Mizuho Securities Raises Price Target on Alexandria Real Estate (ARE) to $113; Reiterates Buy
Mizuho Securities reiterated a Buy rating on Alexandria Real Estate (NYSE: ARE), and raised the price target to $113.00 (from $110.00), as the company continues to target its long-term debt/EBITDA goal of sub 6x. Management is inclined to stick with the plan to tap dispositions and EBITDA growth as the primary de-leveraging tools.
Analyst Richard Anderson commented, "With the planned acquisition of One Kendall Square in East Cambridge ($725mm @ 4.7% initial cash cap rate), we think the benefit of the forward equity offering is at least two-fold: a) it addresses the funding of the deal (~ $500mm of equity needed) in an earnings-friendly manner, while b) taking ARE down the de-leveraging path at a faster rate (now targeting 6.4x by 4Q16 vs. 6.7x previously). As such, we reiterate our Buy rating and are increasing our PT to $113 from $110 (no methodology change)."
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Shares of Alexandria Real Estate closed at $101.27 yesterday.