Boston Properties Inc.’s BXP first-quarter 2017 funds from operations (“FFO”) per share of $1.48 missed the Zacks Consensus Estimate of $1.50. The figure also came lower than the year-ago quarter tally of $1.63.

However, quarterly FFO per share equaled the mid-point of the company’s previously guided range of $1.47–$1.49. Notably, the prior-year quarter result included lease termination income from a tenant in New York City, aggregating around $45.0 million or $0.26 per share.

Total revenue during the quarter decreased 5.1% year over year to $632.2 million. However, the revenue figure comfortably surpassed the Zacks Consensus Estimate of $618.4 million. The quarterly decrease was primarily due to a fall in rental revenues. Rental revenues were down 6.1% year over year to $503.6 million.

Property Update

As of Mar 31, 2017, Boston Properties’ portfolio comprised 174 properties, covering a total of around 47.7 million square feet of space. This included eight under-development properties, covering an area of 4.0 million square feet.

The overall operating portfolio, comprising 163 properties (excluding two residential properties and hotel), was 90.4% leased as of Mar 31, 2017.

Liquidity

Boston Properties exited first-quarter 2017 with cash and cash equivalents of around $302.9 million, down from $356.9 million as of year-end 2016.

Outlook

Boston Properties updated its full-year 2017 FFO per share guidance to $6.15–$6.23 from $6.13–$6.23 provided earlier. The Zacks Consensus Estimate of $6.20 remains within this range.

The company projects its second-quarter 2017 FFO per share in a range of $1.61–$1.63. The range is above the Zacks Consensus Estimate of $1.57.    

Our Viewpoint

Boston Properties is well poised for growth, backed by properties located in select high-rent, high barrier-to-entry geographic markets, diversified tenant and industry base. Also, with economic improvement and recovery in the job market, healthy growth in demand for office spaces is expected, in turn, strengthening the company’s growth opportunities.  

However, several big companies are choosing to resize their businesses and contain cost, which are leading to lower demand for office space. In addition, there is growth in supply of office space in the market and this remains a concern because higher supply usually leads to lesser absorption and also curtails the landlord’s capability to demand more rents.

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

Boston Properties, Inc. Price, Consensus and EPS Surprise
 

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

Let us now look forward to the earnings releases of Essex Property Trust Inc. ESS, Apartment Investment and Management Company AIV and Simon Property Group, Inc. SPG, all of which are expected to report their quarterly figures this week.

Note: All EPS numbers presented in this write up represent funds from operations (“FFO”) per share. 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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Boston Properties, Inc. (BXP): Free Stock Analysis Report
 
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