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Group 1: Market Overview - The fourth quarter of 2025 saw favorable gains in equity markets, with the Russell 2000 Index returning 2.19% and the Russell 1000 Index gaining 2.41% [1] - Health care was the best-performing sector in the Russell 2000 Index, with an impressive return of 18.6% [1] - Despite heightened uncertainty and geopolitical risks, the Russell 2000 Index posted a 12.81% gain for the year [1] Group 2: Diamond Hill Small Cap Strategy Performance - The Diamond Hill Small Cap Strategy achieved a return of 4.88% (net of fees) in the fourth quarter, outperforming the Russell 2000 Index [1] - The firm continues to focus on resilient businesses capable of sustaining earnings in a volatile market environment as it heads into 2026 [1] Group 3: Alexandria Real Estate Equities, Inc. (NYSE:ARE) Insights - Alexandria Real Estate Equities, Inc. is a life science REIT and the largest owner of US life-sciences real estate, focusing on major biotech research clusters [3] - The company has faced challenges due to higher interest rates, lower venture capital funding, regulatory pressures, and overbuilding of lab space, leading to a significant reduction in earnings and a dividend cut [3] - Despite a 42.76% decline in shares over the past twelve months, the company maintains a solid balance sheet and a well-located portfolio [3] - Alexandria Real Estate Equities, Inc. has a market capitalization of $9.585 billion and delivered a 3.83% return in the past month [2] Group 4: Hedge Fund Interest - Alexandria Real Estate Equities, Inc. was held by 31 hedge fund portfolios at the end of the third quarter, a decrease from 33 in the previous quarter [5] - While the potential of Alexandria Real Estate Equities, Inc. as an investment is acknowledged, certain AI stocks are considered to offer greater upside potential with less downside risk [5]

Core Viewpoint - Alexandria Real Estate Equities, Inc. has initiated cash tender offers to purchase up to $800,000,000 of its outstanding senior notes, which include 3.000% Senior Notes due 2051, 3.550% Senior Notes due 2052, and 4.000% Senior Notes due 2050 [1][4] Group 1: Tender Offer Details - The tender offers are open to all registered holders of the notes and are subject to the conditions outlined in the Offer to Purchase dated January 27, 2026 [4] - The company reserves the right to adjust the Aggregate Maximum Tender Amount at any time without extending withdrawal rights, except as required by law [4] - The total consideration for each series of notes will include an early tender premium of $50 per $1,000 principal amount if tendered by the Early Tender Date of February 9, 2026 [5][6] Group 2: Acceptance Priority and Conditions - Notes will be accepted based on their Acceptance Priority Levels, with higher priority notes being accepted before lower priority ones [7] - If the tender offers are fully subscribed by the Early Tender Date, notes tendered after this date will not be accepted for purchase [8] - The company's obligation to accept notes is contingent upon receiving at least $500,000,000 from other capital market financing transactions [9] Group 3: Financial and Operational Context - Alexandria Real Estate Equities, Inc. is a leading life science REIT, recognized for its role in developing collaborative ecosystems in key life science innovation clusters [11] - The company has been operational since 1994 and is noted for its long-standing presence in the life science real estate sector [11]

Core Insights - The company reported a leasing volume of 1.2 million square feet, which is a 14% increase compared to the prior four-quarter average and a 10% increase compared to the prior eight-quarter average [1] - The fourth quarter of 2025 saw a diluted FFO per share of $2.16, aligning with the company's prior guidance, and a full-year FFO of $9.01 [2] - Management's focus for 2026 includes timely execution, prioritizing dispositions, balance sheet flexibility, and reducing capital expenditures [3][7] Leasing Performance - The company achieved a total leasing volume of 1.2 million square feet in Q4 2025, marking the highest quarterly leasing volume in the last year [2][6] - Vacant space leasing totaled 393,000 rentable square feet, nearly double the quarterly average over the last five quarters [1] - Occupancy at the end of 2025 was 90.9%, up 30 basis points sequentially [8] Financial Performance - The company executed $1.5 billion in dispositions across 26 transactions during Q4 2025 [2][6] - Same-property net operating income (NOI) declined by 6% in Q4 and 3.5% for the full year, with expectations of an 8.5% decline in 2026 [11] - The company recognized $1.45 billion in impairments in Q4, primarily related to land [16] 2026 Outlook - Management anticipates occupancy to dip in early 2026 due to approximately 1.2 million square feet of lease expirations, with a recovery expected in the second half of the year [5][9] - The company has set a disposition target of $2.9 billion for 2026, with 65% to 75% expected to come from non-core assets [7][15] - Capitalized interest is projected to decline by 24% to $250 million in 2026 [13] Market Conditions - The leasing environment remains cautious, particularly in the biotech sector, with venture capital funding at its lowest in a decade [21][22] - Smaller spaces under 50,000 square feet are active, but there is a lack of public biotech tenants in the 50,000 to 150,000 square foot range [22] - Free rent levels have been increasing, indicating weakening fundamentals in the leasing market [23]

