Boston Properties Inc. (BXP - Free Report) reported second-quarter 2016 funds from operations (“FFO”) per share of $1.43 backed by higher revenues. Reported FFO was above both the Zacks Consensus Estimate of $1.40 and the year-ago figure of $1.36.
Motably, quarterly FFO per share was higher than the REIT’s (real estate investment trust) previously guided range of $1.36–$1.38, thanks to the earlier-than-anticipated tenant termination income and better-than-expected portfolio operations.
Total revenue during the quarter improved 0.9% year over year to $623.5 million, comfortably surpassing the Zacks Consensus Estimate of $607.8 million. Growth was primarily attributable to a rise in rental revenues. Rental revenues were up 0.9% year over year to $605.2 million, aided by an uptick in base rents.
Property Update
As of Jun 30, 2016, Boston Properties’ portfolio comprised of 168 properties, covering a total of around 46.5 million square feet of space. This included eight under-development properties, covering an area of 3.8 million square feet.
The overall operating portfolio, comprising 157 properties (excluding 2 residential properties and one hotel), was 90.8% leased as of Jun 30, 2016.
Notably, during the quarter, the company acquired 3625-3635 Peterson Way – a 218,000 net rentable square foot office property – in Santa Clara, CA for roughly $78.0 million in cash. It is fully leased to a single tenant through Mar 2021. Following its expiration, the company plans to develop the site into a Class A office campus with a total of around 632,000 net rentable square feet of space.
Subsequent to the quarter end, Boston Properties forayed into the Los Angeles market by acquiring a 49.8% stake in an existing joint venture that owns and operates the Colorado Center in Santa Monica, CA, for a gross purchase price of around $511.1 million.
Liquidity
Boston Properties exited second-quarter 2016 with cash and cash equivalents of nearly $1.2 billion, up from $723.7 million as of 2015 end.
Outlook
The company has updated its full-year guidance to $5.92–$5.99 per share from the previous projection of $5.85–$5.95. The Zacks Consensus Estimate of $5.93 lies within the guided range. The company raised its outlook to include the impact of its 49.8% stake buyout in Colorado Center and a higher portfolio performance.
It expects its third-quarter 2016 FFO per share in a range of $1.40–$1.42, below the Zacks Consensus Estimate of $1.45.
Our Viewpoint
We are encouraged with a better-than-expected results at Boston Properties. The company is poised to grow amid healthy labor market conditions, with properties in select high-rent, high barrier-to-entry geographic markets, diversified tenant and industry base, including several bellwethers. Further, with the Santa Monica office market having a solid concentration of technology, media, advertising and entertainment tenants in Los Angeles, the stake acquisition in the Colorado Center seems a strategic fit for Boston Properties. Yet, stiff competition and additional supply in some of its markets pose concerns for the company.
Boston Properties currently carries a Zacks Rank #3 (Hold).
We now look forward to other REITs that are scheduled to release second-quarter 2016 results this week. These include Essex Property Trust Inc. (ESS - Free Report) , Apartment Investment and Management Company (AIV - Free Report) and Taubman Centers, Inc. .
Note: FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income. All EPS numbers presented in this write up represent FFO per share.
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Boston Properties Inc. (BXP - Free Report) reported second-quarter 2016 funds from operations (“FFO”) per share of $1.43 backed by higher revenues. Reported FFO was above both the Zacks Consensus Estimate of $1.40 and the year-ago figure of $1.36.
Motably, quarterly FFO per share was higher than the REIT’s (real estate investment trust) previously guided range of $1.36–$1.38, thanks to the earlier-than-anticipated tenant termination income and better-than-expected portfolio operations.
Total revenue during the quarter improved 0.9% year over year to $623.5 million, comfortably surpassing the Zacks Consensus Estimate of $607.8 million. Growth was primarily attributable to a rise in rental revenues. Rental revenues were up 0.9% year over year to $605.2 million, aided by an uptick in base rents.
Property Update
As of Jun 30, 2016, Boston Properties’ portfolio comprised of 168 properties, covering a total of around 46.5 million square feet of space. This included eight under-development properties, covering an area of 3.8 million square feet.
The overall operating portfolio, comprising 157 properties (excluding 2 residential properties and one hotel), was 90.8% leased as of Jun 30, 2016.
Notably, during the quarter, the company acquired 3625-3635 Peterson Way – a 218,000 net rentable square foot office property – in Santa Clara, CA for roughly $78.0 million in cash. It is fully leased to a single tenant through Mar 2021. Following its expiration, the company plans to develop the site into a Class A office campus with a total of around 632,000 net rentable square feet of space.
Subsequent to the quarter end, Boston Properties forayed into the Los Angeles market by acquiring a 49.8% stake in an existing joint venture that owns and operates the Colorado Center in Santa Monica, CA, for a gross purchase price of around $511.1 million.
Liquidity
Boston Properties exited second-quarter 2016 with cash and cash equivalents of nearly $1.2 billion, up from $723.7 million as of 2015 end.
Outlook
The company has updated its full-year guidance to $5.92–$5.99 per share from the previous projection of $5.85–$5.95. The Zacks Consensus Estimate of $5.93 lies within the guided range. The company raised its outlook to include the impact of its 49.8% stake buyout in Colorado Center and a higher portfolio performance.
It expects its third-quarter 2016 FFO per share in a range of $1.40–$1.42, below the Zacks Consensus Estimate of $1.45.
Our Viewpoint
We are encouraged with a better-than-expected results at Boston Properties. The company is poised to grow amid healthy labor market conditions, with properties in select high-rent, high barrier-to-entry geographic markets, diversified tenant and industry base, including several bellwethers. Further, with the Santa Monica office market having a solid concentration of technology, media, advertising and entertainment tenants in Los Angeles, the stake acquisition in the Colorado Center seems a strategic fit for Boston Properties. Yet, stiff competition and additional supply in some of its markets pose concerns for the company.
Boston Properties currently carries a Zacks Rank #3 (Hold).
We now look forward to other REITs that are scheduled to release second-quarter 2016 results this week. These include Essex Property Trust Inc. (ESS - Free Report) , Apartment Investment and Management Company (AIV - Free Report) and Taubman Centers, Inc. .
Note: FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income. All EPS numbers presented in this write up represent FFO per share.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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