ARE Falls 40% but Still Draws an $8 Million New Stake From a Concentrated Fund

On January 21, Kawa Capital Management disclosed a new position in Alexandria Real Estate Equities (NYSE:ARE), acquiring 160,000 shares worth an estimated $7.93 million at quarter-end.

What happened

According to its SEC filing dated January 21, Kawa Capital Management, Inc established a new position in Alexandria Real Estate Equities by acquiring 160,000 shares during the fourth quarter. The quarter-end value of the new stake also totaled $7.93 million, reflecting the purchase of new shares.

What else to know

The ARE stake now represents 18.3% of Kawa Capital Management's reportable U.S. equity assets under management.

Top holdings after the filing:

• NYSE: BDN: $15.73 million (36.4% of AUM)
• NYSE: ONL: $12.54 million (29.0% of AUM)
• NYSE: ARE: $7.93 million (18.3% of AUM)
• NYSE: VALE: $7.05 million (16.3% of AUM)

As of January 20, ARE shares were priced at $57.52, down about 40% over the past year and far underperforming the S&P 500’s roughly 14% gain in the same period.

Company overview

Company snapshot

• Alexandria Real Estate Equities owns, operates, and develops collaborative life science, technology, and agtech campuses in major urban innovation clusters, generating revenue primarily from rental income and property development.
• The company operates as a real estate investment trust (REIT), focusing on long-term leases with high-quality tenants in the life sciences and technology sectors, with additional income from strategic venture capital investments.
• It serves biotechnology, pharmaceutical, technology, and agtech companies seeking high-quality, collaborative workspaces in key U.S. innovation markets.

Alexandria Real Estate Equities, Inc. specializes in Class A office and laboratory properties tailored for the life sciences and technology sectors, with a significant presence in top U.S. innovation hubs. The company leverages its deep industry relationships and strategic development expertise to attract leading tenants and maintain high occupancy rates. Alexandria's focus on collaborative campus environments and a diversified tenant base supports its competitive positioning and long-term asset value.

What this transaction means for investors

Conviction matters most when capital gets scarce, and this portfolio is making that clear. With just four core positions and more than 80% of assets tied up in real estate and materials, the decision to make Alexandria Real Estate Equities nearly a fifth of reportable assets signals a sharp pivot toward income durability and asset quality at a moment of sector stress.

Alexandria’s fundamentals remain sturdier than its stock chart suggests. The company posted adjusted funds from operations of $2.22 per share in the third quarter and $6.85 year to date, supporting a dividend that now yields more than 8%. Occupancy sits at 90.6%, with 97% of leases carrying annual rent escalators and a weighted average lease term of 7.5 years. Liquidity remains ample at $4.2 billion, while only 7% of total debt matures through 2027.

Management is also leaning into capital discipline. Alexandria extended its $500 million share repurchase authorization through 2026, with $241.8 million still available as of October, giving it flexibility to act while shares remain depressed. Ultimately, and placed alongside heavier allocations to BDN and ONL, the ARE stake looks less like a rebound trade and more like a bet on balance sheet resilience, predictable cash flows, and a recovery in life science leasing that does not need to be fast to matter.

Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alexandria Real Estate Equities. The Motley Fool has a disclosure policy.