Boston Properties (BXP) Q3 FFO & Revenues Top, '23 View Revised
Boston Properties Inc.’s BXP third-quarter 2023 funds from operations (FFO) per share of $1.86 outpaced the Zacks Consensus Estimate of $1.85. However, the reported figure fell 2.6% year over year.
BXP’s quarterly results reflect better-than-anticipated revenues on healthy leasing activity. However, higher interest expenses during the quarter marred its year-over-year FFO per share growth. BXP revised its outlook for 2023 FFO per share.
Quarterly revenues from lease came in at $767.2 million, up 3.8% year over year. Total revenues increased 4.3% from the prior-year quarter to $824.3 million. The Zacks Consensus Estimate was pegged at $767.2 million.
Quarter in Detail
Boston Properties’ rental revenues (excluding termination income) for the office portfolio came in at $747.1 million, which rose 2.3% year over year. For the hotel & residential segment, the metric aggregated $25.3 million, indicating a jump of 9.8% year over year. On a consolidated basis, BXP’s rental revenues (excluding termination income) came in at $772.4 million, up 2.6% year over year.
BXP’s share of same property net operating income (NOI) on a cash basis (excluding termination income) totaled $440.1 million, up 1.7% from the prior-year quarter.
Its share of EBITDAre (on a cash basis), as of Sep 30, 2023, was $466.8 million, down 0.5% from $468.9 million as of Jun 30, 2023.
BXP’s in-service properties occupancy increased 50 basis points sequentially to 88.8%. We estimated the metric to be 88.2%.
However, BXP’s quarterly interest expenses were up 32.2% year over year to $147.8 million.
Portfolio Activity
As of Sep 30, 2023, Boston Properties’ portfolio comprised 190 properties encompassing 53.5 million square feet of space. This included 11 properties under construction/redevelopment.
During the third quarter, the company executed 1.06 million square feet of leases with a weighted average lease term of 8.2 years.
Boston Properties completed and fully placed in service the redevelopment of 140 Kendrick Street - Building A in Needham, MA. This 104,000-square-foot property is fully leased. Moreover, BXP completed and fully placed in service 751 Gateway in South San Francisco, CA. BXP has a 49% interest in this 231,000-square-foot laboratory/life sciences property, which is entirely leased.
Balance Sheet Position
Boston Properties exited third-quarter 2023 with cash and cash equivalents of $882.6 million, down from $1.58 billion as of Jun 30, 2023.
BXP’s share of net debt to EBITDAre annualized was 7.28 as of Sep 30, 2023, down from 7.31 times as of Jun 30, 2023.
2023 Outlook
For 2023, Boston Properties revised its projection for FFO per share in the band of $7.25-$7.27 from the $7.24-$7.29 band guided earlier. This revision includes higher projected portfolio NOI, offset by increased net interest expenses from recent financing activities. The Zacks Consensus Estimate is currently pegged at $7.30.
The full-year outlook of BXP is based on the assumption of its share of the same property NOI on a cash basis (excluding termination income) growth of 1.50-2.5% and average in-service portfolio occupancy in the band of 88-89% for the current year.
Boston Properties currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Boston Properties, Inc. Price, Consensus and EPS Surprise
Boston Properties, Inc. price-consensus-eps-surprise-chart | Boston Properties, Inc. Quote
Performance of Other REITs
SL Green Realty Corp.’s SLG third-quarter 2023 funds from operations (FFO) per share of $1.27 missed the Zacks Consensus Estimate by a whisker. The figure also declined 23.5% from the year-ago quarter.
Results reflected lower-than-anticipated revenues despite decent leasing activity in its Manhattan portfolio. Higher interest expenses during the quarter acted as a dampener. Expecting higher severance and stock-based compensation costs during the fourth quarter of 2024, SL Green lowered its guidance for 2023 FFO per share.
Cousins Properties’ CUZ third-quarter 2023 funds from operations (FFO) per share of 65 cents was in line with the Zacks Consensus Estimate.
Results reflected lower-than-anticipated revenues. Although the company witnessed decent leasing activity during the quarter, a substantial jump in interest expenses acted as a dampener. CUZ also revised its 2023 outlook for FFO per share.
Alexandria Real Estate Equities, Inc. ARE reported third-quarter 2023 AFFO per share of $2.26, surpassing the Zacks Consensus Estimate of $2.24. The reported figure climbed 6.1% from the year-ago quarter.
Results reflected year-over-year revenue growth, aided by decent leasing activity and solid rental rate growth. ARE also increased the midpoint of its 2023 AFFO per share outlook by 2 cents.
Note: Anything related to earnings presented in this write-up represent FFO — a widely used metric to gauge the performance of REITs.
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