BXP Completes Acquisition - Analyst Blog

Boston Properties Inc. (BXP), a real estate investment trust (REIT), has recently completed the acquisition of 510 Madison Avenue, a newly-constructed 350,000 square foot Class-A office property in New York City, for approximately $275 million. The company also incurred an additional $2 million as closing costs related to the purchase and sale agreement for acquiring the property.
 
Boston Properties had earlier acquired a junior mezzanine loan interest on the property for approximately $22.5 million. The property is located in a premier market of the Plaza District in midtown Manhattan and includes state-of-the-art facilities. Consequently, the office building is well poised to attract the highest quality tenants at premium rent.
 
Boston Properties owns and develops one of the largest Class-A office, industrial, and hotel properties in the U.S. The company has one of the best balance sheets in the sector with manageable near-term debt maturities and adequate liquidity to take advantage of distressed selling as asset values of office and retail properties continue to drop.
 
However, fundamentals are declining in many of the company's office markets as corporate expansion continues to slow. In addition, Boston Properties has a large development pipeline, which increases operational risks in the current credit-constrained market, exposing it to rising construction costs, entitlement delays and lease-up risk.
 
We maintain our Neutral recommendation on Boston Properties, which currently has a Zacks #3 Rank that translates into a short-term ‘Hold' rating and indicates that the stock is expected to perform in line with the overall U.S. equity market for the next 1-3 months.
 

 
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