StockFactz
Oct 19, 8:27 PM
$ARE I would also want to bring up an old part of my thesis where some of their oversupply can be pivoted to advanced technology use cases. The demand for those spaces seems to be quite high in hubs. Let's hypothetically model a scenario where current biotech occupancy stays the same but advanced technology absorbs 6% of the space but at a depressed rent spread, let's say -25%. When we factor in reduced capex and other maintence fees from advanced tech compared to biotech, we can calculate the final rent spread is actually probably closer to -10-15%, let's just take 15%. 15% of 6% of the properties is about a 1% decline overall for occupancy to recover to 93% with no changes in biotech occupancy. This places the valuation of the overall stock at close to
$72. We took a lot of assumptions here so if you want to assume that FFO takes a hit due to reduced growth expectations then we can reduce it to ~
$65. That's what I would consider a base case for 1 year. Bull case is much higher
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