Alexandria to Sell Megacampus Stakes Amid $638.5M Loss

Alexandria Real Estate Equities is selling parts of its flagship life sciences campuses. The REIT reported a $638.5 million quarterly loss, declining rents and tenant projections that point to more pressure ahead. Biotech real estate remains oversupplied after the pandemic-era building boom.

In October, Alexandria agreed to sell a 29% controlling interest in Campus Point, a San Diego megacampus, for $475 million. It also agreed to sell its interest in 421 Park Drive at the Fenway Megacampus in Boston, which cuts construction spending by $136 million. Closing is expected in the fourth quarter of 2026.

Chief financial officer Marc Binda said more sales are under consideration. They include 667,000 square feet split between 40 Sylvan Road in the Waltham Megacampus and 3000 Minuteman Road in the Andover Megacampus. He expects both to suit advanced tech tenants.

Asset recycling

Alexandria has sold $717 million of assets as of October 26 through its asset recycling programme. Another $1.2 billion in sales is needed to meet its year-end goal. Binda said the company usually makes most of its sales in the fourth quarter and that he believes it will hit its target.

The company also raised $1 billion in an August debt offering. It renegotiated its $5 billion credit line for a more favourable maturity date and interest rate.

Leasing and occupancy

Rental rates fell a further 2.4% in the third quarter. Net operating income dropped 6.7% from the previous quarter and 9.2% year to date. Alexandria signed 450,000 square feet of new leases and 785,000 square feet of renewals and re-leasing, for 1.2 million in total. Occupancy edged up to 87.1% from 86.9%.

It expects 1.25 million square feet of leasing in the fourth quarter. It also forecasts 1.4 million square feet of lease expirations in early 2027, which will take nine to 24 months to fill. Another 717,000 square feet of key expirations are due in 2028. Only 1.1% of new leases this quarter came from public biotech companies.

Alexandria also delivered roughly 529,000 square feet in the quarter, including about 200,000 square feet to Novo Nordisk for its R&D Center at 60 Sylvan Road. The new space was 84% occupied at delivery. Another 905,000 square feet of projects, currently 77% leased, are set to deliver in 2027 and 2028.

Binda said the construction pipeline has been cut by more than half since the fourth quarter of 2025. The company is leaning further into advanced tech tenants, who tend to need less capital spending and pay significantly lower rent. Properties such as 311 Arsenal St. in Watertown, Massachusetts, are now half filled with them.

Chairman Joel Marcus said on Tuesday's earnings call that the company is "well into" the shift away from the Covid-era biotech boom, and that "that transition is never simple and takes a fair amount of time". Savills data shows vacancy at 27.6% in San Diego, 35.4% in Boston and 23.8% in San Francisco.

Source: Bisnow