Boston Properties Earnings: Fundamentals Hold Up Reasonably Well in a Difficult Environment

No-moat-rated Boston Properties’ posted a mixed set of numbers in the third quarter as the firm reported funds from operations, or FFO, of $292.8 million or $1.86 per share, which was around 2.3% lower than the $299.8 million or $1.91 per share in the third quarter of the previous year. The slight decrease in FFO compared with the previous year was mainly due to an increase in interest expenses of $19.0 million that was partially offset by greater contributions from portfolio operations of approximately $13.0 million. The headwind of higher interest expenses on FFO can turn into a tailwind when interest rates eventually start to decline from the currently elevated levels. The company tightened its 2023 FFO full-year guidance to $7.25-$7.27 per diluted share, which is around 4% lower than the 2022 full-year FFO. We are maintaining our $95 per share fair value estimate for Boston Properties after incorporating the third-quarter results.