BXP, Inc. BXP is slated to report third-quarter 2024 results on Oct. 29, after market close. Its quarterly results are likely to reflect a year-over-year decrease in revenues and funds from operations (FFO) per share.

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In the last reported quarter, this office real-estate investment trust (REIT) outpaced the Zacks Consensus Estimate of $1.77 in terms of FFO per share. The quarterly results reflected better-than-anticipated revenues on healthy leasing activity. However, higher interest expenses during the quarter acted as a dampener.

Over the preceding four quarters, BXP’s FFO per share surpassed the Zacks Consensus Estimate on three occasions and met on one occasion, the average beat being 1.00%. This is depicted in the graph below:

BXP, Inc. Price and EPS Surprise

BXP, Inc. price-eps-surprise | BXP, Inc. Quote

U.S. Office Market in Q3

Per a Cushman & Wakefield CWK report, although the overall net absorption was negative in the third quarter, certain markets registered improved absorption. U.S. office vacancy rate grew in the quarter, marking the 10th straight quarter of increasing vacancy.

Overall net absorption of negative 18.5 million square feet (msf) for the third quarter further declined from the negative 13.9 msf recorded in the previous quarter. The nation reported a cumulative total of negative 293.7 msf since the beginning of the pandemic.

The Cushman & Wakefield report highlights that despite the weaker trends at the national level, demand for U.S. office spaces outperformed in some markets.

More than half of the U.S. office markets reported improved absorption figures in the third quarter compared to the prior year quarter, and a similar number of markets experienced quarter-over-quarter absorption growth. In the third quarter of 2024, 27 markets recorded positive absorption.

In addition, occupiers’ growing preference for high-quality office buildings has played a key role in leading to positive net absorption rates in these markets. Further, the occupancy of these assets in six gateway markets was approximately 800 basis points (bps) higher than the overall office average.

Nonetheless, the third-quarter national vacancy rate reached a record high of 20.9%, increasing 55 bps sequentially and 190 bps year over year. The national asking rent increased to $38.15 in the third quarter from $37.68 in the previous quarter.

BXP’s Projections

BXP owns a portfolio of class-A office buildings concentrated in a few select high-rent, high-barrier-to-entry geographic markets of Boston, Los Angeles, New York, San Francisco, Seattle, and Washington, DC. Given the rise in demand for top-tier assets, the company’s properties are likely to have witnessed healthy leasing activity in the third quarter.

We expect BXP’s in-service properties occupancy to increase 20 basis points sequentially to 87.3% in the to-be-reported quarter.

There is a solid demand for life-science assets. Against this backdrop, the demand for BXP’s life-science assets is anticipated to have fared well during the quarter. A healthy balance sheet position is likely to have supported its development activities in the quarter.

However, the elevated supply of office properties in some markets where the company operates is anticipated to have cast a pall on its quarterly performance to a certain extent. This is likely to have partly limited BXP’s ability to retain tenants at relatively higher rents and/or backfill tenant move-outs and vacancies.

The Zacks Consensus Estimate for third-quarter revenues is pegged at $803.8 million, suggesting a decrease of 2.5% from the prior-year quarter’s reported number.

Further, high interest expenses are expected to have been a spoilsport for BXP during the to-be-reported quarter.

BXP’s activities in the to-be-reported quarter were inadequate to garner analysts’ confidence. The Zacks Consensus Estimate for third-quarter FFO per share has remained unrevised at $1.81 over the past month. It suggests a 2.7% decrease from the year-ago quarter’s tally.

What Our Quantitative Model Predicts

Our proven model doesn’t conclusively predict a surprise in terms of FFO per share for BXP this quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an FFO beat, which is not the case here.

BXP has an Earnings ESP of 0.00% and currently carries a Zacks Rank of 3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks That Warrant a Look

Here are two stocks from the broader REIT sector — Cousins Properties CUZ and Digital Realty Trust DLR — you may want to consider as our model shows that these have the right combination of elements to report a surprise this quarter.

Cousins Properties, scheduled to report quarterly numbers on Oct. 24, has an Earnings ESP of +0.75% and carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Digital Realty is slated to report quarterly numbers on Oct. 24. DLR has an Earnings ESP of +1.36% and carries a Zacks Rank of 3 presently.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.

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BXP, Inc. (BXP) : Free Stock Analysis Report

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