Financial Data and Key Metrics Changes - For Q4 2025, the diluted FFO per share was $2.16, and for the full year, it was $9.01, aligning with the midpoint of prior guidance [7] - Same property net operating income (NOI) decreased by 6% for Q4 and 3.5% for the full year, with a cash basis decline of 1.7% for Q4 and an increase of 0.9% for the full year [10][11] - Occupancy at the end of 2025 was 90.9%, up 30 basis points from the previous quarter and 10 basis points above prior guidance [9] Business Line Data and Key Metrics Changes - The company completed $1.5 billion in dispositions across 26 transactions and achieved a total leasing volume of 1.2 million sq ft in Q4, the highest in the last year [7] - Leasing of vacant space in Q4 reached 393,000 rentable sq ft, nearly double the average over the last five quarters [8] - The average lease term for the quarter was just over 7.5 years, consistent with the prior three-year average [8] Market Data and Key Metrics Changes - The company noted that its mega campuses, which account for about 78% of annual rental revenue, outperformed total market occupancy in the largest three markets by 19% [9] - The leasing volume for private biotechnology made up about a fifth of all leasing volume in Q4, indicating sustained demand from this segment [66] Company Strategy and Development Direction - The company plans to focus on timely execution of its strategic plan for 2026, emphasizing dispositions, maintaining a strong balance sheet, and reducing capital expenditures [5] - The strategic path forward includes reducing the size of the pipeline and construction spending needs, with a goal to complete a large-scale non-core disposition plan in 2026 [16][20] - The company aims to recycle capital from dispositions and partial interest sales to support funding needs, particularly focusing on non-core assets and land [22][23] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the leasing environment, noting that while there are positive signs in venture capital funding, decision-making remains conservative among companies [31][32] - The company anticipates a dip in occupancy in Q1 2026 due to key lease expirations but expects growth in the second half of 2026 [10] - Management reiterated that the public biotech sector's recovery is critical for future leasing demand, as many companies currently have sufficient space [76][78] Other Important Information - The company achieved significant general and administrative cost savings of $51.3 million, or 30% compared to the prior year, with G&A costs as a percentage of NOI at 5.6% for 2025 [15] - The company has a strong balance sheet with liquidity of $5.3 billion and a net debt to adjusted EBITDA ratio of 5.7x for Q4 [18] Q&A Session Summary Question: Impact of VC funding on leasing outlook - Management noted that while there is sustained funding in private biotechnology, the overall environment remains cautious, and decision-making is taking longer [30][32] Question: Strategy regarding The Fenway office property - Management confirmed that retaining The Fenway office property for leasing as office space is a strategic decision based on demand [34][35] Question: Cap rate trends for dispositions - Management indicated that cap rates for non-core assets are in the mid-sixes to mid-nines, depending on market conditions and asset specifics [40] Question: Guidance for FFO in Q4 2026 - Management confirmed that the guidance for Q4 2026 FFO remains at $1.40-$1.60, representing a trough for the year [48][49] Question: Buyer types for dispositions - Management highlighted that the buyer pool includes investment funds and residential developers, with a significant portion of land expected to be sold for residential use [56][57] Question: Capital allocation priorities - Management stated that the priority is on debt reduction through the disposition program before considering stock buybacks [85]

