Jim:      Which just completed a secondary on Friday, on a deal that was oversubscribed… more people wanted it, that means a lot more interest… and it allowed them to sell 15 million shares, up from the original 12.1 million, with another 2.3 million going to the underwriters… the secondary, priced $50 a share, down just .31 cents from where the stock was before it was announced… that is very strong… and now it is at $50.43, up slightly from there… I do not think that it will stay at $50 for long.

Why?… okay, so far this year 20 real estate investment trusts with market capitalizations of more than $500M have done secondary offerings like BXP… of those 20 real estate investment trusts, 10 are up more than 10%… from the last close from the last close before the secondary was announced… only 6 are down, and down very minimally… and only 1 down more than 10%, and that is HCM, a troubled real estate investment trusts who invest in senior housing facilities, and the companies president just resigned, and investors are worried that Obama’s healthcare plan could cut into profits… so the record so far indicates that when a real estate investment trust with good properties does a deal, it goes higher… with very little downside… and since Boston Properties is trading right about where it priced its secondary, I am telling you that I think that the stock is a real steal… you do not need to pay up, because there is a ton of stock offer here… but I think that if it follows all of the other trajectories… than you are going to make mad money… that is right, money does not grow on trees… it does grow on real estate investment trusts that do secondary offerings… particularly diversified ones like BXP.

You may not recognize this but this is Mort Zuckerman’s real estate investment trusts… he is one of America’s greatest investors, I have known him from the ‘80’s, I have always followed what he does… not to mention that he is a frequent commentator on CNBC and MSNBC, who is deservedly high profile… with Boston Properties you get to own real estate right along side one of the best real estate owners in America… and right now you are getting the benefit of Zuckerman’s work at less than the people who got in, well lets just say a couple of weeks ago… this is one real estate investment trust that I do not think id going out of business any time soon… Zuckerman is a survivor, and even a thriver, of many a downturn… I thought this was a great opportunity.

Not only is there the potential upside that we have seen after so many of these secondaries, along with fabulous management… but since it is a real estate investment trust, which means that it has to distribute 90% of its profits back to its shareholders in the form of a juicy dividend, you are going to get a lot paying you here… Boston Properties has said that it is considering cutting its quarterly payout from .68 cents, where it gives you a 5.4% yield, to .50 cents, where the yield would be just about 4%… that is still pretty darn high… and given that the company has sold 3 million more shares than it expected to in its secondary, it may even decide not to cut the dividend at all… even if it does, 4% is nothing to complain about… especially when it is backed up by expected cash flow and funds from operations in the $4 per share range.

So what are you buying here… what are you buying with Boston Properties… what is backing that dividend… the company owns mostly Class A office properties… big buildings in Mid-town Manhattan, in Boston, in Princeton, NJ, San Francisco, Washington D.C…. with Mid-town Manhattan generating 44% of the companies net income… you are probably familiar with some of the buildings if you visited New York or live here… Times Square Tower, City Group Center, 599 Lexington, 60% of the GM building in New York, or in Boston, the Prudential Center, everyone knows that one… the Embarka Darrell Center in San Francisco… their largest tenant, the US Government, takes up 5% of their rentable space… I say nice.
 

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