Boston Properties Reports 98% of June Office Rent Collections

Zacks Equity Research

Boston Properties, Inc. BXP has collected about 98% of its total office rental receipts for June, higher than the 97% recorded for May. The June rental collection from all its tenants was 94%, ahead of its May figure which was 93%.

The company also announced some dispositions to boost its capital. It sold an area spanning 455,000 square feet of Capital Gallery. This is a Class A office complex in Washington DC. The property was sold to The Smithsonian Institution for about $254 million. Boston Properties expects to reap net proceeds of $242 million from the disposition after closing costs and associated expenses.

However, the company will maintain ownership of 177,000 square feet of the property, which comprises an office space spanning 157,000 square feet, a retail space covering an area of 20,000 square feet and a 465-space parking garage.

Additionally, the company sold the Annapolis Junction Building Eight, a vacant office building comprising 125,700 square feet of space and two parcels of land at the Annapolis Junction Business Park in Annapolis Junction, MD. The building and land parcels were sold for $47 million. Boston Properties had a 50% stake in the Annapolis Junction properties. After closing costs and repayment of mortgage debt on the properties, the company’s net proceeds from the deal is likely to be $14 million.

With macroeconomic uncertainties and spike in unemployment, demand for space is likely to bear the brunt. Rent collection during these times has become particularly difficult and is likely to remain so in the near term. However, strength in rent collections indicates the company’s high-quality tenant roster and will support its revenues during the April-June quarter.

Moreover, the company has been closely working with its customers on repopulation measures, and in June, repopulation activities started in Boston, New York and Washington DC regions. Protocols were issued for the repopulation of non-essential workers in office sites in San Francisco and Los Angeles. With the states and local regulators opting for the reopening of the economy, these repopulation efforts are likely to bode well for the company as rental receipts become more visible.

Shares of this Zacks Rank #3 (Hold) company have declined 30.6%, over the past year, compared with the industry's fall of 6.8%.

Stocks to Consider

City Office REIT, Inc.’s CIO Zacks Consensus Estimate for the ongoing-year funds from operations (FFO) per share moved 13.3% north to $1.11 over the past two months. The stock currently flaunts a Zacks Rank of 1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.

MGM Growth Properties LLC’s MGP Zacks Consensus Estimate for the current year’s FFO per share moved 5.3% north to $2.39 over the past two months. The stock currently sports a Zacks Rank of 1.

Alexandria Real Estate Equities, Inc.’s ARE Zacks Consensus Estimate for the ongoing-year FFO per share moved marginally upward to $7.27 over the past two months. The stock currently carries a Zacks Rank of 2 (Buy).

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