Boston Properties, Inc. Announces Fourth Quarter 2006 Results
Reports diluted EPS of $0.60
BOSTON, Jan. 30 /PRNewswire-FirstCall/ -- Boston Properties, Inc. (NYSE: BXP), a real estate investment trust, reported results today for the fourth quarter ended December 31, 2006.
Results for the quarter ended December 31, 2006
Funds from Operations (FFO) for the quarter ended December 31, 2006 were $141.9 million, or $1.21 per share basic and $1.18 per share diluted. This compares to FFO for the quarter ended December 31, 2005 of $126.7 million, or $1.13 per share basic and $1.09 per share diluted. The weighted average number of basic and diluted shares outstanding totaled 116,895,438 and 121,456,257, respectively, for the quarter ended December 31, 2006 and 112,340,334 and 119,496,904, respectively, for the quarter ended December 31, 2005.
Net income available to common shareholders was $71.7 million for the three months ended December 31, 2006, compared to $154.1 million for the quarter ended December 31, 2005. Net income available to common shareholders per share (EPS) for the quarter ended December 31, 2006 was $0.61 basic and $0.60 on a diluted basis. This compares to EPS for the fourth quarter of 2005 of $1.35 basic and $1.32 on a diluted basis. EPS for the quarter ended December 31, 2006 reflects a reduction of $0.09, on a diluted basis, representing the amount of earnings allocated to the holders of Series Two Preferred Units of limited partnership interest in the Company's Operating Partnership to account for their right to participate on an as-converted basis in the special dividend that was paid on January 30, 2007 to stockholders of record as of the close of business on December 29, 2006. EPS for the quarter ended December 31, 2005 includes $0.71, on a diluted basis, related to (1) gains on sales of real estate of $0.40, (2) discontinued operations of $0.35 and (3) the cumulative effect of a change in accounting principle of ($0.04).
Results for the year ended December 31, 2006
FFO for the year ended December 31, 2006 were $527.7 million, or $4.60 per share basic and $4.47 per share diluted, after a supplemental adjustment to exclude the loss from early extinguishment of debt associated with the sale of real estate. This compares to FFO for the year ended December 31, 2005 of $489.0 million, or $4.39 per share basic and $4.25 per share diluted, after a supplemental adjustment to exclude losses from early extinguishments of debt associated with the sales of real estate. Losses from early extinguishments of debt associated with the sales of real estate totaled $0.23 and $0.08 per share basic and $0.22 and $0.08 per share diluted for the years ended December 31, 2006 and 2005, respectively. The weighted average number of basic and diluted shares outstanding totaled 114,721,339 and 120,706,904, respectively, for the year ended December 31, 2006 and 111,274,188 and 118,722,134, respectively, for the year ended December 31, 2005.
Net income available to common shareholders was $873.6 million for the year ended December 31, 2006, compared to $438.3 million for the year ended December 31, 2005. Net income available to common shareholders per share (EPS) for the year ended December 31, 2006 was $7.62 basic and $7.46 on a diluted basis. This compares to EPS for the year ended December 31, 2005 of $3.94 basic and $3.86 on a diluted basis.
The reported results are unaudited and there can be no assurance that the results will not vary from the final information for the quarter and year ended December 31, 2006. In the opinion of management, all adjustments considered necessary for a fair presentation of these reported results have been made.
As of December 31, 2006, the Company's portfolio consisted of 131 properties comprising approximately 43.4 million square feet, including six properties under construction totaling 1.4 million square feet and two hotels. The overall percentage of leased space for the 123 properties in service as of December 31, 2006 was 94.2%.
Significant events of the fourth quarter include:
- On October 2, 2006, the Company used available cash to repay the mortgage loan collateralized by its Embarcadero Center Three property located in San Francisco, California totaling approximately $133.4 million. There was no prepayment penalty associated with the repayment. The mortgage loan bore interest at a fixed rate of 6.40% per annum and was scheduled to mature on January 1, 2007.
