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.

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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.

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.

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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.

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