Segment Information

12 Months Ended

Dec. 31, 2023

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

12. Segment Information

The following tables present reconciliations of Net Income Attributable to Boston Properties, Inc. common shareholders to the Company’s share of Net Operating Income and Net Income Attributable to Boston Properties Limited Partnership common unitholders to the Company’s share of Net Operating Income for the years ended December 31, 2023, 2022 and 2021.

BXP

	Year ended December 31,
	2023		2022		2021
	(in thousands)
Net income attributable to Boston Properties, Inc. common shareholders	$	190,215	$	848,947	$	496,223
Add:
Preferred stock redemption charge	—		—		6,412
Preferred dividends	—		—		2,560
Noncontrolling interest—common units of the Operating Partnership	22,548		96,780		55,931
Noncontrolling interests in property partnerships	78,661		74,857		70,806
Interest expense	579,572		437,139		423,346
Losses from early extinguishment of debt	—		—		45,182
Losses from interest rate contracts	79		—		—
Net operating income from unconsolidated joint ventures	160,695		146,081		107,756
Loss from unconsolidated joint ventures	239,543		59,840		2,570
Depreciation and amortization expense	830,813		749,775		717,336
Transaction costs	4,313		2,905		5,036
Payroll and related costs from management services contracts	17,771		15,450		12,487
General and administrative expense	170,158		146,378		151,573
Less:
Net operating income attributable to noncontrolling interests in property partnerships	194,365		191,812		186,304
Unrealized gain (loss) on non-real estate investment	239		(150)		—
Gains (losses) from investments in securities	5,556		(6,453)		5,626
Other income - assignment fee	—		6,624		—
Interest and other income (loss)	69,964		11,940		5,704
Gain on sales-type lease	—		10,058		—
Gains on sales of real estate	517		437,019		123,660
Direct reimbursements of payroll and related costs from management services contracts	17,771		15,450		12,487
Development and management services revenue	40,850		28,056		27,697
Company’s share of Net Operating Income	$	1,965,106	$	1,883,796	$	1,735,740

BPLP

	Year ended December 31,
	2023		2022		2021
	(in thousands)
Net income attributable to Boston Properties Limited Partnership common unitholders	$	219,771	$	957,265	$	561,993
Add:
Preferred unit redemption charge	—		—		6,412
Preferred distributions	—		—		2,560
Noncontrolling interests in property partnerships	78,661		74,857		70,806
Interest expense	579,572		437,139		423,346
Losses from early extinguishment of debt	—		—		45,182
Losses from interest rate contracts	79		—		—
Net operating income from unconsolidated joint ventures	160,695		146,081		107,756
Loss from unconsolidated joint ventures	239,543		59,840		2,570
Depreciation and amortization expense	823,805		742,293		709,035
Transaction costs	4,313		2,905		5,036
Payroll and related costs from management services contracts	17,771		15,450		12,487
General and administrative expense	170,158		146,378		151,573
Less:
Net operating income attributable to noncontrolling interests in property partnerships	194,365		191,812		186,304
Unrealized gain (loss) on non-real estate investment	239		(150)		—
Gains (losses) from investments in securities	5,556		(6,453)		5,626
Other income - assignment fee	—		6,624		—
Interest and other income (loss)	69,964		11,940		5,704
Gain on sales-type lease	—		10,058		—
Gains on sales of real estate	517		441,075		125,198
Direct reimbursements of payroll and related costs from management services contracts	17,771		15,450		12,487
Development and management services revenue	40,850		28,056		27,697
Company’s share of Net Operating Income	$	1,965,106	$	1,883,796	$	1,735,740

Net operating income (“NOI”) is a non-GAAP financial measure equal to net income attributable to Boston Properties, Inc. common shareholders and net income attributable to Boston Properties Limited Partnership common unitholders, as applicable, the most directly comparable GAAP financial measures, plus (1) preferred stock/unit redemption charge, preferred dividends/distributions, net income attributable to noncontrolling interests, interest expense, losses from early extinguishment of debt, losses from interest rate contracts, loss from unconsolidated joint ventures, depreciation and amortization expense, transaction costs, payroll and related costs from management services contracts and corporate general and administrative expense less (2) unrealized gain (loss) on non-real estate investment, gains (losses) from investments in securities, other income - assignment fee, interest and other income (loss), gain on sales-type lease, gains on sales of real estate, direct reimbursements of payroll and related costs from management services contracts and development and management services revenue. The Company believes NOI is useful to investors as a performance measure and believes it provides useful information to investors regarding its results of operations and financial condition because, when compared across periods, it reflects the impact on operations from trends in occupancy rates, rental rates, operating costs and acquisition and development activity on an unleveraged basis, providing perspective not immediately apparent from net income attributable to Boston Properties, Inc. common shareholders and net income attributable to Boston Properties Limited Partnership common unitholders. For example, interest expense is not necessarily linked to the operating performance of a real estate asset and is often incurred at the corporate level as opposed to the property

level. Similarly, interest expense may be incurred at the property level even though the financing proceeds may be used at the corporate level (e.g., used for other investment activity). In addition, depreciation and amortization expense, because of historical cost accounting and useful life estimates, may distort operating performance measures at the property level. NOI presented by the Company may not be comparable to NOI reported by other REITs or real estate companies that define NOI differently.

