Boston Properties gives dim outlook on co-working

Company takes $38M write-off on rent payments, struggles to lease up Dock 72

National /
Jan.January 27, 2021 01:17 PM
 Boston Properties president Doug Linde with Dock 72. (Beth Israel Lahey, Dock 72)

Boston Properties president Doug Linde with Dock 72. (Beth Israel Lahey, Dock 72)

 

Boston Properties just made one of the most damning statements a major landlord has given on the co-working industry: It took a big write-off in recognition that flex tenants will struggle to pay rents.

“This industry is just simply facing revenue challenges,” Boston Properties president Doug Linde said on the company’s first-quarter earnings call Wednesday. “We just looked at the world and said, These guys are going to have a really rough time.”

The company posted net income for the fourth quarter of $24.9 million, down 86 percent from $176 million during the same period last year.

The real estate investment trust took the $38 million write-off on rent income from its co-working tenants, company executives said.

It also switched its accounting method from recognizing future rent payments under the accrual basis to only recording current rents on the cash accounting basis.

Boston Properties executives said nearly all their flexible-space tenants have sought some kind of rent relief, and the company has concluded that their difficulty paying rent will continue.

It’s a sharp turnaround for the REIT, which had been one of the more vocal supporters of co-working during the industry’s rapid expansion. WeWork, for instance, leases about 220,000 square feet at Dock 72, the 675,000-square-foot office building in Brooklyn that Boston Properties is co-developing with Rudin Management.

Linde said the company will be more hesitant to do leases with co-working firms in the future, though will look to do flexible space itself.

“This makes it clear we don’t have a lot of appetite for doing these leases with other people on a going-forward basis,” he said.

Boston Properties also took a $60 million write-off on Dock 72, citing an extension of the timeline to fully lease up the project.





    Related Articles

    arrow_forward_ios
    Homie with Johnny Hanna and Mike Peregrina (Homie, iStock)
    Real Estate “disruptor” cuts staff by 28 percent
    Real Estate “disruptor” cuts staff by 28 percent
    The seven-bedroom mansion sits on land once owned by George Washington. (TTR Sotheby's International Realty)
    Washington Commanders owner unmasked as buyer of DC-area’s most expensive mansion
    Washington Commanders owner unmasked as buyer of DC-area’s most expensive mansion
    (Georgia MLS via Zillow)
    Pole Vault: Stately Georgia home has strip-club-esque basement
    Pole Vault: Stately Georgia home has strip-club-esque basement
    Vornado’s Steven Roth (Getty, iStock/Illustration by Ilya Hourie for The Real Deal)
    Urban retail not recovering like malls, shopping centers: Vornado
    Urban retail not recovering like malls, shopping centers: Vornado
    The cryptonaires will see you now
    The cryptonaires will see you now
    The cryptonaires will see you now
    “Eviction tech” is gaining traction in multifamily
    “Eviction tech” is gaining traction in multifamily
    “Eviction tech” is gaining traction in multifamily
    CRE brokers
    CRE brokers test crypto commissions
    CRE brokers test crypto commissions
    Miami's real estate market is being covered by Artificial Intelligence (iStock
    Miami Herald brings on AI to cover real estate sales
    Miami Herald brings on AI to cover real estate sales
    arrow_forward_ios

    The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

    Loading...