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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Boston Properties Inc | NYSE:BXP | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.63 | 0.98% | 64.68 | 65.83 | 64.60 | 65.75 | 1,664,309 | 21:59:22 |
Boston Properties, Inc. (NYSE: BXP), a real estate investment trust, reported results today for the fourth quarter ended December 31, 2016.
Results for the quarter ended December 31, 2016
Net income attributable to common shareholders was $145.5 million for the quarter ended December 31, 2016, compared to $137.9 million for the quarter ended December 31, 2015. Net income attributable to common shareholders per share (EPS) for the quarter ended December 31, 2016 was $0.95 basic and $0.94 on a diluted basis. This compares to EPS for the quarter ended December 31, 2015 of $0.90 basic and $0.90 on a diluted basis. Net income attributable to common shareholders for the quarter ended December 31, 2016 includes a gain on sale of investment in unconsolidated joint venture of approximately $59.4 million, or $0.35 per share basic and $0.34 per share on a diluted basis. Net income attributable to common shareholders for the quarter ended December 31, 2015 includes gains on sales of real estate aggregating approximately $81.3 million, or $0.48 per share basic and $0.48 per share on a diluted basis. In addition, net income attributable to common shareholders for the quarter ended December 31, 2015 includes a loss from early extinguishment of debt totaling approximately $(22.0) million, or $(0.13) per share basic and $(0.13) per share on a diluted basis, related to the defeasance of the mortgage loan collateralized by the Company's 100 & 200 Clarendon Street property. The weighted-average number of basic and diluted shares outstanding totaled approximately 153,814,000 and 153,991,000, respectively, for the quarter ended December 31, 2016 and 153,602,000 and 153,897,000, respectively, for the quarter ended December 31, 2015.
Funds from Operations (FFO) for the quarter ended December 31, 2016 were $236.9 million, or $1.54 per share basic and $1.54 per share diluted. This compares to FFO for the quarter ended December 31, 2015 of $197.3 million, or $1.28 per share basic and $1.28 per share diluted. The Company’s reported FFO of $1.54 per share diluted was greater than the mid-point of the guidance previously provided of $1.49-$1.51 per share diluted primarily due to better than expected portfolio operations of $0.02 per share and fee income from tenant services, leasing commissions and development services of $0.02 per share.
Results for the year ended December 31, 2016
Net income attributable to common shareholders was $500.6 million for the year ended December 31, 2016, compared to $572.6 million for the year ended December 31, 2015. EPS for the year ended December 31, 2016 was $3.25 basic and $3.25 on a diluted basis. This compares to EPS for the year ended December 31, 2015 of $3.73 basic and $3.72 on a diluted basis. The weighted-average number of basic and diluted shares outstanding totaled approximately 153,715,000 and 153,977,000, respectively, for the year ended December 31, 2016 and 153,471,000 and 153,844,000, respectively, for the year ended December 31, 2015.
FFO for the year ended December 31, 2016 was $927.7 million, or $6.04 per share basic and $6.03 per share diluted. This compares to FFO for the year ended December 31, 2015 of $823.7 million, or $5.37 per share basic and $5.36 per share diluted.
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 and year ended December 31, 2016. In the opinion of management, all adjustments considered necessary for a fair presentation of these reported results have been made.
As of December 31, 2016, 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 December 31, 2016 was 90.2%.
Significant events during the fourth quarter included:
Transactions completed subsequent to December 31, 2016:
EPS and FFO per Share Guidance:
The Company’s guidance for the first 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.
EPS Guidance:
As shown below, the Company has updated its projected guidance for EPS (diluted) for the full year 2017 to $2.56 - $2.66 per share from $2.58 - $2.76 per share. This is a decrease of approximately ($0.06) per share at the mid-point of the Company’s guidance primarily consisting of a ($0.10) per share increase in depreciation and amortization expense, a ($0.02) per share increase in demolition costs and ($0.01) per share increase in G & A expense. These items are partially offset by (1) the net impact from the early termination of a tenant at one of our consolidated joint ventures of $0.03 per share, (2) $0.02 per share of improved portfolio performance and (3) $0.02 per share of additional fee income.
FFO per Share Guidance:
As shown below, the Company has updated its projected guidance for FFO per share (diluted) for the full year 2017 to $6.13 - $6.23 per share from $6.05 - $6.23 per share. This is an increase of approximately $0.04 per share at the mid-point of the Company’s guidance primarily consisting of (1) the net impact from the early termination of a tenant at one of our consolidated joint ventures of $0.03 per share, (2) $0.02 per share of improved portfolio performance and (3) $0.02 per share of additional fee income. These items are partially offset by a ($0.02) per share increase in demolition costs and ($0.01) per share increase in G & A expense.
