Boston Properties knows real estate in more than just its home
city. The self-administered real estate investment trust (REIT)
buys, develops, and manages mostly Class-A office buildings in
large US cities, with its core markets being in Boston, New York,
San Francisco, and Washington, DC. As one of the nation's largest
office owners and developers, Boston Properties owns around 165
office and office/technical properties with 47.7 million rentable
square feet. Its largest tenants include the US government, Bank of
America , Biogen , and Citibank . The REIT also owns a handful of
retail, hotel, residential properties, as well as land sites for
development. The firm's chairman is media czar Mort Zuckerman (U.S.
News & World Report and Daily News).
Boston Properties leases 164 office properties with 47.7 million
sq. ft. of rentable space. About 95% of the REIT's total revenue
comes from its office properties, the majority of which consists of
its Class A portfolio which the REIT defines as centrally-located
buildings that are professionally managed and maintained and
command upper-tier rental rates. The firm also owns
office/technical properties that support office, research and
development, laboratory, and other technical uses. Beyond offices,
the REIT owns one hotel, five retail properties, and four
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.
Despite its name, firm's largest market is actually in New York
City, where its properties generate more than 40% of its total
revenue. Its Boston-based properties contribute more than 30% to
its revenue, while its properties in Washington, DC, and San
Francisco made up another roughly 15% and 10% of its revenue,
Sales and Marketing
The REIT's tenants come from a variety of sectors including the
legal services, media & technology, financial services, retail,
and public sectors. The US government is the REIT's largest tenant,
occupying 4% of its rented space. Citibank, Biogen, and Bank of
America each occupy about 2% of space. Other high-profile tenants
include Genentech, Microsoft, and Google.
Boston Properties' annual revenue has risen 38% since 2012
thanks to rent-boosting property acquisitions and appreciating
property valuations that have commanded higher rental rates.
The REIT's revenue climbed 2% to $2.6 billion in 2016 due to
higher revenue per square foot, partially offset by a reduction in
average occupancy. Termination income increased due to the
termination of 35 tenants, mostly in the New York region.
Net income fell 12% to $512.8 million due to lower income from
unconsolidated joint ventures. Cash provided by operating
activities grew 30% to $1.0 billion.
Boston Properties continues to focus on the Boston, New York,
San Francisco, and Washington, DC. markets, where it aims to be
among the leading -- and preferably the leading -- owners and
developers of office properties.
Aside from acquiring new properties, the REIT also develops its
own. At the end of 2016, Boston had six office properties and two
residential properties under construction totalling 4 million sq.
It also makes property acquisitions, such as an office in Santa
Clara that will be expanded and upgraded in 2021 when the current
tenant's lease expires.
Mergers and Acquisitions
In 2016, Boston Properties acquired 3625-3635 Peterson Way,
Santa Clara, California for $78.0 million. Boston will develop it
into a business campus, nearly tripling rentable floorspace.