Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
 
Date of report (Date of earliest event reported): July 30, 2019
BOSTON PROPERTIES, INC.
BOSTON PROPERTIES LIMITED PARTNERSHIP
(Exact Name of Registrants As Specified in its Charter)
Boston Properties, Inc.
Delaware
113087
042473675
 
(State or Other Jurisdiction
of Incorporation)
(Commission File Number)
(IRS Employer
Identification No.)
Boston Properties Limited Partnership
Delaware
050209
04-3372948
 
(State or Other Jurisdiction
of Incorporation)
(Commission File Number)
(IRS Employer
Identification No.)
800 Boylston Street, Suite 1900, Boston, Massachusetts 02199
(Address of Principal Executive Offices) (Zip Code)
(617) 236-3300
(Registrants’ telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrants under any of the following provisions (see General Instruction A.2. below):
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))





Securities registered pursuant to Section 12(b) of the Act:
Registrant
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Boston Properties, Inc.
Common Stock, par value $0.01 per share
BXP
New York Stock Exchange
Boston Properties, Inc.
Depository Shares Each Representing 1/100th of a share of 5.25% Series B Cumulative Redeemable Preferred Stock, par value $0.01 per share
BXP PRB
New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
  
Boston Properties, Inc.:
Emerging growth company ☐

Boston Properties Limited Partnership:
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Boston Properties, Inc. ☐         Boston Properties Limited Partnership ☐









Item 2.02.
Results of Operations and Financial Condition.

The information in this Item 2.02 - “Results of Operations and Financial Condition” is being furnished. Such information, including Exhibits 99.1 and 99.2 hereto, shall not be deemed “filed” for any purpose, including for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section. The information in this Item 2.02, including Exhibits 99.1 and 99.2, shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act regardless of any general incorporation language in such filing.

On July 30, 2019, Boston Properties, Inc. (the “Company”), the general partner of Boston Properties Limited Partnership, issued a press release announcing its financial results for the second quarter of 2019. That press release referred to certain supplemental information that is available on the Company’s website. The text of the supplemental information and the press release are attached hereto as Exhibits 99.1 and 99.2, respectively, and are incorporated by reference herein.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.
Exhibit No.
 
Description
*99.1
 
*99.2
 
______________
* Filed herewith.









SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned hereunto duly authorized.

BOSTON PROPERTIES, INC.
 
 
By:
/s/    MICHAEL E. LABELLE        
 
Michael E. LaBelle
 
Executive Vice President, Chief Financial Officer
 
and Treasurer
 
 
 
 
 
 
BOSTON PROPERTIES LIMITED PARTNERSHIP
By: Boston Properties, Inc., its General Partner
 
 
By:
/s/    MICHAEL E. LABELLE        
 
Michael E. LaBelle
 
Executive Vice President, Chief Financial Officer
 
and Treasurer

    

Date: July 30, 2019





Exhibit

Exhibit 99.1




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Supplemental Operating and Financial Data
for the Quarter Ended June 30, 2019




THE COMPANY

Boston Properties, Inc. (NYSE: BXP) (“Boston Properties,” “BXP” or the “Company”) is the largest publicly-traded developer, owner and manager of Class A office properties in the United States, concentrated in five markets -  Boston, Los Angeles, New York, San Francisco and Washington, DC. The Company is a fully integrated real estate company, organized as a real estate investment trust (REIT), that develops, manages, operates, acquires and owns a diverse portfolio of primarily Class A office space. The Company’s complete portfolio totals 50.9 million square feet and 193 properties, including 12 properties under construction/redevelopment, and consists of 174 office properties, 12 retail properties, six residential properties and one hotel. Boston Properties is well-known for its in-house building management expertise and responsiveness to tenants’ needs. The Company holds a superior track record of developing premium Central Business District (CBD) office buildings, successful mixed-use complexes, suburban office centers and build-to-suit projects for a diverse array of creditworthy tenants. Boston Properties actively works to promote its growth and operations in a sustainable and responsible manner.  The Company has earned seven consecutive Global Real Estate Sustainability Benchmark (GRESB) Green Stars and the highest GRESB 5-star Rating. Boston Properties, an S&P 500 Company, was founded in 1970 by Mortimer B. Zuckerman and Edward H. Linde and became a public company in 1997.


FORWARD-LOOKING STATEMENTS

This Supplemental package contains forward-looking statements within the meaning of the Federal securities laws. You can identify these statements by our use of the words “assumes,” “believes,” “budgeted,” “estimates,” “expects,” “guidance,” “intends,” “may,” “might,” “plans,” “projects,” “should,” “will” and similar expressions that do not relate to historical matters. You should exercise caution in interpreting and relying on forward-looking statements because they involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond Boston Properties’ control and could materially affect actual results, performance or achievements. These factors include, without limitation, the ability to enter into new leases or renew leases on favorable terms, dependence on tenants’ financial condition, the uncertainties of real estate development, acquisition and disposition activity, the ability to effectively integrate acquisitions, the uncertainties of investing in new markets, the ability of our joint venture partners to satisfy their obligations, the costs and availability of financing, the effectiveness of our interest rate hedging programs, the effects of local, national and international economic and market conditions, the effects of acquisitions, dispositions and possible impairment charges on our operating results, the impact of newly adopted accounting principles on the Company’s accounting policies and on period-to-period comparisons of financial results, regulatory changes and other risks and uncertainties detailed from time to time in the Company’s filings with the Securities and Exchange Commission. These forward-looking statements speak only as of the date of issuance of this report and are not guarantees of future results, performance or achievements. Boston Properties does not undertake a duty to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.


NON-GAAP FINANCIAL MEASURES

This Supplemental package includes non-GAAP financial measures, which are accompanied by what the Company considers the most directly comparable financial measures calculated and presented in accordance with GAAP. Quantitative reconciliations of the differences between the most directly comparable GAAP financial measures and the non-GAAP financial measures presented are provided within this Supplemental package. Definitions of these non-GAAP financial measures and statements of the reasons why management believes the non-GAAP measures provide useful information to investors about the Company’s financial condition and results of operations, and, if applicable, the other purposes for which management uses the measures, can be found in the Definitions section of this Supplemental starting on page 53.

