Boston Properties knows more than beans about real estate. The firm invests in, develops, and manages primarily Class-A office buildings in large US cities. Its core markets include Boston, New York, San Francisco, and Washington, DC. A self-administed real estate investment trust (REIT), Boston Properties owns about 150 office and office/technical properties, including projects under construction. Its largest tenants include the US government, Lockheed Martin, and Citibank. The REIT also owns a handful of retail, hotel, residential properties, as well as land sites for development. Media czar Mort Zuckerman (U.S. News & World Report and Daily News) is Boston Properties' chairman and CEO.
The REIT owns stakes in some rather iconic buildings. It has a 60% stake in New York's GM Building, which was acquired from the ailing Macklowe Properties for $2.8 billion, a record-setting price for a US office building. Boston Properties also owns Times Square Tower in New York, Embarcadero Center in San Francisco, and Metropolitan Square in Washington, DC.
Even as unemployment remains high and the real estate market continues to struggle, Boston Properties has looked to expand its portfolio. The REIT has gone after several high-quality assets that presented attractive repositioning and leasing opportunities as the real estate market entered recovery. In 2010 Boston Properties bought the John Hancock Tower -- the tallest building in Boston -- in a $930 million deal. It also bought 510 Madison Avenue in Midtown Manhattan, Bay Colony Corporate Center in Boston, and 500 North Capitol in Washington, DC. In 2012 the company acquired 100 Federal Street in Boston, which is leased to Bank of America. To fund such acquisitions, the company regularly sells select properties.
The deteriorating property and financial markets have negatively impacted Boston Properties profits since 2008. To raise capital, the REIT has completed public offerings and refinanced debt. It has also raised funds through secured financing. Boston Properties hopes to use the capital to take advantage of bargain deals in the volatile markets; it will also consider making acquisitions in foreign markets. Additionally, the company is taking a more conservative tack for new developments, requiring pre-leasing from a mix of healthy tenants. With properties in some of the stronger markets, the company has even been able to raise some of its rents. As such, revenues have been inching upwards (they grew 13% in 2011 to $1.8 billion) even when profits remain lower than pre-recession levels.
In 2011 Boston Properties opened two major mixed-use developments in Boston and Washington, DC.
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