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MarketScreener Homepage  >  Equities  >  Nyse  >  Boston Properties, Inc.    BXP

BOSTON PROPERTIES, INC.

(BXP)
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Boston Properties : Announces Second Quarter 2020 Results; Reports EPS of $1.71 and FFO Per Share Of $1.52

07/28/2020 | 05:22pm EST

Signs 942,000 Square Feet of Leasing in Q2; Reports July Office Tenant Collections of 98% Reflecting Ongoing Strength in Collections

Boston Properties, Inc. (NYSE: BXP), the largest publicly-traded developer, owner and manager of Class A office properties in the United States, reported results today for the second quarter ended June 30, 2020.

Financial highlights for the second quarter include:

  • Net income attributable to common shareholders of $266.5 million, or $1.71 per diluted share (EPS), compared to $164.3 million, or $1.06 per diluted share, for the quarter ended June 30, 2019. The increase in EPS in the second quarter of 2020 was primarily due to gains on asset sales of $1.21 per diluted share, offset by a $0.24 per share charge to revenue related to the write-off of accrued rent and accounts receivable of tenants primarily in the retail sector.
  • Funds from Operations (FFO) of $236.9 million, or $1.52 per diluted share, compared to FFO of $276.3 million, or $1.78 per diluted share, for the quarter ended June 30, 2019. The decrease in FFO in the second quarter of 2020 was largely due to a $0.24 per share charge to revenue related to the write-off of accrued rent and accounts receivable of tenants primarily in the retail sector.

Second quarter and recent business highlights include:

  • Completed 942,000 square feet of leases and renewals, including a new, 12-year lease with Microsoft Corporation for approximately 400,000 square feet at Reston Town Center in Reston, Virginia.
  • Collected more than 98% of its total rent payments from office tenants due July 1. This follows collections from office tenants of 98% in the second quarter of 2020. Rent collections from all commercial tenants, including retail, were 95% in total in July.
  • Completed and fully placed in-service 20 CityPoint, a 211,000 square foot Class A office development in Waltham, Massachusetts that is 62% leased.
  • Completed two asset sales including:
    • Approximately 455,000 square feet of Capital Gallery, a Class A office complex in Washington, DC for a gross sale price of approximately $254 million. Boston Properties will retain ownership of the remaining 176,000 square feet of the property, which is approximately 100% leased and includes 156,000 square feet of office space, 20,000 square feet of retail and a 465-space parking garage. The Company realized net proceeds of approximately $247 million from the sale and a reported gain on sale of approximately $204 million in the quarter.
    • Annapolis Junction Building Eight, a 125,700 square foot vacant office building and two parcels of land at Annapolis Junction Business Park in Annapolis Junction, Maryland that was sold for a gross sale price of $47 million. The Company had a 50% interest in the Annapolis Junction properties. The Company realized net proceeds of approximately $15 million from the sale after closing costs and the repayment of mortgage debt on the property. The Company recognized a gain on sale of real estate totaling approximately $5.8 million in the quarter.
  • Completed the acquisition of property at 777 Harrison Street in San Francisco, California for a purchase price of approximately $140.1 million. 777 Harrison Street, known as Fourth + Harrison, is a fully-entitled site that can support the development of approximately 804,000 square feet of primarily office space.
  • Completed a $1.25 billion bond offering of 3.250% unsecured senior notes due 2031 on May 5, 2020.
  • Refinanced the mortgage loan collateralized by Metropolitan Square, a 654,000 square foot Class A office property in Washington, DC in which the Company has a 20% interest. The outstanding balance of the loan was approximately $155.9 million and was scheduled to mature on August 5, 2020. The new mortgage financing totals $325.0 million, of which $288.0 million was advanced at closing, and matures on July 7, 2022 with two, one-year extension options. Excess loan proceeds from the new mortgage loan were approximately $112.7 million, of which the Company’s share was approximately $22.5 million.

Separately the Company announced today the acquisition of a 50% interest in Beach Cities Media Center, a 6.4-acre land site on the Rosecrans Corridor of the El Segundo submarket of Los Angeles, California for a purchase price of $21.2 million. The site is fully entitled to support the future development of approximately 275,000 square feet of Class A creative office space. In conjunction with the acquisition, BXP entered into a joint venture with Continental Development Corporation (Continental), a premier developer and owner of Class A properties primarily in the El Segundo and Manhattan Beach submarkets with more than 500 tenants across its portfolio. The Beach Cities Media Center site is located on Rosecrans Avenue, one of the most in-demand creative office nodes in the South Bay of Los Angeles. The site is adjacent to Continental Park, an existing 3.0 million square foot, 86-acre office and mixed-use campus, which is home to several Fortune 500 and emerging office tenants in the technology, entertainment and financial sectors. Further details can be found in the press release issued today.

