Alexandria Real Estate Equities, Inc. ARE
Alexandria's life-science office portfolio is being hit by the same WFH hurricane as traditional offices, and shares face 30-40% downside if re-rated to coastal office REIT peers.
Thesis
Land & Buildings argues that Alexandria Real Estate Equities (ARE), the dominant life-science REIT, is suffering the same secular work-from-home shock as traditional office landlords, and the market has not yet priced it in. Real-time CoStar data shows total available space in ARE's same-store portfolio (the ~70% of lab/office assets built or redeveloped pre-2019) has doubled from 9% at YE 2021 to 18% currently, with sublease space tripling from 3% to 9%. Placer.ai cell-phone geolocation data shows attendance is down ~50% versus pre-pandemic across the same-store base, and Boston, San Francisco and San Diego — ~75% of revenue — are all deteriorating. Combined with new supply, scarce capital and lagged tenant decisions, L&B sees 30-40% downside if ARE is valued like coastal office REIT peers (BXP, DEI, ESRT, HPP, KRC, PGRE, SLG, VNO).
SCQA
Alexandria Real Estate Equities (ARE) is the dominant life-science REIT, owning and operating more than 40 million square feet of lab/office space concentrated in Boston, San Francisco and San Diego.
Cell-phone geolocation data shows same-store attendance down ~50% vs pre-pandemic and CoStar data shows total available space doubling from 9% to 18% since YE 2021, with new supply landing into a much weaker market.
Investors should re-rate ARE in line with traditional coastal office REITs that are already absorbing the full impact of WFH on leasing and financing fundamentals, rather than crediting the life-science premium.
If valued on the implied cap rates and AFFO multiples of coastal office peers (BXP, DEI, ESRT, HPP, KRC, PGRE, SLG, VNO), Alexandria shares could decline 30-40% from current levels.
The three reasons
- 1
Total available space in Alexandria's same-store portfolio doubled from 9% to 18% since YE 2021
- 2
Cell-phone geolocation data shows attendance at ARE's same-store properties down ~50% vs pre-pandemic
- 3
Shares could decline 30-40% if valued like coastal office REIT peers (BXP, SLG, VNO, etc.)
KPIs cited
Pattern membership
Where this document fits across the library's 12 rhetorical / structural patterns.
Precedents cited
- L&B May 2020 white paper 'The New York Office Market is Facing an Existential Hurricane'
- L&B June 16, 2023 white paper 'The Work From Home Hurricane Has Hit Life Science Offices'
Notable slides (2)
Notes
Update #1 to L&B's June 16, 2023 white paper on life-science office WFH risk. Bearish thesis on ARE — there is no 'overvaluation' enum value, so thesis_types is set to 'other'. Disclosure states L&B funds 'beneficially own and/or have an economic interest in' both Alexandria and Healthpeak securities, but specific stake size and direction (long vs short) are not disclosed. Document is a 3-page white-paper update with two clean editorial chart pages plus legal disclaimer; no closing ask, no named villain, no individual signatory.