Shares of BXP Inc. (BXP) have rallied 30.4% in the past three months, outperforming the industry's 18.5% growth. BXP's recent lease renewals and expansion activities showcase the rising demand for its highly amenitized premium offices. In August 2024, it inked a 378,000-square-foot lease renewal and expansion lease with Bain Capital at 200 Clarendon Street in Boston, MA. In July 2024, Bechtel inked a renewal and expansion lease with BXP for about 289,000 square feet at Reston, VA. Analysts seem bullish abou ...

Shares of BXP Inc. (BXP) have rallied 19.5% in the past three months, outperforming the industry's growth of 15.6%. Last month, BXP reported second-quarter 2024 funds from operations (FFO) per share of $1.77, which beat the Zacks Consensus Estimate of $1.72. Results reflected better-than-anticipated revenues on healthy leasing activity. The company, currently carrying a Zacks Rank #3 (Hold), also raised its guidance for 2024. It now expects FFO per share in the range of $7.09-$7.15, up from the $6.98-$7.10 ...

Table of Contents (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number) Registrant Title of each class Trading Symbol(s) Name of each exchange on which registered BXP, Inc. Common Stock, par value $0.01 per share BXP New York Stock Exchange UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended June 30, 2024 or ☐ ...

Financial Data and Key Metrics - FFO per share for Q2 2024 was $0.06 above the forecast and $0.05 above market consensus, with the midpoint of 2024 FFO per share guidance raised by $0.08 [5] - The company completed 1.3 million square feet of leasing in Q2 2024, a 41% increase compared to Q2 2023, close to the 10-year average leasing volume for the second quarter [5] - Weighted average lease term for leases signed in Q2 2024 remained long at nine years [5] - Portfolio NOI for Q2 2024 was $0.01 ahead of the midpoint of guidance, primarily due to lower operating expenses [31] - Full-year 2024 FFO guidance increased to $7.09 to $7.15 per share, an $0.08 increase from the prior guidance midpoint [33] Business Line Data and Key Metrics - Leasing activity in Q2 2024 included 73 transactions: 37 lease renewals for 830,000 square feet and 36 new leases for 500,000 square feet [15] - 45% of absorption came from growth in the existing client pool [15] - East Coast markets dominated leasing activity, with 445,000 square feet in New York, 343,000 square feet in Boston, and 351,000 square feet in Northern Virginia, accounting for 86% of total activity [16] - West Coast activity was primarily in San Francisco, with 146,000 square feet leased [16] - Starting rents on leases signed in Q2 2024 increased by 8% in Boston, remained flat in New York, decreased by 6% in D.C., and decreased by 7% on the West Coast [17] Market Data and Key Metrics - Premier workplaces, representing the highest quality 6.5% of buildings, continue to outperform the broader market, with direct vacancy at 13% compared to 18.5% for the broader market [8] - Net absorption for premier workplaces was positive 6.9 million square feet over the last three years, compared to negative 22.8 million square feet for the broader market [8] - Asking rents for premier workplaces are 51% higher than the broader market [8] - Office sales volume in Q2 2024 remained muted at $6.9 billion, well below pre-2022 levels [9] Company Strategy and Industry Competition - The company is focused on premier workplaces, leveraging its strong balance sheet and high-quality portfolio to gain market share during a period of market dislocation in the office sector [11] - BXP is actively pursuing acquisitions but has seen limited opportunities in the premier workplace segment [10] - The company is advancing a significant development pipeline, including 10 office, lab, retail, and residential projects totaling 3.1 million square feet and $2.3 billion of investment [11] Management Commentary on Operating Environment and Future Outlook - Management highlighted the positive impact of lower interest rates and stronger corporate earnings growth on BXP's performance [7] - The company expects occupancy to increase over time as leasing volumes continue to exceed current lease expirations [5] - Management noted that corporate earnings growth is driving leasing activity, with S&P 500 earnings growth expected to be around 9% for Q2 2024 [7] Other Important Information - The company released its 2023 Sustainability & Impact Report and was recognized by Time Magazine as one of the world's most sustainable companies, ranking number one in the U.S. among property owners [6] - BXP is in active negotiations for the disposition of four land positions, which could generate approximately $150 million in proceeds, with half potentially realized in 2024 [10] Q&A Session Summary Question: Impact of leasing pace on occupancy growth in 2025 [40] - Management expects occupancy to increase, with potential growth to 88% in 2025, driven by signed leases that have not yet commenced [41][42] Question: Yields and funding for new apartment developments [43] - The company is targeting mid-6% yields for new residential projects and plans to bring in JV partners, similar to the Skymark project in Reston [44][45] Question: Correlation between corporate earnings growth and leasing demand [47] - Management emphasized the strong correlation between S&P 500 earnings growth and BXP's leasing activity, with tech and life science sectors still lagging behind pre-pandemic levels [47][48] Question: Stabilization dates and capitalization interest policy for development projects [50] - Stabilization dates assume 85% occupancy, with leasing expected 12-18 months prior. Capitalization of interest stops 12 months after base building completion [51][52] Question: Potential impact of the upcoming election on the business [55] - Management believes state and local elections have a larger impact on day-to-day operations than federal elections, particularly regarding real estate taxes, entitlements, and local infrastructure [55] Question: CapEx spend and expectations for higher lease commencement [57] - Maintenance CapEx is expected to be $80-100 million for 2024, with repositioning CapEx focused on tenant retention and higher rents, particularly at 200 Clarendon Street [57][58] Question: Timing for tech and life science leasing to return to normal [67] - Management noted that tech companies are no longer downsizing but are cautious about high-value real estate investments. Life science demand is expected to grow, but the timing remains uncertain [67][68][69] Question: Divergence between premium and general market leasing [72] - Premium buildings continue to outperform, with asking rents 51% higher than the broader market. Renewals account for around 60% of leasing activity, with the majority focused on 2025 and 2026 expirations [73][74] Question: Transaction activity in the office market and bid-ask spread [75] - Limited foreclosure activity in premier assets, but increased market testing is occurring. The second half of 2024 will be critical for potential deals as owners seek to transact [75][76] Question: Prospects for net effective rent growth in premier assets [78] - Net effective rents have increased in strong submarkets like Park Avenue in Manhattan and Back Bay in Boston, driven by low vacancy rates and stable concessions [78][79][80] Question: Operating expense growth in the same-store portfolio [82] - Operating expenses were lower than expected, with seasonal increases in utilities and repair/maintenance costs in Q2 and Q3 [82] Question: Leverage trajectory and credit rating concerns [84] - Leverage is temporarily elevated due to development pipeline funding but is expected to moderate as projects stabilize, bringing leverage back to the 6.5x-7.5x range [84][85] Question: Details on lease terminations and timing [87] - Terminations involve tenants downsizing or relocating, with new tenants expected to take over the space in 2025. These transactions are expected to improve long-term occupancy and rents [88][89][90] Question: Same-store NOI headwinds and tailwinds for 2025 [93] - Same-store NOI is expected to improve in 2025 as occupancy growth offsets the impact of lease expirations and rollovers [94]

