Le Lézard
Classified in: Business
Subjects: EARNINGS, Conference Call, Webcast

BXP Announces Third Quarter 2023 Results


BXP (NYSE: BXP), the largest publicly traded developer, owner, and manager of premier workplaces in the United States, reported results today for the third quarter ended September 30, 2023.

Financial highlights for the third quarter include:

BXP also provided updated guidance for full year 2023 EPS of $1.05 - $1.07 and FFO of $7.25 - $7.27 per diluted share. Changes to our prior guidance includes higher projected portfolio NOI offset by higher net interest expense from recent financing activities.

See "EPS and FFO per Share Guidance" below.

Third quarter and recent business highlights include:

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 September 30, 2023. In the opinion of management, BXP has made all adjustments considered necessary for a fair statement of these reported results.

EPS and FFO per Share Guidance:

BXP's guidance for the full year 2023 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, interest rates, the timing of the lease-up of available space, the timing of development cost outlays and development deliveries, and the earnings impact of the events referenced in this release and those referenced during the related conference call. The estimates do not include (1) possible future gains or losses or the impact on operating results from other possible future property acquisitions or dispositions, (2) the impacts of any other capital markets activity, (3) future write-offs or reinstatements of accounts receivable and accrued rent balances, or (4) 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, impairment losses on depreciable real estate, and any gains or losses associated with disposition activity. BXP 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 BXP's actual results will not differ materially from the estimates set forth below.

 

 

 

Full Year 2023

 

 

 

Low

 

High

Projected EPS (diluted)

 

$ 1.05

 

$ 1.07

Add:

 

 

 

 

 

Projected Company share of real estate depreciation and amortization

 

4.85

 

4.85

 

Projected Company share of (gains)/losses on sales of real estate, gain on investment from unconsolidated joint venture and impairments

 

1.35

 

1.35

Projected FFO per share (diluted)

 

$ 7.25

 

$ 7.27

BXP will host a conference call on Thursday, November 2, 2023 at 10:00 AM Eastern Time, open to the general public, to discuss the third quarter 2023 results, provide a business update, and discuss other business matters that may be of interest to investors. Participants who would like to join the call and ask a question may register at https://register.vevent.com/register/BI258f07a8cd3f4d07bee856df6e1462c2 to receive the dial-in numbers and unique PIN to access the call. There will also be a live audio, listen-only webcast of the call, which may be accessed in the Investors section of BXP's website at https://investors.bxp.com/events-webcasts. Shortly after the call, a replay of the call will be available on BXP's website at https://investors.bxp.com/events-webcasts for up to twelve months following the call.

Additionally, a copy of BXP's third quarter 2023 "Supplemental Operating and Financial Data" and this press release are available in the Investors section of BXP's website at investors.bxp.com.

BXP (NYSE: BXP) is the largest publicly traded developer, owner, and manager of premier workplaces in the United States, concentrated in six dynamic gateway markets - Boston, Los Angeles, New York, San Francisco, Seattle, and Washington, DC. BXP has delivered places that power progress for our clients and communities for more than 50 years. BXP is a fully integrated real estate company, organized as a real estate investment trust (REIT). Including properties owned by unconsolidated joint ventures, BXP's portfolio totals 53.5 million square feet and 190 properties, including 11 properties under construction/redevelopment. For more information about BXP, please visit our website 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 "anticipates," "believes," "budgeted," "could," "estimates," "expects," "guidance," "intends," "may," "might," "plans," "projects," "should," "will," and similar expressions that do not relate to historical matters. These statements are based on our current plans, expectations, projections and assumptions about 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 BXP's 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 statements. These factors include, without limitation, the risks and uncertainties related to the impact of changes in general economic and capital market conditions, including continued inflation, increasing interest rates, supply chain disruptions, labor market disruptions, dislocation and volatility in capital markets, potential longer-term changes in consumer and client behavior resulting from the severity and duration of any downturn in the U.S. or global economy, general risks affecting the real estate industry (including, without limitation, the inability to enter into or renew leases on favorable terms, changes in client preferences and space utilization, dependence on clients' financial condition, and competition from other developers, owners and operators of real estate), the impact of geopolitical conflicts, the immediate and long-term impact of the outbreak of a highly infectious or contagious disease, on our and our clients' financial condition, results of operations and cash flows (including the impact of actions taken to contain the outbreak or mitigate its impact, the direct and indirect economic effects of the outbreak and containment measures on our clients, and the ability of our clients to successfully operate their businesses), 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 BXP's accounting policies and on period-to-period comparisons of financial results, the uncertainties of costs to comply with regulatory changes (including potential costs to comply with the Securities and Exchange Commission's proposed rules to standardize climate-related disclosures) and other risks and uncertainties detailed from time to time in BXP's filings with the SEC. These forward-looking statements speak only as of the date of issuance of this report and are not guarantees of future results, performance, or achievements. BXP does not undertake a duty to update or revise any forward-looking statement whether as a result of new information, future events or otherwise, except as otherwise required by law.

