Boston Properties Announces First Quarter 2017 Results
Net income attributable to common shareholders was
Funds from Operations (FFO) for the quarter ended March 31, 2017 were
The Company’s reported FFO of
The reported results are unaudited and there can be no assurance that these reported results will not vary from the final information for the quarter ended March 31, 2017. In the opinion of management, all adjustments considered necessary for a fair presentation of these reported results have been made.
As of March 31, 2017, the Company’s portfolio consisted of 174 properties aggregating approximately 47.7 million square feet, including eight properties under construction/redevelopment totaling approximately 4.0 million square feet. The overall percentage of leased space for the 163 properties in service (excluding the Company’s two residential properties and hotel) as of March 31, 2017 was 90.4%.
Transactions completed subsequent to March 31, 2017:
-
On
April 19, 2017 , the Company completed the sale of a parcel of land at30 Shattuck Road located inAndover, Massachusetts for a gross sale price of approximately$5.0 million . -
On
April 21, 2017 , the Company exercised its option to ground lease, with the future right to purchase, real property adjacent to the MacArthur BART station located inOakland, California , that could support the development of a 402-unit residential building and supporting retail space. -
On April 24, 2017, the Company's
Operating Partnership amended and restated its revolving credit agreement (as amended and restated, the “2017 Credit Facility”). Among other things, the amendment and restatement (1) increased the total commitment of the revolving line of credit (the “Revolving Facility”) from$1.0 billion to $1.5 billion , (2) extended the maturity date from July 26, 2018 toApril 24, 2022 , (3) reduced the per annum variable interest rates, and (4) added a$500.0 million delayed draw term loan facility (the “Delayed Draw Facility”) that permits the Company'sOperating Partnership to borrow until the first anniversary of the closing date. Based on the Company’sOperating Partnership's current credit rating, (1) the applicable Eurocurrency margins for the Revolving Facility and Delayed Draw Facility are 87.5 basis points and 95 basis points, respectively and (2) the facility fee on the Revolving Facility commitment is 0.15%. The Delayed Draw Facility has a fee on unused commitments equal to 0.15% per annum. For additional detail on the terms and conditions of the 2017 Credit Facility, refer to the Company's Form 8-K filed onApril 25, 2017 . -
On
April 24, 2017 , the Company's consolidated entity in which it has a 60% interest and that owns767 Fifth Avenue (theGeneral Motors Building ) located inNew York City entered into an interest rate lock and commitment agreement with a group of lenders for a fixed interest rate of 3.43% per annum on a ten-year financing totaling$2.3 billion . The Company expects to close on the financing by the end ofJune 2017 , although there can be no assurance that the financing will be consummated on the terms currently contemplated or at all. In conjunction with the interest rate lock and commitment agreement, the consolidated entity terminated its forward-starting interest rate swap contracts with notional amounts aggregating$450.0 million and will pay approximately$14.4 million , which amount will increase the Company’s interest expense over the ten-year term of the financing, resulting in an estimated effective interest rate of approximately 3.65% per annum, including the estimated amortization of financing costs and additional mortgage recording taxes.
EPS and FFO per Share Guidance:
The Company’s guidance for the second quarter and full year 2017 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 on depreciable real estate 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 projected EPS (diluted) for
the full year 2017 to
In addition, the Company expects to refinance the mortgage and mezzanine
debt secured by its
The Company’s second quarter 2017 estimates include an approximately
| Second Quarter 2017 | Full Year 2017 | ||||||||||||||||||||||||
| Low | - | High | Low | - | High | ||||||||||||||||||||
| Projected EPS (diluted) | $ | 0.77 | - | $ | 0.79 | $ | 2.60 | - | $ | 2.68 | |||||||||||||||
| Add: | |||||||||||||||||||||||||
| Projected Company Share of Real Estate Depreciation and Amortization | 0.86 | - | 0.86 | 3.57 | - | 3.57 | |||||||||||||||||||
| Less: | |||||||||||||||||||||||||
| Projected Company Share of Gains on Sales of Real Estate | 0.02 | - | 0.02 | 0.02 | - | 0.02 | |||||||||||||||||||
| Projected FFO per Share (diluted) | $ | 1.61 | - | $ | 1.63 | $ | 6.15 | - | $ | 6.23 | |||||||||||||||
Additionally, a copy of Boston Properties’ first quarter 2017 “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.
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
Financial tables follow.
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BOSTON PROPERTIES, INC.