Core Viewpoint - BXP, Inc. reported second-quarter 2024 funds from operations (FFO) per share of $1.77, exceeding the Zacks Consensus Estimate of $1.72, but reflecting a year-over-year decline of 4.8% [1] Financial Performance - Quarterly revenues from leases reached $790.6 million, marking a 3.8% increase year over year, surpassing the Zacks Consensus Estimate of $781.3 million. Total revenues rose 4.1% from the prior-year quarter to $850.5 million [2] - BXP's rental revenues for the office portfolio were $767.4 million, showing a slight decline year over year. The hotel and residential segment reported $27 million, a 3.1% increase year over year. Consolidated rental revenues (excluding termination income) totaled $794.5 million, down marginally year over year [3] - The company's share of same property net operating income (NOI) on a cash basis was $446.2 million, a decline of 3.2% from the prior-year quarter. EBITDAre (on a cash basis) was $466.2 million, up 3% from $452.5 million as of March 31, 2024 [4] Cost Structure - Quarterly interest expenses increased by 5% year over year to $149.6 million, slightly above the estimated $149 million [5] Portfolio Activity - As of June 30, 2024, BXP's portfolio included 186 properties totaling 53.5 million square feet, with 10 properties under construction or redevelopment. The company executed 73 leases totaling 1.3 million square feet during the second quarter, with a weighted average lease term of nine years [6] - BXP completed the retail redevelopment of 760 Boylston Street in Boston, MA, which is fully leased to DICK'S Sporting Goods. Additionally, in July 2024, BXP partially placed in service Skymark in Reston, VA, a residential property with 508 units [7] Balance Sheet Position - BXP ended the second quarter of 2024 with cash and cash equivalents of $685.4 million, down from $701.7 million as of March 31, 2024. The company's share of net debt to EBITDAre annualized was 7.91, up from 7.81 times as of March 31, 2024 [8] 2024 Outlook - BXP projects FFO per share for the third quarter of 2024 to be in the range of $1.80-$1.82. For the full year 2024, FFO per share is expected to be between $7.09-$7.15, an increase from the previous projection of $6.98-$7.10, and higher than the Zacks Consensus Estimate of $7.04. The outlook for same property NOI on a cash basis is projected to decrease between 3% and 1.5%, with average in-service portfolio occupancy expected to be between 87.00-88.20% [9][10]

For the quarter ended June 2024, Boston Properties (BXP) reported revenue of $790.56 million, up 3.8% over the same period last year. EPS came in at $1.77, compared to $0.66 in the year-ago quarter. The reported revenue represents a surprise of +1.18% over the Zacks Consensus Estimate of $781.32 million. With the consensus EPS estimate being $1.72, the EPS surprise was +2.91%. Since these metrics play a crucial role in driving the top- and bottom-line numbers, comparing them with the year-ago numbers and wh ...

Over the last four quarters, the company has surpassed consensus FFO estimates three times. Boston Properties (BXP) came out with quarterly funds from operations (FFO) of $1.77 per share, beating the Zacks Consensus Estimate of $1.72 per share. This compares to FFO of $1.86 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an FFO surprise of 2.91%. A quarter ago, it was expected that this real estate investment trust would post FFO of $1.73 per share ...

