It has been about a month since the last earnings report for Boston Properties (BXP). Shares have added about 1.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Boston Properties due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
BXP Q4 FFO Meets Estimates, Revenues Increase Y/Y
BXP reported a fourth-quarter 2024 FFO per share of $1.79, in line with the Zacks Consensus Estimate. However, the reported figure declined 1.6% year over year.
BXP’s quarterly results reflected better-than-anticipated revenues on healthy leasing activity. However, higher interest expenses during the quarter marred its year-over-year FFO per share growth. BXP also issued its guidance for 2025 FFO per share.
Quarterly lease revenues were $798.2 million, up 3.8% year over year. The Zacks Consensus Estimate was pegged at $795.3 million. Total revenues increased 3.6% from the prior-year quarter to $858.6 million.
For 2024, BXP reported an FFO per share of $7.10, which met the Zacks Consensus Estimate. The figure compared unfavorably with the prior year’s $7.28. Lease revenues of $3.18 billion increased 4% year over year.
Quarter in Detail
BXP’s rental revenues (excluding termination income) for the office portfolio came in at $777.4 million, which rose 0.9% year over year. For the hotel & residential segment, the metric aggregated $25.6 million, indicating a jump of 8.5% year over year. On a consolidated basis, BXP’s rental revenues (excluding termination income) came in at $803 million, up 1.2% year over year.
BXP’s share of the same property NOI on a cash basis (excluding termination income) totaled $447.2 million, which increased 0.9% from the prior-year quarter.
Its share of EBITDAre (on a cash basis), as of Dec. 31, 2024, was $476.4 million, up 1.4% from $469.8 million as of Sept. 30, 2024.
BXP’s in-service properties occupancy increased 50 basis points sequentially to 87.5%. We estimated the metric to be 87.3%.
BXP’s quarterly interest expenses were up 9.9% year over year to $170.4 million.
Portfolio Activity
As of Dec. 31, 2024, BXP’s portfolio comprised 185 properties encompassing 53.3 million square feet of space. This included seven properties under construction/redevelopment.
During the fourth quarter, the company executed 83 leases spanning more than 2.3 million square feet, with a weighted average lease term of 10.3 years.
In December, BXP acquired 725 12th Street property encompassing 300,000 square feet of space in Washington, DC, for a gross purchase price of $34 million. The company plans to undertake the demolition and redevelopment of the property, transforming it into a premier workplace of approximately 320,000 square feet.
Balance Sheet Position
BXP exited the fourth quarter of 2024 with cash and cash equivalents of $1.25 billion, down from $1.42 billion as of Sept. 30, 2024.
BXP’s share of net debt to EBITDAre annualized was 7.65 as of Dec. 31, 2024, up from 7.59 times as of Sept. 30, 2024.
2025 Guidance by BXP
BXP projects FFO per share for the first quarter of 2025 to be in the range of $1.63-$1.65. For 2025, FFO per share is expected in the band of $6.77-$6.95.
BXP estimates the change in its share of the same-property NOI on a cash basis (excluding termination income) to be within 1.50% for 2025. The average in-service portfolio occupancy is expected in the band of 86.5-88%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
Currently, Boston Properties has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Boston Properties has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Boston Properties is part of the Zacks REIT and Equity Trust - Other industry. Over the past month, Alexandria Real Estate Equities (ARE), a stock from the same industry, has gained 3.4%. The company reported its results for the quarter ended December 2024 more than a month ago.
Alexandria Real Estate Equities reported revenues of $788.95 million in the last reported quarter, representing a year-over-year change of +4.2%. EPS of -$0.38 for the same period compares with $2.28 a year ago.
Alexandria Real Estate Equities is expected to post earnings of $2.27 per share for the current quarter, representing a year-over-year change of -3.4%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.3%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Alexandria Real Estate Equities. Also, the stock has a VGM Score of F.
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