Boston Properties, Inc. Announces First Quarter 2006 Results and an Agreement to Sell 280 Park Avenue
BOSTON, April 25 /PRNewswire-FirstCall/ -- Boston Properties, Inc. (NYSE: BXP), a real estate investment trust, reported results today for the first quarter ended March 31, 2006.
Funds from Operations (FFO) for the quarter ended March 31, 2006 were $119.2 million, or $1.06 per share basic and $1.03 per share diluted. This compares to FFO for the quarter ended March 31, 2005 of $117.3 million, or $1.06 per share basic and $1.03 per share diluted. The weighted average number of basic and diluted shares outstanding totaled 112,508,647 and 120,013,441, respectively, for the quarter ended March 31, 2006 and 110,187,333 and 117,721,288, respectively, for the quarter ended March 31, 2005.
Net income available to common shareholders was $67.7 million for the three months ended March 31, 2006, compared to $61.2 million for the quarter ended March 31, 2005. Net income available to common shareholders per share (EPS) for the quarter ended March 31, 2006 was $0.60 basic and $0.59 on a diluted basis. This compares to EPS for the first quarter of 2005 of $0.56 basic and $0.55 on a diluted basis. EPS includes $0.05 and $0.01, on a diluted basis, related to gains on sales of real estate and discontinued operations for the quarters ended March 31, 2006 and 2005, respectively.
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 March 31, 2006. In the opinion of management, all adjustments considered necessary for a fair presentation of these reported results have been made.
As of March 31, 2006, the Company's portfolio consisted of 123 properties comprising approximately 42.7 million square feet, including four properties under construction and one expansion project totaling 1.2 million square feet. The overall percentage of leased space for the 117 properties in service as of March 31, 2006 was 94.3%.
Significant events of the first quarter include:
-- On January 3, 2006, the Company completed the previously disclosed sale
of a parcel of land at the Prudential Center located in Boston,
Massachusetts, which is being developed as the Mandarin Oriental, a
hotel and condominium mixed-use complex.
-- On January 17, 2006, the Company placed-in-service its Seven Cambridge
Center development project located in Cambridge, Massachusetts. Seven
Cambridge Center is a fully-leased, build-to-suit project with
approximately 231,000 square feet of office, research laboratory and
retail space. The Company has leased 100% of the space to the
Massachusetts Institute of Technology for occupancy by its affiliate,
the Eli and Edythe L. Broad Institute. On October 1, 2005, the Company
had placed-in-service the West Garage phase of the project consisting
of parking for approximately 800 cars.
-- On January 31, 2006, the Company repaid the mortgage loan
collateralized by its 101 Carnegie Center property located in
Princeton, New Jersey totaling approximately $6.6 million using
available cash. There was no prepayment penalty associated with the
repayment. The mortgage loan bore interest at a fixed rate of 7.66%
per annum and was scheduled to mature on April 1, 2006.
-- On February 24, 2006, the Company repaid the construction financing
collateralized by its Seven Cambridge Center property located in
Cambridge, Massachusetts totaling approximately $112.5 million using
approximately $7.5 million of available cash and $105.0 million drawn
under the Company's Unsecured Line of Credit. The construction
financing bore interest at a variable rate equal to LIBOR plus 1.25%
per annum and was scheduled to mature in April 2007.
-- On March 13, 2006, a joint venture, in which the Company has a 50%
interest, acquired a land parcel located in New York City for a
purchase price of approximately $6.0 million.
-- On March 31, 2006, the Company commenced construction of South of
Market, a Class A office project consisting of two buildings
aggregating approximately 402,000 net rentable square feet located in
Reston, Virginia. The Company expects that the project will be complete
and initial occupancy is expected in the first quarter of 2008.
-- On March 31, 2006, the Company was added to the Standard & Poor's 500
Index, a world-renowned index which includes 500 leading companies in
leading industries of the U.S. economy.
-- The Company was selected for the third year in a row as one of
America's Most Admired Companies in the Real Estate Industry according
to FORTUNE(R) magazine.
Transactions completed subsequent to March 31, 2006:
-- On April 6, 2006, the Company's Operating Partnership closed on an
offering of $400 million in aggregate principal amount of its 3.75%
exchangeable senior notes due 2036. The notes will be exchangeable
into the Company's common stock at an initial exchange rate, subject to
adjustment, of 8.9461 shares per $1,000 principal amount of notes (or
an initial exchange price of approximately $111.78 per share of common
stock) under the circumstances described in the prospectus supplement
filed with the Securities and Exchange Commission on April 3, 2006.
Noteholders may require the Operating Partnership to purchase the notes
at par initially on May 18, 2013 and, after that date, the notes will
be redeemable at par at the option of the Operating Partnership under
the circumstances described in the prospectus.
-- On April 13, 2006, the Company acquired a parcel of land located in
Waltham, Massachusetts for a purchase price of $16.0 million.
