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BXP Stock Rallies 24.8% in 6 Months: Will the Momentum Continue?
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Shares of BXP Inc. (BXP - Free Report) have rallied 24.8% in the past six months, outperforming the industry's 11.2% growth.
In October 2024, BXP reported third-quarter funds from operations (FFO) per share of $1.81, in line with the Zacks Consensus Estimate. However, the reported figure declined 2.7% year over year.
BXP’s quarterly results reflected better-than-anticipated revenues due to healthy leasing activity. However, higher interest expenses during the quarter acted as a dampener.
Image Source: Zacks Investment Research
Factors Behind BXP Stock’s Price Surge: Will the Trend Last?
Favorable Market Fundamentals- BXP has a portfolio of premier office assets, concentrated in a few select high-rent, high barrier-to-entry geographic markets and a solid tenant base, which enables it to generate stable rental revenues.
With return-to-office policies implemented by many companies, coupled with a relatively low unemployment rate and consistent job growth, BXP's strategically located, high-quality office properties are likely to experience healthy demand. In the third quarter of 2024, the company executed 74 leases totaling around 1.1 million square feet with a weighted average lease term of 7.2 years.
Amid strong demand from life-science tenants, the company is converting numerous straight office buildings to laboratory/life science spaces in its suburban portfolio, especially its Kendall Center project, which is one of the leading preferred locations for life-science clients in the world.
Portfolio Revamp Efforts - BXP is boosting its portfolio quality through repositioning initiatives by acquisitions, developing properties in core markets and shedding properties in non-core markets. From the beginning of 2010 through the end of the third quarter of 2024, BXP carried out acquisitions worth $7.5 billion at its share. It also disposed of properties for an aggregate amount of $8.2 billion at its share during this period.
As of the end of the third quarter of 2024, the company has a planned capital expenditure associated with the acquisition for the amount of $1.8 million. Such moves highlight the company’s prudent capital management practices and relieve the pressure on its balance sheet.
BXP also has an encouraging development and redevelopment pipeline, which bodes well for its long-term growth. From the beginning of 2014 through the end of the third quarter of 2024, BXP delivered development projects totaling $8.4 billion. As of the end of the third quarter of 2024, BXP had nine office, lab, retail and residential projects underway, with its share of the estimated total investment aggregating around $2.05 billion.
Healthy Balance Sheet Position - BXP has a healthy balance sheet position with ample liquidity. As of Sept. 30, 2024, the company had $3.0 billion of liquidity. The company’s share of net debt to EBITDAre (annualized) was 7.6x, while the fixed charge coverage ratio was 2.4 times as of the same date. Given its solid financial position and prudent capital management, BXP seems well-poised to navigate economic uncertainty and industry choppiness and capitalize on future growth opportunities.
Key Risks for BXP
The high supply of office properties in certain markets is likely to fuel competition. The continuation of work from home, flexible or hybrid work setups has diminished office space utilization, hampering the demand. A huge development outlay also raises concerns for BXP.
Some better-ranked stocks from the REIT sector are Iron Mountain (IRM - Free Report) and Cousins Properties (CUZ - Free Report) , each carrying a Zacks Rank #2 (Buy) at present.
The consensus estimate for Iron Mountain’s 2024 FFO per share has increased marginally over the past month to $4.49.
The Zacks Consensus Estimate for Cousins Properties’ 2024 FFO per share has moved marginally northward in the past week to $2.68.
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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BXP Stock Rallies 24.8% in 6 Months: Will the Momentum Continue?
Shares of BXP Inc. (BXP - Free Report) have rallied 24.8% in the past six months, outperforming the industry's 11.2% growth.
In October 2024, BXP reported third-quarter funds from operations (FFO) per share of $1.81, in line with the Zacks Consensus Estimate. However, the reported figure declined 2.7% year over year.
BXP’s quarterly results reflected better-than-anticipated revenues due to healthy leasing activity. However, higher interest expenses during the quarter acted as a dampener.
Image Source: Zacks Investment Research
Factors Behind BXP Stock’s Price Surge: Will the Trend Last?
Favorable Market Fundamentals - BXP has a portfolio of premier office assets, concentrated in a few select high-rent, high barrier-to-entry geographic markets and a solid tenant base, which enables it to generate stable rental revenues.
With return-to-office policies implemented by many companies, coupled with a relatively low unemployment rate and consistent job growth, BXP's strategically located, high-quality office properties are likely to experience healthy demand. In the third quarter of 2024, the company executed 74 leases totaling around 1.1 million square feet with a weighted average lease term of 7.2 years.
Amid strong demand from life-science tenants, the company is converting numerous straight office buildings to laboratory/life science spaces in its suburban portfolio, especially its Kendall Center project, which is one of the leading preferred locations for life-science clients in the world.
Portfolio Revamp Efforts - BXP is boosting its portfolio quality through repositioning initiatives by acquisitions, developing properties in core markets and shedding properties in non-core markets. From the beginning of 2010 through the end of the third quarter of 2024, BXP carried out acquisitions worth $7.5 billion at its share. It also disposed of properties for an aggregate amount of $8.2 billion at its share during this period.
As of the end of the third quarter of 2024, the company has a planned capital expenditure associated with the acquisition for the amount of $1.8 million. Such moves highlight the company’s prudent capital management practices and relieve the pressure on its balance sheet.
BXP also has an encouraging development and redevelopment pipeline, which bodes well for its long-term growth. From the beginning of 2014 through the end of the third quarter of 2024, BXP delivered development projects totaling $8.4 billion. As of the end of the third quarter of 2024, BXP had nine office, lab, retail and residential projects underway, with its share of the estimated total investment aggregating around $2.05 billion.
Healthy Balance Sheet Position - BXP has a healthy balance sheet position with ample liquidity. As of Sept. 30, 2024, the company had $3.0 billion of liquidity. The company’s share of net debt to EBITDAre (annualized) was 7.6x, while the fixed charge coverage ratio was 2.4 times as of the same date. Given its solid financial position and prudent capital management, BXP seems well-poised to navigate economic uncertainty and industry choppiness and capitalize on future growth opportunities.
Key Risks for BXP
The high supply of office properties in certain markets is likely to fuel competition. The continuation of work from home, flexible or hybrid work setups has diminished office space utilization, hampering the demand. A huge development outlay also raises concerns for BXP.
BXP currently carries Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stocks to Consider
Some better-ranked stocks from the REIT sector are Iron Mountain (IRM - Free Report) and Cousins Properties (CUZ - Free Report) , each carrying a Zacks Rank #2 (Buy) at present.
The consensus estimate for Iron Mountain’s 2024 FFO per share has increased marginally over the past month to $4.49.
The Zacks Consensus Estimate for Cousins Properties’ 2024 FFO per share has moved marginally northward in the past week to $2.68.
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.