12:06 PM EDT, 07/29/2024 (MT Newswires) -- Alexandria Real Estate Equities' ( ARE ) 2025 lease expirations will have a "significant drag" on same-store net operating income growth, with $37 million in annual rent from known move-outs and anticipated vacancies of 12 to 24 months, BofA Securities said in a note Monday.

Additional challenges for the company include slowed leasing activity relative to expirations, reliance on non-core asset sales for funding Mega Campus expansion, a slowdown in realized investment gains from the venture capital portfolio, and rising GAAP interest expenses as capitalized interest declines due to lower developments and potential Fed rate cuts, according to the note.

BofA said the company's unexpected use of the at-the-market program in Q2 as a precautionary measure due to slower asset sale progress raises concerns and suggests a soft transaction market, particularly for non-core asset sales.

The firm said it is lowering its 2025 and 2026 Core FFO estimates due to cautious rental rate growth assumptions and anticipated challenges in Alexandria Real Estate's operational and financial strategies.

BofA downgraded its rating on the company's stock to neutral from buy and lowered the price objective to $126 from $151.

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