Financial tables follow.

BOSTON PROPERTIES, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

September 30,
2023

 

December 31,
2022

 

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

ASSETS

 

 

 

Real estate, at cost

$

24,809,369

 

 

$

24,261,588

 

Construction in progress

 

551,330

 

 

 

406,574

 

Land held for future development

 

670,691

 

 

 

721,501

 

Right of use assets - finance leases

 

237,532

 

 

 

237,510

 

Right of use assets - operating leases

 

322,790

 

 

 

167,351

 

Less: accumulated depreciation

 

(6,723,616

)

 

 

(6,298,082

)

Total real estate

 

19,868,096

 

 

 

19,496,442

 

Cash and cash equivalents

 

882,647

 

 

 

690,333

 

Cash held in escrows

 

47,741

 

 

 

46,479

 

Investments in securities

 

32,809

 

 

 

32,277

 

Tenant and other receivables, net

 

123,138

 

 

 

81,389

 

Related party note receivable, net

 

88,807

 

 

 

78,576

 

Sales-type lease receivable, net

 

13,475

 

 

 

12,811

 

Accrued rental income, net

 

1,331,796

 

 

 

1,276,580

 

Deferred charges, net

 

692,386

 

 

 

733,282

 

Prepaid expenses and other assets

 

121,431

 

 

 

43,589

 

Investments in unconsolidated joint ventures

 

1,536,822

 

 

 

1,715,911

 

Total assets

$

24,739,148

 

 

$

24,207,669

 

LIABILITIES AND EQUITY

 

 

 

Liabilities:

 

 

 

Mortgage notes payable, net

$

3,275,974

 

 

$

3,272,368

 

Unsecured senior notes, net

 

10,488,568

 

 

 

10,237,968

 

Unsecured line of credit

 

?

 

 

 

?

 

Unsecured term loan, net

 

1,197,173

 

 

 

730,000

 

Lease liabilities - finance leases

 

253,178

 

 

 

249,335

 

Lease liabilities - operating leases

 

341,299

 

 

 

204,686

 

Accounts payable and accrued expenses

 

462,240

 

 

 

417,545

 

Dividends and distributions payable

 

171,916

 

 

 

170,643

 

Accrued interest payable

 

128,422

 

 

 

103,774

 

Other liabilities

 

380,014

 

 

 

450,918

 

Total liabilities

 

16,698,784

 

 

 

15,837,237

 

 

 

 

 

Commitments and contingencies

 

?

 

 

 

?

 

Redeemable deferred stock units

 

6,788

 

 

 

6,613

 

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; none issued or outstanding

 

?

 

 

 

?

 

Common stock, $0.01 par value, 250,000,000 shares authorized, 157,018,080 and 156,836,767 issued and 156,939,180 and 156,757,867 outstanding at September 30, 2023 and December 31, 2022, respectively

 

1,569

 

 

 

1,568

 

Additional paid-in capital

 

6,568,645

 

 

 

6,539,147

 

Dividends in excess of earnings

 

(782,275

)

 

 

(391,356

)

Treasury common stock at cost, 78,900 shares at September 30, 2023 and December 31, 2022

 

(2,722

)

 

 

(2,722

)

Accumulated other comprehensive income (loss)

 

2,866

 

 

 

(13,718

)

Total stockholders' equity attributable to Boston Properties, Inc.

