Boston Properties, Inc. Announces Third Quarter 2008 Results
Reports diluted FFO per share of $1.13
Reports diluted EPS of $0.40
BOSTON, Oct. 28 /PRNewswire-FirstCall/ -- Boston Properties, Inc. (NYSE: BXP), a real estate investment trust, reported results today for the third quarter ended September 30, 2008.
Funds from Operations (FFO) for the quarter ended September 30, 2008 were $137.9 million, or $1.15 per share basic and $1.13 per share diluted. This compares to FFO for the quarter ended September 30, 2007 of $139.1 million, or $1.17 per share basic and $1.15 per share diluted, after a supplemental adjustment to exclude the loss from early extinguishment of debt associated with the sale of real estate. FFO for the quarter ended September 30, 2008 includes non-cash charges of (1) $0.15 per share on a diluted basis related to the establishment of reserves for the accrued straight-line rent balances associated with the Company's leases with Lehman Brothers Inc. and the law firm of Heller Ehrman LLP and (2) $0.04 per share on a diluted basis related to the partial ineffectiveness of the Company's interest rate hedging contracts. FFO for the quarter ended September 30, 2007 includes the write- off of costs related to an abandoned suburban development project of $0.03 per share on a diluted basis. The loss from early extinguishment of debt associated with the sale of real estate was $0.02 per share on a diluted basis for the quarter ended September 30, 2007. The weighted average number of basic and diluted shares outstanding totaled 119,832,474 and 122,830,104, respectively, for the quarter ended September 30, 2008 and 119,010,269 and 122,298,400, respectively, for the quarter ended September 30, 2007.
Net income available to common shareholders was $48.5 million for the quarter ended September 30, 2008, compared to $242.4 million for the quarter ended September 30, 2007. Net income available to common shareholders per share (EPS) for the quarter ended September 30, 2008 was $0.40 basic and $0.40 on a diluted basis. This compares to EPS for the third quarter of 2007 of $2.02 basic and $1.99 on a diluted basis. EPS for the quarter ended September 30, 2007 includes $1.39, on a diluted basis, related to gains on sales of real estate and discontinued operations. The gain on sales of real estate for the quarter ended September 30, 2007 resulted from the sale of Democracy Center for a gross sale price of $280.5 million.
The reported results are unaudited and there can be no assurance that the results will not vary from the final information for the quarter ended September 30, 2008. In the opinion of management, all adjustments considered necessary for a fair presentation of these reported results have been made.
As of September 30, 2008, the Company's portfolio consisted of 146 properties comprising approximately 48.5 million square feet, including 14 properties under construction totaling 4.4 million square feet and one hotel. The overall percentage of leased space for the 131 properties in service as of September 30, 2008 was 95.0%.
Significant events during the third quarter included:
- On July 21, 2008, the Company's Operating Partnership utilized an accordion feature under its unsecured revolving credit facility with a consortium of lenders to increase the current maximum borrowing amount under the facility from $923.3 million to $1.0 billion. All other material terms under the facility remain unchanged.
- On July 31, 2008, the Company cash-settled at maturity its two remaining treasury lock contracts and one forward-starting interest rate swap contract with notional amounts aggregating $100.0 million and made aggregate cash payments to the counterparties totaling approximately $3.9 million. On September 2, 2008, the Company cash- settled its remaining forward-starting interest rate swap contracts with notional amounts aggregating $100.0 million and made aggregate cash payments to the counterparties totaling approximately $6.0 million. On September 9, 2008, the Company executed an interest rate lock agreement with lenders at a fixed rate of 6.10% per annum for an eight-year, $375.0 million loan collateralized by its Four Embarcadero Center property located in San Francisco, California. The Company's interest rate hedging program contemplated a financing with a ten-year term and, as a result, under SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," as amended and interpreted, the Company recognized a net derivative loss of approximately $6.3 million representing the partial ineffectiveness of its interest rate contracts. The expected financing is expected to close in the fourth quarter of 2008. There can be no assurance that the financing will close on the terms currently contemplated or at all.