- On October 27, 2006, the Company acquired a parcel of land located in Waltham, Massachusetts for a purchase price of approximately $5.6 million.
- On November 17, 2006, the Company executed a binding agreement for the sale of the long-term leasehold interest in 5 Times Square in New York City and related credits, for approximately $1.28 billion in cash. 5 Times Square is a fully-leased Class A office tower that contains approximately 1,101,779 net rentable square feet. 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 first quarter of 2007.
- On November 21, 2006, the Company obtained construction financing totaling $200.0 million collateralized by its South of Market development project located in Reston, Virginia. South of Market is a Class A office project consisting of three buildings aggregating approximately 652,000 net rentable square feet. The construction financing bears interest at a variable rate equal to LIBOR plus 1.25% per annum and matures in November 2009 with two one-year extension options.
- On November 30, 2006, the Company acquired Four and Five Cambridge Center and the Cambridge Center East Garage located in Cambridge, Massachusetts, at a purchase price of approximately $186.0 million. This property consists of two Class A office properties totaling approximately 436,000 net rentable square feet and structured parking for approximately 840 vehicles totaling approximately 300,000 square feet. The acquisition was financed with available cash. Four and Five Cambridge Center is currently approximately 65% leased with an average rental rate that is below market. The Company projects this property's 2007 Unleveraged FFO Return to be 5.5% and 2007 Unleveraged Cash Return to be 4.8%. Assuming the Company leases substantially all of the currently available space at market rates by the end of 2008 and spends approximately $9.4 million for capital and tenant improvements and leasing commissions, the Company projects this property's 2008 Unleveraged FFO Return to be 7.2% and 2008 Unleveraged Cash Return to be 6.7%. The calculation of these returns and related disclosures are presented on the accompanying table entitled "Projected 2007 and 2008 Returns on Acquisition." There can be no assurance that actual returns will not differ materially from these projections.
- On December 6, 2006, the Company commenced construction of One Preserve Parkway, a Class A office property totaling approximately 183,000 net rentable square feet located in Rockville, Maryland. The Company expects that the project will be completed with initial occupancy in the second quarter of 2008.
- On December 18, 2006, the Company announced that its Board of Directors declared a special cash dividend of $5.40 per common share payable on January 30, 2007 to shareholders of record as of the close of business on December 29, 2006. The decision to declare a special dividend was the result of the sales of assets in 2006, including 280 Park Avenue and 265 Franklin Street. The Board of Directors did not make any change in the Company's policy with respect to regular quarterly dividends. The payment of the regular quarterly dividend of $0.68 per share and the special dividend of $5.40 per share will result in a total payment of $6.08 per share payable on January 30, 2007. Holders of common units of limited partnership interest in Boston Properties Limited Partnership, the Company's Operating Partnership, as of the close of business on December 29, 2006 will receive the same total distribution, payable on January 30, 2007. Holders of Series Two Preferred Units of limited partnership interest will participate in the special cash dividend (separately from their regular February 2007 distribution) on an as-converted basis in connection with their regular May 2007 distribution payment as provided in the Operating \ Partnership's partnership agreement.
- On December 19, 2006, the Company entered into an interest rate lock agreement with a lender for a fixed interest rate of 5.57% per annum on a ten-year mortgage financing totaling $750.0 million to be collateralized by the Company's 599 Lexington Avenue property in New York City. The Company expects to close on the mortgage financing by the end of February 2007, although there can be no assurance that the financing will be consummated on the terms currently contemplated or at all. In conjunction with the interest rate lock agreement, the Company terminated its forward-starting interest rate swap contracts with notional amounts aggregating $500.0 million and received approximately $10.9 million, which amount will reduce the Company's interest expense over the ten-year term of the financing, resulting in an effective interest rate of 5.38% per annum.
