Boston Properties, Inc. Announces Fourth Quarter 2007 Results

January 29, 2008
Reports diluted FFO per share of $1.22 Reports diluted EPS of $1.02

BOSTON, Jan. 29 /PRNewswire-FirstCall/ -- Boston Properties, Inc. (NYSE: BXP), a real estate investment trust, reported results today for the fourth quarter ended December 31, 2007.

Results for the quarter ended December 31, 2007

Funds from Operations (FFO) for the quarter ended December 31, 2007 were $147.5 million, or $1.24 per share basic and $1.22 per share diluted. This compares to FFO for the quarter ended December 31, 2006 of $141.9 million, or $1.21 per share basic and $1.18 per share diluted. The weighted average number of basic and diluted shares outstanding totaled 119,248,503 and 122,338,037, respectively, for the quarter ended December 31, 2007 and 116,895,438 and 121,456,257, respectively, for the quarter ended December 31, 2006.

Net income available to common shareholders was $123.8 million for the three months ended December 31, 2007, compared to $71.7 million for the quarter ended December 31, 2006. Net income available to common shareholders per share (EPS) for the quarter ended December 31, 2007 was $1.04 basic and $1.02 on a diluted basis. This compares to EPS for the fourth quarter of 2006 of $0.61 basic and $0.60 on a diluted basis. EPS for the quarter ended December 31, 2007 and 2006 reflects a reduction of $0.06 and $0.09, on a diluted basis, representing the amount of earnings allocated to the holders of Series Two Preferred Units of limited partnership interest in the Company's Operating Partnership to account for their right to participate on an as- converted basis in the special dividend to be paid on January 30, 2008 to stockholders of record as of the close of business on December 31, 2007 and that was paid on January 30, 2007 to stockholders of record as of the close of business on December 29, 2006, respectively. EPS also includes $0.39 and $0.05, on a diluted basis, related to gains on sales of real estate and discontinued operations for the quarters ended December 31, 2007 and 2006, respectively.

Results for the year ended December 31, 2007

FFO for the year ended December 31, 2007 were $562.5 million, or $4.73 per share basic and $4.64 per share diluted, after a supplemental adjustment to exclude the loss from early extinguishment of debt associated with the sale of real estate. This compares to FFO for the year ended December 31, 2006 of $527.7 million, or $4.60 per share basic and $4.47 per share diluted, after a supplemental adjustment to exclude the loss from early extinguishment of debt associated with the sale of real estate. The loss from early extinguishment of debt associated with the sale of real estate totaled approximately $2.7 million, or $0.02 per share basic and diluted for the year ended December 31, 2007 and approximately $31.4 million, or $0.23 per share basic and $0.22 per share diluted for the year ended December 31, 2006. The weighted average number of basic and diluted shares outstanding totaled 118,838,524 and 122,453,781, respectively, for the year ended December 31, 2007 and

114,721,339 and 120,706,904, respectively, for the year ended December 31, 2006.

Net income available to common shareholders was $1,324.7 million for the year ended December 31, 2007, compared to $873.6 million for the year ended December 31, 2006. Net income available to common shareholders per share (EPS) for the year ended December 31, 2007 was $11.11 basic and $10.94 on a diluted basis. This compares to EPS for the year ended December 31, 2006 of $7.62 basic and $7.46 on a diluted basis.

The reported results are unaudited and there can be no assurance that the results will not vary from the final information for the quarter and year ended December 31, 2007. In the opinion of management, all adjustments considered necessary for a fair presentation of these reported results have been made.

As of December 31, 2007, the Company's portfolio consisted of 139 properties comprising approximately 43.8 million square feet, including 13 properties under construction totaling 3.9 million square feet and one hotel. The overall percentage of leased space for the 125 properties in service as of December 31, 2007 was 94.9%. The Company's portfolio information and occupancy statistics exclude the Mountain View properties discussed below.

