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Boston Properties Announces First Quarter 2020 Results; Reports EPS of $3.20 and FFO Per Share of $1.83

04/28/20

Reports April Office Tenant Collections of 95%

BOSTON--(BUSINESS WIRE)--Apr. 28, 2020-- Boston Properties, Inc. (NYSE: BXP), the largest publicly-traded developer, owner and manager of Class A office properties in the United States, reported results today for the first quarter ended March 31, 2020.

Financial highlights for the first quarter include:

  • Revenue grew 4% to $752.6 million as compared to revenue of $725.8 million for the first quarter ended March 31, 2019.
  • Net income attributable to common shareholders was $497.5 million, or $3.20 per diluted share (EPS), compared to $98.1 million, or $0.63 per diluted share, for the quarter ended March 31, 2019, primarily due to $2.37 per diluted share from gains on asset sales in the first quarter of 2020.
  • Funds from Operations (FFO) was $284.1 million, or $1.83 per diluted share, reflecting growth of 7% compared to FFO of $266.0 million, or $1.72 per diluted share, for the quarter ended March 31, 2019.
    • FFO in the first quarter of $1.83 per diluted share was $0.02 per share greater than the midpoint of the Company’s first quarter guidance provided on January 28, 2020 due primarily to $0.02 per share of greater-than-projected portfolio performance.

The Company provided a business update pertaining to the current COVID-19 pandemic including:

  • The safety of Boston Properties’ tenants and employees remains the Company’s highest priority. The Company has formed a Heath and Security Task Force to prepare buildings for re-occupancy and will implement a number of processes, technologies and communications to provide a safe environment at the Company’s properties.
  • All office properties throughout the Boston Properties portfolio remain open for tenants, although physical occupancy is low due to shelter-in-place orders.
  • For the month of April, the Company collected 90% of its total commercial rent payments due April 1 from retail and office tenants. Rent collections from office tenants, excluding retail, were 95% in total.
  • The Company continues to maintain a strong liquidity position with $2.1 billion of total liquidity as of March 31, 2020 consisting of $661 million of cash, $151 million of cash held in 1031 exchange escrow as well as $1.25 billion available under its unsecured revolving credit facility.
  • Although the Company’s office rent collections were strong in April, due to the uncertainty of the impacts of the COVID-19 pandemic, including the unknown duration and impact of shelter-in-place requirements and the uncertain economic climate, the Company believes it is prudent to withdraw its guidance for full year 2020 EPS and FFO.

Recent business highlights include:

  • Completed and fully placed in-service 17Fifty Presidents Street located in Reston, Virginia on March 26, 2020. 17Fifty Presidents Street is a build-to-suit project with approximately 276,000 net rentable square feet of Class A office space that is 100% leased to an affiliate of Leidos Holdings, Inc.
  • Completed the sale of New Dominion Technology Park located in Herndon, Virginia on February 20, 2020, for a gross sale price of $256.0 million, resulting in net proceeds of approximately $254.0 million and reported gain on sale of approximately $192.3 million. New Dominion Technology Park is comprised of two Class A office properties aggregating approximately 493,000 net rentable square feet.
  • Completed the acquisition of the land underlying the ground lease at Platform 16 located in San Jose, California on February 20, 2020, for a purchase price of approximately $74.0 million at BXP’s Share. Platform 16 is a joint venture in which the Company owns 55%. Platform 16 consists of a parcel of land totaling approximately 5.6 acres that is expected to support the development of approximately 1.1 million square feet of commercial office space.
  • Entered into a joint venture with Alexandria Real Estate Equities to develop, own and operate approximately 1.1 million square feet of existing office and life science lab properties in South San Francisco, California, with the opportunity for approximately 640,000 square feet of additional future development. The Company contributed three office properties totaling approximately 768,000 square feet and development rights resulting in a non-cash gain on sale of real estate of approximately $217.7 million. Upon completion, the joint venture is expected to own an approximately 1.7 million square foot life science campus including a mix of office and lab buildings. Boston Properties will have a 50% ownership interest in the joint venture.

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, 2020. In the opinion of management, the Company has made all adjustments considered necessary for a fair statement of these reported results.

