J
.P. Morgan downgraded Alexandria Real Estate Equities (ARE) to neutral from overweight due to weak leasing demand in the life sciences sector. Analysts attribute this issue to an oversupply of lab space in major areas like Boston and South San Francisco, which will take time to absorb. The bank reduced its funds from operations per share forecasts for 2024, 2025, and 2026, citing slower core growth, lease expirations, growing ground rent charges, and declining development contributions as key factors.

    While a decrease in administrative expenses might provide some relief in 2024, the company faces challenges in achieving near-term growth. Management is expected to address these concerns at its upcoming investor day. However, even with a recovery plan, a resurgence in life sciences demand may take time. J.P. Morgan revised its FFO per share projections for Alexandria Real Estate: $9.35 (previously $9.49) for 2024, $9.60 (previously $9.82) for 2026.