BOSTON--(BUSINESS WIRE)-- Boston Properties, Inc. (BXP) (NYSE: BXP), the largest publicly-traded developer, owner and manager of Class A office properties in the United States, reported results today for the first quarter ended March 31, 2019.

Financial highlights for the first quarter include:

• Total revenue increased 10% to $725.8 million as compared to total revenue of $661.2 million for the quarter ended March 31, 2018.
• Net income attributable to common shareholders of $98.1 million, or $0.63 per diluted share (EPS), decreased 45% compared to $176.0 million, or $1.14 per diluted share, for the quarter ended March 31, 2018, primarily due to gains on asset sales during the first quarter of 2018.
• Funds from Operations (FFO) increased 15% to $266.0 million, or $1.72 per diluted share, from FFO of $230.6 million, or $1.49 per diluted share, for the quarter ended March 31, 2018, primarily due to higher lease revenue from the completion of development projects and improvements from its in-service portfolio.
  • FFO of $1.72 per diluted share was $0.05 greater than the mid-point of the Company's first quarter guidance provided on January 29, 2019, due to a delay of expenses of $0.03 per share into later in 2019 and $0.02 per share of better-than-projected portfolio performance.

The Company provided guidance for the second quarter of 2019 with projected EPS of $0.72 - $0.74 per diluted share and projected FFO of $1.73 - $1.75 per diluted share.

The Company also reduced its full year 2019 EPS guidance by $0.12 at the mid-point and increased its full year 2019 FFO guidance by $0.05 at the mid-point compared to guidance provided on January 29, 2019. See "EPS and FFO Per Share Guidance" below.

Recent business highlights include:

• Increased total portfolio occupancy to 92.9% for the Company’s in-service office properties, an increase of 150 bps from the fourth quarter of 2018 and an increase of 240 bps as compared to the first quarter of 2018.
• Signed a new, 15-year lease agreement with Bank of America for 545,000 square feet at 100 Federal Street in Boston, Massachusetts. This new agreement is an early renewal of their lease that was scheduled to expire in 2022.
• Announced a 15-year lease with Google, LLC for approximately 362,000 square feet of Class A office space in a build-to-suit development project to be located at the Company’s 325 Main Street property at Kendall Center in Cambridge, Massachusetts. The new, 16-story building will be approximately 400,000 square feet (including a retail component) and will replace the existing, four-story, approximately 115,000 square foot building currently on site. Construction is expected to commence this year and be completed in 2022.
• Issued its 2018 Sustainability Report which outlines the Company’s Key Performance Indicators (KPIs), achievements and initiatives to address key environmental, social and governance (ESG) issues. The 2018 Sustainability Report is aligned with the Global Reporting Initiative (GRI) and reinforces the Company's ongoing leadership in all aspects of sustainability.
• Selected as a 2019 ENERGY STAR® Partner of the Year. The Company was recognized by the U.S. Environmental Protection Agency (EPA) in Washington, DC. Earning an ENERGY STAR® Partner of the Year Award distinguishes corporate energy management programs, and is the highest level of EPA recognition.

Other events during the first quarter include:

Acquisition and Disposition Activities

• Completed the sale of 2600 Tower Oaks Boulevard, a 179,000 square foot property in Rockville, Maryland on January 24, 2019 for a gross sale price of approximately $22.7 million.
• Exercised its right to acquire land parcels at Carnegie Center in Princeton, New Jersey on January 10, 2019, for approximately $42.9 million. The seller will be entitled to receive additional payments aggregating approximately $8.6 million, the payment of which is conditioned on the development or sale of each of the parcels. The land parcels could support approximately 1.7 million square feet of development.

