Boston Properties (BXP) Q1 FFO Meets Estimates, Revenues Up
Boston Properties Inc.’s BXP first-quarter 2018 funds from operations (FFO) per share of $1.49 was in line with the Zacks Consensus Estimate. The figure was also higher than the year-ago quarter’s tally of $1.48. In addition, quarterly FFO per share was within the company’s previously guided range of $1.47-$1.49.
Adjusted revenues, comprising base rent and recoveries from tenants during the quarter, increased 3.7% year over year to $614.6 million. The figure also comfortably surpassed the Zacks Consensus Estimate of $604.5 million. The rise was attributable to increases in both the revenue components.
As of Mar 31, 2018, Boston Properties’ portfolio comprised 179 properties, covering a total of around 50.3 million square feet. This included 13 under development properties, covering an area of 6.5 million square feet.
The overall operating portfolio, including 163 properties (excluding two residential properties and hotel), was 90.5% leased as of Mar 31, 2018.
During the first quarter, Boston Properties entered an agreement with Leidos to construct a build-to-suit project which would include a Class A office space at company’s 17Fifty Presidents Street development project located in Reston, VA, having about 276,000 net rentable square feet. The development of the project has started and will be ready for occupancy by the second quarter of 2020.
Further, the company partly placed 508 apartments and retail spaces in service, spanning across 515,000 square feet, situated in Reston, VA.
Also, Boston Properties entered a binding lease agreement with Fannie Mae for its Reston Gateway project in Reston, VA. Per the agreement, the company will lease approximately 850,000 rentable square feet of space to Fannie Mae out of nearly 1.1 million net rentable square feet, which is to be constructed on the Reston Gateway property. The construction, which awaits a few approvals, will begin during the second half of 2018.
Boston Properties exited the first quarter with cash and cash equivalents of around $294.6 million, down from $434.8 million as of Dec 31, 2017.
Boston Properties updated its full-year 2018 FFO per share guidance to $6.27-$6.36 from $6.23-$6.36 provided earlier. The Zacks Consensus Estimate is pegged at $6.31.
The company projects its second-quarter 2018 FFO per share of $1.53-$1.55. The Zacks Consensus Estimate stands at $1.58.
Boston Properties is well poised for growth, with the support of properties located in select high-rent, high barrier-to-entry geographic markets and diversified tenants along with industry base. In fact, ownership of properties in strategic areas enabled Boston Properties to enter into a lease agreement with Fannie Mae for its Virginia property, which is currently under construction. Also, with economic improvement and recovery in the job market, healthy growth in the demand for office spaces is expected to strengthen the company’s growth opportunities.
However, the market is witnessing growth in the supply of office spaces, which remains a concern as higher supply usually leads to lesser absorption and curtails the landlord’s capability to demand more rent. A few big financial players are resizing their businesses and trying to cut costs, which is affecting demand for office spaces. Further, rate hike adds to its woes.
The company carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Boston Properties, Inc. Price, Consensus and EPS Surprise
We now look forward to the earnings releases of other REITs like Alexandria Real Estate Equities, Inc. ARE, Regency Centers Corporation REG and Welltower Inc. WELL. Alexandria and Regency Centers are scheduled to release results on Apr 30 while WELL is slated to report numbers on May 1.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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