EX-99.1 2 d382516dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO

Supplemental Operating and Financial Data

for the Quarter Ended March 31, 2017


LOGO

FIRST QUARTER 2017

 

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 of Net Income Attributable to Boston Properties, Inc. Common Shareholders to Same Property Performance

     21-22  

Same Property Net Operating Income by Reportable Segment

     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 of issuance of this report and are not guarantees of future results, performance or achievements. Boston Properties does not undertake a duty to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

(Cover photo: 601 Massachusetts Avenue, Washington, DC)

 

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FIRST QUARTER 2017

 

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 Class A 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/redevelopment), five retail properties, four residential properties (including two properties under construction) 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 36 individuals averages 31 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 select 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) with unique amenities and locations 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, (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 and (3) provide superior service to our tenants;

 

    be astute in market timing for investment decisions by acquiring properties in times of opportunity, developing into economic growth and selectively selling assets at attractive prices, 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 and employer of choice for talented real estate professionals.

Snapshot

(as of March 31, 2017)

 

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 and 2014 Multi-Year Long-Term Incentive Program (“MYLTIP”) Units) on an as-converted basis (excludes 2015, 2016 and 2017 MYLTIP Units because not yet earned) (1)

   171.9 million

Dividend—Quarter/Annualized

   $0.75/$3.00

Dividend Yield

   2.27%

Consolidated Market Capitalization

   $32.9 billion

BXP’s Share of Market Capitalization (2)

   $32.0 billion

Senior Debt Ratings

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

 

(1) For additional detail, see page 14.
(2) For the Company’s definition of BXP’s Share of Market Capitalization and related disclosures, see page 47. For a quantitative reconciliation of Consolidated Market Capitalization to BXP’s Share of Market Capitalization, see page 14.

 

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FIRST QUARTER 2017

 

INVESTOR INFORMATION

 

Board of Directors

Joel I. Klein    Dr. Jacob A. Frenkel
Lead Independent Director    Director, Chair of Nominating & Corporate Governance Committee

Owen D. Thomas

Chief Executive Officer and Director

  

Matthew J. Lustig

Director

Douglas T. Linde

President and Director

  

Alan J. Patricof

Director

Bruce W. Duncan

Director

  

Martin Turchin

Director

Karen E. Dykstra

Director

  

David A. Twardock

Director, Chair of Audit Committee

Carol B. Einiger

  
Director, Chair of Compensation Committee   

Chairman Emeritus

Mortimer B. Zuckerman   

Management

Raymond A. Ritchey

Senior Executive Vice President

  

John F. Powers

Executive Vice President,

New York Region

Michael E. LaBelle

Executive Vice President, Chief Financial Officer and Treasurer

  

Frank D. Burt

Senior Vice President,

General Counsel

Peter D. Johnston

Executive Vice President, Washington, DC Region

  

Michael R. Walsh

Senior Vice President, Chief Accounting Officer

Bryan J. Koop   

Executive Vice President,

Boston Region

  
Robert E. Pester   

Executive Vice President,

San Francisco Region

  
 

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   

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
  

Stock Exchange Listing

New York Stock Exchange

      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):

 

     Q1 2017     Q4 2016     Q3 2016     Q2 2016     Q1 2016  

High Closing Price

   $ 139.88     $ 133.39     $ 143.61     $ 133.13     $ 127.26  

Low Closing Price

   $ 127.00     $ 114.07     $ 130.03     $ 123.71     $ 108.18  

Average Closing Price

   $ 132.59     $ 124.31     $ 138.78     $ 128.38     $ 118.69  

Closing Price, at the end of the quarter

   $ 132.41     $ 125.78     $ 136.29     $ 131.90     $ 127.08  

Dividends per share

   $ 0.75     $ 0.75     $ 0.65     $ 0.65     $ 0.65  

Closing dividend yield—annualized

     2.27     2.39     1.91     1.97     2.05

Closing common shares outstanding, plus common units and LTIP units (including Outperformance Plan Units and 2013 and 2014 MYLTIP Units) on an as-converted basis (excludes 2015, 2016 and 2017 MYLTIP Units because not yet earned) (thousands) (1)

     171,938       171,774       171,775       171,772       171,763  

Closing market value of outstanding shares and units (thousands)

   $ 22,966,310     $ 21,805,734     $ 23,611,215     $ 22,856,727     $ 22,027,642  

 

(1) For additional detail, see page 14.

 

Timing

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

Second Quarter, 2017

   Tentatively August 1, 2017

Third Quarter, 2017

   Tentatively November 1, 2017

Fourth Quarter, 2017

   Tentatively January 30, 2018

First Quarter, 2018

   Tentatively April 24, 2018

 

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FIRST QUARTER 2017

 

RESEARCH COVERAGE

 

Equity Research Coverage       Debt Research Coverage    Rating Agencies
Jacob Kilstein    Anthony Paolone    Andrew Mollay    Stephen Boyd
Argus Research Company    J.P. Morgan Securities    Bank of America Merrill Lynch    Fitch Ratings
646.747.5447    212.622.6682    646.855.6435    212.908.9153
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    Richard Anderson    Thomas Cook    Anita Ogbara
Barclays Capital    Mizuho Securities    Citi Investment Research    Standard & Poor’s
212.526.2306    212.205.8445    212.723.1112    212.438.5077
John Kim    Sumit Sharma / Vikram Malhotra    Mark Streeter   
BMO Capital    Morgan Stanley    J.P. Morgan Securities   
212.885.4115    212.761.7567 / 212.761.7064    212.834.5086   
Tom Catherwood    Brad Schwer    Thierry Perrein / Jason Jones   
BTIG    Morningstar    Wells Fargo   
212.593.7510    312.244.7061    704.715.8455 / 704.715.7932   
Thomas Lesnick / Ryan Wineman    Mike Carroll      
Capital One Securities    RBC Capital Markets      
571.633.8191 / 571.633.8414    440.715.2649      
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      
Jed Reagan / Tyler Grant    Nick Yulico      
Green Street Advisors    UBS Securities      
949.640.8780    212.713.3402      
Jonathan Petersen / Omotayo Okusanya    Blaine Heck      
Jefferies & Co.    Wells Fargo Securities      
212.284.1705 / 212.336.7076    443.263.6529      

 

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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FIRST QUARTER 2017

 

GUIDANCE

 

The Company’s guidance for the second 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 April 25, 2017 and otherwise referenced during the Company’s conference call scheduled for April 26, 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.

 

     Second Quarter 2017      Full Year 2017  
     Low      High      Low      High  

Projected EPS (diluted)

   $ 0.77      $ 0.79      $ 2.60      $ 2.68  

Add:

           

Projected Company share of real estate depreciation and amortization

     0.86        0.86        3.57        3.57  

Less:

           

Projected Company share of gains on sales of real estate

     0.02        0.02        0.02        0.02  
  

 

 

    

 

 

    

 

 

    

 

 

 

Projected FFO per share (diluted)

   $ 1.61      $ 1.63      $ 6.15      $ 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 Same Property net operating income

     1.50     3.00

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

     1.00     3.00

BXP’s Share of Non Same Properties’ incremental contribution to net operating income over prior year

   $ 17,000     $ 23,000  

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

   $ 65,000     $ 85,000  

Hotel net operating income

   $ 13,000     $ 15,000  

Termination income(1)

   $ 21,000     $ 25,000  

Other income (expense):

    

Development and management services income

   $ 28,000     $ 33,000  

General and administrative expense

   $ (115,000   $ (110,000

Net interest expense

   $ (368,000   $ (355,000

Noncontrolling interest:

    

Noncontrolling interest in property partnerships’ share of FFO

   $ (132,000   $ (117,000

 

(1) Includes $13,000-$14,000 of termination income in the second quarter of 2017.

