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Boston Properties Scales 52-Week High on Investors' Optimism
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Shares of Boston Properties, Inc. (BXP - Free Report) crafted a 52-week high, touching $132.61 on Aug 17. The stock pulled back to end the trading session at $ 132.15.
This office REIT has seen its shares rise 11.8% in the past three months, outperforming the 8.4% increase registered by the industry during the same period.
Growth Drivers
The company’s impressive second-quarter earnings and raised 2018 outlook drove this upside in the stock. Late last month, the company reported second-quarter 2018 FFO per share of $1.58, surpassing the Zacks Consensus Estimate of $1.56. The figure also came in higher than the company’s projection of $1.53-$1.55 per share.
This reflected better numbers, than what was projected, from portfolio operations, as well as for development and management-service revenues. Also, the company incurred lower-than- projected interest expense in the quarter. Moreover, Boston Properties raised its full-year 2018 FFO per share guidance to $6.36-$6.41, denoting 7 cents per share increase from the mid-point of its previous outlook.
This apart, Boston Properties recently formed a joint venture with Canada Pension Plan Investment Board (CPPIB) for the acquisition of Santa Monica Business Park in the Ocean Park neighborhood of Santa Monica, CA. The partnership shelled out nearly $627.5 million for this acquisition. Also, the company announced that it has agreed to purchase minority interest of a partnership with The Moinian Group for developing a two-million-square-foot office property — 3 Hudson Boulevard.
Further, Boston Properties has signed a new lease with Verizon, for 440,000 square feet of space, at The Hub on Causeway project. This brings the property to be leased by more than 75%. The Hub on Causeway is a joint-venture project between Boston Properties and Delaware North. It features mixed-use retail, office, hotel, and residential space, spanning 1.5 million square feet of space. The transit-oriented development Project, being constructed in three phases, will likely be completed in mid 2021.
Upsurge to Continue?
Boston Properties concentrates on a few select high-rent, high barrier-to-entry geographic markets that usually fare better in an uncertain economy. Moreover, growth in demand for office space continues to be fueled by technology and life-science businesses. The company has achieved an annual revenue growth rate of 7.09% over the last five years. Given the company’s improving core operations, we anticipate this trend to continue, going forward. In addition, the company is likely to experience solid contribution in 2018 from its non-same-property portfolio, chiefly driven by development deliveries.
With economic improvement and recovery in the job market, we expect healthy growth in demand for office spaces. This is because, as the economy revives, business grows and therefore, corporate sectors seek expansion, renting more space to accommodate the increased workforce.
Finally, solid dividend payouts are arguably the biggest enticement for REIT investors and the company has registered a five-year annual dividend growth rate of 6.40%. Backed by the company’s solid financial position and low payout ratio compared with the industry average, its dividend payout rate is expected to be sustainable.
Nevertheless, there is growth in the supply of office space in the market and this remains a concern because higher supply usually leads to lesser absorption and also curtails the landlord’s capability to demand more rents. There is also a trend of increased concessions in some of the markets. Also, big financial players are opting for resizing of their business and cost-containment efforts, which is affecting demand for office space.
Further, hike in interest rate is a concern for the company. Essentially, rising rates imply higher borrowing cost for the company, which would affect its ability to purchase or develop real estate and lower dividend payouts as well. Also, the dividend payout might become less attractive compared with the yields on fixed income and money market accounts.
The stock carries a Zacks Rank #3 (Hold).
Stocks to Consider
A few better-ranked stocks from the real estate space are Outfront Media Inc. (OUT - Free Report) , PS Business Parks, Inc. and W. P. Carey Inc. (WPC - Free Report) . While Outfront Media sports a Zacks Rank #1 (Strong Buy), PS Business Parks and W. P. Carey carry Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Outfront Media’s Zacks Consensus Estimate for 2018 FFO per share remained unchanged at $2.06 in the last 30 days.
PS Business Parks’ current-year FFO per share estimates inched up 0.3% to $6.39 over the last 30 days.