Boston Properties will host a conference call on Wednesday, April 29, 2020 at 10:00 AM Eastern Time, open to the general public, to discuss the first quarter 2020 results, the business update pertaining to the current COVID-19 pandemic and other matters that may be of interest to investors. The number to call for this interactive teleconference is (877) 796-3880 (Domestic) or (443) 961-9013 (International) and entering the passcode 3398131. A replay of the conference call will be available by dialing (855) 859-2056 (Domestic) or (404) 537-3406 (International) and entering the passcode 3398131. There will also be a live audio webcast of the call, which may be accessed in the Investor Relations section of the Company’s website at investors.bxp.com. Shortly after the call, a replay of the webcast will be available in the Investor Relations section of the Company’s website and archived for up to twelve months following the call.

Additionally, a copy of Boston Properties’ first quarter 2020 “Supplemental Operating and Financial Data” and this press release are available in the Investor Relations section of the Company’s website at investors.bxp.com.

Boston Properties (NYSE: BXP) is the largest publicly-held developer and owner of Class A office properties in the United States, concentrated in five markets - Boston, Los Angeles, New York, San Francisco and Washington, DC. The Company is a fully integrated real estate company, organized as a real estate investment trust (REIT), that develops, manages, operates, acquires and owns a diverse portfolio of primarily Class A office space. The Company’s portfolio totals 51.8 million square feet and 196 properties, including 10 properties under construction/redevelopment. For more information about Boston Properties, please visit our website at www.bxp.com or follow us on LinkedIn or Instagram.

This press release contains “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. You can identify these statements by our use of the words “believes,” “budgeted,” “estimates,” “expects,” “guidance,” “intends,” “plans,” “projects” and similar expressions that do not relate to historical matters. These statements are based on our current expectations of future events. 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. If our underlying assumptions prove inaccurate, or known or unknown risks or uncertainties materialize, actual results could differ materially from those expressed or implied by the forward-looking statement. These factors include, without limitation, uncertainties and risks related to the impact of the COVID-19 global pandemic, including the duration, scope and severity of the pandemic domestically and internationally; federal, state and local government actions or restrictive measures implemented in response to COVID-19, the effectiveness of such measures and the direct and indirect impact of such measures on our and our tenants' businesses, financial condition, results of operation, cash flows, liquidity and performance, and the U.S. and international economy and economic activity generally; whether new or existing actions/or measures continue to result in increasing unemployment that impact the ability of our residential tenants to generate sufficient income to pay, or make them unwilling to pay, rent in full or at all in a timely manner; the health, continued service and availability of our personnel, including our key personnel and property management teams; and the effectiveness or lack of effectiveness of governmental relief in providing assistance to individuals and large and small businesses, including our tenants, that have suffered significant adverse effects from COVID-19. In addition to the risks specific to COVID-19, other 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 Securities and Exchange Commission. Boston Properties does not undertake a duty to update or revise any forward-looking statement whether as a result of new information, future events or otherwise.

Financial tables follow.

BOSTON PROPERTIES, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

March 31,
2020

 

December 31,
2019

 

(in thousands, except for share
and par value amounts)

ASSETS

 

 

 

Real estate, at cost

$

21,273,137

 

 

$

21,458,412

 

Construction in progress

804,179

 

 

789,736

 

Land held for future development

264,893

 

 

254,828

 

Right of use assets - finance leases

237,394

 

 

237,394

 

Right of use assets - operating leases

148,057

 

 

148,640

 

Less: accumulated depreciation

(5,209,487

)

 

(5,266,798

)

Total real estate

17,518,173

 

 

17,622,212

 

Cash and cash equivalents

660,733

 

 

644,950

 

Cash held in escrows

197,845

 

 

46,936

 

Investments in securities

28,101

 

 

36,747

 

Tenant and other receivables, net

89,431

 

 

112,807

 

Related party note receivable, net

78,800

 

 

80,000

 

Note receivable, net

15,794

 

 

15,920

 

Accrued rental income, net

1,059,677

 

 

1,038,788

 

Deferred charges, net

667,076

 

 

689,213

 

Prepaid expenses and other assets

136,730

 

 

41,685

 

Investments in unconsolidated joint ventures

1,377,338

 

 

955,647

 

Total assets

$

21,829,698

 

 

$

21,284,905

 

LIABILITIES AND EQUITY

 

 

 

Liabilities:

 

 

 