-- On April 25, 2006, the Company executed a binding agreement for the
sale of 280 Park Avenue, a Class A office property of approximately
1,179,000 net rentable square feet located in midtown Manhattan, for
approximately $1.2 billion. The sale is subject to the satisfaction of
customary closing conditions and, although there can be no assurances
that the sale will be consummated, it is expected to close during the
second quarter of 2006.
The Company's guidance for the second quarter and full year 2006 for EPS (diluted) and FFO per share (diluted) is set forth and reconciled below. The guidance does not reflect the impact of the pending sale of 280 Park Avenue, including among other things, the estimated gain on sale, the use of proceeds and the loss of future earnings contribution from the property.
Second Quarter 2006 Full Year 2006
Low - High Low - High
Projected EPS (diluted) $0.55 - $0.57 $2.25 - $2.37
Add:
Projected Company Share
of Real Estate
Depreciation and
Amortization 0.47 - 0.47 1.95 - 1.95
Less:
Projected Company Share
of Gains on Sales
of Real Estate 0.00 - 0.00 0.05 - 0.05
Projected FFO
per Share (diluted) $1.02 - $1.04 $4.15 - $4.27
Except as otherwise noted above, the foregoing estimates reflect management's view of current and future market conditions, including assumptions with respect to rental rates, occupancy levels and earnings impact of the events referenced in this release. The estimates do not include possible future gains or losses or the impact on operating results from 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.
Boston Properties will host a conference call tomorrow, April 26, 2006 at 10:00 AM (Eastern Time), open to the general public, to discuss the first quarter 2006 results, the 2006 projections and related assumptions, and other related matters. The number to call for this interactive teleconference is (800) 240-4186. A replay of the conference call will be available through May 3, 2006 by dialing (800) 405-2236 and entering the passcode 11057503, or as a podcast on the Company's website, http://www.bostonproperties.com, shortly after the call. An audio-webcast will also be archived and may be accessed in the Investor Relations section of the Company's website under the heading Events & Webcasts.
Additionally, a copy of Boston Properties' first quarter 2006 "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. These materials are also available by contacting Investor Relations at (617) 236-3322 or by written request to:
Investor Relations
Boston Properties, Inc.
111 Huntington Avenue, Suite 300
Boston, MA 02199-7610
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 also includes two hotels. 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 "guidance," "expects," "plans," "estimates," "projects," "intends," "believes" 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 and acquisition activity, the ability to effectively integrate acquisitions, the costs and availability of financing (including the impact of interest rates on our hedging program), the effects of local economic and market conditions, the effects of acquisitions and dispositions, including possible impairment charges, 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 whether as a result of new information, future events or otherwise, including its guidance for the second quarter and full fiscal year 2006.
BOSTON PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended
March 31,
2006 2005
(in thousands, except
for per share amounts)
(unaudited)
Revenue
Rental:
Base rent $276,398 $278,748
Recoveries from tenants 47,193 43,337
Parking and other 13,829 13,925
Total rental revenue 337,420 336,010
Hotel revenue 12,343 12,096
Development and management services 4,376 4,536
Interest and other 1,965 1,631
Total revenue 356,104 354,273
Expenses
Operating:
Rental 112,614 108,484
Hotel 11,477 10,809
General and administrative 14,642 14,813
Interest 74,817 79,354
Depreciation and amortization 66,847 67,796
Loss from early extinguishment of debt 467 --
Total expenses 280,864 281,256
Income before minority interest in
property partnership, income from
unconsolidated joint ventures,
minority interest in Operating
Partnership, gains on sales of real
estate and discontinued operations 75,240 73,017
Minority interest in property partnership 1,236 1,652
Income from unconsolidated joint ventures 1,290 1,335
Income before minority interest in
Operating Partnership, gains on
sales of real estate and
discontinued operations 77,766 76,004
Minority interest in Operating Partnership (15,470) (15,677)
Income before gains on sales of real
estate and discontinued operations 62,296 60,327
Gains on sales of real estate, net of
minority interest 5,441 1,208
Income before discontinued operations 67,737 61,535
Discontinued operations:
Loss from discontinued operations,
net of minority interest -- (293)
Net income available to common shareholders $67,737 $61,242
Basic earnings per common share:
Income available to common
shareholders before discontinued operations $0.60 $0.56
Discontinued operations, net of
minority interest -- --
Net income available to common shareholders $0.60 $0.56
Weighted average number of common
