Commenced Development of Two Fully
Pre-Leased Life Sciences Projects Totaling More Than 800,000 Square
Feet in Cambridge, Massachusetts
BXP (NYSE: BXP), the largest publicly traded developer,
owner, and manager of premier workplaces in the United States,
reported results today for the first quarter ended March 31,
2023.
Financial highlights for the first quarter include:
- Revenue increased 6.5% to $803.2 million for the quarter ended
March 31, 2023, as compared to $754.3 million for the quarter ended
March 31, 2022.
- Net income attributable to common shareholders of $77.9
million, or $0.50 per diluted share (EPS), for the quarter ended
March 31, 2023, compared to $143.0 million, or $0.91 per diluted
share, for the quarter ended March 31, 2022. The decrease compared
to Q1 2022 is primarily due to:
- $22.7 million of higher gains on sales recorded in Q1
2022;
- greater depreciation expense of $31.1 million in Q1 2023
primarily due to development activities and asset acquisitions;
and
- higher interest expense of $33.0 million partially offset by
higher contributions from portfolio operations of approximately
$21.7 million in Q1 2023.
- Funds from Operations (FFO) of $272.0 million, or $1.73 per
diluted share, for the quarter ended March 31, 2023, compared to
FFO of $286.1 million, or $1.82 per diluted share, for the quarter
ended March 31, 2022. The decrease from Q1 2022 is primarily due to
higher interest expense of $33.0 million, partially offset by
higher contributions from portfolio operations of approximately
$21.7 million.
- EPS for the first quarter fell short of the mid-point of BXP’s
guidance by $0.03 primarily due to accelerated depreciation
associated with the redevelopment of 300 Binney Street.
- FFO per diluted share exceeded the mid-point of BXP’s guidance
by $0.06 due to portfolio outperformance primarily as a result of
lower-than-projected operating expenses.
BXP also provided updated guidance for second quarter 2023 EPS
of $0.59 - $0.61 and FFO of $1.79 - $1.81 per diluted share, and
full year 2023 EPS of $2.30 - $2.36 and FFO of $7.14 - $7.20 per
diluted share.
See “EPS and FFO per Share Guidance” below.
First quarter and recent business highlights include:
- Executed approximately 660,000 square feet of leases with a
weighted-average lease term of 7.7 years.
- Further expanded BXP’s life sciences portfolio in Cambridge,
Massachusetts, the largest and most important cluster of life
sciences companies and research space in the U.S., by commencing
the development/redevelopment of two fully pre-leased projects:
- 290 Binney Street, an approximately 566,000 square foot
laboratory/life sciences property, which is 100% pre-leased to
AstraZeneca for a lease term of 15 years.
- 300 Binney Street, an approximately 195,000 net rentable square
foot premier workplace that is being redeveloped into approximately
236,000 net rentable square feet of laboratory/life sciences space,
which is 100% pre-leased to the Broad Institute for a lease term of
15 years.
- Completed the acquisition of a 50% interest in a joint venture
that owns 13100 and 13150 Worldgate Drive located in Herndon,
Virginia for a gross purchase price of approximately $17.0 million.
The acquisition was completed with available cash. The joint
venture intends to redevelop the property for residential use.
There can be no assurance that the joint venture will commence the
development as currently contemplated or at all.
- On January 4, 2023, BPLP closed on a $1.2 billion unsecured
term loan facility that matures in May 2024, with one, twelve-month
extension option subject to the satisfaction of customary
conditions. As of January 4, 2023, the term loan bore interest at a
variable rate equal to adjusted Term SOFR plus 0.85% per annum. A
portion of the proceeds were used to repay in full BPLP’s $730.0
million term loan that was scheduled to mature in May 2023,
resulting in incremental net proceeds of approximately $464.0
million.