Mortgage notes payable, net

$

2,919,157

 

 

$

2,922,408

 

Unsecured senior notes, net

8,393,009

 

 

8,390,459

 

Unsecured line of credit

250,000

 

 

 

Unsecured term loan, net

499,058

 

 

498,939

 

Lease liabilities - finance leases

227,067

 

 

224,042

 

Lease liabilities - operating leases

200,573

 

 

200,180

 

Accounts payable and accrued expenses

293,831

 

 

377,553

 

Dividends and distributions payable

171,026

 

 

170,713

 

Accrued interest payable

82,388

 

 

90,016

 

Other liabilities

366,852

 

 

387,994

 

Total liabilities

13,402,961

 

 

13,262,304

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

Redeemable deferred stock units

5,854

 

 

8,365

 

 

 

 

 

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, 2020 and December 31, 2019

200,000

 

 

200,000

 

Common stock, $0.01 par value, 250,000,000 shares authorized, 155,393,455 and
154,869,198 issued and 155,314,555 and 154,790,298 outstanding at March 31, 2020
and December 31, 2019, respectively

1,553

 

 

1,548

 

Additional paid-in capital

6,321,475

 

 

6,294,719

 

Dividends in excess of earnings

(416,740

)

 

(760,523

)

Treasury common stock at cost, 78,900 shares at March 31, 2020 and December 31, 2019

(2,722

)

 

(2,722

)

Accumulated other comprehensive loss

(55,700

)

 

(48,335

)

Total stockholders’ equity attributable to Boston Properties, Inc.

6,047,866

 

 

5,684,687

 

Noncontrolling interests:

 

 

 

Common units of the Operating Partnership

636,572

 

 

600,860

 

Property partnerships

1,736,445

 

 

1,728,689

 

Total equity

8,420,883

 

 

8,014,236

 

Total liabilities and equity

$

21,829,698

 

 

$

21,284,905

 

BOSTON PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

Three months ended March 31,

 

2020

 

2019

 

(in thousands, except for per
share amounts)

Revenue

 

 

 

Lease

$

710,111

 

 

$

679,251

 

Parking and other

24,504

 

 

24,906

 

Hotel revenue

6,825

 

 

8,938

 

Development and management services

7,879

 

 

9,277

 

Direct reimbursements of payroll and related costs from management services contracts

3,237

 

 

3,395

 

Total revenue

752,556

 

 

725,767

 

Expenses

 

 

 

Operating

 

 

 

Rental

262,966

 

 

257,517

 

Hotel

6,821

 

 

7,863

 

General and administrative

36,454

 

 

41,762

 

Payroll and related costs from management services contracts

3,237

 

 

3,395

 

Transaction costs

615

 

 

460

 

Depreciation and amortization

171,094

 

 

164,594

 

Total expenses

481,187

 

 

475,591

 

Other income (expense)

 

 

 

Income (loss) from unconsolidated joint ventures

(369

)

 

213

 

Gains (losses) on sales of real estate

410,165

 

 

(905

)

Interest and other income

3,017

 

 

3,753

 

Gains (losses) from investments in securities

(5,445

)

 

2,969

 

Impairment losses

 

 

(24,038

)

Interest expense

(101,591

)

 

(101,009

)

Net income

577,146

 

 

131,159

 

Net income attributable to noncontrolling interests

 

 

 

Noncontrolling interests in property partnerships

(19,486

)

 

(18,830

)

Noncontrolling interest—common units of the Operating Partnership

(57,539

)

 

(11,599

)

Net income attributable to Boston Properties, Inc.

500,121

 

 

100,730

 

Preferred dividends

(2,625

)

 

(2,625

)

Net income attributable to Boston Properties, Inc. common shareholders

$

497,496

 

 

$

98,105

 

Basic earnings per common share attributable to Boston Properties, Inc. common shareholders:

 

 

 

Net income

$

3.20

 

 

$

0.63

 

Weighted average number of common shares outstanding

155,011

 

 

154,525

 

Diluted earnings per common share attributable to Boston Properties, Inc. common shareholders:

 

 

 

Net income

$

3.20

 

 

$

0.63

 

Weighted average number of common and common equivalent shares outstanding

155,258

 

 

154,844

 

BOSTON PROPERTIES, INC.