The reported results are unaudited and there can be no assurance that these reported results will not vary from the final information for the quarter ended June 30, 2020. In the opinion of management, the Company has made all adjustments considered necessary for a fair statement of these reported results.

Boston Properties will host a conference call on Wednesday, July 29, 2020 at 10:00 AM Eastern Time, open to the general public, to discuss the second quarter 2020 results, provide a business update pertaining to the current COVID-19 pandemic and discuss other business matters that may be of interest to investors. The number to call for this interactive teleconference is (877) 796-3880 (Domestic) or (443) 961-9013 (International) and entering the passcode 6852468. A replay of the conference call will be available by dialing (855) 859-2056 (Domestic) or (404) 537-3406 (International) and entering the passcode 6852468. There will also be a live audio webcast of the call, which may be accessed in the Investor Relations section of the Company’s website at investors.bxp.com. Shortly after the call, a replay of the webcast will be available in the Investor Relations section of the Company’s website and archived for up to twelve months following the call.

Additionally, a copy of Boston Properties’ second quarter 2020 “Supplemental Operating and Financial Data” and this press release are available in the Investor Relations section of the Company’s website at investors.bxp.com.

Boston Properties (NYSE: BXP) is the largest publicly-held developer and owner of Class A office properties in the United States, concentrated in five markets - Boston, Los Angeles, New York, San Francisco and Washington, DC. The Company is a fully integrated real estate company, organized as a real estate investment trust (REIT), that develops, manages, operates, acquires and owns a diverse portfolio of primarily Class A office space. The Company’s portfolio totals 51.2 million square feet and 195 properties, including nine properties under construction/redevelopment. For more information about Boston Properties, please visit our website at www.bxp.com or follow us on LinkedIn or Instagram.

During the conference call referenced above, management of Boston Properties may make “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. You can identify these statements by our use of the words “believes,” “budgeted,” “estimates,” “expects,” “guidance,” “intends,” “plans,” “projects” and similar expressions that do not relate to historical matters. These statements are based on our current expectations of future events. You should exercise caution in interpreting and relying on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which are, in some cases, beyond Boston Properties’ control. If our underlying assumptions prove inaccurate, or known or unknown risks or uncertainties materialize, actual results could differ materially from those expressed or implied by the forward-looking statement. These factors include, without limitation, uncertainties and risks related to the impact of the COVID-19 global pandemic, including the duration, scope and severity of the pandemic domestically and internationally; federal, state and local government actions or restrictive measures implemented in response to COVID-19, the effectiveness of such measures and the direct and indirect impact of such measures on our and our tenants' businesses, financial condition, results of operation, cash flows, liquidity and performance, and the U.S. and international economy and economic activity generally; whether new or existing actions/or measures result in increasing unemployment that impacts the ability of our residential tenants to generate sufficient income to pay, or makes them unwilling to pay, rent in full or at all in a timely manner; the health, continued service and availability of our personnel, including our key personnel and property management teams; and the effectiveness or lack of effectiveness of governmental relief in providing assistance to individuals and large and small businesses, including our tenants, that have suffered significant adverse effects from COVID-19. In addition to the risks specific to COVID-19, other factors include, without limitation, the Company’s ability to enter into new leases or renew leases on favorable terms, dependence on tenants’ financial condition, the uncertainties of real estate development, acquisition and disposition activity, the ability to effectively integrate acquisitions, the uncertainties of investing in new markets, the costs and availability of financing, the effectiveness of our interest rate hedging contracts, the ability of our joint venture partners to satisfy their obligations, the effects of local, national and international economic and market conditions, the effects of acquisitions, dispositions and possible impairment charges on our operating results, the impact of newly adopted accounting principles on the Company’s accounting policies and on period-to-period comparisons of financial results, regulatory changes and other risks and uncertainties detailed from time to time in the Company’s filings with the Securities and Exchange Commission. Boston Properties does not undertake a duty to update or revise any forward-looking statement whether as a result of new information, future events or otherwise.

Financial tables follow.

