Alexandria Real Estate Equities, Inc. (ARE), a real estate investment trust (REIT), recently increased its quarterly cash dividend from 49 cents to 51 cents per share in the second quarter of 2012. This translates to a 4.0% increase from the prior dividend payout. The increased dividend will be paid on July 16, 2012, to shareholders of record as of June 29, 2012.
Over the past 12 months, the company had increased its cash dividend per share by 6 cents, or approximately 13%. At the end of first quarter 2011, Alexandria Real Estate’s cash balance stood at $77.4 million. We believe that the company has enough cash to provide optimum shareholder value.
Alexandria Real Estate expects to distribute its excess cash to the shareholders through the increased dividend and concurrently look to maintain its cash flow for further reinvestments.
During first quarter 2011, the company reported FFO (funds from operations) of $66.2 million or $1.08 per share compared with $63.1 million or $1.10 per share in the year-earlier quarter. Funds from operations, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
As of March 31, 2012, the company’s fund from operations payout ratio (quarterly common stock dividend by quarterly funds from operations) stood at 46%.
Pasadena, California-based, Alexandria Real Estate is the largest owner and leading life science real estate company, focused principally on science-driven cluster development through the ownership, operation, management, and selective acquisition, development, and redevelopment of properties containing life science laboratory space. The company leases the properties mainly to universities, pharmaceutical, medical device, life science product, biotechnology, service, biodefense, and translational research entities.
Alexandria Real Estate currently has Zacks #3 Rank, which translates into a short-term Hold rating. We also have a long-term Neutral recommendation on the stock. One of its competitors, Liberty Property Trust (LRY) also holds a Zacks #3 Rank.
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