- On December 22, 2006, the Company executed a contract to acquire Kingstowne Towne Center, a mixed-use property located in Alexandria, Virginia, at a purchase price of approximately $134.0 million. This property is comprised of two Class A office properties totaling approximately 307,000 net rentable square feet and a retail/movie theater complex totaling approximately 88,000 net rentable square feet. The acquisition is subject to the satisfaction of customary closing conditions and there can be no assurance that the acquisition will be consummated on the terms currently contemplated or at all.
Transactions completed subsequent to December 31, 2006:
- On January 5, 2007 and January 18, 2007, the Company acquired adjacent parcels of land located in Springfield, Virginia for a purchase price of approximately $12.0 million and $4.5 million, respectively. The Company also has an agreement to acquire an additional adjacent parcel of land for a purchase price of approximately $25.6 million. The assembled land parcels will support a commercial development of approximately 800,000 net rentable square feet.
- On January 9, 2007, the Company acquired a parcel of land located in New York City, through a majority-owned venture, for a purchase price of approximately $38.8 million. On January 24, 2007, the Company acquired an adjacent parcel of land, through a majority-owned venture, for a purchase price of approximately $160.0 million. The Company also has agreements to acquire other real estate interests, through the majority-owned venture, for approximately $60.0 million. The acquisitions were financed with a $160.0 million mortgage loan bearing interest at a variable rate equal to LIBOR plus 0.40% per annum and maturing in January 2009. The assembled land parcels will support the development of an approximately 885,000 net rentable square foot Class A office tower.
- On January 29, 2007, the Company acquired a parcel of land located in Waltham, Massachusetts for a purchase price of approximately $13.9 million.
EPS and FFO per Share Guidance:
The Company's guidance for the first quarter and full year 2007 for EPS (diluted) and FFO per share (diluted) is set forth and reconciled below.
First Quarter 2007 Full Year 2007
Low - High Low - High
Projected EPS (diluted)$ 5.68 - $5.69 $7.59 - $7.69
Add:
Projected Company
Share of Real Estate
Depreciation and
Amortization 0.50 - 0.50 2.00 - 2.00
Less:
Projected Company
Share of Gains on
Sales of Real Estate 5.14 - 5.14 5.14 - 5.14
Projected FFO per
Share (diluted) $ 1.04 - $1.05 $4.45 - $4.55
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, dispositions or financings. 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, January 31, 2007 at 10:00 AM Eastern Time, open to the general public, to discuss the fourth quarter and full fiscal year 2006 results, the 2007 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) 219-6110 (Domestic) or (303) 262-2190 (International); no passcode required. A replay of the conference call will be available through February 7, 2007, by dialing (800) 405-2236 (Domestic) or (303) 590-3000 (International) and entering the passcode 11080783. There will also be a live audio webcast of the call which may be accessed on the Company's website at www.bostonproperties.com in the Investor Relations section, through www.fulldisclosure.com for individual investors, or through the password-protected event management site, www.streetevents.com, for institutional investors. Shortly after the call a replay of the webcast and a podcast will be available on the Company's website, www.bostonproperties.com, in the Investor Relations section, and archived for up to twelve months following the call.
Additionally, a copy of Boston Properties' fourth quarter 2006 "Supplemental Operating and Financial Data" and this press release are available in the Investor Relations section of the Company's website at 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 "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 effects of local economic and market conditions, the effects of acquisitions and dispositions (including the exact amount and timing of any related special dividend and 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 whether as a result of new information, future events or otherwise, including its guidance for the first quarter and full fiscal year 2007.
Financial tables follow.
