Earnings

BXP Sees About 8 Cents Of 2027 Dilution From Asset Sales, But Still Expects FFO To Grow

The office landlord's CFO said a possible Times Square Tower sale would add about 6 cents more, without giving formal 2027 guidance.

Matteo Parrino Jonathan Ponciano

Matteo Parrino, Jonathan Ponciano

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BXP Sees About 8 Cents Of 2027 Dilution From Asset Sales, But Still Expects FFO To Grow

BXP's asset sales already completed will shave about 8 cents a share off 2027 funds from operations, Chief Financial Officer Mike LaBelle said on the company's earnings call, and a possible Times Square Tower sale would take roughly 6 cents more. He still told analysts, without giving guidance, "we expect we're going to grow next year."

Eight cents, then six more

BXP, a real estate investment trust that develops, owns and manages office buildings in Boston, Los Angeles, New York, San Francisco, Seattle and Washington, DC, has been selling assets to cut debt and fund development. LaBelle said transactions completed to date imply about 8 cents a share of dilution in 2027 compared with 2026.

That figure leaves out Times Square Tower. A sale there, if it closes at the end of the first quarter of 2027, would add "approximately six cents per share of additional dilution." CEO Owen Thomas said terms are agreed and a contract is being negotiated, but the buyer still needs to secure debt and equity financing.

Pressed by an analyst on whether "moderate" growth meant slower than 2026's, LaBelle said the point was that the company expects to grow. A Piper Sandler analyst asked whether that includes the Times Square dilution. "It includes everything we talked about," LaBelle answered.

Refinancing and termination income

The largest financing swing is the GM Building mortgage: $2.3 billion, or $1.4 billion at BXP's share, at 3.6% and expiring in June 2027. LaBelle said BXP is getting proposals for a 10-year refinancing at an all-in credit spread in the low 100s.

A $750 million unsecured bond carrying 6.75% matures December 1, 2027. He said BXP could issue a new 10-year bond at about 6.4% today.

Termination income, which LaBelle said should normalize, is expected to total about $24 million this year against a historical average closer to $15 million. Two residential projects delivering mid-2027 will also stop capitalizing interest, a near-term drag before they contribute in 2028.

A raised 2026 outlook

Third-quarter funds from operations were $1.89 per share, 8 cents above the midpoint of prior guidance. BXP raised its 2026 guidance midpoint by 5 cents to $7.06 to $7.08, which LaBelle said implies 3.2% growth.

Occupancy in the in-service portfolio rose to 89.4%, and BXP expects to end the year near 90%. LaBelle said the dilutive part of the sales program should be largely behind it after these deals, with a shift toward land and possible multifamily sales, and that growth could accelerate by 2028.

President Doug Linde said how far 2027 occupancy may exceed the 91% goal will be a topic for 2027 guidance next quarter.

BXP's 2027 guidance, due with next quarter's results, will show how those pieces net out.

Sources

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