Significant events of the fourth quarter include:

  • On October 1, 2007, a joint venture in which the Company has a 50% interest, partially placed in-service 505 9th Street, a 325,000 net rentable square foot Class A office property located in Washington, D.C. On October 17, 2007, the construction financing on the property was converted to a ten-year fixed rate loan. The construction financing was comprised of (1) a $60.0 million loan commitment, which bore interest at a fixed rate of 5.73% per annum, with an outstanding balance of approximately $50.5 million, and (2) a $35.0 million loan commitment, which bore interest at a variable rate equal to LIBOR plus 1.25% per annum, with an outstanding balance of approximately $29.0 million. The new mortgage financing totaling $130.0 million bears interest at a fixed interest rate of 5.73% per annum and matures on November 1, 2017. Approximately $43.3 million of the excess loan proceeds have been placed in escrow with the lender until the completion of construction.
  • On October 1, 2007, the Company used available cash to repay the mortgage loans collateralized by its 504, 506, 508 and 510 Carnegie Center properties located in Princeton, New Jersey totaling approximately $65.0 million. There was no prepayment penalty associated with the repayment. The mortgage loans bore interest at a fixed rate of 7.39% per annum and were scheduled to mature on January 1, 2008.
  • On November 2, 2007, the Company entered into a forward-starting interest rate swap contract to lock the 10-year LIBOR swap rate on a notional amount of $25.0 million at a forward-starting 10-year swap rate of 5.05% per annum. The 10-year treasury rate is a component of the 10-year swap rate and the referenced contract effectively fixed the 10-year treasury rate at 4.38%. The swap contract goes into effect on July 31, 2008 and expires on July 31, 2018. On November 9, 2007 and November 16, 2007, the Company entered into treasury locks that fixed the 10-year treasury rate at 4.33% per annum and 4.24% per annum on notional amounts of $25.0 million, respectively. The treasury locks mature on July 31, 2008. The Company has effectively fixed the 10-year treasury rate at a weighted average interest rate of 4.63% per annum on notional amounts aggregating $525.0 million with its interest rate hedging program.
  • On November 20, 2007, the Company sold its Orbital Sciences Campus and Broad Run Business Park, Building E properties located in Loudon County, Virginia, for approximately $126.7 million in cash. The Orbital Sciences Campus and Broad Run Business Park, Building E properties are comprised of three Class A office properties aggregating approximately 337,000 net rentable square feet and an office/technical property totaling approximately 127,000 net rentable square feet, respectively.
  • On November 27, 2007, the Company acquired Mountain View Research Park for $183.0 million and Mountain View Technology Park for $40.0 million. The Research Park properties are comprised of sixteen Class A office and office/technical properties aggregating approximately 601,000 net rentable square feet located in Mountain View, California. The Technology Park properties are comprised of seven office/technical properties aggregating approximately 135,000 net rentable square feet located in Mountain View, California. The acquisition was financed with available cash. On January 7, 2008, the Company transferred the properties to its Value-Added Fund for an aggregate of approximately $223.2 million, consisting of approximately $100.2 million of cash and a promissory note having a principal amount of $123.0 million. The note bears interest at a rate of 7% per annum and matures in April 2008, subject to extension at the option of the Value-Added Fund until April 2009. The Company expects the Value-Added Fund to obtain third- party financing for the properties and repay the loan. In connection with the transfer of the Research Park and Technology Park properties to the Value-Added Fund, the Company and its partners agreed to certain modifications to the Value-Added Fund's original terms, including bifurcating the Value-Added Fund's promote structure such that Research Park and Technology Park will be accounted for separately from the non- Mountain View properties currently owned by the Value-Added Fund (i.e., Circle Star and 300 Billerica Road). As a result of the modifications, the Company's interest in the Mountain View properties is approximately 39.5% and its interest in the non-Mountain View properties is 25%. Similar to the other Value-Added Fund properties, the Mountain View properties are not included in the Company's portfolio information or occupancy statistics presented above. This investment completes the investment commitments from the Value-Added Fund partners.
  • On December 13, 2007, the Company acquired North First Business Park located in San Jose, California, at a purchase price of approximately $71.5 million. This property is comprised of five office properties aggregating approximately 191,000 net rentable square feet and three vacant properties all located on approximately 24 acres of land. The acquisition was financed with available cash. The Company expects to redevelop this site into approximately 1.3 million net rentable square feet of Class A office space.
  • On December 18, 2007, the Company announced that its Board of Directors declared a special cash dividend of $5.98 per common share payable on January 30, 2008 to shareholders of record as of the close of business on December 31, 2007. The decision to declare a special dividend was the result of the sales of assets in 2007, including 5 Times Square, Orbital Sciences Campus, Broad Run Business Park - Building E, Worldgate Plaza and Newport Office Park. The Board of Directors did not make any change in the Company's policy with respect to regular quarterly dividends. The payment of the regular quarterly dividend of $0.68 per share and the special dividend of $5.98 per share will result in a total payment of $6.66 per share payable on January 30, 2008. Holders of common units of limited partnership interest in Boston Properties Limited Partnership, the Company's Operating Partnership, as of the close of business on December 31, 2007 will receive the same total distribution, payable on January 30, 2008. Holders of Series Two Preferred Units of limited partnership interest will participate in the special cash dividend (separately from their regular February 2008 distribution) on an as-converted basis in connection with their regular May 2008 distribution payment as provided in the Operating Partnership's partnership agreement.
  • On December 20, 2007, the Company executed a lease with Gibson, Dunn & Crutcher LLP for its 250 West 55th Street development project in New York City. The law firm will occupy approximately 222,000 square feet of office space in the approximately 1,000,000 net rentable square foot Class A office project beginning in the spring of 2010.

