Alexandria Q1 2020 Earnings Report
Key Takeaways
Alexandria Real Estate Equities reported Q1 2020 revenues of $439.9 million, a 22.6% increase over Q1 2019. Diluted net income per share was $0.14, and FFO per share, as adjusted, was $1.82. The company highlighted operational excellence and a strong balance sheet with significant liquidity.
Alexandria's tenants are at the forefront of fighting COVID-19, with over 60 tenants focused on increasing testing capacity, advancing new therapies, and developing preventative vaccines.
The company maintains a strong and flexible balance sheet with $4.0 billion of liquidity as of March 31, 2020, and zero debt maturing until 2023.
Alexandria has a REIT industry-leading, high-quality tenant roster, with 51% of annual rental revenue from investment-grade or publicly traded large cap tenants and a weighted-average remaining lease term of 7.8 years.
The company achieved strong rental rate increases of 46.3% for 1Q20, representing their highest quarterly rental rate increase over the past 10 years.
Alexandria
Alexandria
Alexandria Revenue by Segment
Forward Guidance
Guidance for 2020 has been updated to reflect our current view of existing market conditions and assumptions for the year ending December 31, 2020, including the estimated impact stemming from the COVID-19 pandemic on our financial and operating results.
Positive Outlook
- Projected reduction in funds from operations, per share – diluted, as adjusted, primarily consisting of a reduction of eight cents, or one percent, in projected revenues from our retail tenancy and transient/short-term parking over the remaining three quarters of 2020
- Reduction is expected to be weighted toward 2Q20 (as of March 31, 2020, only 0.8% of our annual rental revenue was related to retail tenants)
- Approximately net neutral impact related to higher interest costs related to the issuance of our $700.0 million unsecured senior notes payable in March 2020
- Approximately net neutral impact updated timing of deliveries of our current development and redevelopment projects as a result COVID-19-related construction disruptions, including various executive orders restricting construction activities
- offset by an improvement in EBITDA from our core operations, including early lease renewals and re-leasing of space
Challenges Ahead
- Reduction in our forecasted remaining required sources of capital from real estate dispositions, partial interest sales, and common equity from $925 million to zero dollars
- Reduction in construction by an aggregate $940 million at the midpoints of each respective guidance range
- Reduction in acquisitions by an aggregate $940 million at the midpoints of each respective guidance range
- There can be no assurance that actual amounts will not be materially higher or lower than these expectations.
- Construction disruptions resulting from COVID-19 and various executive orders restricting construction activities may further impact construction and occupancy forecast
Revenue & Expenses
Visualization of income flow from segment revenue to net income