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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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FORM 10-Q

ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2002

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                              to                             

Commission File Number 1-13087

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BOSTON PROPERTIES, INC.
(Exact name of Registrant as specified in its Charter)

Registrant's telephone number, including area code: (617) 236-3300

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        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No o

        Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date.

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						Page
PART I.		FINANCIAL INFORMATION
ITEM 1.		Consolidated Financial Statements:
		a)		Consolidated Balance Sheets as of March 31, 2002 and December 31, 2001		1
		b)		Consolidated Statements of Operations for the three months ended March 31, 2002 and 2001		2
		c)		Consolidated Statements of Comprehensive Income for the three months ended March 31, 2002 and 2001		3
		d)		Consolidated Statements of Cash Flows for the three months ended March 31, 2002 and 2001		4
		e)		Notes to the Consolidated Financial Statements		5
ITEM 2.		Management's Discussion and Analysis of Financial Condition and Results of Operations				13
ITEM 3.		Quantitative and Qualitative Disclosures about Market Risk				21
PART II.		OTHER INFORMATION
ITEM 6.		Exhibits and Reports on Form 8-K				22
Signature						23

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BOSTON PROPERTIES, INC.

CONSOLIDATED BALANCE SHEETS
(unaudited)

					March 31, 2002			December 31, 2001
					(in thousands, except for share amounts)
ASSETS
Real estate:					$	7,539,708		$	7,457,906
	Less: accumulated depreciation					(755,156	)		(719,854	)
		Total real estate				6,784,552			6,738,052
Cash and cash equivalents						71,007			98,067
Escrows						45,216			23,000
Investments in securities						—			4,297
Tenant and other receivables						36,846			43,546
Accrued rental income						133,885			119,494
Deferred charges, net						101,580			107,573
Prepaid expenses and other assets						30,235			20,996
Investments in unconsolidated joint ventures						98,071			98,485
		Total assets			$	7,301,392		$	7,253,510
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
	Mortgage notes and bonds payable				$	4,361,233		$	4,314,942
	Accounts payable and accrued expenses					56,125			81,108
	Dividends and distributions payable					79,985			79,561
	Interest rate contracts					8,635			11,147
	Accrued interest payable					15,032			9,080
	Other liabilities					75,465			58,859
		Total liabilities				4,596,475			4,554,697
Commitments and contingencies						—			—
Minority interests						829,687			844,740
Series A Convertible Redeemable Preferred Stock, liquidation preference $50.00 per share, 2,000,000 shares issued and outstanding						100,000			100,000
Stockholders' equity:
	Excess stock, $.01 par value, 150,000,000 shares authorized, none issued or outstanding					—			—
	Common stock, $.01 par value, 250,000,000 shares authorized, 91,137,874 and 90,780,591 issued and outstanding in 2002 and 2001, respectively					911			908
	Additional paid-in capital					1,809,836			1,789,521
	Dividends in excess of earnings					(15,084	)		(17,669	)
	Treasury common stock, at cost					(2,722	)		(2,722	)
	Unearned compensation					(3,843	)		(2,097	)
	Accumulated other comprehensive loss					(13,868	)		(13,868	)
		Total stockholders' equity				1,775,230			1,754,073
			Total liabilities and stockholders' equity		$	7,301,392		$	7,253,510

The accompanying notes are an integral part of these financial statements.

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BOSTON PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)

					Three months ended March 31,
					2002			2001
					(in thousands, except for per share amounts)
Revenue
	Rental:
		Base rent			$	229,106		$	184,768
		Recoveries from tenants				27,712			25,891
		Parking and other				12,096			13,746
			Total rental revenue			268,914			224,405
	Development and management services					4,134			3,397
	Interest and other					1,272			4,444
			Total revenue			274,320			232,246
Expenses
	Operating					85,089			70,070
	General and administrative					11,069			9,950
	Interest					63,787			47,853
	Depreciation and amortization					42,944			34,541
	Loss on investments in securities					4,297			—
			Total expenses			207,186			162,414
Income before net derivative losses, minority interests, income from unconsolidated joint ventures, minority interest in Operating Partnership, gain on sale of real estate, discontinued operations, cumulative effect of a change in accounting principle and preferred dividend						67,134			69,832
Net derivative losses						(303	)		(3,055	)
Minority interests in property partnerships						471			(255	)
Income from unconsolidated joint ventures						1,682			1,127
Income before minority interest in Operating Partnership, gain on sale of real estate, discontinued operations, cumulative effect of a change in accounting principle and preferred dividend						68,984			67,649
Minority interest in Operating Partnership						(18,386	)		(18,878	)
Income before gain on sale, discontinued operations, cumulative effect of a change in accounting principle and preferred dividend						50,598			48,771
Gain on sale of real estate, net of minority interest						—			4,654
Income before discontinued operations, cumulative effect of a change in accounting principle and preferred dividend						50,598			53,425
Discontinued Operations:
Income from discontinued operations, net of minority interest						570			592
Gain on sales of real estate from discontinued operations, net of minority interest						5,840			—
Income before cumulative effect of a change in accounting principle and preferred dividend						57,008			54,017
Cumulative effect of a change in accounting principle, net of minority interest						—			(6,767	)
Net income before preferred dividend						57,008			47,250
Preferred dividend						(1,643	)		(1,643	)
Net income available to common shareholders					$	55,365		$	45,607
Basic earnings per share:
	Income before discontinued operations and cumulative effect of a change in accounting principle				$	0.54		$	0.58
	Discontinued operations					0.07			0.01
	Cumulative effect of a change in accounting principle					—			(0.08	)
	Net income available to common shareholders				$	0.61		$	0.51
	Weighted average number of common shares outstanding					90,932			88,688
Diluted earnings per share:
	Income before discontinued operations and cumulative effect of a change in accounting principle				$	0.53		$	0.57
	Discontinued operations					0.07			—
	Cumulative effect of a change in accounting principle					—			(0.07	)
	Net income available to common shareholders				$	0.60		$	0.50
	Weighted average number of common and common equivalent shares outstanding					92,783			91,171

The accompanying notes are an integral part of these financial statements.

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BOSTON PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF

COMPREHENSIVE INCOME

				For the three months ended March 31,
				2002			2001
				(unaudited and in thousands)
Net income available to common shareholders				$	55,365		$	45,607
Other comprehensive loss:
	Unrealized losses on investments in securities:
		Unrealized holding losses arising during the period			—			(637	)
		Less: reclassification adjustment for the cumulative effect of a change in accounting principle included in net income available to common shareholders			—			6,853
	Unrealized derivative losses:
		Transition adjustment of interest rate contracts			—			(11,414	)
		Effective portion of interest rate contracts			—			(2,454	)
Other comprehensive loss					—			(7,652	)
Comprehensive income				$	55,365		$	37,955

The accompanying notes are an integral part of these financial statements

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BOSTON PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

					For the three months ended March 31,
					2002			2001
					(unaudited and in thousands)
Cash flows from operating activities:
	Net income before preferred dividend				$	57,008		$	47,250
	Adjustments to reconcile net income before preferred dividend to net cash provided by operating activities:
		Depreciation and amortization				42,944			34,740
		Non-cash portion of interest expense				1,363			732
		Non-cash compensation expense				243			144
		Loss on investments in securities				4,297			—
		Non-cash portion of derivative losses				(1,402	)		3,055
		Minority interest in property partnerships				(1,394	)		255
		Distributions in excess of earnings from unconsolidated joint ventures				1,249			(1,127	)
		Minority interest in Operating Partnership				19,819			18,507
		Gain on sales of real estate				(7,146	)		(5,802	)
		Cumulative effect of a change in accounting principle				—			8,432
	Change in assets and liabilities:
		Escrows				(22	)		(1,910	)
		Tenant and other receivables, net				6,700			2,409
		Accrued rental income, net				(14,530	)		(5,991	)
		Prepaid expenses and other assets				(7,683	)		7,373
		Accounts payable and accrued expenses				(6,540	)		(1,406	)
		Accrued interest payable				5,952			2,528
		Other liabilities				8,549			5,017
		Tenant leasing costs				(2,305	)		(4,986	)
			Total adjustments			50,094			61,970
			Net cash provided by operating activities			107,102			109,220
Cash flows from investing activities:
	Acquisitions/additions to real estate					(116,532	)		(181,428	)
	Investments in unconsolidated joint ventures					(835	)		(1,458	)
	Net proceeds from the sale of real estate					22,194			6,613
	Proceeds from the sale of real estate placed in escrow					(22,194	)		—
	Deposits on real estate					8,057			—
			Net cash used in investing activities			(109,310	)		(176,273	)
Cash flows from financing activities:
	Borrowings on unsecured line of credit					10,000			—
	Repayments of unsecured line of credit					(10,000	)		—
	Repayments of mortgage notes					(11,086	)		(51,784	)
	Proceeds from mortgage notes					57,323			87,065
	Bonds payable proceeds released from escrow					—			57,610
	Dividends and distributions					(72,532	)		(66,109	)
	Proceeds from stock transactions					1,475			1,585
	Deferred financing costs					(32	)		(452	)
			Net cash provided by (used in) financing activities			(24,852	)		27,915
Net decrease in cash and cash equivalents						(27,060	)		(39,138	)
Cash and cash equivalents, beginning of period						98,067			280,957
Cash and cash equivalents, end of period					$	71,007		$	241,819
Supplemental disclosures:
	Cash paid for interest				$	64,318		$	60,606
	Interest capitalized				$	7,846		$	16,013
Non-cash investing and financing activities:
	Additions to real estate included in accounts payable				$	18,031		$	1,565
	Dividends and distributions declared but not paid				$	79,985		$	71,917
	Issuance of Minority Interest in connection with the acquisition of real estate				$	675		$	—
	Conversions of Minority Interest to Stockholders' Equity				$	—		$	95,463
	Basis adjustment in connection with conversions of Minority Interest to Stockholders' Equity				$	—		$	30,074
	Issuance of restricted shares to employees				$	1,989		$	1,827
	Unrealized loss on investments in securities				$	—		$	637

The accompanying notes are an integral part of these financial statements

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BOSTON PROPERTIES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1.  Organization

        Boston Properties, Inc. (the "Company"), a Delaware corporation, is a self-administered and self-managed real estate investment trust ("REIT"). The Company is the sole general partner of Boston Properties Limited Partnership (the "Operating Partnership") and at March 31, 2002, owned an approximate 75.2% general and limited partnership interest in the Operating Partnership. Partnership interests in the Operating Partnership are denominated as "common units of partnership interest" (also referred to as "OP Units") or "preferred units of partnership interest" (also referred to as "Preferred Units"). All references to OP Units and Preferred Units exclude such units held by the Company. A holder of an OP Unit may present such OP Unit to the Operating Partnership for redemption at any time (subject to restrictions agreed upon at the time of issuance of OP Units to particular holders that may restrict such right for a period of time, generally one year from issuance). Upon presentation of an OP Unit for redemption, the Operating Partnership must redeem such OP Unit for cash equal to the then value of a share of common stock of the Company ("Common Stock"), except that, the Company may, at its election, in lieu of a cash redemption, acquire such OP Unit for one share of Common Stock. Because the number of shares of Common Stock outstanding at all times equals the number of OP Units that the Company owns, one share of Common Stock is generally the economic equivalent of one OP Unit, and the quarterly distribution that may be paid to the holder of an OP Unit equals the quarterly dividend that may be paid to the holder of a share of Common Stock. Each series of Preferred Units bears a distribution that is set in accordance with an amendment to the partnership agreement of the Operating Partnership. Preferred Units may also be convertible into OP Units at the election of the holder thereof or the Company.

        All references to the Company refer to Boston Properties, Inc. and its subsidiaries, including the Operating Partnership, collectively, unless the context otherwise requires.

        As of March 31, 2002, the Company and the Operating Partnership had 91,137,874 and 20,645,339 shares of Common Stock and OP Units outstanding, respectively. In addition, the Company had 2,000,000 shares of Preferred Stock and the Operating Partnership had 8,687,314 Preferred Units outstanding.

The Properties:

        As of March 31, 2002, the Company owned and had interests in a portfolio of 144 commercial real estate properties (147 and 146 properties at December 31, 2001 and March 31, 2001, respectively) (the "Properties") aggregating over 41.2 million square feet. The properties consist of 136 office properties with approximately 33.6 million net rentable square feet (including 10 properties under development expected to contain approximately 4.3 million net rentable square feet) and approximately 6.0 million additional square feet of structured parking for 18,484 vehicles, five industrial properties with approximately 0.6 million net rentable square feet and three hotels with a total of 1,054 rooms (consisting of approximately 1.0 million square feet). In addition, the Company owned, had under contract, or had an option to acquire 42 parcels of land totaling approximately 552.0 acres, which will support approximately 8.9 million square feet of development.

2.  Basis of Presentation and Summary of Significant Accounting Policies

        The consolidated financial statements of the Company include all the accounts of the Company, its majority-owned Operating Partnership and subsidiaries. All significant intercompany balances and transactions have been eliminated. These financial statements should be read in conjunction with the

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Company's financial statements and notes thereto contained in the Company's annual report on Form 10-K for its fiscal year ended December 31, 2001.

        The accompanying interim financial statements are unaudited; however, the financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and in conjunction with the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the disclosures required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting solely of normal recurring matters) necessary for a fair presentation of the financial statements for these interim periods have been included. The results of operations for the interim periods are not necessarily indicative of the results to be obtained for other interim periods or for the full fiscal year.

        Certain prior-year balances have been reclassified in order to conform to the current-year presentation.

        In October 2001, the Financial Accounting Standards Board (the "FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS No. 144 supersedes FASB SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," and the accounting and reporting provisions for disposals of a segment of a business as addressed in APB Opinion No. 30, "Reporting the Results of Operations—Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions." SFAS No. 144 establishes a single accounting model for long-lived assets to be disposed of by sale and addresses various implementation issues of SFAS No. 121. In addition, SFAS No. 144 extends the reporting requirements of discontinued operations to include components of an entity that have either been disposed of or are classified as held for sale. The Company adopted SFAS No. 144 as of January 1, 2002. The Company's adoption of SFAS No. 144 resulted in the presentation of the net operating results of properties sold during the three months ended March 31, 2002, as income from discontinued operations for all periods presented. SFAS No. 144 also resulted in the presentation of the gain on sale of properties sold during the three months ended March 31, 2002, as gain on sale of real estate from discontinued operations for all periods presented. The adoption of SFAS No. 144 did not have an impact on net income available to common shareholders. SFAS No. 144 only impacted the presentation of these properties within the consolidated statements of operations.

3.  Real Estate Activity During the Quarter Ended March 31, 2002

        During the quarter ended March 31, 2002, the Company placed in service two development projects consisting of Five Times Square, a 1,099,154 square foot office building in New York City and 7300 Boston Boulevard, a 32,000 square foot office/technical building in Springfield, Virginia.

        On March 4, 2002 the Company disposed of Fullerton Square consisting of two office/technical properties totaling 179,453 square feet in Springfield, Virginia for net proceeds of approximately $22.2 million, resulting in a gain on sale of approximately $5.8 million (net of minority interest share of approximately $1.3 million). In addition, the Company disposed of 7600, 7700 and 7702 Boston Boulevard consisting of three office/technical properties totaling approximately 195,227 square feet in Springfield, Virginia. Due to the structure of the transaction and certain continuing involvement provisions related to the three Boston Boulevard properties, that transaction does not qualify as a sale

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for financial reporting purposes and has been accounted for as a financing transaction. Under the financing method, the cost of real estate and other assets totaling approximately $15.5 million continues to be reflected within the accompanying consolidated balance sheets, the cash received from the buyer totaling approximately $8.1 million has been recorded in other liabilities and notes receivable totaling approximately $18.9 million have not been reflected in the financial statements. The Company expects to complete this transaction during the fourth quarter of 2002, upon the completion of the construction of the 7702 Boston Boulevard property.

4.  Investments in Securities

        During the quarter ended March 31, 2002, the Company realized a loss totaling $4.3 million resulting from the write-down of its investment in the securities of a technology company. The Company determined that the decline in the fair value of these securities was other than temporary.

5.  Investments in Unconsolidated Joint Ventures

        The investments in unconsolidated joint ventures consist of the following:

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(1)

Ownership can increase based on certain return thresholds

(2)

Property is currently under development

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        The combined summarized balance sheets of the joint ventures are as follows:

        The combined summarized statements of operations of the joint ventures are as follows:

6.  Mortgage Notes and Bonds Payable

        On March 8, 2002, the Company obtained construction financing totaling $24.0 million collateralized by the Shaws Supermarket development project at the Prudential Center in Boston, Massachusetts. Such financing bears interest at a rate equal to LIBOR + 1.40% and matures in September 2003. As of March 31, 2002, $5.6 million had been drawn on the construction loan.

7.  Minority Interests

        Minority interests in the Company relate to the interest in the Operating Partnership not owned by Boston Properties, Inc. and an interest in a property partnership that is not owned by the Company. As of March 31, 2002, the minority interest in the Operating Partnership consisted of 20,645,339 OP Units and 8,687,314 Preferred Units held by parties other than Boston Properties, Inc.

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        On February 15, 2002, the Operating Partnership paid a distribution on 2,482,026 Series One Preferred Units of $0.61625 per unit and paid a distribution on the 6,213,131 Series Two and Three Preferred Units of $0.786990 per unit.

        On March 18, 2002, Boston Properties, Inc., as general partner of the Operating Partnership determined a distribution on the OP Units in the amount of $0.58 per OP Unit payable on April 30, 2002 to OP Unit holders of record on March 29, 2002.

8.  Redeemable Preferred Stock and Stockholders' Equity

        On February 15, 2002, the Company paid a dividend on the 2,000,000 shares of Series A Convertible Redeemable Preferred Stock $50 liquidation preference per share (the "Preferred Stock") of $0.786990 per share. In addition, on March 18, 2002, the Board of Directors of the Company declared a dividend of $0.792470 per share on the Preferred Stock payable on May 15, 2002 to shareholders of record on March 29, 2002. These shares of Preferred Stock are not classified as equity as in certain instances they are convertible into shares of Common Stock at the election of the holder after December 31, 2002 or are redeemable for cash at the election of the holder in six annual tranches commencing on May 12, 2009.

        On March 18, 2002, the Board of Directors of the Company declared a first quarter dividend in the amount of $0.58 per share of Common Stock payable on April 30, 2002 to shareholders of record on March 29, 2002.

9.  Stock Option and Incentive Plan

        During the quarter ended March 31, 2002, the Company issued 1,397,000 options to acquire shares of Common Stock at the price per share of Common Stock at the date of grant ($37.70). The options vest over a three-year period, with one-third of the options vesting each year. In addition, the Company issued 52,750 shares of restricted stock valued at approximately $2.0 million ($37.70 per share). The restricted stock vests over a five-year period, with one-fifth of the shares vesting each year and has been recognized as unearned compensation on the consolidated balance sheets. As of March 31, 2002, the Company had outstanding options with respect to 12,223,944 shares of Common Stock.

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10.  Earnings Per Share

			Three Months Ended March 31, 2002
			Income (Numerator)			Shares (Denominator)		Per Share Amount
Basic Earnings:
	Income available to common shareholders		$	55,365		90,932		$	0.61
Effect of Dilutive Securities:
	Stock options and other			155		1,851			(0.01	)
Diluted Earnings:
	Net income		$	55,520		92,783		$	0.60

			Three Months Ended March 31, 2001
			Income (Numerator)			Shares (Denominator)		Per Share Amount
Basic Earnings:
	Income available to common shareholders		$	45,607		88,688		$	0.51
Effect of Dilutive Securities:
	Stock options and other			—		2,483			(0.01	)
Diluted Earnings:
	Net income		$	45,607		91,171		$	0.50

        Preferred Stock and Units outstanding in 2002 and 2001 were not included in the computation of diluted earnings per share as such Preferred Stock and Units were anti-dilutive during the respective periods.

11.  Segment Information

        The Company's segments are based on the Company's method of internal reporting which classifies its operations by both geographic area and property type. The Company's segments by geographic area are: Greater Boston, Greater Washington, D.C., Midtown Manhattan, Greater San Francisco, and New Jersey and Pennsylvania. Segments by property type include: Class A Office, Office/Technical, Industrial and Hotels.

        Asset information by segment is not reported since the Company does not use this measure to assess performance, therefore, the depreciation and amortization expenses are not allocated among segments. Interest income, management and development services, interest expense and general and administrative expenses are not included in net operating income as the internal reporting addresses these on a corporate level.

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        Information by geographic area and property type:

        Three months ended March 31, 2002:

				Greater Boston			Greater Washington, D.C.			Midtown Manhattan			Greater San Francisco			New Jersey/ Pennsylvania			Total
Rental Revenue:
	Class A			$	60,152		$	56,644		$	69,495		$	55,086		$	16,398		$	257,775
	Office/Technical				2,143			3,332			—			490			—			5,965
	Industrial				233			—			—			356			188			777
	Hotels				4,397			—			—			—			—			4,397
		Total			66,925			59,976			69,495			55,932			16,586			268,914
% of Total					24.89	%		22.30	%		25.84	%		20.80	%		6.17	%		100.00	%
Rental Expenses:
	Class A				21,872			14,937			21,229			18,780			5,566			82,384
	Office/Technical				412			661			—			88			—			1,161
	Industrial				83			—			—			57			37			177
	Hotels				1,367			—			—			—			—			1,367
		Total			23,734			15,598			21,229			18,925			5,603			85,089
% of Total					27.89	%		18.33	%		24.95	%		22.24	%		6.59	%		100.00	%
Net Operating Income				$	43,191		$	44,378		$	48,266		$	37,007		$	10,983		$	183,825
% of Total					23.50	%		24.14	%		26.26	%		20.13	%		5.97	%		100.00	%

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        Three months ended March 31, 2001:

				Greater Boston			Greater Washington, D.C.			Midtown Manhattan			Greater San Francisco			New Jersey/ Pennsylvania			Total
Rental Revenue:
	Class A			$	51,562		$	54,922		$	36,412		$	51,655		$	16,708		$	211,259
	Office/Technical				1,702			3,091			—			511			—			5,304
	Industrial				433			351			—			398			151			1,333
	Hotels				6,509			—			—			—			—			6,509
		Total			60,206			58,364			36,412			52,564			16,859			224,405
% of Total					26.83	%		26.01	%		16.23	%		23.42	%		7.51	%		100.00	%
Rental Expenses:
	Class A				18,125			14,260			12,600			17,049			5,089			67,123
	Office/Technical				526			647			—			82			—			1,255
	Industrial				167			148			—			56			30			401
	Hotels				1,291			—			—			—			—			1,291
		Total			20,109			15,055			12,600			17,187			5,119			70,070
% of Total					28.70	%		21.48	%		17.98	%		24.53	%		7.31	%		100.00	%
Net Operating Income				$	40,097		$	43,309		$	23,812		$	35,377		$	11,740		$	154,335
% of Total					25.98	%		28.06	%		15.43	%		22.92	%		7.61	%		100.00	%

        The following is a reconciliation of net operating income to income before minority interests and joint venture income:

			Three Months Ended March 31,
			2002			2001
Net operating income			$	183,825		$	154,335
Add:
	Development and management services			4,134			3,397
	Interest and other			1,272			4,444
Less:
	General and administrative			(11,069	)		(9,950	)
	Interest expense			(63,787	)		(47,853	)
	Depreciation and amortization			(42,944	)		(34,541	)
	Loss on investments in securities			(4,297	)		—
Income before minority interests and joint venture income			$	67,134		$	69,832

12

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ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

        The following discussion should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this report. This Report on Form 10-Q contains forward-looking statements within the meaning the federal securities laws. Actual results or developments could differ materially from those projected in such statements as a result of certain factors set forth in the section below entitled "Certain Factors Affecting Future Operating Results" and elsewhere in this report.

Critical Accounting Policies

        The SEC published cautionary advice in December 2001 regarding MD&A disclosure of critical accounting policies. In response to that release the Company believes the following critical accounting policies affect the Company's more significant judgments and estimates used in the preparation of the Company's consolidated financial statements.

Real Estate

        Real estate is stated at depreciated cost. The Company periodically reviews its properties to determine if their carrying amounts will be recovered from future operating cash flows. If the Company determines that an impairment has occurred, those assets shall be reduced to fair value. No such impairment losses have been recognized to date.

Investments in Unconsolidated Joint Ventures

        The Company accounts for its investments in joint ventures, which it does not control, using the equity method of accounting. Under the equity method of accounting, the net equity investment of the Company is reflected on the consolidated balance sheets, and the Company's share of net income or loss from the joint ventures is included on the consolidated statements of operations.

        The Company serves as the development manager for the joint ventures currently under development. The profit on development fees received from joint ventures is recognized to the extent attributable to the outside interests in the joint ventures.

Revenue Recognition

        Base rental revenue is reported on a straight-line basis over the terms of the respective leases. Accrued rental income represents rental income earned in excess of rent payments received pursuant to the terms of the individual lease agreements. The Company maintains an allowance for estimated losses that may result from the inability of the Company's tenants to make required payments.

        Property operating cost reimbursements due from tenants for common area maintenance, real estate taxes and other recoverable costs are recognized in the period the expenses are incurred.

        Development fees are recognized ratably over the period of development. Management fees are recognized as revenue as they are earned.

        The estimated fair value of warrants received in conjunction with communications license agreements are recognized over the ten-year effective terms of the license agreements.

        Gains from sales of real estate at the time of sale using the full accrual method, provided that various criteria related to the terms of the transactions and any subsequent involvement by the Company with the properties sold are met. If the criteria are not met, the Company defers the gains and recognizes them when the criteria are met or using the finance, installment or cost recovery methods, as appropriate under the circumstances.

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Income Taxes

        The Company has elected to be treated as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the "Code"), commencing with its taxable year ended December 31, 1997. As a result, the Company generally will not be subject to federal corporate income tax on its taxable income that is distributed to its stockholders. A REIT is subject to a number of organizational and operational requirements, including a requirement that it currently distribute at least 90% of its annual taxable income. The Company's policy is to distribute 100% of its taxable income. Accordingly, no provision has been made for federal income taxes in the accompanying consolidated financial statements.

        From January 1, 2001 through March 31, 2002, the Company's portfolio decreased from 146 properties to 144 properties (the "Total Portfolio"). As a result of changes in the Company's Total Portfolio, the financial data presented below shows significant changes in revenue and expenses from period to period. The Company does not believe that its period-to-period financial data are comparable. Therefore, the comparison of operating results for the three months ended March 31, 2002 and 2001 show separately changes attributable to the properties that were owned by the Company for all of each period compared (the "Same Property Portfolio") and the changes attributable to the Total Portfolio.

Results of Operations

Comparison of the three months ended March 31, 2002 to the three months ended March 31, 2001.

        The table below reflects selected operating information for the Same Property Portfolio and the Total Portfolio. The Same Property Portfolio consists of the 120 properties acquired or placed in service on or prior to January 1, 2001 and owned by the Company through March 31, 2002.

