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Alexandria Real Estate Equities, Inc. (ARE) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Alexandria Real Estate Equities, Inc. (ARE)

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Intrinsic Value (DCF)

Current$57.26
→
Intrinsic$142.67
+149%
$74.82$142.67$271.56
Market implies 3% growth for 5 years
DCF analysis suggests ARE could have 149% upside at 15% growth — verify assumptions match your view.
At $57, the market prices in only 3% growth — below historical 15%, suggesting low expectations.
Range: Bear $75 → Bull $272. Current price implies expectations below the bear case — very conservative expectations.
Discount ↓Growth →11%13%15%17%
8%$187$209$233$258
10%$111$126$143$160
12%$69$81$93$106
14%$43$52$61$72

Bull Case

  • Bull case ($272) offers 374% upside at 18% growth, 9% discount
  • Price below even worst-case scenario — strong margin of safety
  • Market-implied growth (3%) ≤ historical CAGR (15%)

Bear Case

  • Bear case ($75) with 12% growth, 12% discount rate
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5-Year FFO Projection

Year 1$1.75B
Year 2$2.02B
Year 3$2.32B
Year 4$2.67B
Year 5$3.07B
Terminal$45.12B

📐 Model Inputs

Growth Rate15.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base FFO$1.53BTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. Uses FFO per NAREIT standards. See FAQ below for full methodology.

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Frequently Asked Questions

Is ARE stock undervalued or overvalued?
🟢 UNDERVALUED

ARE trades at $57.26 vs. our DCF-derived intrinsic value of $142.67, implying +172% upside. At a 10.0% WACC and 15.0% projected FCF growth, the market appears to be underpricing the present value of ARE's future cash flows. The bear case ($74.83) still suggests upside, providing margin of safety.

What is ARE's intrinsic value?

Using a 5-year DCF model: Base FCF of $1.53B, projected at 15.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $12.20B net debt and dividing by 0.17B shares: Bear $74.83 | Base $142.67 | Bull $238.96. Current price $57.26 implies +172% to base case.

How is ARE's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 15.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($36.75B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 24.1x.