Boston Properties Inc.
), one of the leading real estate investment trusts (REITs),
reported first quarter 2012 FFO (funds from operations) of $166.9
million or $1.12 per share, compared with $160.0 million or $1.12
per share in the year-earlier quarter. Funds from operations, 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.
The reported FFO for the quarter marginally missed the Zacks
Consensus Estimate by a penny. Total revenues during the quarter
were $447.7 million, compared with $417.2 million in the year-ago
quarter. The quarterly revenues were well above the Zacks Consensus
Estimate of $428 million. The overall portfolio was 92.1% leased at
During the quarter, Boston Properties started construction work
for renovating '12300 Sunrise Valley Drive' - a Class A office
project spanning 256,000 net rentable square feet in Reston,
Virginia. Also during the quarter, the company acquired '453
Ravendale Drive' - a 30,000 net rentable square foot
office/technical property (currently 100% leased) in Mountain View,
California, for $6.7 million in cash.
At the same time, Boston Properties acquired '100 Federal
Street' - an approximately 1,264,000 net rentable square foot
37-story Class A office tower (currently 94% leased) in Boston,
Massachusetts, for $615.0 million in cash. In concurrence with the
deal, the company entered into a long-term lease agreement for
approximately 735,000 square feet of space with an affiliate of
Bank of America Corporation
During the reported quarter, Boston Properties utilized
available cash to repay a mortgage loan of $143.9 million
collateralized by 'Bay Colony Corporate Center' - an office park in
Waltham, Massachusetts. During first quarter 2012, the servicer of
a non-recourse mortgage loan collateralized by 'Montvale Center'
property in Gaithersburg, Maryland, foreclosed on the property.
Consequently, the mortgage loan totaling $25.0 million (scheduled
to mature on June 6, 2012) was extinguished and the real estate and
working capital were transferred to the servicer.
Subsequent to the quarter-end, Boston Properties entered into an
agreement to sell its 'Bedford Business Park' portfolio in Bedford,
Massachusetts, for approximately $62.8 million in cash. The
held-for-sale asset portfolio includes two office/technical
buildings and one Class A office building aggregating approximately
470,000 net rentable square feet. At the same time, the company
placed in-service '510 Madison Avenue' - a Class A office property
(51% leased) spanning approximately 347,000 net rentable square
foot in New York City.
Subsequent to the quarter-end, Boston Properties also used
available cash to repay the mortgage loan (totaling $65.1 million)
collateralized by 'One Freedom Square' property in Reston,
During the quarter, Boston Properties utilized its "at the
market" (ATM) stock offering program to issue over 1 million shares
for gross proceeds of approximately $110.5 million. Subsequent to
the quarter-end, the company issued an additional 0.4 million
shares for gross proceeds of approximately $44.3 million. Boston
Properties intends to utilize the proceeds from the equity offering
for general business purposes, which may include investment
opportunities and debt repayments.
Boston Properties ended first quarter 2012 with cash and cash
equivalents of $591.2 million. The company expects second quarter
2012 FFO in the range of $1.23-$1.25 per share, while FFO for full
year 2012 is expected in the range of $4.83-$4.93.
We maintain our Neutral rating on Boston Properties, which
currently has a Zacks #2 Rank that translates into a short-term Buy
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