				SAME PROPERTY PORTFOLIO
				2002			2001			INCREASE/ (DECREASE)			% CHANGE
				(Dollars in thousands)
Revenue:
	Rental revenue			$	223,920		$	222,506		$	1,414		0.64	%
	Development and management services				—			—			—		—
	Interest and other				—			—			—		—
	Unconsolidated joint venture income				1,210			1,087			123		11.32	%
		Total revenue			225,130			223,593			1,537		0.69	%
Expenses:
	Operating				71,845			68,485			3,360		4.91	%
	General and administrative				—			—			—		—
	Interest				—			—			—		—
	Depreciation and amortization				34,846			34,247			599		1.75	%
		Total expenses			106,691			102,732			3,959		3.85	%
Income before minority interests and net derivative losses				$	118,439		$	120,861			(2,422	)	(2.00	)%

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				TOTAL PORTFOLIO
				2002			2001			INCREASE/ (DECREASE)			% CHANGE
				(Dollars in thousands)
Revenue:
	Rental revenue			$	268,914		$	224,405		$	44,509		19.83	%
	Development and management services				4,134			3,397			737		21.70	%
	Interest and other				1,272			4,444			(3,172	)	(71.38	)%
	Unconsolidated joint venture income				1,682			1,127			555		49.25	%
		Total revenue			276,002			233,373			42,629		18.27	%
Expenses:
	Operating				85,089			70,070			15,019		21.43	%
	General and administrative				11,069			9,950			1,119		11.25	%
	Interest				63,787			47,853			15,934		33.30	%
	Depreciation and amortization				42,944			34,541			8,403		24.33	%
	Loss on investments in securities				4,297			—			4,297		—
		Total expenses			207,186			162,414			44,772		27.57	%
Income before minority interests and net derivative losses				$	68,816		$	70,959			(2,143	)	(3.02	)%

        The increase in rental revenue in the Company's Same Property Portfolio is primarily a result of an overall increase in rental rates on new leases and rollovers and an increase in reimbursable operating expenses offset by a decrease in termination fees and early surrender income and a decrease in occupancy from quarter to quarter. Rental revenue is comprised of base rent, including termination fees, recoveries from tenants and parking and other. Base rental revenue is recognized on a straight-line basis over the terms of the respective leases. Accrued rental income represents the amount by which straight-line rental revenue exceeds rents currently billed in accordance with the lease agreements. Straight line rent for the quarter ended March 31, 2002 was $14.8 million compared to $6.0 million for the quarter ended March 31, 2001. Termination fees and early surrender income decreased from $1.2 million for the quarter ended March 31, 2001 to $0.5 million for the quarter ended March 31, 2002. The occupancy for the Same Property Portfolio decreased from 98.5% as of March 31, 2001 to 95.2% as of March 31, 2002. Additional increases in rental revenues in the total portfolio are primarily the result of rental revenues earned on properties the Company acquired or placed in service after January 1, 2000 offset by a decrease in overall occupancy from 98.4% to 95.1%.

        The increase in development and management services revenue is mainly due to an incentive fee of approximately $0.2 million received on a development project resulting from meeting certain development deadlines.

        The decrease in interest and other revenue is a result of less interest earned due to lower average cash balances maintained during the quarter ended March 31, 2002 as compared to the quarter ended March 31, 2001. During the quarter ended March 31, 2001, the higher average cash balance was a result of the proceeds remaining from the public offering in October 2000.

        Unconsolidated joint venture income increased as a result of income earned on joint venture properties being placed in service during 2001 and income earned on joint venture properties acquired after January 1, 2001.

        The Company accounts for its investments in unconsolidated joint ventures, which it does not control, using the equity method of accounting. These investments are recorded initially at cost, as Investments in Unconsolidated Joint Ventures, and subsequently adjusted for equity in earnings and cash contributions and distributions. Any difference between the carrying amount of these investments

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on the Company's balance sheet and the underlying equity in net assets is amortized as an adjustment to equity in earnings of unconsolidated joint ventures over 40 years.

        Property operating expenses (real estate taxes, utilities, insurance, repairs and maintenance, cleaning and other property-related expenses) in the Same Property Portfolio increased mainly due to increases in real estate taxes of $1.2 million, or 4.2%, increases in insurance of $1.7 million, or 140.6%, offset by decreases in utilities of $1.4 million, or 13.7%. Most office leases include reimbursement for these operating expenses. The increase in insurance is primarily due to higher rates resulting from the events surrounding September 11, 2001. The increase in real estate taxes was primarily due to higher property tax assessments. Small increases in the other property operating expenses account for the remaining difference. Additional increases in property operating expenses in the Total Portfolio were due to properties the Company acquired or placed in service after January 1, 2001.

        General and administrative expenses increased mainly due an overall increase in compensation.

        Interest expense for the Total Portfolio increased as a result of having a higher average outstanding debt balance as compared to the prior period. The Company's debt outstanding at March 31, 2002 was approximately $4.4 billion, compared to $3.5 billion at March 31, 2001. This was partially offset by a decrease in the Company's weighted average interest rates over the year from 7.26% at March 31, 2001 to 6.52% at March 31, 2002.

        Costs directly related to the development of rental properties are capitalized. Capitalized development costs include interest, wages, property taxes, insurance and other project costs incurred during the period of development. Capitalized wages for the quarters ended March 31, 2002 and 2001 were $1.2 million and $1.7 million, respectively. These costs are not included in the general and administrative expenses discussed above. Interest capitalized for the quarters ended March 31, 2002 and 2001 was $7.8 million and $16.1 million, respectively. These costs are not included in the interest expense discussed above.

        Depreciation and amortization expense for the Same Property Portfolio increased as a result of capital and tenant improvements made after March 31, 2001. Additional increases in depreciation and amortization expense for the Total Portfolio were mainly due to the properties the Company acquired or placed in service after January 1, 2001 and related capital and tenant improvements.

        The decrease in net derivative losses from $3.1 million for the quarter ended March 31, 2001 to $0.3 million for the quarter ended March 31, 2002 is primarily a result of an increase in the Company's fair value of its remaining interest rate contracts. In addition, we repaid two interest rate contracts and a swap contract during 2001 which all had negative fair values. This was offset by the change in fair value of the Company's Series Z preferred stock. Although the Series Z preferred stock was converted into common units, the Company recorded the change in value through the conversion date based on the change in the Company's common stock price.

        The gain on sale for the quarter ended March 31, 2002 is a result of the disposition of Fullerton Square, consisting of two office/technical properties totaling 179,453 square feet in Springfield, Virginia for net proceeds of approximately $22.2 million. This resulted in a gain on sale of approximately $5.8 million (net of minority interest share of approximately $1.3 million). The gain on sale for the quarter ended March 31, 2001 is a result of the disposition of 25–33 Dartmouth Street in Westwood, Massachusetts, an industrial building totaling approximately 78,000 square feet. The Company received net proceeds of approximately $6.6 million, resulting in a gain on sale of approximately $4.7 million (net of minority interest share of approximately $1.1 million).

Liquidity and Capital Resources

        The Company's consolidated indebtedness at March 31, 2002 was approximately $4.4 billion and bore interest at a weighted average interest rate of approximately 6.52% per annum. Based on the

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Company's total market capitalization at March 31, 2002 of approximately $9.3 billion, the Company's consolidated debt represents 47.0% of its total market capitalization.

        The Company has a $605 million Unsecured Line of Credit with Fleet National Bank, as agent. The Company uses the Unsecured Line of Credit principally to facilitate its development and acquisition activities and for working capital purposes. As of May 10, 2002, the Company had no amounts outstanding under the Unsecured Line of Credit.

        The following represents the outstanding principal balances due under the first mortgages at March 31, 2002:

Properties		Interest Rate		Principal Amount			Maturity Date
		(in thousands)
Citigroup Center		7.19	%		520,738		May 11, 2011
Embarcadero Center One, Two and Federal Reserve		6.70	%		307,915		December 10, 2008
5 Times Square(1)		3.90	%		309,486		January 26, 2003
Prudential Center		6.72	%		287,064		July 1, 2008
280 Park Avenue		7.64	%		267,159		February 1, 2011
599 Lexington Avenue(2)		7.00	%		225,000		July 19, 2005
111 Huntington Avenue(3)		3.66	%		193,277		September 27, 2002
Times Square Tower(4)		3.85	%		158,876		November 29, 2004
Embarcadero Center Four		6.79	%		151,082		February 1, 2008
875 Third Avenue(5)		8.00	%		148,228		January 1, 2003
Embarcadero Center Three		6.40	%		144,023		January 1, 2007
Two Independence Square (6)		8.09	%		114,771		February 27, 2003
Riverfront Plaza		6.61	%		112,626		February 1, 2008
Democracy Center		7.05	%		105,587		April 1, 2009
Embarcadero Center West Tower		6.50	%		96,085		January 1, 2006
100 East Pratt Street		6.73	%		89,956		November 1, 2008
601 and 651 Gateway Boulevard		8.40	%		89,061		October 1, 2010
One Independence Square(7)		3.50	%		75,000		August 20, 2003
Reservoir Place(8)		6.88	%		71,283		November 1, 2006
One & Two Reston Overlook		7.45	%		67,300		August 31, 2004
2300 N Street		6.88	%		66,000		August 3, 2003
202, 206, 214 Carnegie Center		8.13	%		62,261		October 1, 2010
New Dominion Technology Park, Building 1		7.70	%		57,589		January 15, 2021
Capital Gallery		8.24	%		55,775		August 15, 2006
Waltham Weston Corporate Center(9)		3.64	%		52,644		February 13, 2004
504,506,508 Carnegie Center		7.39	%		47,225		January 1, 2008
10 and 20 Burlington Mall Road(10)		7.25	%		39,760		October 1, 2011
10 Cambridge Center		8.27	%		35,101		May 1, 2010
1301 New York Avenue		(11	)		31,395		August 15, 2009
Sumner Square		7.35	%		30,075		September 1, 2013
Quorum Office Park(12)		3.55	%		29,041		August 25, 2003
2600 Tower Oaks Boulevard(13)		3.81	%		27,924		September 20, 2002
Eight Cambridge Center		7.73	%		27,852		July 15, 2010
510 Carnegie Center		7.39	%		27,047		January 1, 2008
Lockheed Martin Building		6.61	%		25,616		June 1, 2008
Orbital Sciences—Buildings One and Three(14)		3.56	%		25,572		August 19, 2002
University Place		6.94	%		24,530		August 1, 2021
Reston Corporate Center		6.56	%		24,166		May 1, 2008
Orbital Sciences—Building Two(15)		3.55	%		23,611		June 13, 2003
191 Spring Street		8.50	%		22,359		September 1, 2006
Bedford Business Park		8.50	%		21,036		December 10, 2008

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NIMA Building		6.51	%		20,937		June 1, 2008
40 Shattuck Road(16)		3.65	%		15,283		October 21, 2003
101 Carnegie Center		7.66	%		7,969		April 1, 2006
Montvale Center		8.59	%		7,383		December 1, 2006
302 Carnegie Center(17)		3.73	%		6,969		April 1, 2003
Shaws Supermarket		3.30	%		5,561		September 8, 2003
Hilltop Business Center		6.81	%		5,545		March 1, 2019
201 Carnegie Center		7.08	%		442		February 1, 2010
Total				$	4,361,233

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(1)

Total construction loan in the amount of $420.0 million at a variable rate of Eurodollar + 2.00%. The maturity date can be extended for two one-year periods based on meeting certain conditions.

(2)

At maturity the lender has the option to purchase a 33.33% interest in this property in exchange for the cancellation of the principal balance of $225.0 million.

(3)

Total construction loan in the amount of $203.0 million at a variable rate of LIBOR + 2.00%. The maturity date can be extended for two one-year periods based on meeting certain conditions.

(4)

Total construction loan in the amount of $493.5 million at a variable rate of Eurodollar + 1.95%. The maturity date can be extended for one six month period and two one-year periods based on meeting certain conditions.

(5)

The principal amount and interest rate shown has been adjusted to reflect the fair value of the note. The stated principal balance at March 31, 2002 was $147.3 million and the interest rate was 8.75%.

(6)

The principal amount and interest rate shown has been adjusted to reflect the effective rate on the loan. The stated principal balance at December 31, 2001 was $115.0. The stated interest rate is 8.50% and continues at such rate through the loan expiration.

(7)

Outstanding principal bears interest at a floating rate of LIBOR + 1.75%.

(8)

The principal amount and interest rate shown has been adjusted to reflect the fair value of the note. The stated principal balance at March 31, 2002 was $64.5 million and the interest rate was 9.65%.

(9)

Total construction loan in the amount of $70.0 million at a variable rate of LIBOR + 1.70%. The maturity date can be extended for two one-year periods based on meeting certain conditions.

(10)

Includes outstanding indebtedness secured by 91 Hartwell Avenue.

(11)

Includes outstanding principal in the amounts of $19.7 million, $7.8 million and $4.0 million which bear interest at fixed rates of 6.70%, 8.54% and 6.75%, respectively.

(12)

Total construction loan in the amount of $32.3 million at a variable rate of LIBOR + 1.65%. The maturity date can be extended for two one-year periods based on meeting certain conditions.

(13)

Total construction loan in the amount of $32.0 million at a variable rate of LIBOR + 1.90%. The maturity date can be extended for two one-year periods based on meeting certain conditions.

(14)

Total construction loan in the amount of $27.0 million at a variable rate of Eurodollar + 1.65%. The maturity date can be extended for a one-year period based on meeting certain conditions.

