EX-99.1 2 d336337dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO

 

LOGO

Supplemental Operating and Financial Data

for the Quarter Ended December 31, 2016


LOGO

FOURTH QUARTER 2016

 

Table of Contents

 

 

     Page  

Company Profile

     3   

Investor Information

     4   

Research Coverage

     5   

Guidance and Assumptions

     6   

Financial Highlights

     7-8   

Consolidated Balance Sheets

     9   

Consolidated Income Statements

     10   

Funds From Operations

     11   

Funds Available for Distribution

     12   

Interest Coverage Ratios

     13   

Capital Structure

     14   

Debt Analysis

     15-16   

Unconsolidated Joint Ventures

     17-18   

Consolidated Joint Ventures

     19-20   

Reconciliation to Same Property Performance and Net Income

     21-23   

Residential and Hotel Performance

     24   

Capital Expenditures, Tenant Improvements and Leasing Commissions

     25   

Portfolio Overview

     26   

In-Service Property Listing

     27-29   

Occupancy by Location

     30   

Top 20 Tenants and Tenant Diversification

     31   

Aggregate Lease Expiration Roll Out

     32   

Boston Lease Expiration Roll Out

     33-34   

New York Lease Expiration Roll Out

     35-36   

San Francisco and Los Angeles Lease Expiration Roll Out

     37-38   

Washington, DC Lease Expiration Roll Out

     39-40   

CBD/Suburban Lease Expiration Roll Out

     41-42   

Leasing Activity

     43   

Acquisitions/Dispositions

     44   

Value Creation Pipeline - Construction in Progress

     45   

Value Creation Pipeline - Land Parcels and Purchase Options

     46   

Definitions

     47-48   

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,” “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 hereof 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.

(Cover photo: 888 Boylston Street, Boston, MA)

 

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FOURTH QUARTER 2016

 

COMPANY PROFILE

The Company

Boston Properties, Inc. (“Boston Properties,” “BXP” or the “Company”), a self-administered and self-managed real estate investment trust (REIT), is one of the largest owners, managers, and developers of first-class office properties in the United States, with a significant presence in five markets: Boston, Los Angeles, New York, San Francisco, and Washington, DC. The Company was founded in 1970 by Mortimer B. Zuckerman and Edward H. Linde in Boston, where it maintains its headquarters. Boston Properties became a public company in June 1997. Boston Properties is a fully integrated real estate investment trust that develops, redevelops, acquires, manages, operates and owns a diverse portfolio of primarily Class A office space totaling 47.7 million square feet and consisting of 164 office properties (including six properties under construction), five retail properties, four residential properties (including two properties under construction/redevelopment) 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 in developing premium Central Business District (CBD) office buildings, successful mixed-use complexes, suburban office centers and build-to-suit projects for the U.S. government and a diverse array of creditworthy tenants.

Management

Boston Properties’ senior management team is among the most respected and accomplished in the REIT industry. Our deep and talented team of 35 individuals averages 30 years of real estate experience and 19 years with Boston Properties. We believe that our size, management depth, financial strength, reputation, and relationships of key personnel provide a competitive advantage to realize growth through property development and acquisitions. Boston Properties benefits from the reputation and relationships of key personnel, including Owen D. Thomas, Chief Executive Officer; Douglas T. Linde, President; Raymond A. Ritchey, Senior Executive Vice President; and Michael E. LaBelle, Executive Vice President, Chief Financial Officer and Treasurer. Our senior management team’s national reputation helps us attract business and investment opportunities. In addition, our other executive officers that serve as Regional Managers have strong reputations that assist in identifying and closing on new opportunities, having opportunities brought to us, and in negotiating with tenants and build-to-suit prospects. Additionally, Boston Properties’ Board of Directors consists of 11 distinguished members, the majority of whom are Independent Directors.

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:

 

    concentrating on carefully targeted markets characterized by high barriers to the creation of new supply and strong real estate fundamentals where tenants have demonstrated a preference for high-quality office buildings and other facilities - currently Boston, Los Angeles, New York, San Francisco and Washington, DC;

 

    investing in the highest quality buildings (primarily office) that are able to maintain high occupancy and achieve premium rental rates through economic cycles;

 

    in our core markets, maintaining scale and a full service real estate capability (leasing, development, construction and property management) to ensure we (1) see all relevant investment deal flow and (2) maintain an ability to execute on all types of real estate opportunities, such as acquisitions, dispositions, repositioning and development, throughout the real estate investment cycle;

 

    be astute in market timing for investment decisions by acquiring properties in times of opportunity, developing into economic growth and selectively selling assets to either take advantage of the demand for our premier properties or pare from the portfolio properties that we believe have slower future growth potential, resulting in continuous portfolio refreshment;

 

    taking on complex, technically-challenging development projects that leverage the skills of our management team to successfully develop, acquire, and reposition properties;

 

    exploring joint-venture opportunities with partners who seek to benefit from our depth of development and management expertise;

 

    ensuring a strong balance sheet to maintain consistent access to capital and the resultant ability to make opportunistic investments; and

 

    fostering a culture and reputation of integrity and fair dealing, making us the counterparty of choice for tenants and real estate industry participants.

 

Snapshot     
(as of December 31, 2016)     

Corporate Headquarters

   Boston, Massachusetts

Markets

   Boston, Los Angeles, New York, San Francisco and Washington, DC

Fiscal Year-End

   December 31

Total Properties (includes unconsolidated joint ventures)

   174

Total Square Feet (includes unconsolidated joint ventures)

   47.7 million

Common shares outstanding, plus common units and LTIP units (including Outperformance Plan Units and 2013 Multi-Year Long-Term Incentive Program (“MYLTIP”) Units) on an as-converted basis (excludes 2014, 2015 and 2016 MYLTIP Units because not yet earned) (1)

   171.8 million

Dividend - Quarter/Annualized (2)

   $0.75/$3.00

Dividend Yield

   2.39%

Consolidated Market Capitalization

   $31.6 billion

BXP’s Share of Combined Market Capitalization (3)

   $30.8 billion

Senior Debt Ratings

   A- (S&P); BBB+ (Fitch); Baa2 (Moody’s)

 

(1) For additional detail, see page 14.
(2) The Company increased its regular quarterly cash dividend to $0.75 from $0.65 per share of common stock beginning with the period from October 1, 2016 to December 31, 2016.
(3) For the Company’s definition of BXP’s Share of Combined Market Capitalization and related disclosures, see page 47. For a quantitative reconciliation of Consolidated Market Capitalization to BXP’s Share of Combined Market Capitalization, see page 14.

 

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FOURTH QUARTER 2016

 

INVESTOR INFORMATION

 

Board of Directors

  

Management

Joel I. Klein    Dr. Jacob A. Frenkel    Raymond A. Ritchey    John F. Powers
Lead Independent Director    Director, Chair of Nominating & Corporate Governance Committee    Senior Executive Vice President   

Executive Vice President,

New York Region

        
Owen D. Thomas       Michael E. LaBelle   
Chief Executive Officer and Director    Matthew J. Lustig    Executive Vice President, Chief Financial Officer and Treasurer    Frank D. Burt
   Director       Senior Vice President, General Counsel
Douglas T. Linde         
President and Director    Alan J. Patricof    Peter D. Johnston    Michael R. Walsh
   Director   

Executive Vice President,

Washington, DC Region

   Senior Vice President, Chief Accounting Officer
Bruce W. Duncan         
Director    Martin Turchin      
   Director    Bryan J. Koop   
Karen E. Dykstra       Executive Vice President,   
Director    David A. Twardock    Boston Region   
   Director, Chair of Audit Committee      
Carol B. Einiger       Robert E. Pester   
Director, Chair of Compensation Committee       Executive Vice President,   
      San Francisco Region   

Chairman Emeritus

         

Mortimer B. Zuckerman

        

Company Information

Corporate Headquarters    Trading Symbol    Investor Relations    Inquires

800 Boylston Street

Suite 1900

Boston, MA 02199

(t) 617.236.3300

(f) 617.236.3311

  

BXP

 

Stock Exchange Listing New York Stock Exchange

  

Boston Properties, Inc.

800 Boylston Street, Suite 1900

Boston, MA 02199

(t) 617.236.3322

(f) 617.236.3311

www.bostonproperties.com

  

Inquiries should be directed to Michael E. LaBelle

Executive Vice President, Chief Financial Officer and Treasurer at 617.236.3352 or mlabelle@bostonproperties.com

 

Arista Joyner, Investor Relations Manager at 617.236.3343 or ajoyner@bostonproperties.com

Common Stock Data (NYSE: BXP)

 

Boston Properties’ common stock has the following characteristics (based on information reported by the New York Stock Exchange):

 

     Q4 2016     Q3 2016     Q2 2016     Q1 2016     Q4 2015  

High Closing Price

   $ 133.39      $ 143.61      $ 133.13      $ 127.26      $ 130.15   

Low Closing Price

   $ 114.07      $ 130.03      $ 123.71      $ 108.18      $ 118.62   

Average Closing Price

   $ 124.31      $ 138.78      $ 128.38      $ 118.69      $ 124.47   

Closing Price, at the end of the quarter

   $ 125.78      $ 136.29      $ 131.90      $ 127.08      $ 127.54   

Dividends per share

   $ 0.75 (1)    $ 0.65      $ 0.65      $ 0.65      $ 0.65   

Special dividends per share

   $ —        $ —        $ —        $ —        $ 1.25   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total dividends

   $ 0.75      $ 0.65      $ 0.65      $ 0.65      $ 1.90   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Closing dividend yield - annualized

     2.39     1.91     1.97     2.05     3.02 %(2) 

Closing common shares outstanding, plus common units and LTIP units (including Outperformance Plan Units and 2013 MYLTIP Units) on an as-converted basis (excludes 2014, 2015 and 2016 MYLTIP Units because not yet earned) (thousands) (3)

     171,774        171,775        171,772        171,763        171,509   

Closing market value of outstanding shares and units (thousands)

   $ 21,805,734      $ 23,611,215      $ 22,856,727      $ 22,027,642      $ 22,074,258   

 

(1) The Company increased its regular quarterly cash dividend to $0.75 from $0.65 per share of common stock beginning with the period from October 1, 2016 to December 31, 2016.
(2) Includes the special dividend of $1.25 per share paid on January 28, 2016 to shareholders of record as of the close of business on December 31, 2015.
(3) For additional detail, see page 14.

