Alexandria Real Estate Equities, Inc. (ARE): A Bear Case Theory

We came crossed a bearish thesis on Alexandria Real Estate Equities, Inc. connected Compounding Dividends’s Substack by TJ Terwilliger. In this article, we volition summarize the bears’ thesis connected ARE. Alexandria Real Estate Equities, Inc.'s stock was trading astatine $54.64 arsenic of January 13th. ARE’s trailing and guardant P/E were 150.89 and 16.69 respectively according to Yahoo Finance.

Alexandria Real Estate Equities (ARE), agelong considered a reliable high-yield REIT, precocious slashed its dividend by 45%, astonishing galore investors. The company, a premier landlord for the beingness subject industry, owns ample “Mega Campuses” successful cardinal innovation hubs similar Boston, San Francisco, and San Diego, leasing to pharmaceutical giants specified arsenic Eli Lilly, Bristol Myers Squibb, and Moderna, arsenic good arsenic early-stage biotech firms and probe divisions of universities.

Despite a beardown equilibrium expanse and high-quality assets, Alexandria’s attraction successful beingness sciences has exposed it to a severe, structural downturn crossed the industry. Four large headwinds—tightening NIH funding, declining task superior for startups, FDA enactment turnover and delayed approvals, and authorities pricing unit connected drugs—have collectively strained the gross prospects of its tenants, straight impacting rent collection.

These challenges are compounded by a melodramatic oversupply of laboratory space, which has grown 7.5 times since 2021 adjacent arsenic request has dropped 60%, reducing projected currency flows by astir 8.5% per gathering successful 2026 and causing a astir 30% expected diminution successful FFO. While Alexandria’s halfway tenants stay operational, these structural pressures fundamentally trim aboriginal net power, making the dividend chopped indispensable to sphere the equilibrium sheet.

This concern highlights the captious value of evaluating industry-specific risks and the nonstop transportation betwixt tenant wellness and landlord performance, adjacent for well-managed, high-quality REITs with seemingly beardown financials.

Previously, we covered a bullish thesis connected Simon Property Group, Inc. (SPG) by David successful April 2025, which highlighted its disciplined superior structure, beardown escaped currency flow, strategical tenant mix, and rising dividends. The company's banal terms has appreciated astir by 24.53% since our coverage. This is due to the fact that the thesis played retired arsenic SPG benefited from resilient retail operations. TJ Terwilliger shares a contrarian position connected Alexandria Real Estate Equities, Inc. (ARE), emphasizing structural beingness subject headwinds and a indispensable dividend cut.

Alexandria Real Estate Equities, Inc. is not connected our database of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 31 hedge money portfolios held ARE astatine the extremity of the 3rd 4th which was 33 successful the erstwhile quarter. While we admit the imaginable of ARE arsenic an investment, we judge definite AI stocks connection greater upside imaginable and transportation little downside risk. If you're looking for an highly undervalued AI banal that besides stands to payment importantly from Trump-era tariffs and the onshoring trend, spot our escaped study connected the champion short-term AI stock.