- On August 12, 2008, the Company completed the acquisitions of 540 Madison Avenue and Two Grand Central Tower located in New York City, New York for an aggregate purchase price of approximately $705.0 million, including $309.9 million of assumed indebtedness. On August 13, 2008, the Company completed the acquisition of 125 West 55th Street also located in New York City, New York for a purchase price of approximately $444.0 million, including $263.5 million of assumed indebtedness. Each acquisition was completed through a joint venture among the Company, US Real Estate Opportunities I, L.P., which is a partnership managed by Goldman Sachs, and Meraas Capital LLC, a Dubai-based private equity firm. The Company has a 60% interest in each venture and provides customary property management and leasing services for the ventures. The acquisitions were financed with cash contributions from the ventures' partners aggregating approximately $575.6 million and the assumption of approximately $573.4 million of secured and mezzanine loans. The debt that was assumed as part of the transactions consists of the following:
- 540 Madison Avenue -- two secured loans having an aggregate principal amount of $119.9 million and a weighted-average fixed interest rate of 5.20% per annum, each of which matures in July 2013;
- Two Grand Central Tower -- a $190.0 million secured loan having a fixed interest rate of 5.10% per annum, which matures in July 2010; and
- 125 West 55th Street -- $263.5 million of secured and mezzanine loans having a weighted-average fixed interest rate of 6.25% per annum, all of which mature in March 2010.
- On August 19, 2008, the Company's Operating Partnership completed an offering of $747.5 million in aggregate principal amount (including $97.5 million as a result of the exercise by the initial purchasers of their over-allotment option) of its 3.625% exchangeable senior notes due 2014. The notes were priced at 99.0% of their face amount, resulting in aggregate net proceeds to the Company, after deducting the initial purchasers' discounts and offering expenses, of approximately $731.6 million, resulting in an effective interest rate of approximately 4.057% per annum. The notes mature on February 15, 2014, unless earlier repurchased, exchanged or redeemed. The notes may be exchanged prior to the close of business on the scheduled trading day immediately preceding January 1, 2014 into cash and, at the Operating Partnership's option, shares of the Company's common stock at an initial exchange rate of 8.5051 shares per $1,000 principal amount of notes (or an initial exchange price of approximately $117.58 per share of the Company's common stock). The notes were issued in an offering exempt from registration under the Securities Act of 1933. In addition, in connection with the offering, the Company entered into capped call transactions with affiliates of certain of the initial purchasers, which are intended to reduce the potential dilution upon future exchange of the Notes. The capped call transactions are expected to have the effect of increasing the effective exchange price to the Company of the Notes from $117.58 to approximately $137.17 per share, representing an overall effective premium of approximately 40% over the closing price of $97.98 per share of the Company's common stock on August 13, 2008. The net cost of the capped call transactions was approximately $44.4 million.
- On September 10, 2008, the Company used available cash to repay the mortgage loan collateralized by its One and Two Embarcadero Center properties located in San Francisco, California totaling approximately $274.8 million. There was no prepayment penalty associated with the repayment. The mortgage loan bore interest at a fixed rate of 6.74% per annum and was scheduled to mature on December 10, 2008.
- On September 26, 2008, the Company acquired from National Public Radio ("NPR") its headquarters building at 635 Massachusetts Avenue (the "NPR Building") comprised of approximately 211,000 net rentable square feet located in Washington, DC for a purchase price of approximately $119.5 million in cash. In addition, the Company and NPR have entered into a development management agreement whereby the Company will act as development manager for NPR's new headquarters building on NPR-owned land at 1111 North Capitol Street in Washington, DC. NPR and the Company have entered into a lease for the NPR Building for a five-year term at the conclusion of which NPR will occupy its new headquarters. Following the expiration of the lease with NPR, the Company expects to redevelop the NPR Building site into a Class A office property comprised of approximately 450,000 net rentable square feet.
- During the quarter ended September 30, 2008, the Company recognized reserves for the full amount of the accrued straight-line rent balances associated with the Company's leases in New York City with Lehman Brothers Inc. and the law firm of Heller Ehrman LLP, totaling approximately $13.2 million and $7.8 million, respectively.
EPS and FFO per Share Guidance:
The Company's guidance for the fourth quarter 2008 and full year 2009 for EPS (diluted) and FFO per share (diluted) is set forth and reconciled below.