Timing

 

Quarterly results for the next four quarters will be announced according to the following schedule:

 

First Quarter, 2017    Tentatively April 25, 2017
Second Quarter, 2017    Tentatively August 1, 2017
Third Quarter, 2017    Tentatively November 1, 2017
Fourth Quarter, 2017    Tentatively January 30, 2018

 

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FOURTH QUARTER 2016

 

RESEARCH COVERAGE

 

Equity Research Coverage

 

Debt Research Coverage

 

Rating Agencies

Jacob Kilstein   Anthony Paolone   Andrew Mollay  

Stephen Boyd

Fitch Ratings

212.908.9153

Argus Research Company   J.P. Morgan Securities   Bank of America Merrill Lynch  
646.747.5447   212.622.6682   646.855.6435  
Jeffrey Spector / Jamie Feldman   Craig Mailman / Jordan Sadler   Peter Troisi   Ranjini Venkatesan
Bank of America Merrill Lynch   KeyBanc Capital Markets   Barclays   Moody’s Investors Service
646.855.1363 / 646.855.5808   917.368.2316 / 917.368.2280   212.412.3695   212.553.3828
Ross Smotrich / Peter Siciliano   Richard Anderson   Thomas Cook   Anita Ogbara
Barclays Capital   Mizuho Securities   Citi Investment Research   Standard & Poor’s
212.526.2306 / 212.526.3098   212.205.8445   212.723.1112   212.438.5077
John Kim   Sumit Sharma / Vikram Malhotra   Ron Perrotta  
BMO Capital   Morgan Stanley   Goldman Sachs  
212.885.4115   212.761.7567 / 212.761.7064   212.702.7885  
Tom Catherwood   Brad Schwer   Mark Streeter  
BTIG   Morningstar   J.P. Morgan Securities  
212.593.7510   312.244.7061   212.834.5086  
Thomas Lesnick / Ryan Wineman   Mike Carroll   Thierry Perrein / Jason Jones  
Capital One Securities   RBC Capital Markets   Wells Fargo  
571.633.8191 / 571.633.8414   440.715.2649   704.715.8455 / 704.715.7932  
Michael Bilerman / Emmanuel Korchman   David Rodgers / Richard Schiller    
Citigroup Global Markets   RW Baird    
212.816.1383 / 212.816.1382   216.737.7341 / 312.609.5485    
Barry Oxford   Alexander Goldfarb / Daniel Santos    
D.A. Davidson & Co.   Sandler O’Neill & Partners    
212.240.9871   212.466.7937 / 212.466.7927    
Vincent Chao / Mike Husseini   John Guinee / Erin Aslakson    
Deutsche Bank Securities   Stifel, Nicolaus & Company    
212.250.6799 / 212.250.7703   443.224.1307 / 443.224.1350    
Steve Sakwa / Robert Simone   Michael Lewis    
Evercore ISI   SunTrust Robinson Humphrey    
212.446.9462 / 212.446.9459   212.319.5659    
Brad Burke   Nick Yulico    
Goldman Sachs   UBS Securities    
917.343.2082   212.713.3402    
Jed Reagan / Tyler Grant   Blaine Heck    
Green Street Advisors   Wells Fargo Securities    
949.640.8780   443.263.6529    
Jonathan Petersen / Omotayo Okusanya      
Jefferies & Co.      
212.284.1705 / 212.336.7076      

With the exception of Green Street Advisors, an independent research firm, the equity analysts listed above are those analysts that, according to First Call Corporation, have published research material on the Company and are listed as covering the Company. Please note that any opinions, estimates or forecasts regarding Boston Properties’ performance made by the analysts listed above do not represent the opinions, estimates or forecasts of Boston Properties or its management. Boston Properties does not by its reference above imply its endorsement of or concurrence with any information, conclusions or recommendations made by any of such analysts.

 

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FOURTH QUARTER 2016

 

GUIDANCE

 

The Company’s guidance for the first quarter 2017 and full year 2017 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 and the earnings impact of the events referenced in the earnings release issued on January 31, 2017 and otherwise referenced during the Company’s conference call scheduled for February 1, 2017. The estimates do not include possible future gains or losses or the impact on operating results from other possible future property acquisitions or dispositions, other possible capital markets activity or 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 48. There can be no assurance that the Company’s actual results will not differ materially from the estimates set forth below.

 

     First Quarter 2017      Full Year 2017  
     Low             High      Low             High  

Projected EPS (diluted)

   $ 0.55               $ 0.57       $ 2.56               $ 2.66   

Add:

                 

Projected Company share of real estate depreciation and amortization

     0.92                 0.92         3.57                 3.57   

Less:

                 

Projected Company share of gains on sales of real estate

     —                   —           —                   —     
  

 

 

       

 

 

    

 

 

       

 

 

 

Projected FFO per share (diluted)

   $ 1.47               $ 1.49       $ 6.13               $ 6.23   
  

 

 

       

 

 

    

 

 

       

 

 

 

ASSUMPTIONS

(dollars in thousands)

 

 

    Full Year 2017  
    Low           High  

Operating property activity:

     

Average In-service portfolio occupancy

    90.0            91.0

Increase in BXP’s Share of Combined Same Property net operating income

    2.00            3.50

Increase in BXP’s Share of Combined Same Property net operating income - cash basis

    1.50            3.50

BXP’s Share of Combined Non Same Properties’ incremental contribution over prior year

  $ 18,000             $ 25,000   

BXP’s Share of Combined Straight-line rent and fair value lease revenue (non-cash revenue)

  $ 55,000             $ 80,000   

Hotel net operating income

  $ 13,000             $ 15,000   

Termination income

  $ 16,000             $ 18,000   

Other income (expense):

     

Development and management services income

  $ 27,000             $ 33,000   

General and administrative expense

  $ (115,000          $ (110,000

Net interest expense

  $ (391,000          $ (378,000

Noncontrolling interest:

     

Noncontrolling interest in property partnerships’ share of FFO

  $ (110,000          $ (95,000

 

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FOURTH QUARTER 2016

 

FINANCIAL HIGHLIGHTS

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

This section 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 shown on pages 11-13. 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 on pages 47-48.

 

    Three Months Ended  
    31-Dec-16     30-Sep-16     30-Jun-16     31-Mar-16     31-Dec-15  

Net income attributable to Boston Properties, Inc. common shareholders

  $ 145,530      $ 76,753      $ 96,597      $ 181,747      $ 137,851   

Net income attributable to Boston Properties, Inc. per share - basic

  $ 0.95      $ 0.50      $ 0.63      $ 1.18      $ 0.90   

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

  $ 0.94      $ 0.50      $ 0.63      $ 1.18      $ 0.90   

FFO attributable to Boston Properties, Inc. (1)

  $ 236,898      $ 219,564      $ 220,595      $ 250,688      $ 197,339   

FFO per share - diluted (1)

  $ 1.54      $ 1.42      $ 1.43      $ 1.63      $ 1.28   

Dividends per common share

  $ 0.75      $ 0.65      $ 0.65      $ 0.65      $ 1.90   

Funds available for distribution to common shareholders and common unitholders (FAD) (1) (2)

  $ 151,183      $ 149,725      $ 160,948      $ 188,204      $ 138,872   

Ratios:

         

Interest Coverage Ratio (excluding capitalized interest) (3)

    3.86        3.49        3.63        3.79        3.20   

Interest Coverage Ratio (including capitalized interest) (3)

    3.46        3.17        3.28        3.45        2.95   

FFO Payout Ratio (2)

    48.70     45.77     45.45     39.88     50.78

FAD Payout Ratio (2)

    85.28     74.63     69.42     59.35     80.33

Selected Items (4):

         

Revenue

  $ 636,061      $ 625,228      $ 623,546      $ 665,985      $ 624,240   

Partners’ share of revenue from consolidated joint ventures

    (69,766     (69,391     (69,609     (73,667     (73,697

BXP’s share of revenue from unconsolidated joint ventures

    24,828        25,271        18,825        18,447        18,672   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

BXP’s Share of Combined revenue

  $ 591,123      $ 581,108      $ 572,762      $ 610,765      $ 569,215   

Straight-line rent (5)

  $ 14,711      $ 11,107      $ (6,503   $ 14,424      $ 19,623   

Partners’ share of straight-line rent from consolidated joint ventures

    (1,103     (707     (718     (1,696     (2,605

BXP’s share of straight-line rent from unconsolidated joint ventures

    3,696        3,285        1,787        1,064        1,131   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

BXP’s Share of Combined straight-line rent

  $ 17,304      $ 13,685      $ (5,434   $ 13,792      $ 18,149   

Fair value lease revenue (6)

  $ 6,840      $ 6,547      $ 8,808      $ 8,186      $ 7,450   

Partners’ share of fair value lease revenue from consolidated joint ventures (6)

    (2,194     (2,084     (3,031     (2,810     (2,483

BXP’s share of fair value lease revenue from unconsolidated joint ventures (6)

    494        511        (1     (1     (1
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

BXP’s Share of Combined fair value lease revenue

  $ 5,140      $ 4,974      $ 5,776      $ 5,375      $ 4,966   

Lease termination fees (7)

  $ 504      $ (170   $ 7,654      $ 51,306      $ 7,701   

Partners’ share of lease termination fees from consolidated joint ventures

    (31     421        (44     (1,852     (2,113

BXP’s share of termination income from unconsolidated joint ventures

    13        8        4        (9     17   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

BXP’s Share of Combined termination income

  $ 486      $ 259      $ 7,614      $ 49,445      $ 5,605   

Fair value interest adjustment

  $ 10,145      $ 10,378      $ 11,272      $ 12,321      $ 13,076   

Partners’ share of fair value interest adjustment from consolidated joint ventures

    (4,598     (4,569     (4,540     (4,511     (4,483

BXP’s share of fair value interest adjustment from unconsolidated joint ventures

    —          —          —          —          —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

BXP’s Share of Combined fair value interest adjustment

  $ 5,547      $ 5,809      $ 6,732      $ 7,810      $ 8,593   

Ground rent expense (8)

  $ 3,460      $ 3,471      $ 3,469      $ 3,471      $ 3,463   

Losses from early extinguishments of debt

  $ —        $ (371   $ —        $ —        $ (22,040

Capitalized interest

  $ 10,281      $ 9,788      $ 9,899      $ 9,269      $ 8,298   

Capitalized wages

  $ 5,376      $ 4,155      $ 4,467      $ 4,344      $ 4,130   

Operating margins [(rental revenue - rental expense)/rental revenue]

    63.6     62.3     64.0     66.3     64.3

Income from unconsolidated joint ventures

  $ 2,585      $ 1,464      $ 2,234      $ 1,791      $ 2,211   

BXP’s share of funds from operations (FFO) from unconsolidated joint ventures

  $ 11,277 (9)    $ 10,592      $ 6,852      $ 6,287      $ 6,205   

Net income attributable to noncontrolling interests in property partnerships

  $ (2,121   $ (17,225   $ 6,814      $ 10,464      $ 10,143   

FFO attributable to noncontrolling interests in property partnerships

  $ 25,135 (10)    $ 23,682      $ 26,183      $ 30,019      $ 30,828   

Income before gains on sales of real estate

  $ 163,018      $ 58,521      $ 117,357      $ 148,599      $ 85,406   

 

(1) For the Company’s definitions and related disclosures, see pages 47-48.
(2) FFO Payout Ratio equals dividends per common share (excluding any special dividends) divided by FFO per share-diluted. For a quantitative reconciliation of FFO, see page 11. FAD Payout Ratio equals distributions to common shareholders and unitholders (excluding any special distributions) divided by FAD. For a quantitative reconciliation of FAD, see page 12.
(3) For a quantitative reconciliation and related disclosures, see page 13.
(4) Partners’ share and BXP’s share of line items below are based upon percentage ownership interests in the applicable joint ventures. For additional details, see page 47.
(5) During the three months ended June 30, 2016, the Company recognized an aggregate of approximately $15.4 million of lump sum rental income amounts from three tenants that will be straight-lined through each tenant’s lease term. These amounts are in addition to the tenants’ monthly rental payments.
(6) Represents the net adjustment for above- and below-market leases that are being amortized over the terms of the respective leases in place at the property acquisition dates.
(7) For the three months ended March 31, 2016, includes approximately $45.0 million received from a tenant that terminated its lease for approximately 85,000 square feet at the Company’s 250 West 55th Street property located in New York City. For the three months ended June 30, 2016, includes a distribution received by the Company from its unsecured creditor claim against Lehman Brothers, Inc. of approximately $1.4 million.
(8) Includes non-cash straight-line adjustments to ground rent. See page 13 for the straight-line adjustments to the ground rent expense.
(9) For additional detail, see page 18.
(10) For additional detail, see page 20.