BOSTON PROPERTIES, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

June 30, 2020

 

December 31, 2019

 

(in thousands, except for share
and par value amounts)

ASSETS

 

 

 

Real estate, at cost

$

21,267,915

 

 

$

21,458,412

 

Construction in progress

893,935

 

 

789,736

 

Land held for future development

414,053

 

 

254,828

 

Right of use assets - finance leases

237,394

 

 

237,394

 

Right of use assets - operating leases

147,512

 

 

148,640

 

Less: accumulated depreciation

(5,292,389)

 

 

(5,266,798)

 

Total real estate

17,668,420

 

 

17,622,212

 

Cash and cash equivalents

1,691,047

 

 

644,950

 

Cash held in escrows

300,608

 

 

46,936

 

Investments in securities

32,848

 

 

36,747

 

Tenant and other receivables, net

82,545

 

 

112,807

 

Related party note receivable, net

78,520

 

 

80,000

 

Note receivables, net

25,480

 

 

15,920

 

Accrued rental income, net

1,069,004

 

 

1,038,788

 

Deferred charges, net

655,813

 

 

689,213

 

Prepaid expenses and other assets

56,768

 

 

41,685

 

Investments in unconsolidated joint ventures

1,339,724

 

 

955,647

 

Total assets

$

23,000,777

 

 

$

21,284,905

 

LIABILITIES AND EQUITY

 

 

 

Liabilities:

 

 

 

Mortgage notes payable, net

$

2,915,852

 

 

$

2,922,408

 

Unsecured senior notes, net

9,633,577

 

 

8,390,459

 

Unsecured line of credit

 

 

 

Unsecured term loan, net

499,150

 

 

498,939

 

Lease liabilities - finance leases

230,146

 

 

224,042

 

Lease liabilities - operating leases

200,979

 

 

200,180

 

Accounts payable and accrued expenses

328,292

 

 

377,553

 

Dividends and distributions payable

171,077

 

 

170,713

 

Accrued interest payable

95,274

 

 

90,016

 

Other liabilities

373,281

 

 

387,994

 

Total liabilities

14,447,628

 

 

13,262,304

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

Redeemable deferred stock units

6,003

 

 

8,365

 

 

 

 

 

Equity:

 

 

 

Stockholders’ equity attributable to Boston Properties, Inc.:

 

 

 

Excess stock, $0.01 par value, 150,000,000 shares authorized, none issued or outstanding

 

 

 

Preferred stock, $0.01 par value, 50,000,000 shares authorized; 5.25% Series B
cumulative redeemable preferred stock, $0.01 par value, liquidation preference
$2,500 per share, 92,000 shares authorized, 80,000 shares issued and outstanding
at June 30, 2020 and December 31, 2019

200,000

 

 

200,000

 

Common stock, $0.01 par value, 250,000,000 shares authorized, 155,701,186 and
154,869,198 issued and 155,622,286 and 154,790,298 outstanding at June 30, 2020
and December 31, 2019, respectively

1,556

 

 

1,548

 

Additional paid-in capital

6,340,665

 

 

6,294,719

 

Dividends in excess of earnings

(302,511)

 

 

(760,523)

 

Treasury common stock at cost, 78,900 shares at June 30, 2020 and December 31, 2019

(2,722)

 

 

(2,722)

 

Accumulated other comprehensive loss

(54,921)

 

 

(48,335)

 

Total stockholders’ equity attributable to Boston Properties, Inc.

6,182,067

 

 

5,684,687

 

Noncontrolling interests:

 

 

 

Common units of the Operating Partnership

640,491

 

 

600,860

 

Property partnerships

1,724,588

 

 

1,728,689

 

Total equity

8,547,146

 

 

8,014,236

 

Total liabilities and equity

$

23,000,777

 

 

$

21,284,905

 

BOSTON PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

Three months ended June 30,

 

Six months ended June 30,

 

 

2020

 

2019

 

2020

 

2019

 

 

(in thousands, except for per share amounts)

Revenue

 

 

 

 

 

 

 

 

Lease

 

$

630,119

 

 

$

680,189

 

 

$

1,340,230

 

 

$

1,359,440

 

Parking and other

 

13,946

 

 

26,319

 

 

38,450

 

 

51,225

 

Hotel revenue

 

99

 

 

14,844

 

 

6,924

 

 

23,782

 

Development and management services

 

8,125

 

 

9,986

 

 

16,004

 

 

19,263

 

Direct reimbursements of payroll and related costs from
management services contracts

 

2,484

 

 

2,403

 

 

5,721

 

 

5,798

 

Total revenue

 

654,773

 

 

733,741

 

 

1,407,329

 

 

1,459,508

 

Expenses

 

 

 

 

 

 

 

 

Operating

 

 

 

 

 

 

 

 

Rental

 

239,787

 

 

257,971

 

 

502,753

 

 

515,488

 

Hotel

 

1,973

 

 

9,080

 

 

8,794

 

 

16,943

 

General and administrative

 

37,743

 

 

35,071

 

 

74,197

 

 

76,833

 

Payroll and related costs from management services contracts

 