Fourth Quarter 2008 Full Year 2009
Low - High Low - High
Projected EPS
(diluted) $0.60 - $0.64 $1.72 - $1.97
Add:
Projected
Company
Share of Real
Estate Depreciation
and Amortization 0.75 - 0.75 3.00 - 3.00
Less:
Projected Company Share
of Gains on Sales of
Real Estate 0.01 - 0.01 0.07 - 0.07
Projected FFO per Share
(diluted) $1.34 - $1.38 $4.65 - $4.90
Except as described below, the foregoing 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 this release and previously disclosed. The guidance for the fourth quarter 2008 does not include the additional non-cash interest expense resulting from the change in accounting for convertible debt instruments that is more fully described in the next paragraph, but the guidance for the full year 2009 does include the impact of such accounting rule change. In addition, the estimates do not include possible future gains or losses or the impact on operating results from other possible future property acquisitions or dispositions. 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 or gains or losses associated with disposition activities. There can be no assurance that the Company's actual results will not differ materially from the estimates set forth above.
On May 9, 2008, the Financial Accounting Standards Board (the "FASB") issued FASB Staff Position No. APB 14-1 "Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)" ("FSP No. APB 14-1") that requires the liability and equity components of convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement) to be separately accounted for in a manner that reflects the issuer's nonconvertible debt borrowing rate. FSP No. APB 14-1 requires that the initial proceeds from the sale of Boston Properties Limited Partnership's $862.5 million of 2.875% exchangeable senior notes due 2037, $450.0 million of 3.75% exchangeable senior notes due 2036 and $747.5 million of 3.625% exchangeable senior notes due 2014 be allocated between a liability component and an equity component in a manner that reflects interest expense at the interest rate of similar nonconvertible debt. The resulting debt discount will be amortized over the period during which the debt is expected to be outstanding (i.e., through the first optional redemption dates) as additional non-cash interest expense. Based on the Company's understanding of the application of FSP No. APB 14-1, this will result in an aggregate of approximately $0.15 - $0.16 per share (net of incremental capitalized interest) of additional non-cash interest expense for fiscal 2008 and approximately $0.21 - $0.22 per share for fiscal 2009. Excluding the impact of capitalized interest, the additional non-cash interest expense will be approximately $0.19 - $0.20 per share for fiscal 2008 and approximately $0.27 - $0.28 per share for fiscal 2009. The additional non- cash interest expense (before netting) will increase in subsequent reporting periods through the first optional redemption dates as the debt accretes to its par value over the same period. FSP No. APB 14-1 is effective for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. Early adoption is not permitted. Upon adoption, FSP No. APB 14-1 requires companies to retrospectively apply the requirements of the pronouncement to all periods presented. The guidance for fiscal 2008 set forth in the table above does not include the impact of FSP No. APB 14-1 as the Company is not permitted to early adopt the pronouncement. However, commencing in 2009, the Company will present prior period comparative results reflecting the impact of FSP No. APB 14-1.
Boston Properties will host a conference call on Wednesday, October 29, 2008 at 10:00 AM Eastern Time, open to the general public, to discuss the third quarter 2008 results, the fourth quarter 2008 and fiscal 2009 projections and related assumptions, and other related matters that may be of interest to investors. The number to call for this interactive teleconference is (800) 240-4186 (Domestic) or (303) 262-2075 (International); no passcode required. A replay of the conference call will be available through November 5, 2008, by dialing (800) 405-2236 (Domestic) or (303) 590-3000 (International) and entering the passcode 11120266. There will also be a live audio webcast of the call which may be accessed on the Company's website at http://www.bostonproperties.com in the Investor Relations section. Shortly after the call a replay of the webcast will be available in the Investor Relations section of the Company's website and archived for up to twelve months following the call.
Additionally, a copy of Boston Properties' third quarter 2008 "Supplemental Operating and Financial Data" and this press release are available in the Investor Relations section of the Company's website at http://www.bostonproperties.com.
Boston Properties is a fully integrated, self-administered and self- managed real estate investment trust that develops, redevelops, acquires, manages, operates and owns a diverse portfolio of Class A office properties and one hotel. The Company is one of the largest owners and developers of Class A office properties in the United States, concentrated in five markets -- Boston, Midtown Manhattan, Washington, D.C., San Francisco and Princeton, N.J.
This press release 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," "plans," "projects" 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 which 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 costs and availability of financing, the effectiveness of our interest rate hedging program, the ability of our joint venture partners to satisfy their obligations, the effects of local economic and market conditions, the effects of acquisitions and dispositions (including 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. Boston Properties does not undertake a duty to update or revise any forward-looking statement, including its guidance for the fourth quarter 2008 and full fiscal year 2009, whether as a result of new information, future events or otherwise.
