NEW YORK, Feb 6 (Reuters) - Boston Properties Inc (BXP.N), an owner and developer of office buildings in key U.S. cities, said on Friday it was suspending development of a Manhattan skyscraper after a potential major tenant backed out.
Less than a week after the company said it was nearing a deal to sign a lease for 480,000 square feet in the building at 250 West 55th Street, Boston Properties said it had been unable to come to an agreement on final terms with a major law firm.
The 1-million-square-foot building was to have opened in 2011. Work is currenty underway on the foundation.
Boston Properties shares were down 2.8 percent at $45.64 in after-hours trading after ending regular trade at $46.93.
The company said that it and the law firm, which it did not identify, had reached agreement on financial terms after a year of negotiations but the potential tenant had recently said that it could not proceed on those terms.
As a result of the decision to suspend construction, Boston Properties said it would reduce its capital commitments through 2011 by about $450 million.
“I view it as at least neutral to slightly positive that they’re going to stop,” said Michael Knott, a senior analyst at Green Street Advisors.
“It’s good news from a liquidity standpoint; now they don’t have to come up with an extra $450 million to complete the project,” he said.
Boston Properties, whose chairman is publisher Mort Zuckerman, is reviewing the potential impact of the suspension on its forecasts.
On Jan. 29 the company forecast 2009 funds from operations, a performance measure of real estate investment trusts, of $4.75 to $4.95 per share, compared with $3.49 in 2008. (Reporting by Ilaina Jonas; Editing by Ted Kerr)