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Alexandria Real Estate: Landlord Of Biotech And Pharma
Pharma and Biotech are two of the most interesting and fastest growing markets, but the landlord of those markets might be even more interesting and definitely a safer long-term investment:
- Alexandria Real Estate $ARE is one of the largest landlords of biotech and pharma/healthcare buildings. These buildings hold highly equipped labs to power cutting-edge research.
- Cluster Model: The company uses a “cluster model” have high density in key areas for their markets like Cambridge, New York, San Francisco, and more
- Growth: Alexandria is also a high-growth REIT. They have more than doubled revenue from rent over the past 5 years from ~$800m to ~$1.7b. Now that they are more established they are putting more earnings towards dividends in a more typical REIT fashion.
- Debt Safety: With currently increased interest rates maturing debt is a major concern, especially with REITs. However, $ARE doesn’t have any debt maturing until at least 2025 and they have more than sufficient cash to weather short-term increased interest expenditures.
- If you want to hear more about Alexandria $ARE in-depth go here https://open.substack.com/pub/pillarsandprofits/p/the-landlord-of-pharma-alexandria?r=hll04&utm_campaign=post&utm_medium=web
- Valuation: On top of all of this, Alexandria is valued at a reasonable (especially for a more “growthy” REIT) 17.5x Price/FFO and 22x Price/AFFO. And the company has grown its Net Asset Value by 54% from 2017-2021.
open.substack.com
The Landlord Of Pharma: Alexandria Real Estate (Issue #45)
Biotech and Pharmaceuticals are two of the most exciting and can be some of the best-returning industries to invest in. However, with FDA and other regulations, high budgets and specific materials and/or labs are necessary. Alternatively, REITs are an interesting and often high-returning asset class, giving investors access to many of the virtues of real estate without many of the risks. Alexandria combines these two sectors by renting real estate to the largest and most successful Biotech and Pharma companies.
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