Transactions completed subsequent to December 31, 2007:

  • On January 29, 2008, the Wisconsin Place joint venture entity that owns and is developing the office component of the project (the "Office Entity") (a joint venture entity in which the Company owns a 66.67% interest) obtained construction financing totaling $115.0 million collateralized by the office property. Wisconsin Place is a mixed-use development project consisting of office, retail and residential properties located in Chevy Chase, Maryland. The construction financing bears interest at a variable rate equal to LIBOR plus 1.25% per annum and matures on January 29, 2011 with two, one-year extension options.

2008 Outperformance Awards under the Second Amendment and Restatement of the Boston Properties, Inc. 1997 Stock Option and Incentive Plan (the "1997 Plan"):

As reported in the Company's Current Report on Form 8-K filed earlier today, on January 24, 2008, the Company's Compensation Committee approved outperformance awards under the 1997 Plan to officers and employees of the Company. These awards (the "2008 OPP Awards") are part of a new broad-based, long-term incentive compensation program designed to provide the Company's management team at several levels within the organization with the potential to earn equity awards subject to the Company "outperforming" and creating shareholder value in a pay-for-performance structure. 2008 OPP Awards utilize total return to shareholders ("TRS") over a three-year measurement period as the performance metric and include two years of time-based vesting after the end of the performance measurement period (subject to acceleration in certain events) as a retention tool.

Recipients of 2008 OPP Awards will share in an outperformance pool if the Company's TRS, including both share appreciation and dividends, exceeds absolute and relative hurdles over a three-year measurement period from February 5, 2008 to February 5, 2011, based on the average closing price of a share of the Company's common stock (a "REIT Share") for the five trading days prior to and including February 5, 2008. The aggregate reward that recipients of all 2008 OPP Awards can earn, as measured by the outperformance pool, is subject to a maximum cap of $110 million, although OPP awards for an aggregate of up to approximately $104.8 million have been allocated and will be granted on February 5, 2008. The balance remains available for future grants. Investors are encouraged to refer to the Form 8-K referenced above for a detailed discussion of the terms and conditions of the 2008 OPP Awards, including the manner in which the outperformance pool is calculated. The Company expects that under Statement of Financial Accounting Standards No. 123(R) "Share-Based Payment" the 2008 OPP Awards will have an aggregate value of approximately $19 - $20 million, which amount will generally be amortized into earnings over the five-year plan period (although awards for retirement-eligible employees will be amortized over a three-year period) and has been reflected in the 2008 guidance below.

EPS and FFO per Share Guidance:

The Company's guidance for the first quarter and full year 2008 for EPS (diluted) and FFO per share (diluted) is set forth and reconciled below.



