Why Alexandria Real Estate Equities Was Diving This Week

The Motley FoolOct 31, 2025 8:15 AM

Key Points

The specialty REIT didn't look so special after posting third-quarter results.
It suffered year-over-year drops in key fundamentals.
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A disappointing quarterly earnings report and an analyst's recommendation downgrade combined to put the hurt on Alexandria Real Estate Equities (NYSE: ARE) stock over the past few trading days. According to data compiled by S&P Global Market Intelligence, shares of the real estate investment trust (REIT) had shed over 27% of their value week to date as of early Friday morning.

Third-quarter tumbles

The gloom descended early in the week. On Monday, following market close, Alexandria took the wraps off its third-quarter performance. For the period, the REIT suffered drops in both total revenue and funds from operations (FFO) not according to generally accepted accounting principles (GAAP).

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Specifically, the top line sagged by almost 5% to just under $752 million, while non-GAAP (adjusted) FFO slid by more than 7% to nearly $378 million. Compounding that, average occupancy for its properties declined to 91.4% from the year-ago 94.8%, quite a steep decline by REIT standards.

Investors didn't get any relief with guidance, either. Management lowered adjusted FFO guidance to $9.01 for the entirety of 2025, from its previous estimate of $9.26.

A pundit chimes in

So it hardly bolstered the buy case for Alexandria stock when, on Wednesday, a pundit tracking its fortunes made that recommendation downgrade.

The prognosticator in question is BTIG's Thomas Catherwood, who knocked the REIT one peg down to neutral from his former buy, although his price target was unknown. According to reports, Catherwood acknowledged the company's strengths (such as its focus on the burgeoning life sciences segment), but expressed concern about that occupancy decline and oversupply in the market, among other factors.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alexandria Real Estate Equities. The Motley Fool has a disclosure policy.

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