BXP Announces First Quarter 2024 Results

BXP, the largest publicly traded developer, owner, and manager of premier workplaces in the United States, reported results today for the first quarter ended March 31, 2024.

Financial Highlights

• Revenue increased 4.5% to $839.4 million for the quarter ended March 31, 2024, compared to $803.2 million for the quarter ended March 31, 2023.

• Net income attributable to Boston Properties, Inc. of $79.9 million, or $0.51 per diluted share (EPS), for the quarter ended March 31, 2024, compared to $77.9 million, or $0.50 per diluted share, for the quarter ended March 31, 2023.

• EPS for the first quarter fell short of the mid-point of BXP’s guidance by $0.16 per diluted share primarily due to an $0.08 per diluted share non-cash impairment charge related to its Shady Grove, Maryland investment and $0.06 per diluted share in greater depreciation and amortization expense.

• Funds from Operations (FFO) of $271.3 million, or $1.73 per diluted share, for the quarter ended March 31, 2024, compared to FFO of $272.0 million, or $1.73 per diluted share, for the quarter ended March 31, 2023.

• FFO per diluted share for the first quarter was inline with the mid-point of BXP’s guidance.

Guidance

BXP provided guidance for second quarter 2024 EPS of $0.45 - $0.47 and FFO of $1.70 - $1.72 per diluted share, and full year 2024 EPS of $1.97 - $2.09 and FFO of $6.98 - $7.10 per diluted share. This represents a reduction of approximately $0.33 and $0.06 per share of EPS and FFO, respectively, at the midpoint of our guidance provided last quarter.

• Guidance for full year 2024 EPS has been adjusted primarily due to $0.18 per diluted share in greater depreciation and amortization expense and $0.08 per diluted share in the aforementioned non-cash impairment charge.

• Guidance for each of full year 2024 EPS and FFO per diluted share has been adjusted due to increased interest expense, primarily as a result of $0.05 per share of greater non-cash fair value interest expense related to finalizing the market value of the in-place debt and interest rate swaps for our recent acquisitions, in addition to the impact of the expected deferral of interest rate cuts by the Federal Reserve and the resulting uncertainty surrounding the number of cuts this year. We have made no changes to our prior guidance for full-year portfolio occupancy and NOI.

Leasing & Occupancy

• Executed 61 leases totaling approximately 900,000 square feet with a weighted-average lease term of 11.6 years.

• BXP’s CBD portfolio of premier workplaces was 91.0% occupied and 92.8% leased (including vacant space for which we have signed leases that have not yet commenced in accordance with GAAP). Approximately 91.0% of BXP’s Share of annualized rental obligations are from clients located in our CBD portfolio, underscoring the strength of BXP’s strategy to invest in the highest quality buildings in dynamic urban gateway markets.

Development

• Commenced development of 121 Broadway, a residential project located in Cambridge, Massachusetts, that is adjacent to BXP’s development projects at 290 and 300 Binney Street. Upon completion, 121 Broadway is expected to consist of 439 rental units and at 37 stories, will be the tallest building in Cambridge.

Transactions

• Completed the acquisition of its joint venture partner’s 50% economic ownership interest in 901 New York Avenue located in Washington, DC for a purchase price of $10.0 million and recorded a gain on consolidation of approximately $21.8 million. The property is encumbered by an approximately $207.1 million mortgage loan, which bears interest at 3.61% per annum and matures on January 5, 2025. Following the acquisition, BXP modified the mortgage loan to provide for two loan extension options totaling five years of additional term, each subject to certain conditions. The first loan extension option, which provides for an additional term of four years, is at a fixed interest rate of 5.0% per annum. 901 New York Avenue is a premier workplace consisting of approximately 523,939 net rentable square feet.

• Completed the previously announced sale of a 45% interest in 290 Binney Street, a life sciences development located in Kendall Square in Cambridge Massachusetts, to Norges Bank Investment Management (“NBIM”). NBIM’s investment in 290 Binney Street will reduce BXP’s share of the project’s estimated development spend over time by approximately $533.5 million, including $141.8 million that was funded at closing. The consummation of this joint venture completed NBIM’s two-building investment in Cambridge, Massachusetts with a gross valuation of approximately $1.66 billion or $2,050 per square foot. The properties – 290 Binney Street and 300 Binney Street – total 802,000 square feet and are each 100% pre-leased. BXP retains a 55% interest in each joint venture and provides development, property management, and leasing services for the ventures.

Balance Sheet & Liquidity

• Boston Properties Limited Partnership (“BPLP”) completed the repayment of $700.0 million in aggregate principal amount of its 3.800% senior notes upon maturity which was February 1, 2024. The repayment was completed with the proceeds of a $600.0 million mortgage loan entered into on October 26, 2023 and available cash.

• On April 16, 2024, BPLP provided notice to exercise its one-year extension option on its unsecured term loan facility. BPLP anticipates effectuating the extension on or prior to the current May 16, 2024 maturity date. Upon effectiveness, the term loan facility will mature on May 16, 2025. After making an approximately $500.0 million optional repayment on April 29, 2024, the term loan facility has an outstanding principal balance of $700.0 million.

• On April 17, 2024, BPLP established an unsecured commercial paper program. Under the terms of the program, BPLP may issue, from time to time, unsecured commercial paper notes up to a maximum aggregate amount outstanding at any one time of $500 million with varying maturities of up to one year. The notes will be sold in a private placement and will rank pari passu with all of BPLP’s other unsecured senior indebtedness, including its outstanding senior notes. The commercial paper program is backstopped by available capacity under BPLP's unsecured revolving credit facility. As of April 30, 2024, BPLP had $500.0 million outstanding under its commercial paper program, the proceeds of which were used to reduce BPLP’s $1.2 billion term loan to $700.0 million.

• On April 29, 2024, BPLP increased the current maximum borrowing amount under its unsecured revolving credit facility from $1.815 billion to $2.0 billion. All other terms of the credit facility, including its expiration date of June 15, 2026, remain unchanged. BPLP has no current borrowings under the credit facility.

Sustainability & Impact

• On April 22, 2024, in connection with Earth Day, we published BXP’s 2023 Sustainability & Impact Report, which highlights that, among other things, BXP remains on track to achieve carbon-neutral operations by 2025. In conjunction with the publication, BXP announced its third annual Sustainability & Impact Investor Update to be held on May 15, 2024 at 2:00 PM ET.

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