                                    First Quarter 2008       Full Year 2008
                                      Low   -   High         Low   -   High

    Projected EPS (diluted)         $0.56   -   $0.57      $2.43   -   $2.53

    Add:
    Projected Company Share of
    Real Estate Depreciation and
     Amortization                    0.53   -    0.53       2.12   -    2.12

    Less:
    Projected Company Share of
    Gains on Sales of Real Estate
                                     0.00   -    0.00       0.00   -    0.00

    Projected FFO per Share
     (diluted)                      $1.09   -   $1.10      $4.55   -   $4.65

The foregoing estimates reflect management's view of current and future market conditions, including assumptions with respect to rental rates, occupancy levels and the earnings impact of the events referenced in this release. The estimates do not include possible future gains or losses or the impact on operating results from other possible future property acquisitions, dispositions or financings. EPS estimates may be subject to fluctuations as a result of several factors, including changes in the recognition of depreciation and amortization expense and any gains or losses associated with disposition activity. The Company is not able to assess at this time the potential impact of these factors on projected EPS. By definition, FFO does not include real estate-related depreciation and amortization or gains or losses associated with disposition activities. There can be no assurance that the Company's actual results will not differ materially from the estimates set forth above.

On August 31, 2007, the Financial Accounting Standards Board (the "FASB") issued proposed FASB Staff Position No. APB 14-a "Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)" (the "proposed FSP") that would require the liability and equity components of convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement) to be separately accounted for in a manner that reflects the issuer's nonconvertible debt borrowing rate. As disclosed in the Company's most recent Form 10-Q, the proposed FSP, if issued as currently contemplated, would require that the initial debt proceeds from the sale of Boston Properties Limited Partnership's ("BPLP") $862.5 million of 2.875% exchangeable senior notes due 2037 and $450.0 million of 3.75% exchangeable senior notes due 2036 be allocated between a liability component and an equity component in a manner that reflects interest expense at the interest rate of similar nonconvertible debt. The resulting debt discount would be amortized over the period during which the debt is expected to be outstanding (i.e., through the first optional redemption dates) as additional non-cash interest expense. Based on the Company's understanding of the application of the proposed FSP, this would result in an aggregate of approximately $0.13 - $0.14 per share (net of incremental capitalized interest) of additional non-cash interest expense for fiscal 2008. Excluding the impact of capitalized interest, the additional non-cash interest expense would be approximately $0.15 - $0.16 per share, and this amount (before netting) would increase in subsequent reporting periods through the first optional redemption dates as the debt accretes to its par value over the same period. The 45-day comment period for the proposed FSP ended on October 15, 2007 and the FASB was scheduled to commence deliberations of the guidance in the proposed FSP in January 2008. There can be no assurance that the proposed FSP will be issued in the form currently contemplated by the FASB, or at all, and therefore its ultimate impact on the Company's interest expense may differ materially from the aforementioned estimate. Accordingly, the guidance set forth in the table above also does not include the potential impact of the proposed FSP.

Boston Properties will host a conference call tomorrow, January 30, 2008 at 10:00 AM Eastern Time, open to the general public, to discuss the fourth quarter and full fiscal year 2007 results, the 2008 projections and related assumptions, and other related matters that may be of interest to investors. The number to call for this interactive teleconference is (800) 218-0530 (Domestic) or (303) 205-0055 (International); no passcode required. A replay of the conference call will be available through February 6, 2008, by dialing (800) 405-2236 (Domestic) or (303) 590-3000 (International) and entering the passcode 11105622. There will also be a live audio webcast of the call which may be accessed on the Company's website at www.bostonproperties.com in the Investor Relations section, through www.fulldisclosure.com for individual investors, or through the password-protected event management site, www.streetevents.com, for institutional investors. Shortly after the call a replay of the webcast and a podcast will be available on the Company's website, www.bostonproperties.com, in the Investor Relations section, and archived for up to twelve months following the call.

