Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Alexandria Real Estate Equities, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from -39.8% to 8.9% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 19, DPO 224, DIO 60). At a 5.0% WACC with mid-year discounting, the terminal value (121% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 14.6x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $412.30 per share, suggesting ARE is undervalued by 767.6% at the current price of $47.52.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 1,043 | 1,003 | 1,615 | 1,759 | 1,917 | 1,964 |
| (−) Net Interest | 96 | 92 | 148 | 161 | 176 | 180 |
| (+) D&A | 1,467 | 1,244 | 2,441 | 4,367 | 6,465 | 6,626 |
| EBITDA | 2,606 | 2,339 | 4,203 | 6,287 | 8,557 | 8,771 |
| (−) Tax | 0 | 0 | 0 | 0 | 0 | — |
| (−) CapEx | 6,221 | 5,983 | 9,629 | 10,491 | 11,430 | — |
| (−) ΔWC | 37 | 6 | -88 | -21 | -23 | — |
| Free Cash Flow (FCF) | -3,653 | -3,649 | -5,338 | -4,183 | -2,850 | — |
| Peers' EBITDA Multiple | 14.6x | |||||
| Terminal Value | 127,617 | |||||
| WACC / Discount Rate | 5.00% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | -3,565 | -3,391 | -4,725 | -3,527 | -2,289 | 99,992 |
| Enterprise Value | 82,495 | |||||
| Projection Period | -17,496 | -21.2% | ||||
| Terminal Value | 99,992 | 121.2% | ||||
| (−) Current Net Debt | 12,212 | |||||
| Equity Value | 70,283 | |||||
| (÷) Outstanding Shares | 170M | |||||
| Fair Price | $412 | +768.0% | ||||
| WACC \ EV/EBITDA Exit Multiple | 10.5x | 12.5x | 14.5x | 16.5x | 18.5x |
|---|---|---|---|---|---|
| 3.0% | $289 | $378 | $467 | $556 | $644 |
| 4.0% | $269 | $354 | $439 | $523 | $608 |
| 5.0% | $251 | $332 | $412 | $493 | $574 |
| 6.0% | $234 | $310 | $387 | $464 | $541 |
| 7.0% | $217 | $291 | $364 | $437 | $511 |
Current price: $47.52. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.