In the first three quarters this year, real estate investment trusts recorded strong gains, beating some of the major indices.
In fact, the FTSE REIT Index posted a higher gain than for the S&P 500.
However, the possibility of a Federal Reserve interest rate increase is very real, and that is hindering many REIT gains.
To be sure, other major players, such as HCP, Simon Property and Vornado Realty Trust have suffered.
But Wall Street has been unfair to Boston Properties, including analysts at BAML, Evercore ISI, Morgan Stanley and Stifel, who have downgraded the stock since July.
Boston Properties has the potential to hand medium- and long-term investors some juicy gains. That would make today's low price a discount opportunity.
The company is primarily focused on five key markets: Boston; Los Angeles; New York; San Francisco; and Washington.
At the end of September, Boston Properties' portfolio covered around 47.7 million square feet of space, with 89.6% of properties leased out.
Over a 15-year period, the company's shares have clocked total returns of 11.1%, easily overwhelming the office REIT average of 9.93% and the S&P 500 Total Returns index (stock price and dividends combined) of 6.58%. The company's strategy is deploying funds effectively to support higher-yield projects and selling assets in strong markets.
That is better than a number of other REITs.
This is despite the company's delivering in-line results in this period while boosting guidance.
Boston Properties' latest upward revision of its own full-year funds from operations guidance to $5.97 to $5.99 a share, from $5.92 to $5.99 a share looks healthy.
Boston Properties offers a modest 2.28% dividend yield.
Several analysts have placed a 12-month median price forecast at $147, an upside potential of about 29% from its current stock price.
Investors with a medium-term (one- to two-year) and long-term (three- to five-year) outlook should start accumulating Boston Properties, taking advantage of its bargain valuation compared to historical average rates.
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