Alexandria Real Estate Equities, Inc.(ARE) recently announced that it has priced a public offering of $550 million principal amount of 4.60% senior notes due 2022. The sale of the notes is scheduled on February 29, 2012.
The notes will be unsecured obligations of the company and fully guaranteed by Alexandria Real Estate Equities, L.P., a wholly owned subsidiary of the company.
The company intends to use the net proceeds from this offering to repay the outstanding balance of $250 million of its unsecured term loan under its unsecured credit facility and to reduce the outstanding balance of its borrowings on its unsecured line of credit.
The company also intends to borrow in intervals under its unsecured line of credit to fund accretive acquisitions, to repay debt, for general working capital and other corporate purposes, including the selective development or redevelopment of existing or new life science properties.This offering will enable the company to attain financial flexibility and seize investment opportunities and acquisitions, which go a long way in enhancing top-line growth.
Alexandria Real Estate reported fourth quarter 2011 FFO (funds from operations) of $67.8 million or $1.10 per share compared with $60.8 million or $1.07 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.
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.
Alexandria Real Estate currently retains its Zacks #4 Rank, which translates into a short-term Sell rating. We are also maintaining our long-term Neutral recommendation on the stock. One of its competitors, Liberty property Trust (LRY), has a Zacks #3 Rank, which translates into a short-term Hold rating.
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