BOSTON PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended Year ended
December 31, December 31,
2006 2005 2006 2005
(in thousands, except for per share amounts)
(unaudited)
Revenue
Rental:
Base rent $278,186 $279,583 $1,104,773 $1,110,212
Recoveries from tenants 42,868 44,098 181,521 173,254
Parking and other 15,261 14,051 57,740 55,567
Total rental revenue 336,315 337,732 1,344,034 1,339,033
Hotel revenue 25,126 22,161 76,990 69,277
Development and management
services 5,661 3,714 19,825 17,310
Interest and other 11,571 2,726 36,737 12,015
Total revenue 378,673 366,333 1,477,586 1,437,635
Expenses
Operating:
Rental 107,374 112,284 441,814 438,335
Hotel 17,392 16,125 55,538 51,689
General and administrative 16,198 13,136 59,375 55,471
Interest 71,423 74,804 298,260 308,091
Depreciation and
amortization 70,452 66,290 276,759 266,829
Losses from early
extinguishments of debt 11 - 32,143 12,896
Total expenses 282,850 282,639 1,163,889 1,133,311
Income before minority
interest in property
partnership, income from
unconsolidated joint ventures,
minority interest in Operating
Partnership, gains on sales
of real estate, discontinued
operations and cumulative
effect of a change in
accounting principle 95,823 83,694 313,697 304,324
Minority interest in property
partnership - 1,366 2,013 6,017
Income from unconsolidated
joint ventures 1,340 1,530 24,507 4,829
Income before minority
interest in Operating
Partnership, gains
on sales of real estate,
discontinued operations and
cumulative effect of a
change in accounting principle 97,163 86,590 340,217 315,170
Minority interest in
Operating Partnership (26,691) (16,928) (72,976) (74,103)
Income before gains on sales
of real estate, discontinued
operations and cumulative
effect of a change in
accounting principle 70,472 69,662 267,241 241,067
Gains on sales of real
estate, net of minority
interest 1,183 48,542 606,394 151,884
Income before discontinued
operations and cumulative
effect of a change in
accounting principle 71,655 118,204 873,635 392,951
Discontinued operations:
Income from discontinued
operations, net of minority
interest - 730 - 1,908
Gains on sales of real
estate from discontinued
operations, net of minority
interest - 39,364 - 47,656
Income before cumulative
effect of a change in
accounting principle 71,655 158,298 873,635 442,515
Cumulative effect of a change
in accounting principle - (4,235) - (4,223)
Net income available to
common shareholders $71,655 $154,063 $873,635 $438,292
Basic earnings per common
share:
Income available to common
shareholders before
discontinued operations
and cumulative effect of a
change in accounting
principle $0.61 $1.03 $7.62 $3.53
Discontinued operations, net
of minority interest - 0.36 - 0.45
Cumulative effect of a
change in accounting
principle, net of minority
interest - (0.04) - (0.04)
Net income available to
common shareholders $0.61 $1.35 $7.62 $3.94
Weighted average number of
common shares outstanding 116,895 112,340 114,721 111,274
Diluted earnings per common
share:
Income available to common
shareholders before
discontinued operations
and cumulative effect of a
change in accounting
principle $0.60 $1.01 $7.46 $3.46
Discontinued operations, net
of minority interest - 0.35 - 0.44
Cumulative effect of a
change in accounting
principle, net of minority
interest - (0.04) - (0.04)
Net income available to
common shareholders $0.60 $1.32 $7.46 $3.86
Weighted average number of
common and common
equivalent shares
outstanding 119,190 114,640 117,077 113,559
BOSTON PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
December 31, December 31,
2006 2005
(in thousands, except for share amounts)
(unaudited)
ASSETS
Real estate $8,819,934 $8,724,954
Real estate held for sale, net 433,492 -
Construction in progress 115,629 177,576
Land held for future development 183,403 248,645
Less: accumulated depreciation (1,392,055) (1,265,073)
Total real estate 8,160,403 7,886,102
Cash and cash equivalents 725,788 261,496
Cash held in escrows 25,784 25,618
Tenant and other receivables, net of
allowance for doubtful accounts of
$2,682 and $2,519, respectively 57,052 52,668
Accrued rental income, net of
allowance of $783 and $2,638,
respectively 327,337 302,356
Deferred charges, net 274,079 242,660
Prepaid expenses and other assets 40,868 41,261
Investments in unconsolidated joint
ventures 83,711 90,207
Total assets $9,695,022 $8,902,368
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Mortgage notes payable $2,679,462 $3,297,192
Unsecured senior notes, net of
discount 1,471,475 1,471,062
Unsecured exchangeable senior notes 450,000 -
Unsecured line of credit - 58,000
Accounts payable and accrued expenses 102,934 109,823
Dividends and distributions payable 857,892 107,643
Accrued interest payable 47,441 47,911
Other liabilities 239,084 154,123
Total liabilities 5,848,288 5,245,754
Commitments and contingencies - -
Minority interests 623,508 739,268
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,
117,582,442 and 112,621,162 shares
issued and 117,503,542 and 112,542,262
shares outstanding in 2006 and 2005,
respectively 1,175 1,125
Additional paid-in capital 3,119,941 2,745,719
Earnings in excess of dividends 108,155 182,105
Treasury common stock, at cost (2,722) (2,722)
Accumulated other comprehensive loss (3,323) (8,881)
Total stockholders' equity 3,223,226 2,917,346
Total liabilities and
stockholders' equity $9,695,022 $8,902,368
BOSTON PROPERTIES, INC.