(15)

Total construction loan in the amount of $25.1 million at a variable rate of Eurodollar + 1.65%. The maturity date can be extended for a one-year period based on meeting certain conditions.

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(16)

Total construction loan in the amount of $16.0 million at a variable rate of Eurodollar + 1.75%. The maturity date can be extended for two one-year periods based on meeting certain conditions.

(17)

Total construction loan in the amount of $10.0 million at a variable rate of LIBOR + 1.85%. The maturity date can be extended for two one-year periods based on meeting certain conditions.

        NOTE: LIBOR and Eurodollar rate contracts in effect on March 31, 2002 ranged from 3.30% to 3.90%. The LIBOR and Eurodollar rates at March 31, 2002 were 1.88%.

Joint Ventures

        The Company has investments in eight unconsolidated joint ventures with ownership ranging from 25-51%. The Company does not have control of these partnerships, and therefore, they are accounted for using the equity method of accounting. At March 31, 2002, the Company's share of the debt related to these investments is equal to approximately $220.4 million. The table below summarizes the outstanding debt relative to the Company's investment in these joint venture properties at March 31, 2002:

General

        The Company has determined that its estimated cash flows and available sources of liquidity are adequate to meet liquidity needs for the next twelve months. The Company believes that its principal liquidity needs for the next twelve months are to fund normal recurring expenses, debt service requirements, current development costs not covered under construction loans and the minimum distribution required to maintain its REIT qualifications under the Internal Revenue Code of 1986, as amended. The Company believes that these needs will be fully funded from cash flows provided by operating and financing activities. The Company's operating properties and hotels require periodic investments of capital for tenant-related capital expenditures and for general capital improvements. For the three months ended March 31, 2002, the Company's recurring capital expenditures totaled $2.9 million, $1.8 million, and $10.1 million for general capital expenditures, hotel capital expenditures, and tenant improvement and leasing commissions, respectively.

        The Company expects to meet liquidity requirements for periods beyond twelve months for the costs of development, property acquisitions, scheduled debt maturities, major renovations, expansions and other non-recurring capital improvements through construction loans, the incurrence of long-term secured and unsecured indebtedness, income from operations and sales of real estate and possibly the issuance of additional common and preferred units of Boston Properties Limited Partnership and equity securities of Boston Properties, Inc. In addition, the Company may finance the development, redevelopment or acquisition of additional properties by using our unsecured revolving line of credit.

        The Company has three construction loans maturing during 2002. The Company may exercise its extension options on these three loans. If the Company does not exercise its extension options, it will

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utilize its $605 million Line of Credit or obtain permanent long term financing. All of these buildings are in excess of 95% leased.

        The Company had construction projects in process, which require commitments to fund to completion. Equity commitments under these arrangements totaled approximately $194.6 million as of March 31, 2002. In addition, the Company has options to acquire land. If and when the Company exercises its option, the Company will fund the acquisitions using available cash or the Unsecured Line of Credit.

        Based on leases in place at March 31, 2002, leases with respect to 2.18% of the Company's Class A office buildings will expire in the remaining three quarters of 2002. While the Company is working to retain its current tenants in situations that are beneficial to them, conditions over the past year, including more sublet space available and decreasing rental rates across the board, make it difficult to predict what future changes may be and how they will effect the Company's re-leasing efforts.

        In addition, Arthur Andersen LLP has a lease for 620,947 square feet at Times Square Tower. Times Square Tower is a 1.2 million square foot office property that is expected to be completed during 2004. Because of our uncertainty over Arthur Andersen LLP's ultimate space needs, the Company has begun discussions with them about options ranging from reducing the size of the leased premises to termination of the lease. Meanwhile, the Company continues to actively market space in the building and is encouraged by the level of interest.

Insurance

        In January 2002, the Company formed a wholly-owned subsidiary, IXP, Inc. (IXP), which will act as a captive insurance company to provide earthquake re-insurance coverage for the Company's Greater San Franciso properties. The accounts of IXP are consolidated within the Company. IXP is acting as a reinsurer for the Lexington insurance Company, rated AAA by Standard & Poors, for losses in excess of $25 million and any applicable deductibles, up to a $20.0 million limit. The Company has purchased earthquake insurance with coverage per occurrence and in the aggregate of $115 million, including the aforementioned $20.0 million that is reinsured by the Company's IXP subsidiary.

        In response to recent market conditions, the Company has secured $250 million of terrorism coverage, in the aggregate, on a portfolio-wide basis. The Company will continue to monitor the state of the insurance market.

Funds from Operations

        Management believes that Funds from Operations ("FFO") is helpful to investors as a measure of the performance of an equity REIT because, along with cash flows from operating activities, financing activities and investing activities, it provides investors with an understanding of the ability of the Company to incur and service debt, to make capital expenditures and to fund other cash needs. In accordance with the National Association of Real Estate Investment Trusts ("NAREIT") revised definition of FFO, the Company calculated FFO by adjusting net income (loss) (computed in accordance with accounting principles generally accepted in the United States, including non-recurring items), for gains (or losses) from debt restructuring and sales of properties (except gains and losses from sales of depreciable operating properties), real estate related depreciation and amortization and unconsolidated partnerships and joint ventures. The Company's FFO may not be comparable to FFO reported by other REITs that do not define the term in accordance with the current NAREIT definition or that interpret the NAREIT definition differently. FFO does not represent cash generated from operating activities determined in accordance with accounting principles generally accepted in the United States and should not be considered as an alternative to net income (determined in accordance with accounting principles generally accepted in the United States) as a measure of the Company's

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liquidity, nor is it indicative of funds available to fund the Company's cash needs, including its ability to make cash distributions.

        The following tables present the Company's FFO for the three months ended March 31, 2002 and 2001 (in thousands):

				Three Months Ended March 31, 2002			Three Months Ended March 31, 2001
Income from operations before minority interests and joint venture income				$	67,134		$	69,832
Add:
	Real estate depreciation and amortization				44,499			35,557
	Income from discontinued operations				697			738
	Income from unconsolidated joint ventures				1,682			1,127
Less:
	Derivative losses, net				303			3,055
	Minority property partnerships' share of funds from operations				719			303
	Preferred dividends and distributions				8,400			8,221
Funds from Operations				$	104,590		$	95,675
	Add:
		Net derivative losses			303			3,055
		Early surrender lease payments received — contractual basis			3,927			—
FFO before net derivative losses and after early surrender lease payments received.				$	108,820		$	98,730
FFO available to common shareholders before net derivative losses and after early surrender lease payments received				$	88,929		$	79,201

        Reconciliation to Diluted Funds from Operations:

			Three Months Ended March 31, 2002					Three Months Ended March 31, 2001
			Income (Numerator)			Shares (Denominator)		Income (Numerator)			Shares (Denominator)
Funds from Operations			$	108,820		111,272		$	98,730		110,556
Effect of Dilutive Securities
	Convertible Preferred Units			6,757		10,823			6,578		11,011
	Convertible Preferred Stock			1,643		2,625			1,643		2,625
	Stock Options			—		1,387			—		1,837
Diluted FFO			$	117,220		126,107		$	106,951		126,029
Company's share of diluted FFO before net derivative losses and after early surrender lease payments received			$	98,314		105,768		$	88,379		104,160

Newly Issued Accounting Standards

        In October 2001, the Financial Accounting Standards Board (the "FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. SFAS No. 144 supersedes FASB SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" and the accounting and reporting

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provisions for disposals of a segment of a business as addressed in APB Opinion No. 30, "Reporting the Results of Operations—Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions." SFAS No. 144 establishes a single accounting model for long-lived assets to be disposed of by sale and addresses various implementation issues of SFAS No. 121. In addition, SFAS No. 144 extends the reporting requirements of discontinued operations to include components of an entity that have either been disposed of or are classified as held for sale. The Company adopted SFAS No. 144 as of January 1, 2002. The Company's adoption of SFAS No. 144 resulted in the presentation of the net operating results of properties sold during the three months ended March 31, 2002, as income from discontinued operations for all periods presented. SFAS No. 144 also resulted in the presentation of the gain on sale of properties sold during the three months ended March 31, 2002, as gain on sale of real estate from discontinued operations for all periods presented. The adoption of SFAS No. 144 did not have an impact on net income available to common shareholders. SFAS No. 144 only impacted the presentation of these held for sale properties within the consolidated statements of operations.

Certain Factors Affecting Future Operating Results

        This Report on Form 10-Q contains forward-looking statements within the meaning the federal securities laws regarding the Company's business, strategies, revenues, expenditures and operating and capital requirements. The following factors, among others, could cause actual results, performance or achievements of the Company to differ materially from those set forth or contemplated in the forward-looking statements made in this report: general risks affecting the real estate industry (including, without limitation, the inability to enter into or renew leases, dependence on tenants' financial condition, and competition from other developers, owners and operators of real estate); risks associated with the availability and terms of financing and the use of debt to fund acquisitions and developments; failure to manage effectively the Company's growth and expansion into new markets or to integrate acquisitions successfully; risks and uncertainties affecting property development and construction (including, without limitation, construction delays, cost overruns, inability to obtain necessary permits and public opposition to such activities); risks associated with downturns in the national and local economies, increases in interest rates, and volatility in the securities markets; costs of compliance with the Americans with Disabilities Act and other similar laws; potential liability for uninsured losses and environmental contamination; risks associated with the Company's potential failure to qualify as a REIT under the Internal Revenue Code of 1986, as amended, and possible adverse changes in tax and environmental laws; and risks associated with the Company's dependence on key personnel whose continued service is not guaranteed.

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

        Market risk is the risk of loss from adverse changes in market prices and interest rates. The primary market risk facing the Company is mortgage debt, which bears interest primarily at fixed rates, and therefore, the fair value of these instruments is affected by changes in the market interest rates. The following table presents principal cash flows (in thousands) based upon maturity dates of the debt obligations and the related weighted average interest rates by expected maturity dates for the fixed rate debt. The interest rate of the variable rate debt as of March 31, 2002 ranged from LIBOR plus 1.00% to LIBOR plus 2.00%. At March 31, 2002, we had hedge contracts totaling $150 million. The hedging agreements provide for a fixed interest rate when LIBOR is less than 5.80% and when LIBOR is

22

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between 6.70% and 9.00% for terms ranging from three to five years per the individual hedging agreements.

		Mortgage Debt (in thousands)
		2002			2003			2004			2005			2006			Thereafter			Total		Fair Value
Fixed Rate		$	33,906		$	372,843		$	114,649		$	277,880		$	284,516		$	2,354,145		3,437,939		$	3,479,939
Weighted Average Interest Rate			7.32%			8.03%			7.35%			7.04%			7.79%			7.11%		7.27%			—
Variable Rate		$	246,772		$	465,001		$	211,521			—			—			—		923,294			923,294

PART II. OTHER INFORMATION

ITEM 6. Exhibits and Reports on Form 8-K

(a)

Exhibits

(b)

Reports on Form 8-K

A Form 8-K dated January 22, 2002 was filed with the Securities and Exchange Commission to report under Item 5 of such report the information presented to investors and analysts and the Company's press release for the quarter and year ended December 31, 2001.

23

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SIGNATURE

        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 thereunto duly authorized.

		BOSTON PROPERTIES, INC.
May 15, 2002		By:		/s/  DOUGLAS T. LINDE       Douglas T. Linde, Chief Financial Officer (duly authorized officer and principal financial officer)

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QuickLinks

BOSTON PROPERTIES, INC. CONSOLIDATED BALANCE SHEETS (unaudited)
BOSTON PROPERTIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
BOSTON PROPERTIES, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
BOSTON PROPERTIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS
BOSTON PROPERTIES, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
PART II. OTHER INFORMATION
SIGNATURE

BOSTON PROPERTIES
Deferred Compensation Plan
MASTER PLAN DOCUMENT


                             EFFECTIVE MARCH 1, 2002


                               COPYRIGHT (C) 2001
            BY CLARK/BARDES CONSULTING - COMPENSATION RESOURCE GROUP,
                   A DIVISION OF CLARK/BARDES CONSULTING, INC.
                               ALL RIGHTS RESERVED



BOSTON PROPERTIES
Deferred Compensation Plan
MASTER PLAN DOCUMENT

                                TABLE OF CONTENTS



                                                                                                          PAGE
                                                                                                          ----
                                                                                                     
PURPOSE      ...............................................................................................1

ARTICLE 1    DEFINITIONS....................................................................................1

ARTICLE 2    SELECTION, ENROLLMENT, ELIGIBILITY.............................................................4

     2.1     SELECTION BY COMPENSATION COMMITTEE............................................................4
     2.2     ENROLLMENT REQUIREMENTS........................................................................4
     2.3     ELIGIBILITY; COMMENCEMENT OF PARTICIPATION.....................................................4
     2.4     TERMINATION OF PARTICIPATION AND/OR DEFERRALS..................................................4

ARTICLE 3    DEFERRAL COMMITMENTS/ 401(k) RESTORATION MATCHING AMOUNTS/VESTING/CREDITING/TAXES..............5

     3.1     MINIMUM DEFERRALS..............................................................................5
     3.2     MAXIMUM DEFERRAL...............................................................................5
     3.3     ELECTION TO DEFER; EFFECT OF ELECTION FORM.....................................................5
     3.4     WITHHOLDING OF ANNUAL DEFERRAL AMOUNTS.........................................................6
     3.5     ANNUAL 401(k) RESTORATION MATCHING AMOUNT......................................................6
     3.6     VESTING........................................................................................6
     3.7     CREDITING/DEBITING OF ACCOUNT BALANCES.........................................................6
     3.8     FICA AND OTHER TAXES...........................................................................8

