Boston Properties Limited Partnership, an operating partner of
real estate investment trust
) announced its intention to divest $1.0 billion of 3.85% senior
unsecured notes due 2023 in an underwritten public offering.
The notes were priced at 99.779% of the principal amount to
yield 3.876% scheduled to mature on February 1, 2023. The offering
is expected to close on June 11, 2012.
The transaction is expected to generate net proceeds of $989.4
million, which will be used for general business purposes, which
may include investment opportunities and debt repayment and also
investment in short-term, interest-bearing securities.
The company 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.
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. The company
ended first quarter 2012 with cash and cash equivalents of $591.2
Massachusetts-based Boston Properties owns and develops one of
the largest first-class office portfolios in the U.S. Boston
Properties concentrates on a few select high-rent, high
barrier-to-entry geographic markets, which usually fare better in a
faltering economy. Two of the largest markets of the company, New
York and Washington DC are still among the best of the office
markets in the US.
The company has one of the best balance sheets in the sector
with manageable near-term debt maturities and adequate liquidity to
take advantage of distressed selling as asset values of office and
retail properties continue to drop.
Boston Properties currently retains a Zacks #3 Rank, which
translates into a short-term Hold rating. We are also maintaining
our long-term Neutral recommendation on the stock. One of its
Vornado Realty Trust
) also holds a Zacks #3 Rank.
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