- On April 21, 2023, a joint venture in which BXP has a 50%
interest exercised an option to extend by one year the maturity
date of its $252.6 million construction loan collateralized by its
7750 Wisconsin Avenue property. The completed 734,000 square foot
build-to-suit, premier workplace is located in Bethesda, Maryland
and is 100% leased to an affiliate of Marriott International, Inc.
Effective June 1, 2023, the financing will bear interest at a
variable rate equal to Term SOFR plus 1.35% per annum and now
matures on April 26, 2024, with a one-year extension option,
subject to certain conditions.
- Continued BXP’s leadership and ongoing commitment to ESG and
sustainability performance:
- named to Newsweek’s List of America’s Most Responsible
Companies in 2023 for the third consecutive year, ranking first in
the Real Estate & Housing category
- named to the Dow Jones Sustainability Index (DJSI) North
America for the second consecutive year, one of eight real estate
companies that qualified and the only office REIT in the index
- received the 2023 ENERGY STAR Partner of the Year—Sustained
Excellence Award from the U.S. Environmental Protection Agency and
the U.S. Department of Energy for the third consecutive year
- published, In April 2023, BXP’s 2022 ESG Report, which
highlights that, among other things, BXP achieved its energy and
water reduction targets in 2022 and remains on track to achieve
carbon-neutral operations by 2025. In conjunction with the
publication, BXP announced its second annual ESG Investor Update
Webcast to be held on May 31, 2023.
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, 2023. 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 2023 and full year 2023
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, interest rates, the timing of the lease-up of available
space, the timing of development cost outlays and development
deliveries, and the earnings impact of the events referenced in
this release and those referenced during the related conference
call. The estimates do not include (1) possible future gains or
losses or the impact on operating results from other possible
future property acquisitions or dispositions, (2) the impacts of
any other capital markets activity, (3) future write-offs or
reinstatements of accounts receivable and accrued rent balances, or
(4) 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 2023
Full Year 2023
Low
High
Low
High
Projected EPS (diluted)
$
0.59
$
0.61
$
2.30
$
2.36
Add:
Projected Company share of real estate
depreciation and amortization
1.20
1.20
4.84
4.84
Projected FFO per share (diluted)
$
1.79
$
1.81
$
7.14
$
7.20
BXP will host a conference call on Wednesday, April 26, 2023 at
10:00 AM Eastern Time, open to the general public, to discuss the
first quarter 2023 results, provide a business update, and discuss
other business matters that may be of interest to investors.
Participants who would like to join the call and ask a question may
register at
https://register.vevent.com/register/BI9b503bc560604b2a83e1db1271fc2c2d
to receive the dial-in numbers and unique PIN to access the call.
There will also be a live audio, listen-only webcast of the call,
which may be accessed in the Investors section of BXP’s website at
https://investors.bxp.com/events-webcasts. Shortly after the call,
a replay of the call will be available on BXP’s website at
https://investors.bxp.com/events-webcasts for up to twelve months
following the call.
Additionally, a copy of BXP’s first quarter 2023 “Supplemental
Operating and Financial Data” and this press release are available
in the Investors section of BXP’s website at investors.bxp.com.
BXP (NYSE: BXP) is the largest publicly traded developer, owner,
and manager of premier workplaces in the United States,
concentrated in six dynamic gateway markets - Boston, Los Angeles,
New York, San Francisco, Seattle, and Washington, DC. BXP has
delivered places that power progress for our clients and
communities for more than 50 years. BXP is a fully integrated real
estate company, organized as a real estate investment trust (REIT).
