GlobeSt.com looked at Boston Properties Inc., Alexandria RealEstate Equities Inc. and Douglas Emmett, all among the largestoffice REITs in the country. The common thread is the uncertaincapital markets hasn't kept the trio from buying, selling anddeveloping.

|

At Boston Properties, which owns 139 properties totaling about43.9 million sf, Q1 FFO crept up only one penny per share to $1.11in comparison with FFO of $1.10 for first quarter 2007. Total FFOrose $1.7 million to $134.7 million on a year-to-year basis. TheREIT's net income for the latest quarter showed a dramatic declinefrom the net income of last year's first quarter--down to $88.5million from last year's $854.3 million--but that was because lastyear's net income jumped on the basis of one-time gains on sales of5 Times Square for $1.2 billion and the Long Wharf Marriott hotelfor $231 million, respectively.

|

Pasadena, CA-based Alexandria, which specializes in office andlab space for the life sciences industry reported first-quarter FFOof $46.9 million and $1.48 per share compared to FFO of $40.3million for the same quarter last year. Like Boston Properties,Alexandria reported one-time gains that boosted net income. TheREIT's net income more than doubled to $34.7 million and $1.09 pershare in comparison to net income of $15.1 million and 52 cents pershare in 2007. But, this year's results showed gains of more than$20 million on the sales of six properties. Alexandria owns 159properties totaling 13.3 million sf, of which 11.7 million sf isexisting and 1.6 million sf is under development.

|

Alexandria also reported it is continuing to win rent increasesfor new leases and renewals, with the rates on average about 14.1%higher than rental rates for expiring leases, a reflection in partof the strong life sciences sector. For the first quarter, thecompany executed 48 leases totaling 570,000 sf at 31 differentproperties, of which about 369,000 sf were deals in existing assetsand about 201,000 sf at its newly developed space. About 89% of theREIT's leases are triple-net rents.

|

Douglas Emmett, which is based in Santa Monica, CA, reported thelargest gain in FFO among the three REITs, an increase to $53.4million and 34 cents per share in comparison to $46.4 million and28 cents per share in the first quarter last year. Jordan L.Kaplan, the REIT's president and CEO, said in its recent conferencecall that "changing market conditions are permitting us to movemore aggressively into the acquisition arena."

|

Kaplan pointed out the REIT this year has acquired a smalloffice building in Honolulu and a 1.4-million-sf portfolio of sixclass A office buildings in Los Angeles for $610 million. "Weexpect that a number of additional, large, attractive acquisitionopportunities will develop in our markets," Kaplan said.

|

Emmett's acquisitions typify the continued buying, selling andselective development by three of the large REITs despite theuncertain credit market conditions. Boston Properties, for example,is part of a joint venture developing the $115-million WisconsinPlace in Chevy Chase, MD, which has secured construction financingat a variable rate equal to Libor plus 1.25%. Alexandria sold sixCalifornia properties totaling nearly 360,000 sf for $70 millionduring the first quarter. In addition to the 1.6 million sf thatthe company has under development, Alexandria redeveloped 103,267sf of existing space at five properties during the firstquarter.

Want to continue reading?
Become a Free ALM Digital Reader.

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.