Financial tables follow.
BOSTON PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended Nine months ended
September 30, September 30,
2008 2007 2008 2007
(in thousands, except for per share amounts)
(unaudited)
Revenue
Rental:
Base rent $266,205 $268,277 $828,671 $807,221
Recoveries from tenants 55,968 44,934 154,700 138,003
Parking and other 16,624 16,328 50,442 48,137
Total rental revenue 338,797 329,539 1,033,813 993,361
Hotel revenue 8,482 8,646 24,714 24,690
Development and management
services 9,557 5,318 21,494 15,175
Interest and other 212 25,081 16,106 68,274
Total revenue 357,048 368,584 1,096,127 1,101,500
Expenses
Operating:
Rental 127,715 113,506 364,551 339,375
Hotel 6,318 6,275 18,664 18,706
General and administrative 18,758 20,189 55,813 53,288
Interest 68,308 69,929 200,711 217,598
Depreciation and amortization 75,321 70,916 224,381 214,609
Net derivative losses 6,318 - 9,849 -
Losses from early
extinguishments of debt - 2,695 - 3,417
Total expenses 302,738 283,510 873,969 846,993
Income before minority
interests in property
partnerships, income from
unconsolidated joint
ventures, minority interest
in Operating Partnership,
gains on sales of real estate
and discontinued operations 54,310 85,074 222,158 254,507
Minority interests in
property partnerships (525) - (1,570) -
Income from unconsolidated
joint ventures 2,644 1,390 5,541 19,623
Income before minority
interest in Operating
Partnership, gains on sales
of real estate and
discontinued operations 56,429 86,464 226,129 274,130
Minority interest in
Operating Partnership (9,420) (13,946) (36,486) (41,754)
Income before gains on sales
of real estate and
discontinued operations 47,009 72,518 189,643 232,376
Gains on sales of real
estate, net of minority
interest 1,497 168,495 26,823 788,855
Income before discontinued
operations 48,506 241,013 216,466 1,021,231
Discontinued operations:
Income from discontinued
operations, net of minority
interest - 1,357 - 5,342
Gains on sales of real
estate from discontinued
operations, net of
minority interest - - - 173,899
Net income available to
common shareholders $48,506 $242,370 $216,466 $1,200,472
Basic earnings per common share:
Income available to common
shareholders before
discontinued
operations $0.40 $2.01 $1.81 $8.50
Discontinued operations, net
of minority interest - 0.01 - 1.51
Net income available to
common shareholders $0.40 $2.02 $1.81 $10.01
Weighted average number of
common shares outstanding 119,832 119,010 119,708 118,715
Diluted earnings per common share:
Income available to common
shareholders before
discontinued
operations $0.40 $1.98 $1.79 $8.36
Discontinued operations, net
of minority interest - 0.01 - 1.48
Net income available to
common shareholders $0.40 $1.99 $1.79 $9.84
Weighted average number of
common and common
equivalent
shares outstanding 121,369 120,655 121,236 120,760
BOSTON PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
2008 2007
(in thousands, except for share amounts)
(unaudited)
ASSETS
Real estate $9,434,884 $9,077,528
Real estate held for sale, net - 221,606
Construction in progress 813,404 700,762
Land held for future development 253,891 249,999
Less: accumulated depreciation (1,710,875) (1,531,707)
Total real estate 8,791,304 8,718,188
Cash and cash equivalents 55,597 1,506,921
Cash held in escrows 34,311 186,839
Marketable securities 16,160 22,584
Tenant and other receivables, net of allowance
for doubtful accounts of $3,821 and
$1,901, respectively 57,554 58,074
Note receivable 270,000 -
Accrued rental income, net of allowance of
$22,613 and $829, respectively 316,411 300,594
Deferred charges, net 314,562 287,199
Prepaid expenses and other assets 44,039 30,566
Investments in unconsolidated joint ventures 973,396 81,672
Total assets $10,873,334 $11,192,637
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Mortgage notes payable $2,282,699 $2,726,127
Unsecured senior notes, net of discount 1,472,258 1,471,913
Unsecured exchangeable senior notes, net
of discount 2,037,506 1,294,126
Unsecured line of credit 319,000 -
Accounts payable and accrued expenses 164,986 145,692
Dividends and distributions payable 96,491 944,870
Accrued interest payable 48,705 54,487
Other liabilities 167,646 232,705
Total liabilities 6,589,291 6,869,920
Commitments and contingencies - -
Minority interests 639,171 653,892
Stockholders' equity:
Excess stock, $.01 par value, 150,000,000
shares authorized, none issued or
outstanding - -
Preferred stock, $.01 par value, 50,000,000
shares authorized, none issued or
outstanding - -
Common stock, $.01 par value, 250,000,000
shares authorized, 119,930,768 and
119,581,385 shares issued and 119,851,868
and 119,502,485 shares outstanding in
2008 and 2007, respectively 1,199 1,195
Additional paid-in capital 3,317,358 3,305,219
Earnings in excess of dividends 366,482 394,324
Treasury common stock, at cost (2,722) (2,722)
Accumulated other comprehensive loss (37,445) (29,191)
Total stockholders' equity 3,644,872 3,668,825
Total liabilities and
stockholders' equity $10,873,334 $11,192,637
BOSTON PROPERTIES, INC.