W. P. Carey’s FFO per share estimates for 2018 moved 5.8% north to $5.12 in 60 days’ time.
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.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
Image: Bigstock
Boston Properties Scales 52-Week High on Investors' Optimism
Shares of Boston Properties, Inc. (BXP - Free Report) crafted a 52-week high, touching $132.61 on Aug 17. The stock pulled back to end the trading session at $ 132.15.
This office REIT has seen its shares rise 11.8% in the past three months, outperforming the 8.4% increase registered by the industry during the same period.
Growth Drivers
The company’s impressive second-quarter earnings and raised 2018 outlook drove this upside in the stock. Late last month, the company reported second-quarter 2018 FFO per share of $1.58, surpassing the Zacks Consensus Estimate of $1.56. The figure also came in higher than the company’s projection of $1.53-$1.55 per share.
This reflected better numbers, than what was projected, from portfolio operations, as well as for development and management-service revenues. Also, the company incurred lower-than- projected interest expense in the quarter. Moreover, Boston Properties raised its full-year 2018 FFO per share guidance to $6.36-$6.41, denoting 7 cents per share increase from the mid-point of its previous outlook.
This apart, Boston Properties recently formed a joint venture with Canada Pension Plan Investment Board (CPPIB) for the acquisition of Santa Monica Business Park in the Ocean Park neighborhood of Santa Monica, CA. The partnership shelled out nearly $627.5 million for this acquisition. Also, the company announced that it has agreed to purchase minority interest of a partnership with The Moinian Group for developing a two-million-square-foot office property — 3 Hudson Boulevard.
Further, Boston Properties has signed a new lease with Verizon, for 440,000 square feet of space, at The Hub on Causeway project. This brings the property to be leased by more than 75%. The Hub on Causeway is a joint-venture project between Boston Properties and Delaware North. It features mixed-use retail, office, hotel, and residential space, spanning 1.5 million square feet of space. The transit-oriented development Project, being constructed in three phases, will likely be completed in mid 2021.
Upsurge to Continue?
Boston Properties concentrates on a few select high-rent, high barrier-to-entry geographic markets that usually fare better in an uncertain economy. Moreover, growth in demand for office space continues to be fueled by technology and life-science businesses. The company has achieved an annual revenue growth rate of 7.09% over the last five years. Given the company’s improving core operations, we anticipate this trend to continue, going forward. In addition, the company is likely to experience solid contribution in 2018 from its non-same-property portfolio, chiefly driven by development deliveries.
With economic improvement and recovery in the job market, we expect healthy growth in demand for office spaces. This is because, as the economy revives, business grows and therefore, corporate sectors seek expansion, renting more space to accommodate the increased workforce.
Finally, solid dividend payouts are arguably the biggest enticement for REIT investors and the company has registered a five-year annual dividend growth rate of 6.40%. Backed by the company’s solid financial position and low payout ratio compared with the industry average, its dividend payout rate is expected to be sustainable.
Nevertheless, there is growth in the supply of office space in the market and this remains a concern because higher supply usually leads to lesser absorption and also curtails the landlord’s capability to demand more rents. There is also a trend of increased concessions in some of the markets. Also, big financial players are opting for resizing of their business and cost-containment efforts, which is affecting demand for office space.
Further, hike in interest rate is a concern for the company. Essentially, rising rates imply higher borrowing cost for the company, which would affect its ability to purchase or develop real estate and lower dividend payouts as well. Also, the dividend payout might become less attractive compared with the yields on fixed income and money market accounts.
The stock carries a Zacks Rank #3 (Hold).
Stocks to Consider
A few better-ranked stocks from the real estate space are Outfront Media Inc. (OUT - Free Report) , PS Business Parks, Inc. and W. P. Carey Inc. (WPC - Free Report) . While Outfront Media sports a Zacks Rank #1 (Strong Buy), PS Business Parks and W. P. Carey carry Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Outfront Media’s Zacks Consensus Estimate for 2018 FFO per share remained unchanged at $2.06 in the last 30 days.
PS Business Parks’ current-year FFO per share estimates inched up 0.3% to $6.39 over the last 30 days.
W. P. Carey’s FFO per share estimates for 2018 moved 5.8% north to $5.12 in 60 days’ time.
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.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>