The Company also presents “BXP’s Share” of certain of these measures, which are non-GAAP financial measures that are calculated as the consolidated amount calculated in accordance with GAAP, plus the Company’s share of the amount from the Company’s unconsolidated joint ventures (calculated based upon the Company’s percentage ownership interest and, in some cases, after priority allocations), minus the Company’s partners’ share of the amount from the Company’s consolidated joint ventures (calculated based upon the partners’ percentage ownership interests and, in some cases, after priority allocations, income allocation to private REIT shareholders and their share of fees due to the Company).  Management believes that presenting “BXP’s Share” of these measures provides useful information to investors regarding the Company’s financial condition and/or results of operations because the Company has several significant joint ventures and in some cases, the Company exercises significant influence over, but does not control, the joint venture, in which case GAAP requires that the Company account for the joint venture entity using the equity method of accounting and the Company does not consolidate it for financial reporting purposes. In other cases, GAAP requires that the Company consolidate the venture even though the Company’s partner(s) owns a significant percentage interest. As a result, management believes that presenting BXP Share of various financial measures in this manner can help investors better understand the Company’s financial condition and/or results of operations after taking into account its true economic interest in these joint ventures.  The Company cautions investors that the ownership percentages used in calculating “BXP’s Share” of these measures may not completely and accurately depict all of the legal and economic implications of holding an interest in a consolidated or unconsolidated joint venture. For example, in addition to partners’ interests in profits and capital, venture agreements vary in the allocation of rights regarding decision making (both routine and major decisions), distributions, transferability of interests, financing and guarantees, liquidations and other matters. As a result, presentations of “BXP’s Share” of a financial measure should not be considered a substitute for, and should only be considered together with and as a supplement to, the Company’s financial information presented in accordance with GAAP. Unless noted otherwise, reconciliations of “BXP’s Share” of these financial measures can be found in the Reconciliations section of this Supplemental package starting on page 57.


GENERAL INFORMATION
Corporate Headquarters
Trading Symbol
Investor Relations
Inquires
800 Boylston Street
BXP
Boston Properties, Inc.
Inquiries should be directed to
Suite 1900
 
800 Boylston Street, Suite 1900
Michael E. LaBelle
Boston, MA 02199
Stock Exchange Listing
Boston, MA 02199
Executive Vice President, Chief Financial Officer
www.bxp.com
New York Stock Exchange
investors.bxp.com
at 617.236.3352 or
(t) 617.236.3300
 
investorrelations@bxp.com
mlabelle@bxp.com
(f) 617.236.3311
 
(t) 617.236.3822
 
 
 
(f) 617.236.3311
Sara Buda
 
 
 
Vice President, Investor Relations
 
 
 
at 617.236.3429 or
 
 
 
sbuda@bxp.com

(Cover photo: The Exchange at 100 Federal Street, Boston, MA)




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Q2 2019
Table of contents
 
Page
OVERVIEW
 
Company Profile
Guidance and Assumptions
 
 
FINANCIAL INFORMATION
 
Financial Highlights
Consolidated Balance Sheets
Consolidated Income Statements
Funds From Operations (FFO)
Funds Available for Distribution (FAD)
Net Operating Income (NOI)
Same Property Net Operating Income (NOI) by Reportable Segment
Capital Expenditures, Tenant Improvement Costs and Leasing Commissions
Acquisitions and Dispositions
 
 
DEVELOPMENT ACTIVITY
 
Construction in Progress
Land Parcels and Purchase Options
 
 
LEASING ACTIVITY
 
Leasing Activity
 
 
PROPERTY STATISTICS
 
Portfolio Overview
Residential and Hotel Performance
In-Service Property Listing
Top 20 Tenants Listing and Portfolio Tenant Diversification
Occupancy by Location
 
 
DEBT AND CAPITALIZATION
 
Capital Structure
Debt Analysis
Senior Unsecured Debt Covenant Compliance Ratios
Net Debt to EBITDAre
Debt Ratios
 
 
JOINT VENTURES
 
Consolidated Joint Ventures
Unconsolidated Joint Ventures
 
 
LEASE EXPIRATION ROLL-OUT
 
Total In-Service Properties
Boston
Los Angeles
New York
San Francisco
Washington, DC
CBD
Suburban
 
 
RESEARCH COVERAGE, DEFINITIONS AND RECONCILIATIONS
 
Research Coverage
Definitions
Reconciliations
Consolidated Income Statement - Prior Year











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Q2 2019
Company profile

SNAPSHOT

(as of June 30, 2019)
Fiscal Year-End
December 31
Total Properties (includes unconsolidated joint ventures)
193
Total Square Feet (includes unconsolidated joint ventures)
50.9 million
Common shares outstanding, plus common units and LTIP units (other than unearned Multi-Year Long-Term Incentive Program (MYLTIP) Units) on an as-converted basis 1
172.6 million
Closing Price, at the end of the quarter
$129.00 per share
Dividend - Quarter/Annualized
$0.95/$3.80 per share
Dividend Yield
2.95%
Consolidated Market Capitalization 1
$34.3 billion
BXP’s Share of Market Capitalization 1, 2
$34.0 billion
Senior Debt Ratings
A- (S&P); BBB+ (Fitch); Baa1 (Moody’s)
STRATEGY

Boston Properties’ primary business objective is to maximize return on investment in an effort to provide its investors with the greatest possible total return in all points of the economic cycle. To achieve this objective, the Company maintains consistent strategies that include the following:
to maintain a keen focus on select markets that exhibit the strongest economic growth and investment characteristics over time - currently Boston, Los Angeles, New York, San Francisco and Washington, DC;
to invest in the highest quality buildings (primarily office) with unique amenities and locations that are able to maintain high occupancy, achieve premium rental rates through economic cycles and that advance our commitment to sustainable development and operations;
in our core markets, to maintain scale and a full-service real estate capability (development, construction, leasing and property management) to ensure we (1) see all relevant investment deal flow, (2) maintain an ability to execute on all types of real estate opportunities, such as development, repositioning, acquisitions and dispositions, throughout the real estate investment cycle and (3) provide superior service to our tenants;
to be astute in market timing for investment decisions by developing into economic growth, acquiring properties in times of opportunity and selling assets at attractive prices, resulting in continuous portfolio refreshment;
to ensure a strong balance sheet to maintain consistent access to capital and the resultant ability to make opportunistic investments; and
to foster a culture and reputation of integrity, excellence and purposefulness, making us the employer of choice for talented real estate professionals and the counterparty of choice for tenants and real estate industry participants.
MANAGEMENT

Board of Directors
 
Chairman Emeritus
Joel I. Klein
Chairman of the Board
 
Mortimer B. Zuckerman
Owen D. Thomas
Chief Executive Officer
 
 
Douglas T. Linde
President
 
Management
Kelly A. Ayotte
 
 
Owen D. Thomas
Chief Executive Officer
Bruce W. Duncan
Chair of Compensation Committee
 
Douglas T. Linde
President
Karen E. Dykstra
 
 
Raymond A. Ritchey
Senior Executive Vice President
Carol B. Einiger
 
 
Michael E. LaBelle
Executive Vice President, Chief Financial Officer and Treasurer
Diane J. Hoskins
 
 
 
Matthew J. Lustig
Chair of Nominating & Corporate Governance Committee

 
Peter D. Johnston
Executive Vice President, Washington, DC Region
 
 
Bryan J. Koop
Executive Vice President, Boston Region
David A. Twardock
Chair of Audit Committee
 
Robert E. Pester
Executive Vice President, San Francisco Region
William H. Walton, III
 
 
John F. Powers
Executive Vice President, New York Region
 
 
 
Frank D. Burt
Senior Vice President and Chief Legal Officer
 
 
 
Michael R. Walsh
Senior Vice President and Chief Accounting Officer
TIMING OF EARNINGS ANNOUNCEMENTS
Quarterly results for the next four quarters will be announced according to the following schedule:
Third Quarter, 2019
Tentatively October 29, 2019
 
 
Fourth Quarter, 2019
Tentatively January 28, 2020
 
 
First Quarter, 2020
Tentatively April 28, 2020
 
 
Second Quarter, 2020
Tentatively July 28, 2020
 
 
____________________
1 
For additional detail, see page 26.
2 
For the Company’s definitions and related disclosures, see the Definitions and Reconciliations sections of this Supplemental package starting on page 53.

