Boston Properties, Inc. BXP announced a special dividend of $1.25 per common share. The company also announced the completion of the sale of the Innovation Place property for a gross sale price of $207 million.
The special dividend announced by the office real estate investment trust (REIT) came on the back of asset sales worth around $584 million in 2015. The company also declared a regular cash dividend of 65 cents for the fourth quarter of 2015. Both the special and regular dividends are slated to be paid on Jan 28, 2016 to shareholders at the close of business on Dec 31, 2015.
On the other hand, recently sold Innovation Place, located in San Jose, CA, is a 26-acre site. It has three vacant and one occupied office buildings, with a total of 574,000 square feet of space, comprising 463,000 square feet of vacant space.
Usually, special dividends are paid by REITs on capital gains from assets sales to avoid paying tax. From the proceeds generated by the company from assets dispositions in 2015, Boston Properties expects to retain around $287 million of cash, following the payment of the special dividend. The amount is meant for general business needs, along with investments for its current development pipeline as well as other investment opportunities.
In October, Boston Properties reported third-quarter 2015 funds from operations (FFO) per share of $1.41, exceeding the Zacks Consensus Estimate by a nickel. Quarterly FFO per share also came ahead of the company’s previously guided range of $1.34–$1.36, driven by better-than-expected portfolio operations, lease termination income, and development and management services income.
Given Boston Properties’ leading position in the high barrier-to-entry U.S. markets and a recovering economy, we expect solid growth in demand for its office assets. As such, we believe that the company remains well poised to return value to shareholders.
Boston Properties currently has a Zacks Rank #3 (Hold). Investors interested in the REIT sector may consider stocks like Cousins Properties Incorporated CUZ, Public Storage PSA and STAG Industrial, Inc. STAG. All these stocks carry a Zacks Rank #2 (Buy).
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.
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