shares outstanding 112,509 110,187
Diluted earnings per common share:
Income available to common
shareholders before discontinued
operations $0.59 $0.55
Discontinued operations, net of
minority interest -- --
Net income available to common shareholders $0.59 $0.55
Weighted average number of common
and common equivalent shares outstanding 115,157 112,364
BOSTON PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
2006 2005
(in thousands, except
for share amounts)
(unaudited)
ASSETS
Real estate $8,864,907 $8,724,954
Construction in progress 107,051 177,576
Land held for future development 189,024 248,645
Less: accumulated depreciation (1,320,712) (1,265,073)
Total real estate 7,840,270 7,886,102
Cash and cash equivalents 32,214 261,496
Cash held in escrows 23,715 25,618
Tenant and other receivables, net of
allowance for doubtful accounts of
$2,301 and $2,519, respectively 41,458 52,668
Accrued rental income, net of
allowance of $1,060 and $2,638,
respectively 316,048 302,356
Deferred charges, net 246,214 242,660
Prepaid expenses and other assets 91,646 41,261
Investments in unconsolidated joint
ventures 98,836 90,207
Total assets $8,690,401 $8,902,368
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Mortgage notes payable $3,185,550 $3,297,192
Unsecured senior notes, net of
discount 1,471,163 1,471,062
Unsecured line of credit 40,000 58,000
Accounts payable and accrued expenses 86,938 109,823
Dividends and distributions payable 95,344 107,643
Accrued interest payable 39,269 47,911
Other liabilities 98,296 154,123
Total liabilities 5,016,560 5,245,754
Commitments and contingencies -- --
Minority interests 735,185 739,268
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,
112,892,557 and
112,621,162 shares issued and
112,813,657 and 112,542,262
shares outstanding in
2006 and 2005, respectively 1,128 1,125
Additional paid-in capital 2,759,580 2,745,719
Earnings in excess of dividends 173,129 182,105
Treasury common stock, at cost (2,722) (2,722)
Accumulated other comprehensive
income (loss) 7,541 (8,881)
Total stockholders' equity 2,938,656 2,917,346
Total liabilities and
stockholders' equity $8,690,401 $8,902,368
BOSTON PROPERTIES, INC.
FUNDS FROM OPERATIONS (1)
Three months ended
March 31,
2006 2005
(in thousands, except
for per share amounts)
(unaudited)
Net income available to common
shareholders $67,737 $61,242
Add:
Minority interest in Operating
Partnership 15,470 15,677
Loss from discontinued operations,
net of minority interest -- 293
Less:
Minority interest in property
partnership 1,236 1,652
Income from unconsolidated joint
ventures 1,290 1,335
Gains on sales of real estate, net
of minority interest 5,441 1,208
Income before minority interest in
property partnership, income from
unconsolidated joint ventures,
minority interest in Operating
Partnership, gains on sales of
real estate and discontinued operations 75,240 73,017
Add:
Real estate depreciation and
amortization (2) 68,674 69,540
Income from unconsolidated joint
ventures 1,290 1,335
Less:
Minority interest in property
partnership's share of funds from
operations 268 (75)
Preferred distributions 3,110 3,280
Loss from discontinued operations -- 351
Funds from operations (FFO) 141,826 140,336
Less:
Minority interest in Operating
Partnership's share of funds from
operations 22,616 23,035
Funds from operations available to
common shareholders $119,210 $117,301
Our percentage share of funds from
operations - basic 84.05% 83.59%
Weighted average shares outstanding
- basic 112,509 110,187
FFO per share basic $1.06 $1.06
Weighted average shares outstanding
- diluted 120,013 117,721
FFO per share diluted $1.03 $1.03
(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.
FFO should not be considered as an alternative to net income
(determined in accordance with GAAP) as an indication of our
performance. FFO does not represent cash generated from operating
activities determined in accordance with GAAP and is not a measure of
liquidity or an indicator of our ability to make cash distributions.
We believe that to further understand our performance, FFO 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 $66,847
and $67,796, our share of unconsolidated joint venture real estate
depreciation and amortization of $2,304 and $1,798 and depreciation
and amortization from discontinued operations of $0 and $366, less
corporate related depreciation and amortization of $477 and $420 for
the three months ended March 31, 2006 and 2005, respectively.
BOSTON PROPERTIES, INC.
PORTFOLIO LEASING PERCENTAGES
% Leased by Location
March 31, 2006 December 31, 2005
Greater Boston 91.6% 89.9%
Greater Washington, D.C. 97.2% 97.2%
Midtown Manhattan 98.9% 98.3%
Princeton/East Brunswick, NJ 87.2% 86.9%
Greater San Francisco 89.3% 90.8%
Total Portfolio 94.3% 93.8%
% Leased by Type
March 31, 2006 December 31, 2005
Class A Office Portfolio 94.1% 93.7%
Office/Technical Portfolio 97.9% 97.6%
Total Portfolio 94.3% 93.8%
CONTACT:
Michael Walsh,
Senior Vice President, Finance
1-617-236-3410
Kathleen DiChiara
Investor Relations Manager,
1-617-236-3343
Both of Boston Properties, Inc.
Marilynn Meek
General Info.
1-212-827-3773
Financial Relations Board for Boston Properties, Inc.