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Alexandria’s Strategy to Generate Sustainable Growth

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Maximize asset value

Alexandria Real Estate Equities (ARE) aims to generate higher shareholder returns and maximize long-term asset value through internal and external growth. The company follows a number of strategic initiatives to achieve its long-term strategic objectives.

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Focus on urban campuses

Alexandria’s strategy is to focus on class A properties located in urban campuses. These locations are highly sought after by science and technology entities because of their proximity to skilled manpower, knowledge bases, collaborative institutions, and related businesses. The company believes that high-quality properties in core markets have the potential to generate higher occupancy, which could lead to higher rental income.

Geographic diversification

The company’s strategy aims for a geographically diversified property portfolio. Alexandria’s properties are located in nine high-growth markets in the country.

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Attracting quality tenants

The company’s strategy is to acquire high-profile investment grade clients. Tenants with strong financial resources ensure steady cash flows for the company over a long period of time.

Capital recycling

Alexandria’s strategy is to acquire, develop, and redevelop properties in target cluster markets that add substantial value to its portfolio and generate higher returns to the stockholders. The development and redevelopment strategy is focused on projects with significant pre-leasing opportunities. The company expects to earn higher income from such properties.

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Financial strategy

The company aims to maintain a flexible balance sheet with higher liquidity levels through owning and operating office, laboratory, and tech office properties. This helps the company to deploy funds for new investment opportunities when they arise.

Strategy to boost income

Alexandria expects its strategy to generate higher rental income along with higher occupancy levels in the years to come. Other major office REITs such as Kilroy Realty (KRC), SL Green Realty (SLG), and Boston Properties (BXP) also focus on core markets to garner higher market shares. The SPDR Dow Jones REIT ETF (RWR) invests ~1.1% of its portfolio in Alexandria. In the next article, we’ll analyze Alexandria’s occupancy levels.

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