 

5,788,083

 

 

 

6,132,919

 

Noncontrolling interests:

 

 

 

Common units of the Operating Partnership

 

656,587

 

 

 

683,583

 

Property partnerships

 

1,588,906

 

 

 

1,547,317

 

Total equity

 

8,033,576

 

 

 

8,363,819

 

Total liabilities and equity

$

24,739,148

 

 

$

24,207,669

 

BOSTON PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

Three months ended
September 30,

 

Nine months ended
September 30,

 

 

2023

 

2022

 

2023

 

2022

 

 

(in thousands, except for per share amounts)

Revenue

 

 

 

 

 

 

 

 

Lease

 

$

767,181

 

 

$

739,255

 

 

$

2,285,789

 

 

$

2,179,274

 

Parking and other

 

 

30,428

 

 

 

28,154

 

 

 

81,421

 

 

 

80,234

 

Hotel

 

 

13,484

 

 

 

11,749

 

 

 

35,554

 

 

 

28,395

 

Development and management services

 

 

9,284

 

 

 

7,465

 

 

 

28,122

 

 

 

19,650

 

Direct reimbursements of payroll and related costs from management services contracts

 

 

3,906

 

 

 

3,900

 

 

 

13,750

 

 

 

11,204

 

Total revenue

 

 

824,283

 

 

 

790,523

 

 

 

2,444,636

 

 

 

2,318,757

 

Expenses

 

 

 

 

 

 

 

 

Operating

 

 

 

 

 

 

 

 

Rental

 

 

300,192

 

 

 

281,702

 

 

 

882,536

 

 

 

825,805

 

Hotel

 

 

9,020

 

 

 

8,548

 

 

 

23,852

 

 

 

19,832

 

General and administrative

 

 

31,410

 

 

 

32,519

 

 

 

131,387

 

 

 

110,378

 

Payroll and related costs from management services contracts

 

 

3,906

 

 

 

3,900

 

 

 

13,750

 

 

 

11,204

 

Transaction costs

 

 

751

 

 

 

1,650

 

 

 

1,970

 

 

 

2,146

 

Depreciation and amortization

 

 

207,435

 

 

 

190,675

 

 

 

618,746

 

 

 

551,445

 

Total expenses

 

 

552,714

 

 

 

518,994

 

 

 

1,672,241

 

 

 

1,520,810

 

Other income (expense)

 

 

 

 

 

 

 

 

Loss from unconsolidated joint ventures

 

 

(247,556

)

 

 

(3,524

)

 

 

(261,793

)

 

 

(1,389

)

Gains on sales of real estate

 

 

517

 

 

 

262,345

 

 

 

517

 

 

 

381,293

 

Interest and other income (loss)

 

 

20,715

 

 

 

3,728

 

 

 

48,999

 

 

 

6,151

 

Other income - assignment fee

 

 

?

 

 

 

?

 

 

 

?

 

 

 

6,624

 

Gains (losses) from investments in securities

 

 

(925

)

 

 

(1,571

)

 

 

2,311

 

 

 

(8,549

)

Unrealized gain (loss) on non-real estate investment

 

 

(51

)

 

 

?

 

 

 

332

 

 

 

?

 

Interest expense

 

 

(147,812

)

 

 

(111,846

)

 

 

(424,492

)

 

 

(317,216

)

Net income (loss)

 

 

(103,543

)

 

 

420,661

 

 

 

138,269

 

 

 

864,861

 

Net (income) loss attributable to noncontrolling interests

 

 

 

 

 

 

 

 

Noncontrolling interests in property partnerships

 

 

(20,909

)

 

 

(18,801

)

 

 

(59,337

)

 

 

(54,896

)

Noncontrolling interest?common units of the Operating Partnership

 

 

12,626

 

 

 

(40,883

)

 

 

(8,642

)

 

 

(82,821

)

Net income (loss) attributable to Boston Properties, Inc.

 

$

(111,826

)

 

$

360,977

 

 

$

70,290

 

 

$

727,144

 

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

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(0.71

)

 

$

2.30

 

 

$

0.45

 

 

$

4.63

 

Weighted average number of common shares outstanding

 

 

156,880

 

 

 

156,754

 

 

 

156,837

 

 

 

156,708

 

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

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(0.71

)

 

$

2.29

 

 

$

0.45

 

 

$

4.62

 

Weighted average number of common and common equivalent shares outstanding

 

 

156,880

 

 

 

157,133

 

 

 

157,177

 

 

 

157,144

 

BOSTON PROPERTIES, INC.

FUNDS FROM OPERATIONS (1)

(Unaudited)

 

 

Three months ended
September 30,

 

Nine months ended
September 30,

 

2023

 

2022

 

2023

 

2022

 

(in thousands, except for per share amounts)

Net income (loss) attributable to Boston Properties, Inc.

