Alexandria Leases 1.236 Million Square Feet in Third Quarter, Highest Activity in 7 Quarters
Key Facts
Alexandria Real Estate Equities said total leasing reached 1.236 million rentable square feet in the third quarter of 2026, the highest quarterly volume in 7 quarters, according to its filing with the U.S. Securities and Exchange Commission. The activity included leasing 450,961 square feet of previously vacant space, the second-highest quarterly total for this type of leasing in the company’s history. Occupancy at operating properties was 87.1% on September 30, up 20 basis points from June 30. The indicators present a mixed picture of the company’s performance: leasing activity and occupancy improved quarter over quarter, while same-property net operating income declined. In August, the company completed a $1 billion bond issuance and said the proceeds support liquidity, its capital structure and deleveraging goals.
The company said net proceeds from the bonds would be used for general purposes, which may include working capital, reducing the balance of its credit facility or commercial paper program, and repaying other debt. Uses may also include developing, redeveloping or acquiring properties, according to a separate filing with the SEC. The financing forms part of the liquidity and capital management goals the company has announced, with the filing not directly linking the proceeds to third-quarter leasing contracts. On the property activity front, the average lease term for contracts signed from the start of 2026 through the end of the third quarter was 10.9 years. Alexandria said that was 21% above the 9-year average lease term from 2017 to 2025.
By contrast, same-property net operating income fell 6.7% on an accrual basis and 2.8% on a cash basis in the third quarter. The company attributed the decline mainly to lower occupancy compared with the same period a year earlier, according to its filing. Funds from operations, as adjusted, were $1.54 per share in the third quarter of 2026, compared with $2.22 per share in the third quarter of 2025. This puts the quarterly improvement in occupancy alongside weaker year-over-year comparisons for operating income and adjusted funds from operations. The company’s shares, listed under the ticker ARE, closed at $45.88 on November 9, 2026.
The company expects average occupancy at operating properties to decline temporarily in 2027 compared with projected occupancy at the end of 2026. According to its filing, this reflects a vacancy period after major leases expire and the possibility that some tenants will cease operations. Major leases expiring in 2027 for which the company expects post-expiration vacancies cover 1,377,960 rentable square feet and are associated with annual rental revenue of $100.5 million. These leases are expected to expire in March 2027, with vacancy periods lasting from 9 to 24 months. Alexandria said it expects same-property net operating income in 2027 to improve compared with the midpoint of its 2026 guidance range, while remaining negative, attributing this mainly to the expected temporary decline in average occupancy.
The company is scheduled to present its 2027 outlook and related assumptions, along with its sources and uses of capital for that year, at its investor day on December 2, 2026. The event follows its announcement of third-quarter leasing and occupancy results and its identification of major leases expected to leave space vacant next year. Occupancy forecasts are one element of the operating picture the company will present, as it acknowledges an expected temporary decline during 2027. It also plans to provide details on funding sources and uses of capital for 2027. The shares closed at $45.88 in the November 9 session, according to EL7 data.