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||||||||||
| March 31, 2017 | December 31, 2016 | |||||||||
|
(in thousands, except for share and par value |
||||||||||
| ASSETS | ||||||||||
| Real estate, at cost | $ | 18,931,136 | $ | 18,862,648 | ||||||
| Construction in progress | 1,211,324 | 1,037,959 | ||||||||
| Land held for future development | 249,800 | 246,656 | ||||||||
| Less: accumulated depreciation | (4,302,283 | ) | (4,222,235 | ) | ||||||
| Total real estate | 16,089,977 | 15,925,028 | ||||||||
| Cash and cash equivalents | 302,939 | 356,914 | ||||||||
| Cash held in escrows | 51,244 | 63,174 | ||||||||
| Investments in securities | 25,817 | 23,814 | ||||||||
| Tenant and other receivables, net | 73,012 | 92,548 | ||||||||
| Accrued rental income, net | 812,124 | 799,138 | ||||||||
| Deferred charges, net | 666,677 | 686,163 | ||||||||
| Prepaid expenses and other assets | 150,905 | 129,666 | ||||||||
| Investments in unconsolidated joint ventures | 793,932 | 775,198 | ||||||||
| Total assets | $ | 18,966,627 | $ | 18,851,643 | ||||||
| LIABILITIES AND EQUITY | ||||||||||
| Liabilities: | ||||||||||
| Mortgage notes payable, net | $ | 2,046,959 | $ | 2,063,087 | ||||||
| Unsecured senior notes, net | 7,248,152 | 7,245,953 | ||||||||
| Unsecured line of credit | 105,000 | — | ||||||||
| Mezzanine notes payable | 306,734 | 307,093 | ||||||||
| Outside members’ notes payable | 180,000 | 180,000 | ||||||||
| Accounts payable and accrued expenses | 313,723 | 298,524 | ||||||||
| Dividends and distributions payable | 130,418 | 130,308 | ||||||||
| Accrued interest payable | 266,714 | 243,933 | ||||||||
| Other liabilities | 446,489 | 450,821 | ||||||||
| Total liabilities | 11,044,189 | 10,919,719 | ||||||||
| Commitments and contingencies | — | — | ||||||||
| 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 at March 31, 2017 and December 31, 2016 | 200,000 | 200,000 | ||||||||
| Common stock, $0.01 par value, 250,000,000 shares authorized, 153,928,131 and 153,869,075 issued and 153,849,231 and 153,790,175 outstanding at March 31, 2017 and December 31, 2016, respectively | 1,538 | 1,538 | ||||||||
| Additional paid-in capital | 6,339,970 | 6,333,424 | ||||||||
| Dividends in excess of earnings | (712,270 | ) | (693,694 | ) | ||||||
| Treasury common stock at cost, 78,900 shares at March 31, 2017 and December 31, 2016 | (2,722 | ) | (2,722 | ) | ||||||
| Accumulated other comprehensive loss | (50,983 | ) | (52,251 | ) | ||||||
| Total stockholders’ equity attributable to Boston Properties, Inc. | 5,775,533 | 5,786,295 | ||||||||
| Noncontrolling interests: | ||||||||||
| Common units of the Operating Partnership | 617,252 | 614,982 | ||||||||
| Property partnerships | 1,529,653 | 1,530,647 | ||||||||
| Total equity | 7,922,438 | 7,931,924 | ||||||||
| Total liabilities and equity | $ | 18,966,627 | $ | 18,851,643 | ||||||
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BOSTON PROPERTIES, INC.
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||||||||||
| Three months ended March 31, | ||||||||||
| 2017 | 2016 | |||||||||
|
(in thousands, except for per share |
||||||||||
| Revenue | ||||||||||
| Rental | ||||||||||
| Base rent | $ | 503,562 | $ | 536,128 | ||||||
| Recoveries from tenants | 89,164 | 89,586 | ||||||||
| Parking and other | 25,610 | 24,825 | ||||||||
| Total rental revenue | 618,336 | 650,539 | ||||||||
| Hotel revenue | 7,420 | 8,757 | ||||||||
| Development and management services | 6,472 | 6,689 | ||||||||
| Total revenue | 632,228 | 665,985 | ||||||||
| Expenses | ||||||||||
| Operating | ||||||||||
| Rental | 228,287 | 219,172 | ||||||||
| Hotel | 7,091 | 7,634 | ||||||||
| General and administrative | 31,386 | 29,353 | ||||||||
| Transaction costs | 34 | 25 | ||||||||
| Depreciation and amortization | 159,205 | 159,448 | ||||||||
| Total expenses | 426,003 | 415,632 | ||||||||
| Operating income | 206,225 | 250,353 | ||||||||
| Other income (expense) | ||||||||||
| Income from unconsolidated joint ventures | 3,084 | 1,791 | ||||||||
| Interest and other income | 614 | 1,505 | ||||||||
| Gains from investments in securities | 1,042 | 259 | ||||||||
| Interest expense | (95,534 | ) | (105,309 | ) | ||||||
| Income before gains on sales of real estate | 115,431 | 148,599 | ||||||||
| Gains on sales of real estate | 133 | 67,623 | ||||||||
| Net income | 115,564 | 216,222 | ||||||||
| Net income attributable to noncontrolling interests | ||||||||||
| Noncontrolling interests in property partnerships | (4,424 | ) | (10,464 | ) | ||||||
| Noncontrolling interest—common units of the Operating Partnership | (11,432 | ) | (21,393 | ) | ||||||
| Net income attributable to Boston Properties, Inc. | 99,708 | 184,365 | ||||||||
| Preferred dividends | (2,625 | ) | (2,618 | ) | ||||||
| Net income attributable to Boston Properties, Inc. common shareholders | $ | 97,083 | $ | 181,747 | ||||||
| Basic earnings per common share attributable to Boston Properties, Inc. common shareholders: | ||||||||||
| Net income | $ | 0.63 | $ | 1.18 | ||||||
| Weighted average number of common shares outstanding | 153,860 | 153,626 | ||||||||
| Diluted earnings per common share attributable to Boston Properties, Inc. common shareholders: | ||||||||||
| Net income | $ | 0.63 | $ | 1.18 | ||||||
| Weighted average number of common and common equivalent shares outstanding | 154,214 | 153,917 | ||||||||
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BOSTON PROPERTIES, INC.
