EX-99.2 4 a2120697zex-99_2.htm EX-99.2
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Exhibit 99.2

[FRB LOGO]   Boston Properties, Inc.
111 Huntington Avenue
Boston, MA 02199
(NYSE: BXP)

AT THE COMPANY
Kathleen DiChiara
Investor Relations
(617) 236-3300
 
AT FRB/WEBER SHANDWICK
Marilynn Meek—General Info. (212) 445-8431
Suzie Pileggi—Media (212) 445-8170

FOR IMMEDIATE RELEASE:
October 21, 2003
 
 

BOSTON PROPERTIES, INC. ANNOUNCES
THIRD QUARTER 2003 RESULTS

Reports diluted FFO per share of $0.98   Reports diluted EPS of $0.48

BOSTON, MA, October 21, 2003—Boston Properties, Inc. (NYSE: BXP), a real estate investment trust, today reported results for the third quarter ended September 30, 2003.

Funds from Operations (FFO) for the quarter ended September 30, 2003 were $99.1 million, or $1.02 per share basic and $0.98 per share diluted before the application of SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," as amended. This compares to FFO of $99.0 million, or $1.04 per share basic and $1.00 per share diluted for the quarter ended September 30, 2002. The weighted average number of basic and diluted shares outstanding totaled 97,360,498 and 107,231,333, respectively, for the quarter ended September 30, 2003 and 94,903,894 and 105,724,729, respectively, for the same quarter last year.

Net income available to common shareholders per share (EPS) for the quarter ended September 30, 2003 was $0.48 basic and $0.48 on a diluted basis. This compares to EPS for the third quarter of 2002 of $0.75 basic and $0.74 on a diluted basis. EPS for the third quarter of 2003 includes a charge of ($0.10) for the cumulative effect of a change in accounting principle related to the adoption of SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity" and $0.02 related to a gain on sale of real estate and other assets. EPS for the third quarter of 2002 included $0.19 related to gains on sales of real estate and discontinued operations. Excluding the impact of these items, diluted EPS was $0.56 for the quarter ended September 30, 2003 compared to $0.55 for the third quarter of 2002.

The reported results are unaudited and there can be no assurance that the results will not vary from the final information for the quarter ended September 30, 2003. In the opinion of management, all adjustments considered necessary for a fair presentation of these reported results have been made.

As of September 30, 2003, the Company's portfolio consisted of 139 properties comprising more than 43.5 million square feet, including three properties under construction totaling 2.0 million square feet. The overall percentage of leased space for the properties in service as of September 30, 2003 was 92.2%.

Significant events of the third quarter include:

    •
    On August 5, 2003, the Company acquired the remaining outside interests in its One Freedom Square and Two Freedom Square joint venture properties located in Reston, Virginia for an aggregate of $36.0 million of cash and the assumption of the outside partner's share of the mortgage debt on the properties of approximately $56.4 million and $35.4 million, respectively. Subsequent to the acquisition, the Company repaid in full the mortgage debt on the Two Freedom Square property totaling $70.7 million. For 2004, the Company projects these

      properties' combined Unleveraged FFO Return to be 10.8% and Unleveraged Cash Return to be 9.8%. The calculation of these returns and related disclosures are presented on the accompanying table entitled "Projected 2004 Returns on Acquisitions." There can be no assurances that actual returns will not differ materially from these projections. Also on August 5, 2003, the Company acquired a 5.2-acre parcel of land in Reston, Virginia for $13.5 million of cash. The site will support approximately 507,000 square feet of commercial development.

    •
    On August 12, 2003, Boston Properties Limited Partnership, the Company's Operating Partnership, exercised its redemption right and caused all of the outstanding Series One Preferred Units to be converted into common Operating Partnership units.

    •
    On August 19, 2003, the Company recognized a gain on sale of $1.3 million (net of minority interest in Operating Partnership's share of $0.3 million) related to the transfer of the remaining mortgage on the Five Times Square property in New York City.

    •
    On September 4, 2003, the Company modified an $87.9 million mortgage loan that is secured by the 601 and 651 Gateway Boulevard properties in South San Francisco, California. The loan bore interest at 8.40% per annum and was scheduled to mature on October 1, 2010. In connection with the modification, the Company repaid $5.7 million of principal. The modified mortgage loan of $82.2 million requires monthly payments equal to the net cash flow from the property which will be allocated first to interest based on a rate of 3.50% per annum with the remainder applied to principal. The modified mortgage loan matures on September 1, 2006.

