Here’s Why Why Baron Capital Bought Alexandria (ARE)

Here’s Why Why Baron Capital Bought Alexandria (ARE)

Thu, September 17, 2026 at 5:31 PM GMT+3 3 min read

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Baron Capital, an investment management company, released its Q2 2026 letter for the "Baron Real Estate Income Fund." The Fund gained 12.18% (Institutional Shares) during the quarter, modestly outperforming the MSCI US REIT Index, which increased 11.84%. The letter can be downloaded here. Its long-term performance also remains strong, with Morningstar ranking it the #2 real estate fund since its December 2017 inception. The letter discusses management's current views, portfolio composition, key contributors and detractors, recent activity, and the outlook for real estate and the Fund. Management believes a multi-year recovery in real estate is beginning to emerge, despite elevated interest rates, housing affordability pressures, and AI-related disruption. Its constructive outlook is supported by attractive valuations, accelerating M&A, favorable supply-demand dynamics, healthy balance sheets, improving debt conditions, and increasing recognition of real estate as an AI beneficiary. The Fund remains positioned to benefit from improving growth, rising dividends, and potential valuation normalization. Please review the Fund's top five holdings to gain insights into their key selections for 2026.

In its second-quarter 2026 investor letter, Baron Real Estate Income Fund highlighted Alexandria Real Estate Equities, Inc. (NYSE:ARE). Alexandria Real Estate Equities, Inc. (NYSE:ARE) is a best-in-class life science REIT. On September 16, 2026, Alexandria Real Estate Equities, Inc. (NYSE:ARE) closed at $53.52 per share. One-month return of Alexandria Real Estate Equities, Inc. (NYSE:ARE) was 5.70% and its shares lost 36.01% over the past 52 weeks. Alexandria Real Estate Equities, Inc. (NYSE:ARE) has a market capitalization of $9.33 billion with a 52-week trading range between $39.41 and $88.24.

Baron Real Estate Income Fund stated the following regarding Alexandria Real Estate Equities, Inc. (NYSE:ARE) in its Q2 2026 investor letter:

"In the second quarter, we acquired shares in Alexandria Real Estate Equities, Inc. (NYSE:ARE), a REIT that owns a portfolio of life science office properties concentrated in Boston, San Diego, San Francisco, Seattle, New York, and North Carolina. Alexandria is classified as a Health Care REIT, but we view it as Life Sciences. The company accounted for 4.0% of the Fund's assets as of quarter end. We have been cautious on the prospects for life science real estate for several years, owing to alife science sharp slowdown in demand, several years of excess supply deliveries, and a rising cost of capital that negatively impacted financing costs and development economics. While we remain cautious, we have begun to see signs that business fundamentals are beginning to stabilize. We believe Alexandria's growth can inflect positively over the next couple years and, in the meantime, the company will sell select properties and accretively recycle capital into share repurchases..." (Click here to read the full text)

Alexandria Real Estate Equities, Inc. (NYSE:ARE) is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 32 hedge fund portfolios held Alexandria Real Estate Equities, Inc. (NYSE:ARE) at the end of the second quarter which was 34 in the previous quarter. While we acknowledge the potential of Alexandria Real Estate Equities, Inc. (NYSE:ARE) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Alexandria Real Estate Equities, Inc. (NYSE:ARE) and shared how the company's profit rebound comes with a cash flow catch. In addition, please check out our hedge fund investor letters Q2 2026 page for more investor letters from hedge funds and other leading investors.

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This article is originally published at Insider Monkey.