Boston Properties (BXP) Disposes of Office Property for $531M
Boston Properties, Inc. BXP recently announced that it has completed the disposition of 601 Massachusetts Avenue, NW, Washington, DC. This move comes as part of the company’s capital-reallocation strategy focused on expanding into the growing Seattle market.
The 11-story office property was sold for a gross sales price of $531 million, which is equivalent to around $1,100 per rentable square foot. The transaction generated net proceeds of nearly $512 million for BXP.
The property, which encompasses 480,000 square feet, was originally developed by Boston Properties in 2015 and is 98% leased at present. The company will continue to render its services related to property management to the new owner.
Per Owen Thomas, Chairman & CEO of BXP “This disposition demonstrates continued investor demand for premier, well-leased office properties.”
The Seattle market has experienced substantial growth in jobs from the technology and life sciences sectors in recent years and emerged as one of the top tech markets for employers and employees. Further, it offers a strong potential for companies in the technology, life sciences, financial services and manufacturing sectors. Hence, Boston Properties’ expansion in the Seattle market seems prudent.
In May 2022, as part of this expansion strategy, BXP acquired Madison Centre, a 37-story, LEED-Platinum certified Class A office property, for $730 million.
Accordingly, Boston Properties’ sale of the office property was carried out as part of a reverse like kind exchange under Section 1031 of the Internal Revenue Code with its Madison Center acquisition.
BXP anticipates deferring the recognition of taxable gains from the sale for federal income tax purposes. Such efforts highlight Boston Properties' prudent capital-management practices and release the pressure on its balance sheet.
Analysts seem bullish on this Zacks Rank #3 (Hold) stock. The Zacks Consensus Estimate for BXP’s 2022 funds from operations (FFO) per share indicates a favorable outlook, with estimates moving northward over the past month.
However, its shares have lost 8.9% in the quarter-to-date period against its industry's growth of 1.0%.
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Stocks to Consider
Some better-ranked stocks from the REIT sector are Prologis PLD, Extra Space Storage EXR and Host Hotels & Resorts HST, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Prologis’ current-year FFO per share has moved marginally northward in the past two months to $5.17.
The Zacks Consensus Estimate for Extra Space Storage’s ongoing year’s FFO per share has been raised 1.9% over the past month to $8.46.
The Zacks Consensus Estimate for Host Hotels & Resorts’ 2022 FFO per share has moved 1.7% upward in the past month to $1.75.
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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