2,484

 

 

2,403

 

 

5,721

 

 

5,798

 

Transaction costs

 

332

 

 

417

 

 

947

 

 

877

 

Depreciation and amortization

 

178,188

 

 

177,411

 

 

349,282

 

 

342,005

 

Total expenses

 

460,507

 

 

482,353

 

 

941,694

 

 

957,944

 

Other income (expense)

 

 

 

 

 

 

 

 

Income from unconsolidated joint ventures

 

1,832

 

 

47,964

 

 

1,463

 

 

48,177

 

Gains on sales of real estate

 

203,767

 

 

1,686

 

 

613,932

 

 

781

 

Interest and other income (loss)

 

1,305

 

 

3,615

 

 

4,322

 

 

7,368

 

Gains (losses) from investments in securities

 

4,552

 

 

1,165

 

 

(893)

 

 

4,134

 

Impairment losses

 

 

 

 

 

 

 

(24,038)

 

Interest expense

 

(107,142)

 

 

(102,357)

 

 

(208,733)

 

 

(203,366)

 

Net income

 

298,580

 

 

203,461

 

 

875,726

 

 

334,620

 

Net income attributable to noncontrolling interests

 

 

 

 

 

 

 

 

Noncontrolling interests in property partnerships

 

767

 

 

(17,482)

 

 

(18,719)

 

 

(36,312)

 

Noncontrolling interest—common units of the Operating Partnership

 

(30,197)

 

 

(19,036)

 

 

(87,525)

 

 

(30,627)

 

Net income attributable to Boston Properties, Inc.

 

269,150

 

 

166,943

 

 

769,482

 

 

267,681

 

Preferred dividends

 

(2,625)

 

 

(2,625)

 

 

(5,250)

 

 

(5,250)

 

Net income attributable to Boston Properties, Inc. common shareholders

 

$

266,525

 

 

$

164,318

 

 

$

764,232

 

 

$

262,431

 

Basic earnings per common share attributable to Boston Properties,
Inc. common shareholders:

 

 

 

 

 

 

 

 

Net income

 

$

1.71

 

 

$

1.06

 

 

$

4.92

 

 

$

1.70

 

Weighted average number of common shares outstanding

 

155,386

 

 

154,555

 

 

155,199

 

 

154,540

 

Diluted earnings per common share attributable to Boston Properties,
Inc. common shareholders:

 

 

 

 

 

 

 

 

Net income

 

$

1.71

 

 

$

1.06

 

 

$

4.91

 

 

$

1.69

 

Weighted average number of common and common equivalent
shares outstanding

 

155,407

 

 

154,874

 

 

155,333

 

 

154,859

 

BOSTON PROPERTIES, INC.

FUNDS FROM OPERATIONS (1)

(Unaudited)

 

 

Three months ended June 30,

 

Six months ended June 30,

 

2020

 

2019

 

2020

 

2019

 

(in thousands, except for per share amounts)

Net income attributable to Boston Properties, Inc. common shareholders

$

266,525

 

 

$

164,318

 

 

$

764,232

 

 

$

262,431

 

Add:

 

 

 

 

 

 

 

Preferred dividends

2,625

 

 

2,625

 

 

5,250

 

 

5,250

 

Noncontrolling interest - common units of the Operating Partnership

30,197

 

 

19,036

 

 

87,525

 

 

30,627

 

Noncontrolling interests in property partnerships

(767)

 

 

17,482

 

 

18,719

 

 

36,312

 

Net income

298,580

 

 

203,461

 

 

875,726

 

 

334,620

 

Add:

 

 

 

 

 

 

 

Depreciation and amortization expense

178,188

 

 

177,411

 

 

349,282

 

 

342,005

 

Noncontrolling interests in property partnerships’ share of
depreciation and amortization

(22,480)

 

 

(17,869)

 

 

(40,107)

 

 

(35,871)

 

Company’s share of depreciation and amortization from
unconsolidated joint ventures

21,012

 

 

14,778

 

 

39,344

 

 

30,248

 

Corporate-related depreciation and amortization

(486)

 

 

(412)

 

 

(955)

 

 

(807)

 

Impairment loss

 

 

 

 

 

 

24,038

 

Less:

 

 

 

 

 

 

 

Gain on sale of real estate included within income from
unconsolidated joint ventures

5,946

 

 

47,757

 

 

5,946

 

 

47,757

 

Gains on sales of real estate

203,767

 

 

1,686

 

 

613,932

 

 

781

 

Noncontrolling interests in property partnerships

(767)

 

 

17,482

 

 

18,719

 

 

36,312

 

Preferred dividends

2,625

 

 

2,625

 

 

5,250

 

 

5,250

 

Funds from operations (FFO) attributable to the Operating Partnership
common unitholders (including Boston Properties, Inc.)