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Q2 2019
Guidance and assumptions

GUIDANCE

The Company’s guidance for the third quarter 2019 and full year 2019 for diluted earnings per common share attributable to Boston Properties, Inc. common shareholders (EPS) and diluted funds from operations (FFO) per common share attributable to Boston Properties, Inc. common shareholders is set forth and reconciled below.  Except as described below, the estimates reflect management’s view of current and future market conditions, including assumptions with respect to rental rates, occupancy levels, the timing of the lease-up of available space and development deliveries and the earnings impact of the events referenced in the earnings release issued on July 30, 2019 and otherwise referenced during the Company’s conference call scheduled for July 31, 2019Except as otherwise publicly disclosed, the estimates do not include any material (1) possible future gains or losses or the impact on operating results from other possible future property acquisitions or dispositions, (2) other possible capital markets activity or (3) possible future impairment charges. EPS estimates may be subject to fluctuations as a result of several factors, including changes in the recognition of depreciation and amortization expense and any gains or losses associated with disposition activity. The Company is not able to assess at this time the potential impact of these factors on projected EPS. By definition, FFO does not include real estate-related depreciation and amortization, impairment losses on depreciable real estate or gains or losses associated with disposition activities. For a complete definition of FFO and statements of the reasons why management believes it provides useful information to investors, see page 55. There can be no assurance that the Company’s actual results will not differ materially from the estimates set forth below.

 
 
 
 
Third Quarter 2019
 
Full Year 2019
 
 
 
 
Low
 
High
 
Low
 
High
Projected EPS (diluted)
 
$
0.81

 
$
0.83

 
$
3.32

 
$
3.38

 
Add:
 
 
 
 
 
 
 
 
 
 
 
Projected Company share of real estate depreciation and amortization
 
0.94

 
0.94

 
3.84

 
3.84

 
 
Impairment Loss
 

 

 
0.14

 
0.14

 
 
Projected Company share of (gains)/losses on sales of real estate
 

 

 
(0.28
)
 
(0.28
)
Projected FFO per share (diluted)
 
$
1.75

 
$
1.77

 
$
7.02

 
$
7.08



ASSUMPTIONS
(dollars in thousands)

 
 
 
Full Year 2019
 
 
 
Low
 
High
Operating property activity:
 
 
 
 
 
Average In-service portfolio occupancy
 
92.50
%
93.50
%
 
Increase in BXP’s Share of Same Property net operating income (excluding termination income)
 
6.00
%
6.75
%
 
Increase in BXP’s Share of Same Property net operating income - cash (excluding termination income)
 
5.00
%
6.50
%
 
BXP’s Share of Non Same Properties’ incremental contribution to net operating income over prior year (excluding asset sales)
 
$
75,000

$
85,000

 
BXP’s Share of incremental net operating income related to asset sales over prior year
 
$
(17,000
)
$
(17,000
)
 
BXP’s Share of straight-line rent and fair value lease revenue (non-cash revenue)
 
$
105,000

$
120,000

 
Hotel net operating income
 
$
15,000

$
16,500

 
Termination income
 
$
13,000

$
17,000

 
 
 
 
 
 
Other revenue (expense):
 
 
 
 
 
Development and management services revenue
 
$
34,000

$
38,000

 
General and administrative expense
 
$
(140,000
)
$
(136,000
)
 
Net interest expense
 
$
(410,000
)
$
(398,000
)
 
 
 
 
 
 
Noncontrolling interest:
 
 
 
 
 
Noncontrolling interest in property partnerships’ share of FFO
 
$
(148,000
)
$
(138,000
)






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Q2 2019
Financial highlights


(unaudited and in thousands, except ratios and per share amounts)

 
 
Three Months Ended
 
 
30-Jun-19
 
31-Mar-19
Net income attributable to Boston Properties, Inc. common shareholders
 
$
164,318

 
$
98,105

Net income attributable to Boston Properties, Inc. per share - diluted
 
$
1.06

 
$
0.63

FFO attributable to Boston Properties, Inc. common shareholders 1
 
$
276,275

 
$
266,007

Diluted FFO per share 1
 
$
1.78

 
$
1.72

Dividends per common share
 
$
0.95

 
$
0.95

Funds available for distribution to common shareholders and common unitholders (FAD) 2
 
$
223,719

 
$
161,705

 
 
 
 
 
Selected items:
 
 
 
 
Revenue
 
$
733,741

 
$
725,767

Recoveries from tenants 3
 
$
117,971

 
$
118,818

Service income from tenants 4
 
$
2,818

 
$
2,970

BXP’s Share of revenue 5
 
$
698,643

 
$
688,241

BXP’s Share of straight-line rent 5
 
$
18,653

 
$
23,255

BXP’s Share of fair value lease revenue 5, 6
 
$
5,124

 
$
5,297

BXP’s Share of termination income 5
 
$
4,969

 
$
6,854

Ground rent expense
 
$
3,656

 
$
3,677

Capitalized interest
 
$
13,256

 
$
11,813

Capitalized wages
 
$
2,594

 
$
2,892

BXP’s Share of internal leasing and external legal costs that were to be capitalized prior to the adoption of ASU 2016-02 - “Leases” on January 1, 2019 5
 
$
1,270

 
$
1,248

Income from unconsolidated joint ventures 7
 
$
47,964

 
$
213

BXP’s share of FFO from unconsolidated joint ventures 8
 
$
14,985

 
$
15,683

Net income attributable to noncontrolling interests in property partnerships
 
$
17,482

 
$
18,830

FFO attributable to noncontrolling interests in property partnerships 9
 
$
35,351

 
$
36,832

 
 
 
 
 
Balance Sheet items:
 
 
 
 
Above-market rents (included within Prepaid Expenses and Other Assets)
 
$
13,111

 
$
14,915

Below-market rents (included within Other Liabilities)
 
$
49,623

 
$
58,216

Accrued rental income liability (included within Other Liabilities)
 
$
79,687

 
$
80,500

 
 
 
 
 
Ratios:
 
 
 
