Alexandria Real Estate Equities

Methodology

This EPS-based method has fundamental limitations for Alexandria as a REIT, since depreciation distorts reported earnings despite stable cash flows from lab space. The company's revenue comes from long-term leases to biotech and pharma tenants in key life science clusters. Investors should use FFO or AFFO-based models rather than traditional earnings metrics for evaluating specialty office REITs like Alexandria.

Methodology

Traditional PEG analysis is problematic for Alexandria given GAAP depreciation that doesn't reflect the economic reality of well-located lab buildings appreciating over time. If using PEG, substitute FFO or AFFO growth for EPS growth. Even then, Alexandria's niche focus on life science properties means valuation depends more on occupancy trends, development pipeline, and tenant credit quality than earnings-based growth multiples.

Methodology

Alexandria's meaningful dividend yield represents an important but not singular component of total return for a growth-oriented specialty REIT. The company balances current income with reinvestment in high-return life science development projects in prime markets. PEGY provides more complete context than PEG, though development spreads, occupancy in key clusters, and life science funding trends offer better valuation insights than dividend-adjusted earnings metrics.