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

Baron Capital's Q2 2026 letter for the Baron Real Estate Income Fund revealed that the Fund gained 12.18% during the quarter, slightly surpassing the MSCI US REIT Index's 11.84% growth. The letter also discussed the Fund's long-term performance, ranking it #2 in real estate funds since its December 2017 inception. Management expressed optimism about a multi-year recovery in real estate, despite high interest rates, housing affordability issues, and AI-related disruption.

This optimism was backed by attractive valuations, increased M&A activity, favorable supply-demand dynamics, strong balance sheets, improving debt conditions, and the growing recognition of real estate as an AI beneficiary. The letter highlighted Alexandria Real Estate Equities, Inc. (NYSE:ARE) as one of the Fund's top five holdings.

Alexandria is a best-in-class life science REIT, and, as of the quarter's end, it accounted for 4.0% of the Fund's assets. Baron Capital had been cautious about life science real estate due to a slowdown in demand, an excess supply, and rising financing costs, but recent signs suggest that business fundamentals are stabilizing. The company plans to sell some properties and recycle capital into share repurchases.

Alexandria Real Estate Equities, Inc. (NYSE:ARE), closed at $53.52 per share during the quarter, with a 52-week trading range between $39.41 and $88.24.