Boston Properties, Inc. (NYSE: BXP), a real estate
investment trust, reported results today for the second quarter
ended June 30, 2016.
Net income available to common shareholders was $96.6 million
for the quarter ended June 30, 2016, compared to $79.5 million
for the quarter ended June 30, 2015. Net income available to
common shareholders per share (EPS) for the quarter ended
June 30, 2016 was $0.63 basic and $0.63 on a diluted basis.
This compares to EPS for the quarter ended June 30, 2015 of
$0.52 basic and $0.52 on a diluted basis. The weighted-average
number of basic and diluted shares outstanding totaled
approximately 153,662,000 and 153,860,000, respectively, for the
quarter ended June 30, 2016 and 153,450,000 and 153,815,000,
respectively, for the quarter ended June 30, 2015.
Funds from Operations (FFO) for the quarter ended June 30,
2016 were $220.6 million, or $1.44 per share basic and $1.43 per
share diluted. This compares to FFO for the quarter ended
June 30, 2015 of $208.7 million, or $1.36 per share basic and
$1.36 per share diluted.
The Company’s reported FFO of $1.43 per share diluted was
greater than the guidance previously provided of $1.36-$1.38 per
share diluted primarily due to earlier than anticipated tenant
termination income of $0.04 per share and better than expected
portfolio operations of $0.02 per share.
The reported results are unaudited and there can be no assurance
that these reported results will not vary from the final
information for the quarter ended June 30, 2016. In the
opinion of management, all adjustments considered necessary for a
fair presentation of these reported results have been made.
As of June 30, 2016, the Company’s portfolio consisted of
168 properties aggregating approximately 46.5 million square feet,
including eight properties under construction/redevelopment
totaling approximately 3.8 million square feet. The overall
percentage of leased space for the 157 properties in service
(excluding the Company’s two residential properties and hotel) as
of June 30, 2016 was 90.8%.
Significant events during the second quarter included:
- On April 4, 2016, a joint venture in
which the Company has a 50% interest extended the loan
collateralized by its Annapolis Junction Building Seven property.
At the time of the extension, the outstanding balance of the loan
totaled approximately $21.5 million and was scheduled to mature on
April 4, 2016. The extended loan has a total commitment amount of
$22.0 million, bears interest at a variable rate equal to LIBOR
plus 1.65% per annum and matures on April 4, 2017, with one,
one-year extension option, subject to certain conditions. Annapolis
Junction Building Seven is a Class A office property with
approximately 127,000 net rentable square feet located in
Annapolis, Maryland.
- On April 11, 2016, the Company used
available cash to repay the mortgage loan collateralized by its
Fountain Square property located in Reston, Virginia totaling
approximately $211.3 million. The mortgage loan bore interest at a
fixed rate of 5.71% per annum and was scheduled to mature on
October 11, 2016. There was no prepayment penalty.
- On April 11, 2016, a joint venture in
which the Company has a 50% interest received a Notice of Event of
Default from the lender for the loan collateralized by its
Annapolis Junction Building One property. The Event of Default
relates to the loan to value ratio not being in compliance with the
loan agreement. The joint venture is currently in discussions with
the lender regarding the Event of Default, although there can be no
assurance as to the outcome of those discussions. The loan has an
outstanding balance of approximately $39.8 million, is non-recourse
to the Company, bears interest at a variable rate equal to LIBOR
plus 1.75% per annum and has a stated maturity date of March 31,
2018, with one, three-year extension option, subject to certain
conditions. Annapolis Junction Building One is a Class A office
property with approximately 118,000 net rentable square feet
located in Annapolis, Maryland.
- On April 22, 2016, the Company acquired
3625-3635 Peterson Way located in Santa Clara, California for a
purchase price of approximately $78.0 million in cash. 3625-3635
Peterson Way is an approximately 218,000 net rentable square foot
office property. The property is 100% leased to a single tenant
through March 2021. Following the lease expiration, the Company
intends to develop the site into a Class A office campus containing
an aggregate of approximately 632,000 net rentable square
feet.
- On May 27, 2016, the Company completed
and fully placed in-service 601 Massachusetts Avenue, a Class A
office project with approximately 479,000 net rentable square feet
located in Washington, DC. The property is 90% leased.
- On May 27, 2016, the Company completed
and fully placed in-service 804 Carnegie Center, a Class A office
project with approximately 130,000 net rentable square feet located
in Princeton, New Jersey. The property is 100% leased.
- On June 24, 2016, the Company completed
and fully placed in-service 10 CityPoint, a Class A office project
with approximately 241,000 net rentable square feet located in
Waltham, Massachusetts. The property is 97% leased.
Transactions completed subsequent to June 30, 2016:
- On July 1, 2016, the Company entered
the Los Angeles market through its acquisition of a 49.8% interest
in an existing joint venture that owns and operates Colorado Center
located in Santa Monica, California for a gross purchase price of
approximately $511.1 million, or approximately $503.6 million in
cash net of credits for free rent, unfunded leasing costs and other
adjustments. Colorado Center is a six-building office complex that
sits on a 15-acre site and contains an aggregate of approximately
1,184,000 net rentable square feet with an underground parking
garage for 3,100 vehicles. The property is 68% leased.
EPS and FFO per Share Guidance:
The Company’s guidance for the third quarter and full year 2016
for EPS (diluted) and FFO per share (diluted) is set forth and
reconciled below. Except as described below, the estimates reflect
management’s view of current and future market conditions,
including assumptions with respect to rental rates, occupancy
levels and the earnings impact of the events referenced in this
release and otherwise referenced during the conference call
referred to below. The estimates do not include possible future
gains or losses or the impact on operating results from other
possible future property acquisitions or dispositions, other
possible capital markets activity or possible future impairment
charges. EPS estimates may be subject to fluctuations as a result
of several factors, including changes in the recognition of
depreciation and amortization expense and any gains or losses
associated with disposition activity. The Company is not able to
assess at this time the potential impact of these factors on
projected EPS. By definition, FFO does not include real
estate-related depreciation and amortization, impairment losses or
gains or losses associated with disposition activities. There can
be no assurance that the Company’s actual results will not differ
materially from the estimates set forth below.
As shown below, the Company has updated its projected EPS
(diluted) for the full year 2016 to $3.04 - $3.11 per share from
$3.00 - $3.10 per share. This is an increase of approximately $0.03
per share at the mid-point of the Company’s guidance consisting of
$0.02 per share due to the acquisition of a 49.8% interest in the
joint venture that owns Colorado Center (net of $0.03 per share of
real estate depreciation and amortization expense) and $0.01
per share due to higher portfolio performance. In addition, the
Company has updated its projected guidance for FFO per share
(diluted) for the full year 2016 to $5.92 - $5.99 per share from
$5.85 - $5.95 per share. This is an increase of approximately $0.06
per share at the mid-point of the Company’s guidance consisting of
$0.05 per share from the acquisition of a 49.8% interest in
Colorado Center and $0.01 per share due to higher portfolio
performance.
Third Quarter 2016 Full Year 2016 Low - High
Low - High Projected EPS (diluted) $ 0.57 - $ 0.59 $ 3.04 - $ 3.11
Add: Projected Company Share of Real Estate Depreciation and
Amortization 0.83 - 0.83 3.27 - 3.27 Less: Projected Company Share
of Gains on Sales of Real Estate — - — 0.39 -
0.39 Projected FFO per Share (diluted) $ 1.40 - $ 1.42 $
5.92 - $ 5.99
Boston Properties will host a conference call on Wednesday, July
27, 2016 at 10:00 AM Eastern Time, open to the general public, to
discuss the second quarter 2016 results, the 2016 projections and
related assumptions, and other related matters that may be of
interest to investors. The number to call for this interactive
teleconference is (877) 706-4503 (Domestic) or (281) 913-8731
(International) and entering the passcode 23627785. A replay of the
conference call will be available through August 12, 2016, by
dialing (855) 859-2056 (Domestic) or (404) 537-3406 (International)
and entering the passcode 23627785. There will also be a live audio
webcast of the call which may be accessed on the Company’s website
at www.bostonproperties.com in the Investor Relations section.
Shortly after the call a replay of the webcast will be available in
the Investor Relations section of the Company’s website and
archived for up to twelve months following the call.
Additionally, a copy of Boston Properties’ second quarter 2016
“Supplemental Operating and Financial Data” and this press release
are available in the Investor Relations section of the Company’s
website at www.bostonproperties.com.
Boston Properties is a fully integrated, self-administered and
self-managed real estate investment trust that develops,
redevelops, acquires, manages, operates and owns a diverse
portfolio of primarily Class A office space, five retail
properties, four residential properties (including two properties
under construction) and one hotel. The Company is one of the
largest owners and developers of Class A office properties in the
United States, concentrated in five markets - Boston, Los Angeles,
New York, San Francisco and Washington, DC.
This press release contains forward-looking statements within
the meaning of the Federal securities laws. You can identify these
statements by our use of the words “assumes,” “believes,”
“estimates,” “expects,” “guidance,” “intends,” “plans,” “projects”
and similar expressions that do not relate to historical matters.
You should exercise caution in interpreting and relying on
forward-looking statements because they involve known and unknown
risks, uncertainties and other factors which are, in some cases,
beyond Boston Properties’ control and could materially affect
actual results, performance or achievements. These factors include,
without limitation, the Company’s ability to enter into new leases
or renew leases on favorable terms, dependence on tenants’
financial condition, the uncertainties of real estate development,
acquisition and disposition activity, the ability to effectively
integrate acquisitions, the uncertainties of investing in new
markets, the costs and availability of financing, the effectiveness
of our interest rate hedging contracts, the ability of our joint
venture partners to satisfy their obligations, the effects of
local, national and international economic and market conditions,
the effects of acquisitions, dispositions and possible impairment
charges on our operating results, the impact of newly adopted
accounting principles on the Company’s accounting policies and on
period-to-period comparisons of financial results, regulatory
changes and other risks and uncertainties detailed from time to
time in the Company’s filings with the Securities and Exchange
Commission. Boston Properties does not undertake a duty to update
or revise any forward-looking statement, including its guidance for
the third quarter and full fiscal year 2016, whether as a result of
new information, future events or otherwise.
Financial tables follow.
BOSTON PROPERTIES,
INC.CONSOLIDATED BALANCE SHEETS(Unaudited)
June 30,2016
December 31,2015
(in thousands, except for
shareand par value amounts)
ASSETS Real estate, at cost $ 18,690,403 $ 18,465,405
Construction in progress 865,359 763,935 Land held for future
development 241,106 252,195 Less: accumulated depreciation
(4,056,716 ) (3,925,894 ) Total real estate 15,740,152
15,555,641 Cash and cash equivalents 1,180,044 723,718 Cash held in
escrows 65,654 73,790 Investments in securities 21,775 20,380
Tenant and other receivables, net 84,861 97,865 Accrued rental
income, net 776,816 754,883 Deferred charges, net 697,823 704,867
Prepaid expenses and other assets 144,222 185,118 Investments in
unconsolidated joint ventures 252,618 235,224
Total assets $ 18,963,965 $ 18,351,486
LIABILITIES AND EQUITY Liabilities: Mortgage notes payable,
net $ 3,189,013 $ 3,435,242 Unsecured senior notes, net 6,257,274
5,264,819 Unsecured line of credit — — Mezzanine notes payable
307,797 308,482 Outside members’ notes payable 180,000 180,000
Accounts payable and accrued expenses 287,464 274,709 Dividends and
distributions payable 113,071 327,320 Accrued interest payable
222,175 190,386 Other liabilities 508,952
483,601 Total liabilities 11,065,746
10,464,559 Commitments and contingencies —
— Equity: Stockholders’ equity attributable to
Boston Properties, Inc.: Excess stock, $0.01 par value, 150,000,000
shares authorized, none issued or outstanding — — Preferred stock,
$0.01 par value, 50,000,000 shares authorized; 5.25% Series B
cumulative redeemable preferred stock, $0.01 par value, liquidation
preference $2,500 per share, 92,000 shares authorized, 80,000
shares issued and outstanding at June 30, 2016 and December 31,
2015 200,000 200,000 Common stock, $0.01 par value, 250,000,000
shares authorized, 153,753,830 and 153,658,866 issued and