 
Interest Coverage Ratio (excluding capitalized interest) 10
 
4.13

 
4.04

Interest Coverage Ratio (including capitalized interest) 10
 
3.60

 
3.58

Fixed Charge Coverage Ratio 7
 
2.84

 
3.03

BXP’s Share of Net Debt to BXP’s Share of EBITDAre 11
 
6.32

 
6.47

Change in BXP’s Share of Same Store Net Operating Income (NOI) (excluding termination income) 12
 
7.6
%
 
7.7
%
Change in BXP’s Share of Same Store NOI (excluding termination income) - cash 12
 
9.0
%
 
9.2
%
FAD Payout Ratio 2
 
73.32
%
 
101.40
%
Operating Margins [(rental revenue - rental expense)/rental revenue]
 
63.5
%
 
63.4
%
Occupancy of In-Service Properties
 
93.4
%
 
92.9
%
 
 
 
 
 
Capitalization:
 
 
 
 
Consolidated Debt
 
$
11,846,241

 
$
11,005,558

BXP’s Share of Debt 13
 
$
11,509,782

 
$
10,721,203

Consolidated Market Capitalization
 
$
34,309,061

 
$
34,306,284

Consolidated Debt/Consolidated Market Capitalization
 
34.53
%
 
32.08
%
BXP’s Share of Market Capitalization 13
 
$
33,972,602

 
$
34,021,929

BXP’s Share of Debt/BXP’s Share of Market Capitalization 13
 
33.88
%
 
31.51
%
_____________
1 
For a quantitative reconciliation of FFO attributable to Boston Properties, Inc. common shareholders and Diluted FFO per share, see page 7.
2 
For a quantitative reconciliation of FAD, see page 8. FAD Payout Ratio equals distributions to common shareholders and unitholders (excluding any special distributions) divided by FAD.
3 
Upon the adoption of ASU 2016-02 - “Leases” on January 1, 2019, Recoveries from tenants are included in Lease revenue.
4 
Upon the adoption of ASU 2016-02 - “Leases” on January 1, 2019, Service income from tenants are included in Lease revenue. Prior to adoption, these amounts were included within the line Development and management services revenue.  
5 
See the Definitions and Reconciliations sections of this Supplemental package starting on page 53.
6 
Represents the net adjustment for above- and below-market leases that are amortized over the terms of the respective leases in place at the property acquisition dates.  

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Q2 2019
Financial highlights (continued)


7 
For the three months ended June 30, 2019, includes the Company’s share of the gain on sale of 540 Madison Avenue totaling approximately $47.8 million, see pages 13 and 35.
8 
For a quantitative reconciliation for the three months ended June 30, 2019, see page 35.
9 
For a quantitative reconciliation for the three months ended June 30, 2019, see page 32.
10 
For a quantitative reconciliation for the three months ended June 30, 2019 and March 31, 2019, see page 30.
11 
For a quantitative reconciliation for the three months ended June 30, 2019 and March 31, 2019, see page 29.
12 
For a quantitative reconciliation for the three months ended June 30, 2019, see page 11.
13 
For a quantitative reconciliation for June 30, 2019, see page 26.

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Q2 2019
Consolidated Balance Sheets


(unaudited and in thousands)
 
 
30-Jun-19
 
31-Mar-19
ASSETS
 
 
 
 
Real estate
 
$
20,858,468

 
$
20,835,575

Construction in progress
 
812,408

 
647,469

Land held for future development
 
272,332

 
258,221

Right of use assets - finance leases
 
187,269

 
187,292

Right of use assets - operating leases
 
149,839

 
151,166

Less accumulated depreciation
 
(5,050,606
)
 
(4,962,959
)
Total real estate
 
17,229,710

 
17,116,764

Cash and cash equivalents
 
1,087,001

 
360,091

Cash held in escrows
 
75,923

 
72,207

Investments in securities
 
33,411

 
32,052

Tenant and other receivables, net
 
87,727

 
92,462

Related party note receivable
 
80,000

 
80,000

Note receivable
 
19,718

 
19,593

Accrued rental income, net
 
973,167

 
954,063

Deferred charges, net
 
676,082

 
666,320

Prepaid expenses and other assets
 
68,701

 
131,472

Investments in unconsolidated joint ventures
 
936,835

 
976,580

Total assets
 
$
21,268,275

 
$
20,501,604

 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
Liabilities:
 
 
 
 
Mortgage notes payable, net
 
$
2,956,833

 
$
2,959,908

Unsecured senior notes, net
 
8,390,708

 
7,547,043

Unsecured line of credit
 

 

Unsecured term loan, net
 
498,700

 
498,607

Lease liabilities- finance leases
 
172,902

 
173,123

Lease liabilities - operating leases
 
199,344

 
199,653

Accounts payable and accrued expenses
 
418,429

 
328,885

Dividends and distributions payable
 
165,419

 
165,352

Accrued interest payable
 
89,289

 
89,171

Other liabilities
 
355,984

 
369,575

Total liabilities
 
13,247,608

 
12,331,317

 
 
 
 
 
Commitments and contingencies
 

 

 
 
 
 
 
Equity:
 
 
 
 
Stockholders’ equity attributable to Boston Properties, Inc.:
 
 
 
 
Excess stock, $0.01 par value, 150,000,000 shares authorized, none issued or outstanding
 

 

Preferred stock, $0.01 par value, 50,000,000 shares authorized; 5.25% Series B cumulative redeemable preferred stock, $0.01 par value, liquidation preference $2,500 per share, 92,000 shares authorized, 80,000 shares issued and outstanding at June 30, 2019 and March 31, 2019
 
200,000

 
200,000

Common stock, $0.01 par value, 250,000,000 shares authorized, 154,642,030 and 154,594,386 issued and 154,563,130 and 154,515,486 outstanding at June 30, 2019 and March 31, 2019, respectively
 
1,546

 
1,545

Additional paid-in capital
 
6,278,961

 
6,414,612

Dividends in excess of earnings
 
(710,592
)
 
(728,083
)
Treasury common stock at cost, 78,900 shares at June 30, 2019 and March 31, 2019
 
(2,722
)
 
(2,722
)
Accumulated other comprehensive loss
 
(51,340
)
 
(48,734
)
Total stockholders’ equity attributable to Boston Properties, Inc.
 
