Boston Properties Inc. (BXP) reported fourth-quarter 2014 funds from operations (“FFO”) per share of $1.26, in line with the Zacks Consensus Estimate, but down 3 cents from the prior-year quarter.
However, quarterly FFO per share came ahead of the company’s previously guided range of $1.23–$1.25 per share, thanks to greater than projected portfolio operations and fee income.
Total revenue during the quarter improved 6.5% year over year to $613.7 million, coming well above the Zacks Consensus Estimate of $584 million. The quarterly increase was primarily attributable to a significant rise in rental revenues. Rental revenues were up 6.7% year over year to $595.7 million, aided by an uptick in base rents and higher tenant recoveries.
For full year 2014, Boston Properties reported FFO per share of $5.26, up from $4.91 in 2013. Total revenue for 2014 came at $2.4 billion, up 12.2% from the prior year.
Property Update
As of Dec 31, 2014, Boston Properties’ portfolio comprised 169 properties, mainly Class A office space, 1 hotel, 3 residential and 5 retail assets. These properties, including 10 under development ones, span approximately 45.8 million square feet. Additionally, the company has structured parking lots covering around 15.0 million square feet.
The overall operating portfolio, comprising 155 properties (excluding the 3 in-service residential properties and the hotel), was 91.7% leased.
Notably, during the quarter, the company accomplished the sale of 45% interest in each of 601 Lexington Avenue in New York City, and Atlantic Wharf Office Building and 100 Federal Street in Boston. Net cash proceeds amounted to around $1.497 billion, following the payment of transaction costs.
Subsequent to the quarter end, Boston Properties entered into a deal for the sale of its Residences on The Avenue property in Washington, DC, for a gross price of $196.0 million.
Liquidity
Boston Properties exited fourth-quarter 2014 with cash and cash equivalents of nearly $1.8 billion, down from $2.4 billion as of year-end 2013.
Outlook
Boston Properties has updated its guidance for full year 2015 to $5.28–$5.43 per share from the previous projection of $5.22–$5.42 per share. The Zacks Consensus Estimate of $5.37 per share also lies within this range.
The company expects its first-quarter 2015 FFO per share in the range of $1.22–$1.24. This is below the Zacks Consensus Estimate of $1.28 per share.
Our Viewpoint
Boston Properties’ endeavors to maintain a dominant position in the high barrier-to-entry geographic markets in the U.S. bode well for its future growth. Yet, slow recovery in some of its office markets could partly impede the growth momentum of the company. Also, interest rates are anticipated to rise, which might hurt the company’s rate sensitive business.
Boston Properties currently carries a Zacks Rank #4 (Sell). Presently, we look forward to the results of other REITs, which are scheduled to report next week. These include Equity Residential (EQR), The Macerich Company (MAC) and Essex Property Trust Inc. (ESS).
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.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment