Exceeds Q1 2022 Guidance for EPS and FFO;
Executes 1.2 Million SF of Leases in Q1, and Agrees to 2nd
Acquisition in Seattle, WA in Q2 2022
Boston Properties, Inc. (NYSE: BXP), the largest publicly
traded developer, owner, and manager of Class A office properties
in the United States, reported results today for the first quarter
ended March 31, 2022.
Financial highlights for the first quarter include:
- Revenue grew approximately 6% to $754.3 million for the quarter
ended March 31, 2022, as compared to $713.7 million for the quarter
ended March 31, 2021.
- Net income attributable to common shareholders of $143.0
million, or $0.91 per diluted share (EPS), compared to $91.6
million, or $0.59 per diluted share, for the quarter ended March
31, 2021.
- Funds from Operations (FFO) of $286.1 million, or $1.82 per
diluted share for the quarter ended March 31, 2022, compared to FFO
of $243.8 million, or $1.56 per diluted share, for the quarter
ended March 31, 2021.
- EPS and FFO per share exceeded the mid-point of BXP’s guidance
due primarily to $0.07 per share of improvement in portfolio
performance, $0.01 per share of the impact of reinstating accrual
basis accounting for certain tenants that were previously
reclassified to cash basis accounting and $0.01 per share of lower
general and administrative expenses. Additionally, Q1 2022 EPS
included a gain on sale of $0.13 per share.
BXP provided guidance for (1) second quarter 2022 EPS of $0.79 -
$0.81 and FFO of $1.84 - $1.86 per diluted share and (2) full year
2022 EPS of $5.32 - $5.42 and FFO of $7.40 - $7.50 per diluted
share. See “EPS and FFO per Share Guidance” below.
First quarter and recent business highlights include:
- Executed approximately 1.2 million square feet of leases in the
first quarter having a weighted-average lease term of 7.3 years.
Executed leases for the quarter included an approximately 330,000
square foot renewal and expansion with a financial services firm at
601 Lexington Avenue in New York City, NY. The leasing volume
achieved in Q1 of 2022 is in line with BXP’s 10-year first quarter
leasing average, and double the volume from Q1 2021.
- In April 2022, executed an agreement to purchase Madison
Centre, an approximately 760,000 square foot, 37-story Class A
office building in Seattle, WA, for a gross purchase price of
approximately $730 million. As one of the newest commercial high
rises in the city with one of the most generous amenity offerings
in the market, Madison Centre will serve as a showpiece and
foundational asset for BXP’s expansion in the Seattle market. There
can be no assurance that this acquisition will occur on the terms
currently contemplated or at all.
- In April 2022, signed an approximately 570,000 rentable square
foot lease with AstraZeneca to lease the first phase of a future
life sciences development at 290 Binney Street in Cambridge, MA.
This future development site is located in the heart of Kendall
Square, and when complete, will include two buildings totaling
approximately 1.1 million rentable square feet of life sciences
space as well as an approximately 400,000 square foot residential
building. The lease and the commencement of development are subject
to various conditions, some of which are not within BXP’s
control.
- Commenced two development projects:
- the redevelopment of 651 Gateway in South San Francisco, CA.
651 Gateway is an office building that is being converted to an
approximately 327,000 net rentable square foot life sciences space.
This property is owned by a joint venture in which BXP has a 50%
interest.
- the development of the first phase of Platform 16 in San Jose,
CA. Platform 16 is a Class A office project that, after completion
of all phases, is expected to be approximately 1.1 million square
feet. The first phase is approximately 390,000 net rentable square
feet. This property is owned by a joint venture in which BXP has a
55% interest.
- Disposed of 195 West Street, an approximately 63,500 square
foot office building in Waltham, MA for a gross sales price of
$37.7 million and net proceeds of $35.4 million. BXP recognized a
gain on sale of approximately $22.7 million.
- Refinanced the mortgage loan collateralized by Metropolitan
Square located in Washington, DC. The new loans aggregate
approximately $420.0 million and mature on April 9, 2024. The
previous mortgage loan had an outstanding balance of approximately
$294.1 million and was scheduled to mature on July 7, 2022. This
property is owned by a joint venture in which BXP has a 20%
interest.
- In April 2022, released BXP’s 2021 ESG Report, which provides
details on BXP’s ESG approach, goals, key performance indicators,
leadership, and reporting methodologies related to environmental
impact, social impact, and governance.
- Named to Barron’s 10 Most Sustainable REITs in the U.S. BXP
improved from 8th place to 3rd place in the 2nd year that Barron’s
produced a REIT ranking.
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 March 31, 2022. In the opinion of
management, BXP has made all adjustments considered necessary for a
fair statement of these reported results.
EPS and FFO per Share Guidance:
BXP’s guidance for the second quarter and full year 2022 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, the timing of the lease-up of available space, and the
earnings impact of the events referenced in this release and those
referenced during the related conference call. Except as otherwise
publicly disclosed, the estimates do not include the impacts of any
potential (1) capital markets activity, (2) future write-offs or
reinstatements of accounts receivable and accrued rent balances, or
(3) 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,
impairment losses on depreciable real estate, and any gains or
losses associated with disposition activity. BXP 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 on
depreciable real estate, or gains or losses associated with
disposition activities. There can be no assurance that BXP’s actual
results will not differ materially from the estimates set forth
below.
Second Quarter 2022
Full Year 2022
Low
High
Low
High
Projected EPS (diluted)
$
0.79
$
0.81
$
5.32
$
5.42
Add:
Projected Company share of real estate
depreciation and amortization
1.05
1.05
4.30
4.30
Projected Company share of (gains)/losses
on sales of real estate
—
—
(2.22
)
(2.22
)
Projected FFO per share (diluted)
$
1.84
$
1.86
$
7.40
$
7.50
BXP will host a conference call on Tuesday, May 3, 2022 at 11:00
AM Eastern Time, open to the general public, to discuss the first
quarter 2022 results, provide a business update, and discuss other
business matters that may be of interest to investors. The number
to call for this interactive teleconference is (877) 796-3880
(Domestic) or (443) 961-9013 (International) and entering the
passcode 7770877. A replay of the conference call will be available
by dialing (855) 859-2056 (Domestic) or (404) 537-3406
(International) and entering the passcode 7770877. There will also
be a live audio webcast of the call, which may be accessed in the
Investors section of BXP’s website at investors.bxp.com. Shortly
after the call, a replay of the webcast will be available in the
Investors section of BXP’s website and archived for up to twelve
months following the call.
Additionally, a copy of BXP’s first quarter 2022 “Supplemental
Operating and Financial Data” and this press release are available
in the Investors section of BXP’s website at investors.bxp.com.
Boston Properties (NYSE: BXP) is the largest publicly traded
developer, owner, and manager of Class A office properties in the
United States, concentrated in six markets - Boston, Los Angeles,
New York, San Francisco, Seattle, and Washington, DC. BXP is a
fully integrated real estate company, organized as a real estate
investment trust (REIT), that develops, manages, operates,
acquires, and owns a diverse portfolio of primarily Class A office
space. Including properties owned by unconsolidated joint ventures,
the Company’s portfolio totals 53.1 million square feet and 201
properties, including eleven properties under
construction/redevelopment. For more information about BXP, please
visit our website at www.bxp.com or follow us on LinkedIn or
Instagram.
This press release contains “forward-looking statements” as
defined in the Private Securities Litigation Reform Act of 1995.
You can identify these statements by our use of the words
“anticipates,” “believes,” “budgeted,” “could,” “estimates,”
“expects,” “guidance,” “intends,” “may,” “might,” “plans,”
“projects,” “should,” “will,” and similar expressions that do not
relate to historical matters. These statements are based on our
current plans, expectations, projections and assumptions about
future events. 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. If our underlying
assumptions prove inaccurate, or known or unknown risks or
uncertainties materialize, actual results could differ materially
from those expressed or implied by the forward-looking statement.
These factors include, without limitation, the risks and
uncertainties related to the impact of the COVID-19 global
pandemic, including the emergence of additional variants, the
effectiveness, availability and distribution of vaccines, including
their efficacy against new variant strains and the willingness of
individuals to be vaccinated, the impact of geopolitical conflicts,
including the ongoing war in Ukraine, and the severity and duration
of the indirect economic impacts of the foregoing, such as
recession, supply chain disruptions, labor market disruptions,
rising inflation, increasing interest rates, dislocation and
volatility in capital markets, job losses, potential longer-term
changes in consumer and tenant behavior, as well as possible future
governmental responses, risks related to volatile or adverse global
economic and geopolitical conditions, health crises and
dislocations in the credit markets, risks associated with downturns
in the national and local economies, increasing interest rates, and
volatility in the securities markets, 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,
the uncertainties of costs to comply with regulatory changes
(including potential costs to comply with the Securities and
Exchange Commission’s proposed rules to standardize climate-related
disclosures) and other risks and uncertainties detailed from time
to time in the Company’s filings with the SEC. These
forward-looking statements speak only as of the date of issuance of
this report and are not guarantees of future results, performance,
or achievements. Boston Properties does not undertake a duty to
update or revise any forward-looking statement whether as a result
of new information, future events or otherwise, except as may be
required by law.
Financial tables follow.
BOSTON PROPERTIES,
INC.
CONSOLIDATED BALANCE
SHEETS
(Unaudited)
March 31, 2022
December 31, 2021
(in thousands, except for
share and par value amounts)
ASSETS
Real estate, at cost
$
22,472,940
$
22,298,103
Construction in progress
846,775
894,172
Land held for future development
582,511
560,355
Right of use assets - finance leases
237,501
237,507
Right of use assets - operating leases
169,248
169,778
Less: accumulated depreciation
(5,995,760
)
(5,883,961
)
Total real estate
18,313,215
18,275,954
Cash and cash equivalents
436,271
452,692
Cash held in escrows
46,072
48,466
Investments in securities
36,032
43,632
Tenant and other receivables, net
56,132
70,186
Related party note receivable, net
78,544
78,336
Note receivables, net
9,674
9,641
Accrued rental income, net
1,243,395
1,226,745
Deferred charges, net
609,205
618,798
Prepaid expenses and other assets
128,472
57,811
Investments in unconsolidated joint
ventures
1,518,622
1,482,997
Total assets
$
22,475,634
$
22,365,258
LIABILITIES AND EQUITY
Liabilities:
Mortgage notes payable, net
$
3,268,745
$
3,267,914
Unsecured senior notes, net
9,486,379
9,483,695
Unsecured line of credit
255,000
145,000
Unsecured term loan, net
—
—
Lease liabilities - finance leases
245,554
244,421
Lease liabilities - operating leases
204,677
204,561
Accounts payable and accrued expenses
304,576
320,775
Dividends and distributions payable
170,869
169,859
Accrued interest payable
90,861
94,796
Other liabilities
396,283
391,441
Total liabilities
14,422,944
14,322,462
Commitments and contingencies
—
—
Redeemable deferred stock units
11,031
9,568
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; none issued or outstanding
—
—
Common stock, $0.01 par value, 250,000,000
shares authorized, 156,790,614 and 156,623,749 issued and
156,711,714 and 156,544,849 outstanding at March 31, 2022 and
December 31, 2021, respectively
1,567
1,565
Additional paid-in capital
6,509,663
6,497,730
Dividends in excess of earnings
(636,421
)
(625,891
)
Treasury common stock at cost, 78,900
shares at March 31, 2022 and December 31, 2021
(2,722
)
(2,722
)
Accumulated other comprehensive loss
(28,485
)
(36,662
)
Total stockholders’ equity attributable to
Boston Properties, Inc.
5,843,602
5,834,020
Noncontrolling interests:
Common units of the Operating
Partnership
649,602
642,655
Property partnerships
1,548,455
1,556,553
Total equity
8,041,659
8,033,228
Total liabilities and equity
$
22,475,634
$
22,365,258
BOSTON PROPERTIES,
INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
Three months ended March
31,
2022
2021
(in thousands, except for per
share amounts)
Revenue
Lease
$
718,120
$
685,817
Parking and other
21,734
16,938
Hotel revenue
4,557
632
Development and management services
5,831
6,803
Direct reimbursements of payroll and
related costs from management services contracts
4,065
3,505
Total revenue
754,307
713,695
Expenses
Operating
Rental
270,255
257,389
Hotel
4,840
2,051
General and administrative
43,194
44,959
Payroll and related costs from management
services contracts
4,065
3,505
Transaction costs
—
331
Depreciation and amortization
177,624
176,565
Total expenses
499,978
484,800
Other income (expense)
Income from unconsolidated joint
ventures
2,189
5,225
Gains on sales of real estate
22,701
—
Interest and other income (loss)
1,228
1,168
Gains (losses) from investments in
securities
(2,262
)
1,659
Losses from early extinguishment of
debt
—
(898
)
Interest expense
(101,228
)
(107,902
)
Net income
176,957
128,147
Net income attributable to noncontrolling
interests
Noncontrolling interests in property
partnerships
(17,549
)
(16,467
)
Noncontrolling interest—common units of
the Operating Partnership
(16,361
)
(11,084
)
Net income attributable to Boston
Properties, Inc.
