Alexandria Sells Campus Stakes as 2027 Lease Risk Builds

Alexandria Real Estate Equities is selling stakes in major life-science campuses as it prepares for another difficult leasing year. The company reported a third-quarter net loss attributable to common shareholders of $638.5 million, or $3.74 per diluted share, largely because of $637.9 million of real-estate impairment charges.

Adjusted funds from operations, a non-GAAP measure widely used for real-estate investment trusts, were $1.54 per diluted share. The gap between the net loss and adjusted FFO shows that asset write-downs, rather than current cash operations alone, drove the reported loss. It also confirms that management is recognizing lower values on properties being sold or repositioned.

The larger operating risk is the next wave of vacancies. Alexandria expects about 1.4 million rentable square feet of key lease expirations in 2027. Management estimates that replacing those tenants could take nine to 24 months, and its filing warns that some space may require lower rents or significant capital spending. The expiring leases represent about $101 million of annual rent.

Third-quarter leasing improved but did not erase the problem. Alexandria signed more than 1.2 million square feet of leases, the strongest quarterly volume since late 2024. Operating occupancy rose slightly to 87.1% from 86.9% in the second quarter. Same-property net operating income, however, fell 6.7% from a year earlier as earlier vacancies weighed on revenue.

Management is responding by recycling assets and reducing construction exposure. The company agreed to sell a 29% controlling interest in San Diego's Campus Point for $475 million. It also entered an agreement to sell its interest in 421 Park Drive at Boston's Fenway Megacampus, a transaction expected to reduce future construction spending by $136 million.

As of October 26, Alexandria had completed about $716.8 million of 2026 disposition and partial-interest transactions. Another $355.4 million was pending with non-refundable deposits, while roughly $1.55 billion was covered by signed letters of intent or late-stage negotiations. Those categories differ in certainty, so the full amount should not be treated as closed cash proceeds.

The company raised $1 billion in debt in August and extended its $5 billion unsecured credit line to 2032. That liquidity helps fund the transition, but asset sales can also reduce future net operating income if proceeds are not reinvested at attractive returns or used to lower leverage.

Alexandria maintained the midpoint of its 2026 adjusted FFO guidance at $6.40 per share. The near-term question is whether leasing and asset sales can offset the 2027 expiration wall without deeper rent cuts. Higher occupancy in one quarter is encouraging, but the impairment charges, weaker same-property income and long expected downtime show that the life-science property reset is not finished.