First Quarter 2017 Full Year 2017 Low - High Low - High Projected EPS (diluted) $ 0.55 - $ 0.57 $ 2.56 - $ 2.66 Add: Projected Company Share of Real Estate Depreciation and Amortization 0.92 - 0.92 3.57 - 3.57 Less: Projected Company Share of Gains on Sales of Real Estate — - — — - — Projected FFO per Share (diluted) $ 1.47 - $ 1.49 $ 6.13 - $ 6.23Boston Properties will host a conference call on Wednesday, February 1, 2017 at 10:00 AM Eastern Time, open to the general public, to discuss the fourth quarter and full year 2016 results, the 2017 projections and related assumptions, and other related matters that may be of interest to investors. The number to call for this interactive teleconference is (877) 706-4503 (Domestic) or (281) 913-8731 (International) and entering the passcode 23631735. A replay of the conference call will be available through February 17, 2017, by dialing (855) 859-2056 (Domestic) or (404) 537-3406 (International) and entering the passcode 23631735. There will also be a live audio webcast of the call which may be accessed on the Company’s website at www.bostonproperties.com in the Investor Relations section. 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’ fourth quarter 2016 “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.
Boston Properties is a fully integrated real estate investment trust that develops, redevelops, acquires, manages, operates and owns a diverse portfolio of primarily Class A office space totaling 47.7 million square feet and consisting of 164 office properties (including six properties under construction), five retail properties, four residential properties (including two properties under construction) and one hotel. The Company is one of the largest owners and developers of Class A office properties in the United States, concentrated in five markets - Boston, Los Angeles, New York, San Francisco and Washington, DC.
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 Securities and Exchange Commission. Boston Properties does not undertake a duty to update or revise any forward-looking statement, including its guidance for the first quarter and full fiscal year 2017, whether as a result of new information, future events or otherwise.
Financial tables follow.
BOSTON PROPERTIES, INC.CONSOLIDATED BALANCE SHEETS
(Unaudited)
December 31, 2016 December 31, 2015(in thousands, except for share and par value amounts)
ASSETS Real estate, at cost $ 18,862,648 $ 18,465,405 Construction in progress 1,037,959 763,935 Land held for future development 246,656 252,195 Less: accumulated depreciation (4,223,743 ) (3,925,894 ) Total real estate 15,923,520 15,555,641 Cash and cash equivalents 356,914 723,718 Cash held in escrows 63,174 73,790 Investments in securities 23,814 20,380 Tenant and other receivables, net 92,548 97,865 Accrued rental income, net 799,138 754,883 Deferred charges, net 685,795 704,867 Prepaid expenses and other assets 129,666 185,118 Investments in unconsolidated joint ventures 775,198 235,224 Total assets $ 18,849,767 $ 18,351,486 LIABILITIES AND EQUITY Liabilities: Mortgage notes payable, net $ 2,063,087 $ 3,435,242 Unsecured senior notes, net 7,245,953 5,264,819 Unsecured line of credit — — Mezzanine notes payable 307,093 308,482 Outside members’ notes payable 180,000 180,000 Accounts payable and accrued expenses 298,524 274,709 Dividends and distributions payable 130,308 327,320 Accrued interest payable 243,933 190,386 Other liabilities 450,821 483,601 Total liabilities 10,919,719 10,464,559 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 December 31, 2016 and December 31, 2015
200,000 200,000Common stock, $0.01 par value, 250,000,000 shares authorized, 153,869,075 and 153,658,866 issued and 153,790,175 and 153,579,966 outstanding at December 31, 2016 and December 31, 2015, respectively
1,538 1,536 Additional paid-in capital 6,333,427 6,305,687 Dividends in excess of earnings (695,377 ) (780,952 ) Treasury common stock at cost, 78,900 shares at December 31, 2016 and December 31, 2015 (2,722 ) (2,722 ) Accumulated other comprehensive loss (52,251 ) (14,114 ) Total stockholders’ equity attributable to Boston Properties, Inc. 5,784,615 5,709,435 Noncontrolling interests: Common units of the Operating Partnership 614,786 603,092 Property partnerships 1,530,647 1,574,400 Total equity 7,930,048 7,886,927 Total liabilities and equity $ 18,849,767 $ 18,351,486 BOSTON PROPERTIES, INC.CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended December 31,
Year ended December 31,
