Alexandria Real Estate Equities, Inc. (ARE): A Bull Case Theory

Published on August 7, 2025 at 3:29 pm by Ricardo Pillai in News, Stock Analysis

We came across a bullish thesis on Alexandria Real Estate Equities, Inc. on Compounding Dividends’s Substack by TJ Terwilliger. In this article, we will summarize the bulls’ thesis on ARE. Alexandria Real Estate Equities, Inc.’s share was trading at $73.85 as of August 6^th. ARE’s trailing and forward P/E were 150.89 and 16.69 respectively according to Yahoo Finance.

Aerial city skyline highlighting a large modern office building owned by the REIT.

Alexandria Real Estate Equities (ARE) is a specialized REIT that develops and leases high-tech life science and biotech campuses in top innovation clusters like Boston, San Diego, and the San Francisco Bay Area. Its tenants include leading names such as Eli Lilly, Moderna, and Google, who sign long-term leases—offering predictable, high-quality rental income. As of the latest trading, ARE is priced at $72, yielding a 7.2% dividend, the highest in over a decade. The dividend is well-supported by Funds From Operations (FFO), which totaled $8.11 per share in 2024, with guidance of $9.26 per share for 2025.

Alexandria’s payout ratio remains healthy, and its dividend has increased for 15 consecutive years at a 5.2% CAGR. The REIT boasts a strong balance sheet, with a 0.6x debt/equity ratio, a 12.7-year average debt maturity at a low 3.86% interest rate, and an investment-grade credit rating. The company’s capital allocation strategy centers around its Megacampus model—large-scale, amenity-rich campuses near top research universities. To fund this strategy, ARE has actively recycled capital by selling non-core assets and repurchasing shares, minimizing shareholder dilution. While its occupancy dipped to 91.7% in Q1 due to expected tenant transitions, fundamentals remain intact.

However, its tight concentration in the U.S. life sciences sector introduces risk, especially as federal research funding faces political scrutiny. Valuation appears attractive, with a forward P/FFO of just 7.8x versus a historical average of 14x. While ARE’s fundamentals are strong, investors must weigh its upside against its exposure to the volatile biotech ecosystem.

Previously, we covered a bullish thesis on JBG SMITH Properties (JBGS) by Jake LaMotta in September 2024, which highlighted strong multifamily performance, office asset pruning, and buybacks. The stock has appreciated approximately 9.05% since then as multifamily trends played out positively. The thesis still stands as low D.C. supply supports NOI growth. TJ Terwilliger shares a similar view on ARE, emphasizing biotech campus focus.