Alexandria Real Estate Equities (ARE) is still facing a "soft" life science real estate market, even as the company has made some progress backfilling vacated space, RBC Capital Markets said in a note Monday.

The company expects occupancy to trend lower in the near term and is actively selling non-core assets to fund its development pipeline, potentially weighing on earnings, according to the note.

RBC said it "modestly" reduced its funds from operations estimates for the company, citing additional tenant move-outs along with higher than expected Q4 disposition volume.

The firm also expects core earnings to fall 28.3% in 2026 and 6.8% in 2027.

"Public biotech real estate demand has been more muted as the existing companies are generally stable (do not need space) and, given the slow IPO market, there are not many new (generally faster growing) companies entering the market," the note said.

RBC kept Alexandria's sector perform rating and $60 price target.

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