Baron Funds, an investment management firm, released its “Baron Focused Growth Fund” first quarter 2023 investor letter, a copy of which can be downloaded here. During the quarter ending on March 31, 2023, the Fund’s Institutional Shares exhibited a notable increase of 14.49%. This remarkable performance can be attributed to the resilience and robust demand witnessed by companies held within the Fund’s portfolio. Spare some time to check the fund’s top 5 holdings to know more about their top bets for 2023.
In its Q1 2023 investor letter, Baron Focused Growth Fund mentioned Alexandria Real Estate Equities Inc. (NYSE:ARE) and explained its insights for the company. Founded in 1994, Alexandria Real Estate Equities Inc. (NYSE:ARE) is a Pasadena, California-based real estate investment trust company with a $20.8 billion market capitalization. Alexandria Real Estate Equities Inc. (NYSE:ARE) delivered a -17.42% return since the beginning of the year, while its 12-month returns are down by -7.84%. The stock closed at $121.92 per share on June 14, 2023.
Here is what Baron Focused Growth Fund has to say about Alexandria Real Estate Equities Inc. (NYSE:ARE) in its Q1 2023 investor letter:
“Alexandria, an office REIT for the life sciences industry, declined 14.0% and hurt performance by 27 bps in the first quarter. The decline was due to concerns about bank failures and worries that regional banks were key lenders to many biotechnology companies that could fail if they did not get financing. However, Alexandria has minimal exposure to the biotechnology industry and has no exposure to regional banking troubles. We believe Alexandria is a truly special company with high barriers to entry, numerous other competitive advantages, and an attractive runway for growth. The company has long-term leases of 7 to 10 years. The lease terms escalate every year. Alexandria has an irreplaceable developable land portfolio that has lower development risk since it is tenant driven. The company continues to grow its earnings organically at a high single-digit rate and has development spending of another $3 billion that is already 80% pre-leased. Alexandria’s balance sheet is strong – 95% of its debt is fixed rate, and there are no debt maturities for the next two years. Business conditions remain favorable, with continued life science rent growth and institutional appetite for Alexandria’s assets at multiples above the company’s current valuation. Sales are taking place at over 20 times net operating income, while Alexandria today trades at just 15 times. The stock is trading today at an almost 50% discount to replacement cost. Assets trade today at $1,500 per square foot, while Alexandria is valued in the public market today at just $800 per square foot.”
Photo by Owen Lystrup on Unsplash
Our calculations show that Alexandria Real Estate Equities Inc. (NYSE:ARE) was not able to secure a spot on our list of the 30 Most Popular Stocks Among Hedge Funds. Alexandria Real Estate Equities Inc. (NYSE:ARE) was in 33 hedge fund portfolios at the end of the first quarter of 2023, compared to 29 funds in the previous quarter. Alexandria Real Estate Equities Inc. (NYSE:ARE) delivered a -3.05% return in the past 3 months.
In March this year, we also shared Baron Fund’s Q4 2022 views on Alexandria Real Estate Equities Inc. (NYSE:ARE) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters Q1 2023 page.
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Disclosure: None. This article is originally published at Insider Monkey.