FUNDS FROM OPERATIONS (1)
Three months ended Nine months ended
September 30, September 30,
2008 2007 2008 2007
(in thousands, except for per share amounts)
(unaudited)
Net income available to common
shareholders $48,506 $242,370 $216,466 $1,200,472
Add:
Minority interest in Operating
Partnership 9,420 13,946 36,486 41,754
Minority interests in property
partnerships 525 - 1,570 -
Less:
Income from unconsolidated
joint ventures 2,644 1,390 5,541 19,623
Gains on sales of real estate,
net of minority interest 1,497 168,495 26,823 788,855
Income from discontinued
operations, net of minority
interest - 1,357 - 5,342
Gains on sales of real estate
from discontinued operations,
net of minority interest - - - 173,899
Income before minority interests
in property partnerships,
income from unconsolidated
joint ventures, minority
interest in Operating Partnership,
gains on sales of real estate
and discontinued operations 54,310 85,074 222,158 254,507
Add:
Real estate depreciation and
amortization (2) 106,475 73,195 266,932 222,329
Income from discontinued
operations - 1,589 - 6,264
Income from unconsolidated
joint ventures (3) 2,644 1,390 5,541 4,170
Less:
Minority interests in property
partnerships' share of funds
from operations 1,013 - 3,052 -
Preferred distributions (4) 931 1,054 2,785 3,340
Funds from operations (FFO) 161,485 160,194 488,794 483,930
Add:
Losses from early
extinguishments of debt
associated with the sales of
real estate - 2,675 - 2,675
Funds from operations after a
supplemental adjustment to
exclude losses from early
extinguishments of debt
associated with the sales of
real estate 161,485 162,869 488,794 486,605
Less:
Minority interest in the
Operating Partnership's share
of funds from operations
after a supplemental
adjustment to exclude
losses from early
extinguishments of debt
associated with the
sales of real estate 23,540 23,815 71,180 71,609
Funds from operations available
to common shareholders after a
supplemental adjustment to
exclude losses from early
extinguishments of debt
associated with the sales of
real estate $137,945 $139,054 $417,614 $414,996
Our percentage share of funds
from operations - basic 85.42% 85.38% 85.44% 85.28%
Weighted average shares
outstanding - basic 119,832 119,010 119,708 118,715
FFO per share basic after a
supplemental adjustment to
exclude losses from
early extinguishments of
debt associated with the
sales of real estate $1.15 $1.17 $3.49 $3.50
FFO per share basic $1.15 $1.15 $3.49 $3.48
Weighted average shares
outstanding - diluted 122,830 122,298 122,697 122,506
FFO per share diluted after a
supplemental adjustment to
exclude losses from
early extinguishments of
debt associated with the
sales of real estate $1.13 $1.15 $3.44 $3.43
FFO per share diluted $1.13 $1.13 $3.44 $3.41
(1) Pursuant to the revised definition of Funds from Operations adopted
by the Board of Governors of the National Association of Real Estate
Investment Trusts ("NAREIT"), we calculate Funds from Operations, or
"FFO," by adjusting net income (loss) (computed in accordance with
GAAP, including non-recurring items) for gains (or losses) from
sales of properties, real estate related depreciation and
amortization, and after adjustment for unconsolidated partnerships
and joint ventures. FFO is a non-GAAP financial measure. The use
of FFO, combined with the required primary GAAP presentations, has
been fundamentally beneficial in improving the understanding of
operating results of REITs among the investing public and making
comparisons of REIT operating results more meaningful. Management
generally considers FFO to be a useful measure for reviewing our
comparative operating and financial performance because, by
excluding gains and losses related to sales of previously
depreciated operating real estate assets and excluding real estate
asset depreciation and amortization (which can vary among owners of
identical assets in similar condition based on historical cost
accounting and useful life estimates), FFO can help one compare the
operating performance of a company's real estate between periods or
as compared to different companies. Our computation of FFO may not
be comparable to FFO reported by other REITs or real estate
companies that do not define the term in accordance with the current
NAREIT definition or that interpret the current NAREIT definition
differently.
