Boston Properties’ Q3 income drops 17%

REIT executives eye late 2021 for tenants to return to offices

Boston Properties CEO Owen Thomas (Photo by Axel Dupeux)
Boston Properties CEO Owen Thomas (Photo by Axel Dupeux)

Boston Properties’ income declined about 17 percent in the third quarter, and executives don’t expect tenants to return to their offices in large numbers until late next year.

Net income for the quarter totaled $89.9 million, down from $108.7 million the same time last year, the company reported Tuesday. Growth declined due to income drops in the real estate investment trust’s hotel and office sectors. Office occupancy dropped the most in New York City and San Francisco.

Company CEO Owen Thomas said on the firm’s earnings call Wednesday morning that Boston Properties collected 99 percent of office rents in the third quarter.

He said that in New York City, about 16 percent of the company’s tenants were back working in their offices, and the landlord expects companies to return in more meaningful ways in the second half of 2021, depending on when a vaccine for the coronavirus becomes available.

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But he added, the vaccine is “unlikely to be a silver bullet.”

Aside from a 110,000-square-foot renewal at the General Motors Building and another deal at 399 Park Avenue, discussion of the Manhattan market remained relatively light.

Boston Properties executives discussed demand for life sciences properties around Boston, leases at their Virginia properties and the spectre of sublease space hitting San Francisco.

“There’s absolutely more sublet space in October 2020 then there was in March 2020,” said company president Doug Linde.

Linde added that the company had “made some progress” with Ann Taylor parent company Ascena Group, which owes millions of dollars in rent for its office space at 7 Times Square.