SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): JUNE 9, 1998 BOSTON PROPERTIES, INC. (Exact name of Registrant as specified in its charter) DELAWARE 1-13087 04-2473675 (State or other jurisdiction (Commission File (I.R.S. Employer of incorporation) Number) Identification No.) 8 ARLINGTON STREET BOSTON, MASSACHUSETTS 02116 (Address of principal executive offices and zip code) Registrant's telephone number, including area code: (617) 859-2600 ITEM 5. OTHER EVENTS. In connection with certain investor presentations between June 9, 1998 and June 12, 1998, Boston Properties, Inc. will be using the slides attached as Exhibit 99.1 to this Current Report on Form 8-K. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (c) EXHIBITS: Exhibit No. - ----------- 99.1 The Boston Properties, Inc. investor presentation slides used during the period of June 9-12, 1998. 2 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: June 9, 1998 BOSTON PROPERTIES, INC. /s/ David G. Gaw -------------------------------------- By: David G. Gaw Chief Financial Officer 3
EXHIBIT 99.1 [START: DESCRIPTION OF SLIDES] [LOGO] BOSTON PROPERTIES, INC. Safe Harbor This presentation contains forward-looking statements within the meaning of the Federal securities laws. Forward-looking statements are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy. Acquisitions that are pursued by Boston Properties may not be consummated for a variety of reasons, including a failure to reach agreement with the selling party regarding the acquisition price or other terms of a contribution or acquisition agreement. Information contained in this presentation regarding current and future market conditions is based on the Company's assessment of the market and is subject to the uncertainties inherent in such an assessment. In particular, national and regional economic conditions and the rate of new construction and rehabilitation in a market will affect projected rents and the cost of lease renewals. 2 Overview Initial public offering: June 1997 -- $903 million Follow-on offering: January 1998 -- $808 million Current dividend yield: 4.6% 1998 FFO multiple (a): 14.1x Equity market capitalization (a): $2.8 billion Total market capitalization (a): $4.2 billion Debt to market capitalization (a): 32.2% Available line of credit: $500 million (a) As of March 31, 1998 3 Leadership Position in Targeted Markets - - High Barriers to Entry - Strong Real Estate Fundamentals 102 properties* totaling 24.6 million square feet [START: PIE CHARTS] Pro Forma Net Rentable Square Feet** Pro Forma Escalated Rents** Greater Boston (27%) Greater Boston (22%) Greater Washington D.C. (27%) Greater Washington D.C. (27%) Midtown Manhattan (15%) Midtown Manhattan (18%) Greater San Francisco (22%) Greater San Francisco (22%) Other (9%) Other (11%) [END: BAR CHARTS] * Excludes three hotels (one under development) and one garage property totaling 1.3 million sq. ft. ** Includes Prudential Center and Embarcadero Center 4 Clearly Defined -- and Executed -- Growth Strategy - - Acquire premier irreplaceable assets in select markets - - Capitalize on outstanding development opportunities - - Maximize growth in existing portfolio 5 Focused -- and Proven -- Acquisition Strategy - - Target selected markets and submarkets - - Acquire Class A office properties - Create additional value through development opportunities where possible - - Utilize Boston Properties "currency" - - Purchase assets below replacement cost - - Employ flexible financing structures 6 Acquisitions Announced Since IPO [START: BAR CHART] ($millions) 280 Park Avenue $ 321 100 East Pratt Street 138 875 Third Avenue 215 Riverfront Plaza 174 Mulligan/Griffin 258 Decoverly 3 11 Prudential Center Complex 519 Embarcadero Center 1,220 -------- Total $2.9 billion ======== [END: BAR CHART] 7 Prudential Center Complex Boston, Massachusetts - - New England's largest multi-used development - - 1.6 million sq. ft. of development rights - - 5-year rollover of 885,000 sq. ft. at average $20/sq. ft. below [PRUDENTIAL PHOTO] today's market rates - - 1999 unlevered FFO yield = 8.2% - - 1999 return on equity = 10.2% - - 1997 retail sales (in-line stores) of $650/sq. ft. - 1.7 million sq. ft. office space - 500,000 sq. ft. retail space - 2,550 parking spaces 8 Embarcadero Center San Francisco, California - - Office/retail space acquired for less than $300/sq. ft. - - 4 1/2-year rollover of 1.5 million sq. ft. at average $15/sq. ft. below today's market rates - - 1999 unlevered FFO yield = 7.8% - - Since 