FUNDS FROM OPERATIONS (1)

(Unaudited)

 

 

Three months ended March 31,

 

2020

 

2019

 

(in thousands, except for per share amounts)

Net income attributable to Boston Properties, Inc. common shareholders

$

497,496

 

 

$

98,105

 

Add:

 

 

 

Preferred dividends

2,625

 

 

2,625

 

Noncontrolling interest - common units of the Operating Partnership

57,539

 

 

11,599

 

Noncontrolling interests in property partnerships

19,486

 

 

18,830

 

Net income

577,146

 

 

131,159

 

Add:

 

 

 

Depreciation and amortization expense

171,094

 

 

164,594

 

Noncontrolling interests in property partnerships’ share of depreciation and amortization

(17,627

)

 

(18,002

)

Company’s share of depreciation and amortization from unconsolidated joint ventures

18,332

 

 

15,470

 

Corporate-related depreciation and amortization

(469

)

 

(395

)

Impairment loss

 

 

24,038

 

Less:

 

 

 

Gains (losses) on sales of real estate

410,165

 

 

(905

)

Noncontrolling interests in property partnerships

19,486

 

 

18,830

 

Preferred dividends

2,625

 

 

2,625

 

Funds from operations (FFO) attributable to the Operating Partnership common unitholders
(including Boston Properties, Inc.)

316,200

 

 

296,314

 

Less:

 

 

 

Noncontrolling interest - common units of the Operating Partnership’s share of funds
from operations

32,138

 

 

30,307

 

Funds from operations attributable to Boston Properties, Inc. common shareholders

$

284,062

 

 

$

266,007

 

Boston Properties, Inc.’s percentage share of funds from operations - basic

89.84

%

 

89.77

%

Weighted average shares outstanding - basic

155,011

 

 

154,525

 

FFO per share basic

$

1.83

 

 

$

1.72

 

Weighted average shares outstanding - diluted

155,258

 

 

154,844

 

FFO per share diluted

$

1.83

 

 

$

1.72

 

  1. Pursuant to the revised definition of Funds from Operations adopted by the Board of Governors of the National Association of Real Estate Investment Trusts (“Nareit”), we calculate Funds from Operations, or “FFO,” by adjusting net income (loss) attributable to Boston Properties, Inc. common shareholders (computed in accordance with GAAP) for gains (or losses) from sales of properties, impairment losses on depreciable real estate consolidated on our balance sheet, impairment losses on our investments in unconsolidated joint ventures driven by a measurable decrease in the fair value of depreciable real estate held by the unconsolidated joint ventures and real estate-related depreciation and amortization. FFO is a non-GAAP financial measure, but we believe the presentation of FFO, combined with the presentation of required GAAP financial measures, has improved the understanding of operating results of REITs among the investing public and has helped make comparisons of REIT operating results more meaningful. Management generally considers FFO and FFO per share to be useful measures for understanding and comparing our operating results because, by excluding gains and losses related to sales of previously depreciated operating real estate assets, impairment losses and real estate asset depreciation and amortization (which can differ across owners of similar assets in similar condition based on historical cost accounting and useful life estimates), FFO and FFO per share can help investors compare the operating performance of a company’s real estate across reporting periods and to the operating performance of other companies.

    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 Boston Properties, Inc. common shareholders as presented in the Company’s consolidated financial statements. FFO should not be considered as a substitute for net income attributable to Boston Properties, Inc. common shareholders (determined in accordance with GAAP) or any other GAAP financial measures and should only be considered together with and as a supplement to the Company’s financial information prepared in accordance with GAAP.

 

BOSTON PROPERTIES, INC.

PORTFOLIO LEASING PERCENTAGES

 

 

 

 

 

% Leased by Location

 

March 31, 2020

 

December 31, 2019

Boston

96.5

%

 

95.9

%

Los Angeles

95.9

%

 

96.7

%

New York

94.1

%

 

92.9

%

San Francisco

93.8

%

 

93.7

%

Washington, DC

84.7

%

 

87.6

%

Total Portfolio

92.9

%

 

93.0

%

 

AT THE COMPANY
Michael LaBelle
Executive Vice President,
Chief Financial Officer and Treasurer
(617) 236-3352

Sara Buda
Vice President, Investor Relations
(617) 236-3429
sbuda@bxp.com

Source: Boston Properties, Inc.