Reports diluted FFO per share of
$1.36Reports diluted EPS of $0.52
Boston Properties, Inc. (NYSE: BXP), a real estate
investment trust, reported results today for the second quarter
ended June 30, 2015.
Funds from Operations (FFO) for the quarter ended June 30, 2015
were $208.7 million, or $1.36 per share basic and $1.36 per share
diluted. This compares to FFO for the quarter ended June 30, 2014
of $207.0 million, or $1.35 per share basic and $1.35 per share
diluted. The weighted average number of basic and diluted shares
outstanding totaled approximately 153,450,000 and 153,815,000,
respectively, for the quarter ended June 30, 2015 and 153,078,000
and 153,623,000, respectively, for the quarter ended June 30,
2014.
The Company’s reported FFO of $1.36 per share diluted was
greater than the guidance previously provided of $1.32-$1.34 per
share diluted primarily due to better than expected portfolio
operations of $0.02 per share and lease termination income of $0.01
per share.
Net income available to common shareholders was $79.5 million
for the quarter ended June 30, 2015, compared to $76.5 million for
the quarter ended June 30, 2014. Net income available to common
shareholders per share (EPS) for the quarter ended June 30, 2015
was $0.52 basic and $0.52 on a diluted basis. This compares to EPS
for the quarter ended June 30, 2014 of $0.50 basic and $0.50 on a
diluted basis.
The reported results are unaudited and there can be no assurance
that the results will not vary from the final unaudited information
for the quarter ended June 30, 2015. In the opinion of management,
all adjustments considered necessary for a fair presentation of
these reported results have been made.
As of June 30, 2015, the Company’s portfolio consisted of 170
properties aggregating approximately 46.3 million square feet,
including 13 properties under construction/redevelopment totaling
4.2 million square feet. In addition, the Company has structured
parking for vehicles containing approximately 14.7 million square
feet. The overall percentage of leased space for the 154 properties
in service (excluding the Company’s two residential properties and
hotel) as of June 30, 2015 was 91.1%.
Significant events during the second quarter included:
- During the three months ended June 30,
2015, the Company entered into forward-starting interest rate swap
contracts which fix the ten-year swap rate on notional amounts
aggregating $75.0 million. The Company has now entered into
forward-starting interest rate swap contracts which fix the
ten-year swap rate at a weighted-average rate of approximately
2.458% per annum on notional amounts aggregating $325.0 million.
The interest rate swap contracts were entered into in advance of a
financing with a target commencement date in September 2016 and
maturity in September 2026.
In addition, the Company’s 767 Fifth Partners LLC consolidated
entity (the entity in which the Company has a 60% interest and that
owns the General Motors Building at 767 Fifth Avenue in New York
City) entered into forward-starting interest rate swap contracts,
including contracts entered into subsequent to June 30, 2015, which
fix the ten-year swap rate at a weighted-average rate of
approximately 2.809% per annum on notional amounts aggregating
$225.0 million. These interest rate swap contracts were entered
into in advance of a financing with a target commencement date in
June 2017 and maturity in June 2027.
- On May 1, 2015, the Company commenced
the redevelopment of Reservoir Place North, a Class A office
project with approximately 73,000 net rentable square feet located
in Waltham, Massachusetts.
- On May 8, 2015, the Company entered
into a joint venture with an affiliate of 1265 Main Street LLC to
redevelop an existing building into a Class A office building
totaling approximately 115,000 net rentable square feet at 1265
Main Street in Waltham, Massachusetts. The joint venture partner
contributed real estate and improvements, with an aggregate fair
value of approximately $9.4 million, for its initial 50% interest
in the joint venture. For its initial 50% interest, the Company
will contribute cash totaling approximately $9.4 million as the
joint venture incurs costs. The joint venture has entered into a
fifteen-year lease with a tenant to occupy 100% of the
building.
- On June 25, 2015, the Company’s
Operating Partnership redeemed the remaining 12,667 Series Four
Preferred Units for cash totaling approximately $0.6 million.
