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Alexandria (ARE) Prices 7M Share Offering for Forward Sale

Zacks Equity Research
·3-min read

Alexandria Real Estate Equities, Inc. ARE has announced the pricing of its upsized public offering of 7 million shares of common stock at $210 per share, which will be offered on a forward basis. Moreover, ARE granted the underwriters a 30-day option to buy up to 1.05 million additional shares.

The offering, expected to close on or about Jan 7, is subject to customary closing conditions.

The REIT entered into forward sale agreements with JPMorgan Chase Bank, N.A., Bank of America, N.A., Citibank, N.A., Goldman Sachs & Co. LLC and Royal Bank of Canada for the 7 million shares.

Alexandria will not receive any proceeds from the sale of shares initially. However, if funds flow in upon the future settlement of forward sale agreements, ARE will then finance its pending acquisitions and advance the construction of its highly leased development and redevelopment projects.

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Moreover, the remaining proceeds will be used for general working capital and other corporate needs, including the reduction of any outstanding balance in its unsecured senior line of credit and outstanding indebtedness under the commercial paper program.

The common stock offering will boost Alexandria’s financial flexibility. It will offer ample scope for deploying capital to long-term growth opportunities and help meet its debt obligations. Further, a forward sale arrangement will enable ARE to set in the price of such shares at the time of pricing of the offering, while delaying share issuance and the receipt of net proceeds until a funding requirement comes up.

Alexandria is well-poised to grow with focus on Class A properties concentrated on the urban campuses, primarily for the life science and technology entities. However, it has a huge development pipeline. This exposes ARE to the risk of rising construction costs and lease-up concern.

Shares of this presently Zacks Rank #4 (Sell) player have appreciated 18.5%, outperforming the industry’s growth of 9.9% in the past six months.

Image Source: Zacks Investment Research

Other Stocks to Consider

Some other top-ranked stocks from the REIT sector are Extra Space Storage EXR, Cedar Realty Trust CDR and Cubesmart CUBE.

Extra Space flaunts a Zacks Rank #1 (Strong Buy) at present. Shares of EXR have gained 29.7% in the past six months. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Extra Space’s 2021 funds from operations (FFO) per share has been raised 3.3% over the past two months. Over the last four quarters, EXR’s FFO per share surpassed the consensus mark on all occasions, the average being 5.9%.

The Zacks Consensus Estimate for Cedar Realty’s 2021 FFO per share has been raised 2.6% to $2.36 in the past two months. Over the last four quarters, CDR’s FFO per share surpassed the consensus mark twice and missed the same on the other two occasions, the average being 6.4%.

Currently, CDR sports a Zacks Rank of 1. Shares of Cedar Realty have appreciated 51.3% in the past six months.

The Zacks Consensus Estimate for Cubesmart’s 2021 FFO per share has been raised 2.4% over the past two months. Over the last four quarters, CUBE’s FFO per share surpassed the consensus mark on all occasions, the average being 7.1%.

Cubesmart flaunts a Zacks Rank of 1 at present. Shares of CUBE have rallied 13.5% in the past six months.

Note: Anything related to earnings presented in this write-up represents FFO — a widely used metric to gauge the performance of REITs.


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Alexandria Real Estate Equities, Inc. (ARE) : Free Stock Analysis Report

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Cedar Realty Trust, Inc. (CDR) : Free Stock Analysis Report

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Zacks Investment Research