Boston Properties Inc.
) reported fourth-quarter 2013 FFO (funds from operations) per
share of $1.29, which beat the Zacks Consensus Estimate by a
nickel and the year-ago quarter figure by 2 cents. Also, this was
ahead of the company's guidance range of $1.23-$1.25.
The results at this real estate investment trust (REIT) were
aided by higher revenues and improved core operations. For
full-year 2013, FFO came in at $4.91 per share, up from $4.90 per
share last year. This also surpassed the Zacks Consensus Estimate
Inside the Headlines
Total revenue during the quarter advanced 20.5% year over year
to $576.2 million and was substantially higher than the Zacks
Consensus Estimate of $544 million.
For the full year, total revenue came in at $2.14 billion, up
15.6% year over year and exceeded the Zacks Consensus Estimate of
$2.08 billion. The quarterly and yearly hikes in revenues were
primarily attributable to a significant surge in rental
Rental revenues escalated 21.9% year over year to $558.3
million. For the full year, rental revenues increased 16.4% year
over year to $2.07 billion. Both quarterly and yearly increases
were mainly driven by higher tenant recoveries revenues and base
Notable Portfolio Enhancement Activity
During the quarter under review, Boston Properties closed the
divestiture of 45% ownership interest in a New York City-based
Class A office property - Times Square Tower - for $684 million
and reaped proceeds of about $673.1 million (after paying of the
transaction costs). With regards to the sale deal, Boston
Properties inked a joint venture (JV) with the purchaser and will
offer property management and leasing services to the JV.
In addition, Boston Properties concluded the divestiture of
two Class A office properties - 10 & 20 Burlington Mall Road
- in Massachusetts for about $30 million and garnered about $29.4
million as net proceeds. The company also closed the disposition
of another Class A office asset - One Preserve Parkway - in
Rockville, Md. for around $61.3 million and gained proceeds of
approximately $59.9 million.
During the quarter, Boston Properties penned a build-to-suit
lease deal with
NRG Energy, Inc.
) for Class A office space, spanning around 130,000 net rentable
square feet, in Princeton, N.J. The property is anticipated to be
complete and available for tenancy in 2016.
Also, Boston Properties partly placed in-service a mixed use
development project - The Avant at Reston Town Center - which
consists of apartment units and retail space. The residential
units are presently 15% leased and retail space is fully
As of Dec 31, 2013, Boston Properties' portfolio comprised 175
properties spanning approximately 44.4 million square feet,
including 9 properties under development totaling 2.9 million
square feet. Its properties include Class A office space, one
hotel, three residential and four retail assets. Additionally,
the company has structured parking lots of around 15.4 million
The overall operating portfolio, which comprised 163
properties (excluding the two in-service residential properties
and the hotel), was 93.4% leased - up 200 basis points on a
year-over-year basis and 60 basis points sequentially.
Boston Properties exited 2013 with cash and cash equivalents
of about $2.37 billion, higher than $1.04 billion as of Dec 31,
Special Dividend & Regular Dividend
On Dec 2, Boston Properties declared a special cash dividend
of $2.25 per share. The dividend is scheduled to be paid on Jan
29, 2014 to stockholders of record as of Dec 31, 2013. Notably,
the disposition of the company's stake in the Time Square Tower
property facilitated Boston Properties to reward shareholders
with this special dividend.
In addition, Boston Properties declared a regular quarterly
cash dividend of 65 cents per share. This dividend is also slated
to be paid on Jan 29, 2014 to shareholders of record as of Dec
Boston Properties expects its first-quarter 2014 FFO per share
in the range of $1.21-$1.23. This is lower than the current Zacks
Consensus Estimate of $1.26 per share.
Also, the company narrowed its outlook range for full-year
2014 FFO per share and now projects it in the range of $5.20 -
$5.33 (previous one being $5.20 - $5.35). This is also below the
Zacks Consensus Estimate of $5.34 per share for 2014.
The guidance includes the effect of Boston Properties' 2014
Multi-Year, Long-Term Incentive Program, which the company's
Compensation Committee approved on Jan 27, 2014. The programs'
aggregate value is about $13.1 million that will be amortized
into earnings over the four-year plan period.
Continuing with its winning streak over the past few quarters,
Boston Properties posted impressive results yet again this
quarter. The company's improved core operations and successful
endeavors to maintain a strong grip on high barrier-to-entry
geographic markets across the U.S bode well going forward. Also,
Boston Properties has a healthy balance sheet position with
adequate liquidity to facilitate further portfolio enhancement
activities. The declaration of a special dividend offered the
company's shareholders' a reason to rejoice as well.
Boston Properties currently holds a Zacks Rank #3 (Hold). Some
better-ranked REIT Stocks include
PS Business Parks Inc.
). Both stocks carry a Zacks Rank #2 (Buy).
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.
BOSTON PPTYS (BXP): Free Stock Analysis
NRG ENERGY INC (NRG): Free Stock Analysis
PUBLIC STORAGE (PSA): Free Stock Analysis
PS BUSINESS PKS (PSB): Free Stock Analysis
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