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Boston Properties’ Santa Monica Investment Could Grow in a Snap

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Boston Properties Inc., a real estate investment trust and one of the largest owners, managers and developers of class A office properties in the US, recently reported results for the first quarter ended March 31, 2018. According to analyst firm Mizuho Securities USA LLC, the company’s Santa Monica investment “could grow in a snap.”

Net income attributable to common shareholders was $176 million compared to $97.1 million for the quarter ended March 31, 2017. Net income attributable to common shareholders per share was $1.14 basic and $1.14 on a diluted basis, compared to $0.63 basic and $0.63 on a diluted basis for the quarter ended March 31, 2017.

Funds from Operations were $230.6 million, or $1.49 per share basic and $1.49 per share diluted. This compares to FFO of $228.4 million, or $1.48 per share basic and $1.48 per share diluted, for the quarter ended March 31, 2017.

The REIT entered into an agreement to acquire Santa Monica Business Park, a 1.2 million square foot office park located in Santa Monica, CA for a net purchase price of $616 million. The analyst report says that the vision of this particular property “looks compelling” and says it brings BXP’s share of the class A Santa Monica office market to 24%.

The company also entered into a lease with Fannie Mae for approximately 850,000 net rentable square feet of the company’s 1.1 million square foot Reston Gateway office development in Reston, Virginia, for which construction is expected to commence in the second half of 2018.

At March 31, 2018, the company’s portfolio consisted of 179 properties aggregating approximately 50.3 million square feet, including thirteen properties under construction/redevelopment totaling approximately 6.5 million square feet. The overall percentage of leased space for the 163 properties in-service (excluding the company’s two residential properties and hotel) as of March 31, 2018 was 90.5%.

Analyst RBC Capital Markets says that the earnings growth for the company should rebound and accelerate in 2019 and 2020. That company’s report noted that they are encouraged by the strong leasing activity within the in-service portfolio combined with management’s success sourcing new highly pre-leased development opportunities.