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||||||||||
| Three months ended March 31, | ||||||||||
| 2017 | 2016 | |||||||||
|
(in thousands, except for per |
||||||||||
| Net income attributable to Boston Properties, Inc. common shareholders | $ | 97,083 | $ | 181,747 | ||||||
| Add: | ||||||||||
| Preferred dividends | 2,625 | 2,618 | ||||||||
| Noncontrolling interest - common units of the Operating Partnership | 11,432 | 21,393 | ||||||||
| Noncontrolling interests in property partnerships | 4,424 | 10,464 | ||||||||
| Less: | ||||||||||
| Gains on sales of real estate | 133 | 67,623 | ||||||||
| Income before gains on sales of real estate | 115,431 | 148,599 | ||||||||
| Add: | ||||||||||
| Depreciation and amortization | 159,205 | 159,448 | ||||||||
| Noncontrolling interests in property partnerships' share of depreciation and amortization | (21,415 | ) | (19,555 | ) | ||||||
| Company's share of depreciation and amortization from unconsolidated joint ventures | 9,041 | 4,496 | ||||||||
| Corporate-related depreciation and amortization | (525 | ) | (364 | ) | ||||||
| Less: | ||||||||||
| Noncontrolling interests in property partnerships | 4,424 | 10,464 | ||||||||
| Preferred dividends | 2,625 | 2,618 | ||||||||
| Funds from operations (FFO) attributable to the Operating Partnership common unitholders (including Boston Properties, Inc.) | 254,688 | 279,542 | ||||||||
| Less: | ||||||||||
| Noncontrolling interest - common units of the Operating Partnership’s share of funds from operations | 26,305 | 28,854 | ||||||||
| Funds from operations attributable to Boston Properties, Inc. common shareholders | $ | 228,383 | $ | 250,688 | ||||||
| Boston Properties, Inc.’s percentage share of funds from operations - basic | 89.67 | % | 89.68 | % | ||||||
| Weighted average shares outstanding - basic | 153,860 | 153,626 | ||||||||
| FFO per share basic | $ | 1.48 | $ | 1.63 | ||||||
| Weighted average shares outstanding - diluted | 154,214 | 153,917 | ||||||||
| FFO per share diluted | $ | 1.48 | $ | 1.63 | ||||||
(1) Pursuant to the revised definition of Funds from Operations adopted
by the Board of Governors of the
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.
In order to facilitate a clear understanding of the Company's operating
results, FFO should be examined in conjunction with net income
attributable to
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BOSTON PROPERTIES, INC.
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||||||||
| % Leased by Location | ||||||||
| March 31, 2017 | December 31, 2016 | |||||||
| Boston | 91.0 | % | 90.7 | % | ||||
| New York | 90.4 | % | 90.2 | % | ||||
| San Francisco and Los Angeles | 90.0 | % | 89.8 | % | ||||
| Washington, DC | 90.0 | % | 89.9 | % | ||||
| Total Portfolio | 90.4 | % | 90.2 | % | ||||
View source version on businesswire.com: http://www.businesswire.com/news/home/20170425006966/en/
Source:
Boston Properties, Inc.
Michael LaBelle, 617-236-3352
Executive
Vice President,
Chief Financial Officer and Treasurer
or
Arista
Joyner, 617-236-3343
Investor Relations Manager