153,674,930 and 153,579,966 outstanding at June 30, 2016 and
December 31, 2015, respectively 1,537 1,536 Additional paid-in
capital 6,316,191 6,305,687 Dividends in excess of earnings
(702,361 ) (780,952 ) Treasury common stock at cost, 78,900 shares
at June 30, 2016 and December 31, 2015 (2,722 ) (2,722 )
Accumulated other comprehensive loss (79,748 )
(14,114 ) Total stockholders’ equity attributable to Boston
Properties, Inc. 5,732,897 5,709,435 Noncontrolling interests:
Common units of the Operating Partnership 612,385 603,092 Property
partnerships 1,552,937 1,574,400 Total
equity 7,898,219 7,886,927 Total
liabilities and equity $ 18,963,965 $ 18,351,486
BOSTON PROPERTIES,
INC.CONSOLIDATED STATEMENTS OF
OPERATIONS(Unaudited)
Three months endedJune
30,
Six months endedJune 30,
2016 2015 2016 2015
(in thousands, except for per share amounts) Revenue Rental
Base rent $ 493,386 $ 486,609 $ 1,029,514 $ 977,291 Recoveries from
tenants 85,706 86,795 175,292 175,388 Parking and other
26,113 26,552 50,938
51,340 Total rental revenue 605,205 599,956 1,255,744
1,204,019 Hotel revenue 12,808 13,403 21,565 22,488 Development and
management services 5,533 4,862
12,222 10,190 Total revenue 623,546
618,221 1,289,531
1,236,697 Expenses Operating Rental 217,938 214,464 437,110
435,814 Hotel 7,978 8,495 15,612 16,071 General and administrative
25,418 22,284 54,771 51,075 Transaction costs 913 208 938 535
Depreciation and amortization 153,175 167,844
312,623 322,067 Total expenses
405,422 413,295 821,054
825,562 Operating income 218,124 204,926 468,477
411,135 Other income (expense) Income from unconsolidated joint
ventures 2,234 3,078 4,025 17,912 Interest and other income 1,524
1,293 3,029 2,700 Gains (losses) from investments in securities 478
(24 ) 737 369 Interest expense (105,003 ) (108,534 )
(210,312 ) (217,291 ) Income before gains on sales of
real estate 117,357 100,739 265,956 214,825 Gains on sales of real
estate — — 67,623
95,084 Net income 117,357 100,739 333,579 309,909 Net income
attributable to noncontrolling interests Noncontrolling interests
in property partnerships (6,814 ) (9,264 ) (17,278 ) (24,472 )
Noncontrolling interest—redeemable preferred units of the Operating
Partnership — (3 ) — (6 ) Noncontrolling interest—common units of
the Operating Partnership (11,357 ) (9,394 )
(32,771 ) (29,530 ) Net income attributable to Boston
Properties, Inc. 99,186 82,078 283,530 255,901 Preferred dividends
(2,589 ) (2,618 ) (5,207 ) (5,207 ) Net
income attributable to Boston Properties, Inc. common shareholders
$ 96,597 $ 79,460 $ 278,323 $ 250,694
Basic earnings per common share attributable to Boston Properties,
Inc. common shareholders: Net income $ 0.63 $ 0.52 $
1.81 $ 1.63 Weighted average number of common shares
outstanding 153,662 153,450
153,644 153,341 Diluted earnings per common
share attributable to Boston Properties, Inc. common shareholders:
Net income $ 0.63 $ 0.52 $ 1.81 $ 1.63
Weighted average number of common and common equivalent shares
outstanding 153,860 153,815
153,889 153,845
BOSTON PROPERTIES, INC.FUNDS
FROM OPERATIONS (1)(Unaudited)
Three months endedJune
30,
Six months endedJune 30,
2016
2015
2016
2015
(in thousands, except for per share amounts) Net
income attributable to Boston Properties, Inc. common shareholders
$ 96,597 $ 79,460 $ 278,323 $ 250,694 Add: Preferred dividends
2,589 2,618 5,207 5,207 Noncontrolling interest - common units of
the Operating Partnership 11,357 9,394 32,771 29,530 Noncontrolling
interest - redeemable preferred units of the Operating Partnership
— 3 — 6 Noncontrolling interests in property partnerships 6,814
9,264 17,278 24,472 Less: Gains on sales of real estate —
— 67,623 95,084
Income before gains on sales of real estate 117,357 100,739 265,956
214,825 Add: Real estate depreciation and amortization (2) 157,431
171,384 321,011 320,138 Less: Noncontrolling interests in property
partnerships’ share of funds from operations 26,183 36,699 56,202
73,214 Noncontrolling interest - redeemable preferred units of the
Operating Partnership — 3 — 6 Preferred dividends 2,589
2,618 5,207 5,207
Funds from operations (FFO) attributable to the Operating
Partnership common unitholders (including Boston Properties, Inc.)