263,243

 

 

307,819

 

 

579,443

 

 

604,133

 

Less:

 

 

 

 

 

 

 

Noncontrolling interest - common units of the Operating
Partnership’s share of funds from operations

26,335

 

 

31,544

 

 

58,430

 

 

61,851

 

Funds from operations attributable to Boston Properties, Inc. common shareholders

$

236,908

 

 

$

276,275

 

 

$

521,013

 

 

$

542,282

 

Boston Properties, Inc.’s percentage share of funds from operations - basic

90.00

%

 

89.75

%

 

89.92

%

 

89.76

%

Weighted average shares outstanding - basic

155,386

 

 

154,555

 

 

155,199

 

 

154,540

 

FFO per share basic

$

1.52

 

 

$

1.79

 

 

$

3.36

 

 

$

3.51

 

Weighted average shares outstanding - diluted

155,407

 

 

154,874

 

 

155,333

 

 

154,859

 

FFO per share diluted

$

1.52

 

 

$

1.78

 

 

$

3.35

 

 

$

3.50

 

  1. Pursuant to the revised definition of Funds from Operations adopted by the Board of Governors of the National Association of Real Estate Investment Trusts (“Nareit”), we calculate Funds from Operations, or “FFO,” by adjusting net income (loss) attributable to Boston Properties, Inc. common shareholders (computed in accordance with GAAP) for gains (or losses) from sales of properties, impairment losses on depreciable real estate consolidated on our balance sheet, impairment losses on our investments in unconsolidated joint ventures driven by a measurable decrease in the fair value of depreciable real estate held by the unconsolidated joint ventures and real estate-related depreciation and amortization. FFO is a non-GAAP financial measure, but we believe the presentation of FFO, combined with the presentation of required GAAP financial measures, has improved the understanding of operating results of REITs among the investing public and has helped make comparisons of REIT operating results more meaningful. Management generally considers FFO and FFO per share to be useful measures for understanding and comparing our operating results because, by excluding gains and losses related to sales of previously depreciated operating real estate assets, impairment losses and real estate asset depreciation and amortization (which can differ across owners of similar assets in similar condition based on historical cost accounting and useful life estimates), FFO and FFO per share can help investors compare the operating performance of a company’s real estate across reporting periods and to the operating performance of other companies.

    Our computation of FFO may not be comparable to FFO reported by other REITs or real estate companies that do not define the term in accordance with the current Nareit definition or that interpret the current Nareit definition differently.

    In order to facilitate a clear understanding of the Company’s operating results, FFO should be examined in conjunction with net income attributable to Boston Properties, Inc. common shareholders as presented in the Company’s consolidated financial statements. FFO should not be considered as a substitute for net income attributable to Boston Properties, Inc. common shareholders (determined in accordance with GAAP) or any other GAAP financial measures and should only be considered together with and as a supplement to the Company’s financial information prepared in accordance with GAAP.

BOSTON PROPERTIES, INC.

PORTFOLIO LEASING PERCENTAGES

 

 

 

 

 

 

% Leased by Location

 

June 30, 2020

 

December 31, 2019

Boston

94.8

%

 

95.9

%

Los Angeles

95.9

%

 

96.7

%

New York

92.6

%

 

92.9

%

San Francisco

93.2

%

 

93.7

%

Washington, DC

84.8

%

 

87.6

%

Total Portfolio

92.0

%

 

93.0

%

 


© Business Wire 2020
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Financials (USD)
Sales 2020 2 845 M - -
Net income 2020 950 M - -
Net Debt 2020 11 562 M - -
P/E ratio 2020 16,4x
Yield 2020 4,00%
Capitalization 15 280 M 15 280 M -
EV / Sales 2020 9,43x
EV / Sales 2021 9,70x
Nbr of Employees 760
Free-Float 99,8%
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Technical analysis trends BOSTON PROPERTIES, INC.
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Mean consensus OUTPERFORM
Number of Analysts 22
Average target price 102,55 $
Last Close Price 98,16 $
Spread / Highest target 48,7%
Spread / Average Target 4,47%
Spread / Lowest Target -23,6%
EPS Revisions
Managers
NameTitle
Owen D. Thomas Chief Executive Officer & Director
Douglas T. Linde President & Director
Joel Irwin Klein Independent Non-Executive Chairman
Michael E. LaBelle Chief Financial Officer, Treasurer & Executive VP
James J. Whalen Chief Information Officer & Senior Vice President
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