BXP Records Strongest Q3 Leasing Since 2019
As part of growth plans shared in September, BXP captured strong leasing activity in the third quarter.
The Boston-based office REIT recorded more than 1.5M SF in total leasing across 79 transactions, marking its strongest third quarter since 2019, according to the company's quarterly earnings. Overall leasing stood at 3.8M SF in the first three quarters of the year, and the REIT's executives expressed confidence that it will surpass its goal of 4M SF by year’s end.
"Our clients in general are growing, healthy and more intensively using their space, creating increasingly positive leasing market conditions," BXP CEO Owen Thomas said on a Wednesday morning earnings call.
BXP’s stock fell 1.6% on Wednesday after the earnings call.
BXP recorded revenue of $871.5M for a Q3 net loss of $122M, a $206M swing in profitability compared to $84M in gains during the same quarter last year.
The loss was partly due to a noncash impairment charge totaling $145.1M from write-downs regarding its Gateway Commons joint venture in San Francisco. The REIT had already written down the property at the end of 2024 for roughly $121M.
The REIT also recorded $68.9M in impairment charges relating to “pending dispositions in the portfolio.”
BXP's New York City, Boston, West Coast and Washington, D.C., portfolios were in high demand, with more than 795K SF, 398K SF, 191K SF and 140K SF signed, respectively.
The company's largest lease starts and expirations were in its suburban Boston portfolio. Tenants allowed 160K SF of leases to expire, but BXP signed two new leases for 104K SF and 162K SF in Waltham.
Occupancy across the portfolio dipped in the third quarter to 86%, compared to 86.4% in the second quarter.
BXP President Doug Linde said the portfolio has dramatically decreased the number of tenants with pending expirations, and he expects occupancy to rebound by 200 basis points by the end of 2026.
The REIT has several properties under contract to sell, which could result in approximately $400M in net proceeds. BXP expects to complete these sales in 2025 and 2027. The REIT also executed four land sales in Q3, aggregating $57M in proceeds, Thomas said.
In September, the office REIT announced plans to slash dividends from 98 cents per share to 70 cents and sell several noncore assets. It made the cuts to fund new construction projects and target future growth, company officials said.
The most notable of these projects is BXP's $2B, 930K SF 343 Madison Ave. office tower in New York. Construction began on the tower in the third quarter. An unnamed financial institution has already delivered a letter of intent to occupy roughly 274K SF of the tower, which will rise above Grand Central Terminal.
The company also delivered three office buildings in Boston, New York and Reston, Virginia, totaling 697K SF.
BXP also has eight office, life sciences, residential and retail projects underway comprising 3.5M SF and roughly $3.7B in BXP investment.
Thomas said the REIT is looking into deals across the country and seeing the strongest opportunities on the East Coast.
"There are an increasing number of higher-quality office assets in our core markets available for acquisition, some on an off-market basis," Thomas said.
Last month, BXP and partner Delaware North secured a $465M refinancing loan for a section of their 1.5M SF The Hub on Causeway mixed-use tower next to TD Garden.
Boston Properties Limited Partnership issued $1B in five-year unsecured notes at a 2% coupon to the REIT in late September. BXP has another $1B bond expiring on Oct. 1, 2026, which it expects to refinance.
UPDATE, OCT. 30, 11:50 A.M. ET: This story has been updated with context about BXP's stock price and impairment charges.
