While leasing activity at Alexandria Real Estate Equities is picking up noticeably, the US real estate investment trust remains under considerable financial pressure. The company, which specialises in laboratories and life sciences properties, posted a net loss of 638.5 million dollars for the third quarter of 2026. In the prior-year period, the deficit had stood at 234.9 million dollars, the executive management announced during the recent earnings call.
Operating earnings power also declined year-on-year. Funds from operations (FFO) amounted to 264.4 million dollars in the past quarter, down from 296 million dollars in the second quarter and 377.8 million dollars in the third quarter of 2025. Quarterly revenue rose moderately to 671 million dollars compared with 662.7 million dollars in the previous quarter, but remained below the 751.9 million dollars recorded in the prior-year period.
Strong tenant credit profile and portfolio disposals
During the analyst conference call, Joel Marcus, founder and executive chairman of Alexandria, pointed out that the company continues to be supported by a stable tenant base despite current market weakness. Around 57 per cent of annual rental income is generated by investment-grade tenants or large publicly listed corporations. At the same time, management under CEO Peter Moglia is pressing ahead with portfolio downsizing: in the third quarter, the company sold properties valued at 234 million dollars.
In addition, the 421 Park Drive property, part of the Alexandria Center for Life Science - Fenway Megacampus in Boston, is under contract for sale for around 136 million dollars. Details regarding the prospective buyer have not yet been disclosed.
Space demand rises ahead of upcoming lease expiries
At the operational level, the REIT reported an occupancy rate of 87.1 per cent for its standing portfolio. In the third quarter, the company logged new lettings of 1.2 million square feet. This volume clearly surpasses the average of 979,822 square feet seen over the preceding six quarters.
However, the group faces substantial challenges in 2027. Leases covering up to 1.4 million square feet are due to expire, representing estimated annual rental income of 100.5 million dollars. Void periods of nine to 24 months are anticipated for re-letting this space. Management attributes the ongoing pressure on earnings to a massive oversupply of laboratory space following the pandemic-related construction boom, as well as significant cuts in funding for scientific research under the second administration of Donald Trump.