5,715,853

 
5,836,618

 
 
 
 
 
Noncontrolling interests:
 
 
 
 
Common units of the Operating Partnership
 
608,593

 
623,061

Property partnerships
 
1,696,221

 
1,710,608

Total equity
 
8,020,667

 
8,170,287

 
 
 
 
 
Total liabilities and equity
 
$
21,268,275

 
$
20,501,604



5



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Q2 2019
Consolidated Income Statements


(unaudited and in thousands, except per share amounts)
 
 
Three Months Ended
 
 
30-Jun-19
 
31-Mar-19
Revenue
 
 
 
 
Lease
 
$
680,189

 
$
679,251

Parking and other
 
26,319

 
24,906

Hotel revenue
 
14,844

 
8,938

Development and management services
 
9,986

 
9,277

Direct reimbursements of payroll and related costs from management services contracts
 
2,403

 
3,395

Total revenue
 
733,741

 
725,767

Expenses
 
 
 
 
Operating
 
127,939

 
127,857

Real estate taxes
 
129,620

 
129,660

Demolition costs
 
412

 

Hotel operating
 
9,080

 
7,863

General and administrative 1
 
35,071

 
41,762

Payroll and related costs from management services contracts
 
2,403

 
3,395

Transaction costs
 
417

 
460

Depreciation and amortization
 
177,411

 
164,594

Total expenses
 
482,353

 
475,591

Other income (expense)
 
 
 
 
Income from unconsolidated joint ventures
 
47,964

 
213

Gains (losses) on sales of real estate
 
1,686

 
(905
)
Gains from investments in securities 1
 
1,165

 
2,969

Interest and other income
 
3,615

 
3,753

Impairment loss 2
 

 
(24,038
)
Interest expense
 
(102,357
)
 
(101,009
)
Net income
 
203,461

 
131,159

Net income attributable to noncontrolling interests
 
 
 
 
Noncontrolling interest in property partnerships
 
(17,482
)
 
(18,830
)
Noncontrolling interest - common units of the Operating Partnership 3
 
(19,036
)
 
(11,599
)
Net income attributable to Boston Properties, Inc.
 
166,943

 
100,730

Preferred dividends
 
(2,625
)
 
(2,625
)
Net income attributable to Boston Properties, Inc. common shareholders
 
$
164,318

 
$
98,105

 
 
 
 
 
 
 
 
 
 
INCOME PER SHARE OF COMMON STOCK (EPS)
 
 
 
 
 
 
 
 
 
Net income attributable to Boston Properties, Inc. per share - basic
 
$
1.06

 
$
0.63

Net income attributable to Boston Properties, Inc. per share - diluted
 
$
1.06

 
$
0.63













_____________
1 
General and administrative expense includes $1.2 million and $3.0 million and Gains from investments in securities include $1.2 million and $3.0 million for the three months ended June 30, 2019 and March 31, 2019, respectively, related to the Company’s deferred compensation plan.
2 
For the period ended March 31, 2019, includes the impairment loss resulting from the anticipated sale of the Company’s One Tower Center located in East Brunswick, NJ.
3 
For additional detail, see page 7.

6



 http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13031205&doc=7
Q2 2019
Funds from operations (FFO) 1


(unaudited and dollars in thousands, except per share amounts)
 
 
Three Months Ended
 
 
30-Jun-19
 
31-Mar-19
Net income attributable to Boston Properties, Inc. common shareholders
 
$
164,318

 
$
98,105

Add:
 
 
 
 
Preferred dividends
 
2,625

 
2,625

Noncontrolling interest - common units of the Operating Partnership
 
19,036

 
11,599

Noncontrolling interests in property partnerships
 
17,482

 
18,830

Net income
 
203,461

 
131,159

Add:
 
 
 
 
Depreciation and amortization expense
 
177,411

 
164,594

Noncontrolling interests in property partnerships' share of depreciation and amortization 2
 
(17,869
)
 
(18,002
)
BXP's share of depreciation and amortization from unconsolidated joint ventures 3
 
14,778

 
15,470

Corporate-related depreciation and amortization
 
(412
)
 
(395
)
Impairment loss
 

 
24,038

Less:
 
 
 
 
Gain on sale of real estate included within income from unconsolidated joint ventures
 
47,757

 

Gains (losses) on sales of real estate
 
1,686

 
(905
)
Noncontrolling interests in property partnerships
 
17,482

 
18,830

Preferred dividends
 
2,625

 
2,625

FFO attributable to the Operating Partnership common unitholders (including Boston Properties, Inc.) (Basic FFO)
 
307,819

 
296,314

Less:
 
 
 
 
Noncontrolling interest - common units of the Operating Partnership’s share of FFO
 
31,544

 
30,307

FFO attributable to Boston Properties, Inc. common shareholders
 
$
276,275

 
$
266,007

 
 
 
 
 
Boston Properties, Inc.’s percentage share of Basic FFO
 
89.75
%
 
89.77
%
Noncontrolling interest’s - common unitholders percentage share of Basic FFO
 
10.25
%
 
10.23
%
Basic FFO per share
 
$
1.79

 
$
1.72

Weighted average shares outstanding - basic
 
154,555

 
154,525

Diluted FFO per share
 
$
1.78

 
$
1.72

Weighted average shares outstanding - diluted
 
154,874

 
154,844


RECONCILIATION TO DILUTED FFO
 
 
Three Months Ended
 
 
30-Jun-19
 
31-Mar-19
Basic FFO
 
$
307,819

 
$
296,314

Add:
 
 
 
 
Effect of dilutive securities - stock-based compensation
 

 

Diluted FFO
 
307,819

 
296,314

Less:
 
 
 
 
Noncontrolling interest - common units of the Operating Partnership’s share of diluted FFO
 
31,486

 
30,251

Boston Properties, Inc.’s share of Diluted FFO
 
$
276,333

 
$
266,063


RECONCILIATION OF SHARES/UNITS FOR DILUTED FFO
 
 
Three Months Ended
 
 
30-Jun-19
 
31-Mar-19
Shares/units for Basic FFO
 
172,202

 
172,131

Add:
 
 
 
 
Effect of dilutive securities - stock-based compensation (shares/units)
 
319

 
319

Shares/units for Diluted FFO
 
172,521

 
172,450

Less:
 
 
 
 
Noncontrolling interest - common units of the Operating Partnership’s share of Diluted FFO (shares/units)
 
17,647

 
17,606

Boston Properties, Inc.’s share of shares/units for Diluted FFO
 
154,874

 
154,844

 
 
 
 
 
Boston Properties, Inc.’s percentage share of Diluted FFO
 
89.77
%
 
89.79
%
_____________
1 
See the Definitions and Reconciliations sections of this Supplemental package starting on page 53.
2 
For a quantitative reconciliation for the three months ended June 30, 2019, see page 32.
3 
For a quantitative reconciliation for the three months ended June 30, 2019, see page 35.