 

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FIRST QUARTER 2017

 

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-Mar-17     31-Dec-16     30-Sep-16     30-Jun-16     31-Mar-16  

Net income attributable to Boston Properties, Inc. common shareholders

   $ 97,083     $ 147,214     $ 76,753     $ 96,597     $ 181,747  

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

   $ 0.63     $ 0.96     $ 0.50     $ 0.63     $ 1.18  

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

   $ 0.63     $ 0.96     $ 0.50     $ 0.63     $ 1.18  

FFO attributable to Boston Properties, Inc. (1)

   $ 228,383     $ 236,898     $ 219,564     $ 220,595     $ 250,688  

FFO per share—diluted (1)

   $ 1.48     $ 1.54     $ 1.42     $ 1.43     $ 1.63  

Dividends per common share

   $ 0.75     $ 0.75     $ 0.65     $ 0.65     $ 0.65  

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

   $ 178,002     $ 151,183     $ 149,725     $ 160,948     $ 188,204  

Ratios:

          

Interest Coverage Ratio (excluding capitalized interest) (3)

     3.88       3.86       3.49       3.63       3.79  

Interest Coverage Ratio (including capitalized interest) (3)

     3.40       3.46       3.17       3.28       3.45  

FFO Payout Ratio (2)

     50.68     48.70     45.77     45.45     39.88

FAD Payout Ratio (2)

     72.49     85.28     74.63     69.42     59.35

Selected Items (4):

          

Revenue

   $ 632,228     $ 636,061     $ 625,228     $ 623,546     $ 665,985  

Partners’ share of revenue from consolidated joint ventures

     (70,178     (69,766     (69,391     (69,609     (73,667

BXP’s share of revenue from unconsolidated joint ventures

     25,650       24,828       25,271       18,825       18,447  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

BXP’s share of revenue

   $ 587,700     $ 591,123     $ 581,108     $ 572,762     $ 610,765  

Straight-line rent (5)

   $ 12,023     $ 14,711     $ 11,107     $ (6,503   $ 14,424  

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

     (590     (1,103     (707     (718     (1,696

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

     3,563       3,696       3,285       1,787       1,064  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

BXP’s share of straight-line rent

   $ 14,996     $ 17,304     $ 13,685     $ (5,434   $ 13,792  

Fair value lease revenue (6)

   $ 5,390     $ 6,840     $ 6,547     $ 8,808     $ 8,186  

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

     (1,575     (2,194     (2,084     (3,031     (2,810

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

     493       494       511       (1     (1
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

BXP’s share of fair value lease revenue

   $ 4,308     $ 5,140     $ 4,974     $ 5,776     $ 5,375  

Lease termination fees (7)

   $ 3,918     $ 504     $ (170   $ 7,654     $ 51,306  

Partners’ share of lease termination fees from consolidated joint ventures

     (1,310     (31     421       (44     (1,852

BXP’s share of termination income from unconsolidated joint ventures

     316       13       8       4       (9
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

BXP’s share of termination income

   $ 2,924     $ 486     $ 259     $ 7,614     $ 49,445  

Fair value interest adjustment and hedge amortization

   $ 10,323     $ 10,145     $ 10,378     $ 11,272     $ 12,321  

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

     (4,627     (4,598     (4,569     (4,540     (4,511

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

     —         —         —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

BXP’s share of fair value interest adjustment

   $ 5,696     $ 5,547     $ 5,809     $ 6,732     $ 7,810  

Ground rent expense (8)

   $ 3,459     $ 3,460     $ 3,471     $ 3,469     $ 3,471  

Losses from early extinguishments of debt

   $ —       $ —       $ (371   $ —       $ —    

Capitalized interest

   $ 12,345     $ 10,281     $ 9,788     $ 9,899     $ 9,269  

Capitalized wages

   $ 3,947     $ 5,376     $ 4,155     $ 4,467     $ 4,344  

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

     63.1     63.6     62.3     64.0     66.3

Income from unconsolidated joint ventures

   $ 3,084     $ 2,585     $ 1,464     $ 2,234     $ 1,791  

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

   $ 12,125 (9)    $ 11,277     $ 10,592     $ 6,852     $ 6,287  

Net income attributable to noncontrolling interests in property partnerships

   $ 4,424     $ (2,121   $ (17,225   $ 6,814     $ 10,464  

FFO attributable to noncontrolling interests in property partnerships

   $ 25,839 (10)    $ 25,135     $ 23,682     $ 26,183     $ 30,019  

 

(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 lump-sum rental income from three tenants totaling approximately $15.4 million 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.

 

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FIRST QUARTER 2017

 

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-Mar-17     31-Dec-16     30-Sep-16     30-Jun-16     31-Mar-16  

Balance Sheet Items:

          

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

   $ 33,923     $ 37,079     $ 40,346     $ 43,780     $ 47,388  

Below-market rents (included within Other Liabilities)

   $ 123,545     $ 132,495     $ 142,595     $ 152,576     $ 160,504  

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

   $ 43,356     $ 42,717     $ 41,718     $ 40,687     $ 39,752  

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)

   $ 162,936     $ 153,758     $ 144,825     $ 136,131     $ 127,670  

Capitalization:

          

Common Stock Price @ Quarter End

   $ 132.41     $ 125.78     $ 136.29     $ 131.90     $ 127.08  

Equity Value @ Quarter End

   $ 22,966,310     $ 21,805,734     $ 23,611,215     $ 22,856,727     $ 22,027,642  

Consolidated Debt

   $ 9,886,845     $ 9,796,133     $ 9,808,922     $ 9,934,084     $ 10,160,366  

Add:

          

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

     317,719       318,193       350,225       350,831       351,394  

Less:

          

Partners’ share of Consolidated Debt (5)

     1,138,446       1,144,473       1,150,462       1,156,399       1,162,292  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

BXP’s Share of Debt (3)(4)

   $ 9,066,118     $ 8,969,853     $ 9,008,685     $ 9,128,516     $ 9,349,468  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Consolidated Market Capitalization

   $ 32,853,155     $ 31,601,867     $ 33,420,137     $ 32,790,811     $ 32,188,008  

Consolidated Debt/Consolidated Market Capitalization (3)

     30.09     31.00     29.35     30.30     31.57

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

   $ 32,032,428 (6)    $ 30,775,587     $ 32,619,900     $ 31,985,243     $ 31,377,110  

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

     28.30 %(6)      29.15     27.62     28.54     29.80

 

(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

FIRST QUARTER 2017

 

CONSOLIDATED BALANCE SHEETS

(unaudited and in thousands)

 

     31-Mar-17     31-Dec-16     30-Sep-16     30-Jun-16     31-Mar-16  

ASSETS

          

Real estate

   $ 18,931,136     $ 18,862,648     $ 18,704,856     $ 18,690,403     $ 18,424,542  

Construction in progress (1)

     1,211,324       1,037,959       954,013       865,359       857,578  

Land held for future development (2)

     249,800       246,656       243,887       241,106       256,952  

Less accumulated depreciation

     (4,302,283     (4,222,235     (4,113,553     (4,056,716     (3,969,648
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total real estate

     16,089,977       15,925,028       15,789,203       15,740,152       15,569,424  

Cash and cash equivalents

     302,939       356,914       419,323       1,180,044       1,605,678  

Cash held in escrows

     51,244       63,174       63,980       65,654       71,349  

Investments in securities

     25,817       23,814       23,022       21,775       21,077  

Tenant and other receivables, net

     73,012       92,548       76,258       84,861       73,759  

Accrued rental income, net

     812,124       799,138       785,569       776,816       767,864  

Deferred charges, net

     666,677       686,163       680,192       697,823       693,976  

Prepaid expenses and other assets

     150,905       129,666       176,693       144,222       136,799  

Investments in unconsolidated joint ventures

     793,932       775,198       775,659       252,618       235,904  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

   $ 18,966,627     $ 18,851,643     $ 18,789,899     $ 18,963,965     $ 19,175,830  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

LIABILITIES AND EQUITY

          

Liabilities:

          

