Boston Properties Inc. (BXP), one of the leading real estate investment trusts (REITs), reported first quarter 2011 FFO (funds from operations) of $160.0 million or $1.12 per share, compared with $149.6 million or $1.07 per share in the year-earlier quarter. 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.
The reported FFO for the quarter surpassed the Zacks Consensus Estimate by 3 cents. The increase in first quarter 2011 FFO was primarily due to strong rental income, which improved 11.4% during the quarter on a year-over-year basis.
Total revenues of the company during the quarter were $417.9 million, compared with $378.1 million in the year-ago quarter. The quarterly revenues were well above the Zacks Consensus Estimate of $385 million. The overall portfolio was 91.7% leased at quarter-end.
During the quarter, Boston Properties placed in-service approximately 57% of the office component of its Atlantic Wharf development project in Boston, Massachusetts. The office component of the project, spanning approximately 790,000 net rentable square feet, is currently 79% leased.
Also during the quarter, the company placed in-service approximately 13% of the office component of its development project in Washington, DC. The office component of the development project, which is comprised of approximately 460,000 net rentable square feet, is currently 84% leased.
During the quarter, Boston Properties completed the acquisition of Bay Colony Corporate Center, an office park in Waltham, Massachusetts, for $185 million. The purchase price included approximately $41.1 million in cash and the assumption of $143.9 million in a senior mortgage loan that bears interest at a fixed rate of 6.53% per annum and matures in June 2012.
Subsequent to the quarter-end, Boston Properties entered into an agreement to sell its Carnegie Center portfolio in Princeton, New Jersey for approximately $468.0 million. The held-for-sale asset portfolio includes a 16 building Class A office park totaling over 2.0 million net rentable square feet. At the same time, the company placed in-service approximately 16% of its development project in New York City. The Class A office property spanning approximately 347,000 net rentable square foot is currently 36% leased.
During the quarter, Boston Properties utilized its 'at the market' (ATM) stock offering program to issue approximately 3.7 million shares for gross proceeds of approximately $350.0 million. Subsequent to the quarter-end, the company issued an additional 0.5 million shares for gross proceeds of approximately $50.0 million. Boston Properties intends to utilize the proceeds from the equity offering for general business purposes, which may include investment opportunities and debt repayments.
Boston Properties ended first quarter 2011 with cash and cash equivalents of $747.3 million. The company expects second quarter 2011 FFO in the range of $1.18–$1.20 per share, while FFO for full year 2011 is expected in the range of $4.45–$4.55.
We presently have a ‘Neutral’ rating on Boston Properties, which currently has a Zacks #3 Rank that translates into a short-term ‘Hold’ recommendation indicating that the stock is expected to perform in line with the overall U.S. equity market for the next 1–3 months. We also have a ‘Neutral’ recommendation and a Zacks #3 Rank for Vornado Realty Trust (VNO), a competitor of Boston Properties.
BOSTON PPTYS (BXP): Free Stock Analysis Report
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