7



 http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13031205&doc=7
Q2 2019
Funds available for distributions (FAD) 1


(dollars in thousands)
 
 
Three Months Ended
 
 
30-Jun-19
 
31-Mar-19
Net income attributable to Boston Properties, Inc. common shareholders
 
$
164,318

 
$
98,105

Add:
 
 
 
 
Preferred dividends
 
2,625

 
2,625

Noncontrolling interest - common units of the Operating Partnership
 
19,036

 
11,599

Noncontrolling interests in property partnerships
 
17,482

 
18,830

Net income
 
203,461

 
131,159

Add:
 
 
 
 
Depreciation and amortization expense
 
177,411

 
164,594

Noncontrolling interests in property partnerships’ share of depreciation and amortization 2
 
(17,869
)
 
(18,002
)
BXP’s share of depreciation and amortization from unconsolidated joint ventures 3
 
14,778

 
15,470

Corporate-related depreciation and amortization
 
(412
)
 
(395
)
Impairment loss
 

 
24,038

Less:
 
 
 
 
Gain on sale of real estate included within income from unconsolidated joint ventures
 
47,757

 

Gains (losses) on sales of real estate
 
1,686

 
(905
)
Noncontrolling interests in property partnerships
 
17,482

 
18,830

Preferred dividends
 
2,625

 
2,625

Basic FFO
 
307,819

 
296,314

Add:
 
 
 
 
BXP’s Share of lease transaction costs that qualify as rent inducements 1, 4
 
1,587

 
1,052

BXP’s Share of hedge amortization 1
 
1,435

 
1,435

Straight-line ground rent expense adjustment 5
 
1,019

 
975

Stock-based compensation
 
10,394

 
15,050

Non-real estate depreciation
 
412

 
395

Unearned portion of capitalized fees from consolidated joint ventures 6
 
4,092

 
697

Less:
 
 
 
 
BXP’s Share of straight-line rent 1
 
18,653

 
23,255

BXP’s Share of fair value lease revenue 1, 7
 
5,124

 
5,297

BXP’s Share of non-cash termination income adjustment (fair value lease amounts) 1
 

 

BXP’s Share of 2nd generation tenant improvements and leasing commissions 1
 
51,822

 
108,943

BXP’s Share of maintenance capital expenditures 1, 8
 
27,016

 
15,064

Hotel improvements, equipment upgrades and replacements
 
424

 
1,654

Funds available for distribution to common shareholders and common unitholders (FAD) (A)
 
$
223,719

 
$
161,705

 
 
 
 
 
Distributions to common shareholders and unitholders (excluding any special distributions) (B)
 
164,041

 
163,975

 
 
 
 
 
FAD Payout Ratio1 (B÷A)
 
73.32
%
 
101.40
%




_____________
1 
See the Definitions and Reconciliations sections of this Supplemental package starting on page 53.
2 
For a quantitative reconciliation for the three months ended June 30, 2019, see page 32.
3 
For a quantitative reconciliation for the three months ended June 30, 2019, see page 35.
4 
Consists of lease transaction costs that qualify as rent inducements in accordance with GAAP. Lease transaction costs are generally included in 2nd generation tenant improvements and leasing commissions in the period the lease commences.
5 
Includes the straight-line impact of the Company’s 99-year ground and air rights lease related to the Company’s 100 Clarendon Street garage and Back Bay Transit Station. The Company has allocated contractual ground lease payments aggregating approximately $34.4 million, which it expects to incur by the end of 2023 with no payments thereafter. The Company is recognizing these amounts on a straight-line basis over the 99-year term of the ground and air rights lease, see page 3.
6 
See page 59 for additional information.
7 
Represents the net adjustment for above- and below-market leases that are amortized over the terms of the respective leases in place at the property acquisition dates.
8 
Maintenance capital expenditures do not include planned capital expenditures related to acquisitions and repositioning capital expenditures.

8




 http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13031205&doc=7
Q2 2019
Reconciliation of net income attributable to Boston Properties, Inc. common shareholders to BXP’s Share of same property net operating income (NOI)
(in thousands)
 
 
Three Months Ended
 
 
30-Jun-19
 
30-Jun-18
Net income attributable to Boston Properties, Inc. common shareholders
 
$
164,318

 
$
128,681

Preferred dividends
 
2,625

 
2,625

Net income attributable to Boston Properties, Inc.
 
166,943

 
131,306

Net income attributable to noncontrolling interests:
 
 
 
 
Noncontrolling interest - common units of the Operating Partnership
 
19,036

 
14,859

Noncontrolling interest in property partnerships
 
17,482

 
14,400

Net income
 
203,461

 
160,565

Add:
 
 
 
 
Interest expense
 
102,357

 
92,204

Depreciation and amortization expense
 
177,411

 
156,417

Transaction costs
 
417

 
474

Payroll and related costs from management services contracts
 
2,403

 
1,970

General and administrative expense
 
35,071

 
28,468

Less:
 
 
 
 
Interest and other income
 
3,615

 
2,579

Gains from investments in securities
 
1,165

 
505

Gains on sales of real estate
 
1,686

 
18,292

Income from unconsolidated joint ventures
 
47,964

 
769

Direct reimbursements of payroll and related costs from management services contracts
 
2,403

 
1,970

Development and management services revenue
 
9,986

 
9,305

Net Operating Income (NOI)
 
454,301

 
406,678

Add:
 
 
 
 
BXP’s share of NOI from unconsolidated joint ventures 1
 
24,715

 
16,227

Less:
 
 
 
 
Partners’ share of NOI from consolidated joint ventures (after priority allocations and income allocation to private REIT shareholders) 2
 
45,562

 
43,049

BXP’s Share of NOI
 
433,454

 
379,856

Less:
 
 
 
 
Termination income
 
4,910

 
718

BXP’s share of termination income from unconsolidated joint ventures 1
 
50

 
(3
)
Add:
 
 
 
 
Partners’ share of termination income from consolidated joint ventures 2
 
(9
)
 

BXP’s Share of NOI (excluding termination income)
 
$
428,485

 
$
379,141

 
 
 
 
 
Net Operating Income (NOI)
 
$
454,301

 
$
406,678

Less:
 
 
 
 
Termination income
 
4,910

 
718

NOI from non Same Properties (excluding termination income) 3
 
21,716

 
7,039

Same Property NOI (excluding termination income)
 
427,675

 
398,921

Less:
 
 
 
 
Partners’ share of NOI from consolidated joint ventures (excluding termination income and after priority allocations and income allocation to private REIT shareholders) 2
 
45,571

 
43,049

Add:
 
 
 
 
Partners’ share of NOI from non Same Properties from consolidated joint ventures (excluding termination income and after priority allocations and income allocation to private REIT shareholders) 3
263

 
84

BXP’s share of NOI from unconsolidated joint ventures (excluding termination income) 1
 
24,665

 
16,230

Less:
 
 
 
 
BXP’s share of NOI from non Same Properties from unconsolidated joint ventures (excluding termination income) 3
 
8,473

 
1,859

BXP’s Share of Same Property NOI (excluding termination income)
 
$
398,559

 
$
370,327



_____________
1 
For a quantitative reconciliation for the three months ended June 30, 2019, see page 62.
2 
For a quantitative reconciliation for the three months ended June 30, 2019, see page 59.
3 
Pages 20-23 indicate by footnote the properties that are not included as part of Same Property NOI. In addition, Same Properties exclude properties that were sold prior to June 30, 2019 and therefore are no longer a part of the Company’s property portfolio.