Including properties owned by unconsolidated joint ventures, BXP’s
portfolio totals 54.5 million square feet and 192 properties,
including 15 properties under construction/redevelopment. For more
information about BXP, please visit our website 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 BXP’s 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 statements. These
factors include, without limitation, the risks and uncertainties
related to the impact of changes in general economic and capital
market conditions, including continued inflation, increasing
interest rates, supply chain disruptions, labor market disruptions,
dislocation and volatility in capital markets, potential
longer-term changes in consumer and client behavior resulting from
the severity and duration of any downturn in the U.S. or global
economy, general risks affecting the real estate industry
(including, without limitation, the inability to enter into or
renew leases on favorable terms, changes in client preferences and
space utilization, dependence on clients’ financial condition, and
competition from other developers, owners and operators of real
estate), the impact of geopolitical conflicts, including the
ongoing war in Ukraine, the immediate and long-term impact of the
outbreak of a highly infectious or contagious disease, such as the
COVID-19 global pandemic on our and our clients’ financial
condition, results of operations and cash flows (including the
impact of actions taken to contain the outbreak or mitigate its
impact, the direct and indirect economic effects of the outbreak
and containment measures on our clients, and the ability of our
clients to successfully operate their businesses), 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 BXP’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 BXP’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. BXP 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 otherwise
required by law.
Financial tables follow.
BOSTON PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS (Unaudited)
March 31, 2023
December 31, 2022
(in thousands, except for
share and par value amounts)
ASSETS
Real estate, at cost
$
24,314,813
$
24,261,588
Construction in progress
618,770
406,574
Land held for future development
626,137
721,501
Right of use assets - finance leases
237,503
237,510
Right of use assets - operating leases
166,699
167,351
Less: accumulated depreciation
(6,424,547
)
(6,298,082
)
Total real estate
19,539,375
19,496,442
Cash and cash equivalents
918,952
690,333
Cash held in escrows
45,330
46,479
Investments in securities
32,099
32,277
Tenant and other receivables, net
85,603
81,389
Related party note receivable, net
78,544
78,576
Sales-type lease receivable, net
13,028
12,811
Accrued rental income, net
1,297,767
1,276,580
Deferred charges, net
720,174
733,282
Prepaid expenses and other assets
141,933
43,589
Investments in unconsolidated joint
ventures
1,752,617
1,715,911
Total assets
$
24,625,422
$
24,207,669
LIABILITIES AND EQUITY
Liabilities:
Mortgage notes payable, net
$
3,273,553
$
3,272,368
Unsecured senior notes, net
10,240,967
10,237,968
Unsecured line of credit
—
—
Unsecured term loan, net
1,194,916
730,000
Lease liabilities - finance leases
250,567
249,335
Lease liabilities - operating leases
204,435
204,686
Accounts payable and accrued expenses
397,798
417,545
Dividends and distributions payable
171,427
170,643
Accrued interest payable
114,400
103,774
Other liabilities
465,276
450,918
Total liabilities
16,313,339
15,837,237
Commitments and contingencies
—
—
Redeemable deferred stock units
5,599
6,613
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, 156,908,693 and 156,836,767 issued and
156,829,793 and 156,757,867 outstanding at March 31, 2023 and
December 31, 2022, respectively
1,568
1,568
Additional paid-in capital
6,549,314
6,539,147
Dividends in excess of earnings
(467,159
)
(391,356
)
Treasury common stock at cost, 78,900
shares at March 31, 2023 and December 31, 2022
(2,722
)
(2,722
)
Accumulated other comprehensive loss
(18,214
)
(13,718
)
Total stockholders’ equity attributable to
Boston Properties, Inc.
6,062,787
6,132,919
Noncontrolling interests:
Common units of the Operating
Partnership
691,627
683,583
Property partnerships
1,552,070
1,547,317
Total equity
8,306,484
8,363,819
Total liabilities and equity
$
24,625,422
$
24,207,669
BOSTON PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three months ended March
31,
2023
2022
(in thousands, except for per
share amounts)
Revenue
Lease
$
756,875
$
718,120
Parking and other
24,009
21,734
Hotel revenue
8,101
4,557
Development and management services
8,980
5,831
Direct reimbursements of payroll and
related costs from management services contracts
5,235
4,065
Total revenue
803,200
754,307
Expenses
Operating
Rental
291,308
270,255
Hotel
6,671
4,840
General and administrative
55,802
43,194
Payroll and related costs from management
services contracts
5,235
4,065
Transaction costs
911
—
Depreciation and amortization
208,734
177,624
Total expenses
568,661
499,978
Other income (expense)
Income (loss) from unconsolidated joint
ventures
(7,569
)
2,189
Gains on sales of real estate
—
22,701
Interest and other income (loss)
10,941
1,228
Gains (losses) from investments in
securities
1,665
(2,262
)
Unrealized gain (loss) on non-real estate
investment
259
—
Interest expense
(134,207
)
(101,228
)
Net income
105,628
176,957
Net income attributable to noncontrolling
interests
Noncontrolling interests in property
partnerships
(18,660
)
(17,549
)
Noncontrolling interest—common units of
the Operating Partnership
(9,078
)
(16,361
)
Net income attributable to Boston
Properties, Inc.