Mortgage notes payable, net

   $ 2,046,959     $ 2,063,087     $ 2,077,707     $ 3,189,013     $ 3,416,622  

Unsecured senior notes, net

     7,248,152       7,245,953       7,243,767       6,257,274       6,255,602  

Unsecured line of credit

     105,000       —         —         —         —    

Mezzanine notes payable

     306,734       307,093       307,448       307,797       308,142  

Outside members’ notes payable

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

Accounts payable and accrued expenses

     313,723       298,524       312,979       287,464       252,727  

Dividends and distributions payable

     130,418       130,308       113,038       113,071       113,079  

Accrued interest payable

     266,714       243,933       234,628       222,175       221,578  

Other liabilities

     446,489       450,821       461,079       508,952       498,290  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

     11,044,189       10,919,719       10,930,646       11,065,746       11,246,040  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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, 153,849,231, 153,790,175, 153,773,012, 153,674,930 and 153,604,966 outstanding, respectively

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

Additional paid-in capital

     6,339,970       6,333,424       6,326,580       6,316,191       6,306,723  

Dividends in excess of earnings

     (712,270     (693,694     (725,522     (702,361     (699,048

Treasury common stock, at cost

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

Accumulated other comprehensive loss

     (50,983     (52,251     (73,943     (79,748     (56,706
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total stockholders’ equity attributable to Boston Properties, Inc.

     5,775,533       5,786,295       5,725,931       5,732,897       5,749,783  

Noncontrolling interests:

          

Common units of the Operating Partnership

     617,252       614,982       608,280       612,385       616,095  

Property partnerships

     1,529,653       1,530,647       1,525,042       1,552,937       1,563,912  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total equity

     7,922,438       7,931,924       7,859,253       7,898,219       7,929,790  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities and equity

   $ 18,966,627     $ 18,851,643     $ 18,789,899     $ 18,963,965     $ 19,175,830  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(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

FIRST QUARTER 2017

 

CONSOLIDATED INCOME STATEMENTS

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

 

     Three Months Ended  
     31-Mar-17     31-Dec-16     30-Sep-16     30-Jun-16     31-Mar-16  

Revenue

          

Rental

          

Base rent

   $ 503,562     $ 498,941     $ 489,312     $ 493,386     $ 536,128  

Recoveries from tenants

     89,164       91,123       92,560       85,706       89,586  

Parking and other

     25,610       25,334       24,638       26,113       24,825  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total rental revenue

     618,336       615,398       606,510       605,205       650,539  

Hotel revenue

     7,420       10,965       12,354       12,808       8,757  

Development and management services

     6,472       9,698       6,364       5,533       6,689  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue

     632,228       636,061       625,228       623,546       665,985  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Expenses

          

Operating

     116,415       113,669       117,728       113,212       114,467  

Real estate taxes

     109,435       108,556       109,480       104,726       104,705  

Demolition costs

     2,437       1,873       1,352       —         —    

Hotel operating

     7,091       7,736       8,118       7,978       7,634  

General and administrative (1)

     31,386       25,293       25,165       25,418       29,353  

Transaction costs

     34       1,200       249       913       25  

Impairment loss

     —         —         1,783       —         —    

Depreciation and amortization (2)

     159,205       178,032       203,748       153,175       159,448  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses

     426,003       436,359       467,623       405,422       415,632  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     206,225       199,702       157,605       218,124       250,353  

Other income (expense)

          

Income from unconsolidated joint ventures

     3,084       2,585       1,464       2,234       1,791  

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

     —         59,370       —         —         —    

Interest and other income

     614       573       3,628       1,524       1,505  

Gains from investments in securities (1)

     1,042       560       976       478       259  

Interest expense (4)

     (95,534     (97,896     (104,641     (105,003     (105,309

Losses from early extinguishments of debt

     —         —         (371     —         —    

Losses from interest rate contracts

     —         —         (140     —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before gains on sales of real estate

     115,431       164,894       58,521       117,357       148,599  

Gains on sales of real estate

     133       —         12,983       —         67,623  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     115,564       164,894       71,504       117,357       216,222  

Net income attributable to noncontrolling interests

          

Noncontrolling interest in property partnerships

     (4,424     2,121       17,225       (6,814     (10,464

Noncontrolling interest—common units of the Operating Partnership (5)

     (11,432     (17,097     (9,387     (11,357     (21,393
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to Boston Properties, Inc.

     99,708       149,918       79,342       99,186       184,365  

Preferred dividends

     (2,625     (2,704     (2,589     (2,589     (2,618
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to Boston Properties, Inc. common shareholders

   $ 97,083     $ 147,214     $ 76,753     $ 96,597     $ 181,747  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

INCOME PER SHARE OF COMMON STOCK (EPS)

                              

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

   $ 0.63     $ 0.96     $ 0.50     $ 0.63     $ 1.18  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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

   $ 0.63     $ 0.96     $ 0.50     $ 0.63     $ 1.18  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) General and administrative expense includes $(1,042), $(560), $(976), $(478) and $(259) and gains from investments in securities include $1,042, $560, $976, $478 and $259 for the three months ended March 31, 2017, December 31, 2016, September 30, 2016, June 30, 2016 and March 31, 2016, 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 March 31, 2017, December 31, 2016, September 30, 2016, June 30, 2016 and March 31, 2016, interest expense includes $9,178, $8,933, $8,694, $8,461 and $8,234, 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) Equals noncontrolling interest—common units of the Operating Partnership’s share of 10.33%, 10.25%, 10.28%, 10.33% and 10.32% of income before net income attributable to noncontrolling interests in Operating Partnership after deduction for preferred distributions for the three months ended March 31, 2017, December 31, 2016, September 30, 2016, June 30, 2016 and March 31, 2016, respectively.

 

10


LOGO

FIRST QUARTER 2017

 

FUNDS FROM OPERATIONS (FFO)

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

 

     Three Months Ended  
     31-Mar-17     31-Dec-16     30-Sep-16     30-Jun-16     31-Mar-16  

Net income attributable to Boston Properties, Inc. common shareholders

   $ 97,083     $ 147,214     $ 76,753     $ 96,597     $ 181,747  

Add:

          

Preferred dividends

     2,625       2,704       2,589       2,589       2,618  

Noncontrolling interest—common units of the Operating Partnership

     11,432       17,097       9,387       11,357       21,393  

Noncontrolling interests in property partnerships

     4,424       (2,121     (17,225     6,814       10,464  

Less:

          

Gains on sales of real estate

     133       —         12,983       —         67,623  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before gains on sales of real estate

     115,431       164,894       58,521       117,357       148,599  

Add:

          

Depreciation and amortization

     159,205       178,032       203,748       153,175       159,448  

Noncontrolling interests in property partnerships’ share of depreciation and amortization

     (21,415     (27,256     (40,907     (19,369     (19,555

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

     9,041       8,692       9,128       4,618       4,496  

Corporate-related depreciation and amortization

     (525     (449     (393     (362     (364

Less:

          

Gain on sale of investment in unconsolidated joint venture

     —         59,370       —         —         —    

Noncontrolling interests in property partnerships

     4,424       (2,121     (17,225     6,814       10,464  

Preferred dividends

     2,625       2,704       2,589       2,589       2,618  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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

     254,688       263,960       244,733       246,016       279,542  

Less:

          

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

     26,305       27,062       25,169       25,421       28,854  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

FFO attributable to Boston Properties, Inc. common shareholders

   $ 228,383     $ 236,898     $ 219,564     $ 220,595     $ 250,688  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Boston Properties, Inc.’s percentage share of Basic FFO

     89.67     89.75     89.72     89.67     89.68
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

FFO per share—basic

   $ 1.48     $ 1.54     $ 1.43     $ 1.44     $ 1.63  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding—basic

     153,860       153,814       153,754       153,662       153,626  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

FFO per share—diluted

   $ 1.48     $ 1.54     $ 1.42     $ 1.43     $ 1.63  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding—diluted

     154,214       153,991       154,136       153,860       153,917  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation to Diluted FFO:

          

Basic FFO

   $ 254,688     $ 263,960     $ 244,733     $ 246,016     $ 279,542  

Add:

          

Effect of dilutive securities—stock-based compensation

     —         —         —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted FFO

     254,688       263,960       244,733       246,016       279,542  

Less:

          

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

     26,251       27,034       25,113       25,391       28,805  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Boston Properties, Inc.’s share of Diluted FFO

   $ 228,437     $ 236,926     $ 219,620     $ 220,625     $ 250,737  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of Shares/Units for Diluted FFO:

          

Shares/units for Basic FFO

     171,581       171,385       171,379       171,370       171,309  

Add:

          

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

     354       177       382       198       291  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Shares/units for Diluted FFO

     171,935       171,562       171,761       171,568       171,600  

Less:

          

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

     17,721       17,571       17,625       17,708       17,683  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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

     154,214       153,991       154,136       153,860       153,917  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Boston Properties, Inc.’s percentage share of Diluted FFO

     89.69     89.76     89.74     89.68     89.70
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

11


LOGO

FIRST QUARTER 2017

 

FUNDS AVAILABLE FOR DISTRIBUTION (FAD)

(in thousands, except for ratio amounts)

 

     Three Months Ended  
     31-Mar-17     31-Dec-16     30-Sep-16     30-Jun-16     31-Mar-16  

Net income attributable to Boston Properties, Inc. common shareholders

   $ 97,083     $ 147,214     $ 76,753     $ 96,597     $ 181,747  

Add:

          

Preferred dividends

     2,625       2,704       2,589       2,589       2,618  

Noncontrolling interest—common units of the Operating Partnership

     11,432       17,097       9,387       11,357       21,393  

Noncontrolling interests in property partnerships

     4,424       (2,121     (17,225     6,814       10,464  

Less:

          

Gains on sales of real estate

     133       —         12,983       —         67,623  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before gains on sales of real estate

     115,431       164,894       58,521       117,357       148,599  

Add:

          

Depreciation and amortization

     159,205       178,032       203,748       153,175       159,448  

Noncontrolling interests in property partnerships’ share of depreciation and amortization

     (21,415     (27,256     (40,907     (19,369     (19,555

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

     9,041       8,692       9,128       4,618       4,496  

Corporate-related depreciation and amortization

     (525     (449     (393     (362     (364

Less:

          

Gain on sale of investment in unconsolidated joint venture

     —         59,370       —         —         —    

Noncontrolling interests in property partnerships

     4,424       (2,121     (17,225     6,814       10,464  

Preferred dividends

     2,625       2,704       2,589       2,589       2,618  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Basic FFO

     254,688       263,960       244,733       246,016       279,542  

Straight-line rent (1)

     (12,023     (14,711     (11,107     6,503       (14,424

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

     590       1,103       707       718       1,696  

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

     (3,563     (3,696     (3,285     (1,787     (1,064

Lease transaction costs that qualify as rent inducements (2)

     682       487       861       2,200       5,305  

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

     —         —         —         —         (17

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

     132       43       15       —         —    

Fair value lease revenue (3)

     (5,390     (6,840     (6,547     (8,808     (8,186

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

     1,575       2,194       2,084       3,031       2,810  

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

     (493     (494     (511     1       1  

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

     —         —         371       —         —    

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

     (403     7       —         141       29  

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

     161       (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)

     639       998       1,031       935       987  

Stock-based compensation

     10,802       7,621       7,643       7,578       10,069  

Non-real estate depreciation

     525       449       393       362       364  

Impairment loss

     —         —         1,783       —         —    

Fair value interest adjustment

     (10,323     (10,145     (10,378     (11,272     (12,321

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

     4,627       4,598       4,569       4,540       4,511  

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

     —         —         —         —         —    

2nd generation tenant improvements and leasing commissions

     (48,730     (75,708     (69,742     (74,719     (58,100

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

     123       449       805       1,247       2,525  

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

     (1,164     (1,472     (18     (8,616     (4,769

Unearned portion of capitalized fees from consolidated joint ventures

     537       1,787       250       2,697       1,191  

Maintenance capital expenditures (5)

     (10,677     (16,334     (11,889     (9,654     (21,961

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

     2,129       1,197       377       422       573  

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

     (211     (437     (283     (112     (197

Hotel improvements, equipment upgrades and replacements

     (6,231     (3,870     (2,137     (434     (360
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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

   $ 178,002     $ 151,183     $ 149,725     $ 160,948     $ 188,204  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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

   $ 129,040     $ 128,930     $ 111,739     $ 111,737     $ 111,708  

FAD Payout Ratio (B÷A)

     72.49     85.28     74.63     69.42     59.35
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) During the three months ended June 30, 2016, the Company recognized lump-sum rental income from three tenants totaling approximately $15.4 million 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. 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

FIRST QUARTER 2017

 

INTEREST COVERAGE RATIOS

(in thousands, except for ratio amounts)

 

     Three Months Ended  
     31-Mar-17     31-Dec-16     30-Sep-16     30-Jun-16     31-Mar-16  

Net income attributable to Boston Properties, Inc. common shareholders

   $ 97,083     $ 147,214     $ 76,753     $ 96,597     $ 181,747  

Add:

          

Preferred dividends

     2,625       2,704       2,589       2,589       2,618  

Noncontrolling interest—common units of the Operating Partnership

     11,432       17,097       9,387       11,357       21,393  

Noncontrolling interests in property partnerships

     4,424       (2,121     (17,225     6,814       10,464  

Less:

          

Gains on sales of real estate

     133       —         12,983       —         67,623  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before gains on sales of real estate

     115,431       164,894       58,521       117,357       148,599  

Noncontrolling interests in property partnerships

     (4,424     2,121       17,225       (6,814     (10,464

Interest expense

     95,534       97,896       104,641       105,003       105,309  

Partners’ share of interest expense from consolidated joint ventures

     (17,259     (17,579     (17,460     (17,177     (16,988

BXP’s share of interest expense from unconsolidated joint ventures

     3,749       3,654       4,025       4,010       4,015  

Depreciation and amortization expense

     159,205       178,032       203,748       153,175       159,448  

Noncontrolling interests in property partnerships’ share of depreciation and amortization

     (21,415     (27,256     (40,907     (19,369     (19,555

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

     9,041       8,692       9,128       4,618       4,496  

Gain on sale of investment in unconsolidated joint venture

     —         (59,370     —         —         —    

Losses from early extinguishments of debt

     —         —         371       —         —    

Impairment loss

     —         —         1,783       —         —    

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

     (403     7       —         141       29  

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

     161       (3     —         (41     —    

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

     —         —         —         —         —    

Stock-based compensation

     10,802       7,621       7,643       7,578       10,069  

Straight-line ground rent expense adjustment (1)

     639       998       1,031       935       987  

Straight-line rent (2)

     (12,023     (14,711     (11,107     6,503       (14,424

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

     590       1,103       707       718       1,696  

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

     (3,563     (3,696     (3,285     (1,787     (1,064

Lease transaction costs that qualify as rent inducements (3)

     682       487       861       2,200       5,305  

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

     —         —         —         —         (17

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

     132       43       15       —         —    

Fair value lease revenue (4)

     (5,390     (6,840     (6,547     (8,808     (8,186

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

     1,575       2,194       2,084       3,031       2,810  

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

     (493     (494     (511     1       1  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Subtotal (A)

   $ 332,571     $ 337,793     $ 331,966     $ 351,274     $ 372,066  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Divided by:

          

Interest expense

   $ 95,534     $ 97,896     $ 104,641     $ 105,003     $ 105,309  

Partners’ share of interest expense from consolidated joint ventures

     (17,259     (17,579     (17,460     (17,177     (16,988

BXP’s share of interest expense from unconsolidated joint ventures

     3,749       3,654       4,025       4,010       4,015  

Fair value interest adjustment

     10,323       10,145       10,378       11,272       12,321  

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

     (4,627     (4,598     (4,569     (4,540     (4,511

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

     —         —         —         —         —    

Amortization of financing costs

     (1,967     (1,964     (1,889     (1,704     (1,829

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

     9       39       38       38       38  

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

     (100     (100     (113     (112     (120
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted interest expense excluding capitalized interest (B)