ARTICLE 4    SHORT-TERM PAYOUT; WITHDRAWAL ELECTION.........................................................8

     4.1     SHORT-TERM PAYOUT..............................................................................8
     4.2     OTHER BENEFITS TAKE PRECEDENCE OVER SHORT-TERM.................................................9
     4.3     WITHDRAWAL ELECTION............................................................................9

ARTICLE 5    RETIREMENT BENEFIT.............................................................................9

     5.1     RETIREMENT BENEFIT.............................................................................9
     5.2     PAYMENT OF RETIREMENT BENEFIT..................................................................9
     5.3     DEATH PRIOR TO COMPLETION OF RETIREMENT BENEFIT................................................9

ARTICLE 6    PRE-RETIREMENT SURVIVOR BENEFIT...............................................................10

     6.1     PRE-RETIREMENT SURVIVOR BENEFIT...............................................................10
     6.2     PAYMENT OF PRE-RETIREMENT SURVIVOR BENEFIT....................................................10

ARTICLE 7    TERMINATION BENEFIT...........................................................................10


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Deferred Compensation Plan
MASTER PLAN DOCUMENT


                                                                                                     
     7.1     TERMINATION BENEFIT...........................................................................10
     7.2     PAYMENT OF TERMINATION BENEFIT................................................................10

ARTICLE 8    BENEFICIARY DESIGNATION.......................................................................10

     8.1     BENEFICIARY...................................................................................10
     8.2     BENEFICIARY DESIGNATION; CHANGE; SPOUSAL CONSENT..............................................10
     8.3     ACKNOWLEDGEMENT...............................................................................11
     8.4     NO BENEFICIARY DESIGNATION....................................................................11
     8.5     DOUBT AS TO BENEFICIARY.......................................................................11
     8.6     DISCHARGE OF OBLIGATIONS......................................................................11

ARTICLE 9    LEAVE OF ABSENCE..............................................................................11

     9.1     PAID LEAVE OF ABSENCE.........................................................................11
     9.2     UNPAID LEAVE OF ABSENCE.......................................................................11

ARTICLE 10   TERMINATION, AMENDMENT OR MODIFICATION........................................................12

     10.1    TERMINATION...................................................................................12
     10.2    AMENDMENT.....................................................................................12
     10.3    DELEGATION TO BENEFITS COMMITTEE..............................................................12
     10.4    EFFECT OF PAYMENT.............................................................................12

ARTICLE 11   ADMINISTRATION................................................................................12

     11.1    BENEFITS COMMITTEE DUTIES.....................................................................12
     11.2    AGENTS........................................................................................13
     11.3    BINDING EFFECT OF DECISIONS...................................................................13
     11.4    INDEMNITY OF BENEFITS COMMITTEE...............................................................13
     11.5    SPONSOR INFORMATION...........................................................................13

ARTICLE 12   OTHER BENEFITS AND AGREEMENTS.................................................................13

     12.1    COORDINATION WITH OTHER BENEFITS..............................................................13

ARTICLE 13   CLAIMS PROCEDURES.............................................................................13

     13.1    PRESENTATION OF CLAIM.........................................................................13
     13.2    NOTIFICATION OF DECISION......................................................................14
     13.3    REVIEW OF A DENIED CLAIM......................................................................14
     13.4    DECISION ON REVIEW............................................................................14
     13.5    LEGAL ACTION..................................................................................15

ARTICLE 14   TRUST.........................................................................................15


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Deferred Compensation Plan
MASTER PLAN DOCUMENT


                                                                                                     
     14.1    ESTABLISHMENT OF THE TRUST....................................................................15
     14.2    INTERRELATIONSHIP OF THE PLAN AND THE TRUST...................................................15
     14.3    DISTRIBUTIONS FROM THE TRUST..................................................................15

ARTICLE 15   MISCELLANEOUS.................................................................................15

     15.1    STATUS OF PLAN................................................................................15
     15.2    UNSECURED GENERAL CREDITOR....................................................................15
     15.3    SPONSOR'S LIABILITY...........................................................................15
     15.4    NONASSIGNABILITY..............................................................................15
     15.5    NOT A CONTRACT OF EMPLOYMENT..................................................................16
     15.6    FURNISHING INFORMATION........................................................................16
     15.7    TERMS.........................................................................................16
     15.8    CAPTIONS......................................................................................16
     15.9    GOVERNING LAW.................................................................................16
     15.10   NOTICE........................................................................................16
     15.11   SUCCESSORS....................................................................................17
     15.12   SPOUSE'S INTEREST.............................................................................17
     15.13   VALIDITY......................................................................................17
     15.14   INCOMPETENT...................................................................................17
     15.15   COURT ORDER...................................................................................17
     15.16   DISTRIBUTION IN THE EVENT OF TAXATION.........................................................17
     15.17   INSURANCE.....................................................................................18


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Deferred Compensation Plan
MASTER PLAN DOCUMENT

                                BOSTON PROPERTIES
                           DEFERRED COMPENSATION PLAN
                             Effective March 1, 2002

                                     PURPOSE

          The purpose of this Plan is to provide specified benefits to a select
group of management or highly compensated Employees who contribute materially to
the continued growth, development and future business success of Boston
Properties Limited Partnership. This Plan shall be unfunded for tax purposes and
for purposes of Title I of ERISA.

                                    ARTICLE 1
                                   DEFINITIONS

          For the purposes of this Plan, unless otherwise clearly apparent from
the context, the following phrases or terms shall have the following indicated
meanings:

1.1       "Account Balance" shall mean, with respect to a Participant, a credit
          on the records of the Sponsor equal to the sum of (i) the Deferral
          Account balance and (ii) the 401(k) Restoration Matching Account
          balance. The Account Balance, and each other specified account
          balance, shall be a bookkeeping entry only and shall be utilized
          solely as a device for the measurement and determination of the
          amounts to be paid to a Participant, or his or her designated
          Beneficiary, pursuant to this Plan.

1.2       "Annual Bonus" shall mean any compensation, in addition to Base Annual
          Salary, payable during the Plan Year to a Participant as an Employee
          under the Sponsor's annual bonus and cash incentive plans, excluding
          stock options and restricted stock, which the Benefits Committee, in
          its sole discretion, determines to be eligible for deferral under this
          Plan.

1.3       "Annual Deferral Amount" shall mean that portion of a Participant's
          Base Annual Salary, Annual Bonus and/or LTIP Bonus that a Participant
          defers in accordance with Article 3 for any one Plan Year. In the
          event of a Participant's Retirement, death or a Termination of
          Employment prior to the end of a Plan Year, such year's Annual
          Deferral Amount shall be the actual amount withheld prior to such
          event.

1.4       "Annual 401(k) Restoration Matching Amount" for any one Plan Year
          shall be the amount determined in accordance with Section 3.5.

1.5       "Annual Installment Method" shall be an annual installment payment
          over the number of years selected by the Participant in accordance
          with this Plan, calculated as follows: (i) for the first annual
          installment, the Account Balance of the Participant shall be
          calculated as of the close of business on or around the last business
          day of the Plan Year in which the Participant Retires and (ii) for
          remaining annual installments, the Account Balance of the Participant
          shall be calculated on every applicable anniversary of the last
          business day of the Plan Year in which the Participant Retired. The
          annual installment shall be calculated by multiplying this balance by
          a fraction, the numerator of which is one and the denominator of which
          is the remaining number of annual

                                       -1-


BOSTON PROPERTIES
Deferred Compensation Plan
MASTER PLAN DOCUMENT

          payments due the Participant. By way of example, if the Participant
          elects a ten (10) year Annual Installment Method, the first payment
          shall be 1/10 of the Account Balance, calculated as described in this
          definition. The following year, the payment shall be 1/9 of the
          Account Balance, calculated as described in this definition. The first
          annual installment payment shall be paid no later than fifteen (15)
          days after the last day of the Plan Year in which the Participant
          Retires. Remaining annual installments shall be paid no later than
          fifteen (15) days after the last day of the applicable Plan Year.

1.6       "Base Annual Salary" shall mean the annual cash compensation included
          on the Federal Income Tax Form W-2 for such calendar year, excluding
          bonuses, commissions, overtime, fringe benefits, stock options,
          relocation expenses, incentive payments, non-monetary awards,
          directors fees and other fees, and automobile and other allowances
          paid to a Participant for employment services rendered (whether or not
          such allowances are included in the Employee's gross income). Base
          Annual Salary shall be calculated before reduction for compensation
          voluntarily deferred or contributed by the Participant pursuant to all
          qualified or non-qualified plans of the Sponsor and shall be
          calculated to include amounts not otherwise included in the
          Participant's gross income under Code Sections 125, 132(f), 402(e)(3),
          402(h), or 403(b) pursuant to plans established by the Sponsor;
          provided, however, that all such amounts will be included in
          compensation only to the extent that had there been no such plan, the
          amount would have been payable in cash to the Employee.

1.7       "Beneficiary" shall mean one or more persons, trusts, estates or other
          entities, designated in accordance with Article 8, that are entitled
          to receive benefits under this Plan upon the death of a Participant.

1.8       "Beneficiary Designation Form" shall mean the form established from
          time to time by the Benefits Committee that a Participant completes,
          signs and returns to the Benefits Committee to designate one or more
          Beneficiaries.

1.9       "Benefits Committee" shall mean the committee described in Article 11.

1.10      "Claimant" shall have the meaning set forth in Section 13.1.

1.11      "Code" shall mean the Internal Revenue Code of 1986, as it may be
          amended from time to time.

1.12      "Compensation Committee" shall mean the Compensation Committee of the
          Board of Directors of Boston Properties, Inc.

1.13      "Deferral Account" shall mean (i) the sum of all of a Participant's
          Annual Deferral Amounts, plus (ii) amounts credited in accordance with
          all the applicable crediting and debiting provisions of this Plan that
          relate to the Participant's Deferral Account, less (iii) all
          distributions made to the Participant or his or her Beneficiary
          pursuant to this Plan that relate to his or her Deferral Account.

1.14      "Election Form" shall mean the form established from time to time by
          the Benefits Committee that a Participant completes, signs and returns
          to the Benefits Committee to make an election under the Plan.

                                       -2-


BOSTON PROPERTIES
Deferred Compensation Plan
MASTER PLAN DOCUMENT

1.15      "Employee" shall mean a person who is an employee of the Sponsor or an
          affiliate of the Sponsor.

1.16      "ERISA" shall mean the Employee Retirement Income Security Act of
          1974, as it may be amended from time to time.

1.17      "First Plan Year" shall mean the period beginning March 1, 2002 and
          ending December 31, 2002.

1.18      "401(k) Plan" shall be the Boston Properties Retirement Savings Plan
          as in effect from time to time.

1.19      "401(k) Restoration Matching Account" shall mean (i) the sum of all of
          a Participant's Annual 401(k) Restoration Matching Amounts, plus (ii)
          amounts credited in accordance with all the applicable crediting and
          debiting provisions of this Plan that relate to the Participant's
          401(k) Restoration Matching Account, less (iii) all distributions made
          to the Participant or his or her Beneficiary pursuant to this Plan
          that relate to the Participant's 401(k) Restoration Matching Account.

1.20      "LTIP Bonus" shall mean any compensation payable to a Participant as
          an Employee under the Sponsor's long-term incentive plan or any other
          long-term incentive arrangement designated by the Benefits Committee
          as eligible for deferral under this Plan.

1.21      "Participant" shall mean any Employee (i) who is selected to
          participate in the Plan, (ii) who elects to participate in the Plan,
          (iii) who signs an Election Form and a Beneficiary Designation Form,
          (iv) whose signed Election Form and Beneficiary Designation Form are
          accepted by the Benefits Committee, (v) who commences participation in
          the Plan, and (vi) whose participation in the Plan has not terminated.
          A spouse or former spouse of a Participant shall not be treated as a
          Participant in the Plan or have an account balance under the Plan,
          even if he or she has an interest in the Participant's benefits under
          the Plan as a result of applicable law or property settlements
          resulting from legal separation or divorce.

1.22      "Plan" shall mean the Boston Properties Deferred Compensation Plan,
          which shall be evidenced by this instrument, as it may be amended from
          time to time.

1.23      "Plan Year" shall, except for the First Plan Year, mean a period
          beginning on January 1 of each calendar year and continuing through
          December 31 of such calendar year.

1.24      "Pre-Retirement Survivor Benefit" shall mean the benefit set forth in
          Article 6.

1.25      "Retirement", "Retire(s)" or "Retired" shall mean, with respect to an
          Employee, severance from employment with the Sponsor (or any affiliate
          thereof) for any reason other than a leave of absence or death, on or
          after the earlier of the attainment of (a) age sixty-five (65) or (b)
          age fifty-five (55) with seven (7) Years of Service.

1.26      "Retirement Benefit" shall mean the benefit set forth in Article 5.

1.27      "Short-Term Payout" shall mean the payout set forth in Section 4.1.

1.29      "Sponsor" shall mean Boston Properties Limited Partnership, a Delaware
          limited partnership, and any successor to all or substantially all of
          the Sponsor's assets or business.

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BOSTON PROPERTIES
Deferred Compensation Plan
MASTER PLAN DOCUMENT

1.30      "Termination Benefit" shall mean the benefit set forth in Article 7.

1.31      "Termination of Employment" shall mean the severing of employment with
          the Sponsor voluntarily or involuntarily, for any reason other than
          Retirement, death or an authorized leave of absence.

1.32      "Trust" shall mean one or more trusts, if any, established by the
          Sponsor in its sole discretion.