    •
    On September 9, 2003, the Company completed registered exchange offers for its 5.625% senior notes due 2015 and 5.00% senior notes due 2015, as required by agreements with the initial purchasers of the notes. The exchanges did not involve any changes in principal amount, interest rate or other terms of the notes.

    •
    On September 11, 2003, the Company entered into a joint venture with an unaffiliated third party to pursue the development of a Class A office property at 801 New Jersey Avenue in Washington, D.C. that would support approximately 1.1 million square feet of commercial development. The Company made an initial cash contribution of $3.0 million for a 50% interest in the joint venture.

Effective July 1, 2003, the Company adopted SFAS No. 150 "Accounting for Certain Instruments with Characteristics of Both Liabilities and Equity," which establishes a new standard for reclassifying certain financial instruments (e.g., minority interest in equity of consolidated joint ventures) from either equity or mezzanine presentation to liabilities. The liability is initially measured at fair value with subsequent changes in fair value of the instruments recognized through earnings. SFAS No. 150 requires the minority interest in equity of one of the Company's consolidated joint ventures to be reflected at fair value. Accordingly upon adoption of SFAS No. 150, the Company recognized a non-cash charge of $9.8 million (net of minority interest in Operating Partnership's share of $2.2 million) to account for the cumulative effect of adjusting the venture partner's outside minority interest to fair value. Under SFAS No. 150, the Company is not permitted to recognize its share of appreciation in the venture's net assets until later realized through sale or liquidation.

Transactions completed subsequent to September 30, 2003:

    •
    On October 8, 2003, the Company acquired 1333 New Hampshire Avenue, a 320,000 square foot Class A office property in Washington, D.C. at a purchase price of approximately $111.6 million. The acquisition was financed with borrowings under the Company's unsecured revolving credit facility and available cash. The property is 100% leased. For 2004, the Company projects this property's Unleveraged FFO Return to be 10.6% and Unleveraged Cash Return to be 8.2%. The calculation of these returns and related disclosures are presented on the accompanying table entitled "Projected 2004 Returns on Acquisitions." There can be no assurances that actual returns will not differ materially from these projections.

EPS and FFO Per Share Guidance:

        The Company's guidance for the fourth quarter of 2003 and the full year of 2004 for EPS (diluted) and FFO per share (diluted) is set forth and reconciled below. The reconciliation of Projected EPS to Projected FFO per share, as provided below, is consistent with the Company's historical computations.

 
   Fourth Quarter 2003
   Full Year 2004
 
   Low
   –
   High
   Low
   –
   High
 
  
 
Projected EPS (diluted)   $ 0.59   –   $ 0.61   $ 2.23   –   $ 2.41
Add:                                
Projected Company Share of Real Estate Depreciation and Amortization   $ 0.45   –   $ 0.44   $ 1.85   –   $ 1.85
Projected Company Share of Net Derivatives   $ 0.00   –   $ 0.00   $ 0.00   –   $ 0.00
Less:                                
Dilutive Impact of Preferred Securities   $ 0.04   –   $ 0.04   $ 0.15   –   $ 0.15
   
 
 
 
 
 
Projected FFO per Share (diluted) before net derivatives   $ 1.00   –   $ 1.01   $ 3.93   –   $ 4.11

The foregoing estimates reflect management's view of current and future market conditions, including certain assumptions with respect to rental rates, occupancy levels and earnings impact of the events referenced in this release. There can be no assurance that the Company's actual results will not differ materially from the estimates set forth above.

Boston Properties will host a conference call tomorrow, October 22, 2003 at 11:00 AM (Eastern Time), open to the general public, to discuss the results of this year's third quarter. The number to call for this interactive teleconference is (800) 240-5318. A replay of the conference call will be available through October 29, 2003 by dialing (800) 405-2236 and entering the passcode 547315. An audio-webcast will also be archived and may be accessed at www.bostonproperties.com in the Investors section under the heading Audio Archive.