FUNDS FROM OPERATIONS (1)
Three months ended Year ended
December 31, December 31,
2006 2005 2006 2005
(in thousands, except for per share amounts)
(unaudited)
Net income available to common
shareholders $71,655 $154,063 $873,635 $438,292
Add:
Minority interest in
Operating Partnership 26,691 16,928 72,976 74,103
Cumulative effect of a
change in accounting
principle - 4,235 - 4,223
Less:
Minority interest in
property partnership - 1,366 2,013 6,017
Income from unconsolidated
joint ventures 1,340 1,530 24,507 4,829
Gains on sales of real
estate, net of minority
interest 1,183 48,542 606,394 151,884
Income from discontinued
operations, net of minority
interest - 730 - 1,908
Gains on sales of real
estate from discontinued
operations, net of minority
interest - 39,364 - 47,656
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 95,823 83,694 313,697 304,324
Add:
Real estate depreciation and
amortization (2) 71,495 67,987 283,350 274,476
Income from discontinued
operations - 869 - 2,279
Income from unconsolidated
joint ventures 1,340 1,530 6,590 (3) 4,829
Less:
Minority interest in
property partnership's
share of funds from
operations - 114 479 113
Preferred distributions (4) 1,431 3,098 9,418 12,918
Funds from operations (FFO) 167,227 150,868 593,740 572,877
Add:
Losses from early
extinguishments of debt
associated with the sales
of real estate - - 31,444 11,041
Funds from operations after a
supplemental adjustment to
exclude losses from early
extinguishments of debt
associated with the sales
of real estate 167,227 150,868 625,184 583,918
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 25,377 24,167 97,519 94,946
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 $141,850 $126,701 $527,665 $488,972
Our percentage share of funds
from operations - basic 84.82% 83.98% 84.40% 83.74%
Weighted average shares
outstanding - basic 116,895 112,340 114,721 111,274
FFO per share basic after a
supplemental adjustment to
exclude losses from early
extinguishments of debt
associated with the sales
of real estate $1.21 $1.13 $4.60 $4.39
FFO per share basic $1.21 $1.13 $4.37 $4.31
Weighted average shares
outstanding - diluted 121,456 119,497 120,707 118,722
FFO per share diluted after
a supplemental adjustment
to exclude losses from
early extinguishments of
debt associated with the
sales of real estate $1.18 $1.09 $4.47 $4.25
FFO per share diluted $1.18 $1.09 $4.25 $4.17
(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 excludes, among other
items, interest expense (which may vary depending on the level of
corporate debt or property-specific debt), as well as depreciation and
amortization expense (which can vary among owners of identical assets
in similar condition based on 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
$70,452, $66,290, $276,759 and $266,829, our share of unconsolidated
joint venture real estate depreciation and amortization of $2,250,
$2,174, $9,087 and $8,554 and depreciation and amortization from
discontinued operations of $0, $63, $0 and $812, less corporate
related depreciation and amortization of $295, $540, $1,584 and $1,719
and adjustment of asset retirement obligations of $912, $0, $912 and
$0 for the three months and year ended December 31, 2006 and 2005,
respectively.
