Alexandria Real Estate Equities: Valuation Insights After Dividend Decision and Record San Diego Life Science Lease

Alexandria Real Estate Equities (ARE) is getting plenty of second glances after announcing it will maintain its quarterly cash dividend at $1.32 per share for the third quarter of 2025. On the surface, holding the dividend steady suggests ARE is prioritizing financial flexibility. What really makes waves here is the timing. The company has also just inked its largest-ever life science lease: a 16-year commitment in San Diego. This move shows tenant demand for its specialized properties remains strong even as the broader real estate landscape faces headwinds.

Zooming out, Alexandria’s decision comes after a year that has tested the nerves of even long-term investors. Despite recent gains of nearly 17% in the past month, the stock is still down around 26% over the last year and remains below where it traded three and five years ago. These trends indicate that, while momentum might be ticking up lately, the market continues to weigh persistent worries over high vacancies and slow tenant growth against pockets of clear progress like the recent lease deal.

With the share price still in recovery mode and the dividend yield at attractive levels, some may be asking whether this could be a rare buying window or if the market is already factoring in the best-case scenario for future growth.

Most Popular Narrative: 12.9% Undervalued

The most widely followed view suggests Alexandria Real Estate Equities is undervalued by nearly 13%, based on projected future earnings growth, profit margins, and risk assumptions.

Alexandria's premium, strategically located assets in high-barrier-to-entry innovation clusters (such as Boston, San Diego, and San Francisco) are allowing for successful large-scale, long-term leases to blue-chip tenants. This provides significant support for above-market rental rates, NOI expansion, and net margin stability.

Want to know what aggressive growth projections and surprising profit margins are baked into this fair value? The most bullish forecasts depend on future earnings levels that could transform Alexandria’s entire profit profile. Wondering how these bold assumptions stack up against the company’s current performance and what might really be driving this double-digit discount? There is more behind this story than meets the eye. Find out which numbers make or break the case for huge upside.

Result: Fair Value of $96.42 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, sluggish leasing activity and persistently high interest rates could limit Alexandria’s upside. These factors may potentially dampen earnings growth despite recent optimistic forecasts.

Find out about the key risks to this Alexandria Real Estate Equities narrative.

Another View: What Does Our DCF Model Say?

While many analysts focus on profit and revenue forecasts, our discounted cash flow (DCF) model offers a different lens. This approach also points to Alexandria trading below its estimated fair value. However, do the underlying assumptions hold up? Could the true opportunity or hidden risks be in the cash flows?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Alexandria Real Estate Equities for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Alexandria Real Estate Equities Narrative

If you think there is another angle to Alexandria's story or want to weigh the numbers yourself, it takes just a few minutes to craft your own perspective. Do it your way

A great starting point for your Alexandria Real Estate Equities research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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