BXP, Inc.BXPNYSE

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DCF Valuation

DCF Valuation Summary

Strong Buy

Fair Value: $167.54 per share(market-calibrated)

+197.7%

Upside to Fair Value

Current

$56.28

Pure Model

$191.54

Fair Value

$167.54

Bull Case

$239.22

Bear Case

$155.71

Market Reality Check

Model Terminal Growth

2.50%

Market-Implied Growth

0.50%

Calibrated Growth

1.80%

Fair value uses 65% model / 35% market-implied terminal growth. Pure model: $191.54.

What's Driving This Ratingfor BXP

↓

CapEx normalizing toward maintenance

Historical CapEx is 10.90% of revenue (heavy investment phase). Model fades this to 2.50% by Year 10, freeing up ~$406M in annual FCF. This is the biggest driver of long-term cash flow improvement.

↑

Margin expansion modeled

Current EBIT margin is 32.21% — below the sector mature average of 55.71%. Model expands margins as the business scales and operating leverage kicks in. Year 10 EBIT reaches $1.6B (32.21% margin).

→

Moderate revenue growth

Analyst consensus projects -0.75% revenue growth, fading to 2.50% by Year 10. Revenue reaches $4.8B (vs $3.5B today).

🎯

Market pricing in lower growth than model

The market implies only 0.50% perpetual growth — 200bps below the model's 2.50%. This suggests the market sees headwinds or risks not in the model.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 80.26% indicates efficient cash generation. FCF reaches $2.0B by Year 10 (40.58% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.03

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)9.14%

Cost of Debt

Pre-tax Cost of Debt3.14%

Tax Rate21.00%

After-tax Cost of Debt2.48%

Equity Weight (E/V)34.03%

Debt Weight (D/V)65.97%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (34.03% × 9.14%) + (65.97% × 2.48%)

= 5.50%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$3.5B	$3.7B	$4.0B	$4.4B	$4.8B
EBIT	$1.1B	$1.2B	$1.3B	$1.4B	$1.6B
Tax	$234M	$248M	$271M	$298M	$327M
NOPAT	$880M	$932M	$1.0B	$1.1B	$1.2B
+ Depreciation	$634M	$672M	$737M	$808M	$887M
- Capex	$377M	$331M	$288M	$233M	$121M
- Δ NWC	-$8M	$30M	$64M	$55M	$35M
Free Cash Flow	$1.1B	$1.2B	$1.4B	$1.6B	$2.0B
Discount Factor	0.948	0.852	0.765	0.687	0.585
Present Value	$1.1B	$1.1B	$1.1B	$1.1B	$1.1B

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$2.0B

Terminal Growth Rate2.50%

WACC5.50%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$67.0B

PV of Terminal Value$39.2B

Exit Multiple Method

Year 10 EBITDA$2.4B

Exit Multiple (EV/EBITDA)22.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$53.7B

PV of Terminal Value$31.5B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$11.0B

PV of Terminal Value$39.2B

Enterprise Value$50.2B

(-) Net Debt$15.9B

Equity Value$34.3B

Shares Outstanding159M

Price per Share$215.91

Exit Multiple Method

PV of Projected FCFs$11.0B

PV of Terminal Value$31.5B

Enterprise Value$42.5B

(-) Net Debt$15.9B

Equity Value$26.6B

Shares Outstanding159M

Price per Share$167.16

Pure Model Fair Value

$191.54

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.50%	2.00%	2.50%	3.00%	3.50%
3.50%	$318.78	$301.65	$285.34	$269.79	$254.98
4.50%	$216.22	$243.87	$285.34	$269.79	$254.98
5.50%	$159.82	$173.41	$191.54	$216.91	$254.98
6.50%	$122.49	$130.26	$139.97	$152.46	$169.11
7.50%	$95.12	$99.99	$105.84	$112.98	$121.91

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$155.71

176.7% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 1.29

Base Case

$191.54

240.3% vs current

• Analyst consensus
• Terminal growth: 2.5%
• Beta: 1.03

Bull Case

$239.22

325.1% vs current

• +25% vs analyst consensus
• Terminal growth: 3.0%
• Beta: 0.88

Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Real Estate Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth-0.75%

Year 3 Revenue Growth2.90%

Year 5 Revenue Growth5.71%

Year 7 Revenue Growth4.42%

Year 10 Revenue Growth2.50%

Terminal Growth Rate2.50%

Margin & Efficiency

Current EBIT Margin32.21%

Terminal EBIT Margin55.71%

Tax Rate21.00%

Historical Capex / Rev10.90%

Terminal Capex / Rev2.50%

NWC / Revenue29.35%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 22x EV/EBITDA (Real Estate sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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