$
77,890
$
143,047
Basic earnings per common share
attributable to Boston Properties, Inc.
Net income
$
0.50
$
0.91
Weighted average number of common shares
outstanding
156,803
156,650
Diluted earnings per common share
attributable to Boston Properties, Inc.
Net income
$
0.50
$
0.91
Weighted average number of common and
common equivalent shares outstanding
157,043
157,004
BOSTON PROPERTIES, INC.
FUNDS FROM OPERATIONS (1) (Unaudited)
Three months ended March
31,
2023
2022
(in thousands, except for per
share amounts)
Net income attributable to Boston
Properties, Inc.
$
77,890
$
143,047
Add:
Noncontrolling interest - common units of
the Operating Partnership
9,078
16,361
Noncontrolling interests in property
partnerships
18,660
17,549
Net income
105,628
176,957
Add:
Depreciation and amortization expense
208,734
177,624
Noncontrolling interests in property
partnerships’ share of depreciation and amortization
(17,711
)
(17,653
)
Company’s share of depreciation and
amortization from unconsolidated joint ventures
25,645
22,044
Corporate-related depreciation and
amortization
(469
)
(404
)
Less:
Gains on sales of real estate
—
22,701
Unrealized gain on non-real estate
investment
259
—
Noncontrolling interests in property
partnerships
18,660
17,549
Funds from operations (FFO) attributable
to the Operating Partnership (including Boston Properties,
Inc.)
302,908
318,318
Less:
Noncontrolling interest - common units of
the Operating Partnership’s share of funds from operations
30,957
32,182
Funds from operations attributable to
Boston Properties, Inc.
$
271,951
$
286,136
Boston Properties, Inc.’s percentage share
of funds from operations - basic
89.78
%
89.89
%
Weighted average shares outstanding -
basic
156,803
156,650
FFO per share basic
$
1.73
$
1.83
Weighted average shares outstanding -
diluted
157,043
157,004
FFO per share diluted
$
1.73
$
1.82
(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.
(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 calculation 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. 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. (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
% Occupied by Location
(1)
% Leased by Location
(2)
March 31, 2023
December 31, 2022
March 31, 2023
December 31, 2022
Boston
90.7 %
90.2 %
92.5 %
92.7 %
Los Angeles
86.0 %
88.3 %
86.2 %
88.6 %
New York
87.2 %
86.8 %
90.7 %
90.9 %
San Francisco
88.4 %
88.5 %
89.3 %
88.8 %
Seattle
87.9 %
88.3 %
90.5 %
90.9 %
Washington, DC
88.1 %
88.7 %
91.5 %
93.0 %
Total Portfolio
88.6 %
88.6 %
91.0 %
91.5 %
(1)
Represents signed leases for
which revenue recognition has commenced in accordance with
GAAP.
(2)
Represents signed leases for
which revenue recognition has commenced in accordance with GAAP and
signed leases for vacant space with future commencement dates.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230425006043/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
BXP (NYSE:BXP)
Historical Stock Chart
From Jun 2024 to Jul 2024
BXP (NYSE:BXP)
Historical Stock Chart
From Jul 2023 to Jul 2024