DC Market Choppy: Should You Hold Boston Properties (BXP)?
Boston Properties Inc. (BXP) is experiencing lower levels of activity and growth in markets like downtown Washington, DC and Midtown Manhattan. Yet, encouragingly, growth trends remain favorable (rent increases and net absorption) in markets like San Francisco, Cambridge and sections of New York City, which are fueled by tenants from technology and other creative sectors.
This office landlord that concentrates on a few select high-rent, high barrier-to-entry geographic markets came up with better-than-expected revenues in the second quarter. This helped it in achieving FFO (funds from operations) per share of $1.35, beating the Zacks Consensus Estimate by 2 cents and the prior-year quarter figure by 7 cents.
FFO per share also came ahead of the company’s previously guided range of $1.32–$1.34 per share, thanks to property-associated cost savings as well as higher-than-expected development and management services income. However, the company has slightly tweaked its previously issued guidance.
With a diversified tenant and industry base as well as strategic deals like that of Salesforce, the company remains well poised for growth. The company witnessed strong leasing activities in second-quarter 2014, signing around 2.1 million square feet of leases. It surpassed the approximate lease figure of 1.6 million square feet executed in the prior quarter.
Yet the Washington, DC market remains a drag. Also, interest rates, expected to rise in the long term, might hurt the company’s rate sensitive business.
The Zacks Consensus Estimate over the last 30 days remained unchanged at $5.28 per share for 2014 and $5.68 per share for 2015. Boston Properties currently carries a Zacks Rank #3 (Hold).
To gain a deeper insight into Boston Properties, you can refer to our updated research report issued on Sep 9, 2014.
Other Stocks to Consider
Investors interested in the REIT industry may consider better-ranked stocks like DCT Industrial Trust Inc. (DCT), Omega Healthcare Investors Inc. (OHI) and Gladstone Commercial Corp. (GOOD). All these stocks have a Zacks Rank #2 (Buy).
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.
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Read the Full Research Report on GOOD
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