Real Estate

3 Months Ended

Mar. 31, 2020

3. Real Estate

Boston Properties, Inc.

Real estate consisted of the following at March 31, 2020 and December 31, 2019 (in thousands):



	March 31, 2020			December 31, 2019
Land	$	5,070,208		$	5,111,606
Right of use assets - finance leases	237,394			237,394
Right of use assets - operating leases	148,057			148,640
Land held for future development (1)	264,893			254,828
Buildings and improvements	13,517,218			13,646,054
Tenant improvements	2,641,448			2,656,439
Furniture, fixtures and equipment	44,263			44,313
Construction in progress	804,179			789,736
Total	22,727,660			22,889,010
Less: Accumulated depreciation	(5,209,487		)	(5,266,798		)
	$	17,518,173		$	17,622,212

_______________


(1)	Includes pre-development costs.

Boston Properties Limited Partnership

Real estate consisted of the following at March 31, 2020 and December 31, 2019 (in thousands):



	March 31, 2020			December 31, 2019
Land	$	4,972,992		$	5,011,153
Right of use assets - finance leases	237,394			237,394
Right of use assets - operating leases	148,057			148,640
Land held for future development (1)	264,893			254,828
Buildings and improvements	13,232,157			13,351,286
Tenant improvements	2,641,448			2,656,439
Furniture, fixtures and equipment	44,263			44,313
Construction in progress	804,179			789,736
Total	22,345,383			22,493,789
Less: Accumulated depreciation	(5,107,243		)	(5,162,908		)
	$	17,238,140		$	17,330,881

_______________


(1)	Includes pre-development costs.

Developments

On January 28, 2020, the Company exercised its option to acquire real property at 425 Fourth Street located in San Francisco, California for a purchase price totaling approximately $134.1 million. 425 Fourth Street is expected to support the development of approximately 804,000 square feet of primarily commercial office space. There can be no assurance that the acquisition will be consummated on the terms currently contemplated or at all.

On March 26, 2020, the Company completed and fully placed in-service 17Fifty Presidents Street located in Reston, Virginia. 17Fifty Presidents Street is a build-to-suit project with approximately 276,000 net rentable square feet of Class A office space that is 100% leased.

Dispositions

On January 28, 2020, the Company entered into a joint venture with a third party to own, operate and develop properties at its Gateway Commons complex located in South San Francisco, California. The Company contributed its 601, 611 and 651 Gateway properties and development rights with an agreed upon value aggregating approximately $350.0 million for its 50% interest in the joint venture. 601, 611 and 651 Gateway consist of three Class A office properties aggregating approximately 768,000 net rentable square feet. The partner contributed three properties and development rights with an agreed upon value aggregating approximately $280.8 million at closing and will contribute cash totaling approximately $69.2 million in the future for its 50% ownership interest in the joint venture. As a result of the partner’s deferred contribution, the Company has an initial approximately 55% interest in the joint venture. Future development projects will be owned 49% by the Company and 51% by its partner. Upon the third party’s contribution, the Company ceased accounting for the joint venture entity on a consolidated basis and is accounting for the joint venture entity on an unconsolidated basis using the equity method of accounting, as it has reduced its ownership interest in the joint venture entity and no longer has a controlling financial or operating interest in the joint venture entity (See Note 5). The Company recognized a gain on the retained and sold interest in the real estate contributed to the joint venture totaling approximately $217.7 million for Boston Properties, Inc. and $222.4 million for Boston Properties Limited Partnership during the three months ended March 31, 2020 within Gains (Losses) on Sales of Real Estate on the respective Consolidated Statements of Operations, as the fair value of the real estate exceeded its carrying value. 601, 611 and 651 Gateway contributed approximately $0.2 million of net income to the Company for the period from January 1, 2020 through January 27, 2020 and contributed approximately $2.9 million of net income to the Company for the three months ended March 31, 2019.

On February 20, 2020, the Company completed the sale of New Dominion Technology Park located in Herndon, Virginia for a gross sale price of $256.0 million. Net cash proceeds totaled approximately $254.0 million, resulting in a gain on sale of real estate totaling approximately $192.3 million for Boston Properties, Inc. and approximately $197.1 million for Boston Properties Limited Partnership. New Dominion Technology Park is comprised of two Class A office properties aggregating approximately 493,000 net rentable square feet. New Dominion Technology Park contributed approximately $1.6 million of net income to the Company for the period from January 1, 2020 through February 19, 2020 and contributed approximately $2.1 million of net income to the Company for the three months ended March 31, 2019.