1.33      "Years of Service" shall mean the total number of full years in which
          a Participant has been employed by the Sponsor (or any affiliate
          thereof). For purposes of this definition, a year of employment shall
          be a 365 day period (or 366 day period in the case of a leap year)
          that, for the first year of employment, commences on the Employee's
          date of hiring and that, for any subsequent year, commences on an
          anniversary of that hiring date. The Benefits Committee shall make a
          determination as to whether any partial year of employment shall be
          counted as a Year of Service.

                                    ARTICLE 2
                       SELECTION, ENROLLMENT, ELIGIBILITY

2.1       SELECTION BY COMPENSATION COMMITTEE. Participation in the Plan shall
          be limited to a select group of management and highly compensated
          Employees of the Sponsor, as determined by the Compensation Committee
          in its sole discretion. From that group, the Compensation Committee
          shall select, in its sole discretion, Employees to participate in the
          Plan.

2.2       ENROLLMENT REQUIREMENTS. As a condition to participation, each
          selected Employee shall complete, execute and return to the Benefits
          Committee an Election Form and a Beneficiary Designation Form, all
          within thirty (30) days after he or she is selected to participate in
          the Plan. In addition, the Benefits Committee shall establish from
          time to time such other enrollment requirements as it determines in
          its sole discretion are necessary.

2.3       ELIGIBILITY; COMMENCEMENT OF PARTICIPATION. Provided an Employee
          selected to participate in the Plan has met all enrollment
          requirements set forth in this Plan and required by the Benefits
          Committee, including returning all required documents to the Benefits
          Committee within the specified time period, that Employee shall
          commence participation in the Plan on the first day of the month
          following the month in which the Employee completes all enrollment
          requirements. If an Employee fails to meet all such requirements
          within the period required, in accordance with Section 2.2, that
          Employee shall not be eligible to participate in the Plan until the
          first day of the Plan Year following the delivery to and acceptance by
          the Benefits Committee of the required documents.

2.4       TERMINATION OF PARTICIPATION AND/OR DEFERRALS. If the Compensation
          Committee determines in good faith that a Participant no longer
          qualifies as a member of a select group of management or highly
          compensated employees, as membership in such group is determined in
          accordance with Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, the
          Compensation Committee shall have the right, in its sole discretion,
          to (i) terminate any deferral election the Participant has made for
          the remainder of the Plan Year in which the Participant's membership
          status changes, (ii) prevent the

                                       -4-


BOSTON PROPERTIES
Deferred Compensation Plan
MASTER PLAN DOCUMENT

          Participant from making future deferral elections and/or (iii)
          immediately distribute the Participant's then Account Balance as a
          Termination Benefit and terminate the Participant's participation in
          the Plan.

                                    ARTICLE 3
                DEFERRAL COMMITMENTS/ 401(k) RESTORATION MATCHING
                        AMOUNTS/VESTING/CREDITING/TAXES

3.1       MINIMUM DEFERRALS.

          (a)  ANNUAL DEFERRAL AMOUNT. For each Plan Year, a Participant may
               elect to defer, as his or her Annual Deferral Amount, an
               aggregate minimum of $2,000 of Base Annual Salary, Annual Bonus
               and/or LTIP Bonus. If an election is made for less than stated
               minimum amounts, or if no election is made, the amount deferred
               shall be zero.

          (b)  SHORT PLAN YEAR. Notwithstanding the foregoing, if a Participant
               first becomes a Participant after the first day of a Plan Year,
               the minimum Annual Deferral Amount shall be an amount equal to
               the minimum set forth above, multiplied by a fraction, the
               numerator of which is the number of complete months remaining in
               the Plan Year and the denominator of which is 12.

3.2       MAXIMUM DEFERRAL.

          (a)  BASE ANNUAL SALARY, ANNUAL BONUS AND/OR LTIP BONUS. For each Plan
               Year, a Participant may elect to defer, as his or her Annual
               Deferral Amount, Base Annual Salary, Annual Bonus and/or LTIP
               Bonus up to the maximum percentages established by the Benefits
               Committee from time to time. For the First Plan Year, the maximum
               percentage for Base Annual Salary shall be twenty percent (20%)
               and no deferral shall be permitted from Annual Bonus or LTIP
               Bonus. The Benefits Committee may impose additional limitations
               on any Participant's Annual Deferral Amount in any Plan Year in
               which the Benefits Committee determines, in its sole discretion,
               that such additional limitation is in the best interests of the
               Sponsor.

          (b)  SHORT PLAN YEAR. Notwithstanding the foregoing, if a Participant
               first becomes a Participant after the first day of a Plan Year,
               the maximum Annual Deferral Amount (i) with respect to Base
               Annual Salary shall be limited to the amount of compensation not
               yet earned by the Participant as of the date the Participant
               submits an Election Form to the Benefits Committee for
               acceptance, and (ii) with respect to Annual Bonus and/or LTIP
               Bonus shall be limited to those amounts deemed eligible for
               deferral, in the sole discretion of the Benefits Committee.

3.3       ELECTION TO DEFER; EFFECT OF ELECTION FORM.

          (a)  FIRST PLAN YEAR. In connection with a Participant's commencement
               of participation in the Plan, the Participant shall make an
               irrevocable deferral election for the Plan Year in which the
               Participant commences participation in the Plan, along with such
               other elections as the Benefits Committee deems necessary or
               desirable under the Plan. For

                                       -5-


BOSTON PROPERTIES
Deferred Compensation Plan
MASTER PLAN DOCUMENT

               these elections to be valid, the Election Form must be completed
               and signed by the Participant, timely delivered to the Benefits
               Committee (in accordance with Section 2.2 above) and accepted by
               the Benefits Committee.

          (b)  SUBSEQUENT PLAN YEARS. For each succeeding Plan Year, an
               irrevocable deferral election for that Plan Year, and such other
               elections as the Benefits Committee deems necessary or desirable
               under the Plan, shall be made by timely delivering to the
               Benefits Committee, in accordance with its rules and procedures,
               before the end of the Plan Year preceding the Plan Year for which
               the election is made, a new Election Form. If no such Election
               Form is timely delivered for a Plan Year, the Annual Deferral
               Amount shall be zero for that Plan Year.

3.4       WITHHOLDING OF ANNUAL DEFERRAL AMOUNTS. For each Plan Year, the Base
          Annual Salary portion of the Annual Deferral Amount shall be withheld
          from each regularly scheduled Base Annual Salary payroll in equal
          amounts, as adjusted from time to time for increases and decreases in
          Base Annual Salary to the extent the Annual Deferral Amount is
          denominated as a percentage of Base Annual Salary. The Annual Bonus
          portion of the Annual Deferral Amount shall be withheld at the time
          the Annual Bonus and/or LTIP Bonus are or otherwise would be paid to
          the Participant, whether or not this occurs during the Plan Year
          itself.

3.5       ANNUAL 401(k) RESTORATION MATCHING AMOUNT. For each Plan Year during
          which a Participant participates in the Sponsor's 401(k) Plan and the
          Sponsor makes a matching contribution to such 401(k) Plan, the Sponsor
          shall credit a Participant's Annual 401(k) Restoration Matching
          Account under this Plan with an amount equal to the difference between
          (i) the amount the Sponsor contributed to the 401(k) Plan on behalf of
          such Participant during the Plan Year, and (ii) the amount that the
          Sponsor would have contributed to the 401(k) Plan on behalf of such
          Participant during such plan year had any deferrals of Base Annual
          Salary under this Plan been considered compensation under the 401(k)
          Plan, subject to the compensation limit under Section 401(a)(17) of
          the Code. The amount credited as a Participant's Annual 401(k)
          Restoration Matching Amount for any Plan Year under this Section 3.5
          shall be credited to the Participant's 401(k) Restoration Matching
          Account on a date or dates to be determined by the Benefits Committee
          in its sole discretion.

3.6       VESTING. A Participant shall at all times be 100% vested in his or her
          Deferral Account and 401(k) Restoration Matching Account.

3.7       CREDITING/DEBITING OF ACCOUNT BALANCES. In accordance with, and
          subject to, the rules and procedures that are established from time to
          time by the Benefits Committee, in its sole discretion, amounts shall
          be credited or debited to a Participant's Account Balance in
          accordance with the following rules:

          (a)  MEASUREMENT FUNDS. The Participant may elect one or more of the
               measurement funds (the "Measurement Funds"), based on certain
               mutual funds or other investment indices, for the purpose of
               crediting or debiting additional amounts to his or her Account
               Balance. At the beginning of each Plan Year, the Benefits
               Committee shall provide the Participant

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               with a list of Measurement Funds available. As necessary, the
               Benefits Committee may, in its sole discretion, discontinue,
               substitute or add a Measurement Fund.

          (b)  ELECTION OF MEASUREMENT FUNDS. A Participant, in connection with
               his or her initial deferral election in accordance with Section
               3.3(a) above, shall elect, on the Election Form, one or more
               Measurement Fund(s) (as described in Section 3.7(a) above) to be
               used to determine the amounts to be credited or debited to his or
               her Account Balance. The Participant may (but is not required to)
               subsequently elect at any time, by submitting an Election Form
               (or other form of communication) to the Benefits Committee that
               is accepted by the Benefits Committee, to add or delete one or
               more Measurement Fund(s) to be used to determine the amounts to
               be credited or debited to his or her Account Balance, or to
               change the portion of his or her Account Balance allocated to
               each previously or newly elected Measurement Fund. If, in
               accordance with the previous sentence, an election is on any
               business day prior to 4:00 p.m. Eastern Standard Time, it shall
               be effective as of the day on which such election is made and
               shall continue thereafter for each subsequent day in which the
               Participant participates in the Plan, unless changed in
               accordance with this Section 3.7(b). If such election is made on
               any business day after 4:00 p.m. Eastern Standard Time or on any
               non-business day, it shall be effective as of the first business
               day following the day on which such election is made and shall
               continue thereafter for each subsequent day in which the
               Participant participates in the Plan, unless changed in
               accordance with this Section 3.7(b).

          (c)  PROPORTIONATE ALLOCATION. In making any election described in
               Section 3.7(b) above, the Participant shall specify on the
               Election Form (or such other form of communication acceptable to
               the Committee), in increments of one percent (1%), the percentage
               of his or her Account Balance to be allocated to a Measurement
               Fund (as if the Participant was making an investment in that
               Measurement Fund with that portion of his or her Account
               Balance).

          (d)  CREDITING OR DEBITING METHOD. The performance of each elected
               Measurement Fund (either positive or negative) will be determined
               by the Benefits Committee, in its reasonable discretion, based on
               the performance of the Measurement Funds themselves. A
               Participant's Account Balance shall be credited or debited on a
               daily basis, if possible, based on the performance of each
               Measurement Fund selected by the Participant, SUCH PERFORMANCE
               BEING DETERMINED BY THE BENEFITS COMMITTEE IN ITS SOLE
               DISCRETION.

          (e)  NO ACTUAL INVESTMENT. Notwithstanding any other provision of this
               Plan that may be interpreted to the contrary, the Measurement
               Funds are to be used for measurement purposes only, and a
               Participant's election of any such Measurement Fund, the
               allocation to his or her Account Balance thereto, the calculation
               of additional amounts and the crediting or debiting of such
               amounts to a Participant's Account Balance SHALL NOT be
               considered or construed in any manner as an actual investment of
               his or her Account Balance in any such Measurement Fund. In the
               event that the Sponsor or the Trustee (as that term is defined in
               the Trust), in its own discretion, decides to invest in any of
               the investments on which the Measurement Funds are based, no
               Participant shall have any

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               rights in or to such investments themselves. Without limiting the
               foregoing, a Participant's Account Balance shall at all times be
               a bookkeeping entry only and shall not represent any investment
               made on his or her behalf by the Sponsor or the Trust; the
               Participant shall at all times remain an unsecured creditor of
               the Sponsor.

3.8       FICA AND OTHER TAXES3.

          (a)  ANNUAL DEFERRAL AMOUNTS. For each Plan Year in which an Annual
               Deferral Amount is being withheld from a Participant, the Sponsor
               shall withhold from that portion of the Participant's Base Annual
               Salary, Annual Bonus and/or LTIP Bonus that is not being
               deferred, in a manner determined by the Sponsor, the
               Participant's share of FICA and other employment taxes on such
               Annual Deferral Amount. If necessary, the Benefits Committee may
               reduce the Annual Deferral Amount in order to comply with this
               Section 3.8.

          (b)  401(k) RESTORATION MATCHING ACCOUNT. When the Sponsor credits an
               Annual 401(k) Restoration Matching Amount to a Participant's
               401(k) Restoration Matching Account, the Sponsor shall withhold
               from the Participant's Base Annual Salary, Annual Bonus and/or
               LTIP Bonus, as applicable, that is not deferred, in a manner
               determined by the Sponsor, the Participant's share of FICA and
               other employment taxes. If necessary, the Benefits Committee may
               reduce the Participant's Annual 401(k) Restoration Matching
               Amount in order to comply with this Section 3.8.

          (c)  DISTRIBUTIONS. The Sponsor, or the trustee of the Trust, shall
               withhold from any payments made to a Participant under this Plan
               all federal, state and local income, employment and other taxes
               required to be withheld by the Sponsor, or the trustee of the
               Trust, in connection with such payments, in amounts and in a
               manner to be determined in the sole discretion of the Sponsor and
               the trustee of the Trust.