Additionally, a copy of Boston Properties' third quarter 2003 "Supplemental Operating and Financial Data" and this press release are available in the Investors section of the Company's website at www.bostonproperties.com. These materials are also available by contacting Investor Relations at (617) 236-3322 or by written request to:

      Investor Relations
      Boston Properties, Inc.
      111 Huntington Avenue, Suite 300
      Boston, MA 02199-7610

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

This press release contains forward-looking statements within the meaning of the Federal securities laws. You can identify these statements by our use of the words "expects," "plans," "estimates," "projects," "intends," "believes" and similar expressions that do not relate to historical matters. You should exercise caution in interpreting and relying on forward-looking statements because they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond Boston Properties' control and could materially affect actual results, performance or achievements. These factors include, without limitation, the ability to enter into new leases or renew leases on favorable terms, dependence on tenants' financial condition, the uncertainties of real estate development and acquisition activity, the ability to effectively integrate acquisitions, the costs and availability of financing, the effects of local economic and market conditions, the impact of newly adopted accounting principles 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. The Company does not undertake a duty to update forward-looking statements, including its expected operating results for the fourth quarter of 2003 and the full year of 2004.

Financial tables follow.


BOSTON PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

 
   Three months ended
September 30,
   Nine months ended
September 30,
  
 
   2003
   2002
   2003
   2002
  
 
   (in thousands, except for per share amounts)
(unaudited)

  
Revenue                          
  Rental:                          
    Base rent   $ 253,594   $ 229,453   $ 749,795   $ 678,766  
    Recoveries from tenants     42,079     34,884     119,222     103,409  
    Parking and other     13,249     13,056     41,399     37,610  
   
 
 
 
 
      Total rental revenue     308,922     277,393     910,416     819,785  
  Hotel revenue     17,542     20,007     48,001     20,007  
  Development and management services     3,616     2,571     13,635     7,979  
  Interest and other     1,089     1,222     2,167     4,804  
   
 
 
 
 
      Total revenue     331,169     301,193     974,219     852,575  
   
 
 
 
 
Expenses                          
  Operating:                          
    Rental     107,404     95,118     302,195     269,940  
    Hotel     12,829     13,524     36,258     13,524  
  General and administrative     11,183     9,956     33,610     34,589  
  Interest     75,343     65,476     224,435     190,657  
  Depreciation and amortization     53,455     43,933     154,021     127,819  
  Net derivative (gains)/losses     (885 )   5,284     1,038     10,413  
  Loss from early extinguishment of debt     —     —     1,474     —  
  Loss on investments in securities     —     —     —     4,297  
   
 
 
 
 
      Total expenses     259,329     233,291     753,031     651,239  
   
 
 
 
 
Income before minority interests in property partnerships, income from unconsolidated joint ventures, minority interest in Operating Partnership, gains on sales of real estate and other assets, discontinued operations, cumulative effect of a change in accounting principle and preferred dividend     71,840     67,902     221,188     201,336  
Minority interests in property partnerships     563     720     1,205     1,903  
Income from unconsolidated joint ventures     1,343     2,530     5,354     5,871  
   
 
 
 
 
Income before minority interest in Operating Partnership, gains on sales of real estate and other assets, discontinued operations, cumulative effect of a change in accounting principle and preferred dividend     73,746     71,152     227,747     209,110  
Minority interest in Operating Partnership     (18,117 )   (18,071 )   (55,783 )   (54,761 )
   
 
 
 
 
Income before gains on sales of real estate and other assets, discontinued operations, cumulative effect of a change in accounting principle and preferred dividend     55,629     53,081     171,964     154,349  
Gains on sales of real estate and other assets, net of minority interest     1,341     3,644     57,729     3,644  
   
 
 
 
 
Income before discontinued operations, cumulative effect of a change in accounting principle and preferred dividend     56,970     56,725     229,693     157,993  
Discontinued Operations:                          
  Income from discontinued operations, net of minority interest     —     3,032     1,938     9,350  
  Gains on sales of real estate from discontinued operations, net of minority interest     —     11,910     73,436     17,750  
   
 
 
 
 
Income before cumulative effect of a change in accounting principle and preferred dividend     56,970     71,667     305,067     185,093  
Cumulative effect of a change in accounting principle, net of minority interest     (9,846 )   —     (9,889 )   —  
   
 
 
 
 
Income before preferred dividend     47,124     71,667     295,178     185,093  
Preferred dividend     —     (126 )   —     (3,412 )
   
 
 
 
 
Net income available to common shareholders   $ 47,124   $ 71,541   $ 295,178   $ 181,681  
   
 
 
 
 
Basic earnings per share:                          
  Income available to common shareholders before discontinued operations and cumulative effect of a change in accounting principle   $ 0.58   $ 0.59   $ 2.38   $ 1.68  
  Discontinued operations, net of minority interest     —     0.16     0.78     0.29  
  Cumulative effect of a change in accounting principle, net of minority interest     (0.10 )   —     (0.10 )   —  
   
 
 
 
 