2016 2015 2016 2015 (in thousands, except for per share amounts) Revenue Rental Base rent $ 498,941 $ 493,141 $ 2,017,767 $ 1,964,732 Recoveries from tenants 91,123 88,576 358,975 355,508 Parking and other 25,334 25,132 100,910 101,981 Total rental revenue 615,398 606,849 2,477,652 2,422,221 Hotel revenue 10,965 10,939 44,884 46,046 Development and management services 9,698 6,452 28,284 22,554 Total revenue 636,061 624,240 2,550,820 2,490,821 Expenses Operating Rental 224,098 216,642 889,768 872,252 Hotel 7,736 7,888 31,466 32,084 General and administrative 25,293 24,300 105,229 96,319 Transaction costs 1,200 470 2,387 1,259 Impairment loss — — 1,783 — Depreciation and amortization 179,908 164,460 696,279 639,542 Total expenses 438,235 413,760 1,726,912 1,641,456 Operating income 197,826 210,480 823,908 849,365 Other income (expense) Income from unconsolidated joint ventures 2,585 2,211 8,074 22,770 Gain on sale of investment in unconsolidated joint venture 59,370 — 59,370 — Interest and other income 573 440 7,230 6,777 Gains (losses) from investments in securities 560 493 2,273 (653 ) Interest expense (97,896 ) (106,178 ) (412,849 ) (432,196 ) Losses from early extinguishments of debt — (22,040 ) (371 ) (22,040 ) Losses from interest rate contracts — — (140 ) — Income before gains on sales of real estate 163,018 85,406 487,495 424,023 Gains on sales of real estate — 81,332 80,606 375,895 Net income 163,018 166,738 568,101 799,918 Net income attributable to noncontrolling interests Noncontrolling interests in property partnerships 2,121 (10,143 ) 2,068 (149,855 )Noncontrolling interest—redeemable preferred units of the Operating Partnership
— — — (6 ) Noncontrolling interest—common units of the Operating Partnership (16,905 ) (16,098 ) (59,067 ) (66,951 ) Net income attributable to Boston Properties, Inc. 148,234 140,497 511,102 583,106 Preferred dividends (2,704 ) (2,646 ) (10,500 ) (10,500 )Net income attributable to Boston Properties, Inc. common shareholders
$ 145,530 $ 137,851 $ 500,602 $ 572,606Basic earnings per common share attributable to Boston Properties, Inc. common shareholders:
Net income $ 0.95 $ 0.90 $ 3.25 $ 3.73 Weighted average number of common shares outstanding 153,814 153,602 153,715 153,471Diluted earnings per common share attributable to Boston Properties, Inc. common shareholders:
Net income $ 0.94 $ 0.90 $ 3.25 $ 3.72Weighted average number of common and common equivalent shares outstanding
153,991 153,897 153,977 153,844 BOSTON PROPERTIES, INC.FUNDS FROM OPERATIONS (1)
(Unaudited)
Three months ended December 31,
Year ended December 31,
2016 2015 2016 2015 (in thousands, except for per share amounts)Net income attributable to Boston Properties, Inc. common shareholders
$ 145,530 $ 137,851 $ 500,602 $ 572,606 Add: Preferred dividends 2,704 2,646 10,500 10,500Noncontrolling interest - common units of the Operating Partnership
16,905 16,098 59,067 66,951Noncontrolling interest - redeemable preferred units of the Operating Partnership
— — — 6 Noncontrolling interests in property partnerships (2,121 ) 10,143 (2,068 ) 149,855 Less: Gains on sales of real estate — 81,332 80,606 375,895 Income before gains on sales of real estate 163,018 85,406 487,495 424,023 Add: Depreciation and amortization 179,908 164,460 696,279 639,542Noncontrolling interests in property partnerships' share of depreciation and amortization
(27,256 ) (20,685 ) (107,087 ) (90,832 )Company's share of depreciation and amortization from unconsolidated joint ventures
8,692 3,994 26,934 6,556 Corporate-related depreciation and amortization (449 ) (486 ) (1,568 ) (1,503 ) Less: Gain on sale of investment in unconsolidated joint venture 59,370 — 59,370 —Noncontrolling interests in property partnerships (2)
(2,121 ) 10,143 (2,068 ) 48,737Noncontrolling interest - redeemable preferred units of the Operating Partnership
— — — 6 Preferred dividends 2,704 2,646 10,500 10,500Funds from operations (FFO) attributable to the Operating Partnership common unitholders (including Boston Properties, Inc.)
263,960 219,900 1,034,251 918,543 Less:Noncontrolling interest - common units of the Operating Partnership’s share of funds from operations
27,062 22,561 106,504 94,828Funds from operations attributable to Boston Properties, Inc. common shareholders
$ 236,898 $ 197,339 $ 927,747 $ 823,715Boston Properties, Inc.’s percentage share of funds from operations - basic
89.75 % 89.74 % 89.70 % 89.68 % Weighted average shares outstanding - basic 153,814 153,602 153,715 153,471 FFO per share basic $ 1.54 $ 1.28 $ 6.04 $ 5.37 Weighted average shares outstanding - diluted 153,991 153,897 153,977 153,844 FFO per share diluted $ 1.54 $ 1.28 $ 6.03 $ 5.36(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, real estate-related depreciation and amortization, and our share of income (loss) from unconsolidated partnerships and joint ventures. 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.
(2) For the year ended December 31, 2015, excludes the noncontrolling interests in property partnerships' share of a gain on sale of real estate totaling approximately $101.1 million.
BOSTON PROPERTIES, INC.PORTFOLIO LEASING PERCENTAGES
% Leased by Location December 31, 2016 December 31, 2015 Boston 90.7 % 90.6 % New York 90.2 % 91.5 % San Francisco and Los Angeles 89.8 % 93.8 % Washington, DC 89.9 % 91.0 % Total Portfolio 90.2 % 91.4 %
View source version on businesswire.com: http://www.businesswire.com/news/home/20170131006460/en/
Boston Properties, Inc.Michael LaBelle, 617-236-3352Executive Vice PresidentChief Financial OfficerorArista Joyner, 617-236-3343Investor Relations Manager
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