Boston Properties Inc (
BXP
)
- a real estate investment trust (REIT) - reported fourth quarter
2012 FFO (funds from operations) per share of $1.27, beating the
Zacks Consensus Estimate by 3 cents. This also compares favorably
with the year-ago quarter's FFO per share of $1.21.
For full year 2012, FFO stood at $741.4 million or $4.90 per
share compared with $711.0 million or $4.84 per share last year.
Behind the Headlines Number
Total revenue during the quarter stood at $485.4 million compared
with $450.5 million in the year-ago quarter. The quarterly
revenues reached well above the Zacks Consensus Estimate of $454
million.
For the full year, total revenue came in at $1.88 billion
compared with $1.75 billion in 2011. The revenues for the year
also surpassed the Zacks Consensus Estimate of $1.75 billion. The
quarterly and yearly hikes in revenues were primarily
attributable to significant surge in rental revenues.
Rental revenues during the fourth quarter climbed 8.2% to $465.4
million from $430.2 million in the prior-year quarter. For the
full year, rental revenues increased 7.2% to $1.80 billion from
$1.68 billion in 2011.
Leasing Activity
During the quarter, Boston Properties inked a 20-year lease deal
with a law firm to lease around 246,000 square feet of space at
250 West 55th Street, which is an underdevelopment office
building in midtown Manhattan. With the transaction, the property
is now about 46% occupied.
Also, the company penned a 20-year lease agreement with another
law firm for around 376,000 square feet of space at 601
Massachusetts Avenue, which is the Boston Properties' proposed
development project in Wash. slated to start in the second
quarter of 2013. With the transaction, the property is now around
79% anchored.
Subsequent to the end of the quarter, on Jan 7, 2013, Boston
Properties signed a 20-year lease deal with the General Services
Administration for fully renting a Va.-based property - Three
Patriots Park.
Property Update
As of Dec 31, 2012, Boston Properties' portfolio comprised 157
properties spanning around approximately 44.4 million square
feet, including 9 properties under development totaling 2.8
million square feet. In addition, the company has structured
parking lots of around 15.9 million square feet.
The overall operating portfolio, which comprised 145 properties
(excluding the two in-service residential building and the
hotel), was 91.4% leased at the end of the quarter.
Other Transactions
During the quarter, Boston Properties also inked a joint venture
(JV) for a 30% interest in a Class A operating office
redevelopment project - 500 North Capitol Street, NW, - located
in Washington, DC.
The company also formed a JV, which owns and operates a Va.-based
office and retail complex - Fountain Square. Boston Properties
paid around $87.0 million in cash to the JV partner for gaining
50% interest in it. Post agreement, Boston Properties received
the rights to acquire the partner's 50% interest and the partner
got the right to make the former acquire its interest on Jan 4,
2016 for a fixed price of $102.0 million, in each case. The fixed
price option rights will expire on Jan 31, 2016.
In addition, Boston Properties penned a JV with an affiliate of
Hines to acquire a land in San Francisco, which could hold a
61-story office building - Transbay Tower - of 1.4 million square
feet. The acquisition, worth $190.0 million, is expected to close
in the first quarter of 2013. The company holds a 50% interest in
the JV and has provided a non-refundable deposit of $5.0 million
for the land purchase.
Liquidity
During the quarter under review, Boston Properties terminated the
construction loan facility worth $170.0 million collateralized by
San Francisco-based development project - 680 Folsom Street. The
facility was scheduled to mature on May 30, 2015.
Boston Properties ended fourth quarter 2012 with cash and cash
equivalents of about $1.04 billion.
Dividend
The company paid a quarterly dividend of 65 cents per share to
shareholders of record as of Dec 31, 2012. The dividend
represented an increase of 18.2% over the previous quarterly
dividend of 55 cents per share.
2013 Outlook
Boston Properties expects first quarter 2013 FFO per share in the
range of $1.19-$1.21. Also, the company increased its guidance
for 2013 FFO per share to the range of $5.06-$5.18 from the prior
range of $5.00-$5.15.
Our Viewpoint
We are encouraged with Boston Properties' impressive results in
the reported quarter. Moreover, we expect that its strong leasing
activity and JV deals will pave way for maintaining a strong grip
on high barrier-to-entry geographic markets across the U.S. This
will likely drive growth and prove accretive to its earnings
going forward.
Boston Properties currently holds a Zacks Rank #4 (Sell). Other
REITs that are performing better and are worth a look include
Ventas Inc. (
VTR
)
,
Terreno Realty Corp. (
TRNO
)
and
Brandywine Realty Trust (
BDN
)
. These stocks carry a Zacks Rank #2.
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.
BRANDYWINE RT (BDN): Free Stock Analysis
Report
BOSTON PPTYS (BXP): Free Stock Analysis
Report
TERRENO REALTY (TRNO): Free Stock Analysis
Report
VENTAS INC (VTR): Free Stock Analysis Report
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