  Net income available to common shareholders   $ 0.48   $ 0.75   $ 3.06   $ 1.97  
   
 
 
 
 
  Weighted average number of common shares outstanding     97,360     94,904     96,547     92,413  
   
 
 
 
 
Diluted earnings per share:                          
  Income available to common shareholders before discontinued operations and cumulative effect of a change in accounting principle   $ 0.58   $ 0.59   $ 2.34   $ 1.64  
  Discontinued operations, net of minority interest     —     0.15     0.77     0.29  
  Cumulative effect of a change in accounting principle, net of minority interest     (0.10 )   —     (0.10 )   —  
   
 
 
 
 
  Net income available to common shareholders   $ 0.48   $ 0.74   $ 3.01   $ 1.93  
   
 
 
 
 
  Weighted average number of common and common equivalent shares outstanding     99,183     96,181     98,029     94,026  
   
 
 
 
 


BOSTON PROPERTIES, INC.

CONSOLIDATED BALANCE SHEETS

 
   September 30,
2003
   December 31,
2002
  
 
   (in thousands, except for share amounts)
(unaudited)

  
ASSETS
              
Real estate   $ 8,060,525   $ 7,781,684  
Development in progress     481,571     448,576  
Land held for future development     232,361     215,866  
Real estate held for sale, net     —     224,585  
  Less: accumulated depreciation     (952,754 )   (822,933 )
   
 
 
      Total real estate     7,821,703     7,847,778  
Cash and cash equivalents     37,621     55,275  
Cash held in escrows     27,992     41,906  
Tenant and other receivables, net     21,813     20,458  
Accrued rental income, net     175,063     165,321  
Deferred charges, net     178,819     176,545  
Prepaid expenses and other assets     57,012     18,015  
Investments in unconsolidated joint ventures     88,632     101,905  
   
 
 
      Total assets   $ 8,408,655   $ 8,427,203  
   
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY              
Liabilities:              
  Mortgage notes payable   $ 3,450,112   $ 4,267,119  
  Unsecured senior notes, net of discount     1,470,231     747,375  
  Unsecured bridge loan     —     105,683  
  Unsecured line of credit     —     27,043  
  Accounts payable and accrued expenses     69,940     73,846  
  Dividends and distributions payable     83,972     81,226  
  Interest rate contracts     9,875     14,514  
  Accrued interest payable     44,010     25,141  
  Minority interest in property partnership     12,019     —  
  Other liabilities     69,242     81,085  
   
 
 
      Total liabilities     5,209,401     5,423,032  
   
 
 
Commitments and contingencies           —  
   
 
 
Minority interests     827,537     844,581  
   
 
 
Stockholders' equity:              
  Excess stock, $.01 par value, 150,000,000 shares authorized, none issued or outstanding     —     —  
  Preferred stock, $.01 par value, 50,000,000 shares authorized, none issued or outstanding     —     —  
  Common stock, $.01 par value, 250,000,000 shares authorized, 97,656,565 and 95,441,890 shares issued and 97,577,665 and 95,362,990 shares outstanding in 2003 and 2002, respectively     976     954  
  Additional paid-in capital     2,084,375     1,982,689  
  Earnings in excess of dividends     312,868     198,586  
  Treasury common stock, at cost     (2,722 )   (2,722 )
  Unearned compensation     (7,271 )   (2,899 )
  Accumulated other comprehensive loss     (16,509 )   (17,018 )
   
 
 
      Total stockholders' equity     2,371,717     2,159,590  
   
 
 
        Total liabilities and stockholders' equity   $ 8,408,655   $ 8,427,203  
   
 
 


BOSTON PROPERTIES, INC.

FUNDS FROM OPERATIONS (1)

 
   Three months ended
September 30,
   Nine months ended
September 30,
  
 
   2003
   2002
   2003
   2002
  
 
   (in thousands, except for per share amounts)
(unaudited)

  
Net income available to common shareholders   $ 47,124   $ 71,541   $ 295,178   $ 181,681  
Add:                          
  Preferred dividend     —     126     —     3,412  
  Minority interest in Operating Partnership     18,117     18,071     55,783     54,761  
  Cumulative effect of a change in accounting principle, net of minority interest     9,846     —     9,889     —  
Less:                          
  Minority interests in property partnerships     563     720     1,205     1,903  
  Income from unconsolidated joint ventures     1,343     2,530     5,354     5,871  
  Gains on sales of real estate and other assets, net of minority interest     1,341     3,644     57,729     3,644  
  Income from discontinued operations, net of minority interest     —     3,032     1,938     9,350  
  Gains on sales of real estate from discontinued operations, net of minority interest     —     11,910     73,436     17,750  
Income before minority interests in property partnerships, income from unconsolidated joint ventures, minority interest in Operating Partnership, gains on sales of real estate and other assets, discontinued operations, cumulative effect of a change in accounting principle and preferred dividend   $ 71,840   $ 67,902   $ 221,188   $ 201,336  

