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Tickers in this Article: BXP, VNO
Boston Properties Inc (BXP), a real estate investment trust (REIT), is scheduled to report its third quarter 2012 earnings on October 23, 2012 after the closing bell. The current Zacks Consensus Estimate for the third quarter is pegged at $1.16 per share, representing a year-over-year decline of about 9.1%.

Second Quarter Recap

Boston Properties reported second quarter 2012 FFO (funds from operations) of $206.8 million or $1.37 per share, compared with $181.6 million or $1.23 per share in the year-earlier quarter. The reported FFO for the quarter beat the Zacks Consensus Estimate by $0.13. The year over year increase in FFO was primarily driven by higher rental revenue.

Total revenues during the quarter were $472.9 million, compared with $433.9 million in the year-ago quarter. The quarterly revenues were well above the Zacks Consensus Estimate of $425 million. The overall portfolio was 91.6% leased at quarter-end.

Agreement of Analysts

In the last 7 days, none of the analysts have revised their earnings estimate for fiscal 2012 and fiscal 2013. This signifies that the analysts are cautious about both the short- and long-term earnings prospect of the company.

Magnitude of Estimate Revisions

The company expects FFO for full year 2012 to be in the range of $4.85-$4.91.  The Zacks Consensus Estimate for 2012 has remained constant over the last 7 days at $4.88 per share which is at the middle of the company guidance. For 2013, the Zacks Consensus Estimate remained unchanged over the last 7 days at $5.28 per share.
    
Our Recommendation

Massachusetts-based Boston Properties is a fully integrated, self-administered and self-managed that owns and develops one of the largest first-class office portfolios in the U.S.

Boston Properties concentrates on a few select high-rent, high barrier-to-entry geographic markets which usually fare better in a faltering economy.  The company has a strong and dedicated management team, which is also one of the most respected and accomplished in the industry. The company benefits from the reputation and relationships of its key personnel with the industry as a whole, which further helps to attract profitable business and investment opportunities.

However, Boston Properties face significant competition from developers, owners and operators of office properties and other commercial real estate, including sublease space available from its tenants. This influences its ability to attract and retain tenants at relatively high rents than its competitors, adversely affecting its long-term profitability

Boston Properties currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock. One of its competitors, Vornado Realty Trust  (VNO) holds a Zacks #3 Rank.

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