 

7


LOGO

FOURTH QUARTER 2016

 

FINANCIAL HIGHLIGHTS (continued)

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

 

This section 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. 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 on pages 47-48.

 

    31-Dec-16     30-Sep-16     30-Jun-16     31-Mar-16     31-Dec-15  

Balance Sheet Items:

         

Above-market rents (included within Prepaid Expenses and Other Assets)

  $ 37,079      $ 40,346      $ 43,780      $ 47,388      $ 51,397   

Below-market rents (included within Other Liabilities)

  $ 132,495      $ 142,595      $ 152,576      $ 160,504      $ 172,670   

Accrued ground rent expense, net liability (included within Prepaid Expenses and Other

         

Assets and Other Liabilities)

  $ 42,717      $ 41,718      $ 40,687      $ 39,752      $ 38,765   

Outside members’ notes payable (1)

  $ 180,000      $ 180,000      $ 180,000      $ 180,000      $ 180,000   

Accrued interest payable on outside members’ notes payable (included within

         

Accrued Interest Payable) (1)

  $ 153,758      $ 144,825      $ 136,131      $ 127,670      $ 119,436   

Capitalization:

         

Common Stock Price @ Quarter End

  $ 125.78      $ 136.29      $ 131.90      $ 127.08      $ 127.54   

Equity Value @ Quarter End

  $ 21,805,734      $ 23,611,215      $ 22,856,727      $ 22,027,642      $ 22,074,258   

Consolidated Debt

  $ 9,796,133      $ 9,808,922      $ 9,934,084      $ 10,160,366      $ 9,188,543   

BXP’s share of Unconsolidated Joint Venture Debt (2)

    318,193        350,225        350,831        351,394        351,926   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Combined Debt (3)(4)

    10,114,326        10,159,147        10,284,915        10,511,760        9,540,469   

Less:

         

Partners’ share of Consolidated Debt (5)

    1,144,473        1,150,462        1,156,399        1,162,292        1,168,142   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

BXP’s Share of Combined Debt (3)(4)

  $ 8,969,853      $ 9,008,685      $ 9,128,516      $ 9,349,468      $ 8,372,327   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Consolidated Market Capitalization

  $ 31,601,867      $ 33,420,137      $ 32,790,811      $ 32,188,008      $ 31,262,801   

Consolidated Debt/Consolidated Market Capitalization (3)

    31.00     29.35     30.30     31.57     29.39

BXP’s Share of Combined Market Capitalization (3)(4)

  $ 30,775,587 (6)    $ 32,619,900      $ 31,985,243      $ 31,377,110      $ 30,446,585   

BXP’s Share of Combined Debt/BXP’s Share of Combined Market Capitalization (3)(4)

    29.15 %(6)      27.62     28.54     29.80     27.50

 

(1) Amount is allocated to the Company’s 767 Fifth Avenue (The GM Building) partners through noncontrolling interests in property partnerships.
(2) Amount is calculated based on the Company’s percentage ownership interest in the unconsolidated joint venture entities. For additional detail, see page 17.
(3) For the Company’s definitions, see pages 47-48.
(4) Partners’ share and BXP’s share of line items are based upon percentage ownership interests in the applicable joint ventures. For additional details, see page 47.
(5) Amount is calculated based on the outside partners’ percentage ownership interest in the consolidated joint venture entities. For additional detail, see page 19.
(6) For additional detail, see page 14.

 

8


LOGO

FOURTH QUARTER 2016

 

CONSOLIDATED BALANCE SHEETS

(unaudited and in thousands)

 

     31-Dec-16     30-Sep-16     30-Jun-16     31-Mar-16     31-Dec-15  

ASSETS

          

Real estate

   $ 18,862,648      $ 18,704,856      $ 18,690,403      $ 18,424,542      $ 18,465,405   

Construction in progress (1)

     1,037,959        954,013        865,359        857,578        763,935   

Land held for future development (2)

     246,656        243,887        241,106        256,952        252,195   

Less accumulated depreciation

     (4,223,743     (4,113,553     (4,056,716     (3,969,648     (3,925,894
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total real estate

     15,923,520        15,789,203        15,740,152        15,569,424        15,555,641   

Cash and cash equivalents

     356,914        419,323        1,180,044        1,605,678        723,718   

Cash held in escrows

     63,174        63,980        65,654        71,349        73,790   

Investments in securities

     23,814        23,022        21,775        21,077        20,380   

Tenant and other receivables, net

     92,548        76,258        84,861        73,759        97,865   

Accrued rental income, net

     799,138        785,569        776,816        767,864        754,883   

Deferred charges, net

     685,795        680,192        697,823        693,976        704,867   

Prepaid expenses and other assets

     129,666        176,693        144,222        136,799        185,118   

Investments in unconsolidated joint ventures

     775,198        775,659        252,618        235,904        235,224   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

   $ 18,849,767      $ 18,789,899      $ 18,963,965      $ 19,175,830      $ 18,351,486   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

LIABILITIES AND EQUITY

          

Liabilities:

          

Mortgage notes payable, net

   $ 2,063,087      $ 2,077,707      $ 3,189,013      $ 3,416,622      $ 3,435,242   

Unsecured senior notes, net

     7,245,953        7,243,767        6,257,274        6,255,602        5,264,819   

Unsecured line of credit

     —          —          —          —          —     

Mezzanine notes payable

     307,093        307,448        307,797        308,142        308,482   

Outside members’ notes payable

     180,000        180,000        180,000        180,000        180,000   

Accounts payable and accrued expenses

     298,524        312,979        287,464        252,727        274,709   

Dividends and distributions payable

     130,308        113,038        113,071        113,079        327,320   

Accrued interest payable

     243,933        234,628        222,175        221,578        190,386   

Other liabilities

     450,821        461,079        508,952        498,290        483,601   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

     10,919,719        10,930,646        11,065,746        11,246,040        10,464,559   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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

     200,000        200,000        200,000        200,000        200,000   

Common stock, $0.01 par value, 250,000,000 shares authorized, 153,790,175, 153,773,012, 153,674,930, 153,604,966 and 153,579,966 outstanding, respectively

     1,538        1,538        1,537        1,536        1,536   

Additional paid-in capital

     6,333,427        6,326,580        6,316,191        6,306,723        6,305,687   

Dividends in excess of earnings

     (695,377     (725,522     (702,361     (699,048     (780,952

Treasury common stock, at cost

     (2,722     (2,722     (2,722     (2,722     (2,722

Accumulated other comprehensive loss

     (52,251     (73,943     (79,748     (56,706     (14,114
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total stockholders’ equity attributable to Boston Properties, Inc.

     5,784,615        5,725,931        5,732,897        5,749,783        5,709,435   

Noncontrolling interests:

          

Common units of the Operating Partnership

     614,786        608,280        612,385        616,095        603,092   

Property partnerships

     1,530,647        1,525,042        1,552,937        1,563,912        1,574,400   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total equity

     7,930,048        7,859,253        7,898,219        7,929,790        7,886,927   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities and equity

   $ 18,849,767      $ 18,789,899      $ 18,963,965      $ 19,175,830      $ 18,351,486   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) Represents the portion of the Company’s consolidated development projects that qualifies for interest capitalization. Such portion generally excludes intangible assets.
(2) Includes land held for future development and pre-development costs.

 

9


LOGO

FOURTH QUARTER 2016

 

CONSOLIDATED INCOME STATEMENTS

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

 

    Three Months Ended  
    31-Dec-16     30-Sep-16     30-Jun-16     31-Mar-16     31-Dec-15  

Revenue

         

Rental

         

Base rent

  $ 498,941      $ 489,312      $ 493,386      $ 536,128      $ 493,141   

Recoveries from tenants

    91,123        92,560        85,706        89,586        88,576   

Parking and other

    25,334        24,638        26,113        24,825        25,132   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total rental revenue

    615,398        606,510        605,205        650,539        606,849   

Hotel revenue

    10,965        12,354        12,808        8,757        10,939   

Development and management services

    9,698        6,364        5,533        6,689        6,452   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue

    636,061        625,228        623,546        665,985        624,240   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Expenses

         

Operating

    113,669        117,728        113,212        114,467        112,846   

Real estate taxes

    108,556        109,480        104,726        104,705        103,796   

Demolition costs

    1,873        1,352        —          —          —     

Hotel operating

    7,736        8,118        7,978        7,634        7,888   

General and administrative (1)

    25,293        25,165        25,418        29,353        24,300   

Transaction costs

    1,200        249        913        25        470   

Impairment loss

    —          1,783        —          —          —     

Depreciation and amortization

    179,908        203,748 (2)      153,175        159,448        164,460   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses

    438,235        467,623        405,422        415,632        413,760   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

    197,826        157,605        218,124        250,353        210,480   

Other income (expense)

         

Income from unconsolidated joint ventures

    2,585        1,464        2,234        1,791        2,211   

Gain on sale of investment in uconsolidated joint venture (3)

    59,370        —          —          —          —     

Interest and other income

    573        3,628        1,524        1,505        440   

Gains from investments in securities (1)

    560        976        478        259        493   

Interest expense (4)

    (97,896     (104,641     (105,003     (105,309     (106,178

Losses from early extinguishments of debt

    —          (371     —          —          (22,040

Losses from interest rate contracts

    —          (140     —          —          —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before gains on sales of real estate

    163,018        58,521        117,357        148,599        85,406   

Gains on sales of real estate (5)

    —          12,983        —          67,623        81,332   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

    163,018        71,504        117,357        216,222        166,738   

Net income attributable to noncontrolling interests

         

Noncontrolling interest in property partnerships

    2,121        17,225        (6,814     (10,464     (10,143

Noncontrolling interest - common units of the Operating Partnership (6)

    (16,905     (9,387     (11,357     (21,393     (16,098
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to Boston Properties, Inc.