                                    ARTICLE 4
                     SHORT-TERM PAYOUT; WITHDRAWAL ELECTION

4.1       SHORT-TERM PAYOUT. In connection with each election to defer an Annual
          Deferral Amount, a Participant may irrevocably elect to receive a
          future "Short-Term Payout" from the Plan with respect to all or a
          portion of such Annual Deferral Amount. The Short-Term Payout shall be
          a lump sum payment in an amount that is equal to the portion of the
          Annual Deferral Amount the Participant elected to have distributed as
          a Short-Term Payout plus amounts credited or debited in the manner
          provided in Section 3.7 above on that amount, calculated as of the
          close of business on or around the date on which the Short-Term Payout
          becomes payable, as determined by the Benefits Committee in its sole
          discretion. Subject to the other terms and conditions of this Plan,
          each Short-Term Payout elected shall be paid out during a fifteen (15)
          day period commencing immediately after the first day of any Plan Year
          designated by the Participant. The Plan Year designated by the
          Participant must be at least five Plan Years after the end of the Plan
          Year in which the Annual Deferral Amount is actually deferred. By way
          of example, if a five year Short-Term Payout is elected for Annual
          Deferral Amounts that are deferred in the Plan

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          Year commencing January 1, 2002, the five year Short-Term Payout would
          become payable during a fifteen (15) day period commencing January 1,
          2008.

4.2       OTHER BENEFITS TAKE PRECEDENCE OVER SHORT-TERM. Should an event occur
          that triggers a benefit under Article 5, 6, or 7, any Annual Deferral
          Amount, plus amounts credited or debited thereon, that is subject to a
          Short-Term Payout election under Section 4.1 shall not be paid in
          accordance with Section 4.1 but shall be paid in accordance with the
          other applicable Article.

4.3       WITHDRAWAL ELECTION. A Participant may elect, at any time, to withdraw
          all or any portion of his or her Account Balance. For purposes of this
          Section 4.3, the value of a Participant's Account Balance shall be
          calculated as of the close of business on or around the date the
          Participant's benefit distribution is processed, as determined by the
          Benefits Committee, in its sole discretion, less a withdrawal penalty
          equal to 10% of such amount (the net amount shall be referred to as
          the "Withdrawal Amount"). This election can be made at any time,
          before or after Retirement, death or Termination of Employment, and
          whether or not the Participant (or Beneficiary) is in the process of
          being paid pursuant to an installment payment schedule. The
          Participant (or his or her Beneficiary) shall make this election by
          giving the Benefits Committee advance written notice of the election
          in a form determined from time to time by the Benefits Committee. The
          Participant (or his or her Beneficiary) shall be paid the Withdrawal
          Amount within fifteen (15) days of his or her election. Once the
          Withdrawal Amount is paid, the Participant's participation in the Plan
          shall be suspended for the remainder of the Plan Year in which the
          withdrawal is elected and for one (1) full Plan Year thereafter.

                                    ARTICLE 5
                               RETIREMENT BENEFIT

5.1       RETIREMENT BENEFIT. A Participant who Retires shall receive, as a
          Retirement Benefit, his or her Account Balance calculated as of the
          close of business on or around the date the Participant's benefit
          distribution is processed, as determined by the Benefits Committee in
          its sole discretion.

5.2       PAYMENT OF RETIREMENT BENEFIT. A Participant, in connection with his
          or her commencement of participation in the Plan, shall elect on an
          Election Form to receive the Retirement Benefit in a lump sum or
          pursuant to an Annual Installment Method of up to 15 years. The
          Participant may change his or her election to an allowable alternative
          payout period by submitting a new Election Form to the Benefits
          Committee, provided that any such Election Form is submitted to and
          accepted by the Benefits Committee in its sole discretion at least
          thirteen (13) months prior to the Participant's Retirement. The
          Election Form most recently accepted by the Benefits Committee shall
          govern the payout of the Retirement Benefit. If a Participant does not
          make any election with respect to the payment of the Retirement
          Benefit, or if the Participant's Account Balance on the date of the
          Participant's Retirement is less than $25,000, then such benefit shall
          be payable in a lump sum. The lump sum payment shall be made, or
          installment payments shall commence, no later than fifteen (15) days
          after the last day of the Plan Year in which the Participant Retires.

5.3       DEATH PRIOR TO COMPLETION OF RETIREMENT BENEFIT. If a Participant dies
          after Retirement but before the Retirement Benefit is paid in full,
          the Participant's Beneficiary shall receive a lump

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          sum payment that is equal to the Participant's unpaid remaining
          Account Balance calculated as of the close of business on or around
          the date the benefit distribution is processed, as determined by the
          Benefits Committee in its sole discretion. The lump sum payment shall
          be made no later than fifteen (15) days after the Benefits Committee
          is provided with proof that is satisfactory to the Benefits Committee
          of the Participant's death.

                                    ARTICLE 6
                         PRE-RETIREMENT SURVIVOR BENEFIT

6.1       PRE-RETIREMENT SURVIVOR BENEFIT. If the Participant dies before he or
          she Retires or experiences a Termination of Employment, the
          Participant's Beneficiary shall receive a Pre-Retirement Survivor
          Benefit equal to the Participant's Account Balance calculated as of
          the close of business on or around the date the benefit distribution
          is processed, as determined by the Benefits Committee in its sole
          discretion.

6.2       PAYMENT OF PRE-RETIREMENT SURVIVOR BENEFIT. The Pre-Retirement
          Survivor Benefit shall be paid to the Participant's Beneficiary in a
          lump sum payment no later than fifteen (15) days after the Benefits
          Committee is provided with proof that is satisfactory to the Benefits
          Committee of the Participant's death.

                                    ARTICLE 7
                               TERMINATION BENEFIT

7.1       TERMINATION BENEFIT. If a Participant experiences a Termination of
          Employment prior to his or her Retirement or death, the Participant
          shall receive a Termination Benefit, which shall be equal to the
          Participant's Account Balance calculated as of the close of business
          on or around the date the benefit distribution is processed, as
          determined by the Benefits Committee in its sole discretion.

7.2       PAYMENT OF TERMINATION BENEFIT. The Participant shall receive his or
          her Termination Benefit in a lump sum payment no later than fifteen
          (15) days after the last day of the Plan Year in which the Participant
          experiences the Termination of Employment.

                                    ARTICLE 8
                             BENEFICIARY DESIGNATION

8.1       BENEFICIARY. Each Participant shall have the right, at any time, to
          designate his or her Beneficiary(ies) (both primary as well as
          contingent) to receive any benefits payable under the Plan to a
          beneficiary upon the death of a Participant. The Beneficiary
          designated under this Plan may be the same as or different from the
          Beneficiary designation under any other plan of the Sponsor in which
          the Participant participates.

8.2       BENEFICIARY DESIGNATION; CHANGE; SPOUSAL CONSENT. A Participant shall
          designate his or her Beneficiary by completing and signing the
          Beneficiary Designation Form, and returning it to the

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          Benefits Committee or its designated agent. A Participant shall have
          the right to change a Beneficiary by completing, signing and otherwise
          complying with the terms of the Beneficiary Designation Form and the
          Benefits Committee's rules and procedures, as in effect from time to
          time. If the Participant resides in a community property state and
          names someone other than his or her spouse as a Beneficiary, a spousal
          consent, in the form designated by the Benefits Committee, must be
          signed by that Participant's spouse and returned to the Benefits
          Committee. Upon the acceptance by the Benefits Committee of a new
          Beneficiary Designation Form, all Beneficiary designations previously
          filed shall be canceled. The Benefits Committee shall be entitled to
          rely on the last Beneficiary Designation Form filed by the Participant
          and accepted by the Benefits Committee prior to his or her death.

8.3       ACKNOWLEDGMENT. No designation or change in designation of a
          Beneficiary shall be effective until received and acknowledged in
          writing by the Benefits Committee or its designated agent.

8.4       NO BENEFICIARY DESIGNATION. If a Participant fails to designate a
          Beneficiary as provided in Sections 8.1, 8.2 and 8.3 above or, if all
          designated Beneficiaries predecease the Participant or die prior to
          complete distribution of the Participant's benefits, then the
          Participant's designated Beneficiary shall be deemed to be his or her
          surviving spouse. If the Participant has no surviving spouse, the
          benefits remaining under the Plan to be paid to a Beneficiary shall be
          payable to the executor or personal representative of the
          Participant's estate.

8.5       DOUBT AS TO BENEFICIARY. If the Benefits Committee has any doubt as to
          the proper Beneficiary to receive payments pursuant to this Plan, the
          Benefits Committee shall have the right, exercisable in its
          discretion, to cause the Sponsor to withhold such payments until this
          matter is resolved to the Benefits Committee's satisfaction.

8.6       DISCHARGE OF OBLIGATIONS. The payment of benefits under the Plan to a
          Beneficiary shall fully and completely discharge the Sponsor and the
          Benefits Committee from all further obligations under this Plan with
          respect to the Participant, and that Participant's participation in
          the Plan shall terminate upon such full payment of benefits.

                                    ARTICLE 9
                                LEAVE OF ABSENCE

9.1       PAID LEAVE OF ABSENCE. If a Participant is authorized by the Sponsor
          for any reason to take a paid leave of absence from the employment of
          the Sponsor, the Participant shall continue to be considered employed
          by the Sponsor and the Annual Deferral Amount shall continue to be
          withheld during such paid leave of absence in accordance with Section
          3.3.

9.2       UNPAID LEAVE OF ABSENCE. If a Participant is authorized by the Sponsor
          for any reason to take an unpaid leave of absence from the employment
          of the Sponsor, the Participant shall continue to be considered
          employed by the Sponsor and the Participant shall be excused from
          making deferrals until the earlier of the date the leave of absence
          expires or the Participant returns to a paid employment status. Upon
          such expiration or return, deferrals shall resume for the remaining
          portion of the Plan Year in which the expiration or return occurs,
          based on the deferral election, if any, made for that Plan Year. In
          the event of a deferral of a fixed dollar amount from Base

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MASTER PLAN DOCUMENT

          Annual Salary, the Committee may make appropriate adjustments to
          reflect the period of unpaid leave. If no election was made for that
          Plan Year, no deferral shall be withheld.

                                   ARTICLE 10
                     TERMINATION, AMENDMENT OR MODIFICATION

10.1      TERMINATION. Although the Sponsor anticipates that it will continue
          the Plan for an indefinite period of time, there is no guarantee that
          the Sponsor will continue the Plan or will not terminate the Plan at
          any time in the future. Accordingly, the Sponsor reserves the right to
          discontinue its sponsorship of the Plan and/or to terminate the Plan
          at any time with respect to any or all of its participating Employees.
          Upon the termination of the Plan with respect to the Sponsor, the
          affected Participants' participation in the Plan shall terminate and
          their Account Balances shall be paid in a lump sum notwithstanding any
          elections made by the Participants. The termination of the Plan shall
          not adversely affect any Participant or Beneficiary who has become
          entitled to the payment of any benefits under the Plan as of the date
          of termination; provided however, that the Sponsor shall have the
          right to accelerate installment payments without a premium or
          prepayment penalty by paying the Account Balance in a lump sum.

10.2      AMENDMENT. The Sponsor may, at any time, amend or modify the Plan in
          whole or in part; provided, however, that no amendment or modification
          shall be effective to decrease or restrict the value of a
          Participant's Account Balance in existence at the time the amendment
          or modification is made, calculated as if the Participant had
          experienced a Termination of Employment as of the effective date of
          the amendment or modification or, if the amendment or modification
          occurs after the date upon which the Participant was eligible to
          Retire, the Participant had Retired as of the effective date of the
          amendment or modification. The amendment or modification of the Plan
          shall not affect any Participant or Beneficiary who has become
          entitled to the payment of benefits under the Plan as of the date of
          the amendment or modification; provided, however, that the Sponsor
          shall have the right to accelerate installment payments by paying the
          Account Balance in a lump sum or pursuant to an Annual Installment
          Method using fewer years.

10.3      DELEGATION TO BENEFITS COMMITTEE. The Sponsor has delegated its rights
          to act under Sections 10.1 and 10.2 above to the Benefits Committee
          and the Benefits Committee shall have the full power to take action
          under Sections 10.1 and 10.2.

10.4      EFFECT OF PAYMENT. The full payment of the applicable benefit under
          Articles 4, 5, 6, or 7 of the Plan shall completely discharge all
          obligations to a Participant and his or her designated Beneficiaries
          under this Plan and the Participant's participation in the Plan shall
          terminate.

                                   ARTICLE 11
                                 ADMINISTRATION

11.1      BENEFITS COMMITTEE DUTIES. Except as otherwise provided in this
          Article 11, this Plan shall be administered by the Benefits Committee
          of the Sponsor. The Benefits Committee shall also have the discretion
          and authority to (i) make, amend, interpret, and enforce all
          appropriate rules and

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          regulations for the administration of this Plan and (ii) decide or
          resolve any and all questions including interpretations of this Plan,
          as may arise in connection with the Plan. Any individual serving on
          the Benefits Committee who is a Participant shall not vote or act on
          any matter relating solely to himself or herself. When making a
          determination or calculation, the Benefits Committee shall be entitled
          to rely on information furnished by a Participant or the Sponsor.

11.2      AGENTS. In the administration of this Plan, the Benefits Committee
          may, from time to time, employ agents and delegate to them such
          administrative duties as it sees fit (including acting through a duly
          appointed representative) and may from time to time consult with
          counsel who may be counsel to the Sponsor.

11.3      BINDING EFFECT OF DECISIONS. The decision or action of the Benefits
          Committee with respect to any question arising out of or in connection
          with the administration, interpretation and application of the Plan
          and the rules and regulations promulgated hereunder shall be final and
          conclusive and binding upon all persons having any interest in the
          Plan.