9



 http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13031205&doc=7
Q2 2019
Reconciliation of net income attributable to Boston Properties, Inc. common shareholders to BXP’s Share of same property net operating income (NOI) - cash

(in thousands)
 
 
Three Months Ended
 
 
30-Jun-19
 
30-Jun-18
Net income attributable to Boston Properties, Inc. common shareholders
 
$
164,318

 
$
128,681

Preferred dividends
 
2,625

 
2,625

Net income attributable to Boston Properties, Inc.
 
166,943

 
131,306

Net income attributable to noncontrolling interests:
 
 
 
 
Noncontrolling interest - common units of the Operating Partnership
 
19,036

 
14,859

Noncontrolling interest in property partnerships
 
17,482

 
14,400

Net income
 
203,461

 
160,565

Add:
 
 
 
 
Interest expense
 
102,357

 
92,204

Depreciation and amortization expense
 
177,411

 
156,417

Transaction costs
 
417

 
474

Payroll and related costs from management services contracts
 
2,403

 
1,970

General and administrative expense
 
35,071

 
28,468

Less:
 
 
 
 
Interest and other income
 
3,615

 
2,579

Gains from investments in securities
 
1,165

 
505

Gains on sales of real estate
 
1,686

 
18,292

Income from unconsolidated joint ventures
 
47,964

 
769

Direct reimbursements of payroll and related costs from management services contracts
 
2,403

 
1,970

Development and management services revenue
 
9,986

 
9,305

Net Operating Income (NOI)
 
454,301

 
406,678

Less:
 
 
 
 
Straight-line rent
 
17,017

 
19,972

Fair value lease revenue
 
6,012

 
6,092

Termination income
 
4,910

 
718

Add:
 
 
 
 
Straight-line ground rent expense adjustment 1
 
843

 
887

Lease transaction costs that qualify as rent inducements 2
 
1,438

 
521

NOI - cash (excluding termination income)
 
428,643

 
381,304

Less:
 
 
 
 
NOI - cash from non Same Properties (excluding termination income) 3
 
22,843

 
8,703

Same Property NOI - cash (excluding termination income)
 
405,800

 
372,601

Less:
 
 
 
 
Partners’ share of NOI - cash from consolidated joint ventures (excluding termination income and after priority allocations and income allocation to private REIT shareholders) 4
 
41,862

 
38,408

Add:
 
 
 
 
Partners’ share of NOI - cash from non Same Properties from consolidated joint ventures (excluding termination income and after priority allocations and income allocation to private REIT shareholders) 3
334

 
153

BXP’s share of NOI - cash from unconsolidated joint ventures (excluding termination income) 5
 
20,357

 
13,516

Less:
 
 
 
 
BXP’s share of NOI - cash from non Same Properties from unconsolidated joint ventures (excluding termination income) 3
 
7,384

 
1,834

BXP’s Share of Same Property NOI - cash (excluding termination income)
 
$
377,245

 
$
346,028


_____________
1 
In light of the front-ended, uneven rental payments required by the Company’s 99-year ground and air rights lease for the 100 Clarendon Street garage and Back Bay Transit Station in Boston, MA, and to make period-to-period comparisons more meaningful to investors, the adjustment does not include the straight-line impact of approximately $176 and $116 for the three months ended June 30, 2019 and 2018, respectively. As of June 30, 2019, the Company has remaining lease payments aggregating approximately $26.0 million, all of which it expects to incur by the end of 2023 with no payments thereafter. Under GAAP, the Company recognizes expense of $(87) per quarter on a straight-line basis over the term of the lease. However, unlike more traditional ground and air rights leases, the timing and amounts of the rental payments by the Company correlate to the uneven timing and funding by the Company of capital expenditures related to improvements at Back Bay Transit Station. As a result, the amounts excluded from the adjustment each quarter through 2023 may vary significantly.
2 
Consists of lease transaction costs that qualify as rent inducements in accordance with GAAP. Lease transaction costs are generally included in 2nd generation tenant improvements and leasing commissions in the Company’s FAD calculation on page 8.  
3 
Pages 20-23 indicate by footnote the properties that are not included as part of Same Property NOI. In addition, Same Properties exclude properties that were sold prior to June 30, 2019 and therefore are no longer a part of the Company’s property portfolio.
4 
For a quantitative reconciliation for the three months ended June 30, 2019, see page 59.
5 
For a quantitative reconciliation for the three months ended June 30, 2019, see page 62.

10



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Q2 2019
Same property net operating income (NOI) by reportable segment

(dollars in thousands)
 
Office 1
 
Hotel & Residential
 
Three Months Ended
 
$
 
%
 
Three Months Ended
 
$
 
%
 
30-Jun-19
 
30-Jun-18
 
Change
 
Change
 
30-Jun-19
 
30-Jun-18
 
Change
 
Change
Rental Revenue 2
$
662,617

 
$
616,680

 
 
 
 
 
$
19,027

 
$
18,877

 
 
 
 
Less: Termination income
4,910

 
186

 
 
 
 
 

 

 
 
 
 
Rental revenue (excluding termination income) 2
657,707

 
616,494

 
$
41,213

 
6.7
 %
 
19,027

 
18,877

 
$
150

 
0.8
 %
Less: Operating expenses and real estate taxes
238,262

 
226,141

 
12,121

 
5.4
 %
 
10,797

 
10,309

 
488

 
4.7
 %
NOI (excluding termination income) 2, 3
$
419,445

 
$
390,353

 
$
29,092

 
7.5
 %
 
$
8,230

 
$
8,568

 
$
(338
)
 
(3.9
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental revenue (excluding termination income) 2
$
657,707

 
$
616,494

 
$
41,213

 
6.7
 %
 
$
19,027

 
$
18,877

 
$
150

 
0.8
 %
Less: Straight-line rent and fair value lease revenue
24,165

 
27,671

 
(3,506
)
 
(12.7
)%
 
(9
)
 

 
(9
)
 
(100.0
)%
Add: Lease transaction costs that qualify as rent inducements 4
1,438

 
464

 
974

 
209.9
 %
 

 

 

 
 %
Subtotal
634,980

 
589,287

 
45,693

 
7.8
 %
 
19,036

 
18,877

 
159

 
0.8
 %
Less: Operating expenses and real estate taxes
238,262

 
226,141

 
12,121

 
5.4
 %
 
10,797

 
10,309

 
488

 
4.7
 %
Add: Straight-line ground rent expense 5
843

 
887

 
(44
)
 
(5.0
)%
 

 

 

 
 %
NOI - cash (excluding termination income) 2, 3
$
397,561

 
$
364,033

 
$
33,528

 
9.2
 %
 
$
8,239

 
$
8,568

 
$
(329
)
 
(3.8
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated Total 1 (A)
 
BXP’s share of Unconsolidated Joint Ventures (B)
 
Three Months Ended
 
$
 
%
 
Three Months Ended
 
$
 
%
 
30-Jun-19
 
30-Jun-18
 
Change
 
Change
 
30-Jun-19
 
30-Jun-18
 
Change
 
Change
Rental Revenue 2
$
681,644

 
$
635,557

 
 
