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Boston Properties' (BXP) Buyout Boosts Life-Science Portfolio

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As part of its expansion efforts in the life sciences space in Cambridge, MA, Boston Properties, Inc. (BXP - Free Report) recently closed the acquisition of 125 Broadway in Kendall Square. The six-story laboratory/life sciences property was purchased from Biogen for $592 million.

Biogen has signed a lease for the 271,000 square feet property, by which it will continue occupying the entire property through April 2028.

The building is located adjacent to Kendall Center, a 2.2 million square feet portfolio belonging to BXP in Kendall Square in Cambridge, MA.

Cambridge being one of the largest and most important clusters of life sciences companies and research space in the United States, the acquisition seems a strategic fit for Boston Properties.

The drug research and innovation business is experiencing solid growth driven by the need for effective diagnostics, therapies and vaccines. This has increased demand for BXP’s life-science assets covering more than 3 million square feet in the leading innovation markets of Boston, Cambridge, Waltham/Lexington, MA, Montgomery County, MD, and San Francisco and Los Angeles, CA.

Moreover, Boston Properties has an encouraging development pipeline with 6 million square feet of life sciences-focused development opportunities. This includes around 1 million square feet of current lab developments and redevelopments underway, anticipated to be delivered in the next 36 months. This positions the company well for growth.

Per Bryan Koop, executive vice president, Boston Region, of BXP, “BXP has been an integral member of the Cambridge community since the development of our first property in 1981, and we are pleased to continue to grow and evolve Kendall Center to meet the needs of the life sciences community.”

The latest acquisition was funded through cash and borrowings available under BXP’s line of credit. Moreover, Boston Properties plans to own the property with one or more joint venture equity partners and is assessing opportunities for the same.

Following the acquisition of 125 Broadway, Boston Properties and Biogen ended their lease agreement for 300 Binney Street to enable the conversion and expansion of the property to a 240,000 square feet of laboratory/life sciences space. The six-story property encompassing 195,000 square feet is adjacent to 125 Broadway and was developed by BXP in 2013.

Furthermore, Boston Properties has signed a 15-year lease with a well-known life sciences organization, which is anticipated to commence once the renovations are completed by late 2024.

Analysts seem bullish on this Zacks Rank #3 (Hold) stock. The Zacks Consensus Estimate for BXP’s 2022 funds from operations (FFO) per share indicates a favorable outlook, with estimates moving northward over the past month.

However, its shares have lost 10.6% in the quarter-to-date period compared with its industry's fall of 1.6%.

Zacks Investment Research
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Stocks to Consider

Some better-ranked stocks from the REIT sector are Prologis (PLD - Free Report) , SBA Communications (SBAC - Free Report) and Xenia Hotels & Resorts (XHR - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Prologis’ current-year FFO per share has moved marginally northward in the past two months to $5.17.

The Zacks Consensus Estimate for SBA Communications’ 2022 FFO per share has moved marginally upward in the past week to $12.17. 

The Zacks Consensus Estimate for Xenia Hotels & Resorts’ 2022 FFO per share has moved 3.2% upward in the past month to $1.59.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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