143,047
100,596
Preferred dividends
—
(2,560
)
Preferred stock redemption charge
—
(6,412
)
Net income attributable to Boston
Properties, Inc. common shareholders
$
143,047
$
91,624
Basic earnings per common share
attributable to Boston Properties, Inc. common shareholders:
Net income
$
0.91
$
0.59
Weighted average number of common shares
outstanding
156,650
155,928
Diluted earnings per common share
attributable to Boston Properties, Inc. common shareholders:
Net income
$
0.91
$
0.59
Weighted average number of common and
common equivalent shares outstanding
157,004
156,099
BOSTON PROPERTIES,
INC.
FUNDS FROM OPERATIONS
(1)
(Unaudited)
Three months ended March
31,
2022
2021
(in thousands, except for per
share amounts)
Net income attributable to Boston
Properties, Inc. common shareholders
$
143,047
$
91,624
Add:
Preferred stock redemption charge
—
6,412
Preferred dividends
—
2,560
Noncontrolling interest - common units of
the Operating Partnership
16,361
11,084
Noncontrolling interests in property
partnerships
17,549
16,467
Net income
176,957
128,147
Add:
Depreciation and amortization expense
177,624
176,565
Noncontrolling interests in property
partnerships’ share of depreciation and amortization
(17,653
)
(16,457
)
Company’s share of depreciation and
amortization from unconsolidated joint ventures
22,044
18,412
Corporate-related depreciation and
amortization
(404
)
(440
)
Less:
Gains on sale of investment included
within income from unconsolidated joint ventures
—
10,257
Gains on sales of real estate
22,701
—
Noncontrolling interests in property
partnerships
17,549
16,467
Preferred dividends
—
2,560
Preferred stock redemption charge
—
6,412
Funds from operations (FFO) attributable
to the Operating Partnership common unitholders (including Boston
Properties, Inc.)
318,318
270,531
Less:
Noncontrolling interest - common units of
the Operating Partnership’s share of funds from operations
32,182
26,728
Funds from operations attributable to
Boston Properties, Inc. common shareholders
$
286,136
$
243,803
Boston Properties, Inc.’s percentage share
of funds from operations - basic
89.89
%
90.12
%
Weighted average shares outstanding -
basic
156,650
155,928
FFO per share basic
$
1.83
$
1.56
Weighted average shares outstanding -
diluted
157,004
156,099
FFO per share diluted
$
1.82
$
1.56
(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) 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 and real estate-related
depreciation and amortization. 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.
In order to facilitate a clear
understanding of the Company’s operating results, FFO should be
examined in conjunction with net income attributable to Boston
Properties, Inc. common shareholders as presented in the Company’s
consolidated financial statements. FFO should not be considered as
a substitute for net income attributable to Boston Properties, Inc.
common shareholders (determined in accordance with GAAP) or any
other GAAP financial measures and should only be considered
together with and as a supplement to the Company’s financial
information prepared in accordance with GAAP.
BOSTON PROPERTIES,
INC.
PORTFOLIO LEASING
PERCENTAGES
% Leased by Location
March 31, 2022
December 31, 2021
Boston
91.8 %
91.4 %
Los Angeles
88.4 %
88.8 %
New York
87.5 %
87.6 %
San Francisco
87.8 %
87.3 %
Seattle
87.7 %
90.9 %
Washington, DC
88.1 %
87.2 %
Total Portfolio
89.1 %
88.8 %
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220502005825/en/
AT BXP Michael LaBelle
Executive Vice President, Chief Financial Officer and Treasurer
mlabelle@bxp.com Helen Han Vice President, Investor Relations
hhan@bxp.com
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