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Key Factors to Impact Boston Properties (BXP) in Q4 Earnings

Boston Properties, Inc. BXP is slated to report fourth-quarter and full-year 2021 results on Jan 25, 2022, after market close. BXP’s quarterly results are likely to reflect year over year growth in both funds from operations (FFO) per share and revenues.

In the last reported quarter, this office real-estate investment trust (REIT) delivered a surprise of 1.76% in terms of FFO per share. The higher-than-expected performance reflected better-than-projected results from the in-service portfolio and improved parking revenues.

Over the preceding four quarters, Boston Properties’ FFO per share surpassed estimates on three occasions and missed the mark in the remaining one, the average negative surprise being 1.3%. This is depicted in the graph below:

Boston Properties, Inc. Price and EPS Surprise

Boston Properties, Inc. price-eps-surprise | Boston Properties, Inc. Quote

Let’s see how things have shaped up ahead of this announcement.

Factors at Play

With relaxations of the pandemic-related restrictions and accelerated vaccine roll-outs, there has been a noticeable return of the workforce to offices and other places of businesses of late. Per Cushman & Wakefield CWK report, the U.S. office sector is already on the path of recovery.

Though the U.S. office sector witnessed a negative net absorption of 8.6 million square feet, the same improved 33% on a quarter-over-quarter basis. The vacancy rate has increased a minimal amount since the pandemic, ending the year at 17.6%.

Boston Properties is well poised to bank on the improving office real-estate market. Its portfolio of modern, class A office buildings is likely to have gained from the flight-to-quality preference of office tenants. These make us optimistic about BXP’s fourth-quarter results.

Moreover, amid the heightening need for effective diagnostics, therapies and vaccines to fight the health crisis, the drug research and innovation business continued witnessing solid growth in fourth-quarter 2021, thus driving demand for life-science assets.

The REIT saw an uptick in leasing activity in the fourth quarter. Last December, BXP announced the execution of three leases, aggregating 166,000 square feet at 880 Winter Street in Waltham, MA. Boston Properties also secured a 229,000-square-foot lease at 751 Gateway with a leading biotech company in the same month. Moreover, BXP announced a long-term, net zero repositioning and lease commitment with Wellington Management for a 106,000-square feet space at 140 Kendrick Street in Needham last month.

Additionally, BXP acquired 360 Park Avenue South in the Midtown South submarket of Manhattan, NY, from Enterprise Asset Management during the quarter. As part of its Strategic Capital Program, Boston Properties accomplished the buyout through a newly formed joint venture with two institutional partners for roughly $300 million.

The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $695.1 million, suggesting growth of 8.7% from the prior-year quarter’s reading. In addition, the consensus estimate for quarterly parking and other revenues is pegged at $24.01 million, calling for a 51% increase from the year-ago period’s reported number.

However, prior to the fourth-quarter earnings release, analysts seem pessimistic about BXP’s prospects as the Zacks Consensus Estimate for the quarterly FFO per share has been revised 3.2%downward to $1.52 over the past month. Nevertheless, the same calls for a 10.9% increase from the prior-year period’s reported figure.

For the full year, the Zacks Consensus Estimate for FFO per share has been revised marginally downward to $6.52 over the past week. The figure indicates a 4.1% increase year over year on revenues of $2.76 billion.

Earnings Whispers

Boston Properties has the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Boston Properties has an Earnings ESP of +1.78%.

Zacks Rank: Boston Properties currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks That Warrant a Look

Here are some stocks worth considering from the REIT sector, as our model shows that these have the right combination of elements to deliver a surprise this reporting cycle:

City Office REIT CIO, slated to release fourth-quarter earnings on Feb 25, has an Earnings ESP of +4.21% and a Zacks Rank #1 (Strong Buy) at present.

Life Storage, Inc. LSI, scheduled to report quarterly figures on Feb 28, has an Earnings ESP of +0.74% and a Zacks Rank of 1, currently.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.


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Boston Properties, Inc. (BXP): Free Stock Analysis Report
 
Life Storage, Inc. (LSI): Free Stock Analysis Report
 
City Office REIT, Inc. (CIO): Free Stock Analysis Report
 
Cushman & Wakefield PLC (CWK): Free Stock Analysis Report
 
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