- On June 26, 2015, the Company entered
into a joint venture with Rudin Development to develop Dock72, an
office building totaling approximately 670,000 net rentable square
feet located at the Brooklyn Navy Yard in Brooklyn, New York. Each
partner contributed cash totaling approximately $9.1 million for
their initial 50% interest in the joint venture. The joint venture
entered into a 96-year ground lease with the Brooklyn Navy Yard
Development Corporation, comprised of an initial term of 49 years,
which may be extended by the joint venture to 2111, subject to
certain conditions. The joint venture also entered into a 20-year
lease with WeWork to occupy approximately 222,000 net rentable
square feet at the building and be a co-developer of the
project.
Transactions completed subsequent to June 30, 2015:
- On July 29, 2015, a consolidated entity
in which the Company has a 50% interest executed a binding
agreement for the sale of 505 9th Street, N.W. located in
Washington, DC, for approximately $318.0 million, including the
assumption by the buyer of approximately $117.0 million of mortgage
indebtedness. 505 9th Street, N.W. is an approximately 322,000 net
rentable square foot Class A office building. The sale is subject
to the satisfaction of customary closing conditions and, although
there can be no assurance that the sale will be consummated on the
terms currently contemplated or at all, it is expected to close by
the end of the third quarter of 2015.
EPS and FFO per Share Guidance:
The Company’s guidance for the third quarter and full year 2015
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 guidance for FFO per
share (diluted) for full year 2015 to $5.37 - $5.45 per share from
$5.35 - $5.45 per share. The updated guidance reflects, when
compared to the Company’s prior guidance, an increase from the
second quarter 2015 results of $0.03 per share offset by an
increase in projected operating expenses for the remainder of 2015
of $0.01 per share and a decrease in FFO of $0.01 per share from
the projected sale of 505 9th Street in Washington, DC.
Third Quarter 2015
Full Year 2015
Low - High Low - High Projected EPS (diluted) $ 1.13 - $
1.15 $ 3.13 - $ 3.21 Add: Projected Company Share of Real
Estate Depreciation and Amortization
0.82
-
0.82
3.41
-
3.41
Less: Projected Company Share of Gains on Sales of Real Estate
0.61
-
0.61
1.17
-
1.17
Projected FFO per Share (diluted)
$
1.34
-
$
1.36
$
5.37
-
$
5.45
Boston Properties will host a conference call on Thursday, July
30, 2015 at 10:00 AM Eastern Time, open to the general public, to
discuss the second quarter 2015 results, the 2015 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) 796-3880 (Domestic) or (281) 913-8731
(International) and entering the passcode 56899689. A replay of the
conference call will be available through August 13, 2015, by
dialing (855) 859-2056 (Domestic) or (404) 537-3406 (International)
and entering the passcode 56899689. 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 2015
“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 Class A office space, one hotel, two residential
properties and five retail properties. The Company is one of the
largest owners and developers of Class A office properties in the
United States, concentrated in four markets – Boston, 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 satisfy the closing
conditions to the pending transactions described above, 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 2015, whether as a result of
new information, future events or otherwise.
BOSTON PROPERTIES, INC.CONSOLIDATED BALANCE
SHEETS June 30,2015
December 31,2014 (in thousands, except for
share amounts)(unaudited) ASSETS
Real estate $ 18,207,934 $ 18,231,978 Construction in
progress 880,996 736,311 Land held for future development 277,327
268,114
Less: accumulated depreciation
(3,753,926 ) (3,547,659 )
Total real estate
15,612,331 15,688,744 Cash and cash equivalents 1,342,751
1,763,079 Cash held in escrows 252,558 487,321 Investments in
securities 20,953 19,459 Tenant and other receivables, net of
allowance for doubtful accounts of $1,061 and $1,142, respectively
55,183 46,595 Accrued rental income, net of allowance of $1,219 and
$1,499, respectively 730,797 691,999 Deferred charges, net 771,419
831,744 Prepaid expenses and other assets 117,993 164,432
Investments in unconsolidated joint ventures 209,974
193,394
Total assets
$ 19,113,959 $ 19,886,767
LIABILITIES
AND EQUITY Liabilities:
Mortgage notes payable
$ 4,269,808 $ 4,309,484
Unsecured senior notes, net of
discount
5,288,503 5,287,704
Unsecured exchangeable senior notes, net
of discount
- -
Unsecured line of credit
- -
Mezzanine notes payable
309,148 309,796
Outside members' notes payable
180,000 180,000
Accounts payable and accrued expenses
231,900 243,263
Dividends and distributions payable
112,892 882,472
Accrued interest payable
178,548 163,532
Other liabilities
448,480 502,255
Total liabilities
11,019,279 11,878,506
Commitments and contingencies - -
Noncontrolling interest:
Redeemable preferred units of the
Operating Partnership
- 633
Redeemable interest in property
partnership
106,233 104,692
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 atJune 30, 2015 and December 31, 2014, respectively
200,000
200,000
Common stock, $0.01 par value, 250,000,000
shares authorized,153,552,831 and 153,192,845 shares issued and
153,473,931and 153,113,945 shares outstanding atJune 30, 2015 and
December 31, 2014, respectively
1,535 1,531
Additional paid-in capital
6,293,556 6,270,257
Dividends in excess of earnings
(711,239 ) (762,464 )
Treasury common stock, at cost
(2,722 ) (2,722 )
Accumulated other comprehensive income
(loss)
1,848 (9,304 )
Total stockholders' equity attributable to
Boston Properties, Inc.
