BXP - Boston Properties: Tentative Signs The Office Market Is Getting Less Weak (Rating Upgrade)

2024-06-07 00:57:22 ET

Summary

• Boston Properties' shares have gained 20% in the past year, but are still down over 50% from five years ago.
• The company's recent financial results showed flat year-over-year funds from operations (FFO) due to increased expenses, and re-leasing activity has been better than feared.
• The lack of office supply and successful leasing activity have made weakened the bearish argument about its future prospects.

Shares of Boston Properties ( BXP ) have been a solid performer over the past year, gaining 20%, though they are still down by over 50% from five years ago as higher rates and increased hybrid work have significantly weighed on office property valuations. Given my concerns about long-term occupancy trends, I rated BXP a “ sell ” in November. Since then, shares have returned about 19%, a bit below the market’s 21% gain—in hindsight, I would view this performance as more akin to a “hold” than a “sell,” given the positive return and just modest relative underperformance. Given this performance and with updated financials, now is an opportune time to revisit BXP. Recent developments have made me less bearish....

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