In addition to presenting FFO in accordance with the NAREIT
definition, we also disclose FFO after a specific and defined
supplemental adjustment to exclude losses from early extinguishments
of debt associated with the sales of real estate. The adjustment to
exclude losses from early extinguishments of debt results when the
sale of real estate encumbered by debt requires us to pay the
extinguishment costs prior to the debt's stated maturity and to
write-off unamortized loan costs at the date of the extinguishment.
Such costs are excluded from the gains on sales of real estate
reported in accordance with GAAP. However, we view the losses from
early extinguishments of debt associated with the sales of real
estate as an incremental cost of the sale transactions because we
extinguished the debt in connection with the consummation of the
sale transactions and we had no intent to extinguish the debt absent
such transactions. We believe that this supplemental adjustment
more appropriately reflects the results of our operations exclusive
of the impact of our sale transactions.
Although our FFO as adjusted clearly differs from NAREIT's
definition of FFO, and may not be comparable to that of other REITs
and real estate companies, we believe it provides a meaningful
supplemental measure of our operating performance because we believe
that, by excluding the effects of the losses from early
extinguishments of debt associated with the sales of real estate,
management and investors are presented with an indicator of our
operating performance that more closely achieves the objectives of
the real estate industry in presenting FFO.
Neither FFO nor FFO as adjusted should be considered as an
alternative to net income (determined in accordance with GAAP) as an
indication of our performance. Neither FFO nor FFO as adjusted
represents cash generated from operating activities determined in
accordance with GAAP, and neither is a measure of liquidity or an
indicator of our ability to make cash distributions. We believe
that to further understand our performance, FFO and FFO as adjusted
should be compared with our reported net income and considered in
addition to cash flows in accordance with GAAP, as presented in our
consolidated financial statements.
(2) Real estate depreciation and amortization consists of depreciation
and amortization from the Consolidated Statements of Operations of
$75,321, $70,916, $224,381 and $214,609, our share of unconsolidated
joint venture real estate depreciation and amortization of $31,669,
$1,989, $43,904 and $6,173 and depreciation and amortization from
discontinued operations of $0, $700, $0 and $2,714, less corporate-
related depreciation and amortization of $515, $410, $1,353 and
$1,167 for the three months and nine months ended September 30, 2008
and 2007, respectively.
(3) Excludes approximately $15.5 million related to our share of the
gain on sale and related loss from early extinguishment of debt
associated with the sale of Worldgate Plaza for the nine months
ended September 30, 2007.
(4) Excludes an adjustment of approximately $3.1 million for the nine
months ended September 30, 2007 to the income allocated to the
holders of Series Two Preferred Units to account for their right to
participate on an as-converted basis in the special dividend that
followed previously completed sales of real estate.
BOSTON PROPERTIES, INC.
PORTFOLIO LEASING PERCENTAGES
% Leased by Location
September 30, 2008 December 31, 2007
Greater Boston 92.4% 93.3%
Greater Washington, D.C. 98.4% 99.1%
Midtown Manhattan 98.9% 99.5%
Princeton/East Brunswick, NJ 83.9% 83.3%
Greater San Francisco 92.3% 91.1%
Total Portfolio 95.0% 94.9%
% Leased by Type
September 30, 2008 December 31, 2007
Class A Office Portfolio 95.7% 95.4%
Office/Technical Portfolio 81.9% 86.1%
Total Portfolio 95.0% 94.9%
CONTACT:
Michael Walsh
Senior Vice President, Finance
+1-617-236-3410
Arista Joyner
Investor Relations Manager
+1-617-236-3343
Both of Boston
Properties, Inc.
Marilynn Meek
Financial Relations Board for Boston Properties, Inc.
+1-212-827-3773