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Boston Properties' (BXP) 200 West Street Asset Now 100% Leased

Zacks Equity Research
·4 min read

Boston Properties, Inc. BXP recently inked a long-term lease with Translate Bio, a clinical-stage messenger RNA therapeutics company, for 138,000 square feet of space at 200 West Street in Waltham, MA. Following this deal, the property is fully leased.

Notably, the strategic location of the property in a submarket popular among preeminent and emerging life sciences, biotechnology and technology companies, and redevelopment efforts at the building to offer modern work space might have attracted the tenant to lease the property for 10 years.

Specifically, 200 West Street is being revamped to offer a variety of lab space, including cold rooms and pilot, chemistry and biology labs, with anticipated completion in 2021. Moreover, it can be expanded in future with around 130,000 square feet of additional developable life science space.

Moreover, the property holds a full service cafe, offers fitness and conference facilities, and convenient access to the highly-skilled workforce in Waltham and neighboring towns that can be beneficial to the tenant.

Per management, “Translate Bio’s selection underscores our commitment to providing biotech customers the most flexible, modern and creative work environments to discover and develop therapies that increase wellness and improve lives.”

Markedly, in light of global efforts to develop vaccines and treatments for the coronavirus, there is higher demand for drug innovation. Leveraging on these factors that are also driving sector fundamentals, Boston Properties is focusing on development of commercial properties for the life sciences sector.

Through such efforts, the company existing portfolio comprises 3.3 million square feet of properties leased by biotechnology, healthcare and medical device companies. Moreover, it has around six million square feet of opportunities for redevelopment and future development. This is likely to accelerate the company’s growth over the long term.

However, the office real estate market continues to bear the brunt of the coronavirus pandemic with office-using employment (a key demand driver for the office real estate sector) remaining at a low level, while new supply is increasing as construction projects have started to be delivered.

This lackluster environment is hindering net absorption and occupancy rates at office properties. In fact, as of third-quarter end, portfolio occupancy was 91.1% in the company’s in-service office properties marking a contraction of 90 basis points from second-quarter 2020.

Its third-quarter 2020 funds from operations (FFO) per share of $1.57 also lagged the Zacks Consensus Estimate of $1.64. The reported figure declined 4.3% from the year-ago quarter’s $1.64.

Shares of this Zacks Rank #4 (Sell) have plunged 33% over the past year compared with the industry’s decline of 2.3%.

Stocks to Consider

Alpine Income Property Trust, Inc.’s PINE FFO per share estimates for 2020 have been revised upward by 1.7% to $1.21 over the past month. The company carries a Zacks Rank of 2 (Buy), currently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Extra Space Storage Inc’s EXR Zacks Consensus Estimate for 2020 FFO per share has moved upmarginally to $4.98 over the past week. The company currently carries a Zacks Rank of 2.

Rexford Industrial Realty, Inc.’s REXR Zacks Consensus Estimate for 2020 FFO per share has improved 1.5% to $1.30 in a month’s time. The company has a Zacks Rank of 2, at present.

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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