Boston Properties Inc., a real estate investment trust that owns high-end office buildings, posted better-than-expected earnings, helped by higher rental revenue.
The real estate investment trust said on Tuesday that funds from operations (FFO) rose to $190.3 million, or $1.28 per share, compared with $150.8 million, or $1.08 per share, a year ago.
That beat analysts’ average expectation of FFO of $1.24 per share, according to Thomson Reuters I/B/E/S. The company had forecast FFO in the range of $1.23 to $1.25 per share.
FFO, a measure of performance of a real estate investment trust (REIT), removes the profit-reducing effect depreciation has on earnings. It usually also excludes gains on property sales.
In addition to its base in the Hub, Boston Properties owns buildings in Washington D.C., New York and San Francisco. Its largest tenant is the U.S. government, which comprises 5 percent of its tenants by square foot. Citibank is its second biggest tenant at 2.7 percent.
By revenue, the legal services industry comprises its largest tenant sector at 26 percent.
The company, whose chairman and chief executive officer is publisher Mortimer Zuckerman, said revenue rose 17 percent to $452.4 million.
Occupancy at its properties fell to 91.3 percent at the end of September, from 93.2 at the end of 2010.
Boston Properties also said that it had closed on the $401 million sale of New York’s Two Grand Central Tower. According to a source familiar with the deal, Rockwood Capital LLC is the buyer. The price includes the assumption of a $176.6 million mortgage.
Boston Properties bought the building in 2008 as part of a joint venture. For Boston Properties’ 60 percent stake, it will receive $125.9 million.
The sale means the rent will no longer be included in its revenue.
For the fourth quarter, Boston Properties expects FFO in the range of $1.18 to $1.20 per share, below Wall Street’s view of $1.24 per share, according to Thomson Reuters I/B/E/S.
For 2012, the company expects FFO in the range of $4.58 per share to $4.78 percent, while analysts, on average, had forecast $5.14 per share.
The forecast is the result of the redevelopment of Patriots Park in Reston, Virginia, which will shave 14 cents per share off 2012 results, the company said, and a reduction in non-cash fair value lease revenue associated with investments in unconsolidated joint ventures that will clip another 11 cents per share from FFO.
Shares of Boston Properties closed down 2 percent at $92.99 on Tuesday.
