Real Estate

12 Months Ended

Dec. 31, 2023

3. Real Estate

BXP

Real estate consisted of the following at December 31, 2023 and December 31, 2022 (in thousands):


	December 31, 2023		December 31, 2022
Land	$	5,251,224	$	5,189,811
Right of use assets - finance leases (1)	401,680		237,510
Right of use assets - operating leases (1)	324,298		167,351
Land held for future development (2)	697,061		721,501
Buildings and improvements	16,607,756		15,820,724
Tenant improvements	3,592,172		3,200,743
Furniture, fixtures and equipment	53,716		50,310
Construction in progress	547,280		406,574
Total	27,475,187		25,794,524
Less: Accumulated depreciation	(6,881,728)		(6,298,082)
	$	20,593,459	$	19,496,442

_______________

(1)See Note 4.

(2)Includes pre-development costs.

BPLP

Real estate consisted of the following at December 31, 2023 and December 31, 2022 (in thousands):


	December 31, 2023		December 31, 2022
Land	$	5,156,515	$	5,095,102
Right of use assets - finance leases (1)	401,680		237,510
Right of use assets - operating leases (1)	324,298		167,351
Land held for future development (2)	697,061		721,501
Buildings and improvements	16,336,200		15,547,919
Tenant improvements	3,592,172		3,200,743
Furniture, fixtures and equipment	53,716		50,310
Construction in progress	547,280		406,574
Total	27,108,922		25,427,010
Less: Accumulated depreciation	(6,758,361)		(6,180,474)
	$	20,350,561	$	19,246,536

_______________

(1)See Note 4.

(2)Includes pre-development costs.

Acquisition

On December 14, 2023, the Company completed the acquisition of its joint venture partner’s 45% interest in the joint venture entity that owns Santa Monica Business Park located in Santa Monica, California (See Note 6). Santa Monica Business Park is a 47-acre office park consisting of 21 buildings totaling approximately 1.2 million net rentable square feet. Approximately 70% of the rentable square footage is subject to a ground lease with 75 years remaining, including renewal periods (See Note 4). The property is subject to existing mortgage indebtedness of $300.0 million (See Note 7). The acquisition was completed for a gross purchase price of $38.0 million and the Company acquired net working capital, including cash and cash equivalents of approximately $20 million. The purchase of the joint venture partner’s interest was at a discount and therefore the net assets were recorded at the Company’s relative fair value. Prior to consolidation, the Company had an approximately $149.9 million investment in the joint venture. As the purchase was at a discount, the gain on consolidation was calculated based on the Company’s share of the determined fair market value of the net acquired assets. This resulted in the Company recording a gain upon consolidation of approximately $29.9 million, which is included within income (loss) from

unconsolidated joint ventures in the Consolidated Statement of Operations. The total equity acquired was equal to the Company’s share of the calculated fair market value, used in the gain on consolidation calculation, plus the cash consideration paid. The difference between the determined fair market value and recorded equity is adjusted based on the relative fair value and used to calculate the net assets that were recorded.

The following table summarizes the allocation of the relative fair value of the net assets the Company received at the date of acquisition for Santa Monica Business Park (in thousands):


Land and site improvements	$	46,360
Building and improvements	390,305
Tenant improvements	20,116
In-place lease intangibles	74,022
Above-market lease intangibles	6,715
Below-market lease intangibles	(4,630)
Ground lease intangible	(46,659)
Mortgage note payable adjustment	4,491
Net assets acquired	$	490,720

The following table summarizes the estimated annual amortization of the acquired in-place lease intangibles, acquired ground lease intangible and the acquired above- and below-market lease intangibles for Santa Monica Business Park for each of the five succeeding fiscal years (in thousands):


	Acquired In-Place Lease Intangibles		Acquired Ground Lease Intangible		Acquired Above-Market Lease Intangibles		Acquired Below-Market Lease Intangible
2024	$	32,362	$	10,979	$	3,584	$	1,109
2025	20,782		10,979		1,491		944
2026	7,986		10,979		593		910
2027	4,078		10,979		354		910
2028	2,726		2,193		216		553

The following table summarizes the weighted-average useful life of the acquired in-place lease intangibles, acquired ground lease intangible and the acquired above- and below-market lease intangibles for Santa Monica Business Park as of the acquisition (in years):


	Acquired In-Place Lease Intangibles	Acquired Ground Lease Intangible	Acquired Above-Market Lease Intangibles	Acquired Below-Market Lease Intangible
Weighted-average useful life	2.9	4.2	2.3	5.1

Santa Monica Business Park contributed approximately $3.9 million of revenue and $(0.9) million of net income to the Company for the period December 14, 2023 through December 31, 2023.

Developments/Redevelopments

On January 5, 2023, the Company commenced the development of 290 Binney Street, an approximately 566,000 net rentable square foot laboratory/life sciences project in Cambridge, Massachusetts. Concurrently with the commencement of this project, the Kendall Center Blue Parking Garage was taken out of service and demolished to support the development of this project. 290 Binney Street is 100% pre-leased to AstraZeneca. There can be no assurance that the Company will complete development of the project on the terms and schedule currently contemplated or at all.

On January 30, 2023, the Company commenced the redevelopment of 300 Binney Street at Kendall Center in Cambridge, Massachusetts. 300 Binney Street consisted of an approximately 195,000 net rentable square foot premier workplace that is being redeveloped into approximately 236,000 net rentable square feet of laboratory/life

sciences space. BXP and BPLP recognized approximately $11.0 million of depreciation expense during the year ended December 31, 2023 associated with the acceleration of depreciation on the assets being removed from service and demolished as part of the redevelopment of the property. The project is 100% pre-leased to the Broad Institute. On November 13, 2023, the Company completed the sale of a 45% interest in 300 Binney Street to an institutional investor (See Note 10).

On April 29, 2023, the Company completed and fully placed in-service 2100 Pennsylvania Avenue, a premier workplace project with approximately 476,000 net rentable square feet located in Washington, DC.

On June 1, 2023, the Company completed and fully placed in-service its View Boston observatory at The Prudential Center, a redevelopment of the top three floors of 800 Boylston Street - The Prudential Center, located in Boston, Massachusetts. View Boston observatory at The Prudential Center consists of approximately 63,000 net rentable square feet of retail, including food and beverage, and observation space.

On July 20, 2023, the Company completed and fully placed in-service 140 Kendrick Street - Building A, a premier workplace redevelopment project with approximately 104,000 net rentable square feet located in Needham, Massachusetts. The property is the first net-zero, carbon-neutral office repositioning of its scale in Massachusetts.

On September 26, 2023, the Company partially placed in-service 180 CityPoint, an approximately 329,000 net rentable square feet laboratory/life sciences project located in Waltham, Massachusetts.

On October 5, 2023, the Company partially placed in-service 103 CityPoint, an approximately 113,000 net rentable square feet laboratory/life sciences project located in Waltham, Massachusetts.

On November 30, 2023, the Company elected to suspend redevelopment on 105 Carnegie Center located in Princeton, New Jersey and as a result ceased capitalization on the project. 105 Carnegie Center was a premier workplace that consisted of approximately 70,000 net rentable square feet that was being redeveloped into approximately 73,000 net rentable square feet of laboratory/life sciences space.