Key Points
Alexandria reported a "throw in everything but the kitchen sink" quarter on Monday, prompting today's sell-off.
Revenue, FFO, occupancy rates, and guidance were all down.
That said, Alexandria's long-term prospects remain bright, especially while it trades near its lowest valuation this decade.
Shares of healthcare-focused real estate investment trust (REIT) Alexandria Real Estate Equities (NYSE: ARE) are down almost 19% as of 3 p.m. ET on Tuesday, according to data provided by S&P Global Market Intelligence.
The REIT reported third-quarter earnings yesterday that missed analysts' expectations on both the top and bottom lines. Revenue declined by 5% and adjusted funds from operations (FFO) dropped 7%, helping to prompt the market's negative reaction.
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Making matters worse, Alexandria lowered its guidance for adjusted FFO in 2025 to be $9.01 instead of the $9.26 it previously expected.
Alexandria Real Estate: Buy-the-dip candidate or falling knife?
I wish the bad news stopped there, but Alexandria also saw its average occupancy drop to 91.4% in Q3 from 94.8% last year. Rounding out Alexandria's "throwing in everything but the kitchen sink" quarter, it realized real estate impairments that turned earnings negative as the company divested "non-core real estate assets."
With all that bad news out of the way -- investors shouldn't panic just yet. In fact, I'd argue Alexandria is an interesting stock to consider buying now that its shares are down 71% from their all-time high.
Image source: Getty Images.
First, the REIT primarily caters to biotech customers, which is an industry expected to grow by around 14% annually through 2034.
Second, the $1.5 billion in FFO it generated over the last year easily covers the $912 million it spent on dividends, meaning its hefty 6.8% yield should be safe.
Lastly, management believes the REIT's credit ranking is in the top 10% of all publicly traded U.S. REITs, so its balance sheet looks stable for now.
Currently trading near decade-long lows for price-to-sales and enterprise-value-to-FFO ratios, Alexandria Real Estate looks like an intriguing high-yield investment.
Josh Kohn-Lindquist 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.