246,016 232,803 525,558 456,536 Less: Noncontrolling interest -
common units of the Operating Partnership’s share of funds from
operations 25,421 24,072 54,277
47,423 Funds from operations attributable to
Boston Properties, Inc. common shareholders $ 220,595 $
208,731 $ 471,281 $ 409,113 Boston Properties,
Inc.’s percentage share of funds from operations - basic
89.67 % 89.66 % 89.67 % 89.61 % Weighted
average shares outstanding - basic 153,662
153,450 153,644 153,341 FFO per
share basic $ 1.44 $ 1.36 $ 3.07 $ 2.67
Weighted average shares outstanding - diluted 153,860
153,815 153,889 153,845
FFO per share diluted $ 1.43 $ 1.36 $ 3.06 $
2.66
(1) Pursuant to the revised definition of Funds from Operations
adopted by the Board of Governors of the National Association of
Real Estate Investment Trusts (“NAREIT”), we calculate Funds from
Operations, or “FFO,” by adjusting net income (loss) attributable
to Boston Properties, Inc. common shareholders (computed in
accordance with GAAP, including non-recurring items) for gains (or
losses) from sales of properties, impairment losses on depreciable
real estate consolidated on our balance sheet, impairment losses on
our investments in unconsolidated joint ventures driven by a
measurable decrease in the fair value of depreciable real estate
held by the unconsolidated joint ventures, real estate-related
depreciation and amortization, and our share of income (loss) from
unconsolidated partnerships and joint ventures. FFO is a non-GAAP
financial measure, but we believe the presentation of FFO, combined
with the presentation of required GAAP financial measures, has
improved the understanding of operating results of REITs among the
investing public and has helped make comparisons of REIT operating
results more meaningful. Management generally considers FFO and FFO
per share to be useful measures for understanding and comparing our
operating results because, by excluding gains and losses related to
sales of previously depreciated operating real estate assets,
impairment losses and real estate asset depreciation and
amortization (which can differ across owners of similar assets in
similar condition based on historical cost accounting and useful
life estimates), FFO and FFO per share can help investors compare
the operating performance of a company’s real estate across
reporting periods and to the operating performance of other
companies.
Our computation of FFO may not be comparable to FFO reported by
other REITs or real estate companies that do not define the term in
accordance with the current NAREIT definition or that interpret the
current NAREIT definition differently.
FFO should not be considered as a substitute for net income
attributable to Boston Properties, Inc. common shareholders
(determined in accordance with GAAP). FFO does not represent cash
generated from operating activities determined in accordance with
GAAP, and is not a measure of liquidity or an indicator of our
ability to make cash distributions. We believe that to more
comprehensively understand our operating performance, FFO should be
considered along with our reported net income attributable to
Boston Properties, Inc. and our cash flows in accordance with GAAP,
as presented in our consolidated financial statements.
(2) Real estate depreciation and amortization consists of
depreciation and amortization from the Consolidated Statements of
Operations of $153,175, $167,844, $312,623 and $322,067 and our
share of unconsolidated joint venture real estate depreciation and
amortization of $4,618, $3,886, $9,114 and $(1,246), less
corporate-related depreciation and amortization of $362, $346, $726
and $683 for the three and six months ended June 30, 2016 and
2015, respectively.
BOSTON PROPERTIES, INC.
PORTFOLIO LEASING PERCENTAGES
% Leased by Location June 30,
2016 December 31, 2015 Boston 91.3 % 90.6 % New York
90.7 % 91.5 % San Francisco 90.5 % 93.8 % Washington, DC 90.3 %
91.0 % Total Portfolio 90.8 % 91.4 %
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160726006573/en/
Boston PropertiesMichael LaBelle, 617-236-3352Executive Vice
President, Chief Financial Officer and TreasurerorArista Joyner,
617-236-3343Investor Relations Manager
Boston Properties (NYSE:BXP)
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