Add:
 
 
 
 
 
 
 
 
 
 
 
 
 
  Real estate depreciation and amortization     54,606     46,971     158,735     136,502  
  Income from discontinued operations     —     3,687     2,355     11,417  
  Income from unconsolidated joint ventures     1,343     2,530     5,354     5,871  
  Loss from early extinguishment of debt associated with the sale of real estate     —     —     1,474     —  
Less:                          
  Minority interests in property partnerships' share of funds from operations     (805 )   (521 )   (2,513 )   (1,833 )
  Preferred dividends and distributions     (5,183 )   (6,162 )   (16,806 )   (22,785 )
   
 
 
 
 
Funds from operations     121,801     114,407     369,787     330,508  

Add (subtract):
 
 
 
 
 
 
 
 
 
 
 
 
 
  Net derivative (gains)/losses (SFAS No. 133)     (885 )   5,284     1,038     10,413  
  Early surrender lease adjustment (2)     —     667     —     8,520  
   
 
 
 
 
Funds from operations before net derivative losses (SFAS No. 133) and after early surrender lease adjustment   $ 120,916   $ 120,358   $ 370,825   $ 349,441  
   
 
 
 
 
Funds from operations available to common shareholders before net derivative losses (SFAS No. 133) and after early surrender lease adjustment   $ 99,057   $ 98,980   $ 305,122   $ 286,080  
   
 
 
 
 
Weighted average shares outstanding—basic     97,360     94,904     96,547     92,413  
   
 
 
 
 
  FFO per share basic before net derivative losses (SFAS No. 133) and after early surrender adjustment   $ 1.02   $ 1.04   $ 3.16   $ 3.10  
   
 
 
 
 
  FFO per share basic after net derivative losses (SFAS No. 133) and before early surrender lease adjustment   $ 1.02   $ 0.99   $ 3.15   $ 2.93  
   
 
 
 
 
Weighted average shares outstanding—diluted     107,231     105,725     106,839     105,870  
   
 
 
 
 
  FFO per share diluted before net derivative losses (SFAS No. 133) and after early surrender lease adjustment   $ 0.98   $ 1.00   $ 3.04   $ 2.95  
   
 
 
 
 
  FFO per share diluted after net derivative losses (SFAS No. 133) and before early surrender lease adjustment   $ 0.99   $ 0.95   $ 3.03   $ 2.80  
   
 
 
 
 
(1)
Pursuant to the revised definition of Funds from Operations adopted by the Board of Governors of the National Association of Real Estate Investment Trusts ("NAREIT"), we calculate Funds from Operations, or "FFO," by adjusting net income (loss) (computed in accordance with accounting principles generally accepted in the United States of America ("GAAP"), including non-recurring items), for gains (or losses) from sales of properties, real estate related depreciation and amortization, and after adjustment for unconsolidated partnerships and joint ventures. The use of FFO, combined with the required primary GAAP presentations, has been fundamentally beneficial, improving the understanding of operating results of REITs among the investing public and making comparisons of REIT operating results more meaningful. Management generally considers FFO to be a useful measure for reviewing the comparative operating and financial performance of the Company because, by excluding gains and losses related to sales of previously depreciated operating real estate assets and excluding real estate asset depreciation and amortization (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates), FFO can help one compare the operating performance of a company's real estate between periods or as compared to different companies.

Our computation of FFO may not be comparable to FFO reported by other REITs or real estate companies that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently. In addition to presenting FFO in accordance with the NAREIT definition, we also disclose FFO after specific supplemental adjustments, including net derivative losses and early surrender lease adjustments. Although our FFO as adjusted clearly differs from NAREIT's definition of FFO, as well as that of other REITs and real estate companies, we believe it provides a meaningful supplemental measure of our operating performance. FFO should not be considered as an alternative to net income (determined in accordance with GAAP) as an indication of our performance. FFO does not represent cash generated from operating activities determined in accordance with GAAP and is not a measure of liquidity or an indicator of our ability to make cash distributions. We believe that to further understand our performance, FFO and FFO as adjusted should be compared with our reported net income and considered in addition to cash flows in accordance with GAAP, as presented in our consolidated financial statements.

