Alexandria Real Estate Equities, Inc. Details Tax Treatment for 2025 Distributions

Alexandria Real Estate Equities, Inc. (NYSE: ARE), a leading life science real estate investment trust (REIT), released detailed information on the federal income tax treatment of its shareholder distributions for the tax year 2025. This announcement breaks down how the quarterly payments made throughout the year are classified for tax purposes, providing clarity for investors preparing to report and file their taxes.

Overview of 2025 Distributions

In 2025, Alexandria Real Estate Equities paid four quarterly distributions to common stockholders, each totaling $1.32 per share, resulting in an aggregate of $5.28 per share over the year. This comprehensive tax classification is outlined in the company’s announcement and associated internal tax reporting chart.

Purpose of the Tax Notice

The tax treatment disclosure is aimed at helping shareholders understand the components of their received distributions — particularly how much is ordinary income, capital gains, return of capital, and other categories — which can significantly affect their individual tax filings. The company suggests that investors consult their own tax advisors for personalized guidance specific to their circumstances.

Breakdown of Distribution Components

The 2025 distributions were split into various categories that have different tax implications. Below is a description of the key components and how they are treated for U.S. federal income tax purposes.

Taxable Ordinary Dividends

A significant portion of the total distributions — $3.517008 per share, or approximately 66.61% of the total — was classified as taxable ordinary dividends (Box 1a on IRS Form 1099-DIV). These amounts are generally subject to standard income tax rates for shareholders.

Qualified Dividends

Within the taxable ordinary dividends, a portion qualifies for preferential tax treatment as qualified dividends (subject to lower tax rates for many U.S. taxpayers). For 2025, the sum of qualified dividends was $0.762960 per share. This amount is also reflected in the company’s disclosure chart and helps many individual investors reduce their overall tax burden relative to ordinary income.

Return of Capital

A smaller segment of the distributions — $1.000032 per share, or roughly 18.94% — was categorized as a return of capital. This portion is not immediately taxable but instead reduces the investor’s basis in their shares for tax purposes.

Other Tax Categories

The announcement also details other IRS-related categories:

• Unrecaptured Section 1250 gains — gain components from real property that can be taxed at up to 25%.
• Section 199A dividends — certain qualified REIT dividends that may qualify for a deduction under U.S. tax law.

Quarter-by-Quarter Tax Classification

The company’s announcement includes a table that summarizes tax classification for each quarter’s payment. While the total is standardized across all quarters, each quarter’s distribution shows the consistent makeup of taxable ordinary income, return of capital, and qualified components. This consistent structure helps investors plan ahead for expected taxation on their 2025 dividend earnings.

Example: First Quarter of 2025 Distribution

For example, the first quarter distribution, paid on January 15, 2025 for shareholders of record on December 31, 2024, was comprised primarily of taxable ordinary income with smaller portions allocated to return of capital and qualified dividend classifications. Similar patterns are seen in subsequent quarters.

Practical Implications for Investors

This tax breakdown is important because different components of a distribution are taxed at different rates and in different ways under U.S. tax law. Most shareholders will find that a majority of their 2025 distribution is ordinary income. Qualified dividends, on the other hand, may be eligible for lower tax rates, depending on the investor’s tax bracket. Meanwhile, return of capital has unique implications for the stock basis and future capital gains.

Non-U.S. Stockholders Considerations

For some non-U.S. stockholders, certain parts of the distribution related to U.S. real property interests under Section 897 may affect withholding or tax obligations, especially for those owning more than 10% of the company. However, for most U.S. taxpayers, the main categories of ordinary and qualified dividends, as well as return of capital, will be the principal considerations.

Background on Alexandria Real Estate Equities, Inc.

Alexandria Real Estate Equities, Inc. is a major U.S.-based REIT focused on acquiring, owning, and operating collaborative life science and technology campuses across key innovation hubs nationwide. Founded in 1994 and headquartered in Pasadena, California, the company is listed on the NYSE under the ticker “ARE” and is included in the S&P 500® Index.

As a REIT, Alexandria is required to distribute at least 90% of its taxable income to shareholders, which generally allows it to avoid federal corporate income taxes on earnings that are passed through as dividends. This tax structure is a defining feature of REITs and makes the classification of distributions especially important for investors.

Life Science REIT Specialty

A unique aspect of Alexandria’s business model is its focus on life science properties, including lab and research facilities clustered near major universities and research institutions. This niche has distinguished the company in the real estate market and contributed to its reputation among investors seeking exposure to long-term growth sectors.

Investor Takeaways and Final Thoughts

For the 2025 tax year, Alexandria Real Estate Equities’ distribution breakdown shows a strong emphasis on ordinary income components, with qualified dividends and return of capital also playing meaningful roles. Stockholders need to be aware of these classifications as they prepare to file their federal tax returns.

Consultation with a tax professional is recommended, particularly for investors with complex financial situations or non-U.S. tax considerations. By understanding how these distributions are treated, shareholders can better anticipate tax liabilities and plan investment strategies accordingly.

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