One of the first major casualties of the hibernation in the NY commercial market is Boston Properties, which announced today after market close that it is suspending construction of what would have been a lovely 39 story glass building on 8th and 55th, and in its place will leave a gaping hole and some construction equipment to the enjoyment of Carnegie Hall goers. Mort Zuckerman, who yesterday was on CNBC extolling the virtues of the NY office market, and is owner of Boston Properties (which had a nice 10% pop in stock price today for reasons unknown) has announced Boston Prop will suspend construction of the project because it was unable to close a lease with major unnamed law firm.
We presume that the unnamed firm is either Gibson Dunn or Proskauer Rose who had previously been in consideration for 220,000 and 600,000 square feet, respectively, and likely decided to amend their lease agreements. Suspension of the project will lower the real estate investment trust's capital commitments through 2011 by about $450 million. What was not mentioned is that it will dramatically slash future revenues and earnings by a substantial amount, although BXP did note that "the company is currently evaluating the impact of the suspension of construction on its guidance for earnings per share and Funds From Operations for fiscal 2009, and the Company intends to publish updated guidance for fiscal 2009 as soon as practicable."
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