Why the new San Francisco leases matter for BXP (BXP)

BXP (BXP) has just secured more than 200,000 square feet of new leases at 680 Folsom and 50 Hawthorne in San Francisco, taking 50 Hawthorne to full occupancy and 680 Folsom above 90% leased.

With Dropbox, Decagon, Swinerton Builders and a software tenant committing to these refreshed buildings, investors can reassess how stabilized leasing at these assets fits into BXP’s broader office focused REIT portfolio.

These new San Francisco leases arrive as BXP’s share price sits at US$58.91, with a 1-month share price return of 13.11% and a 3-year total shareholder return of 33.91%, suggesting recent momentum after earlier setbacks.

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With BXP trading at US$58.91, carrying a value score of 3 and sitting about 19% below the US$70.05 analyst price target, plus an indicated intrinsic discount of roughly 29%, is the market offering potential upside or already factoring in future growth?

Most Popular Narrative: 17.1% Undervalued

At a last close of $58.91 against a narrative fair value of $71.10, the most followed view sees BXP as materially underpriced, with that gap hinging on how its earnings power unfolds over time.

BXP's aggressive capital recycling and asset sales strategy (targeting $600 million in non-core dispositions), along with redevelopment and adaptive reuse of assets for mixed-use and multifamily, is expected to unlock higher-yielding income streams, fortify net margins, and provide non-dilutive funding for growth, supporting future FFO and earnings resilience.

Curious what needs to happen for that higher fair value to hold up? The narrative leans on firmer margins, steadier top line growth, and a richer future earnings multiple, all tied to how BXP fills and recycles its gateway assets.

Result: Fair Value of $71.10 (UNDERVALUED)

However, the narrative also depends on BXP avoiding prolonged softness in leasing, particularly in life sciences and West Coast offices, and on its ability to manage 343 Madison capital and leverage risks.

Another Way To Look At BXP’s Valuation

The narrative fair value of $71.10 suggests upside, but the P/E ratio tells a tighter story. BXP trades on 33.8x earnings versus a 16.1x average for global Office REITs and a fair ratio of 33.1x, so the margin of value appeal is slim. Which signal do you trust more?

Next Steps

With mixed signals on value and sentiment running both hot and cold, it makes sense to move quickly, weigh the data yourself, and see what the numbers suggest about BXP’s balance of 3 key rewards and 3 important warning signs

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.