REIT - Office · NYSE
Current Price
$41.05
Intrinsic Value
Use the calculator below to estimate
Run a full DCF analysis on Alexandria Real Estate Equities, Inc. with auto-filled fundamentals, adjustable assumptions, and sensitivity heatmap.
Alexandria Real Estate Equities, Inc. (NYSE:ARE), an S&P 500® urban office real estate investment trust (REIT), is the first, longest-tenured, and pioneering owner, operator, and developer uniquely focused on collaborative life science, technology, and agtech campuses in AAA innovation cluster locations, with a total market capitalization of $31.9 billion as of December 31, 2020, and an asset base in North America of 49.7 million square feet (SF). The asset base in North America includes 31.9 million RSF of operating properties and 3.3 million RSF of Class A properties undergoing construction, 7.1 million RSF of near-term and intermediate-term development and redevelopment projects, and 7.4 million SF of future development projects. Founded in 1994, Alexandria pioneered this niche and has since established a significant market presence in key locations, including Greater Boston, San Francisco, New York City, San Diego, Seattle, Maryland, and Research Triangle. Alexandria has a longstanding and proven track record of developing Class A properties clustered in urban life science, technology, and agtech campuses that provide our innovative tenants with highly dynamic and collaborative environments that enhance their ability to successfully recruit and retain world-class talent and inspire productivity, efficiency, creativity, and success. Alexandria also provides strategic capital to transformative life science, technology, and agtech companies through our venture capital platform. We believe our unique business model and diligent underwriting ensure a high-quality and diverse tenant base that results in higher occupancy levels, longer lease terms, higher rental income, higher returns, and greater long-term asset value.
ROIC (TTM)
-3.9%
ROE (TTM)
-6.3%
FCF Yield
19.61%
Based on trailing twelve-month data, ARE shows a free cash flow per share of N/A and a ROIC of -3.9%, key inputs for stock valuation using the DCF method. The P/FCF ratio of N/A and FCF yield of 19.61% are important context metrics when evaluating ARE's stock valuation relative to peers.
The intrinsic value of ARE depends on assumptions about future growth rate, discount rate (WACC), and terminal value. A DCF model discounts projected free cash flows back to present value — small changes in WACC can shift the estimate by 20% or more, which is why sensitivity analysis is essential.
Whether ARE is undervalued depends on comparing the DCF-derived intrinsic value to the current market price of $41.05. A positive margin of safety (intrinsic value above market price) suggests potential undervaluation, but the degree of confidence depends on the reliability of your growth and discount rate assumptions.
To perform a DCF valuation on Alexandria Real Estate Equities, Inc.: (1) Start with the trailing free cash flow per share as the base, (2) project future FCF growth over 5-10 years based on REIT - Office industry trends and company fundamentals, (3) apply a discount rate (WACC) reflecting ARE's risk profile, and (4) add a terminal value for cash flows beyond the projection period.
DCF (Discounted Cash Flow) estimates what a company is worth today based on its future cash generation. For Alexandria Real Estate Equities, Inc., this means projecting how much free cash flow the REIT - Office will produce over the next 5-10 years, then discounting those amounts to today's dollars. ARE's ROIC of -3.9% suggests the company may face challenges generating returns above its cost of capital.
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For ARE, the capital structure and equity risk premium determine WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%.