Property and Occupancy - Total in-service properties amount to 176, covering 50,407,904 square feet with an occupancy rate of 87.1% and a leased percentage of 89.1%[1] - As of June 30, 2024, the total square footage of properties is 10,399,609 with an overall occupancy rate of 90.8%[39] - The total number of buildings across all listed properties is 19[39] - The company has a 50% ownership in Dock 72, which has an occupancy rate of 33.4%[39] - The overall occupancy rate for the San Francisco office properties is 84.0%[39] - The company has a total of 29 buildings in the Washington, DC CBD, with an average occupied percentage of 90.9%[48] - The total square footage for the Boston suburban area is 4,677,825, with an average occupied percentage of 76.8%[48] Financial Performance - BXP's share of EBITDA re – cash for Q2 2024 was $466,203, an increase from $452,490 in Q1 2024, representing a growth of approximately 3.9%[13] - Revenue for Q2 2024 was $850,482, an increase from $839,439 in Q1 2024, representing a growth of approximately 1.24%[158] - Total rental revenue for the three months ended June 30, 2024, was $189,389,000, a decrease from the previous period[164] - Net Operating Income (NOI) for the same period was $114,157,000, reflecting a decline compared to prior results[164] - BXP's share of net debt increased slightly to $14,735,679 as of June 30, 2024, compared to $14,689,415 at the end of Q1 2024[13] - The company reported a net income of $46,012,000, with BXP's share of Funds From Operations (FFO) amounting to $52,018,000[26] Debt and Financing - The company has an unsecured credit facility of $2 billion, with a remaining capacity of $1,493,373 as of June 30, 2024[3] - The total outstanding debt to total assets ratio is 47.3%, well below the 60% limit[9] - Interest coverage ratio, calculated as annualized consolidated EBITDA to annualized interest expense, is 3.15, exceeding the 1.50x requirement[9] - The weighted average remaining lease term for top clients is 7.7 years for Salesforce and 12.8 years for Google[2] - The company’s fixed rate debt constitutes 92.20% of total debt, with a weighted average GAAP rate of 4.01%[5] - The unsecured term loan outstanding as of June 30, 2024, is $700,000, representing 71.55% of total debt[4] Rental Obligations and Lease Expirations - The annualized rental obligations per occupied square foot stand at $80.70[1] - The annualized rental obligations per occupied square foot for the total portfolio is $109.85[39] - In 2024, 1,425,834 square feet are subject to expiring leases, with current annualized rental obligations of $86,146,800, averaging $66.79 per square foot[52] - For 2025, 2,739,994 square feet are subject to expiring leases, with annualized rental obligations of $170,192,086, averaging $72.90 per square foot[52] - The company has a total of 13,759,116 square feet subject to expiring leases thereafter, with obligations of $890,223,601, averaging $80.71 per square foot[52] - The total annualized rental obligations for the "Thereafter" period (beyond 2033) is estimated at $347,331,376, covering 5,139,666 square feet[58] Operational Efficiency and Sustainability - The company has achieved a twelfth consecutive GRESB "Green Star" recognition and the highest GRESB 5-star Rating, highlighting its commitment to sustainability[130] - BXP has been recognized as one of the world's most sustainable companies by TIME Magazine, reflecting its focus on responsible growth[130] - The company is actively pursuing new product and technology developments to enhance operational efficiency and market competitiveness[26] - BXP's average economic occupancy is calculated by measuring total possible revenue less vacancy loss, expressed as a percentage[123] - The company emphasizes the importance of NOI – cash, which excludes non-cash rental revenues, to provide a clearer picture of cash generated at the property level[152] Market Position and Future Outlook - The company operates in six dynamic gateway markets: Boston, Los Angeles, New York, San Francisco, Seattle, and Washington, DC[130] - The company anticipates continued growth in rental revenue driven by strategic market expansions and new developments[26] - BXP aims to maintain a strong balance sheet to ensure consistent access to capital for new investments[184] - The company is actively monitoring lease expirations and rental obligations to optimize its portfolio and financial performance[69] - The company plans to continue focusing on market expansion and new product development to enhance future revenue streams[36]

BXP, Inc. (BXP) is slated to report second-quarter 2024 results on Jul 30, after market close. While its quarterly results are likely to reflect year-over-year growth in revenues, funds from operations (FFO) per share may decline. Per a Cushman & Wakefield (CWK) report, although the U.S. economy is now slowing, job growth remains healthy. CWK expects office-using job growth to be moderate for the remainder of the year before picking up in 2025. Nonetheless, the second-quarter national vacancy rate reached a ...

Real estate investment trusts (REITs) represent one of the best ways to get exposure to investing in real estate without having to take on the risks and capital expenditures of purchasing your own property. When buying into a REIT, investors are essentially giving their money as a loan to a capital management firm, which then invests that money into further property as the value of that property grows so two does the dividend yield of the REIT lowering it to provide comfortable returns on the original inves ...