By Maria Armental
Boston Properties Inc.'s (BXP) second-quarter profit rose on
investment gains and a nearly 5% revenue increase even as more of
its properties went vacant.
Citing its overall results, the Boston-based real-estate
investment trust raised by two cents the low-end of a key
performance metric for REITs. It now projects funds from operations
between $5.37 and $5.45 a share.
For the current quarter, however, it projected FFO of $1.34 to
$1.36 a share, compared with the consensus of $1.38 a share,
according to analysts surveyed by Thomson Reuters.
Boston Properties defines funds from operations as net income
less real-estate-related depreciation and amortization along with
impairment losses or gains or losses associated with disposition
activities.
The REIT, which focuses on office space, has said it expected
results to benefit from the expansion of the life sciences and
technology industry in the Boston area, which accounts for nearly a
third of its square footage.
It gave its iconic John Hancock Tower, on Boston's Back Bay, a
facelift that it said it expects to attract new tenants at a 40%
premium. The company, however, said it expects much of the space to
sit vacant until at least the second half of 2016. The revamped
space includes a second lobby and new address for that portion of
the building. As of June 30, Boston Properties said the percentage
of space leased in the office tower declined to 73.8%, from 77% in
the previous quarter.
Overall, Boston Properties reported a profit of $82.1 million,
or 52 cents a share, compared with $79.1 million, or 50 cents a
share, a year earlier. FFO were $1.36 a share, compared with $1.35
a share a year earlier, above its projection of $1.32 to $1.34 a
share.
Revenue rose nearly 5% to $618.2 million, compared with the
consensus of $614.8 million.
The percentage of leased properties in its portfolio fell to
90.1% from 91.7% a year earlier, with Boston, New York and
Washington, D.C., reporting lower percentages of leased properties.
The percentage of leased property in San Francisco, where a tech
boom is fuelling demand and adding pressure to the city's cap on
office-space development under Proposition M, improved to 89.2%
from 88.3%.
Shares, largely inactive in late trading, closed at $126.32 on
Wednesday, down 1.8% for the year.
Write to Maria Armental at maria.armental@wsj.com
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