$

(111,826

)

 

$

360,977

 

 

$

70,290

 

 

$

727,144

 

Add:

 

 

 

 

 

 

 

Noncontrolling interest - common units of the Operating Partnership

 

(12,626

)

 

 

40,883

 

 

 

8,642

 

 

 

82,821

 

Noncontrolling interests in property partnerships

 

20,909

 

 

 

18,801

 

 

 

59,337

 

 

 

54,896

 

Net income (loss)

 

(103,543

)

 

 

420,661

 

 

 

138,269

 

 

 

864,861

 

Add:

 

 

 

 

 

 

 

Depreciation and amortization expense

 

207,435

 

 

 

190,675

 

 

 

618,746

 

 

 

551,445

 

Noncontrolling interests in property partnerships' share of depreciation and amortization

 

(18,174

)

 

 

(17,706

)

 

 

(53,743

)

 

 

(52,773

)

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

 

25,666

 

 

 

21,485

 

 

 

77,067

 

 

 

64,649

 

Corporate-related depreciation and amortization

 

(446

)

 

 

(431

)

 

 

(1,357

)

 

 

(1,248

)

Impairment losses included within loss from unconsolidated joint ventures

 

272,603

 

 

 

?

 

 

 

272,603

 

 

 

?

 

Less:

 

 

 

 

 

 

 

Gains on sales of real estate

 

517

 

 

 

262,345

 

 

 

517

 

 

 

381,293

 

Gain on investment included within loss from unconsolidated joint ventures

 

35,756

 

 

 

?

 

 

 

35,756

 

 

 

?

 

Unrealized gain (loss) on non-real estate investment

 

(51

)

 

 

?

 

 

 

332

 

 

 

?

 

Noncontrolling interests in property partnerships

 

20,909

 

 

 

18,801

 

 

 

59,337

 

 

 

54,896

 

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

 

326,410

 

 

 

333,538

 

 

 

955,643

 

 

 

990,745

 

Less:

 

 

 

 

 

 

 

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

 

33,588

 

 

 

33,787

 

 

 

98,049

 

 

 

100,164

 

Funds from operations attributable to Boston Properties, Inc.

$

292,822

 

 

$

299,751

 

 

$

857,594

 

 

$

890,581

 

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

 

89.71

%

 

 

89.87

%

 

 

89.74

%

 

 

89.89

%

Weighted average shares outstanding - basic

 

156,880

 

 

 

156,754

 

 

 

156,837

 

 

 

156,708

 

FFO per share basic

$

1.87

 

 

$

1.91

 

 

$

5.47

 

 

$

5.68

 

Weighted average shares outstanding - diluted

 

157,269

 

 

 

157,133

 

 

 

157,177

 

 

 

157,144

 

FFO per share diluted

$

1.86

 

 

$

1.91

 

 

$

5.46

 

 

$

5.67

 

(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. (computed in accordance with GAAP) for gains (or losses) from sales of properties, including a change in control, 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 or a change in control 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 calculation 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 (loss) attributable to Boston Properties, Inc. as presented in the Company's consolidated financial statements. FFO should not be considered as a substitute for net income (loss) attributable to Boston Properties, Inc. (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

 

 

% Occupied by Location (1)

 

% Leased by Location (2)

 

September 30, 2023

 

December 31, 2022

 

September 30, 2023

 

December 31, 2022

Boston

90.8 %

 

90.2 %

 

91.5 %

 

92.7 %

Los Angeles

85.9 %

 

88.3 %

 

87.6 %

 

88.6 %

New York

90.2 %

 

86.8 %

 

90.9 %

 

90.9 %

San Francisco

87.1 %

 

88.5 %

 

87.9 %

 

88.8 %

Seattle

84.7 %

 

88.3 %

 

87.6 %

 

90.9 %

Washington, DC

86.5 %

 

88.7 %

 

90.9 %

 

93.0 %

Total Portfolio

88.8 %

 

88.6 %

 

90.4 %

 

91.5 %

(1)

 

Represents signed leases for which revenue recognition has commenced in accordance with GAAP.

(2)

Represents signed leases for which revenue recognition has commenced in accordance with GAAP and signed leases for vacant space with future commencement dates.

 


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