1990, $85 million invested by previous owners [EMBARCADERO PHOTO] - - Addition of Rockefeller interests - $305 million investment - Representation on BXP's Board of Directors - - Opportunity to enter one of America's most desirable markets - 3.3 million sq. ft. office space - 354,000 sq. ft. retail space - 2,090 parking spaces 9 San Francisco Market Dynamics [MAP] - - Highly educated workforce, excellent transportation and infrastructure - - "24-hour powerhouse" - - Downtown Class A rents increasing dramatically - - Falling vacancies -- North of Market (Direct Class A*) - 5.9% in 1996 - 2.5% in 1997 - - Severe limits to increased supply * Information compiled by Cushman & Wakefield's San Francisco Market Research Department 10 Proven Development Strategy - - Build a development pipeline responsive to market conditions - - Acquire sites with near-term development potential - - Use proven development skills/experience - - Secure major prelease commitments - - Create opportunistic joint ventures 11 Development Completed/ Under Construction Since IPO Value at Expected Stabilized Property Completion Unlevered FFO Yield - -------- --------- ------------------- (000's) Washingtonian North $ 60,000 11.0% 200 West Street $ 43,423 13.5 Residence Inn By Marriott $ 32,000 15.3 Eight Cambridge Center $ 26,000 14.0 One Freedom Square* $ 19,150 11.3 One & Two Reston Overlook* $ 18,100 13.3 201 Spring Street $ 17,689 12.3 The Arboretum $ 15,265 12.3 Virginia Building Seven $ 11,470 12.2 181 Spring Street $ 10,871 14.0 Virginia Building Twelve $ 10,427 12.9 Sugarland Building One $ 6,506 18.5 Sugarland Building Two $ 5,542 18.5 -------- ---- Total/Weighted Average $276,443 13.0% * 25% Ownership 12 In-place Development Pipeline Expected stabilized unlevered yields of 10.5% - 15.0% [START: BAR CHARTS] Investment (in $Millions) Square Feet (in Thousands)
1999 2000 2001 2002 2003 Currently Under Development $141.6 $ 93.5 $ - $ - $ - Controlled for Future Development 42.0 262.8 651.0 832.7 732.0 ------ ------ ------ ------ ------ Total $183.6 $356.3 $651.0 $832.7 $732.0 ====== ====== ====== ====== ====== [END: BAR CHARTS] 13
1999 2000 2001 2002 2003 Currently Under Development 1,612 1,945 - - - Controlled for Future Development 185 485 3,243 2,886 2,364 ------ ------ ------ ------ ------ Total 1,797 2,430 3,243 2,886 2,364 ====== ====== ====== ====== ====== Development Opportunities by Market* Total Development Program = $2.8 billion and 12.7 million sq. ft. [START: PIE CHART] Greater Washington D.C. $992 million (36%) Greater Boston $776 million (28%) Midtown Manhattan $1 billion (36%) [END: PIE CHART] * Total Investment 14 Greater Washington, D.C. Development Sites [MAP] 15 Times Square Development Sites [MAP] Site 1 Site 4 - ------ ------ 1.2 million sq. ft. 1.0 million sq. ft. 49-story tower 40-story tower 16 Prudential Center Complex [PHOTO] Developable Space - ----------------- 992,000 sq. ft. office 241,000 sq. ft. retail 371,000 sq. ft. residential Total = 1.6 million sq. ft. 17 Growth Within Existing Portfolio - - Premier buildings in desirable markets - Rising rents and decreasing vacancies - - Proven marketing strategies and responsive property management - - Attractive market rollover prospects 18 Comparison of Expiring Rents to Current Market Rents Sq. Ft. Average Implied Rental Expiring* % of $ Per Market Rate Growth Year (000's) Portfolio Sq. Ft. Rent PSF** on Core Portfolio - ---- -------------- --------- ------- ---------- ----------------- 1999 1,494 8.3% $24.81 $35.24 3.5% 2000 1,491 8.3 25.21 36.65 3.8 2001 1,573 8.7 33.58 38.11 1.2 2002 2,613 14.6 32.20 39.64 3.4 2003+ 9,360 52.1 31.49 41.23 16.1 * Excludes approximately 850,000 sq. ft. of retail space ** Assumes current market rental rates escalated by 4%/year 19 Annual Growth of Funds From Operations [START: BAR CHART] Year FFO/share % Increase - ----------- -------- ---------- 1997 $1.99 - 1998E* $2.50 26% 1999E* $2.94 18% [END: BAR CHART] * First Call Estimates (6/5/98) 20 Investment Appeals of Boston Properties - - Leadership position in markets with high barriers to entry and strong real estate fundamentals - - Clearly defined growth strategies - - Proven management expertise - 28 years of value creation - 16 officers average 25 years of real estate experience - Established local presence and market savvy - - Incentivized Organization - Management ownership (21.4%) exceeds $600 million at March 31, 1998 - Options distributed at all levels 21 [LOGO] Boston Properties, Inc. [END: DESCRIPTION OF SLIDES] 22