Transactions completed subsequent to March 31, 2019:

• A joint venture in which the Company has a 50% interest obtained construction financing with a total loan commitment of $255.0 million for its 7750 Wisconsin Avenue development project on April 26, 2019. The 734,000 square foot build-to-suit, Class A office building is located in Bethesda, Maryland and is 100% pre-leased to an affiliate of Marriott International, Inc. The construction financing bears interest at a variable rate equal to LIBOR plus 1.25% per annum and matures on April 26, 2023, with two, one-year extension options, subject to certain conditions.
• On April 18, 2019, the Company entered into an agreement to sell One Tower Center, a 410,000 square foot office property in East Brunswick, New Jersey, for a gross sale price of approximately $38.0 million. The property is 39% leased and is considered a non-core asset. At March 31, 2019, the Company shortened its expected hold period for One Tower Center and, as a result, the Company reduced the carrying value of the property to its estimated fair value at March 31, 2019 and recognized an impairment loss totaling approximately $24.0 million. This impairment loss reduced EPS for the first quarter of 2019 but did not impact FFO.
• The Company completed the acquisition of its partner's 5% ownership interest and promoted profits interest in the consolidated entity that owns Salesforce Tower in San Francisco, California on April 1, 2019, for cash totaling approximately $210.9 million, which amount was reduced by approximately $24.1 million to $186.8 million to reflect the repayment of the Company's preferred equity and preferred return in the venture. The partner was entitled to receive an additional promoted payment based on the success of the property which is included in the total consideration. The Company now owns 100% of Salesforce Tower.

The reported results are unaudited and there can be no assurance that these reported results will not vary from the final information for the quarter ended March 31, 2019. In the opinion of management, the Company has made all adjustments considered necessary for a fair statement of these reported results.

EPS and FFO per Share Guidance:
The Company’s guidance for the second quarter and full year 2019 for EPS (diluted) and FFO per share (diluted) is set forth and reconciled below. Except as described below, the estimates reflect management’s view of current and future market conditions, including assumptions with respect to rental rates, occupancy levels and the earnings impact of the events referenced in this release and otherwise referenced during the conference call and in the Company’s Supplemental Operating and Financial Data for the quarter ended March 31, 2019. The estimates do not include possible future gains or losses or the impact on operating results from other possible future property acquisitions or dispositions, other possible capital markets activity or possible future impairment charges. EPS estimates may be subject to fluctuations as a result of several factors, including changes in the recognition of depreciation and amortization expense and any gains or losses associated with disposition activity. The Company is not able to assess at this time the potential impact of these factors on projected EPS. By definition, FFO does not include real estate-related depreciation and amortization, impairment losses on depreciable real estate or gains or losses associated with disposition activities. There can be no assurance that the Company’s actual results will not differ materially from the estimates set forth below. For details of the Company's assumptions related to guidance for the second quarter and full year 2019 for EPS (diluted) and FFO per share (diluted), please see the First Quarter 2019 Supplemental Operating and Financial Data located on the Investor Relations section of the Company's website at bostonproperties.com.

As set forth below, the Company has updated its projected EPS (diluted) for the full year 2019 to $2.95 - $3.02 per share from $3.05 - $3.17 per share. This is a decrease of approximately $0.12 per share at the mid-point of the Company’s guidance provided on January 29, 2019 primarily due to a $0.14 per share impairment loss recognized as a result of the expected sale of One Tower Center, $0.02 per share of increased depreciation expense, $0.01 per share of projected company share of losses on sales of real estate, partially offset by $0.02 per share of greater-than-expected portfolio performance and $0.03 per share of lower-than-expected interest expense.

In addition, the Company has updated its projected guidance range for FFO per diluted share for the full year 2019 to $6.95 - $7.02 per share from $6.88 - $7.00 per share. This is an increase of approximately $0.05 per share at the mid-point of the Company’s guidance provided on January 29, 2019 primarily due to $0.02 per share of greater than expected portfolio performance and $0.03 per share of lower than expected interest expense.

Boston Properties (NYSE: BXP) is the largest publicly-held developer and owner of Class A office properties in the United States, concentrated in five markets - Boston, Los Angeles, New York, San Francisco and Washington, DC. The Company is a fully integrated real estate company, organized as a real estate investment trust (REIT), that develops, manages, operates, acquires and owns a diverse portfolio of primarily Class A office space. The Company’s portfolio totals 51.4 million square feet and 196 properties, including eleven properties under construction.