BXP's Q2 FFO Outpaces Estimates, Lease Revenues Rise Y/Y

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]