Alexandria Real Estate Equities, Inc. (NYSE: ARE), a major real estate investment trust specializing in life science properties, has reported a significant net loss for the third quarter of 2025. The company announced a net loss attributable to common stockholders of $234.9 million, or $(1.38) per share, a stark reversal from the $164.7 million net income reported in the same period last year.
In response to challenging market conditions and a slowdown in the life science sector, the company has also revised its full-year guidance for 2025, lowering its earnings and funds from operations projections and signaling a cautious approach for 2026.
Key Takeaways
- Alexandria Real Estate reported a Q3 2025 net loss of $(1.38) per share, compared to a profit of $0.96 per share in Q3 2024.
- Funds from Operations (FFO), a key REIT metric, was $2.22 per share, down from $2.37 in the prior year.
- The company lowered its full-year 2025 FFO guidance midpoint from $9.26 to $9.01 per share.
- Operating occupancy in North America declined to 90.6% as of September 30, 2025, down from 94.7% a year earlier.
- A strategic review of the company's dividend policy for 2026 is expected due to market conditions.
Financial Performance Under Pressure
Alexandria's third-quarter financial results reflect a complex operating environment. While the headline figure shows a net loss of $234.9 million, this was heavily influenced by non-cash charges, including a $323.9 million impairment on real estate assets.
A more closely watched metric for real estate investment trusts (REITs), Funds From Operations (FFO), presented a different picture. The company's adjusted FFO for the third quarter was $377.8 million, or $2.22 per share. Although this figure indicates positive cash flow from operations, it represents a decline from the $407.9 million, or $2.37 per share, recorded in the third quarter of 2024.
For the first nine months of 2025, the company's net loss stands at $356.1 million, a significant shift from the $374.5 million in net income during the same period in 2024.
Understanding FFO vs. Net Income
For REITs, Net Income can be misleading due to large, non-cash depreciation expenses on properties. Funds From Operations (FFO) is a standard industry metric that adds back depreciation and amortization and excludes gains or losses from property sales. It is often considered a more accurate measure of a REIT's operating performance.
Operational Metrics Show Mixed Results
The company's operational performance reveals both strengths and weaknesses. Occupancy rates, a critical indicator of health for a landlord, have seen a steady decline. The North American portfolio's occupancy was 90.6% at the end of September 2025, marking the fourth consecutive quarterly decrease from a high of 94.7% one year prior.
Despite the dip in occupancy, Alexandria demonstrated robust leasing activity. The company leased 1.2 million rentable square feet (RSF) during the quarter. This included the largest life science lease in the company's history, a 16-year agreement for nearly 467,000 RSF with a major pharmaceutical tenant in San Diego.
Leasing by the Numbers
- Total Q3 Leasing: 1.2 million RSF
- Rental Rate Increase (Renewals): 15.2%
- Leasing from Existing Tenants: 82% of activity over the last 12 months
Rental rates on renewed and re-leased spaces increased by 15.2% during the quarter, signaling continued demand for high-quality lab space in key markets. A significant 82% of leasing activity over the past year came from existing tenants, highlighting strong tenant retention.
Strategic Asset Sales and Capital Management
Alexandria is actively managing its balance sheet through a strategy of "capital recycling." The company is selling non-core assets to fund its development pipeline and strengthen its financial position. As of October 27, 2025, Alexandria had completed $508 million in dispositions for the year, with another $1 billion in transactions pending.
The company maintains a strong liquidity position of $4.2 billion and a long weighted-average debt maturity of 11.6 years, the longest among S&P 500 REITs. This financial flexibility is crucial as it navigates current market headwinds.
However, the company's leverage has increased. The guidance for its net debt to Adjusted EBITDA ratio was raised to a range of 5.5x to 6.0x, up from a previous target of 5.2x or less. This change was attributed to delays in asset sales and reduced earnings projections.
Revised Guidance and a Cautious 2026 Outlook
The most significant news for investors is the downward revision of Alexandria's 2025 financial guidance. The company reduced the midpoint of its adjusted FFO per share forecast by 25 cents to $9.01. The outlook for net income per share was lowered more dramatically, from a midpoint of $0.50 to $(2.94), reflecting potential future asset impairments.
Reasons cited for the revision include:
- Slower-than-expected re-leasing of vacant spaces.
- Reduced demand across the broader life science industry.
- A reduction in projected gains from non-real estate investments.
Looking ahead to 2026, the company is signaling caution. Officials noted that key lease expirations totaling 1.2 million RSF are expected in early 2026, which could lead to vacancies with downtime ranging from 6 to 24 months. These factors, combined with potentially lower FFO, have prompted the company's Board of Directors to state it will "carefully evaluate" its dividend strategy for 2026.
Alexandria plans to provide formal guidance for 2026 during its Investor Day on December 3, 2025.