The Company’s internal reporting utilizes its share of NOI, which includes its share of NOI from consolidated and unconsolidated joint ventures, which is a non-GAAP financial measure that is calculated as the consolidated amount, plus the Company’s share of the amount from the Company’s unconsolidated joint ventures (calculated based upon the Company’s economic percentage ownership interest and, in some cases, after priority allocations), less the Company’s partners’ share of the amount from the Company’s consolidated joint ventures (calculated based upon the partners’ economic percentage ownership interests and, in some cases, after priority allocations, income allocation to private REIT shareholders and their share of fees due to the Company). The Company’s share of NOI from unconsolidated joint ventures, as defined above, also does not include its share of unrealized gain (loss) on derivative instruments, gain on sale of investment, gain on investment, gain (loss) on sale/consolidation and impairment losses on investments, all of which are included within Loss from Unconsolidated Joint Ventures in the Company’s Consolidated Statements of Operations.  Management utilizes its share of NOI in assessing its performance as the Company has several significant joint ventures and, in some cases, the Company exercises significant influence over, but does not control, the joint venture, in which case GAAP requires that the Company account for the joint venture entity using the equity method of accounting and the Company does not consolidate it for financial reporting purposes. In other cases, GAAP requires that the Company consolidate the venture even though the Company’s partner(s) owns a significant percentage interest. As a result, the presentations of the Company’s share of NOI should not be considered a substitute for, and should only be considered together with and as a supplement to, the Company’s financial information presented in accordance with GAAP.

Asset information by segment is not reported because the Company does not use this measure to assess performance. Therefore, depreciation and amortization expense is not allocated among segments. Interest expense, losses from early extinguishment of debt, losses from interest rate contracts, loss from unconsolidated joint ventures, depreciation and amortization expense, transaction costs, payroll and related costs from management services contracts, corporate general and administrative expense, unrealized gain (loss) on non-real estate investment, gains (losses) from investments in securities, other income - assignment fee, interest and other income (loss), gain on sales-type lease, gains on sales of real estate, direct reimbursements of payroll and related costs from management services contracts and development and management services revenue are not included in NOI and are provided as reconciling items to the Company’s reconciliations of its share of NOI to net income.

The Company’s segments are based on the Company’s method of internal reporting which classifies its operations by geographic area. The Company’s segments by geographic area are Boston, Los Angeles, New York, San Francisco, Seattle and Washington, DC. On September 1, 2021, the Company invested in a joint venture that acquired Safeco Plaza located in Seattle, Washington. As such, the Seattle region was identified as a segment during the third quarter of 2021. The Company also presents information for each segment by property type, including Premier Workplace (which includes office, life sciences and retail), Residential and Hotel.

Information by geographic area and property type (dollars in thousands):

For the year ended December 31, 2023:

	Boston			Los Angeles			New York			San Francisco			Seattle			Washington, DC			Total
Rental Revenue: (1)
Premier Workplace	$	1,093,840		$	3,890		$	1,053,615		$	539,904		$	63,830		$	364,920		$	3,119,999
Residential	16,452			—			—			14,102			—			17,038			47,592
Hotel	47,357			—			—			—			—			—			47,357
Total	1,157,649			3,890			1,053,615			554,006			63,830			381,958			3,214,948
% of Grand Totals	36.01		%	0.12		%	32.77		%	17.23		%	1.99		%	11.88		%	100.00		%
Rental Expenses:
Premier Workplace	393,339			1,431			415,831			194,205			12,387			143,504			1,160,697
Residential	6,378			—			—			9,255			—			7,617			23,250
Hotel	32,225			—			—			—			—			—			32,225
Total	431,942			1,431			415,831			203,460			12,387			151,121			1,216,172
% of Grand Totals	35.51		%	0.12		%	34.19		%	16.73		%	1.02		%	12.43		%	100.00		%
Net operating income	$	725,707		$	2,459		$	637,784		$	350,546		$	51,443		$	230,837		$	1,998,776
% of Grand Totals	36.31		%	0.12		%	31.91		%	17.54		%	2.57		%	11.55		%	100.00		%
Less: Net operating income attributable to noncontrolling interests in property partnerships	(45,730)			—			(148,635)			—			—			—			(194,365)
Add: Company’s share of net operating income from unconsolidated joint ventures	34,376			48,818			14,314			16,203			7,494			39,490			160,695
Company’s share of net operating income	$	714,353		$	51,277		$	503,463		$	366,749		$	58,937		$	270,327		$	1,965,106
% of Grand Totals	36.35		%	2.61		%	25.62		%	18.66		%	3.00		%	13.76		%	100.00		%

  _______________

(1)Rental Revenue is equal to Total Revenue per the Company’s Consolidated Statements of Operations, less Development and Management Services Revenue and Direct Reimbursements of Payroll and Related Costs from Management Services Contracts Revenue per the Consolidated Statements of Operations.

