Alexandria Real Estate Equities, the life science office and lab REIT, wrote down $637.9 million of properties it plans to sell and posted a third-quarter net loss of $638.5 million, or $3.74 a share, the company reported Oct. 26. The Pasadena, Calif.-based REIT (NYSE: ARE) lost $234.9 million, or $1.38 a share, in the same quarter of 2025.
Funds from operations as adjusted, the cash-flow measure REITs use in place of earnings, fell to $1.54 a share from $2.22 a year earlier. Alexandria kept the midpoint of its 2026 FFO guidance at $6.40 a share and narrowed the range to $6.38 to $6.42, from $6.35 to $6.45 in August.
Where the write-downs landed
The impairments reduce assets the company has classified as held for sale to their estimated sale value, and the list shows which parts of the lab market Alexandria is backing away from. According to the release, the charges include:
- $343.3 million on a development project in Boston’s Fenway submarket that the company expects to sell to an institutional user and that “would have required significant capital to complete and lease”;
- $135.3 million on four vacant office buildings in Palo Alto, Calif., outside its megacampuses, that would have needed major investment to convert to lab use;
- $79.2 million on six operating properties in San Carlos, Calif., for the same reason;
- $50.4 million on a 344,000-square-foot land parcel in Austin, Texas; and
- $41.6 million on a future development project in Palo Alto.
The Fenway project is 421 Park Drive, a 339,668-square-foot building on the Alexandria Center for Life Science β Fenway campus. Alexandria said it has signed a purchase and sale agreement with an unnamed institutional user, expects to close in the fourth quarter and will avoid about $136 million of future construction spending. It did not disclose a price.
At 311 Arsenal Street in Watertown, Mass., the company is taking a different route. It has signed 66,859 square feet of leases and is negotiating 100,684 more for what it calls “advanced technology use,” which lets it drop plans for a full lab build-out and cut about $220 million of construction spending. The release says that space will earn lower rents and yields than originally underwritten. Three more redevelopment projects totaling 667,002 square feet are still under review, with options including a pause, a pivot or a sale.
Leasing improved, rents did not
Leasing volume was the bright spot. Alexandria signed 1,236,030 square feet of leases in the quarter, its highest quarterly total since the fourth quarter of 2024, including 450,961 square feet of previously vacant space, which the company said was the second-highest quarterly amount in its history.
Pricing was weaker. Rents on renewals and re-leased space fell 2.4%, or 3.3% on a cash basis. Same-property net operating income fell 6.7% from a year earlier (2.8% on a cash basis), which the company tied mainly to previously disclosed lease expirations. Average same-property occupancy was 88.1%, down from 91.7% a year earlier.
Occupancy of operating properties ended September at 87.1%, up from 86.9% at the end of June, or 90.8% counting signed leases that have not yet started. Alexandria still expects year-end occupancy of 86.2% to 87.8%.
Selling to fund the pipeline
The company is paying for its construction largely by selling assets. In October it sold an approximately 29% stake in its Campus Point by Alexandria megacampus in San Diego for $475 million, cutting its ownership from 59% to about 30%, though it keeps control of the joint venture. With that sale and $242 million of land and non-core dispositions, completed deals total $717 million. Pending deals bring the total to about $2.62 billion, above the $1.9 billion midpoint of 2026 guidance, and the company said some proceeds may be deferred into 2027.
Net debt and preferred stock stood at 6.9 times annualized adjusted EBITDA in the third quarter, or 6.6 times pro forma for the Campus Point sale, against a fourth-quarter target of 5.6 to 6.2 times. Liquidity was $4.56 billion. Alexandria, which sold $1 billion of 7.25% junior subordinated notes in August, also extended its $5 billion credit line to 2032. The board declared a $0.72 quarterly dividend, unchanged from the second quarter. None of the $500 million share buyback authorized in December 2025 had been used as of Sept. 30.
2027 pressure
The release flags tenant wind-downs as a continuing problem. Alexandria’s 2026 guidance includes a $30 million to $35 million hit to FFO from struggling tenants, about $30 million of which has already been recognized, including roughly $16 million in the third quarter. The company said it preliminarily expects “at least a similar level of reduction” in 2027 and that occupancy next year “may also be negatively impacted.” It also expects about $11 million a year of development fee income to largely stop by the end of 2026.
The release lands the same week as the ULI-PwC Emerging Trends in Real Estate 2027 survey, which said office and life sciences remain challenged even as shrinking construction pipelines help other sectors. Alexandria’s results fit that picture: leasing has picked up, but the company is still repricing land and buildings it once planned for lab use, continuing the impairments behind its second-quarter loss. More REIT and lab-market coverage is in our commercial real estate section.