     85,662       87,493       95,051       96,790       98,235  

Capitalized interest

     12,345       10,281       9,788       10,222       9,525  

Partners’ share of capitalized interest from consolidated joint ventures

     (251     (203     (21     —         —    

BXP’s share of capitalized interest from unconsolidated joint ventures

     (6     —         —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted interest expense including capitalized interest (C)

   $ 97,750     $ 97,571     $ 104,818     $ 107,012     $ 107,760  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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

     3.88       3.86       3.49       3.63       3.79  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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

     3.40       3.46       3.17       3.28       3.45  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(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 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. 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

FIRST QUARTER 2017

 

CAPITAL STRUCTURE

(in thousands, except percentages)

Consolidated Debt

 

 

     Aggregate Principal
March 31, 2017
 

Mortgage Notes Payable

   $ 2,026,578  

Mezzanine Notes Payable

     306,000  

Unsecured Line of Credit

     105,000  

Unsecured Senior Notes, at face value

     7,300,000  

Outside Members’ Notes Payable

     180,000  
  

 

 

 

Subtotal

     9,917,578  

Fair Value Interest Adjustment on Mortgage Notes Payable

     22,622  

Fair Value Interest Adjustment on Mezzanine Notes Payable

     734  

Discount on Unsecured Senior Notes

     (18,132

Deferred Financing Costs, Net

     (35,957
  

 

 

 

Consolidated Debt

   $ 9,886,845  
  

 

 

 

Boston Properties Limited Partnership Unsecured Senior Notes (1)

 

Settlement
Date
     Maturity
Date
     Principal      Effective 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     2.750     99.271   $ 6,925      $ 7,692      $ 985,383  
  1/20/2016        2/1/2026        1,000,000        3.766     3.650     99.708     2,631        7,194        990,175  
  6/27/2013        2/1/2024        700,000        3.916     3.800     99.694     1,460        3,843        694,697  
  4/11/2013        9/1/2023        500,000        3.279     3.125     99.379     2,044        2,580        495,376  
  6/11/2012        2/1/2023        1,000,000        3.954     3.850     99.779     1,311        4,560        994,129  
  11/10/2011        11/15/2018        850,000        3.853     3.700     99.767     502        2,782        846,716  
  11/18/2010        5/15/2021        850,000        4.289     4.125     99.260     2,796        2,032        845,172  
  4/19/2010        11/15/2020        700,000        5.708     5.625     99.891     310        1,437        698,253  
  10/9/2009        10/15/2019        700,000        5.967     5.875     99.931     153        1,596        698,251  
     

 

 

          

 

 

    

 

 

    

 

 

 
      $ 7,300,000            $ 18,132      $ 33,716      $ 7,248,152  
     

 

 

          

 

 

    

 

 

    

 

 

 

Equity

 

 

     Shares/Units Outstanding
as of 3/31/2017
     Common Stock
Equivalents
     Equivalent
Value (2)
 

Common Stock

     153,849        153,849      $ 20,371,146  

Common Operating Partnership Units

     18,089        18,089        2,395,164  

5.25% Series B Cumulative Redeemable Preferred Stock (non-callable through March 27, 2018)

     80        —          200,000  
     

 

 

    

 

 

 

Total Equity

        171,938      $ 22,966,310  
     

 

 

    

 

 

 

Consolidated Debt

         $ 9,886,845  

Add:

        

BXP’s share of unconsolidated joint venture debt (3)

           317,719  

Less:

        

Partners’ share of consolidated debt (4)

           1,138,446  
        

 

 

 

BXP’s Share of Debt (5)

         $ 9,066,118  
        

 

 

 

Consolidated Market Capitalization

         $ 32,853,155  
        

 

 

 

BXP’s Share of Market Capitalization (5)

         $ 32,032,428  
        

 

 

 

 

(1) All unsecured senior notes are rated A- (stable), BBB+ (stable) and Baa2 (positive) by S&P, Fitch and Moody’s, respectively.
(2) Values based on March 31, 2017 closing price of $132.41 per share of common stock, except the Series B Preferred Stock is valued at its fixed liquidation preference.
(3) Amount is calculated based on the Company’s percentage ownership interest in the unconsolidated joint venture entities. For additional detail, see page 17.
(4) Amount is calculated based on the outside partners’ percentage ownership interest in the consolidated joint venture entities. For additional detail, see page 19.
(5) For the Company’s definitions, see pages 47-48.

 

14


LOGO

FIRST QUARTER 2017

 

DEBT ANALYSIS (1)

as of March 31, 2017

(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

     —         105,000       —         —         —         —         105,000 (2) 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Floating Rate Debt

   $ —       $ 105,000     $ —       $ —       $ —       $ —       $ 105,000  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Fixed Rate Debt:

                                          

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

   $ 1,300,000     $ —       $ —       $ —       $ —       $ —       $ 1,300,000 (3)(4) 

601 Lexington Avenue (55% ownership)

     9,847       13,684       14,349       15,045       15,776       614,710       683,411  

New Dominion Technology Park, Building One

     1,465       3,100       3,340       3,598       22,906       —         34,409  

University Place

     1,305       1,849       1,981       2,123       1,500       —         8,758  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Mortgage Notes Payable

     1,312,617       18,633       19,670       20,766       40,182       614,710       2,026,578  

Fair Value Interest Adjustment

     22,622       —         —         —         —         —         22,622  

Deferred Financing Costs, Net

     (520     (431     (431     (431     (342     (86     (2,241
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Mortgage Notes Payable, Net

   $ 1,334,719     $ 18,202     $ 19,239     $ 20,335     $ 39,840     $ 614,624     $ 2,046,959  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Mezzanine Notes Payable

   $ 306,000     $ —       $ —       $ —       $ —       $ —       $ 306,000 (4) 

Fair Value Interest Adjustment

     734       —         —         —         —         —         734  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Mezzanine Notes Payable

   $ 306,734     $ —       $ —       $ —       $ —       $ —       $ 306,734  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Unsecured Senior Notes, Face Amount

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

Discount Amortization

     (1,992     (2,696     (2,503     (2,528     (2,063     (6,350     (18,132

Deferred Financing Costs, Net

     (4,639     (6,019     (5,036     (4,510     (3,648     (9,864     (33,716
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Unsecured Senior Notes, Net

   $ (6,631   $ 841,285     $ 692,461     $ 692,962     $ 844,289     $ 4,183,786     $ 7,248,152  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Outside Members’ Notes Payable

   $ 180,000     $ —       $ —       $ —       $ —       $ —       $ 180,000 (4) 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Fixed Rate Debt

   $ 1,814,822     $ 859,487     $ 711,700     $ 713,297     $ 884,129     $ 4,798,410     $ 9,781,845  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Consolidated Debt

   $ 1,814,822     $ 964,487     $ 711,700     $ 713,297     $ 884,129     $ 4,798,410     $ 9,886,845  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

% of Consolidated Debt

     18.36     9.76     7.20     7.21     8.94     48.53     100.00
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balloon Payments

   $ 1,786,000     $ 955,000     $ 700,000     $ 700,000     $ 872,906     $ 4,810,648     $ 9,824,554  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Scheduled Principal Amortization

   $ 12,617     $ 18,633     $ 19,670     $ 20,766     $ 17,276     $ 4,062     $ 93,024  

GAAP Weighted Average Floating Rate Debt (5) (6)

     —         2.45     —         —         —         —         2.45
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

GAAP Weighted Average Fixed Rate Debt (5) (6)

     3.04     3.89     5.96     5.70     4.39     3.85     4.06
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total GAAP Weighted Average Rate (5) (6)