For the year ended December 31, 2022:

	Boston			Los Angeles			New York			San Francisco			Seattle			Washington, DC			Total
Rental Revenue: (1)
Premier Workplace	$	1,005,156		$	—		$	1,031,479		$	534,397		$	31,978		$	365,402		$	2,968,412
Residential	15,086			—			—			14,769			—			27,326			57,181
Hotel	39,482			—			—			—			—			—			39,482
Total	1,059,724			—			1,031,479			549,166			31,978			392,728			3,065,075
% of Grand Totals	34.58		%	—		%	33.65		%	17.92		%	1.04		%	12.81		%	100.00		%
Rental Expenses:
Premier Workplace	360,218			—			391,293			183,353			8,386			135,237			1,078,487
Residential	5,961			—			—			11,371			—			12,251			29,583
Hotel	27,478			—			—			—			—			—			27,478
Total	393,657			—			391,293			194,724			8,386			147,488			1,135,548
% of Grand Totals	34.66		%	—		%	34.46		%	17.15		%	0.74		%	12.99		%	100.00		%
Net operating income	$	666,067		$	—		$	640,186		$	354,442		$	23,592		$	245,240		$	1,929,527
% of Grand Totals	34.52		%	—		%	33.18		%	18.37		%	1.22		%	12.71		%	100.00		%
Less: Net operating income attributable to noncontrolling interests in property partnerships	(45,822)			—			(145,990)			—			—			—			(191,812)
Add: Company’s share of net operating income from unconsolidated joint ventures	34,233			53,023			1,594			12,785			7,690			36,756			146,081
Company’s share of net operating income	$	654,478		$	53,023		$	495,790		$	367,227		$	31,282		$	281,996		$	1,883,796
% of Grand Totals	34.75		%	2.81		%	26.32		%	19.49		%	1.66		%	14.97		%	100.00		%

  _______________

(1)Rental Revenue is equal to Total Revenue per the Company’s Consolidated Statements of Operations, less Development and Management Services Revenue and Direct Reimbursements of Payroll and Related Costs from Management Services Contracts Revenue per the Consolidated Statements of Operations.

For the year ended December 31, 2021:

	Boston			Los Angeles			New York			San Francisco			Seattle			Washington, DC			Total
Rental Revenue: (1)
Premier Workplace	$	930,560		$	—		$	1,012,172		$	508,620		$	—		$	340,808		$	2,792,160
Residential	13,397			—			—			3,892			—			25,379			42,668
Hotel	13,609			—			—			—			—			—			13,609
Total	957,566			—			1,012,172			512,512			—			366,187			2,848,437
% of Grand Totals	33.62		%	—		%	35.53		%	17.99		%	—		%	12.86		%	100.00		%
Rental Expenses:
Premier Workplace	322,298			—			379,267			168,040			—			127,102			996,707
Residential	5,811			—			—			6,717			—			11,916			24,444
Hotel	12,998			—			—			—			—			—			12,998
Total	341,107			—			379,267			174,757			—			139,018			1,034,149
% of Grand Totals	32.98		%	—		%	36.67		%	16.90		%	—		%	13.45		%	100.00		%
Net operating income	$	616,459		$	—		$	632,905		$	337,755		$	—		$	227,169		$	1,814,288
% of Grand Totals	33.98		%	—		%	34.88		%	18.62		%	—		%	12.52		%	100.00		%
Less: Net operating income attributable to noncontrolling interests in property partnerships	(43,232)			—			(143,072)			—			—			—			(186,304)
Add: Company’s share of net operating income (loss) from unconsolidated joint ventures	16,551			51,641			(664)			14,152			2,498			23,578			107,756
Company’s share of net operating income	$	589,778		$	51,641		$	489,169		$	351,907		$	2,498		$	250,747		$	1,735,740
% of Grand Totals	33.98		%	2.98		%	28.18		%	20.27		%	0.14		%	14.45		%	100.00		%

  _______________

(1)Rental Revenue is equal to Total Revenue per the Company’s Consolidated Statements of Operations, less Development and Management Services Revenue and Direct Reimbursements of Payroll and Related Costs from Management Services Contracts Revenue per the Consolidated Statements of Operations.