    148,234        79,342        99,186        184,365        140,497   

Preferred dividends

    (2,704     (2,589     (2,589     (2,618     (2,646
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to Boston Properties, Inc. common shareholders

  $ 145,530      $ 76,753      $ 96,597      $ 181,747      $ 137,851   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

INCOME PER SHARE OF COMMON STOCK (EPS)

         

Net income attributable to Boston Properties, Inc. per share - basic

  $ 0.95      $ 0.50      $ 0.63      $ 1.18      $ 0.90   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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

  $ 0.94      $ 0.50      $ 0.63      $ 1.18      $ 0.90   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) General and administrative expense includes $(560), $(976), $(478), $(259) and $(493) and gains from investments in securities include $560, $976, $478, $259 and $493 for the three months ended December 31, 2016, September 30, 2016, June 30, 2016, March 31, 2016 and December 31, 2015, respectively, related to the Company’s deferred compensation plan.
(2) For the three months ended September 30, 2016, includes approximately $50.8 million of accelerated depreciation expense related to the redevelopment of the Company’s 601 Lexington Avenue property.
(3) On October 20, 2016, the Company and its partner in the unconsolidated joint venture that owns Metropolitan Square located in Washington, DC, completed the sale of an 80% interest in the joint venture for a gross sale price of approximately $282.4 million, including the assumption by the buyer of its pro rata share of the mortgage loan collateralized by the property totaling approximately $133.4 million and certain unfunded leasing costs totaling approximately $14.2 million. Net cash proceeds to the Company totaled approximately $58.2 million, resulting in a gain on sale of investment totaling approximately $59.4 million. The Company continues to own a 20% interest in the joint venture.
(4) For the three months ended December 31, 2016, September 30, 2016, June 30, 2016, March 31, 2016 and December 31, 2015, interest expense includes $8,933, $8,694, $8,461, $8,234 and $8,014, respectively, consisting of the interest expense on the partner loans for the 767 Fifth Avenue (The GM Building) consolidated joint venture, which amount is allocated to the partners within noncontrolling interests in property partnerships. The Company’s share of the interest expense on its loan to the joint venture eliminates in consolidation.
(5) See page 44 for additional information.
(6) Equals noncontrolling interest - common units of the Operating Partnership’s share of 10.25%, 10.28%, 10.33%, 10.32% and 10.26% of income before net income attributable to noncontrolling interests in Operating Partnership after deduction for preferred distributions for the three months ended December 31, 2016, September 30, 2016, June 30, 2016, March 31, 2016 and December 31, 2015, respectively.

 

10


LOGO

FOURTH QUARTER 2016

 

FUNDS FROM OPERATIONS (FFO)

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

 

    Three Months Ended  
    31-Dec-16     30-Sep-16     30-Jun-16     31-Mar-16     31-Dec-15  

Net income attributable to Boston Properties, Inc. common shareholders

  $ 145,530      $ 76,753      $ 96,597      $ 181,747      $ 137,851   

Add:

         

Preferred dividends

    2,704        2,589        2,589        2,618        2,646   

Noncontrolling interest - common units of the Operating Partnership

    16,905        9,387        11,357        21,393        16,098   

Noncontrolling interests in property partnerships

    (2,121     (17,225     6,814        10,464        10,143   

Less:

         

Gains on sales of real estate

    —          12,983        —          67,623        81,332   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before gains on sales of real estate

    163,018        58,521        117,357        148,599        85,406   

Add:

         

Depreciation and amortization

    179,908        203,748        153,175        159,448        164,460   

Noncontrolling interests in property partnerships’ share of depreciation and amortization

    (27,256     (40,907     (19,369     (19,555     (20,685

BXP’s share of depreciation and amortization from unconsolidated joint ventures

    8,692        9,128        4,618        4,496        3,994   

Corporate-related depreciation and amortization

    (449     (393     (362     (364     (486

Less:

         

Gain on sale of investment in uconsolidated joint venture

    59,370        —          —          —          —     

Noncontrolling interests in property partnerships

    (2,121     (17,225     6,814        10,464        10,143   

Preferred dividends

    2,704        2,589        2,589        2,618        2,646   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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

    263,960        244,733        246,016        279,542        219,900   

Less:

         

Noncontrolling interest - common units of the Operating Partnership’s share of FFO

    27,062        25,169        25,421        28,854        22,561   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

FFO attributable to Boston Properties, Inc. common shareholders

  $ 236,898      $ 219,564      $ 220,595      $ 250,688      $ 197,339   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Boston Properties, Inc.’s percentage share of FFO - basic

    89.75     89.72     89.67     89.68     89.74
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

FFO per share - basic

  $ 1.54      $ 1.43      $ 1.44      $ 1.63      $ 1.28   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding - basic

    153,814        153,754        153,662        153,626        153,602   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

FFO per share - diluted

  $ 1.54      $ 1.42      $ 1.43      $ 1.63      $ 1.28   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding - diluted

    153,991        154,136        153,860        153,917        153,897   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation to Diluted FFO:

         

Basic FFO

  $ 263,960      $ 244,733      $ 246,016      $ 279,542      $ 219,900   

Add:

         

Effect of dilutive securities - stock-based compensation

    —          —          —          —          —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted FFO

    263,960        244,733        246,016        279,542        219,900   

Less:

         

Noncontrolling interest - common units of the Operating Partnership’s share of diluted FFO

    27,034        25,113        25,391        28,805        22,522   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Boston Properties, Inc.’s share of diluted FFO

  $ 236,926      $ 219,620      $ 220,625      $ 250,737      $ 197,378   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of Shares/Units for Diluted FFO:

         

Shares/units for Basic FFO

    171,385        171,379        171,370        171,309        171,162   

Add:

         

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

    177        382        198        291        295   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Shares/units for Diluted FFO

    171,562        171,761        171,568        171,600        171,457   

Less:

         

Noncontrolling interest - common units of the Operating Partnership’s share of diluted FFO (shares/units)

    17,571        17,625        17,708        17,683        17,560   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Boston Properties, Inc.’s share of shares/units for diluted FFO

    153,991        154,136        153,860        153,917        153,897   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Boston Properties, Inc.’s percentage share of FFO - diluted

    89.76     89.74     89.68     89.70     89.76
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

11


LOGO

FOURTH QUARTER 2016

 

FUNDS AVAILABLE FOR DISTRIBUTION (FAD)

(in thousands, except for ratio amounts)

 

    Three Months Ended  
    31-Dec-16     30-Sep-16     30-Jun-16     31-Mar-16     31-Dec-15  

Net income attributable to Boston Properties, Inc. common shareholders

  $ 145,530      $ 76,753      $ 96,597      $ 181,747      $ 137,851   

Add:

         

Preferred dividends

    2,704        2,589        2,589        2,618        2,646   

Noncontrolling interest - common units of the Operating Partnership

    16,905        9,387        11,357        21,393        16,098   

Noncontrolling interests in property partnerships

    (2,121     (17,225     6,814        10,464        10,143   

Less:

         

Gains on sales of real estate

    —          12,983        —          67,623        81,332   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before gains on sales of real estate

    163,018        58,521        117,357        148,599        85,406   

Add:

         

Depreciation and amortization

    179,908        203,748        153,175        159,448        164,460   

Noncontrolling interests in property partnerships’ share of depreciation and amortization

    (27,256     (40,907     (19,369     (19,555     (20,685

BXP’s share of depreciation and amortization from unconsolidated joint ventures

    8,692        9,128        4,618        4,496        3,994   

Corporate-related depreciation and amortization

    (449     (393     (362     (364     (486

Less:

         

Gain on sale of investment in uconsolidated joint venture

    59,370        —          —          —          —     

Noncontrolling interests in property partnerships

    (2,121     (17,225     6,814        10,464        10,143   

Preferred dividends

    2,704        2,589        2,589        2,618        2,646   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Basic FFO

    263,960        244,733        246,016        279,542        219,900   

Straight-line rent (1)

    (14,711     (11,107     6,503        (14,424     (19,623

Partners’ share of straight-line rent from consolidated joint ventures

    1,103        707        718        1,696        2,605   

BXP’s share of straight-line rent from unconsolidated joint ventures

    (3,696     (3,285     (1,787     (1,064     (1,131

Lease transaction costs that qualify as rent inducements (2)

    487        861        2,200        5,305        1,939   

Partners’ share of lease transaction costs that qualify as rent inducements from consolidated joint ventures (2)

    —          —          —          (17     (18

BXP’s share of lease transaction costs that qualify as rent inducements from unconsolidated joint ventures (2)

    43        15        —          —          24   

Fair value lease revenue (3)

    (6,840     (6,547     (8,808     (8,186     (7,450

Partners’ share of fair value lease revenue from consolidated joint ventures (3)

    2,194        2,084        3,031        2,810        2,483   

BXP’s share of fair value lease revenue from unconsolidated joint ventures (3)

    (494     (511     1        1        1   

Non-cash losses (gains) from early extinguishments of debt

    —          371        —          —          (3,604

Non-cash termination income adjustment (fair value lease amounts)

    7        —          141        29        3   

Partners’ share of non-cash termination income adjustment (fair value lease amounts) from consolidated joint ventures

    (3     —          (41     —          —     

BXP’s share of non-cash termination income adjustment (fair value lease amounts) from unconsolidated joint ventures

    —          —          —          —          —     

Straight-line ground rent expense adjustment (4)

    998        1,031        935        987        (3,983

Stock-based compensation

    7,621        7,643        7,578        10,069        6,358   

Non-real estate depreciation

    449        393        362        364        486   

Impairment loss

    —          1,783        —          —          —     

Fair value interest adjustment

    (10,145     (10,378     (11,272     (12,321     (13,076

Partners’ share of fair value interest adjustment from consolidated joint ventures

    4,598        4,569        4,540        4,511        4,483   

BXP’s share of fair value interest adjustment from unconsolidated joint ventures

    —          —          —          —          —     

2nd generation tenant improvements and leasing commissions

    (75,708     (69,742     (74,719     (58,100     (34,206

Partners’ share of 2nd generation tenant improvements and leasing commissions from consolidated joint ventures

    449        805        1,247        2,525        2,075   

BXP’s share of 2nd generation tenant improvements and leasing commissions from unconsolidated joint ventures

    (1,472     (18     (8,616     (4,769     (207

Unearned portion of capitalized fees from consolidated joint ventures

    1,787        250        2,697        1,191        451   

Maintenance capital expenditures (5)

    (16,334     (11,889     (9,654     (21,961     (18,963

Partners’ share of maintenance capital expenditures from consolidated joint ventures (5)

    1,197        377        422        573        2,134   

BXP’s share of maintenance capital expenditures from unconsolidated joint ventures (5)

    (437     (283     (112     (197     (578

Hotel improvements, equipment upgrades and replacements

    (3,870     (2,137     (434     (360     (1,231
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Funds available for distribution to common shareholders and common unitholders (FAD) (A)

  $ 151,183      $ 149,725      $ 160,948      $ 188,204      $ 138,872   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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

  $ 128,930      $ 111,739      $ 111,737      $ 111,708      $ 111,556   

FAD Payout Ratio (B÷A)

    85.28     74.63     69.42     59.35     80.33
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) During the three months ended June 30, 2016, the Company recognized an aggregate of approximately $15.4 million of lump sum rental income amounts from three tenants that will be straight-lined through each tenant’s lease term. These amounts are in addition to the tenants’ monthly rental payments.
(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 period the lease commences.
(3) Represents the net adjustment for above- and below-market leases that are being amortized over the terms of the respective leases in place at the property acquisition dates.
(4) Includes the straight-line impact of the Company’s 99-year ground and air rights lease related to the Company’s 200 Clarendon Street property’s adjacent 100 Clarendon Street garage and Back Bay Station concourse level. The Company has allocated contractual ground lease payments aggregating approximately $34.4 million, which it expects to incur over the next three years 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. For additional information, see page 7.
(5) Maintenance capital expenditures do not include planned capital expenditures related to acquisitions and repositioning capital expenditures – see page 25 for additional detail.

