Boston Properties Inc (
announced that it has completed the acquisition of a development
site - 535 Mission Street - in San Francisco, Calif. from Beacon
Capital Partners. The $71.0 million deal will facilitate Boston
Properties to boost its presence in the San Francisco region.
Notably, the acquisition price includes the cost of curtain wall
and other buildings materials that Beacon Capital purchased 5
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The real estate investment trust (REIT) expects to commence
working on the project in the middle of this month. The project,
which is anticipated to be finished by fall 2014, will carry an
anticipated total cost of roughly $215 million.
Boston Properties expects to construct a 27-story, 378 foot tall
Class A office tower at 535 Mission Street. The property, which
will comprise approximately 307,000 square feet of rentable
office and retail space, is expected to attain a LEED Gold label.
The property will be positioned in one of the most attractive
submarkets of San Francisco, which boasts a cluster of office and
CBRE Group Inc. (
, San Francisco remained one of the top office markets among the
30 most desirable office markets in the U.S. during the fourth
quarter of 2012. Strong demand from the technology sector
resulted in strong leasing activity and represented 55% of the
downtown market's 10.9 million square feet of leasing activity.
Also, the occupancy at downtown the San Francisco market and
suburbs dipped 170 bps (basis points) and 20 bps, respectively.
Thus, San Francisco office rents jumped 27.2% year over year
during the quarter. These factors justify Boston Properties'
decision to expand its reach in the San Francisco market.
In addition to the abovementioned transaction, Boston Properties
stated that it has inked a deal to buy the last remaining parcel
of land in center of Reston Town Center in Va. for around $27
million. The land parcel is commercially zoned for office space,
spanning 250,000 square feet.
However, Boston Properties is planning to use the land for
mixed-use development plan, which may possibly include
residential as well as commercial properties. The transaction is
expected to close within the first quarter of 2013, subject to
customary closing conditions.
The company mainly concentrates on a few selected high-rent, high
barrier-to-entry geographic markets for acquisition and
development purposes. We expect both the transactions to help the
company maintain a strong grip on the vibrant markets and provide
an upside potential for growth going forward.
Last month, Boston Properties reported strong fourth quarter 2012
results with FFO (funds from operations) per share of $1.27,
beating the Zacks Consensus Estimate by 3 cents. The impressive
results was consistent with its strong leasing activity and joint
Boston Properties currently holds a Zacks Rank #3 (Hold). Other
REITs that are performing better than the company include
Ventas Inc. (
Simon Property Group Inc. (
. Both of these stocks carry a Zacks Rank #2 (Buy).
Note: Fund 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.