Additionally, a copy of Boston Properties' fourth quarter 2007 "Supplemental Operating and Financial Data" and this press release are available in the Investor Relations section of the Company's website at www.bostonproperties.com. These materials are also available by contacting Investor Relations at (617) 236-3322 or by written request to:


    Investor Relations
    Boston Properties, Inc.
    Prudential Center
    800 Boylston Street, Suite 1900
    Boston, MA 02199-8103

Boston Properties is a fully integrated, self-administered and self- managed real estate investment trust that develops, redevelops, acquires, manages, operates and owns a diverse portfolio of Class A office properties and one hotel. The Company is one of the largest owners and developers of Class A office properties in the United States, concentrated in five markets - Boston, Midtown Manhattan, Washington, D.C., San Francisco and Princeton, N.J.

This press release contains forward-looking statements within the meaning of the Federal securities laws. You can identify these statements by our use of the words "assumes," "believes," "estimates," "expects," "guidance," "intends," "plans," "projects" and similar expressions that do not relate to historical matters. You should exercise caution in interpreting and relying on forward-looking statements because they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond Boston Properties' control and could materially affect actual results, performance or achievements. These factors include, without limitation, the ability to enter into new leases or renew leases on favorable terms, dependence on tenants' financial condition, the uncertainties of real estate development, acquisition and disposition activity, the ability to effectively integrate acquisitions, the costs and availability of financing, the effects of local economic and market conditions, the effects of acquisitions and dispositions (including the exact amount and timing of any related special dividend and possible impairment charges) on our operating results, the impact of newly adopted accounting principles on the Company's accounting policies and on period-to- period comparisons of financial results, regulatory changes and other risks and uncertainties detailed from time to time in the Company's filings with the Securities and Exchange Commission. Boston Properties does not undertake a duty to update or revise any forward-looking statement, including its guidance for the first quarter and full fiscal year 2008, whether as a result of new information, future events or otherwise.




                             BOSTON PROPERTIES, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS

                               Three months ended        Year ended
                                   December 31,         December 31,
                                 2007      2006       2007        2006

                               (in thousands, except for per share amounts)
                                               (unaudited)
    Revenue
     Rental:
       Base rent                 $277,088  $275,049  $1,084,308  $1,092,545
       Recoveries from tenants     46,926    42,170     184,929     178,491
       Parking and other           16,845    15,211      64,982      57,080
         Total rental revenue     340,859   332,430   1,334,219   1,328,116
     Hotel revenue                 13,121    11,417      37,811      33,014
     Development and management
      services                      5,378     5,661      20,553      19,820
     Interest and other            21,432    11,554      89,706      36,677
         Total revenue            380,790   361,062   1,482,289   1,417,627

    Expenses
     Operating:
       Rental                     116,465   106,519     455,840     437,705
       Hotel                        9,059     8,106      27,765      24,966
     General and administrative    16,594    16,198      69,882      59,375
     Interest                      68,289    71,423     285,887     298,260
     Depreciation and amortization 71,421    68,924     286,030     270,562
     Losses from early
      extinguishments of debt         -          11       3,417      32,143
         Total expenses           281,828   271,181   1,128,821   1,123,011
    Income before minority
     interest in property
     partnership, income from
     unconsolidated joint
     ventures, minority
     interest in Operating
     Partnership, gains on sales
     of real estate and
     discontinued operations       98,962    89,881     353,468     294,616
    Minority interests in
     property partnerships            (84)      -           (84)      2,013
    Income from unconsolidated
     joint ventures                   805     1,340      20,428      24,507
    Income before minority
     interest in Operating
     Partnership, gains on sales
     of real estate and
     discontinued operations       99,683    91,221     373,812     321,136
    Minority interest in
     Operating Partnership        (23,181)  (25,789)    (64,916)    (69,999)
    Income before gains on sales
     of real estate and
     discontinued operations       76,502    65,432     308,896     251,137
    Gains on sales of real estate,
     net of minority interest         -       1,183     789,238     606,394
    Income before discontinued
     operations                    76,502    66,615   1,098,134     857,531
    Discontinued operations:
     Income from discontinued
      operations, net of
      minority interest               862     5,040       6,206      16,104
     Gains on sales of real
      estate from discontinued
      operations, net of
      minority interest            46,426       -       220,350         -
    Net income available to
     common shareholders         $123,790   $71,655  $1,324,690    $873,635

