I must admit, I'm a bit surprised that shares of Boston Properties (NYSE:BXP) are down 2% today. I think they're more or less fully valued, but the company's long-term outlook is strong, and it's made some interesting moves lately.

Let's briefly look at the office REIT's first-quarter numbers. For the quarter, funds from operations (FFO) were flat with last year, at $1.03 per diluted share. However, that's a few cents better than management had initially expected, thanks to a number of small, non-material items. Overall, the company raised the low end of its FFO guidance for the year by $0.03 per share, to $4.15 to $4.27. That doesn't include the announced sale of a property in midtown Manhattan, expected in the second quarter, which will likely pull FFO down slightly for the rest of the year. However, I think there's some good news here, too, which I'll get to in a bit.

Boston Properties' largest tenants include Citigroup (NYSE:C), Procter & Gamble (NYSE:PG) (via Gillette), and Genentech (NYSE:DNA). The company primarily owns office properties in New York City (Manhattan), San Francisco, Washington D.C., Boston, and Princeton, N.J., and all are doing well at the moment. The company still has some rents decreasing on renewal in Boston and San Francisco, but those decreases are getting smaller, and overall rents are increasing for the company. Occupancy sits at 94.2%, excluding a new property that just opened 100% leased. That's up from 93.8%, and the company has an average lease term of 7.7 years.

Boston Properties maintains a solid balance sheet and used it to make a debt offering earlier this month. The details of the debt offering are in the company's earnings release, and given all of the moving parts in the offering, I consider the net effect to be good for shareholders. There is a conversion aspect to the debt, but the low interest rate and other aspects of the offering appear fair to me.

Let's look at the 280 Park Avenue sale a bit closer. On a previous conference call, the company stated that it was open to selling any property in its portfolio at the right price. If you're a shareholder -- I happen not to be -- that kind of flexible thinking is good to hear. I think the announced sale of 280 Park Avenue, which should close in the second quarter, is an example of this. Commercial real estate is doing very well in New York City, and the $1.2 billion offer is appealing on the surface, since the company paid only $321 million for the property back in late 1997. CFO Doug Linde commented on the conference call that a special dividend from the sale is possible, given that the sale is a taxable transaction, and REITs must pay out 90% of their taxable income. The company's other option is to reinvest the sales proceeds in another property, but it would have to do so fairly quickly after the sale closes to avoid running afoul of the 90% payout rule.

The sale is just one transaction in a fairly large portfolio of office properties, and the obvious longer-term gauge for the company is the cash flow it generates free of all cash expenses. On that basis, I believe Boston Properties is fairly valued, especially with its 3.1% dividend. Still, it's a well-managed company with a lot of future options for developing new properties -- which it's particularly good at -- and for future rent increases as the market recovers. Overall, it's hard not to like Boston Properties for the long term, even if today's price isn't so thrilling.

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Nathan Parmelee has no financial interest in any of the companies mentioned. The Motley Fool has an ironclad disclosure policy.