Bloomberg News

Boston Properties FFO Rises 4.4% as Revenue From Rents Increases

May 02, 2012

Boston Properties Inc. (BXP:US), the largest U.S. office real estate investment trust, reported a 4.4 percent increase in first-quarter funds from operations as revenue from rents increased.

FFO, which gauges a property company’s ability to generate cash, was $166.9 million, or $1.12 a share, compared with $160 million, or $1.12, a year earlier, the Boston-based company said yesterday in a statement. Analysts expected FFO of $1.13 a share, the average of 18 estimates in a Bloomberg survey (BXP:US).

“The explosion of social media companies” should help Boston Properties fill pending vacancies in its San Francisco Bay Area offices, Omotayo Okusanya, an analyst at New York-based Jefferies & Co., wrote on April 23. The company, led by Mortimer Zuckerman, its billionaire chairman, has 18 buildings there, including four in San Francisco’s Embarcadero Center.

“Strong leasing demand is beginning to creep into downtown San Francisco,” wrote Okusanya, who has a hold rating on the company. “New York City also appears to be weathering the economic climate better than we expected. We feel good about the 2012 earnings outlook for Boston Properties, even if first- quarter leasing velocity is somewhat slow.”

Retrenching financial firms helped drive down demand for offices in Manhattan, where the company is marketing space at 510 Madison Ave., a new building it purchased in 2010 when it was almost vacant, and 250 West 55th St., a tower under construction near Eighth Avenue.

Bank of America

Rental revenue in the first quarter increased to $432.7 million from $403.8 million a year earlier.

The company raised its full-year FFO forecast to $4.83 to $4.93 a share from $4.65 to $4.78, mostly because of income expected from 100 Federal St. in downtown Boston, which it acquired during the quarter.

Boston Properties bought the 37-story office tower from Bank of America Corp. for $615 million. The bank leased back 787,000 square feet (73,000 square meters) at the 1.3 million- square-foot building.

Earnings were announced after the close of regular U.S. trading yesterday. Boston Properties rose 1.4 percent to $109.75 in New York yesterday. The shares have gained 10 percent this year, compared with a 13 percent advance in the 17-member Bloomberg REIT Office Property Index. (BBREOFPY)

The company’s holdings include such skyscrapers as New York’s General Motors Building and Boston’s John Hancock Tower and Prudential Center.

To contact the reporter on this story: David M. Levitt in New York at dlevitt@bloomberg.net

To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net


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Companies Mentioned

  • BXP
    (Boston Properties Inc)
    • $121.42 USD
    • 0.34
    • 0.28%
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