     3.04     3.73     5.96     5.70     4.39     3.85     4.04
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Stated Weighted Average Rate (6)

     5.96     3.58     5.87     5.63     4.32     3.78     4.47
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Unsecured Line of Credit - Matures July 26, 2018 (2)

 

 

Facility

   Outstanding
at 3/31/2017
     Letters of
Credit
     Remaining Capacity
at 3/31/2017
 

$1,000,000

   $ 105,000      $ 6,040      $ 888,960  

Unsecured and Secured Debt Analysis (6)

 

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

Unsecured Debt

     75.75     4.09     4.18     5.6  

Secured Debt

     24.25     5.64     3.62     1.9  
  

 

 

   

 

 

   

 

 

   

 

 

 

Consolidated Debt

     100.00     4.47     4.04     4.7  
  

 

 

   

 

 

   

 

 

   

 

 

 

Floating and Fixed Rate Debt Analysis (6)

 

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

Floating Rate Debt

     1.08     1.93     2.45     1.3  

Fixed Rate Debt

     98.92     4.50     4.06     4.7  
  

 

 

   

 

 

   

 

 

   

 

 

 

Consolidated Debt

     100.00     4.47     4.04     4.7  
  

 

 

   

 

 

   

 

 

   

 

 

 

Interest Rate Hedging Instruments

 

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

Forward-starting interest rate swaps (4)

     450,000        2.619     June 7, 2017        June 7, 2027  

 

(1) Excludes unconsolidated joint ventures. For information on BXP’s unconsolidated joint venture debt, see page 17.
(2) On April 24, 2017, Boston Properties Limited Partnership extended the maturity date from July 26, 2018 to April 24, 2022 and increased the capacity from $1.0 million to $1.5 billion.
(3) This property has a fair value interest adjustment that is shown on the Fair Value Interest Adjustment line.
(4) On April 24, 2017, the Company’s consolidated entity in which it has a 60% interest and that owns 767 Fifth Avenue (the General Motors Building) entered into an interest rate lock and commitment agreement with a group of lenders for a fixed interest rate of 3.43% per annum on a ten-year financing totaling $2.3 billion. The Company expects to close on the financing by the end of June 2017, although there can be no assurance that the financing will be consummated on the terms currently contemplated or at all. In conjunction with the interest rate lock and commitment agreement, the consolidated entity terminated its forward-starting interest rate swap contracts with notional amounts aggregating $450.0 million and will pay approximately $14.4 million, which amount will increase the Company’s interest expense over the ten-year term of the financing, resulting in an estimated effective interest rate of approximately 3.65% per annum, including the estimated amortization of financing costs and additional mortgage recording taxes.
(5) 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.
(6) 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.

 

15


LOGO

FIRST QUARTER 2017

 

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 March 31, 2017 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     Senior Notes  
           Issued Prior to     Issued On or After  
           October 9, 2009     October 9, 2009  
           March 31, 2017  

Total Assets:

      

Capitalized Property Value (1)

     $ 23,172,351     $ 23,631,893  

Cash and Cash Equivalents

       302,939       302,939  

Investments in Securities

       25,817       25,817  

Undeveloped Land, at Cost (including Joint Venture %)

       295,805       295,805  

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

       1,438,245       1,438,245  
    

 

 

   

 

 

 

Total Assets

     $ 25,235,157     $ 25,694,699  
    

 

 

   

 

 

 

Unencumbered Assets

     $ 19,867,798     $ 20,308,553  
    

 

 

   

 

 

 

Consolidated Secured Debt (Fixed and Variable) (2)

     $ 2,049,564     $ 2,049,564  

Mezzanine Notes Payable (3)

       306,000       306,000  

Unconsolidated Joint Venture Debt (4)

       318,942       318,942  

Outside Members’ Notes Payable

       180,000       180,000  

Contingent Liabilities & Letters of Credit

       12,043       12,043  

Unsecured Debt (5)

       7,405,000       7,405,000  
    

 

 

   

 

 

 

Total Outstanding Debt

     $ 10,271,549     $ 10,271,549  
    

 

 

   

 

 

 

Consolidated EBITDA:

      

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

     $ 115,431     $ 115,431  

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

       (3,084     (3,084

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

       (1,042     (1,042

Add: Interest Expense (per Consolidated Income Statement)

       95,534       95,534  

Add: Depreciation and Amortization (per Consolidated Income Statement)

       159,205       159,205  
    

 

 

   

 

 

 

EBITDA

       366,044       366,044  

Add: BXP’s share of unconsolidated joint venture EBITDA

       15,777       15,777  
    

 

 

   

 

 

 

Consolidated EBITDA

     $ 381,821     $ 381,821  
    

 

 

   

 

 

 

Adjusted Interest Expense:

      

Interest Expense (per Consolidated Income Statement)

     $ 95,534     $ 95,534  

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

       3,749       3,749  

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

       (2,067     (2,067

Less: Interest expense funded by construction loan draws

       —         —    
    

 

 

   

 

 

 

Adjusted Interest Expense

     $ 97,216     $ 97,216  
    

 

 

   

 

 

 
Covenant Ratios and Related Data    Test     Actual     Actual  

Total Outstanding Debt/Total Assets

     Less than 60%       40.7     40.0

Secured Debt/Total Assets

     Less than 50%       10.6     10.4

Interest Coverage (Annualized Consolidated EBITDA to Annualized Interest Expense)

     Greater than 1.50x       3.93       3.93  

Unencumbered Assets/ Unsecured Debt

     Greater than 150%       268.3     274.3
    

 

 

   

 

 

 

Unencumbered Consolidated Property EBITDA (6)

     $ 325,852     $ 325,852  
    

 

 

   

 

 

 

Unencumbered Interest Coverage (Unencumbered Consolidated Property EBITDA to Unsecured Interest Expense)

       4.39       4.39  
    

 

 

   

 

 

 

% of Unencumbered Consolidated Property EBITDA to Consolidated EBITDA

       85.3     85.3
    

 

 

   

 

 

 

# 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 $22,986 and excludes aggregate fair value interest adjustment of $22,622 and deferred financing costs, net of $2,241.
(3) Excludes aggregate fair value interest adjustment of $734.
(4) Excludes aggregate deferred financing costs, net of $1,223.
(5) Excludes aggregate debt discount of $18,132 and deferred financing costs, net of $33,716.
(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 March 31, 2017, these excluded amounts were approximately $(24,040), $75,399, $378 and $4,232, respectively.

 

16


LOGO

FIRST QUARTER 2017

 

UNCONSOLIDATED JOINT VENTURES (1)

as of March 31, 2017

(dollars in thousands)

Balance Sheet Information

 

 

Property

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

540 Madison Avenue

     60.00   $ 67,652      $ 71,857  

Market Square North

     50.00     (7,837      61,281  

Metropolitan Square

     20.00     2,007        33,061  

901 New York Avenue

     25.00     (10,167      55,904  

Wisconsin Place Parking Facility

     33.33     41,151        —    

Annapolis Junction (2)

     50.00     19,920        44,291  

500 North Capitol Street, N.W.

     30.00     (3,606      31,391  

Colorado Center

     49.80     512,643        —    

The Hub on Causeway—Podium

     50.00     36,888        —    

The Hub on Causeway—Hotel

     50.00     1,167        —    

The Hub on Causeway—Residential

     50.00     21,666        —    

1001 6th Street

     50.00     42,474        —    

Dock 72

     50.00     43,497        —    

1265 Main Street

     50.00     4,866        19,934  
       772,321     
    

 

 

    

Investments with deficit balances reflected within Other Liabilities

       21,610     
    

 

 

    

 

 

 

Investment in Joint Ventures

     $ 793,931      $ 317,719  
    

 

 

    

 

 

 

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%)

     867       1,205       1,265       58,091       —         —         61,428  

901 New York Avenue (25%)

     —         —         —         970       1,095       54,185       56,250  

Metropolitan Square (20%)

