The second-quarter EPS results for 2006 and 2005 include gains of $4.86 and 95 cents, respectively, related to sales of real estate and discontinued operations. Funds from operations, a key metric used by Wall Street analysts to measure REIT performance, were $1.10 a share compared with $1.06 the prior year.

Analysts surveyed by Thomson First Call had pegged earnings at 54 cents a share and FFO at $1.04 a share. Boston Properties manages offices and other properties in several supply-constrained East Coast markets, Boston, Manhattan and Washington, D.C., as well as San Francisco.

Boston Properties sees per-share income for the third quarter of 59 cents to 61 cents, and for the full year of $7.04 to $7.08. The REIT sees quarterly FFO per share of $1.07 to $1.09, with analysts looking for a result of $1.06. The stock is up about 31% year to date with many analysts bullish on office-REIT shares as rents and occupancies move higher and unemployment remains low.

Earlier this month, Banc of America Securities raised its price target on Boston Properties and several other office REITs with property in New York. The analysts saw "positive Manhattan office leasing and sales data points that indicate a uniquely favorable supply/demand environment."

Yet they cautioned "a slowdown in the economy would adversely affect office demand, while rising interest rates may put pressure on REIT earnings and valuation metrics."
Income-focused investors keep a close eye on the spread between REIT dividend yields and bond yields.

By M. Sese
http://realestatepress.org