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Boston Properties Boosts Liquidity

Zacks Equity Research

Boston Properties Inc. (BXP) stated that its operating partner – Boston Properties Limited Partnership ­ (‘BPLP’) – priced an underwritten public offering of 3.800% senior unsecured notes worth $700 million at 99.694% of the principal amount. The transaction is likely to close on Jun 27, 2013.

The senior unsecured notes will mature on Feb 1, 2024 and have a yield to maturity of 3.835%. Notably, Deutsche Bank Securities Inc. of Deutsche Bank AG (DB), Morgan Stanley & Co. LLC of Morgan Stanley (MS), Merrill Lynch, Pierce, Fenner & Smith and J.P. Morgan Securities LLC, Incorporated of JPMorgan Chase & Co. (JPM) supported Boston Properties by acting as joint book-running managers for the offering.

The net proceeds from this notes offering is projected to be around $691.9 million (excluding underwriting discounts and estimated transaction expenses of about $8.1 million). It is planned to be utilized for future investments, reducing debt levels, invest in short-term interest-bearing securities and other general corporate purposes.

As of Mar 31, 2013, Boston Properties had cash and cash equivalents of about $909.4 million compared with $1.04 billion as of Dec 31, 2012. The aforementioned offering will help the company to lower its debt and thereby its interest expenses. Moreover, increased financial flexibility will enable Boston Properties to pursue strong portfolio restructuring activity, which will go a long way in enhancing its top-line growth.

Notably, Boston Properties is benefiting from improved core operations and has been successful in keeping a strong hold on high barrier-to-entry U.S. markets through enhancement of its portfolio base.

Boston Properties currently carries a Zacks Rank #3 (Hold).

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