    Basic earnings per common
     share:
     Income available to common
      shareholders before
      discontinued operations       $0.64     $0.57       $9.20       $7.48
     Discontinued operations,
      net of minority interest       0.40      0.04        1.91        0.14
     Net income available to
      common shareholders           $1.04     $0.61      $11.11       $7.62

     Weighted average number of
      common shares outstanding   119,249   116,895     118,839     114,721

    Diluted earnings per common
     share:
     Income available to common
      shareholders before
      discontinued operations       $0.63     $0.56       $9.06       $7.32
     Discontinued operations,
      net of minority interest       0.39      0.04        1.88        0.14
     Net income available to
      common shareholders           $1.02     $0.60      $10.94       $7.46

     Weighted average number of
      common and common
      equivalent shares
      outstanding                 120,878   119,190     120,780     117,077



                             BOSTON PROPERTIES, INC.
                           CONSOLIDATED BALANCE SHEETS

                                               December 31,       December 31,
                                                  2007               2006

                                              (in thousands, except for share
                                                          amounts)
                                                        (unaudited)
                   ASSETS

    Real estate                                  $9,077,528        $8,819,934
    Real estate held for sale, net                  221,606           433,492
    Construction in progress                        700,762           115,629
    Land held for future development                249,999           183,403
      Less: accumulated depreciation             (1,531,707)       (1,392,055)
             Total real estate                    8,718,188         8,160,403

    Cash and cash equivalents                     1,506,921           725,788
    Cash held in escrows                            186,839            25,784
    Marketable securities                            22,584               -
    Tenant and other receivables, net of
     allowance for doubtful accounts of
     $1,901 and $2,682, respectively                 58,074            57,052
    Accrued rental income, net of
     allowance of $829 and $783, respectively       300,594           327,337
    Deferred charges, net                           287,199           274,079
    Prepaid expenses and other assets                30,566            40,868
    Investments in unconsolidated joint ventures     81,672            83,711
        Total assets                            $11,192,637        $9,695,022

           LIABILITIES AND STOCKHOLDERS' EQUITY

    Liabilities:
      Mortgage notes payable                     $2,726,127        $2,679,462
      Unsecured senior notes, net of discount     1,471,913         1,471,475
      Unsecured exchangeable senior
       notes, net of discount                     1,294,126           450,000
      Unsecured line of credit                          -                 -
      Accounts payable and accrued expenses         145,692           102,934
      Dividends and distributions payable           944,870           857,892
      Accrued interest payable                       54,487            47,441
      Other liabilities                             232,705           239,084
        Total liabilities                         6,869,920         5,848,288

    Commitments and contingencies                       -                 -
    Minority interests                              653,892           623,508
    Stockholders' equity:
      Excess stock, $.01 par value, 150,000,000
       shares authorized, none issued or
       outstanding                                      -                 -
      Preferred stock, $.01 par value,
       50,000,000 shares authorized, none
       issued or outstanding                            -                 -
      Common stock, $.01 par value, 250,000,000
       shares authorized, 119,581,385 and
       117,582,442 shares issued and 119,502,485
       and 117,503,542 shares outstanding in
       2007 and 2006, respectively                    1,195             1,175
      Additional paid-in capital                  3,305,219         3,119,941
      Earnings in excess of dividends               394,324           108,155
      Treasury common stock, at cost                 (2,722)           (2,722)
      Accumulated other comprehensive loss          (29,191)           (3,323)
        Total stockholders' equity                3,668,825         3,223,226
           Total liabilities and
            stockholders' equity                $11,192,637        $9,695,022



                             BOSTON PROPERTIES, INC.
                            FUNDS FROM OPERATIONS (1)

                                     Three months ended       Year ended
                                        December 31,         December 31,
                                       2007      2006       2007       2006

                                       (in thousands, except for per share
                                                     amounts)
                                                   (unaudited)

    Net income available to common
     shareholders                    $123,790   $71,655  $1,324,690  $873,635