Financial Data and Key Metrics Changes - For Q4 2025, the diluted FFO per share was $2.16, and for the full year, it was $9.01, aligning with prior guidance [7] - Same property net operating income (NOI) decreased by 6% for Q4 and 3.5% for the full year [10][11] - Occupancy at the end of 2025 was 90.9%, up 30 basis points from the previous quarter [9] Business Line Data and Key Metrics Changes - The company completed $1.5 billion in dispositions across 26 transactions and achieved 1.2 million sq ft in leasing volume for Q4, the highest in the last year [7] - Leasing volume for Q4 was up 14% compared to the prior four-quarter average [8] - Free rent and rental rate changes were under pressure, reflecting market realities [8] Market Data and Key Metrics Changes - The company noted a significant increase in leasing activity in the Greater Boston region, with an 11% increase in tenants [44] - The public biotech sector showed a notable decline in leasing activity, which is critical for the company's future growth [33][69] Company Strategy and Development Direction - The company plans to focus on timely execution of its strategic plan, emphasizing dispositions and maintaining a strong balance sheet [5] - The strategic path forward includes reducing capital expenditures and completing a large-scale non-core disposition plan in 2026 [16][20] - The company aims to recycle capital from dispositions to support funding needs, particularly in residential developments [22][58] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the leasing environment, noting that decision-making is still taking longer due to market conditions [32] - The company anticipates a dip in occupancy in Q1 2026, primarily due to key lease expirations [10] - Management highlighted the importance of the public biotech sector for future leasing demand and expressed concerns over the current lack of IPO activity [69] Other Important Information - The company achieved $51.3 million in general and administrative cost savings, representing a 30% reduction compared to the prior year [15] - The company has a strong liquidity position of $5.3 billion and a modest leverage ratio of 5.7x for net debt to adjusted EBITDA [18] Q&A Session Summary Question: Impact of VC funding on leasing outlook - Management noted that while there is sustained funding in private biotechnology, the overall environment remains cautious, and decision-making is slower [30][32] Question: Strategy regarding The Fenway office property - Management confirmed that retaining The Fenway office property for leasing as office space is a strategic decision based on demand [34][35] Question: Cap rate trends for dispositions - Management indicated that cap rates for non-core assets are in the mid-sixes to mid-nines, depending on market conditions [40] Question: Leasing pipeline and notable groups - Management highlighted that smaller spaces under 50,000 sq ft are in demand, but there is a lack of activity from public biotech companies [42] Question: Guidance for FFO in Q4 2026 - Management reaffirmed guidance for Q4 2026 FFO of $1.40-$1.60, indicating it represents a trough for the year [48][49] Question: Capital allocation priorities - Management stated that the priority is on debt reduction before considering stock buybacks [87] Question: Non-real estate investments - Management aims to achieve a net neutral position on non-real estate investments moving forward [91]

Financial Data and Key Metrics Changes - FFO per share diluted as adjusted was $2.16 for Q4 2025 and $9.01 for the year, aligning with prior guidance [5] - Same property net operating income (NOI) decreased by 6% for Q4 and 3.5% for the full year 2025 [8][10] - Occupancy at the end of 2025 was 90.9%, up 30 basis points from the prior quarter [7] Business Line Data and Key Metrics Changes - Leasing volume for Q4 was 1.2 million sq ft, up 14% over the prior four-quarter average [6] - The leasing of vacant space completed during Q4 was 393,000 rentable sq ft, nearly double the average over the last five quarters [6] - Free rent and rental rate changes on renewed and released space were under pressure, reflecting market realities [6] Market Data and Key Metrics Changes - The company expects occupancy to dip in Q1 2026 due to 1.2 million sq ft of key lease expirations [8] - The company reiterated its year-end 2026 occupancy range of 87.7%-89.3% [7] - The Greater Boston region saw an 11% increase in tenants, marking the first increase in several quarters [33] Company Strategy and Development Direction - The strategic focus for 2026 includes timely execution of plans, maintaining a strong balance sheet, and reducing capital expenditures [4] - The company aims to significantly reduce the size of its pipeline and construction spending needs [13] - The disposition program for 2026 is expected to include a significant component of land, targeting non-core assets [21] Management's Comments on Operating Environment and Future Outlook - Management noted the life science bear market and the challenges posed by regulatory changes and market dynamics [3] - There is cautious optimism regarding venture capital funding, but decision-making remains slow among companies [26] - The company anticipates a recovery in leasing demand but acknowledges the need for more robust public biotech activity [50] Other Important Information - The company achieved general and administrative cost savings of $51.3 million, or 30% compared to the prior year [12] - Realized gains from venture investments were $21 million, down from the previous quarterly average [15] - The company has a strong balance sheet with liquidity of $5.3 billion and a net debt to adjusted EBITDA ratio of 5.7x [16] Q&A Session Summary Question: Impact of VC funding on leasing outlook - Management noted that while there is sustained funding in private biotechnology, the overall environment remains cautious, and decision-making is slower [25][26] Question: Strategy regarding The Fenway office property - Management indicated that retaining The Fenway office property for leasing is specific to that location and not a broader strategy [28] Question: Cap rate trends for dispositions - Management mentioned that cap rates for non-core assets range from mid-sixes to mid-nines, depending on market conditions [31] Question: Leasing pipeline and notable groups - Management highlighted that smaller spaces under 50,000 sq ft are in demand, but there is a lack of activity from public biotech companies [32][33] Question: Guidance for Q4 2026 FFO - Management confirmed that the guidance for Q4 2026 FFO remains at $1.40-$1.60, representing a trough for the year [34][41] Question: Capital allocation priorities - Management stated that the priority is on debt reduction before considering stock buybacks [52]

