ALS, pancreatic, colon, breast, et cetera, cancers, dementia to name a few. 20...