11.4      INDEMNITY OF BENEFITS COMMITTEE. The Sponsor shall indemnify and hold
          harmless the members of the Benefits Committee and any Employee to
          whom the duties of the Benefits Committee may be delegated against any
          and all claims, losses, damages, expenses or liabilities arising from
          any action or failure to act with respect to this Plan, except in the
          case of willful misconduct by the Benefits Committee, any of its
          members, or any such Employee.

11.5      SPONSOR INFORMATION. To enable the Benefits Committee to perform its
          functions, the Sponsor shall supply full and timely information to the
          Benefits Committee, as the case may be, on all matters relating to the
          compensation of its Participants, the date and circumstances of the
          Retirement, death or Termination of Employment of its Participants,
          and such other pertinent information as the Benefits Committee may
          reasonably require.

                                   ARTICLE 12
                          OTHER BENEFITS AND AGREEMENTS

12.1      COORDINATION WITH OTHER BENEFITS. The benefits provided for a
          Participant and Participant's Beneficiary under the Plan are in
          addition to any other benefits available to such Participant under any
          other plan or program for employees of the Sponsor. The Plan shall
          supplement and shall not supersede, modify or amend any other such
          plan or program except as may otherwise be expressly provided.

                                   ARTICLE 13
                                CLAIMS PROCEDURES

13.1      PRESENTATION OF CLAIM. Any Participant or Beneficiary of a deceased
          Participant (such Participant or Beneficiary being referred to below
          as a "Claimant") may deliver to the Benefits Committee a written claim
          for a determination with respect to the amounts distributable to such
          Claimant from the Plan. If such a claim relates to the contents of a
          notice received by the Claimant, the claim must be made within sixty
          (60) days after such notice was received by the

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          Claimant. All other claims must be made within 180 days of the date on
          which the event that caused the claim to arise occurred. The claim
          must state with particularity the determination desired by the
          Claimant.

13.2      NOTIFICATION OF DECISION. The Benefits Committee shall consider a
          Claimant's claim within a reasonable time, and shall notify the
          Claimant in writing:

          (a)  that the Claimant's requested determination has been made, and
               that the claim has been allowed in full; or

          (b)  that the Benefits Committee has reached a conclusion contrary, in
               whole or in part, to the Claimant's requested determination, and
               such notice must set forth in a manner calculated to be
               understood by the Claimant:

               (i)    the specific reason(s) for the denial of the claim, or any
                      part of it;

               (ii)   specific reference(s) to pertinent provisions of the Plan
                      upon which such denial was based;

               (iii)  a description of any additional material or information
                      necessary for the Claimant to perfect the claim, and an
                      explanation of why such material or information is
                      necessary; and

               (iv)   an explanation of the claim review procedure set forth in
                      Section 13.3 below.

13.3      REVIEW OF A DENIED CLAIM. Within sixty (60) days after receiving a
          notice from the Benefits Committee that a claim has been denied, in
          whole or in part, a Claimant (or the Claimant's duly authorized
          representative) may file with the Benefits Committee a written request
          for a review of the denial of the claim. Thereafter, but not later
          than thirty (30) days after the review procedure began, the Claimant
          (or the Claimant's duly authorized representative):

          (a)  may review pertinent documents;

          (b)  may submit written comments or other documents; and/or

          (c)  may request a hearing, which the Benefits Committee, in its sole
               discretion, may grant.

13.4      DECISION ON REVIEW. The Benefits Committee shall render its decision
          on review promptly, and not later than sixty (60) days after the
          filing of a written request for review of the denial, unless a hearing
          is held or other special circumstances require additional time, in
          which case the Benefits Committee's decision must be rendered within
          120 days after such date. Such decision must be written in a manner
          calculated to be understood by the Claimant, and it must contain:

          (a)  specific reasons for the decision;

          (b)  specific reference(s) to the pertinent Plan provisions upon which
               the decision was based; and

          (c)  such other matters as the Benefits Committee deems relevant.

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13.5      LEGAL ACTION. A Claimant's compliance with the foregoing provisions of
          this Article 13 is a mandatory prerequisite to a Claimant's right to
          commence any legal action with respect to any claim for benefits under
          this Plan.

                                   ARTICLE 14
                                      TRUST

14.1      ESTABLISHMENT OF THE TRUST. In order to provide assets from which to
          fulfill the obligations of the Participants and their beneficiaries
          under the Plan, the Sponsor may establish a Trust by a trust agreement
          with a third party, the trustee, to which the Sponsor may, in its
          discretion, contribute cash or other property, including securities
          issued by the Sponsor, to provide for the benefit payments under the
          Plan.

14.2      INTERRELATIONSHIP OF THE PLAN AND THE TRUST. The provisions of the
          Plan shall govern the rights of a Participant to receive distributions
          pursuant to the Plan. The provisions of the Trust shall govern the
          rights of the Sponsor, Participants and the creditors of the Sponsor
          to the assets transferred to the Trust. The Sponsor shall at all times
          remain liable to carry out its obligations under the Plan.

14.3      DISTRIBUTIONS FROM THE TRUST. The Sponsor's obligations under the Plan
          may be satisfied with Trust assets distributed pursuant to the terms
          of the Trust, and any such distribution shall reduce the Sponsor's
          obligations under this Plan.

                                   ARTICLE 15
                                  MISCELLANEOUS

15.1      STATUS OF PLAN. The Plan is intended to be a plan that is not
          qualified within the meaning of Code Section 401(a) and that "is
          unfunded and is maintained by an employer primarily for the purpose of
          providing deferred compensation for a select group of management or
          highly compensated employees" within the meaning of ERISA Sections
          201(2), 301(a)(3) and 401(a)(1). The Plan shall be administered and
          interpreted to the extent possible in a manner consistent with that
          intent.

15.2      UNSECURED GENERAL CREDITOR. Participants and their Beneficiaries,
          heirs, successors and assigns shall have no legal or equitable rights,
          interests or claims in any property or assets of the Sponsor. For
          purposes of the payment of benefits under this Plan, any and all of
          the Sponsor's assets shall be, and remain, the general, unpledged
          unrestricted assets of the Sponsor. The Sponsor's obligation under the
          Plan shall be merely that of an unfunded and unsecured promise to pay
          money in the future.

15.3      SPONSOR'S LIABILITY. The Sponsor's liability for the payment of
          benefits shall be defined only by the Plan. The Sponsor shall have no
          obligation to a Participant under the Plan except as expressly
          provided in the Plan.

15.4      NONASSIGNABILITY. Neither a Participant nor any other person shall
          have any right to commute, sell, assign, transfer, pledge, anticipate,
          mortgage or otherwise encumber, transfer, hypothecate,

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MASTER PLAN DOCUMENT

          alienate or convey in advance of actual receipt, the amounts, if any,
          payable hereunder, or any part thereof, which are, and all rights to
          which are expressly declared to be, unassignable and non-transferable.
          No part of the amounts payable shall, prior to actual payment, be
          subject to seizure, attachment, garnishment or sequestration for the
          payment of any debts, judgments, alimony or separate maintenance owed
          by a Participant or any other person, be transferable by operation of
          law in the event of a Participant's or any other person's bankruptcy
          or insolvency or be transferable to a spouse as a result of a property
          settlement or otherwise.

15.5      NOT A CONTRACT OF EMPLOYMENT. The terms and conditions of this Plan
          shall not be deemed to constitute a contract of employment between the
          Sponsor and the Participant. Such employment is hereby acknowledged to
          be an "at will" employment relationship that can be terminated at any
          time for any reason, or no reason, with or without cause, and with or
          without notice, unless expressly provided in a written employment
          agreement. Nothing in this Plan shall be deemed to give a Participant
          the right to be retained in the service of the Sponsor, as an
          Employee, or to interfere with the right of the Sponsor to discipline
          or discharge the Participant at any time.

15.6      FURNISHING INFORMATION. A Participant or his or her Beneficiary will
          cooperate with the Benefits Committee by furnishing any and all
          information requested by the Benefits Committee and take such other
          actions as may be requested in order to facilitate the administration
          of the Plan and the payments of benefits hereunder, including but not
          limited to taking such physical examinations as the Benefits Committee
          may deem necessary.

15.7      TERMS. Whenever any words are used herein in the masculine, they shall
          be construed as though they were in the feminine in all cases where
          they would so apply; and whenever any words are used herein in the
          singular or in the plural, they shall be construed as though they were
          used in the plural or the singular, as the case may be, in all cases
          where they would so apply.

15.8      CAPTIONS. The captions of the articles, sections and paragraphs of
          this Plan are for convenience only and shall not control or affect the
          meaning or construction of any of its provisions.

15.9      GOVERNING LAW. Subject to ERISA, the provisions of this Plan shall be
          construed and interpreted according to the internal laws of the
          Commonwealth of Massachusetts without regard to its conflicts of laws
          principles.

15.10     NOTICE. Any notice or filing required or permitted to be given to the
          Benefits Committee under this Plan shall be sufficient if in writing
          and hand-delivered, or sent by registered or certified mail, to the
          address below:

                       Boston Properties Benefits Committee
                       c/o Boston Properties, Inc.
                       111 Huntington Avenue, Suite 300
                       Boston, MA 02199-7610

          Such notice shall be deemed given as of the date of delivery or, if
          delivery is made by mail, as of the date shown on the postmark on the
          receipt for registration or certification.

                                      -16-


BOSTON PROPERTIES
Deferred Compensation Plan
MASTER PLAN DOCUMENT

          Any notice or filing required or permitted to be given to a
          Participant under this Plan shall be sufficient if in writing and
          hand-delivered, or sent by mail, to the last known address of the
          Participant.

15.11     SUCCESSORS. The provisions of this Plan shall bind and inure to the
          benefit of the Sponsor and its successors and assigns and the
          Participant and the Participant's designated Beneficiaries.

15.12     SPOUSE'S INTEREST. The interest in the benefits hereunder of a spouse
          of a Participant who has predeceased the Participant shall
          automatically pass to the Participant and shall not be transferable by
          such spouse in any manner, including but not limited to such spouse's
          will, nor shall such interest pass under the laws of intestate
          succession.

15.13     VALIDITY. In case any provision of this Plan shall be illegal or
          invalid for any reason, said illegality or invalidity shall not affect
          the remaining parts hereof, but this Plan shall be construed and
          enforced as if such illegal or invalid provision had never been
          inserted herein.

15.14     INCOMPETENT. If the Benefits Committee determines in its discretion
          that a benefit under this Plan is to be paid to a minor, a person
          declared incompetent or to a person incapable of handling the
          disposition of that person's property, the Benefits Committee may
          direct payment of such benefit to the guardian, legal representative
          or person having the care and custody of such minor, incompetent or
          incapable person. The Benefits Committee may require proof of
          minority, incompetence, incapacity or guardianship, as it may deem
          appropriate prior to distribution of the benefit. Any payment of a
          benefit shall be a payment for the account of the Participant and the
          Participant's Beneficiary, as the case may be, and shall be a complete
          discharge of any liability under the Plan for such payment amount.

15.15     COURT ORDER. The Benefits Committee is authorized to make any payments
          directed by court order in any action in which the Plan or the
          Benefits Committee has been named as a party. In addition, if a court
          determines that a spouse or former spouse of a Participant has an
          interest in the Participant's benefits under the Plan in connection
          with a property settlement or otherwise, the Benefits Committee, in
          its sole discretion, shall have the right, notwithstanding any
          election made by a Participant, to immediately distribute the spouse's
          or former spouse's interest in the Participant's benefits under the
          Plan to that spouse or former spouse.

15.16     DISTRIBUTION IN THE EVENT OF TAXATION.

          (a)  IN GENERAL. If, for any reason, all or any portion of a
               Participant's benefits under this Plan becomes taxable to the
               Participant prior to receipt, a Participant may petition the
               Benefits Committee for a distribution of that portion of his or
               her benefit that has become taxable. Upon the grant of such a
               petition, which grant shall not be unreasonably withheld, the
               Sponsor shall distribute to the Participant immediately available
               funds in an amount equal to the taxable portion of his or her
               benefit (which amount shall not exceed a Participant's unpaid
               Account Balance under the Plan). If the petition is granted, the
               tax liability distribution shall be made within 90 days of the
               date when the Participant's petition is granted.

                                      -17-


BOSTON PROPERTIES
Deferred Compensation Plan
MASTER PLAN DOCUMENT

          (b)  TRUST. If the Trust terminates in accordance with its terms and
               benefits are distributed from the Trust to a Participant in
               accordance therewith, the Participant's benefits under this Plan
               shall be reduced to the extent of such distributions.

15.17     INSURANCE. The Sponsor, on its own behalf or on behalf of the trustee
          of the Trust, and, in its sole discretion, may apply for and procure
          insurance on the life of the Participant, in such amounts and in such
          forms as the Trust may choose. The Sponsor or the trustee of the
          Trust, as the case may be, shall be the sole owner and beneficiary of
          any such insurance. The Participant shall have no interest whatsoever
          in any such policy or policies, and at the request of the Sponsor
          shall submit to medical examinations and supply such information and
          execute such documents as may be required by the insurance company or
          companies to whom the Sponsor has applied for insurance.

IN WITNESS WHEREOF, the Sponsor has caused this Plan document to be duly
executed by a duly authorized officer of its general partner as of __________,
2002.

                                     BOSTON PROPERTIES LIMITED PARTNERSHIP

                                     By BOSTON PROPERTIES, INC.,
                                     Its General Partner

                                     By:
                                         ---------------------------------------
                                     Title:


                                      -18-