Alexandria Real Estate Equities, Inc. All Rights Reserved. © 2026 Table of Contents December 31, 2025 | COMPANY HIGHLIGHTS | Page | | Page | | | --- | --- | --- | --- | --- | | Alexandria's Mission and Cluster Model | iii | | | CONFERENCE CALL | | | | | | INFORMATION: | | EARNINGS PRESS RELEASE | | | | Tuesday, January 27, 2026 | | Fourth Quarter and Year Ended December 31, 2025 Financial and | | | | 2:00 p.m. Eastern Time | | Operating Results | 1 | Consolidated Statements of Operations | 8 | 11:00 a.m. Pa ...

Core Insights - Alexandria Real Estate Equities, Inc. (ARE) reported fourth-quarter 2025 adjusted funds from operations (AFFO) per share of $2.16, slightly above the Zacks Consensus Estimate of $2.15, but down from $2.39 in the prior year [1][2] - Total revenues for the quarter were $754.4 million, exceeding the consensus estimate of $738.3 million, but reflecting a 4.4% decline year over year [2] - The company’s total leasing activity reached 1.2 million rentable square feet (RSF) in the fourth quarter, indicating strong demand for its office/laboratory space [3] Financial Performance - For the full year 2025, AFFO per share was reported at $9.01, a decrease of 4.9% from the previous year, and slightly missing the Zacks Consensus Estimate of $9.00 [2] - Total revenues for 2025 were $3.03 billion, down 2.9% from the previous year [2] - The company experienced a negative rental rate of 9.9% during the quarter, with a cash basis rental rate decrease of 5.2% [4] Occupancy and Leasing - As of December 31, 2025, occupancy of operating properties in North America was 90.9%, a 0.3% increase from the prior quarter but a 3.7% decrease from the year-ago quarter [4] - The weighted average remaining lease term for all tenants was 7.5 years, with the top 20 tenants having a longer term of 9.7 years [5] Interest Expenses and Dispositions - Interest expenses rose 18% year over year to $65.7 million [6] - The company completed dispositions and sales of partial interests worth $1.47 billion in the fourth quarter [6][9] Liquidity Position - Alexandria ended the fourth quarter with cash and cash equivalents of $549.1 million, down from $579.5 million at the end of the previous quarter [7] - The company had $5.3 billion of liquidity at the end of the reported quarter, with a net debt and preferred stock to adjusted EBITDA ratio of 5.7X [7] 2026 Outlook - For 2026, the company provided AFFO per share guidance in the range of $6.25 to $6.55, with the Zacks Consensus Estimate at $6.42 [10] - Expected occupancy for operating properties in North America is projected to be between 87.7% and 89.3% [10] - Rental rate changes for lease renewals and re-leasing are anticipated to range from a negative 2% to a growth of 6% [10]

Group 1: ClearBridge Investments and Mid Cap Strategy - ClearBridge Mid Cap Strategy underperformed against the Russell Midcap Index, which returned 0.16% during Q4 2025, due to narrow market leadership and sentiment-driven trading [1] - Weakness in information technology and real estate holdings pressured returns, while gains in select consumer discretionary stocks provided partial support [1] - The portfolio management team expressed cautious optimism for the future, citing improving clarity around policy, interest rates, and business investment as potential positive factors for active stock selection [1] Group 2: Alexandria Real Estate Equities Inc. - Alexandria Real Estate Equities Inc. (NYSE:ARE) is a life-science-focused office REIT with a one-month return of 16.03% and a market capitalization of approximately $9.871 billion as of January 26, 2026 [2] - The company's stock faced pressure due to a slowdown in biopharma research spending and excess laboratory capacity, leading to a decline in leasing demand and rental growth expectations [3] - Alexandria Real Estate Equities Inc. was not among the 30 Most Popular Stocks Among Hedge Funds, with 31 hedge fund portfolios holding the stock at the end of Q3, down from 33 in the previous quarter [4]