Boston Properties (BXP) Beats Q1 FFO Estimates, Raises View

Boston Properties Inc.’s (NYSE:BXP) first-quarter 2019 funds from operations (FFO) per share of $1.72 surpassed the Zacks Consensus Estimate of $1.66. The figure also comes in 15% higher than the prior-year tally.

Results were supported by higher occupancy and strong leasing activity. Further, higher lease revenues from development project completions and improvements in the company’s in-service portfolio drove bottom-line growth.

Revenues from lease came in at $679.3 million, surpassing the Zacks Consensus Estimate of $661.5 million.

Property Update

As of Mar 31, 2019, Boston Properties’ portfolio comprised 196 properties, covering a total of around 51.4 million square feet of space. This included 11 under construction/redevelopment properties.

Total portfolio occupancy for the company’s in-service office properties was 92.9% as of Mar 31, 2019, indicating a sequential expansion of 150 basis points (bps).

During the March-end quarter, Boston Properties accomplished the sale of 2600 Tower Oaks Boulevard — a 179,000-square-foot property — in Rockville, MD, for $22.7 million.

In addition to this, Boston Properties secured a long-term lease with Google (NASDAQ:GOOGL), LLC. for 362,000 square feet of office space at its Kendall Square (NYSE:SQ) redevelopment.

Liquidity

Boston Properties exited the first quarter with cash and cash equivalents of $360 million, down from $543.3 million as of Dec 31, 2018.

Outlook

The company provided second-quarter 2019 FFO per share guidance of $1.73-$1.75. The Zacks Consensus Estimate is pinned at $1.73.

For full-year 2019, Boston Properties revised its FFO per share guidance to $6.95-$7.02, up from the previous guidance of $6.88-$7. The Zacks Consensus Estimate for 2019 FFO per share is $6.93.

Our Viewpoint

A portfolio of high-quality properties in select high-rent, high barrier-to-entry geographic markets has enabled the company to enjoy high leasing volumes amid recovery in the job market.

Furthermore, the company is focusing on development projects that are expected to contribute to its earnings when completed. This too, will drive its bottom-line growth in the upcoming quarters.

Boston Properties, Inc. Price, Consensus and EPS Surprise

Boston Properties currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other REITs

Cousins Properties Incorporated (NYSE:CUZ) reported FFO per share of 20 cents during the January-March quarter, in line with the Zacks Consensus Estimate. The figure came in higher than the prior-year reported tally of 15 cents.

Duke Realty Corporation’s (NYSE:DRE) first-quarter 2019 core FFO per share of 33 cents surpassed the Zacks Consensus Estimate of 32 cents. Moreover, the figure came in ahead of the year-ago quarter’s reported tally of 30 cents.

Ventas, Inc. (NYSE:VTR) delivered first-quarter normalized FFO of 99 cents, beating the Zacks Consensus Estimate of 96 cents. The reported figure, however, came in lower than the prior year’s $1.05.

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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