Boston Properties Inc.BXP

Morningstar Rating

Stock Research and Analysis

by Morningstar Analysts

Boston Properties is a real estate investment trust that owns premier office properties in primarily supply-constrained markets. With solid profitability, long average lease terms, and a diverse client base, Boston Properties has earned a narrow moat. Read more

Bulls Say

Boston Properties has ownership or financial interests in premier office properties in major markets, including the GM Building in Manhattan.

Lease terms that average seven and a half years, a diversified tenant base, and rent increases that tend to outpace inflation provide welcome stability to this firm's operating performance.

A deep management bench with extensive industry experience gives this firm an advantage over competitors because of its ability to efficiently allocate capital among properties in the best interests of shareholders. Read more

Bears Say

Turmoil in the credit markets could make future debt more expensive and inhibit otherwise value-creating property developments, sales, and acquisitions.

The financial services sector generates nearly one fourth of gross rent, which could be a head wind as large banks and other financial institutions will likely be highly cost-conscientious in the near term, potentially leading to layoffs and less demand for office space.

If long-term interest rates rise, in addition to already increased credit spreads, this firm's cost of capital would increase, pressuring asset values and reducing cash flow.

Large tenants Lehman Brothers and General Motors recently used bankruptcy to reject their leases with Boston Properties, resulting in a loss of about 4% of revenue. Read more

Strategy

Management at Boston Properties focuses on long-run ownership of its highest-quality properties while churning somewhat less attractive properties on the fringes as it improves their operations. New Read more

Management

Edward H. Linde, 66, has been Boston Properties' CEO and a director since 1997. He helped cofound the company in 1970 and owns about 7% of shares outstanding. The firm's board of directors is staggered and has 10 members, six of whom are independent. Read more

Profile

Boston Properties is a full-service real estate investment trust that focuses primarily on high-end (Class A) office properties in Boston, Washington D.C., Manhattan, San Read more

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