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What does Alexandria Real Estate Equities do and what are its main business segments?

- **Megacampus Focus**: 77% of ARR from megacampuses, with plans to reduce non-income-producing assets to 10-15% of portfolio.
- **Financial Performance**: Q3 FFO per share of $2.22, down 6% YoY, driven by 110 bps occupancy decline.
- **Leasing Strength**: 1.2 million sq. ft. leased in Q3, 82% from existing tenants, with 15.2% rental rate growth on renewals.
- **Risk Management**: $685 million potential impairments on non-core assets, with 2026 expiring leases totaling $46 million in annual rent.

**【CEO Summary Section】**
- Emphasized the company's mission to enable life science innovation, despite challenges like government shutdowns and a slow biotech recovery.
- Highlighted the strategic focus on megacampuses, with 77% of ARR from these assets, aiming to reduce non-income-producing assets to 10-15% of the portfolio.
- Noted the importance of regulatory clarity and cost control in the biotech industry.

**【CFO Financial Commentary】**
- Reported Q3 FFO per share as adjusted of $2.22, down 6% year-over-year due to lower occupancy and venture gains.
- Occupancy declined to 90.6%, with 110 basis points of apples-to-apples decline, driven by oversupply in certain submarkets.
- Leasing volume of 1.2 million sq. ft. remained solid, with 82% from existing tenants and 15.2% rental rate growth on renewals.
- G&A expenses reduced by $49 million annually, with a 5.7% G&A/NOI ratio, outperforming peers.
- Capitalized interest expected to decline in 2026 as development pipeline is curtailed.

**【Q&A Highlights】**
- 2026 outlook includes $1.2 billion in expiring leases, with 1.2 million sq. ft. of known move-outs, and potential impairments of $685 million on non-core assets.
- Dividend policy under review for 2026, with focus on reducing leverage and retaining cash for construction commitments.
- Strategy to pivot non-core assets to alternative uses (e.g., residential) to capitalize on resi demand.
- Regulatory delays (FDA shutdown) and capital market challenges (high interest rates) cited as key risks to demand recovery.

Alexandria Real Estate Equities (ARE)-28 Oct 25-2025 Q3 Earnings call transcript

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