(2)
Represents cash received under contractual obligations.


BOSTON PROPERTIES, INC.

PROJECTED 2004 RETURNS ON ACQUISITIONS

 
   1333 New
Hampshire
Avenue
   One and Two
Freedom Square
  
 
   (dollars in thousands)

  
Base rent and recoveries from tenants   $ 12,600   $ 27,663  
Straight-line rent     800     3,467  
Fair value lease revenue     2,000     (1,393 )
   
 
 
Total rental revenue     15,400     29,737  
Operating Expenses     3,300     6,922  
   
 
 
Revenue less Operating Expenses     12,100     22,815  
Interest expense     —     (5,178 )
Depreciation and amortization     (3,100 )   (5,330 )
   
 
 
Net income   $ 9,000   $ 12,307  
Add:              
Interest expense     —     5,178  
Depreciation and amortization     3,100     5,330  
   
 
 
Unleveraged FFO   $ 12,100   $ 22,815  
Less:              
Straight-line rent     (800 )   (3,467 )
Fair value lease revenue     (2,000 )   1,393  
   
 
 
Unleveraged Cash   $ 9,300   $ 20,741 (3)

Cash
 
$
113,800
 
$
36,000
 
Total debt     —     151,500  
Existing equity     —     6,100  
Costs to complete     —     18,300  
   
 
 
Total Investment   $ 113,800   $ 211,900  

Unleveraged FFO Return (1)
 
 
10.6
%
 
10.8
%
Unleveraged Cash Return (2)     8.2 %   9.8 %
(1)
Unleveraged FFO Return is determined by dividing Unleveraged FFO by Total Investment. Other real estate companies may calculate this return differently. Management believes projected Unleveraged FFO Return is a useful measure in the real estate industry when determining the appropriate purchase price for a property or estimating a property's value. When evaluating acquisition opportunities, management considers, among other factors, projected Unleveraged FFO Return because it excludes, among other items, interest expense (which may vary depending on the level of corporate debt or proprety-specific debt), as well as depreciation and amortization expense (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates) In addition, management considers its cost of capital and available financing alternatives in making decisions concerning acquisitions.

(2)
Unleveraged Cash Return is determined by dividing Unleveraged Cash by Total Investment. Other real estate companies may calculate this return differently. Management believes that projected Unleveraged Cash Return is also a useful measure of a property's value when used in addition to Unleveraged FFO Return because it eliminates the effect of straight-lining of rent and the FAS 141 treatment of in-place above and below market leases which over the forecasted period enables an investor to assess the cash on cash return from the property.

(3)
Does not include approximately $1.3 million of free rent granted to a tenant for the first four months of 2004.

        Management is presenting these projected returns and related calculations to assist investors in analyzing the Company's recent acquisitions. Management does not intend to present this data for any other purpose, for any other period or for its other properties, and is not intending for these measures to otherwise provide information to investors about the Company's financial condition or results of operations. The Company does not undertake a duty to update any of these projections.


BOSTON PROPERTIES, INC.

PORTFOLIO LEASING PERCENTAGES

 
   % Leased by Location
 
   September 30, 2003
   December 31, 2002
Greater Boston   87.5%   91.8%
Greater Washington, D.C.   95.1%   95.9%
Midtown Manhattan   98.9%   98.4%
Baltimore, MD   98.5%   97.6%
Richmond, VA   88.9%   91.8%
Princeton/East Brunswick, NJ   95.0%   93.3%
Greater San Francisco   85.5%   87.4%
Bucks County, PA   100.0%   100.0%
   
 
  Total Portfolio   92.2%   93.9%
   
 
 
  
% Leased by Type
 
   September 30, 2003
   December 31, 2002
Class A Office Portfolio   93.0%   94.1%
Office/Technical Portfolio   86.1%   89.7%
Industrial Portfolio   56.6%   100.0%
   
 
  Total Portfolio   92.2%   93.9%
   
 


QuickLinks

BOSTON PROPERTIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS
BOSTON PROPERTIES, INC. CONSOLIDATED BALANCE SHEETS
BOSTON PROPERTIES, INC. FUNDS FROM OPERATIONS (1)
BOSTON PROPERTIES, INC. PROJECTED 2004 RETURNS ON ACQUISITIONS
BOSTON PROPERTIES, INC. PORTFOLIO LEASING PERCENTAGES