     418       586       620       31,501         —         33,125  

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

     —         —         —         —         —         31,500       31,500  

1265 Main Street (50%)

     278       383       398       413       429       18,238       20,139  

Annapolis Junction Building One (50%)

     256       19,519       —         —         —         —         19,775 (3) 

Annapolis Junction Buildings Seven & Eight (50%)

     244       326       17,723       —         —         —         18,293  

Annapolis Junction Building Six (50%)

     203       6,229       —         —         —         —         6,432  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Dock 72 (50%)

     —         —         —         —         —         —         —    
     2,266       100,248       20,006       90,975       1,524       103,923       318,942  

Deferred Financing Costs, Net

     (283     (263     (186     (115     (77     (299     (1,223
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Mortgage/Construction Loans Payable, Net

   $ 1,983     $ 99,985     $ 19,820     $ 90,860     $ 1,447     $ 103,624     $ 317,719  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

GAAP Weighted Average Rate

     4.46     3.38     3.51     5.20     3.54     3.86     4.09

% of Total Mortgage/Construction Loans Payable, Net

     0.62     31.47     6.24     28.60     0.46     32.61     100.00

Balloon Payments

   $ —       $ 97,453     $ 17,397     $ 88,387     $ —       $ 95,437     $ 298,674  

Scheduled Amortization

   $ 2,266     $ 2,795     $ 2,609     $ 2,588     $ 1,524     $ 8,486     $ 20,268  

Floating and Fixed Rate Debt Analysis

 

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

Floating Rate Debt

     36.56     3.18     3.36     1.4  

Fixed Rate Debt

     63.44     4.44     4.50     6.2  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Debt

     100.00     3.98     4.09     4.4  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(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) 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. Subsequently, the cash flows generated from the property have become insufficient to fund debt service payments and capital improvements necessary to lease and operate the property and the joint venture is not prepared to fund additional cash shortfalls at this time. Consequently, the joint venture is not current on making debt service payments and remains in default. The loan has one, three-year extension option, subject to certain conditions including that no event of default exists or is ongoing.

 

17


LOGO

FIRST QUARTER 2017

 

UNCONSOLIDATED JOINT VENTURES (continued)

(unaudited and dollars in thousands)

Results of Operations

for the three months ended March 31, 2017

 

 

    540
Madison
Avenue
    Market
Square
North
    Metropolitan
Square
    901 New
York
Avenue
    Wisconsin
Place
Parking
Facility
    Annapolis
Junction (1)
    500 North
Capitol
Street, N.W.
    Colorado
Center
    1001
6th Street
    1265 Main
Street
    Total
Unconsolidated
Joint Ventures
 

REVENUE

                     

Rental (2)

  $ 6,481     $ 3,274     $ 4,663     $ 6,584     $ 951     $ 1,881     $ 2,886     $ 12,041     $ 368     $ 1,004     $ 40,133  

Operating recoveries

    826       864       1,300       1,256       378       520       1,248       406       —         208       7,006  

Straight-line rent

    (66     1,253       1,847       658       —         40       113       3,155       —         —         7,000  

Fair value lease revenue

    —         —         —         —         —         —         —         96       —         —         96  

Termination income

    526       —         —         —         —         —         —         —         —         —         526  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue

    7,767       5,391       7,810       8,498       1,329       2,441       4,247       15,698       368       1,212       54,761  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EXPENSES

                     

Operating

    3,608       2,332       3,526       3,426       723       1,639       1,353       4,766       492       214       22,079  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NET OPERATING INCOME/(LOSS)

    4,159       3,059       4,284       5,072       606       802       2,894       10,932       (124     998       32,682  

Interest

    749       1,514       2,379       2,076       —         1,092       1,103       —         —         387       9,300  

Depreciation and amortization

    1,923       972       1,877       1,645       1,383       1,032       954       4,095       —         428       14,309  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

SUBTOTAL

    2,672       2,486       4,256       3,721       1,383       2,124       2,057       4,095       —         815       23,609  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME/(LOSS)

  $ 1,487     $ 573     $ 28     $ 1,351     $ (777   $ (1,322   $ 837     $ 6,837     $ (124   $ 183     $ 9,073  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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)

  $ 892     $ 287     $ 6     $ 372 (3)    $ (259   $ (661   $ 251     $ 3,405     $ (62   $ 92     $ 4,323  

Basis differential

                     

Straight-line rent

    —         —         —         —         —         —         —         660       (4     —         660  

Fair value lease revenue

    —         —         —         —         —         —         —         445       (4     —         445  

Depreciation and amortization

    176       (2     (3     (8     (7     (2     7       (2,501     (4     (4     (2,344
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total basis differential (5)

    176       (2     (3     (8     (7     (2     7       (1,396     (4     (4     (1,239
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income/(loss) from unconsolidated joint ventures

  $ 1,068     $ 285     $ 3     $ 364 (3)    $ (266   $ (663   $ 258     $ 2,009     $ (62   $ 88     $ 3,084  

Gain on investment

    —         —         —         —         —         —         —         —         —         —         —    

BXP’s share of depreciation & amortization

    1,035       480       372       1,152 (3)      458       509       283       4,542       —         210       9,041  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

BXP’s share of Funds from Operations (FFO)

  $ 2,103     $ 765     $ 375     $ 1,516     $ 192     $ (154   $ 541     $ 6,551     $ (62   $ 298     $ 12,125  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

BXP’s share of interest expense

  $ 449     $ 757     $ 476     $ 996 (3)    $ —       $ 546     $ 331     $ —       $ —       $ 194     $ 3,749  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

BXP’s share of amortization of financing costs

  $ 31     $ 10     $ 5     $ 21     $ —       $ 29     $ 4     $ —       $ —       $ —       $ 100  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

BXP’s share of capitalized interest

  $ —       $ —       $ (6   $ —       $ —       $ —       $ —       $ —       $ —       $ —       $ (6
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

BXP’s share of non-cash termination income adjustment

                     

BXP’s share of revenue (6)

  $ 4,660     $ 2,696     $ 1,562     $ 4,079 (3)    $ 443     $ 1,221     $ 1,274     $ 8,925     $ 184     $ 606     $ 25,650  

BXP’s share of operating expenses

    2,165       1,166       705       1,644 (3)      241       820       406       2,373       246       107       9,873  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

BXP’s share of net operating income/(loss) (6)

    2,495       1,530       857       2,435 (3)      202       401       868       6,552       (62     499       15,777  

Less:

                     

BXP’s share of termination income

    316       —         —         —   (3)      —         —         —         —         —         —         316  

BXP’s share of net operating income/(loss) (excluding termination income) (6)

    2,179       1,530       857       2,435 (3)      202       401       868       6,552       (62     499       15,461  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Less:

                     

BXP’s share of straight-line rent

    (40     627       369       316 (3)      —         20       34       2,237       —         —         3,563  

BXP’s share of fair value lease revenue

    —         —         —         —   (3)      —         —         —         493       —         —         493  

Add:

                     

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

    —         132       —         —   (3)      —         —         —         —         —         —         132  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

BXP’s share of net operating income/(loss)—cash basis (excluding termination income) (6)

  $ 2,219     $ 1,035     $ 488     $ 2,119 (3)    $ 202     $ 381     $ 834     $ 3,822     $ (62   $ 499     $ 11,537  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) Annapolis Junction includes four properties in service and two undeveloped land parcels.
(2) Includes approximately $136 of management services income and approximately $38 of interest and other income.
(3) Reflects the allocation percentages pursuant to the achievement of specified investment return thresholds as provided for in the joint venture agreement.
(4) 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.
(5) Represents adjustments related to the carrying values and depreciation of certain of the Company’s investment in unconsolidated joint ventures.
(6) Includes the Company’s share of approximately $81 of management services income and approximately $15 of interest and other income.