 

12


LOGO

FOURTH QUARTER 2016

 

INTEREST COVERAGE RATIOS

(in thousands, except for ratio amounts)

 

    Three Months Ended  
    31-Dec-16     30-Sep-16     30-Jun-16     31-Mar-16     31-Dec-15  

Net income attributable to Boston Properties, Inc. common shareholders

  $ 145,530      $ 76,753      $ 96,597      $ 181,747      $ 137,851   

Add:

         

Preferred dividends

    2,704        2,589        2,589        2,618        2,646   

Noncontrolling interest - common units of the Operating Partnership

    16,905        9,387        11,357        21,393        16,098   

Noncontrolling interests in property partnerships

    (2,121     (17,225     6,814        10,464        10,143   

Less:

         

Gains on sales of real estate

    —          12,983        —          67,623        81,332   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before gains on sales of real estate

    163,018        58,521        117,357        148,599        85,406   

Noncontrolling interests in property partnerships

    2,121        17,225        (6,814     (10,464     (10,143

Interest expense

    97,896        104,641        105,003        105,309        106,178   

Partners’ share of interest expense from consolidated joint ventures

    (17,579     (17,460     (17,177     (16,988     (16,928

BXP’s share of interest expense from unconsolidated joint ventures

    3,654        4,025        4,010        4,015        3,908   

Depreciation and amortization expense

    179,908        203,748        153,175        159,448        164,460   

Noncontrolling interests in property partnerships’ share of depreciation and amortization

    (27,256     (40,907     (19,369     (19,555     (20,685

BXP’s share of depreciation and amortization from unconsolidated joint ventures

    8,692        9,128        4,618        4,496        3,994   

Gain on sale of investment in unconsolidated joint venture

    (59,370     —          —          —          —     

Losses from early extinguishments of debt

    —          371        —          —          22,040   

Impairment loss

    —          1,783        —          —          —     

Non-cash termination income adjustment (fair value lease amounts)

    7        —          141        29        3   

Partners’ share of non-cash termination income adjustment (fair value lease amounts) from consolidated joint ventures

    (3     —          (41     —          —     

BXP’s share of non-cash termination income adjustment (fair value lease amounts) from unconsolidated joint ventures

    —          —          —          —          —     

Stock-based compensation

    7,621        7,643        7,578        10,069        6,358   

Straight-line ground rent expense adjustment (1)

    998        1,031        935        987        (3,983

Straight-line rent (2)

    (14,711     (11,107     6,503        (14,424     (19,623

Partners’ share of straight-line rent from consolidated joint ventures

    1,103        707        718        1,696        2,605   

BXP’s share of straight-line rent from unconsolidated joint ventures

    (3,696     (3,285     (1,787     (1,064     (1,131

Lease transaction costs that qualify as rent inducements (3)

    487        861        2,200        5,305        1,939   

Partners’ share of lease transaction costs that qualify as rent inducements from consolidated joint ventures (3)

    —          —          —          (17     (18

BXP’s share of lease transaction costs that qualify as rent inducements from unconsolidated joint ventures (3)

    43        15        —          —          24   

Fair value lease revenue (4)

    (6,840     (6,547     (8,808     (8,186     (7,450

Partners’ share of fair value lease revenue from consolidated joint ventures (4)

    2,194        2,084        3,031        2,810        2,483   

BXP’s share of fair value lease revenue from unconsolidated joint ventures (4)

    (494     (511     1        1        1   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Subtotal (A)

  $ 337,793      $ 331,966      $ 351,274      $ 372,066      $ 319,438   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Divided by:

         

Interest expense

  $ 97,896      $ 104,641      $ 105,003      $ 105,309      $ 106,178   

Partners’ share of interest expense from consolidated joint ventures

    (17,579     (17,460     (17,177     (16,988     (16,928

BXP’s share of interest expense from unconsolidated joint ventures

    3,654        4,025        4,010        4,015        3,908   

Fair value interest adjustment

    10,145        10,378        11,272        12,321        13,076   

Partners’ share of fair value interest adjustment from consolidated joint ventures

    (4,598     (4,569     (4,540     (4,511     (4,483

BXP’s share of fair value interest adjustment from unconsolidated joint ventures

    —          —          —          —          —     

Amortization of financing costs

    (1,964     (1,889     (1,704     (1,829     (1,921

Partners’ share of amortization of financing costs from consolidated joint ventures

    39        38        38        38        39   

BXP’s share of amortization of financing costs from unconsolidated joint ventures

    (100     (113     (112     (120     (113
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted interest expense excluding capitalized interest (B)

    87,493        95,051        96,790        98,235        99,756   

Capitalized interest

    10,281        9,788        10,222        9,525        8,380   

Partners’ share of capitalized interest from consolidated joint ventures

    (203     (21     —          —          —     

BXP’s share of capitalized interest from unconsolidated joint ventures

    —          —          —          —          50   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted interest expense including capitalized interest (C)

  $ 97,571      $ 104,818      $ 107,012      $ 107,760      $ 108,186   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Interest Coverage Ratio (excluding capitalized interest) (A ÷ B) (5)

    3.86        3.49        3.63        3.79        3.20   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Interest Coverage Ratio (including capitalized interest) (A ÷ C) (5)

    3.46        3.17        3.28        3.45        2.95   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) Includes the straight-line impact of the Company’s 99-year ground and air rights lease related to the 100 Clarendon Street garage and Back Bay Station concourse level, which are adjacent to the Company’s 200 Clarendon Street property. The Company has allocated contractual ground lease payments aggregating approximately $34.4 million, which it expects to incur over the next three years 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. For additional information, see page 7.
(2) During the three months ended June 30, 2016, the Company recognized an aggregate of approximately $15.4 million of lump sum rental income amounts from three tenants that will be straight-lined through each tenant’s lease term. These amounts are in addition to the tenants’ monthly rental payments.
(3) 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.
(4) Represents the net adjustment for above- and below-market leases that are being amortized over the terms of the respective leases in place at the property acquisition dates.
(5) The Company believes that the presentation of its Interest Coverage Ratio provides investors with useful information about the Company’s financial condition because it measures the margin it has for paying interest expense as of a certain date. In addition, by analyzing interest coverage ratios over a period of time, trends may emerge that provide investors a better sense of whether a company’s financial condition is improving or worsening. The ratios may also be used to compare the ability of different companies to meet their interest expense obligations, which can help when making an investment decision. The Company presents its Interest Coverage Ratio in two ways - including capitalized interest and excluding capitalized interest. GAAP requires the capitalization of interest expense during development. Therefore, for a company like Boston Properties, Inc. that is an active developer of real estate, presenting the Interest Coverage Ratio (excluding capitalized interest) provides an alternative measure of financial condition that may be more indicative of the Company’s ability to meet its interest expense obligations.

 

13


LOGO

FOURTH QUARTER 2016

 

CAPITAL STRUCTURE

(in thousands, except percentages)

Consolidated Debt

 

 

     Aggregate Principal  
     December 31, 2016  

Mortgage Notes Payable

   $ 2,031,615   

Mezzanine Notes Payable

     306,000   

Unsecured Line of Credit

     —     

Unsecured Senior Notes, at face value

     7,300,000   

Outside Members’ Notes Payable

     180,000   
  

 

 

 

Subtotal

     9,817,615   

Fair Value Interest Adjustment on Mortgage Notes Payable

     33,830   

Fair Value Interest Adjustment on Mezzanine Notes Payable

     1,093   

Discount on Unsecured Senior Notes

     (18,783

Deferred Financing Costs, Net

     (37,622
  

 

 

 

Consolidated Debt

   $ 9,796,133   
  

 

 

 

Boston Properties Limited Partnership Unsecured Senior Notes (1)

 

 

Settlement
Date

   Maturity Date      Principal      Yield (on issue
date)
    Coupon     Public Offering
Price
    Discount      Deferred Financing
Costs, Net
     Unsecured Senior
Notes, net
 

8/17/2016

     10/1/2026       $ 1,000,000         3.495 %(2)      2.750     99.271   $ 7,084       $ 7,894       $ 985,022   

1/20/2016

     2/1/2026         1,000,000         3.766     3.650     99.708     2,694         7,398         989,908   

6/27/2013

     2/1/2024         700,000         3.916     3.800     99.694     1,507         3,983         694,510   

4/11/2013

     9/1/2023         500,000         3.279     3.125     99.379     2,114         2,681         495,205   

6/11/2012

     2/1/2023         1,000,000         3.954     3.850     99.779     1,361         4,755         993,884   

11/10/2011

     11/15/2018         850,000         3.853     3.700     99.767     577         1,848         847,575   

11/18/2010

     5/15/2021         850,000         4.289     4.125     99.260     2,951         2,950         844,099   

4/19/2010

     11/15/2020         700,000         5.708     5.625     99.891     329         2,174         697,497   

10/9/2009

     10/15/2019         700,000         5.967     5.875     99.931     166         1,581         698,253   
     

 

 

          

 

 

    

 

 

    

 

 

 
      $ 7,300,000             $ 18,783       $ 35,264       $ 7,245,953   
     

 

 

          

 

 

    

 

 

    

 

 

 

Equity

 

 

    Shares/Units              
    Outstanding     Common Stock     Equivalent  
    as of 12/31/2016     Equivalents     Value (3)  

Common Stock

    153,790        153,790 (4)    $ 19,343,706   

Common Operating Partnership Units

    17,984        17,984 (5)      2,262,028   

5.25% Series B Cumulative Redeemable Preferred Stock

    80        —          200,000 (6) 
   

 

 

   

 

 

 

Total Equity

      171,774      $ 21,805,734   
   

 

 

   

 

 

 

Consolidated Debt

      $ 9,796,133   

Add:

     

BXP’s share of unconsolidated joint venture debt (7)

        318,193   
     

 

 

 

Combined Debt (8)

        10,114,326   

Less:

     

Partners’ share of consolidated debt (9)

        1,144,473   
     

 