5,782,978 5,697,298
Noncontrolling interests:
Common units of the Operating
Partnership
614,988 603,171
Property partnerships
1,590,481 1,602,467
Total equity
7,988,447 7,902,936
Total liabilities and equity
$ 19,113,959 $ 19,886,767
BOSTON
PROPERTIES, INC.CONSOLIDATED STATEMENTS OF
OPERATIONS(Unaudited)
Three months endedJune 30, Six months
endedJune 30,
2015
2014
2015
2014
(in thousands, except for per share
amounts)
Revenue Rental Base rent $ 486,609 $ 463,239 $ 977,291 $ 918,257
Recoveries from tenants 86,795 81,382 175,388 163,316 Parking and
other 26,552 26,300 51,340
50,633 Total rental revenue 599,956 570,921
1,204,019 1,132,206 Hotel revenue 13,403 12,367 22,488 20,560
Development and management services 4,862
6,506 10,190 11,722 Total
revenue 618,221 589,794
1,236,697 1,164,488 Expenses Operating
Rental 214,464 202,646 435,814 409,034 Hotel 8,495 7,315 16,071
14,112 General and administrative 22,284 23,271 51,075 53,176
Transaction costs 208 661 535 1,098 Depreciation and amortization
167,844 154,628 322,067
308,898 Total expenses 413,295
388,521 825,562 786,318
Operating income 204,926 201,273 411,135 378,170 Other income
(expense) Income from unconsolidated joint ventures 3,078 2,834
17,912 5,650 Interest and other income 1,293 2,109 2,700 3,420
Gains (losses) from investments in securities (24 ) 662 369 948
Interest expense (108,534 ) (110,977 )
(217,291 ) (224,531 ) Income before gains on sales of real
estate 100,739 95,901 214,825 163,657 Gains on sales of real estate
- - 95,084 -
Net income 100,739 95,901 309,909 163,657 Net income
attributable to noncontrolling interests Noncontrolling interests
in property partnerships (9,264 ) (7,553 ) (24,472 ) (11,907 )
Noncontrolling interest - redeemable
preferred units of theOperating Partnership
(3 ) (320 ) (6 ) (939 )
Noncontrolling interest - common units of
the OperatingPartnership
(9,394 ) (8,883 ) (29,530 ) (15,010 )
Net income attributable to Boston Properties, Inc. 82,078 79,145
255,901 135,801 Preferred dividends (2,618 ) (2,618 ) (5,207 )
(5,207 ) Net income attributable to Boston Properties, Inc. common
shareholders $ 79,460 $ 76,527
$ 250,694 $ 130,594 Basic earnings per
common share attributable to Boston Properties, Inc. common
shareholders: Net income $ 0.52 $ 0.50 $ 1.63
$ 0.85 Weighted average number of common shares
outstanding 153,450 153,078
153,341 153,054 Diluted earnings per
common share attributable to Boston Properties, Inc. common
shareholders: Net income $ 0.52 $ 0.50 $ 1.63
$ 0.85
Weighted average number of common and
commonequivalent shares outstanding
153,815 153,238 153,845
153,203
BOSTON PROPERTIES, INC.FUNDS
FROM OPERATIONS (1)(Unaudited)
Three months endedJune 30, Six
months endedJune 30,
2015
2014
2015
2014
(in thousands, except for per share amounts)
Net income attributable to Boston
Properties, Inc. commonshareholders
$ 79,460 $ 76,527 $ 250,694 $ 130,594 Add: Preferred
dividends 2,618 2,618 5,207 5,207
Noncontrolling interest - common units of
the OperatingPartnership
9,394 8,883 29,530 15,010
Noncontrolling interest - redeemable
preferred units ofthe Operating Partnership
3 320 6 939 Noncontrolling interests in property partnerships 9,264
7,553 24,472 11,907 Less: Gains on sales of real estate -
- 95,084 -
Income before gains on sales of real estate 100,739 95,901 214,825
163,657 Add: Real estate depreciation and amortization (2)
171,384 159,272 320,138 317,786 Less:
Noncontrolling interests in property
partnerships' share offunds from operations
36,699 21,825 73,214 40,848
Noncontrolling interest - redeemable
preferred units ofthe Operating Partnership
3 320 6 939 Preferred dividends 2,618 2,618
5,207 5,207
Funds from operations (FFO) attributable
to the OperatingPartnership common unitholders(including Boston
Properties, Inc.)
232,803 230,410 456,536 434,449 Less:
Noncontrolling interest - common units of
the OperatingPartnership's share of funds from operations
24,072 23,400 47,423
43,566
Funds from operations attributable to
Boston Properties, Inc.common shareholders
$ 208,731 $ 207,010 $ 409,113 $ 390,883
Boston Properties, Inc.'s percentage share
of funds fromoperations - basic
89.66 % 89.84 % 89.61 % 89.97 %
Weighted average shares outstanding - basic 153,450
153,078 153,341 153,054
FFO per share basic $ 1.36 $ 1.35 $ 2.67
$ 2.55 Weighted average shares outstanding -
diluted 153,815 153,623 153,845
153,831 FFO per share diluted $ 1.36
$ 1.35 $ 2.66 $ 2.55
(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 of consolidated real estate, impairment losses on
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 after adjustment for unconsolidated partnerships
and joint ventures. FFO is a non-GAAP financial measure. The use of
FFO, combined with the required primary GAAP presentations, has
been fundamentally beneficial in improving the understanding of
operating results of REITs among the investing public and making
comparisons of REIT operating results more meaningful. Management
generally considers FFO to be a useful measure for reviewing our
comparative operating and financial performance 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 vary
among owners of identical assets in similar condition based on
historical cost accounting and useful life estimates), FFO can help
one compare the operating performance of a company's real estate
between periods or as compared to different 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 an
alternative to net income attributable to Boston Properties, Inc.
common shareholders (determined in accordance with GAAP) as an
indication of our performance. 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 further
understand our performance, FFO should be compared with our
reported net income attributable to Boston Properties, Inc. and
considered in addition to 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 $167,844, $154,628, $322,067 and $308,898 and our
share of unconsolidated joint venture real estate depreciation and
amortization of $3,886, $4,986, $(1,246) and $9,570, less
corporate-related depreciation and amortization of $346, $342, $683
and $682 for the three and six months ended June 30, 2015 and 2014,
respectively.
BOSTON PROPERTIES, INC.PORTFOLIO LEASING
PERCENTAGES % Leased by
Location June 30, 2015 December 31, 2014 Boston
90.6% 91.4% New York 90.5% 90.9% San Francisco 89.2% 88.3%
Washington, DC 93.6% 94.8% Total Portfolio 91.1% 91.7%
% Leased by Type June 30, 2015
December 31, 2014 Class A Office Portfolio 91.4% 91.8%
Office/Technical Portfolio 84.7% 87.7% Total Portfolio 91.1% 91.7%
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150729006827/en/
Boston Properties, Inc.Michael LaBelle,
617-236-3352Senior Vice President, Chief Financial OfficerorArista
Joyner, 617-236-3343Investor Relations Manager
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