 

18


LOGO

FIRST QUARTER 2017

 

CONSOLIDATED JOINT VENTURES

(unaudited and in thousands)

Balance Sheets

as of March 31, 2017

 

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

   $ 3,389,041     $ 2,198,963      $ 874,294     $ 6,462,298  

Cash and cash held in escrows

     116,548       132,923        26,924       276,395  

Other assets

     124,129       185,907        (20     310,016  
  

 

 

   

 

 

    

 

 

   

 

 

 

Total assets

   $ 3,629,718     $ 2,517,793      $ 901,198     $ 7,048,709  
  

 

 

   

 

 

    

 

 

   

 

 

 

LIABILITIES AND EQUITY

         

Liabilities:

         

Mortgage notes payable, net

   $ 1,322,427     $ 681,736      $ —       $ 2,004,163  

Mezzanine notes payable

     306,734       —          —         306,734  

Outside members’ notes payable

     180,000       —          —         180,000  

Accrued interest on related party notes

     162,936       —          —         162,936  

Other liabilities

     153,403       83,913        85,723       323,039  
  

 

 

   

 

 

    

 

 

   

 

 

 

Total liabilities

     2,125,500       765,649        85,723       2,976,872  
  

 

 

   

 

 

    

 

 

   

 

 

 

Equity:

         

Boston Properties, Inc.

     1,108,836 (1)      643,082        790,185       2,542,103  

Noncontrolling interests

     395,382       1,109,062        25,290       1,529,734 (2) 
  

 

 

   

 

 

    

 

 

   

 

 

 

Total equity

     1,504,218       1,752,144        815,475       4,071,837  
  

 

 

   

 

 

    

 

 

   

 

 

 

Total liabilities and equity

   $ 3,629,718     $ 2,517,793      $ 901,198     $ 7,048,709  
  

 

 

   

 

 

    

 

 

   

 

 

 

Partners’ share of mortgage notes payable, net

   $ 528,971     $ 306,781      $ —       $ 835,752  

Partners’ share of mezzanine notes payable

     122,694       —          —         122,694  

Outside members’ notes payable

     180,000       —          —         180,000  
  

 

 

   

 

 

    

 

 

   

 

 

 

Partners’ share of consolidated debt

   $ 831,664     $ 306,781      $ —       $ 1,138,446  
  

 

 

   

 

 

    

 

 

   

 

 

 

 

(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

FIRST QUARTER 2017

 

CONSOLIDATED JOINT VENTURES (continued)

(unaudited and in thousands)

Income Statements

for the three months ended March 31, 2017

 

 

           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
 

REVENUE

        

Rental

   $ 68,075     $ 85,728     $ —       $ 153,803  

Straight-line rent

     916       497       —         1,413  

Fair value lease revenue

     3,673       236       —         3,909  

Termination income

     4,929       (1,472     —         3,457  

Parking and other

     826       1,255       —         2,081  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue

     78,419       86,244       —         164,663  
  

 

 

   

 

 

   

 

 

   

 

 

 

EXPENSES

        

Operating

     27,637       32,438       5       60,080  
  

 

 

   

 

 

   

 

 

   

 

 

 

NET OPERATING INCOME

     50,782       53,806       (5     104,583  

Management services income

     (398     (653     —         (1,051

Interest and other income

     (27     (204     —         (231

Interest expense

     23,535       7,895       —         31,430  

Interest expense—outside members’ notes

     9,178       —         —         9,178  

Fair value interest adjustment

     (11,567     —         —         (11,567

Depreciation and amortization

     30,191       20,822       —         51,013  

Other

     —         —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

 

SUBTOTAL

     50,912       27,860       —         78,772  
  

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME/(LOSS)

   $ (130   $ 25,946     $ (5   $ 25,811  
  

 

 

   

 

 

   

 

 

   

 

 

 

BXP’s ownership percentage

     60.00     55.00     95.00  
  

 

 

   

 

 

   

 

 

   

Partners’ share of NOI (1)

   $ 20,313     $ 24,213     $ —       $ 44,526  
  

 

 

   

 

 

   

 

 

   

 

 

 

BXP’s share of NOI

   $ 30,469     $ 29,593     $ (5   $ 60,058  
  

 

 

   

 

 

   

 

 

   

 

 

 

Unearned portion of capitalized fees (2)

   $ 81     $ 456     $ —       $ 537  
  

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of partners’ noncontrolling interest (NCI):

        

Net income/(loss)

   $ (130   $ 25,946     $ (5   $ 25,811  

Add depreciation & amortization—BXP’s basis difference

     31       31       —         62  

Special allocation—BXP’s basis

     —         (90     —         (90

Add partners’ share of outside members’ loan interest

     9,178       —         —         9,178  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income/(loss) before interest allocation

   $ 9,079     $ 25,887     $ (5   $ 34,961  
  

 

 

   

 

 

   

 

 

   

 

 

 

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

   $ 3,632     $ 11,649     $ —       $ 15,281  

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

     (9,178     —         —         (9,178

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

     (618     (996     —         (1,614

Accretion and adjustments (1)

     —         —         (65     (65
  

 

 

   

 

 

   

 

 

   

 

 

 

Partners’ NCI (1)

   $ (6,164   $ 10,653     $ (65   $ 4,424  
  

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of partners’ share of FFO:

        

Net income/(loss)

   $ (130   $ 25,946     $ (5   $ 25,811  

Add depreciation & amortization

     30,191       20,822       —         51,013  
  

 

 

   

 

 

   

 

 

   

 

 

 

Entity FFO

   $ 30,061     $ 46,768     $ (5   $ 76,824  
  

 

 

   

 

 

   

 

 

   

 

 

 

Partners’ NCI (1)

   $ (6,164   $ 10,653     $ (65   $ 4,424  

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

     12,064       9,351       —         21,415  
  

 

 

   

 

 

   

 

 

   

 

 

 

Partners’ share FFO (1)

   $ 5,900     $ 20,004     $ (65   $ 25,839  
  

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of BXP’s share of FFO:

        

BXP’s share of net income/(loss) adjusted for partners’ NCI

   $ 6,034     $ 15,293     $ 60     $ 21,387  

Depreciation & amortization—BXP’s basis difference

     31       31       —         62  

BXP’s share of depreciation & amortization

     18,096       11,435       —         29,531  
  

 

 

   

 

 

   

 

 

   

 

 

 

BXP’s share of FFO

   $ 24,161     $ 26,759     $ 60     $ 50,980  
  

 

 

   

 

 

   

 

 

   

 

 

 

Partners’ share of select items (1):

        

Partners’ share of revenue

   $ 31,368     $ 38,810     $ —       $ 70,178  
  

 

 

   

 

 

   

 

 

   

 

 

 

Partners’ share of interest expense

   $ 13,968     $ 3,291     $ —       $ 17,259  
  

 

 

   

 

 

   

 

 

   

 

 

 

Partners’ share of fair value interest adjustment

   $ (4,627   $ —       $ —       $ (4,627
  

 

 

   

 

 

   

 

 

   

 

 

 

Partners’ share of amortization of financing costs

   $ 4     $ 5     $ —       $ 9  
  

 

 

   

 

 

   

 

 

   

 

 

 

Partners’ share of capitalized interest

   $ (6   $ 257     $ —       $ 251  
  

 

 

   

 

 

   

 

 

   

 

 

 

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

   $ (161   $ —       $ —       $ (161
  

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of Partners’ share of NOI (1):

        

Rental revenue

   $ 31,368     $ 38,810     $ —       $ 70,178  

Less: Termination income

     1,972       (662     —         1,310  
  

 

 

   

 

 

   

 

 

   

 

 

 

Rental revenue (excluding termination income)

     29,396       39,472       —         68,868  

Operating expenses

     11,055       14,597       —         25,652  
  

 

 

   

 

 

   

 

 

   

 

 

 

NOI (excluding termination income)

   $ 18,341     $ 24,875     $ —       $ 43,216  
  

 

 

   

 

 

   

 

 

   

 

 

 

Rental revenue (excluding termination income)

   $ 29,396