    Add:
      Minority interest in Operating
       Partnership                     23,181    25,789      64,916    69,999
      Minority interests in property
       partnerships                        84       -            84    (2,013)
    Less:
      Income from unconsolidated
       joint ventures                     805     1,340      20,428    24,507
      Gains on sales of real estate,
       net of minority interest           -       1,183     789,238   606,394
      Income from discontinued
       operations, net of minority
       interest                           862     5,040       6,206    16,104
      Gains on sales of real estate
       from discontinued operations,
       net of minority interest        46,426       -       220,350       -

    Income before minority interest
     in property partnership, income
     from unconsolidated joint ventures,
     minority interest in Operating
     Partnership, gains on sales of
     real estate and discontinued
     operations                        98,962    89,881     353,468   294,616

    Add:
      Real estate depreciation and
       amortization (2)                73,306    71,495     295,635   283,350
      Income from discontinued
       operations                       1,009     5,942       7,274    19,081
      Income from unconsolidated
       joint ventures (3)                 805     1,340       4,975     6,590
    Less:
      Minority interest in property
       partnership's share of funds
       from operations                    437       -           437       479
      Preferred distributions (4)         926     1,431       4,266     9,418

    Funds from operations (FFO)       172,719   167,227     656,649   593,740

    Add:
      Losses from early
       extinguishments of debt
       associated with the sales of
       real estate                        -         -         2,675    31,444

    Funds from operations after a
     supplemental adjustment to
     exclude losses from early
     extinguishments of debt
     associated with the sales of
     real estate                      172,719   167,227     659,324   625,184
    Less:
      Minority interest in the
       Operating Partnership's share
       of funds from operations
       after a supplemental
       adjustment to exclude losses
       from early extinguishments
       of debt associated with the
       sales of real estate            25,185    25,377      96,808    97,519

    Funds from operations available
     to common shareholders after a
     supplemental adjustment to
     exclude losses from early
     extinguishments of debt
     associated with the sales of
     real estate                     $147,534  $141,850    $562,516  $527,665

    Our percentage share of funds
     from operations - basic           85.42%    84.82%      85.32%    84.40%

    Weighted average shares
     outstanding - basic              119,249   116,895     118,839   114,721

      FFO per share basic after a
       supplemental adjustment to
       exclude losses from
       early extinguishments of
       debt associated with the
       sales of real estate             $1.24     $1.21       $4.73     $4.60

      FFO per share basic               $1.24     $1.21       $4.71     $4.37

    Weighted average shares
     outstanding - diluted            122,338   121,456     122,454   120,707

      FFO per share diluted after a
       supplemental adjustment to
       exclude losses from
       early extinguishments of
       debt associated with the
       sales of real estate             $1.22     $1.18       $4.64     $4.47

      FFO per share diluted             $1.22     $1.18       $4.62     $4.25

    (1) Pursuant to the revised definition of Funds from Operations adopted
        by the Board of Governors of the National Association of Real Estate
        Investment Trusts ("NAREIT"), we calculate Funds from Operations, or
        "FFO," by adjusting net income (loss) (computed in accordance with
        GAAP, including non-recurring items) for gains (or losses) from sales
        of properties, real estate related depreciation and amortization, and
        after adjustment for unconsolidated partnerships and joint ventures.
        FFO is a non-GAAP financial measure.  The use of FFO, combined with
        the required primary GAAP presentations, has been fundamentally
        beneficial in improving the understanding of operating results of
        REITs among the investing public and making comparisons of REIT
        operating results more meaningful.  Management generally considers FFO
        to be a useful measure for reviewing our comparative operating and
        financial performance because, by excluding gains and losses related
        to sales of previously depreciated operating real estate assets and
        excluding real estate asset depreciation and amortization (which can
        vary among owners of identical assets in similar condition based on
        historical cost accounting and useful life estimates), FFO can help
        one compare the operating performance of a company's real estate
        between periods or as compared to different companies.  Our
        computation of FFO may not be comparable to FFO reported by other
        REITs or real estate companies that do not define the term in
        accordance with the current NAREIT definition or that interpret the
        current NAREIT definition differently.