 

 

BXP’s Share of Combined Debt (8)

      $ 8,969,853   
     

 

 

 

Consolidated Market Capitalization

      $ 31,601,867   
     

 

 

 

BXP’s Share of Combined Market Capitalization (8)

      $ 30,775,587   
     

 

 

 

 

(1) All unsecured senior notes are rated A- (stable), BBB+ (stable) and Baa2 (positive) by S&P, Fitch and Moody’s, respectively.
(2) Includes the impact of the cash settlement of certain forward-starting interest rate swap contracts that fixed the 10-year swap rate at a weighted-average rate of approximately 2.423% per annum on notional amounts aggregating $550.0 million.
(3) Values based on December 31, 2016 closing price of $125.78 per share of common stock, except the shares of Series B Cumulative Redeemable Preferred Stock have been valued at the liquidation preference of $2,500.00 per share (see Note 6 below).
(4) Includes 59,777 shares of restricted stock.
(5) Includes 904,588 long-term incentive plan units (including 166,629 Outperformance Plan Units and 93,928 2013 MYLTIP Units), but excludes an aggregate of 1,314,993 2014, 2015 and 2016 MYLTIP Units because the performance periods for these MYLTIP Units have not ended and therefore none of such units have been earned.
(6) On or after March 27, 2018, the Company, at its option, may redeem the Series B Preferred Stock for a cash redemption price of $2,500.00 per share ($25.00 per depositary share), plus all accrued and unpaid dividends. The Series B Preferred Stock is not redeemable by the holders, has no maturity date and is not convertible into or exchangeable for any other security of the Company or any of its affiliates.
(7) Amount is calculated based on the Company’s percentage ownership interest in the unconsolidated joint venture entities. For additional detail, see page 17.
(8) For the Company’s definitions, see pages 47-48.
(9) Amount is calculated based on the outside partners’ percentage ownership interest in the consolidated joint venture entities. For additional detail, see page 19.

 

14


LOGO

FOURTH QUARTER 2016

 

DEBT ANALYSIS (1)

as of December 31, 2016

(dollars in thousands)

Debt Maturities and Principal Payments

 

 

    2017     2018     2019     2020     2021     Thereafter     Total  

Floating Rate Debt:

             

Mortgage Notes Payable

  $ —        $ —        $ —        $ —        $ —        $ —        $ —     

Unsecured Line of Credit

    —          —          —          —          —          —          —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Floating Rate Debt

  $ —        $ —        $ —        $ —        $ —        $ —        $ —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Fixed Rate Debt:

             

767 Fifth Avenue (The GM Building) (60% ownership)

  $ 1,300,000      $ —        $ —        $ —        $ —        $ —        $ 1,300,000 (2) 

601 Lexington Avenue (55% ownership)

    13,051        13,684        14,349        15,045        15,776        614,710        686,615   

New Dominion Technology Park, Building One

    2,878        3,100        3,340        3,598        22,906        —          35,822   

University Place

    1,725        1,849        1,981        2,123        1,500        —          9,178   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Mortgage Notes Payable

    1,317,654        18,633        19,670        20,766        40,182        614,710        2,031,615   

Fair Value Interest Adjustment

    33,830        —          —          —          —          —          33,830   

Deferred Financing Costs, Net

    (637     (431     (431     (431     (342     (86     (2,358
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Mortgage Notes Payable, Net

  $ 1,350,847      $ 18,202      $ 19,239      $ 20,335      $ 39,840      $ 614,624      $ 2,063,087   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Mezzanine Notes Payable

  $ 306,000      $ —        $ —        $ —        $ —        $ —        $ 306,000   

Fair Value Interest Adjustment

    1,093        —          —          —          —          —          1,093   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Mezzanine Notes Payable

  $ 307,093      $ —        $ —        $ —        $ —        $ —        $ 307,093   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Unsecured Senior Notes, Face Amount

  $ —        $ 850,000      $ 700,000      $ 700,000      $ 850,000      $ 4,200,000      $ 7,300,000   

Discount Amortization

    (2,643     (2,696     (2,503     (2,528     (2,063     (6,350     (18,783

Deferred Financing Costs, Net

    (6,187     (6,019     (5,036     (4,510     (3,648     (9,864     (35,264
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Unsecured Senior Notes, Net

  $ (8,830   $ 841,285      $ 692,461      $ 692,962      $ 844,289      $ 4,183,786      $ 7,245,953   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Outside Members’ Notes Payable

  $ 180,000      $ —        $ —        $ —        $ —        $ —        $ 180,000   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Fixed Rate Debt

  $ 1,829,110      $ 859,487      $ 711,700      $ 713,297      $ 884,129      $ 4,798,410      $ 9,796,133   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Consolidated Debt

  $ 1,829,110      $ 859,487      $ 711,700      $ 713,297      $ 884,129      $ 4,798,410      $ 9,796,133   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

% of Consolidated Debt

    18.67     8.77     7.27     7.28     9.03     48.98     100.00
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balloon Payments

  $ 1,786,000      $ 850,000      $ 700,000      $ 700,000      $ 872,906      $ 4,810,648      $ 9,719,554   

Scheduled Principal Amortization

  $ 17,654      $ 18,633      $ 19,670      $ 20,766      $ 17,276      $ 4,062      $ 98,061   

GAAP Weighted Average Floating Rate Debt (3) (4)

    —          —          —          —          —          —          —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

GAAP Weighted Average Fixed Rate Debt (3) (4)

    3.04     3.89     5.96     5.70     4.39     3.85     4.06
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total GAAP Weighted Average Rate (3) (4)

    3.04     3.89     5.96     5.70     4.39     3.85     4.06
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Stated Weighted Average Rate (4)

    5.96     3.77     5.87     5.63     4.32     3.78     4.50
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Unsecured Line of Credit - Matures July 26, 2018

 

 

     Outstanding      Letters of      Remaining Capacity  

Facility

   at 12/31/2016      Credit      at 12/31/2016  

$1,000,000

   $ —         $ 6,040       $ 993,960   

Unsecured and Secured Debt Analysis (4)

 

 

           Stated Weighted     GAAP Weighted     Weighted Average  
     % of Total Debt     Average Rate     Average Rate     Maturity (years)  

Unsecured Debt

     75.35     4.12     4.21     5.9   

Secured Debt

     24.65     5.64     3.62     2.1   
  

 

 

   

 

 

   

 

 

   

 

 

 

Consolidated Debt

     100.00     4.50     4.06     5.0   
  

 

 

   

 

 

   

 

 

   

 

 

 

Floating and Fixed Rate Debt Analysis (4)

 

 

           Stated Weighted     GAAP Weighted     Weighted Average  
     % of Total Debt     Average Rate     Average Rate     Maturity (years)  

Floating Rate Debt

     —          —          —          —     

Fixed Rate Debt

     100.00     4.50     4.06     5.0   
  

 

 

   

 

 

   

 

 

   

 

 

 

Consolidated Debt

     100.00     4.50     4.06     5.0   
  

 

 

   

 

 

   

 

 

   

 

 

 

Interest Rate Hedging Instruments

 

 

            Weighted-Average           
     Notional Amount      10-Year Swap Rate     Effective Date    Termination Date

Forward-starting interest rate swaps (5)

     450,000         2.619   June 1, 2017    June 1, 2027

 

(1) Excludes unconsolidated joint ventures. For information on BXP’s unconsolidated joint venture debt, see page 17.
(2) This property has a fair value interest adjustment that is shown on the Fair Value Interest Adjustment line.
(3) The GAAP interest rate differs from the stated interest rate due to the inclusion of the amortization of financing charges, effects of hedging transactions and adjustments required to reflect loans at their fair values upon acquisition or consolidation.
(4) Percentage of total debt, weighted average rates and weighted average maturities exclude the Outside Members’ Notes Payable because they are allocated to the Company’s partners through noncontrolling interests in property partnerships.
(5) Represents forward interest rate swap contracts entered into by the Company’s 767 Fifth Partners LLC consolidated entity (the entity in which the Company has a 60% interest and that owns 767 Fifth Avenue (the GM Building) in New York City).

 

15


LOGO

FOURTH QUARTER 2016

 

SENIOR UNSECURED DEBT COVENANT COMPLIANCE RATIOS

(dollars in thousands)

In the fourth quarter of 2002, the Company’s Operating Partnership (Boston Properties Limited Partnership) received investment grade ratings on its senior unsecured debt securities and thereafter issued unsecured notes. The notes were issued under an indenture, dated as of December 13, 2002, by and between Boston Properties Limited Partnership and The Bank of New York Mellon Trust Company, N.A., as trustee, as supplemented from time to time (the “Indenture”), which, among other things, requires us to comply with the following limitations on incurrence of debt: Limitation on Outstanding Debt; Limitation on Secured Debt; Ratio of Annualized Consolidated EBITDA to Annualized Interest Expense; and Maintenance of Unencumbered Assets. Compliance with these restrictive covenants requires us to apply specialized terms the meanings of which are described in detail in our filings with the SEC, and to calculate ratios in the manner prescribed by the Indenture.

This section presents such ratios as of December 31, 2016 to show that the Company’s Operating Partnership was in compliance with the terms of the Indenture, which has been filed with the SEC. Management is not presenting these ratios and the related calculations for any other purpose or for any other period, and is not intending for these measures to otherwise provide information to investors about the Company’s financial condition or results of operations. Investors should not rely on these measures other than for purposes of testing our compliance with the Indenture. This section also presents certain other indenture-related data that we believe assists investors in evaluating the Company’s unsecured debt securities.

