On Sep 6, 2013, we reiterated our long-term Neutral
Boston Properties Inc.
). Though we remain encouraged with the company's
better-than-expected second-quarter results and strategic efforts
to improve its core operations, we believe that new supply and
increased utilization of office space in its operating markets
will remain overhangs.
BOSTON PPTYS (BXP): Free Stock Analysis
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Aided by lower operating expenses and higher-than-expected
leasing and other fee income, Boston Properties' second-quarter
2013 FFO (funds from operations) per share of $1.28 were a penny
above the Zacks Consensus Estimate and the company's guidance of
$1.25-$1.27 per share.
However, this owner and developer of Class A office properties in
the U.S., experienced a 5.9% fall in FFO per share year over
year. It also lowered its guidance for 2013 FFO per share.
Boston Properties concentrates on a few select high-rent, high
barrier-to-entry geographic markets. The company is making
strategic efforts to improve its core operations. It has a decent
balance sheet with manageable near-term debt maturities and
adequate liquidity to take advantage of distressed selling.
Yet, the demand remains moderate for office space with
unemployment levels remaining elevated and adequate space
availability. New supply as well as increased utilization of
office space are headwinds for the demand of the company's
properties. Moreover, the rise in interest rates adversely
affects the company's funding expenses.
Over the last 30 days, the Zacks Consensus Estimate for 2013 FFO
per share remained stable at $4.93 while that for 2014 moved down
a cent to $5.55 per share. The stock currently has a Zacks Rank
Other Stocks to Consider
Better performing REITs that are worth a look include
Sovran Self Storage Inc.
) with a Zacks Rank #1 (Strong Buy) as well as
Highwoods Properties Inc.
SL Green Realty Corp.
), both carrying a Zacks Rank #2 (Buy).
FFO, a widely accepted and reported measure of the
performance of REITs is derived by adding depreciation,
amortization and other non-cash expenses to net income.