(3) Excludes approximately $17.9 million related to our share of the gain
on sale and related loss from early extinguishment of debt associated
with the sale of 265 Franklin Street.
(4) Excludes approximately $12.2 million for the three months and year
ended December 31, 2006 and approximately $12.1 million for the year
ended December 31, 2005 of 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.
PROJECTED 2007 AND 2008 RETURNS ON ACQUISITION
Four and Five Cambridge Center and
East Garage
2007 2008
(dollars in thousands)
Base rent and recoveries from tenants $11,715 $15,645
Straight-line rent 249 169
Fair value lease revenue 936 858
Parking and other 2,009 2,072
Total rental revenue 14,909 18,744
Operating Expenses 4,479 4,642
Revenue less Operating Expenses 10,430 14,102
Depreciation and amortization 11,074 9,687
Net income (loss) $(644) $4,415
Add:
Depreciation and amortization 11,074 9,687
Unleveraged FFO $10,430 $14,102
Less:
Straight-line rent (249) (169)
Fair value lease revenue (936) (858)
Unleveraged Cash $9,245 $13,075
Cash $186,000 $186,000
Closing costs 275 275
Tenant costs and capital improvements 4,925 9,372
Total Investment $191,200 $195,647
Unleveraged FFO Return (1) 5.5% 7.2%
Unleveraged Cash Return (2) 4.8% 6.7%
(1) Unleveraged FFO Return is determined by dividing the Unleveraged FFO
(based on the projected results for the years ending December 31, 2007
and 2008) by Total Investment. Other real estate companies may
calculate this return differently. Management believes projected
Unleveraged FFO Return is a useful measure in the real estate industry
when determining the appropriate purchase price for a property or
estimating a property's value. When evaluating acquisition
opportunities, management considers, among other factors, projected
Unleveraged FFO Return because it excludes, among other items, interest
expense (which may vary depending on the level of corporate debt or
property-specific debt), as well as depreciation and amortization
expense (which can vary among owners of identical assets in similar
condition based on historical cost accounting and useful life
estimates). In addition, management considers its cost of capital and
available financing alternatives in making decisions concerning
acquisitions.
(2) Unleveraged Cash Return is determined by dividing the Unleveraged
Cash (based on the projected results for the years ending December 31,
2007 and 2008) by Total Investment. Other real estate companies may
calculate this return differently. Management believes that projected
Unleveraged Cash Return is also a useful measure of a property's value
when used in addition to Unleveraged FFO Return because, by
eliminating the effect of straight-lining of rent and the SFAS No. 141
treatment of in-place above- and below-market leases, it enables an
investor to assess the cash on cash return from the property over the
forecasted period.
Management is presenting these projected returns and related
calculations to assist investors in analyzing the Company's recent
acquisition. Management does not intend to present this data for any
other purpose, for any other period or for its other properties, and
is not intending for these measures to otherwise provide information
to investors about the Company's financial condition or results of
operations. The Company does not undertake a duty to update any of
these projections.
BOSTON PROPERTIES, INC.
PORTFOLIO LEASING PERCENTAGES
% Leased by Location
December 31, 2006 December 31, 2005
Greater Boston 89.9% 89.9%
Greater Washington, D.C. 98.0% 97.2%
Midtown Manhattan 99.9% 98.3%
Princeton/East Brunswick, NJ 87.9% 86.9%
Greater San Francisco 90.2% 90.8%
Total Portfolio 94.2% 93.8%
% Leased by Type
December 31, 2006 December 31, 2005
Class A Office Portfolio 94.7% 93.7%
Office/Technical Portfolio 84.5% 97.6%
Total Portfolio 94.2% 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. - Financial
Relations Board for Boston Properties, Inc.
+1-212-827-3773