 

           Senior Notes
Issued Prior to
October 9, 2009
    Senior Notes
Issued On or After
October 9, 2009
 
           December 31, 2016  

Total Assets:

      

Capitalized Property Value (1)

     $ 23,161,068      $ 23,633,989   

Cash and Cash Equivalents

       356,914        356,914   

Investments in Securities

       23,814        23,814   

Undeveloped Land, at Cost (including Joint Venture %)

       292,661        292,661   

Development in Process, at Cost (including Joint Venture %)

       1,244,322        1,244,322   
    

 

 

   

 

 

 

Total Assets

     $ 25,078,779      $ 25,551,700   
    

 

 

   

 

 

 

Unencumbered Assets

     $ 19,731,476      $ 20,186,007   
    

 

 

   

 

 

 

Consolidated Secured Debt (Fixed and Variable) (2)

     $ 2,059,507      $ 2,059,507   

Mezzanine Notes Payable (3)

       306,000        306,000   

Unconsolidated Joint Venture Debt (4)

       319,475        319,475   

Outside Members’ Notes Payable

       180,000        180,000   

Contingent Liabilities & Letters of Credit

       12,266        12,266   

Unsecured Debt (5)

       7,300,000        7,300,000   
    

 

 

   

 

 

 

Total Outstanding Debt

     $ 10,177,248      $ 10,177,248   
    

 

 

   

 

 

 

Consolidated EBITDA:

      

Income before Gains on Sales of Real Estate (per Consolidated Income Statement)

     $ 163,018      $ 163,018   

Subtract: Income from Unconsolidated Joint Ventures (per Consolidated Income Statement)

       (2,585     (2,585

Subtract: Gain on Sale of Investment in Unconsolidated Joint Ventures (per Consolidated Income Statement)

       (59,370     (59,370

Subtract: Gains from Investments in Securities (per Consolidated Income Statement)

       (560     (560

Add: Interest Expense (per Consolidated Income Statement)

       97,896        97,896   

Add: Depreciation and Amortization (per Consolidated Income Statement)

       179,908       179,908   
    

 

 

   

 

 

 

EBITDA

       378,307        378,307   

Add: BXP’s share of unconsolidated joint venture EBITDA

       14,315        14,315   
    

 

 

   

 

 

 

Consolidated EBITDA

     $ 392,622      $ 392,622   
    

 

 

   

 

 

 

Adjusted Interest Expense:

      

Interest Expense (per Consolidated Income Statement)

     $ 97,896      $ 97,896   

Add: BXP’s share of unconsolidated joint venture interest expense

       3,495        3,495   

Less: Amortization of financing costs (including BXP’s share of unconsolidated joint ventures)

       (2,064     (2,064

Less: Interest expense funded by construction loan draws

       (57     (57
    

 

 

   

 

 

 

Adjusted Interest Expense

     $ 99,270      $ 99,270   
    

 

 

   

 

 

 
     Test     Actual     Actual  

Covenant Ratios and Related Data

      

Total Outstanding Debt/Total Assets

     Less than 60%        40.6     39.8

Secured Debt/Total Assets

     Less than 50%        10.7     10.5

Interest Coverage (Annualized Consolidated EBITDA to

      

Annualized Interest Expense)

     Greater than 1.50x        3.96        3.96   

Unencumbered Assets/ Unsecured Debt

     Greater than 150%        270.3     276.5
    

 

 

   

 

 

 

Unencumbered Consolidated Property EBITDA (6)

     $ 331,361      $ 331,361   
    

 

 

   

 

 

 

Unencumbered Interest Coverage (Unencumbered Consolidated Property EBITDA to Unsecured

      
    

 

 

   

 

 

 

Interest Expense)

       4.48        4.48   
    

 

 

   

 

 

 

% of Unencumbered Consolidated Property EBITDA to Consolidated EBITDA

       84.4     84.4
    

 

 

   

 

 

 

# of in-service unencumbered properties

       152        152   
    

 

 

   

 

 

 

 

(1) For senior notes issued prior to October 9, 2009, Capitalized Property Value is determined for each property and is the greater of (A) annualized EBITDA capitalized at an 8.5% rate for CBD properties and a 9.0% rate for non-CBD properties, and (B) the undepreciated book value as determined under GAAP. Capitalized Property Value for senior notes issued on or after October 9, 2009 is determined for each property and is the greater of (A) annualized EBITDA capitalized at an 8.0% rate for CBD properties and a 9.0% rate for non-CBD properties, and (B) the undepreciated book value as determined under GAAP.
(2) Includes capital lease obligations of $27,892 and excludes aggregate fair value interest adjustment of $33,830 and deferred financing costs, net of $2,358.
(3) Excludes aggregate fair value interest adjustment of $1,093.
(4) Excludes aggregate deferred financing costs, net of $1,282.
(5) Excludes aggregate debt discount of $18,783 and deferred financing costs, net of $35,264.
(6) Unencumbered Consolidated Property EBITDA is a non-GAAP financial measure equal to Consolidated EBITDA excluding corporate revenue and expenses, encumbered consolidated Property EBITDA, EBITDA from land and properties that have either been disposed of or not fully placed in-service and items that, in the Company’s view, are not representative of a property’s standard ongoing performance, such as termination income and other similar items. For the three months ended December 31, 2016, these excluded amounts were approximately $(15,644), $76,406, $(271) and $770, respectively.

 

16


LOGO

FOURTH QUARTER 2016

 

UNCONSOLIDATED JOINT VENTURES (1)

as of December 31, 2016

(dollars in thousands)

Balance Sheet Information

 

 

Property

  BXP’s Nominal
Ownership
    Net Equity     Mortgage/
Construction
Loans
Payable, Net
 

540 Madison Avenue

    60.00   $ 67,816      $ 71,827   

Market Square North

    50.00     (8,134     61,552   

Metropolitan Square

    20.00     2,004        33,192   

901 New York Avenue

    25.00     (10,564     55,893   

Wisconsin Place Parking Facility

    33.33     41,605        —     

Annapolis Junction (2)

    50.00     20,539        44,313   

500 North Capitol Street, N.W.

    30.00     (3,389     31,386   

Colorado Center

    49.80     510,623        —     

The Hub on Causeway - Podium

    50.00     29,869        —     

The Hub on Causeway - Hotel (3)

    50.00     933        —     

The Hub on Causeway - Residential (3)

    50.00     20,803        —     

1001 6th Street

    50.00     42,528        —     

Dock 72

    50.00     33,699        —     

1265 Main Street

    50.00     4,779        20,030   
   

 

 

   
      753,111     

Investments with deficit balances reflected within Other Liabilities

  

    22,087     
   

 

 

   

 

 

 

Investment in Joint Ventures

    $ 775,198      $ 318,193   
   

 

 

   

 

 

 

Debt Maturities and Principal Payments by Property

 

 

Property

  2017     2018     2019     2020     2021     Thereafter     Total  

540 Madison Avenue (60%)

  $ —        $ 72,000      $ —        $ —        $ —        $ —        $ 72,000   

Market Square North (50%)

    1,148        1,205        1,265        58,091        —          —          61,709   

901 New York Avenue (25%)

    —          —          —          955        1,042        54,253        56,250   

Metropolitan Square (20%)

    553        586        620        31,501          —          33,260   

500 North Capitol Street, N.W. (30%)

    —          —          —          —          —          31,500        31,500   

1265 Main Street (50%)

    339        383        398        413        429        18,238        20,200 (4) 

Annapolis Junction Building One (50%)

    279        19,519        —          —          —          —          19,798 (5) 

Annapolis Junction Buildings Seven & Eight (50%)

    299        326        17,723        —          —          —          18,348 (6) 

Annapolis Junction Building Six (50%)

      6,410        —          —          —          —          6,410 (7) 

Dock 72 (50%)

    —          —          —          —          —          —          —   (8) 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    2,618        100,429        20,006        90,960        1,471        103,991        319,475   

Deferred Financing Costs, Net

    (375     (265     (183     (112     (74     (273     (1,282
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Mortgage/Construction Loans Payable, Net

  $ 2,243      $ 100,164      $ 19,823      $ 90,848      $ 1,397      $ 103,718      $ 318,193   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

GAAP Weighted Average Rate

    3.50     3.14     3.37     5.17     1.68     3.08     3.78

% of Total Mortgage/Construction Loans Payable, Net

    0.70     31.48     6.23     28.55     0.44     32.60     100.00

Balloon Payments

  $ —        $ 97,882      $ 17,397      $ 88,387      $ —        $ 95,505      $ 299,171   

Scheduled Amortization

  $ 2,618      $ 2,547      $ 2,609      $ 2,573      $ 1,471      $ 8,486      $ 20,304   

Floating and Fixed Rate Debt Analysis

 

 

    % of Total Debt     Stated Weighted
Average Rate
    GAAP Weighted
Average Rate
    Weighted Average
Maturity (years)
 

Floating Rate Debt

    36.50     2.99     3.17     1.7   

Fixed Rate Debt

    63.50     4.44     4.50     6.4   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total Debt

    100.00     3.91     4.02     4.7   
 

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) Amounts represent the Company’s share based on its ownership percentage.
(2) Annapolis Junction includes four in-service properties and two undeveloped land parcels.
(3) Refer to page 44, Acquisitions footnote 3.
(4) On December 8, 2016, the joint venture obtained mortgage financing totaling $40.4 million collateralized by the property.
(5) On April 11, 2016, a notice of event of default was received from the lender because the loan to value ratio is not in compliance with the applicable covenant in the loan agreement. On October 17, 2016, the lender notified the joint venture that it has elected to charge the default rate on the loan. The default rate is defined as LIBOR plus 5.75% per annum. The loan has one, three-year extension option, subject to certain conditions including that no event of default exists or is ongoing.
(6) On December 7, 2016, the joint ventures combined and extended mortgage loans collateralized by Annapolis Junction Building Seven and Building Eight, respectively.
(7) On November 15, 2016, the joint venture extended the loan collateralized by its Annapolis Junction Building Six property.
(8) On December 19, 2016, the joint venture obtained construction financing with a total commitment of $250.0 million collateralized by its Dock 72 development project.

 

17


LOGO

FOURTH QUARTER 2016

 

UNCONSOLIDATED JOINT VENTURES (continued)

(unaudited and dollars in thousands)

 

Results of Operations

for the three months ended December 31, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    540 Madison     Market Square     Metropolitan     901 New York     Wisconsin
Place
Parking
Facility
    Annapolis     500 North Capitol     Colorado     1001     1265 Main    

Total

Unconsolidated

 
    Avenue     North     Square (1)     Avenue       Junction (2)     Street, N.W.     Center     6th Street     Street     Joint Ventures  

REVENUE

                     

Rental (3)

  $ 6,423      $ 3,461      $ 4,607      $ 6,415      $ 1,005      $ 1,953      $ 2,735      $ 10,130      $ 258      $ 994      $ 37,981   

Operating recoveries

    931        795        1,268        1,182        282        646        1,253        460        —          205        7,022   

Straight-line rent

    (107     1,059        1,840        602        —          40        269        3,319        —          —          7,022   

Fair value lease revenue

    —          —          —          —          —          —          —          96        —          —          96   

Termination income

    22        —          —          —          —          —          —          —          —          —          22   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue

    7,269        5,315        7,715        8,199        1,287        2,639        4,257        14,005        258        1,199        52,143   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EXPENSES

                     

Operating

    3,716        2,344        3,602        3,534        493        1,868        1,143        4,706        329        227        21,962   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NET OPERATING INCOME/(LOSS)

    3,553        2,971        4,113        4,665        794        771        3,114        9,299        (71     972        30,181   

Interest

    669        1,520        2,419        2,075        —          931        1,128        —          —          102        8,844   

Depreciation and amortization

    1,874        923        1,662        1,388        1,383        1,009        961        3,848        —          379        13,427   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

SUBTOTAL

    2,543        2,443        4,081        3,463        1,383        1,940        2,089        3,848        —          481        22,271   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME/(LOSS)

  $ 1,010      $ 528      $ 32      $ 1,202      $ (589   $ (1,169   $ 1,025      $ 5,451      $ (71   $ 491      $ 7,910   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

BXP’s nominal ownership percentage

    60.00     50.00     20.00     25.00     33.33     50.00     30.00     49.80     50.00     50.00  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

BXP’s share of net income/(loss)

