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What Can Investors Learn From Q3 Office REIT Earnings?

[Updated: Nov 03, 2020 ] Nov 03, 2020 by Matthew DiLallo

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Despite a challenging recessionary environment, BXP continued to perform well in the third quarter, demonstrating the durability of our business. In the quarter, we collected 99% of our office rents and 97% of rents overall. We completed 811,000 square feet of leasing, 40% being either new requirements or expanding existing customers. And we increased our average net rental rates on our second-generation leases by 20%.
For the most part, the results and achievements met or exceeded our expectations and are aligned with our corporate goals, which were, of course, altered back in March and April at the outset of the pandemic. … Our earnings for the quarter were in line as we track toward the higher end of our revised guidance range, so we're pleased with that. And our office and overall collections remain relatively strong, surprisingly strong at 97% and 92% respectively.
We have been in constant contact with our tenant base since the pandemic began. The leaders of these entities are focused on physical design, space and adaptability, environmental health, safety and comfort, and increasing square footage per worker. While some of these concerns are driven by short-term needs, we believe that workspace wellness is an issue that is here to stay. We will see a large premium placed on office properties that can provide larger, more light-filled floor plates, greater flexibility in the layout of traffic flow and use of interior spaces, stronger integration of workspace with the outdoor world and nature, and top-quality state-of-the-art operating systems that not only protect but enhance employees' health.

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