Why Alexandria Real Estate's Dividend Is At Risk
Key Points
The Motley Fool analysts Matt Argersinger and Anthony Schivone discuss the future for Alexandria Real Estate.
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Alexandria Real Estate Equities (NYSE: ARE) is potentially going through the worst period in its history as a publicly traded REIT.
While the company has historically boasted a sturdy dividend and a great balance sheet, recent earnings have highlighted some major concerns. The issue centers on their massive development pipeline. We explore the technical accounting structure where the company capitalizes a lot of interest, and the risk that canceling these early stage projects would force them to expense that interest, heavily impacting their FFO. This unusual accounting construct makes a dividend cut likely, which we expect may be announced soon. Watch to learn the specifics of this risk before their December analyst day.
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Daily Stock News 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.
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