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Boston Properties (BXP) Tops Q3 FFO Estimates, Issues '19 View


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Boston Properties Inc. 's BXP third-quarter 2018 funds from operations (FFO) per share of $1.64 surpassed the Zacks Consensus Estimate of $1.63. The figure also came in higher than the company's prior-year quarter's tally of $1.57.

Results were supported by higher revenues from development and management services. Further, the company achieved higher occupancy as compared to the previous quarter. Boston Properties has also updated its outlook for full-year 2018 and provided the same for 2019.

Adjusted revenues, comprising base rent and recoveries from tenants during the quarter, increased 3.4% year over year to $628.3 million. Also, the figure surpassed the Zacks Consensus Estimate of $627.9 million.

Property Update

As of Sep 30, 2018, Boston Properties' portfolio comprised 200 properties, covering a total of around 52.7 million square feet of space. This included 14 under construction/redevelopment properties, covering an area of 7.5 million square feet.

The company's overall operating portfolio, including 181 in-service office properties was 91.1% occupied as of Sep 30, 2018, indicating a sequential expansion of 70 basis points (bps). Moreover, total portfolio was 91.1% leased as of Sep 30, 2018, compared to 90.7% as of Dec-end 2017.

During the Sep-end quarter, Boston Properties accomplished the sale of Quorum Office Park - an around 268,000 net rentable square foot Class A office property - in Chelmsford, MA, for a gross price of roughly $35.3 million. This resulted in a gain on sale of real estate aggregating about $7.9 million.

In addition to this, the company completed and fully placed in-service its Proto Kendall Square development project in Cambridge, MA, in the quarter under review. The project includes 280 apartment units and retail space, totaling around 167,000 square feet of area. The retail space is approximately 98% leased, while residential units are 49% leased.

Liquidity

Boston Properties exited the third quarter with cash and cash equivalents of around $322.5 million, up from $434.8 million as of Dec 31, 2017.

Outlook

The company projects its fourth-quarter 2018 FFO per share of $1.68-$1.70. The Zacks Consensus Estimate is pinned at $1.67.

Boston Properties updated its full-year 2018 FFO per share guidance to $6.39-$6.41 compared to the prior outlook of $6.36-$6.41. The Zacks Consensus Estimate is pegged at $6.37.

For full-year 2019, Boston Properties provided its FFO per share guidance to $6.75-$6.92, indicating 7% year-on-year growth at the mid-point. The Zacks Consensus Estimate for 2019 FFO per share is $6.83.

Our Viewpoint

With the company's properties located in select high-rent, high barrier-to-entry geographic markets, Boston Properties witnessed growth in its rental revenues in the third quarter.  Economic improvement and recovery in the job market will likely spur demand for the company's office spaces, thereby, increasing leasing and occupancy rates for its portfolio.

Nevertheless, rise in operating and interest expenses unfavorably impacted the company's bottom line. Rising interest rates may hurt the company in the near term as well. 

Boston Properties, Inc. Price, Consensus and EPS Surprise


Boston Properties, Inc. Price, Consensus and EPS Surprise
| Boston Properties, Inc. Quote



Boston Properties currently carries a Zacks Rank #3 (Hold). You can see  the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

We now look forward to the earnings releases of Host Hotels & Resorts, Inc.  HST , Equinix, Inc. EQIX and Outfront Media Inc. OUT . While Host Hotels is scheduled to report its quarterly numbers on Nov 2, Equinix and Outfront are slated to report their third-quarter earnings on Nov 1 and Nov 5, respectively.

Note:  Anything related to earnings presented in this write-up represent funds from operations (FFO) - a widely used metric to gauge the performance of REITs.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Investing , Business , Stocks
Referenced Symbols: EQIX , HST , OUT , BXP



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