  $ 606      $ 264      $ 12      $ 334 (4)    $ (196   $ (585   $ 308      $ 2,715      $ (36   $ 246      $ 3,668   

Basis differential

                     

Straight-line rent

    —          —          —          —          —          —          —          702 (5)      —          —          702   

Fair value lease revenue

    —          —          —          —          —          —          —          446 (5)      —          —          446   

Depreciation and amortization

    174        (7     77        (6     (7     (2     7        (2,463 )(5)      —          (4     (2,231

Gain on investment

    —          —          59,370        —          —          —          —          —          —          —          59,370   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total basis differential (6)

    174        (7     59,447        (6     (7     (2     7        (1,315 )(5)      —          (4     58,287   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income/(loss) from unconsolidated joint ventures

  $ 780      $ 257      $ 59,459      $ 328 (4)    $ (203   $ (587   $ 315      $ 1,400      $ (36   $ 242      $ 61,955   

Gain on investment

    —          —          (59,370     —          —          —          —          —          —          —          (59,370

BXP’s share of depreciation & amortization

    1,015        470        377        986 (4)      466        511        295        4,379        —          193        8,692   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

BXP’s share of Funds from Operations (FFO)

  $ 1,795      $ 727      $ 466      $ 1,314      $ 263      $ (76   $ 610      $ 5,779      $ (36   $ 435      $ 11,277   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

BXP’s share of interest expense

  $ 401      $ 760      $ 643      $ 995 (4)    $ —        $ 466      $ 338      $ —        $ —        $ 51      $ 3,654   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

BXP’s share of fair value interest adjustment

  $ —        $ —        $ —        $ —        $ —        $ —        $ —        $ —        $ —        $ —        $ —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

BXP’s share of amortization of financing costs

  $ 31      $ 10      $ 3      $ 21      $ —        $ 31      $ 4      $ —        $ —        $ —        $ 100   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

BXP’s share of capitalized interest

  $ —        $ —        $ —        $ —        $ —        $ —        $ —        $ —        $ —        $ —        $ —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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

  $ —        $ —        $ —        $ —        $ —        $ —        $ —        $ —        $ —        $ —        $ —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

BXP’s share of revenue (7) (8)

  $ 4,361      $ 2,658      $ 2,000      $ 3,932 (4)    $ 429      $ 1,320      $ 1,277      $ 8,122      $ 129      $ 600      $ 24,828   

BXP’s share of operating expenses

    2,230        1,172        905        1,695 (4)      164        934        343        2,344        165        114        10,066   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

BXP’s share of net operating income/(loss) (7) (8)

    2,131        1,486        1,095        2,237 (4)      265        386        934        5,778        (36     486        14,762   

Less:

                     

BXP’s share of termination income

    13        —          —          —   (4)      —          —          —          —          —          —          13   

BXP’s share of straight-line rent

    (64     530        485        289 (4)      —          20        81        2,355        —          —          3,696   

BXP’s share of fair value lease revenue

    —          —          —          —   (4)      —          —          —          494        —          —          494   

Add:

                     

BXP’s share of lease transaction costs that qualify as rent inducements

    —          —          —          —   (4)      —          —          43        —          —          —          43   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

BXP’s share of net operating income/(loss) (excluding termination income) - cash basis (7) (8)

  $ 2,182      $ 956      $ 610      $ 1,948 (4)    $ 265      $ 366      $ 896      $ 2,929      $ (36   $ 486      $ 10,602   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) On October 20, 2016, the Company and its partner in the unconsolidated joint venture that owns Metropolitan Square, completed the sale of an 80% interest in the joint venture. Prior to the sale, the Company owned a 51% interest and its partner owned a 49% interest in the joint venture. Following the sale, the Company continues to own a 20% interest in the joint venture with the buyer owning the remaining 80%.
(2) Annapolis Junction includes four properties in service and two undeveloped land parcels.
(3) Includes approximately $50 of management services income and approximately $33 of interest and other income.
(4) Reflects the allocation percentages pursuant to the achievement of specified investment return thresholds as provided for in the joint venture agreement.
(5) The Company’s purchase price allocation under ASC 805 for Colorado Center differs from the historical basis of the venture resulting in the majority of the basis differential for this venture.
(6) Represents adjustments related to the carrying values and depreciation of certain of the Company’s investment in unconsolidated joint ventures.
(7) Includes the Company’s share of approximately $2,982 of operating recoveries.
(8) Includes the Company’s share of approximately $29 of management services income and approximately $13 of interest and other income.

 

18


LOGO

FOURTH QUARTER 2016

 

CONSOLIDATED JOINT VENTURES

(unaudited and in thousands)

Balance Sheets

as of December 31, 2016

 

 

BXP's ownership percentage

     60.00     55.00     95.00  
  

 

 

   

 

 

   

 

 

   
           Norges Joint Ventures              
     767 Fifth Avenue
(The GM Building)
    Times Square Tower
601 Lexington Avenue
100 Federal Street
Atlantic Wharf Office
    Salesforce Tower     Total
Consolidated
Joint Ventures
 

ASSETS

        

Real estate, net

   $ 3,411,413      $ 2,184,916      $ 750,078      $ 6,346,407   

Cash and cash held in escrows

     104,976        151,525        2,454        258,955   

Other assets

     100,794        179,957        7        280,758   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

   $ 3,617,183      $ 2,516,398      $ 752,539      $ 6,886,120   
  

 

 

   

 

 

   

 

 

   

 

 

 

LIABILITIES AND EQUITY

        

Liabilities:

        

Mortgage notes payable, net

   $ 1,333,625      $ 684,858      $ —        $ 2,018,483   

Mezzanine notes payable

     307,093        —          —          307,093   

Outside members' notes payable

     180,000        —          —          180,000   

Accrued interest on related party notes

     153,758        —          —          153,758   

Other liabilities

     137,053        91,152        69,836        298,041   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

     2,111,529        776,010        69,836        2,957,375   
  

 

 

   

 

 

   

 

 

   

 

 

 

Equity:

        

Boston Properties, Inc.

     1,104,180 (1)      634,680        657,347        2,396,207   

Noncontrolling interests

     401,474        1,105,708        25,356        1,532,538 (2) 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total equity

     1,505,654        1,740,388        682,703        3,928,745   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities and equity

   $ 3,617,183      $ 2,516,398      $ 752,539      $ 6,886,120   
  

 

 

   

 

 

   

 

 

   

 

 

 

Partners' share of mortgage notes payable, net

   $ 533,450      $ 308,186      $ —        $ 841,636   

Partners' share of mezzanine notes payable

     122,837        —          —          122,837   

Outside members' notes payable

     180,000        —          —          180,000   
  

 

 

   

 

 

   

 

 

   

 

 

 

Partners' share of consolidated debt

   $ 836,287      $ 308,186      $ —        $ 1,144,473   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) Amount is adjusted for related party notes and accrued interest that are allocated to BXP's partners through noncontrolling interests in property partnerships.
(2) Amount excludes preferred shareholders' capital of approximately $0.1 million.

 

19


LOGO

FOURTH QUARTER 2016

 

CONSOLIDATED JOINT VENTURES (continued)

(unaudited and in thousands)

 

Income Statements

for the three months ended December 31, 2016

 

 

           Norges Joint Ventures              
           Times Square Tower              
           601 Lexington Avenue           Total  
     767 Fifth Avenue     100 Federal Street           Consolidated  
     (The GM Building)     Atlantic Wharf Office     Salesforce Tower     Joint Ventures  

REVENUE

        

Rental

   $ 67,558      $ 85,477      $ —        $ 153,035   

Straight-line rent

     2,521        212        —          2,733   

Fair value lease revenue

     3,581        1,693        —          5,274   

Termination income

     (7     75        —          68   

Parking and other

     882        1,325        —          2,207   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue

     74,535        88,782        —          163,317   
  

 

 

   

 

 

   

 

 

   

 

 

 

EXPENSES

        

Operating

     27,023        33,273        15        60,311   
  

 

 

   

 

 

   

 

 

   

 

 

 

NET OPERATING INCOME

     47,512        55,509        (15     103,006   

Management services income

     (134     (737     —          (871

Interest and other income

     (26     (162     —          (188

Interest expense

     24,137        8,063        —          32,200   

Interest expense - outside members’ notes

     8,933        —          —          8,933   

Fair value interest adjustment

     (11,495     —          —          (11,495

Depreciation and amortization

     39,360        25,610        —          64,970   

Other

     —          39        —          39   
  

 

 

   

 

 

   

 

 

   

 

 

 

SUBTOTAL

     60,775        32,813        —          93,588   
  

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME/(LOSS)

   $ (13,263   $ 22,696      $ (15   $ 9,418   
  

 

 

   

 

 

   

 

 

   

 

 

 

BXP’s ownership percentage

     60.00     55.00     95.00  
  

 

 

   

 

 

   

 

 

   

Partners’ share of NOI (1)

   $ 19,005      $ 24,979      $ (1   $ 43,983   
  

 

 

   

 

 

   

 

 

   

 

 

 

BXP’s share of NOI

   $ 28,507      $ 30,530      $ (14   $ 59,023   
  

 

 

   

 

 

   

 

 

   

 

 

 

Unearned portion of capitalized fees (2)

   $ 1,571      $ 216      $ —        $ 1,787   
  

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of partners’ noncontrolling interest (NCI):

        

Net income/(loss)

   $ (13,263   $ 22,696      $ (15   $ 9,418   

Add depreciation & amortization - BXP’s basis difference

     38        33        —          71   

Special allocation - BXP’s basis

     —          (90     —          (90

Add partners’ share of outside members’ loan interest

     8,933        —          —          8,933   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income/(loss) before interest allocation

   $ (4,292   $ 22,639      $ (15   $ 18,332   
  

 

 

   

 

 

   

 

 

   

 

 

 

Partners’ share of net income before interest allocation (1)

   $ (1,717   $ 10,188      $ —        $ 8,471   

Partners’ share of outside members’ loan interest (1)

     (8,933     —          —          (8,933

Allocation of management and other fees to non-controlling partners (1)

     (647     (982     —          (1,629

Accretion and adjustments (1)

     —          —          (30     (30
  

 

 

   

 

 

   

 

 

   

Partners’ NCI (1)

   $ (11,297   $ 9,206      $ (30   $ (2,121
  

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of partners’ share of FFO:

        

Net income/(loss)

   $ (13,263   $ 22,696      $ (15   $ 9,418   

Add depreciation & amortization

     39,360        25,610        —          64,970   
  

 

 

   

 

 

   

 

 

   

 

 

 

Entity FFO

   $ 26,097      $ 48,306      $ (15   $ 74,388   
  

 

 

   

 

 

   

 

 

   

 

 

 

Partners’ NCI (1)

   $ (11,297   $ 9,206      $ (30   $ (2,121

Partners’ share of depreciation and amortization after BXP’s basis differential (1)

     15,728        11,528        —          27,256   
  

 

 

   

 

 

   

 

 

   

 

 

 

Partners’ share FFO (1)

   $ 4,431      $ 20,734      $</