 
 
 
$
24,384

 
$
22,206

 
 
 
 
Less: Termination income
4,910

 
186

 
 
 
 
 
(6
)
 
(3
)
 
 
 
 
Rental revenue (excluding termination income) 2
676,734

 
635,371

 
$
41,363

 
6.5
 %
 
24,390

 
22,209

 
$
2,181

 
9.8
 %
Less: Operating expenses and real estate taxes
249,059

 
236,450

 
12,609

 
5.3
 %
 
8,198

 
7,838

 
360

 
4.6
 %
NOI (excluding termination income) 2, 3
$
427,675

 
$
398,921

 
$
28,754

 
7.2
 %
 
$
16,192

 
$
14,371

 
$
1,821

 
12.7
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental revenue (excluding termination income) 2
$
676,734

 
$
635,371

 
$
41,363

 
6.5
 %
 
$
24,390

 
$
22,209

 
$
2,181

 
9.8
 %
Less: Straight-line rent and fair value lease revenue
24,156

 
27,671

 
(3,515
)
 
(12.7
)%
 
3,368

 
2,754

 
614

 
22.3
 %
Add: Lease transaction costs that qualify as rent inducements 4
1,438

 
464

 
974

 
209.9
 %
 
149

 
65

 
84

 
129.2
 %
Subtotal
$
654,016

 
$
608,164

 
45,852

 
7.5
 %
 
21,171

 
19,520

 
1,651

 
8.5
 %
Less: Operating expenses and real estate taxes
249,059

 
236,450

 
12,609

 
5.3
 %
 
8,198

 
7,838

 
360

 
4.6
 %
Add: Straight-line ground rent expense 5
843

 
887

 
(44
)
 
(5.0
)%
 

 

 

 
 %
NOI - cash (excluding termination income) 2, 3
$
405,800

 
$
372,601

 
$
33,199

 
8.9
 %
 
$
12,973

 
$
11,682

 
$
1,291

 
11.1
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Partners’ share of Consolidated Joint Ventures (C)
 
BXP’s Share 2, 6
 
Three Months Ended
 
$
 
%
 
Three Months Ended
 
$
 
%
 
30-Jun-19
 
30-Jun-18
 
Change
 
Change
 
30-Jun-19
 
30-Jun-18
 
Change
 
Change
Rental Revenue 2
$
73,665

 
$
70,359

 
 
 
 
 
$
632,363

 
$
587,404

 
 
 
 
Less: Termination income
(9
)
 

 
 
 
 
 
4,913

 
183

 
 
 
 
Rental revenue (excluding termination income) 2
73,674

 
70,359

 
$
3,315

 
4.7
 %
 
627,450

 
587,221

 
$
40,229

 
6.9
 %
Less: Operating expenses and real estate taxes
28,366

 
27,394

 
972

 
3.5
 %
 
228,891

 
216,894

 
11,997

 
5.5
 %
NOI (excluding termination income) 2, 3
$
45,308

 
$
42,965

 
$
2,343

 
5.5
 %
 
$
398,559

 
$
370,327

 
$
28,232

 
7.6
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental revenue (excluding termination income) 2
$
73,674

 
$
70,359

 
$
3,315

 
4.7
 %
 
$
627,450

 
$
587,221

 
$
40,229

 
6.9
 %
Less: Straight-line rent and fair value lease revenue
3,780

 
4,710

 
(930
)
 
(19.7
)%
 
23,744

 
25,715

 
(1,971
)
 
(7.7
)%
Add: Lease transaction costs that qualify as rent inducements 4

 

 

 
 %
 
1,587

 
529

 
1,058

 
200.0
 %
Subtotal
69,894

 
65,649

 
4,245

 
6.5
 %
 
605,293

 
562,035

 
43,258

 
7.7
 %
Less: Operating expenses and real estate taxes
28,366

 
27,394

 
972

 
3.5
 %
 
228,891

 
216,894

 
11,997

 
5.5
 %
Add: Straight-line ground rent expense 5

 

 

 
 %
 
843

 
887

 
(44
)
 
(5.0
)%
NOI - cash (excluding termination income) 2, 3
$
41,528

 
$
38,255

 
$
3,273

 
8.6
 %
 
$
377,245

 
$
346,028

 
$
31,217

 
9.0
 %
___________________
1 
Includes 100% share of consolidated joint ventures that are a Same Property.
2 
See the Definitions and Reconciliations sections of this Supplemental package starting on page 53.
3 
For a quantitative reconciliation of net income attributable to Boston Properties, Inc. common shareholders to net operating income (NOI) (excluding termination income) and NOI - cash (excluding termination income), see pages 9-10.
4 
Consists of lease transaction costs that qualify as rent inducements in accordance with GAAP. Lease transaction costs are generally included in 2nd generation tenant improvements and leasing commissions in the Company’s FAD calculation on page 8.
5 
Excludes the straight-line impact of approximately $176 and $116 for the three months ended June 30, 2019 and 2018, respectively, in connection with the Company’s 99-year ground and air rights lease at 100 Clarendon Street garage and Back Bay Transit Station. For additional information, see page 10.
6 
BXP’s Share equals (A) + (B) - (C).

11



 http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13031205&doc=7
Q2 2019
Capital expenditures, tenant improvement costs and leasing commissions

(dollars in thousands, except PSF amounts)

CAPITAL EXPENDITURES
 
 
Three Months Ended
 
 
30-Jun-19
 
31-Mar-19
Maintenance capital expenditures
 
$
27,520

 
$
14,516

Planned capital expenditures associated with acquisition properties
 

 

Repositioning capital expenditures 1
 
13,389

 
432

Hotel improvements, equipment upgrades and replacements
 
424

 
1,654

Subtotal
 
41,333

 
16,602

Add:
 
 
 
 
BXP’s share of maintenance capital expenditures from unconsolidated joint ventures (JVs)
 
640

 
737

BXP’s share of planned capital expenditures associated with acquisition properties from unconsolidated JVs
 
1,692

 
2,970

BXP’s share of repositioning capital expenditures from unconsolidated JVs
 
2,138

 
766

Less:
 
 
 
 
Partners’ share of maintenance capital expenditures from consolidated JVs
 
1,144

 
189

Partners’ share of planned capital expenditures associated with acquisition properties from consolidated JVs
 

 

Partners’ share of repositioning capital expenditures from consolidated JVs 1
 
5,326

 
1,022

BXP’s Share of Capital Expenditures 2
 
$
39,333

 
$
19,864


 


2nd GENERATION TENANT IMPROVEMENTS AND LEASING COMMISSIONS 3 
 
 
Three Months Ended
 
 
30-Jun-19
 
31-Mar-19
Square feet
 
814,371

 
1,622,189

Tenant improvements and lease commissions PSF
 
$
80.60

 
$
79.40