        In addition to presenting FFO in accordance with the NAREIT
        definition, we also disclose FFO after a specific and defined
        supplemental adjustment to exclude losses from early extinguishments
        of debt associated with the sales of real estate.  The adjustment to
        exclude losses from early extinguishments of debt results when the
        sale of real estate encumbered by debt requires us to pay the
        extinguishment costs prior to the debt's stated maturity and to write-
        off unamortized loan costs at the date of the extinguishment.  Such
        costs are excluded from the gains on sales of real estate reported in
        accordance with GAAP.  However, we view the losses from early
        extinguishments of debt associated with the sales of real estate as an
        incremental cost of the sale transactions because we extinguished the
        debt in connection with the consummation of the sale transactions and
        we had no intent to extinguish the debt absent such transactions.  We
        believe that this supplemental adjustment more appropriately reflects
        the results of our operations exclusive of the impact of our sale
        transactions.

        Although our FFO as adjusted clearly differs from NAREIT's definition
        of FFO, and may not be comparable to that of other REITs and real
        estate companies, we believe it provides a meaningful supplemental
        measure of our operating performance because we believe that, by
        excluding the effects of the losses from early extinguishments of debt
        associated with the sales of real estate, management and investors are
        presented with an indicator of our operating performance that more
        closely achieves the objectives of the real estate industry in
        presenting FFO.

        Neither FFO nor FFO as adjusted should be considered as an alternative
        to net income (determined in accordance with GAAP) as an indication of
        our performance.  Neither FFO nor FFO as adjusted represents cash
        generated from operating activities determined in accordance with
        GAAP, and neither is a measure of liquidity or an indicator of our
        ability to make cash distributions.  We believe that to further
        understand our performance, FFO and FFO as adjusted should be compared
        with our reported net income and considered in addition to cash flows
        in accordance with GAAP, as presented in our consolidated financial
        statements.

    (2) Real estate depreciation and amortization consists of depreciation and
        amortization from the Consolidated Statements of Operations of
        $71,421, $68,924, $286,030 and $270,562, our share of unconsolidated
        joint venture real estate depreciation and amortization of $2,074,
        $2,250, $8,247 and $9,087 and depreciation and amortization from
        discontinued operations of $234, $1,528, $2,948 and $6,197, less
        corporate-related depreciation and amortization of $423, $295, $1,590
        and $1,584 and adjustment of asset retirement obligations of $0, $912,
        $0 and $912 for the three months and year ended December 31, 2007 and
        2006, respectively.

    (3) Excludes approximately $15.5 million related to our share of the gain
        on sale and related loss from early extinguishment of debt associated
        with the sale of Worldgate Plaza for the year ended December 31, 2007.
        Excludes approximately $17.9 million related to our share of the gain
        on sale and related loss from early extinguishment of debt associated
        with the sale 265 Franklin Street for the year ended December 31,
        2006.

    (4) Excludes approximately $8.7 million and  $5.6 million for the three
        months and year ended December 31, 2007, respectively, and
        approximately $12.2 million for the three months and year ended
        December 31, 2006 of income allocated to the holders of Series Two
        Preferred Units to account for their right to participate on an as-
        converted basis in the special dividend that followed previously
        completed sales of real estate.



                             BOSTON PROPERTIES, INC.
                          PORTFOLIO LEASING PERCENTAGES

                                                   % Leased by Location
                                                December 31,      December 31,
                                                   2007              2006

    Greater Boston                                 93.3%             89.9%
    Greater Washington, D.C.                       99.1%             98.0%
    Midtown Manhattan                              99.5%             99.9%
    Princeton/East Brunswick, NJ                   83.3%             87.9%
    Greater San Francisco                          91.1%             90.2%
            Total Portfolio                        94.9%             94.2%


                                                      % Leased by Type
                                                December 31,      December 31,
                                                   2007              2006

    Class A Office Portfolio                       95.4%             94.7%
    Office/Technical Portfolio                     86.1%             84.5%
            Total Portfolio                        94.9%             94.2%

CONTACT:
Michael Walsh
Senior Vice President, Finance
Boston Properties, Inc.
+1-617-236-3410

General Information
Marilynn Meek of Financial Relations Board for Boston Properties, Inc.
+1-212-827-3773