Is BXP Stock Worth Buying as Leasing Improves but Risks Stay High?

BXP's Leasing Gains Improve the Fundamental Setup

BXP executed 106 leases covering about 1.8 million square feet in the second quarter, equal to 129% of its 10-year second-quarter average. Portfolio occupancy rose to 88.4%, while the leased rate reached 91.3%.

The 290-basis-point gap between leased and occupied space represented about 1.3 million square feet of signed leases yet to commence. Management expects year-end 2026 occupancy to finish closer to 90% and continues to target 91% by year-end 2027.

BXP's Valuation Offers a Discounted Entry Point

BXP trades at 9.3X forward 12-month earnings per share, below 16.4X for its sub-industry, 17.0X for the broader sector and 20.5X for the S&P 500. Its multiple also sits below its five-year median of 9.8X, providing some valuation support.

Investors comparing office REITs may also consider SL Green Realty Corp. SLG, which focuses primarily on Manhattan commercial properties. Kilroy Realty Corporation KRC owns and operates Class A office and life science properties across major West Coast markets and Austin, providing another reference point for office-sector conditions.

Shares of BXP have risen 13.4% over the past three months, which underperformed SLG, but outperformed KRC.

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BXP Still Faces Uneven Rent Economics

Second-generation net rents increased 1.6% portfolio-wide in the second quarter. The picture was weaker in several markets, with net rents down 17.8% in San Francisco, 20.1% in Seattle and 10.2% in Washington, DC.

New leases generally include six to 12 months of free rent. That concession delays part of the cash net operating income benefit from improving occupancy into 2027, leaving near-term cash-flow gains uneven.

BXP's Development Upside Comes With Execution Risk

BXP's active development and redevelopment pipeline spans about 3.5 million square feet and represents $3.2 billion of company investment, with $2.1 billion still to be spent. The office portion was 65% leased.

The pipeline and recently delivered assets are projected to contribute about $310 million of BXP's share of cash net operating income upon stabilization. The potential is meaningful, but construction, funding and lease-up milestones still have to be met.

BXP's Debt Reset Could Temper FFO Growth

BXP's share of net debt to annualized EBITDAre, a REIT leverage measure, improved to 7.94X from 8.50X sequentially, while fixed-charge coverage rose to 2.62X from 2.40X. Those changes point to better balance-sheet metrics.

Still, a $1 billion unsecured bond carrying a 3.5% GAAP interest rate matures in October 2026. Management said replacement debt could price around 6% under then-current conditions, so refinancing may absorb part of the benefit from occupancy and development gains and temper funds from operations growth.

BXP's Mixed Scores Support Patience

BXP's operating trends are improving and its valuation is modest, but the risk-reward picture remains balanced. For investors deciding whether to buy now, the combination of better leasing, uneven rent economics, development spending and refinancing exposure supports a patient stance.

The stock currently carries a Zacks Rank #3 (Hold). It also has a VGM Score of B, Value Score of B and Momentum Score of B, while its Growth Score is D. The B scores are favorable within those styles, but the #3 Rank and weaker Growth Score stop short of the stronger combination generally associated with a more aggressive buy case. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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