Here's Why You Should Retain BXP Stock in Your Portfolio Now

BXP, Inc.’s BXP assets in a few select markets, a well-diversified tenant base, strategic expansions, prudent capital-management practices and a solid balance sheet position bode well for long-term growth.However, the elevated supply of office properties in some markets will likely fuel competition and weigh on its pricing power. A huge development outlay raises the risks related to cost overruns and lease-up concerns.Last December, BXP acquired the 725 12th Street property, encompassing 300,000 square feet of space in Washington, DC, for a gross purchase price of $34 million. The company plans to undertake the demolition and redevelopment of the property, transforming it into a premier workplace.What is Aiding BXP?BXP's portfolio of premier office assets, concentrated in a few select high-rent, high barrier-to-entry geographic markets and a solid tenant base, enables it to generate stable rental revenues. Last December, the company announced that it had secured a long-term lease renewal with Ropes & Gray, spanning around 413,000 square feet through 2041, showcasing Boston’s largest law firm’s confidence in BXP.The rise in demand for top-quality office spaces continues to be driven by technology and life science businesses, positioning the company well for long-term growth. A total of 3.3 million square feet of leasing was executed in the first three quarters of 2024, representing a 25% increase compared with the same period in 2023. With 2.7 million square feet of leases in its pipeline, BXP is well-positioned to navigate the current environment.Amid strong demand from life-science tenants, the company is converting numerous straight office buildings to laboratory/life-science spaces in its suburban portfolio. As of Sept. 30, 2024, BXP had four life-science projects under development, encompassing 1.2 million rentable square feet with an estimated total investment of $903.1 million (its share) and 70% pre-leased.BXP has been focusing on the successful execution of its capital reallocation strategy.  From the beginning of 2010 through the end of the third quarter of 2024, BXP carried out acquisitions worth $7.5 billion at its share. The company also disposed of properties for an aggregate amount of $8.2 billion at its share during this period. Such moves highlight the company’s prudent capital management practices and relieve pressure on its balance sheet.BXP has a healthy balance sheet position with ample liquidity. As of Sept. 30, 2024, the company had $3 billion of liquidity. Its share of net debt to EBITDAre (annualized) was 7.6X, while the fixed charge coverage ratio was 2.4 times as of the same date. BXP also enjoys unsecured senior debt ratings of BBB from S&P Global Ratings and Baa2 from Moody’s, rendering it favorable access to the debt market.In the past six months, shares of this office REIT, carrying a Zacks Rank #3 (Hold), have rallied 13.1%, outperforming the industry's 0.2% growth.Image Source: Zacks Investment ResearchWhat is Hurting BXP?The rising supply of office properties in some markets where the company operates remains a concern. There is competition from developers, owners and operators of office properties and other commercial real estate, affecting BXP’s ability to retain tenants at relatively higher rents and curbing its pricing power.For the third quarter of 2024, BXP’s in-service properties’ occupancy fell 10 basis points sequentially to 87.0%.  We do not foresee considerable improvement in the near term and expect the company to maintain an occupancy rate of 87.3% in 2024.BXP has nine properties under its development and redevelopment pipeline, with the company’s share of estimated total investment aggregating around $2.05 billion as of Sept. 30, 2024. Although a huge development pipeline is encouraging for long-term growth, it exposes the company to the risk of rising construction costs and lease-up concerns.Stocks to ConsiderSome better-ranked stocks from the broader REIT sector are Cousins Properties CUZ and OUTFRONT Media OUT, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.The Zacks Consensus Estimate for Cousins Properties’ 2024 FFO per share has moved marginally upward in the past two months to $2.68.The consensus estimate for OUTFRONT Media’s 2024 FFO per share has increased 1.8% in the past two months to $1.73.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.Research Chief Names "Single Best Pick to Double"From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report BXP, Inc. (BXP): Free Stock Analysis Report Cousins Properties Incorporated (CUZ): Free Stock Analysis Report OUTFRONT Media Inc. (OUT): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks