SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): OCTOBER 26, 1998 BOSTON PROPERTIES, INC. (Exact name of Registrant as specified in its charter) DELAWARE 1-13087 04-2473675 (State or other jurisdiction (Commission File (I.R.S. Employer of incorporation) Number) Identification No.) 8 ARLINGTON STREET BOSTON, MASSACHUSETTS 02116 (Address of principal executive offices and zip code) Registrant's telephone number, including area code: (617) 859-2600 ITEM 5. OTHER EVENTS. Following the issuance of a press release on October 26, 1998, announcing the Company's results for the third quarter ended September 30, 1998, the Company intends to provide, to certain investors and analysts at their request, supplemental information regarding the Company's operations that is too voluminous for a press release. The Company is attaching this supplementary operating and financial data as Exhibit 99.1 to this Current Report on Form 8-K. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (c) EXHIBITS: Exhibit No. - ----------- 99.1 The Boston Properties, Inc. Supplemental Operating and Financial Data for the Quarter Ended September 30, 1998, and press release dated October 26, 1998. 2 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: October 26, 1998 BOSTON PROPERTIES, INC. /s/David G. Gaw --------------------------------------- By: David G. Gaw Chief Financial Officer 3
================================================================================ EXHIBIT 99.1 BOSTON PROPERTIES, INC. Supplemental Operating and Financial Data for the Quarter Ended September 30, 1998 ================================================================================ BOSTON PROPERTIES, INC. Third Quarter 1998 1
=============================================================================================================== INDEX Page Page ---- ---- Company Background 2 Occupancy Analysis-same property 14 Investor Information 3-4 Office Properties 15 Financial Highlights 5 R&D Properties 16 Consolidated Balance Sheets 6 Industrial Properties 17 Consolidated Income Statements 7 Grand Total Office, R&D and Industrial Properties 18 Funds From Operations 8 Same Property Performance 19-21 Financial Ratios 9 Capital Expenditures 22 Capital Structure 10 Value Creation Pipeline Acquisitions/Repositioning 23 Debt Analysis 11 Value Creation Pipeline Development 24 Portfolio Overview 12-13 Value Creation Pipeline Land Parcels 25 Acquisition Property Profiles 26-29 =============================================================================================================== BOSTON PROPERTIES, INC. Third Quarter 1998 COMPANY BACKGROUND Boston Properties Inc., is a self-administered and self-managed real estate investment trust that develops, acquires, owns, and manages a diverse portfolio of office, industrial, and hotel properties predominantly located in greater Boston, greater Washington, DC, midtown Manhattan, Baltimore, Maryland, Richmond, Virginia and the Princeton/East Brunswick, New Jersey markets. The Company is one of the largest owners and developers of office properties in the United States. On June 23, 1997, Boston Properties successfully completed its initial public offering. The offering and the underwriters' overallotment option closed on the same date resulting in 36,110,000 shares being sold at $25.00 per share for a total offering of $902,750,000. On January 30,1998, the Company closed a follow on offering of 23,000,000 shares (including the underwriters' overallotment) at $35.125 per share for a total offering of $807,875,000. Through its predecessor company founded by Mortimer B. Zuckerman and Edward H. Linde in 1970, the Company grew through the seventies, eighties, and nineties by developing and redeveloping Class A office properties, R&D and industrial properties, and hotels in its primary markets of greater Boston, greater Washington, DC, and midtown Manhattan. Since the Company's Initial Offering in June 1997, the Company has acquired 31 properties adding approximately 10.0 million square feet to its portfolio, representing an investment of approximately $2.3 billion. In addition, the Company is developing eight Class A Office Buildings and one 221 room hotel for a total anticipated investment of approximately $224.8 million. The Company owns or controls land where it can develop an additional 8.8 million square feet. Boston Properties is a full-service real estate company with substantial in-house expertise and resources in acquisitions, development, financing, construction management, property management, marketing, leasing, accounting, and legal services. This report contains forward-looking statements within the meaning of the Federal securities laws. Forward-looking statements are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy. The risks and uncertainties associated with the forward-looking information include the strength of the commercial office and industrial real estate markets in which the Company operates, competitive market conditions, general economic growth, interest rates, capital market conditions and risks associated with development. The Company discusses such risks in detail in its prospectus dated January 26, 1998 as filed with the Securities and Exchange Commission. Acquisitions that are pursued by Boston Properties may not be consummated for a variety of reasons, including a failure to reach agreement with the selling party regarding the acquisition price or other terms of a contribution or acquisition agreement. Agreements that the Company enters into may be terminated or abandoned for a variety of reasons, including a failure by the Company or the other party to fulfill all conditions required for consummation of the agreements. 2 BOSTON PROPERTIES, INC. Third Quarter 1998 INVESTOR INFORMATION -------------------- 8 Arlington Street Boston, MA 02116 (617) 8592600 (617) 5365087 (fax) Mortimer B. Zuckerman Chairman of the Board Edward H. Linde President, Chief Executive Officer and Director Robert E. Burke Executive Vice President, Operations David G. Gaw Senior Vice President, Chief Financial Officer TIMING ------ Quarterly results are anticipated to be announced according to the following schedule: First Quarter Early May Second Quarter Early August Third Quarter Early November Year End Early February 3 BOSTON PROPERTIES, INC. Third Quarter 1998 COMMON STOCK DATA (NYSE:BXP) ---------------------------- Boston Properties' common stock is traded primarily on the New York Stock Exchange under the symbol: BXP. BXP's common stock has had the following characteristics: 4
======================================================================================================== 3rd Quarter 1998 3rd Quarter 1997 ---------------- ---------------- High Price $ 34.6875 $ 33.250 Low Price $ 23.8750 $ 26.63 Closing Price $ 28.50 $ 32.8125 Dividends per share-annualized $ 1.62 $ 1.62 Closing Dividend yield-annualized 5.68% 4.94% Closing shares and units outstanding (thousands) 86,392 54,760 Closing market value of shares and units outstanding (thousands) $ 2,524,037 $ 1,796,813 ======================================================================================================== BOSTON PROPERTIES, INC. Third Quarter 1998 FINANCIAL HIGHLIGHTS (unaudited and in thousands) (1) Net income is before net extraordinary items (2) FFO plus interest (excluding amortization of principal)/interest (excluding amortization of principal)
========================================================================================================================= THREE MONTHS ENDED ----------------------------------------------------- ACTUAL ACTUAL 30-SEP-98 30-SEP-97 % CHANGE --------- --------- -------- INCOME ITEMS: ------------- Revenues $ 140,177 $ 62,989 122.54% Net Income (1) $ 25,341 $ 13,780 83.90% Funds from Operations $ 55,763 $ 28,588 95.06% Company's share (73.62% and 70.66%) $ 41,053 $ 20,200 103.23% Funds from Operations per share - basic $ 0.65 $ 0.52 23.90% Funds from Operations per share - diluted $ 0.64 $ 0.52 23.85% Dividends per share $ 0.405 $ 0.405 n/a RATIOS: ------- Interest Coverage Ratio (2) 2.71 3.00 -9.54% Dividend Payout Ratio 62.61% 77.89% -19.62% ========================================================================================================================= (3) Preferred units are reflected on an as converted basis. The actual number of Preferred units outstanding is 2,442,222. 5
========================================================================================================================= SEPTEMBER 30, 1998 DECEMBER 31, 1997 % CHANGE ------------------ ----------------- -------- CAPITALIZATION: --------------- Total Debt $ 1,947,430 $ 1,332,253 46.18% Total Shares Outstanding @ Quarter End 63,527 38,694 64.18% Total Units Outstanding @ Quarter End 22,865 16,957 34.84% Total Preferred Units Outstanding @ Quarter End (3) 2,171 n/a n/a Price @ Quarter End $ 28.50 $ 33.0625 -13.80% Equity Value @ Quarter End $ 2,524,037 $ 1,839,961 37.18% Total Market Capitalization $ 4,471,467 $ 3,172,214 40.96% Debt/Total Market Capitalization 43.55% 42.00% 3.70% ========================================================================================================================= BOSTON PROPERTIES, INC. Third Quarter 1998 CONSOLIDATED BALANCE SHEETS (unaudited and in thousands) 6
======================================================================================================================= SEPTEMBER 30, 1998 DECEMBER 31, 1997 ------------------ ----------------- ASSETS ------ Real estate and equipment $ 3,562,645 $ 1,796,500 Less accumulated depreciation (335,821) (294,218) ----------------- ----------------- Total real estate and equipment 3,226,824 1,502,282 Cash 15,544 17,560 Escrows 19,668 14,178 Tenant and other receivables 33,160 24,458 Accrued rental income 67,692 55,190 Deferred charges, net 41,244 35,485 Prepaid expenses and other assets 23,064 20,225 Investment in joint ventures 32,136 3,143 ----------------- ----------------- Total assets $ 3,459,332 $ 1,672,521 ================= ================= LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Liabilities: Mortgage notes payable $ 1,752,430 $ 1,099,253 Unsecured line of credit 195,000 233,000 Accounts payable and accrued expenses 41,502 23,822 Dividends payable - 22,539 Accrued interest payable 4,784 6,581 Other liabilities 26,357 11,642 ----------------- ----------------- Total liabilities 2,020,073 1,396,837 ----------------- ----------------- Commitments and contingencies - - ----------------- ----------------- Minority interests 462,015 100,636 ----------------- ----------------- 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, 63,526,785 issued and outstanding 635 387 Additional paid-in capital 949,972 172,347 Earnings in excess of dividends 26,637 2,314 ----------------- ----------------- Total stockholders' equity 977,244 175,048 ----------------- ----------------- Total liabilities and stockholders' equity $ 3,459,332 $ 1,672,521 ================= ================= ======================================================================================================================= BOSTON PROPERTIES, INC. Third Quarter 1998 CONSOLIDATED INCOME STATEMENTS (unaudited and in thousands) 7
============================================================================================================ THREE MONTHS ENDED --------------------------------------- ACTUAL ACTUAL 30-SEP-98 30-SEP-97 % CHANGE ---------- ---------- ---------- Revenue: Rental income $ 136,374 $ 59,251 130.16% Development and management services 2,734 2,105 29.88% Interest and other 1,069 1,633 -34.54% ---------- ---------- ---------- Total revenue 140,177 62,989 122.54% ---------- ---------- ---------- Operating Expenses: Rental expenses 43,255 16,523 161.79% General and administrative 6,129 2,917 110.11% Interest 33,183 14,719 125.44% Depreciation and amortization 21,523 9,268 132.23% ---------- ---------- ---------- Total expenses 104,090 43,427 139.69% ---------- ---------- ---------- Income before minority interests and extraordinary items 36,087 19,562 84.48% Minority interest in property partnership (161) (60) 168.33% ---------- ---------- ---------- Income before minority interest in Operating Partnership and extraordinary items 35,926 19,502 84.22% Minority interest in Operating Partnership (10,585) (5,722) 85.00% ---------- ---------- ---------- Net income before extraordinary items 25,341 13,780 83.89% Net extraordinary loss on early debt extinguishment, net of minority interest - (58) - ---------- ---------- ---------- Net income $ 25,341 $ 13,722 84.67% ========== ========== ========== INCOME PER SHARE OF COMMON STOCK Net income per share - basic $ 0.40 $ 0.36 9.50% ========== ========== ========== Net income per share - diluted $ 0.40 $ 0.35 12.54% ========== ========== ========== ============================================================================================================ BOSTON PROPERTIES, INC. Third Quarter 1998 FUNDS FROM OPERATIONS (in thousands, except for per share amounts) (unaudited) ================================================================================ (1) Based on weighted average shares for the quarter. Company's share for the quarter ended 9/30/98 was 73.62% and 70.66% for the quarter ended 9/30/97. ================================================================================ 8
THREE MONTHS ENDED --------------------------------------- ACTUAL ACTUAL 30-SEP-98 30-SEP-97 % CHANGE ---------- ---------- -------- Income from operations before minority interests $ 36,087 $ 19,562 84.48% Add: Real estate depreciation and amortization 21,359 9,143 133.61% Less: Preferred Distribution (1,505) - - Minority property partnership's share of Funds from Operations (178) (117) 52.14% ---------- ---------- -------- Funds from Operations $ 55,763 $ 28,588 95.06% ========== ========== ======== Company's share (1) $ 41,053 $ 20,200 103.23% ========== ========== ======== Funds from Operations per share - basic $ 0.65 $ 0.52 23.90% ========== ========== ======== Weighted average shares outstanding - basic 63,468 38,694 64.02% ========== ========== ======== Funds from Operations per share - diluted $ 0.64 $ 0.52 23.85% ========== ========== ======== Weighted average shares outstanding - diluted 63,991 38,998 64.09% ========== ========== ======== BOSTON PROPERTIES, INC. Third Quarter 1998 FINANCIAL RATIOS ================================================================================ (1) All coverage and return ratios computed based on FFO before minority interest in earnings of the Operating Partnership and the minority interest share of FFO add-backs. (2) FFO is calculated based on the NAREIT White Paper ================================================================================ 9
THREE MONTHS ENDED SEPTEMBER 30, 1998 ------------------ RATIOS COMPUTED FOR INDUSTRY COMPARISONS: (1) OPERATIONAL RATIOS (2) Debt Service Coverage Ratio 2.4 (Funds from Operations ("FFO")+Interest/Interest+Principal) Interest Coverage Ratio 2.7 (Funds from Operations+Interest/Interest) FFO Return on Shareholder's Equity 23.1% (Funds from Operations/Average Equity (book value)) (%) FFO Return on Real Estate Investments 12.7% (Funds from Operations+Interest/Average Real Estate Investments (book value)) (%) FFO Payout Ratio 63.0% (Dividends Declared/Funds from Operations) (%) BOSTON PROPERTIES, INC. Third Quarter 1998 CAPITAL STRUCTURE DEBT (IN THOUSANDS) ================================================================================ ================================================================================ EQUITY (IN THOUSANDS) ================================================================================
AGGREGATE PRINCIPAL SEPTEMBER 30, 1998 ------------------- Mortgage Loans $ 1,752,430 Unsecured Line of Credit 195,000 ------------------- Total Debt $ 1,947,430 =================== ================================================================================ (1) Value based on September 30, 1998 closing price of $28.50. 10
COMMON SHARES & UNITS STOCK $ VALUE OUTSTANDING EQUIVALENTS EQUIVALENT(1) -------------- ----------- ------------- Common Stock 63,527 63,527 $ 1,810,513 Operating Partnership Units 22,865 22,865 651,650 Preferred Operating Partnership Units 2,442 2,171 61,874 ----------- ------------- Total Equity 88,563 $ 2,524,037 =========== ============= Total Market Capitalization $ 4,471,467 ============= BOSTON PROPERTIES, INC. Third Quarter 1998 DEBT ANALYSIS LONG-TERM MORTGAGE DEBT MATURITIES AND PRINCIPAL PAYMENTS (IN THOUSANDS) UNSECURED LINE OF CREDIT - DUE JUNE 23, 2000 (IN THOUSANDS)
============================================================================================================================== YEAR 1998 1999 2000 2001 2002 THEREAFTER TOTAL ---- ---- ---- ---- ---- ---------- ----- Amount $ 8,716 16,467 221,328 133,454 371,369 1,001,096 $ 1,752,430 ============================================================================================================================== UNSECURED AND SECURED DEBT ANALYSIS
============================================================================================================================== FACILITY OUTSTANDING @ 9/30/98 REMAINING CAPACITY -------- --------------------- ------------------ $ 500,000 195,000 $ 305,000 ============================================================================================================================== FLOATING AND FIXED RATE DEBT ANALYSIS
============================================================================================================================== WEIGHTED AVERAGE WEIGHTED AVERAGE % OF DEBT RATE MATURITY --------- ---------------- ---------------- Unsecured Debt 10.01% 6.63% 1.7 years Secured Debt 89.99% 7.24% 6.1 years --------- --------- --------- Total Debt 100.00% 7.18% 5.6 years ========= ========= ========= ============================================================================================================================== 11
============================================================================================================================== WEIGHTED AVERAGE WEIGHTED AVERAGE % OF DEBT RATE MATURITY --------- ---------------- ---------------- Floating Rate Debt 10.60% 6.60% 1.8 years Fixed Rate Debt 89.40% 7.25% 6.1 years --------- --------- --------- Total Debt 100.00% 7.18% 5.6 years ========= ========= ========= ============================================================================================================================== BOSTON PROPERTIES, INC. Third Quarter 1998 PORTFOLIO OVERVIEW RENTABLE SQUARE FEET OF IN-SERVICE PROPERTIES BY LOCATION AND TYPE OF PROPERTY ================================================================================ ================================================================================ HOTEL PROPERTIES ================================================================================
GEOGRAPHIC AREA OFFICE R&D INDUSTRIAL TOTAL % OF TOTAL --------------- ------ --- ---------- ----- ---------- Greater Boston 4,478,707 545,206 247,318 5,271,231 29.38% Greater Washington, D.C. 4,161,795 1,383,332 236,743 5,781,870 32.23% Midtown Manhattan 2,880,507 - - 2,880,507 16.06% Princeton/East Brunswick, NJ 1,366,360 - - 1,366,360 7.62% Baltimore, MD 1,153,190 - - 1,153,190 6.42% Richmond, VA 899,720 - - 899,720 5.02% Greater San Francisco - 144,479 281,000 425,479 2.37% Bucks County, PA - - 161,000 161,000 0.90% ---------- --------- ------- ---------- ------- Total 14,940,279 2,073,017 926,061 17,939,357 100.00% ========== ========= ======= ========== ======= % of Total 83.29% 11.56% 5.16% 100.00% ================================================================================ GARAGE PROPERTY AND STRUCTURED PARKING ================================================================================
NUMBER OF SQUARE HOTEL PROPERTIES ROOMS FEET ---------------- --------- ------ Long Wharf Marriott 402 420,000 Cambridge Center Marriott 431 330,400 --- ------- Total Hotel Properties 833 750,400 === ======= ================================================================================ 12
NUMBER OF SQUARE SPACES FEET --------- ------ GARAGE PROPERTIES Cambridge Center North Garage 1,170 332,442 STRUCTURED PARKING 12,907 4,407,058 ------ --------- TOTAL GARAGE PROPERTY AND STRUCTURED PARKING 14,077 4,739,500 ====== ========= BOSTON PROPERTIES, INC. Third quarter 1998 PORTFOLIO OVERVIEW PERCENTAGE OF PROPERTY FUNDS FROM OPERATIONS/*/ FOR IN-SERVICE PROPERTIES BY LOCATION AND TYPE OF PROPERTY FOR QUARTER ENDED SEPTEMBER 30, 1998 ================================================================================ (1) Includes the Prudential Center since its acquisition on July 2, 1998. (2) Includes Metropolitan Square since its acquisition on July 10,1998. (3) Includes the Candler Building since its acquisition on July 21, 1998. ================================================================================ * For this table, Property Funds from Operations is equal to GAAP basis property NOI which includes the effect of straight-line rent and excludes any deduction for interest expense. 13
GEOGRAPHIC AREA OFFICE R&D INDUSTRIAL HOTEL GARAGE TOTAL --------------- ------ --- ---------- ----- ------ ----- Greater Boston 20.7%(1) 1.2% 0.3% 7.4% 0.3% 29.9% Greater Washington, D.C. 27.0%(2) 3.7% 0.3% n/a n/a 31.0% Midtown Manhattan 22.7% n/a n/a n/a n/a 22.7% Baltimore, Maryland 5.1%(3) n/a n/a n/a n/a 5.1% Richmond, Virginia 4.4% n/a n/a n/a n/a 4.4% Princeton/East Brunswick, NJ 6.3% n/a n/a n/a n/a 6.3% Greater San Francisco n/a 0.2% 0.2% n/a n/a 0.4% Bucks County, PA n/a n/a 0.2% n/a n/a 0.2% ------- ----- ----- ----- ----- ------ Total 86.2% 5.1% 1.0% 7.4% 0.3% 100.0% ======= ===== ===== ===== ===== ====== BOSTON PROPERTIES, INC. Third Quarter 1998 OCCUPANCY ANALYSIS SAME PROPERTY OCCUPANCY - BY LOCATION ================================================================================ ================================================================================ SAME PROPERTY - BY TYPE OF PROPERTY ================================================================================
LOCATION 30-SEP-98 30-SEP-97 -------- --------- --------- Greater Boston, MA 98.7% 98.4% Greater Washington, D.C. 98.0% 98.2% Midtown Manhattan, NY 100.0% 99.7% Baltimore, MD n/a n/a Princeton/East Brunswick, NJ n/a n/a Richmond, VA n/a n/a Greater San Francisco, CA 99.7% 96.8% Bucks County, PA 100.0% 100.0% --------- --------- Total Portfolio 98.6% 98.4% ========= ========= ================================================================================ 14
30-SEP-98 30-SEP-97 --------- --------- Total Office Portfolio 99.4% 99.2% Total R&D Portfolio 97.5% 98.6% Total Industrial Portfolio 95.0% 93.4% --------- --------- Total Portfolio 98.6% 98.4% ========= ========= BOSTON PROPERTIES, INC. Third Quarter 1998 IN-SERVICE OFFICE PROPERTIES LEASE EXPIRATIONS ================================================================================ ================================================================================ OCCUPANCY BY LOCATION ================================================================================
ANNUALIZED CURRENT RENTABLE SQUARE REVENUES UNDER PERCENTAGE OF TOTAL YEAR OF LEASE FOOTAGE SUBJECT TO EXPIRING LEASES ANNUALIZED CURRENT REVENUES EXPIRATION EXPIRING LEASES (IN THOUSANDS) REPRESENTED BY EXPIRING LEASES ------------- ------------------ ------------------ ------------------------------ 1998 256,318 4,498,003 0.96% 1999 943,053 24,117,160 5.12% 2000 1,273,501 30,121,183 6.40% 2001 1,536,493 29,009,915 6.16% 2002 1,906,543 92,060,046 19.55% 2003 1,396,692 40,231,793 8.54% 2004 1,170,768 34,969,420 7.42% 2005 1,088,570 27,655,179 5.87% 2006 1,618,447 56,308,449 11.96% 2007 1,413,357 51,523,104 10.94% Thereafter 2,248,556 80,496,059 17.09% ================================================================================ 15
30-SEP-98 30-SEP-97 --------- --------- Greater Boston, MA 99.2% 98.6% Greater Washington, D.C. 99.7% 99.4% Midtown Manhattan, NY 99.7% 91.4% Baltimore, MD 99.2% n/a Richmond, VA 98.8% n/a Princeton/East Brunswick, NJ 100.0% n/a Greater San Francisco, CA n/a n/a Bucks County, PA n/a n/a --------- --------- Total Office Portfolio 98.9% 96.6% ========= ========= BOSTON PROPERTIES, INC. Third Quarter 1998 IN-SERVICE R&D PROPERTIES LEASE EXPIRATIONS OCCUPANCY BY LOCATION
============================================================================================================ ANNUALIZED CURRENT RENTABLE SQUARE REVENUES UNDER PERCENTAGE OF TOTAL YEAR OF LEASE FOOTAGE SUBJECT TO EXPIRING LEASES ANNUALIZED CURRENT REVENUES EXPIRATION EXPIRING LEASES (IN THOUSANDS) REPRESENTED BY EXPIRING LEASES ------------- ------------------ ------------------ ------------------------------ 1998 9,267 310,583 1.13% 1999 214,783 2,290,862 8.35% 2000 400,867 4,202,352 15.33% 2001 251,541 2,004,707 7.31% 2002 267,660 3,780,049 13.79% 2003 86,497 1,146,799 4.18% 2004 47,641 704,767 2.57% 2005 146,741 1,815,845 6.62% 2006 150,000 1,622,501 5.92% 2007 107,895 2,294,165 8.37% Thereafter 334,195 7,246,499 26.43% ============================================================================================================ 16
============================================================================================================ 30-SEP-98 30-SEP-97 -------------- -------------- Greater Boston, MA 100.0% 100.0% Greater Washington, D.C. 96.4% 93.8% Midtown Manhattan, NY n/a n/a Baltimore, MD n/a n/a Richmond, VA n/a n/a Princeton/East Brunswick, NJ n/a n/a Greater San Francisco, CA 99.0% 90.6% Bucks County, PA n/a n/a -------------- -------------- Total R&D Portfolio 98.2% 95.8% ============== ============== ============================================================================================================ BOSTON PROPERTIES, INC. Third Quarter 1998 IN-SERVICE INDUSTRIAL PROPERTIES LEASE EXPIRATIONS ================================================================================ ================================================================================ OCCUPANCY BY LOCATION ================================================================================
ANNUALIZED CURRENT RENTABLE SQUARE REVENUES UNDER PERCENTAGE OF TOTAL YEAR OF LEASE FOOTAGE SUBJECT TO EXPIRING LEASES ANNUALIZED CURRENT REVENUES EXPIRATION EXPIRING LEASES (IN THOUSANDS) REPRESENTED BY EXPIRING LEASES ------------- ------------------ ------------------ ------------------------------ 1998 136,358 1,099,055 20.66% 1999 63,904 374,237 7.03% 2000 249,280 1,469,129 27.61% 2001 70,829 357,093 6.71% 2002 - - 0.00% 2003 143,105 975,445 18.33% 2004 195,076 935,485 17.58% 2005 20,500 110,151 2.07% 2006 - - 0.00% 2007 - - 0.00% Thereafter - - 0.00% ================================================================================ 17
30-SEP-98 30-SEP-97 --------- --------- Greater Boston, MA 93.0% 93.0% Greater Washington, D.C. 87.8% 81.4% Midtown Manhattan, NY n/a n/a Baltimore, MD n/a n/a Richmond, VA n/a n/a Princeton/East Brunswick, NJ n/a n/a Greater San Francisco, CA 100.0% 100.0% Bucks County, PA 100.0% 100.0% ------ ------ Total Industrial Portfolio 95.0% 93.4% ====== ====== BOSTON PROPERTIES, INC. Third Quarter 1998 GRAND TOTAL OF ALL IN-SERVICE PROPERTIES LEASE EXPIRATION ================================================================================ ================================================================================ OCCUPANCY BY LOCATION ================================================================================
ANNUALIZED CURRENT RENTABLE SQUARE REVENUES UNDER PERCENTAGE OF TOTAL YEAR OF LEASE FOOTAGE SUBJECT TO EXPIRING LEASES ANNUALIZED CURRENT REVENUES EXPIRATION EXPIRING LEASES (IN THOUSANDS) REPRESENTED BY EXPIRING LEASES - -------------- ------------------ ------------------ ------------------------------ 1998 401,943 5,907,641 1.17% 1999 1,221,740 26,782,259 5.32% 2000 1,923,648 35,792,664 7.11% 2001 1,858,863 31,371,715 6.23% 2002 2,174,203 95,840,095 19.03% 2003 1,626,294 42,354,037 8.41% 2004 1,413,485 36,609,672 7.27% 2005 1,255,811 29,581,175 5.87% 2006 1,768,447 57,930,950 11.50% 2007 1,521,252 53,817,269 10.68% Thereafter 2,582,751 87,742,558 17.42% ================================================================================ 18
30-SEP-98 30-SEP-97 --------- -------- Greater Boston, MA 99.0% 98.4% Greater Washington, D.C. 98.5% 97.1% Midtown Manhattan, NY 99.6% 91.4% Baltimore, MD 99.2% n/a Richmond, VA 98.8% n/a Princeton/East Brunswick, NJ 100.0% n/a Greater San Francisco, CA 99.7% 96.8% Bucks County, PA 100.0% 100.0% --------- -------- Total Portfolio 98.5% 96.2% ========= ======== BOSTON PROPERTIES, INC. Third Quarter 1998 SAME PROPERTY PERFORMANCE HOTEL PROPERTIES Long Wharf Marriott - Boston ================================================================================ ================================================================================ CAMBRIDGE CENTER MARRIOTT ================================================================================
1/1/98- 1/1/97 PERCENT 7/1/98 - 7/1/97 - PERCENT 9/30/98 9/30/97 CHANGE 9/30/98 9/30/97 CHANGE ------- ------- ------- -------- --------- ------- Occupancy 88.5% 88.3% 0.23% 89.0% 91.4% -2.63% Average Daily Rate $ 227.54 $ 218.38 4.19% $ 249.70 $ 243.35 2.61% REVPAR (1) $ 201.37 $ 193.48 4.08% $ 222.23 $ 222.42 -0.09% ================================================================================ TOTAL HOTEL PERFORMANCE ================================================================================
1/1/98- 1/1/97- PERCENT 7/1/98 - 7/1/97 - PERCENT 9/30/98 9/30/97 CHANGE 9/30/98 9/30/97 CHANGE ------- ------- ------- -------- --------- ------- Occupancy 83.4% 88.4% -5.66% 93.1% 93.6% -0.53% Average Daily Rate $ 178.39 $ 162.11 10.04% $ 188.47 $ 171.71 9.76% REVPAR (1) $ 148.78 $ 143.47 3.70% $ 175.47 $ 160.72 9.18% ================================================================================ (1) REVPAR is defined as the revenue per available room as determined by dividing room revenue over the applicable period by available rooms. 19
1/1/98- 1/1/97- PERCENT 7/1/98 - 7/1/97 - PERCENT 9/30/98 9/30/97 CHANGE 9/30/98 9/30/97 CHANGE -------- ------- ------- -------- -------- ------- Occupancy 85.9% 88.4% -2.83% 91.1% 92.5% -1.51% Average Daily Rate $ 202.11 $ 189.27 6.78% $ 218.02 $ 206.28 5.69% REVPAR (1) $ 174.16 $ 167.60 3.91% $ 198.04 $ 190.50 3.96% BOSTON PROPERTIES, INC. Third Quarter 1998 SAME PROPERTY PERFORMANCE
OFFICE, R&D AND INDUSTRIAL PROPERTIES ============================================================================================================= OFFICE R&D INDUSTRIAL ------ --- ---------- Number of Properties 33 23 9 Square feet 5,641,474 1,323,693 926,061 Percent of in-service properties 37.8% 63.9% 100.0% Occupancy @ 9/30/97 99.2% 98.6% 93.4% Occupancy @ 9/30/98 99.4% 97.6% 95.0% Percent change in FFO (1) from 3rd quarter 1998 over 3rd quarter 1997 3.5% 2.3% -1.5% ============================================================================================================= (1) For this table, Funds from Operations is equal to GAAP basis property NOI which includes the effect of straight-line rent and excludes any deduction for interest expense. (2) Represents increase in net rents on a "cash to cash" basis. (Actual net rent at time of expiration vs. initial net rent of new lease.) 20
SAME PROPERTY LEASE ANALYSIS - QUARTER ENDED SEPTEMBER 30, 1998 ============================================================================================================= OFFICE R&D INDUSTRIAL TOTAL ------- ------ ---------- ------- Vacant space available @ 7/1/98 (sf) 42,677 22,080 46,222 110,979 Square footage of leases expiring or terminated 7/1/98 - 9/30/98 137,630 31,347 40,500 209,477 ------- ------- ------- ------- Total space for lease (sf) 180,307 53,427 86,722 320,456 ======= ======= ======= ======= New tenants (sf) 51,929 9,663 20,500 82,092 Renewals (sf) 95,278 7,897 20,000 123,175 ------- ------- ------- ------- Total space leased (sf) 147,207 17,560 40,500 205,267 ======= ======= ======= ======= Space available @ 9/30/98 (sf) 33,100 35,867 46,222 115,189 ======= ======= ======= ======= Net increase (decrease) in leased space (sf) 9,577 (13,787) - (4,210) Average lease term (months) 90 36 44 76 2nd generation TI/Comm PSF $ 20.71 $ 3.84 $ 2.44 $ 15.69 Increase in 2nd generation net rents (2) 16.3% 12.9% 8.4% 15.5% ============================================================================================================= BOSTON PROPERTIES, INC. Third Quarter 1998 SAME PROPERTY LEASE ANALYSIS - YEAR TO DATE 1/1/98 -9/30/98 ================================================================================ ================================================================================ (1) Represents increase in net rents on a "cash to cash" basis (actual net rent at time of expiration vs. initial net rent of new lease). (2) Represents the weighted average cost of tenant improvements and lease commissions for all 2nd generation space leased during the quarter. 21
OFFICE R&D INDUSTRIAL TOTAL ------ --- ---------- ----- Vacant space available @ 1/1/98 (sf) 54,323 41,654 61,222 157,199 Square footage of leases expiring or terminated 1/1/98- 9/30/98 268,427 62,512 222,000 552,939 ------- ------- ------- ------- Total space for lease (sf) 322,750 104,166 283,222 710,138 ======= ======= ======= ======= New tenants (sf) 158,272 36,454 56,000 250,726 Renewals (sf) 131,378 31,354 181,000 343,732 ------- ------- ------- ------- Total space leased (sf) 289,650 67,808 237,000 594,458 ======= ======= ======= ======= Space available @ 9/30/98 (sf) 33,100 36,367 46,222 115,689 ======= ======= ======= ======= Net increase/(decrease) in leased space (sf) 21,223 5,287 15,000 41,510 Average lease term (months) 71 68 35 56 2nd generation TI/Comm PSF (2) $ 15.29 $ 3.30 $ 1.28 $ 8.33 Increase in 2nd generation net rents (1) 18.9% 13.7% -14.2% 11.1% BOSTON PROPERTIES, INC. Third Quarter 1998 HISTORICALLY GENERATED CAPITAL EXPENDITURES, TENANT IMPROVEMENT COSTS AND LEASING COMMISSIONS HISTORICAL CAPITAL EXPENDITURES 2ND GENERATION TENANT IMPROVEMENTS AND LEASING COMMISSIONS
========================================================================================================================== YTD 1992 1993 1994 1995 1996 1997 1998 ------- ------- ------- ------- ------- ------- ------- Recurring capital expenditures $ 1,547 $ 1,425 $ 1,812 $ 1,618 $ 1,083 $ 1,125 $ 2,356 ======= ======= ======= ======= ======= ======= ======= Hotel improvements, equipment upgrades and replacements $ 3,182 $ 836 $ 1,917 $ 4,420 $ 3,041 $ 2,625 $ 3,658 ======= ======= ======= ======= ======= ======= ======= ========================================================================================================================== 22
========================================================================================================================== YTD 1992 1993 1994 1995 1996 1997 1998 ------- ------- ------- ------- ------- ------- ------- Office Square feet 673,138 451,295 690,459 768,459 970,072 1,016,427 378,824 ------- ------- ------- ------- ------- ------- ------- Tenant improvement and lease commissions p.s.f. $ 7.85 $ 8.45 $ 9.45 $ 10.66 $ 11.40 $ 10.83 $ 12.15 ------- ------- ------- ------- ------- ------- ------- R&D Square feet 185,070 166,957 276,332 177,073 337,676 169,878 67,799 ------- ------- ------- ------- ------- ------- ------- Tenant improvement and lease commissions p.s.f. $ 3.82 $ 5.53 $ 0.68 $ 6.99 $ 10.45 $ 2.22 $ 3.30 ------- ------- ------- ------- ------- ------- ------- Industrial Square feet 44,473 241,500 132,521 308,388 128,148 258,795 237,000 ------- ------- ------- ------- ------- ------- ------- Tenant improvement and lease commissions p.s.f. $ 2.31 $ 0.28 $ 3.32 $ 1.00 $ 1.71 $ 0.99 $ 1.28 ------- ------- ------- ------- ------- ------- ------- Average tenant improvement and lease commission p.s.f. $ 6.75 $ 5.59 $ 6.51 $ 7.77 $ 10.31 $ 8.06 $ 7.50 ======= ======= ======= ======= ======= ======= ======= ========================================================================================================================== BOSTON PROPERTIES, INC. Third Quarter 1998 VALUE CREATION PIPELINE - ACQUISITIONS/REPOSITIONING as of September 30,1998 23
==================================================================================================================================== ANTICIPATED DATE PLACED INITIAL FUTURE TOTAL CURRENT PROPERTY IN SERVICE SQUARE FEET INVESTMENT INVESTMENT INVESTMENT OCCUPANCY -------- ----------- ----------- ----------- ------------- -------------- --------- ACQUISITIONS ------------ Class A Office Buildings Prudential Center Jul-98 2,187,373 $ 546,000,000 (1) $18,100,000 $ 564,100,000 99% Metropolitan Square Jul-98 583,685 175,000,000 4,300,000 179,300,000 100% The Candler Building Jul-98 518,954 60,500,000 2,000,000 62,500,000 99% ----------- ----------- ------------- -------------- --------- Subtotal 3,290,012 781,500,000 24,400,000 805,900,000 99% REPOSITIONING ------------- 1301 New York Avenue Mar-99 185,000 28,000,000 18,200,000 46,200,000 100%(2) ----------- ----------- ------------- -------------- --------- TOTAL VALUE CREATION PIPELINE - ACQUISITIONS/REPOSITIONING 3,475,012 $ 809,500,000 $ 42,600,000 $ 852,100,000 99% =========== ============= ============= ============== ========= (1) Includes $27.0 million paid for 50% of the development rights. (2) As of March 1, 1999. ==================================================================================================================================== BOSTON PROPERTIES, INC. Third Quarter 1998 VALUE CREATION PIPELINE - DEVELOPMENT as of September 30, 1998 (1) Represents 25% of the total anticipated project-level investment 24
=================================================================================================================================== ANTICIPATED ESTIMATED PLACED # OF TOTAL PERCENTAGE DEVELOPMENT PROPERTIES IN SERVICE DATE LOCATION BUILDINGS SQUARE FEET INVESTMENT LEASED - ---------------------- --------------- -------- --------- ----------- ---------- ------ Class A Office Buildings - ------------------------ Washingtonian North Q2 2000 Rockville, MD 1 300,000 $ 60,000,000 100% 200 West Street Q2 1999 Waltham, MA 1 250,000 43,423,000 52% Eight Cambridge Center Q2 1999 Cambridge, MA 1 175,000 26,000,000 100% One Freedom Square (25% ownership) Q4 1999 Reston, VA 1 406,980 19,150,000 (1) 73% One and Two Reston Overlook (25% ownership) Q1-Q2 1999 Reston, VA 2 444,000 18,100,000 (1) 100% The Arboretum Q3 1999 Reston, VA 1 96,000 15,265,000 100% 181 Spring Street Q2 1999 Lexington, MA 1 52,000 10,871,085 0% ------- ---------- -------------- ------ Total Class Office Buildings 8 1,723,980 192,809,085 81% Hotels - ------ Residence Inn by Marriott Q1 1999 Cambridge, MA 1 187,474 32,000,000 n/a ------- ---------- ------------- ------ TOTAL DEVELOPMENT PROPERTIES 9 1,911,454 $ 224,809,085 81% ======= ========== ============= ====== =================================================================================================================================== BOSTON PROPERTIES, INC. Third Quarter 1998 VALUE CREATION PIPELINE - OWNED LAND PARCELS as of September 30, 1998 ================================================================================ ================================================================================ (1) Parcels and acreage have not yet been determined. (2) Boston Properties has a 50% ownership interest VALUE CREATION PIPELINE - LAND PURCHASE OPTIONS ================================================================================
NO. OF DEVELOPABLE LOCATION PARCELS ACREAGE SQUARE FEET -------- ------- ------- ----------- Dulles, VA 6 91.1 1,200,000 Rockville, MD 6 117.1 2,031,000 Reston, VA 2 8.8 775,000 Herndon, VA 1 35.5 450,000 Andover, MA 2 27.0 290,000 Springfield, VA 3 9.4 130,000 Boston, MA -- -- (1) 1,600,000 (2) ------- ------- ----------- 20 288.9 6,476,000 ======= ======= =========== ================================================================================ 25
NO. OF DEVELOPABLE LOCATION PARCELS ACREAGE SQUARE FEET -------- ------- ------- ----------- Carnegie Center 16 167.1 2,100,000 Cambridge, MA 1 2.6 209,000 ------- ------- ----------- 17 169.7 2,309,000 ======= ======= =========== BOSTON PROPERTIES, INC. Third Quarter 1998 ACQUISITION PROPERTY PROFILE PROPERTY NAME: Prudential Center PRODUCT TYPE: Multiuse LOCATION: Boston, Massachusetts DESCRIPTION: 23 acre mix-use urban center with approximately 1.7 million square feet of existing office space, 475,000 square feet of retail space and 2,550 parking spaces in an underground garage. In addition, the property has approvals for an additional 1.6 million square feet of development. YEAR CONSTRUCTED: 1965/1993 PURCHASE PRICE: $546 million, which includes $27 million for 50% of the development rights. CLOSING DATE: July 2, 1998 PER SQUARE FOOT: N/A FUTURE INVESTMENT: $18.1 million OCCUPANCY LEVEL: 99% NUMBER OF TENANTS: 113 FUNDING SOURCE: Cash, Operating Partnership Units, Debt Financing LARGEST TENANTS: Company: Gillette Size: 412,970 s.f. Lease Expiration: 12/2007 Company: Boston Edison Size: 261,196 s.f. Lease Expiration: 12/2000 Company: John Hancock Size: 233,516 s.f. Lease Expiration: 12/2003 Company: Bronner Slosberg Size: 205,790 s.f. Lease Expiration: 11/2005 26 BOSTON PROPERTIES, INC. Third Quarter 1998 ACQUISITION PROPERTY PROFILE PROPERTY NAME: Metropolitan Square PRODUCT TYPE: Class A Office Building LOCATION: Washington, D.C. DESCRIPTION: Two 12-story structures connected by a full-height 12-story atrium SIZE: 583,685 net rentable square feet YEAR CONSTRUCTED: 1982/1986 PURCHASE PRICE: $175 million CLOSING DATE: July 10, 1998 PER SQUARE FOOT: $299 FUTURE INVESTMENT: $4.3 million OCCUPANCY LEVEL: 100% NUMBER OF TENANTS: Approximately 37 FUNDING SOURCE: Cash, Operating Partnership Units, Assumption of Debt LARGEST TENANTS: Company: Jones, Day, Reavis & Pogue Size: 196,874 s.f. Lease Expiration: 5/1999 Company: Miller & Chevalier Size: 115,343 s.f. Lease Expiration: 12/2005 Company: Kirkland & Ellis Size: 110,657 s.f. Lease Expiration: 3/2000 27 BOSTON PROPERTIES, INC. Third Quarter 1998 ACQUISITION PROPERTY PROFILE PROPERTY NAME: The Candler Building PRODUCT TYPE: Class A Office Building LOCATION: Baltimore, Maryland DESCRIPTION: 12-story office building encompassing an entire city block SIZE: 518,954 net rentable square feet YEAR CONSTRUCTED: Constructed 1911, renovated 1990 PURCHASE PRICE: $60.5 million CLOSING DATE: July 21, 1998 PER SQUARE FOOT: $114.5 FUTURE INVESTMENT: $2.0 million OCCUPANCY LEVEL: 99% NUMBER OF TENANTS: 31 FUNDING SOURCE: Cash, issuance of common shares LARGEST TENANTS: Company: John Hopkins University Size: 111,553 Lease Expiration: 6/2009 Company: Sierra Size: 83,151 Lease Expiration: 12/2008 Company: AON Size: 74,249 Lease Expiration: 2/2006 28 BOSTON PROPERTIES, INC. Third Quarter 1998 REPOSITIONING PROPERTY PROFILE PROPERTY NAME: 1301 New York Avenue PRODUCT TYPE: Class A Office Building LOCATION: Washington, D.C. DESCRIPTION: 12-story office building currently being renovated SIZE: 185,000 net rentable square feet YEAR CONSTRUCTED: 1983 INITIAL PURCHASE PRICE: $28.0 million CLOSING DATE: August 14, 1998 PER SQUARE FOOT: $150.00 FUTURE INVESTMENT: $18.2 million TOTAL INVESTMENT: $46.2 million FUTURE OCCUPANCY LEVEL: 100% on 3/99 NUMBER OF TENANTS: 1 FUNDING SOURCE: Cash, Debt Financing and Operating Partnership Units LARGEST TENANT: GSA Size: 185,000 Lease Expiration: 2/2009 29 Boston Properties, Inc. 8 Arlington Street Boston, MA 02116 (NYSE: BXP) Boston Properties, Inc. Announces Third Quarter 1998 Results ------------------------------------------------------------ BOSTON, MA Oct. 26, 1998 /PRNewswire/ -- Boston Properties, Inc. (NYSE: BXP) today reported results for the third quarter and the nine months ended September 30, 1998. Funds from Operations (FFO) for the quarter ended September 30, 1998 were approximately $41.1 million, or $0.65 per share basic and $0.64 per share diluted, compared to FFO of approximately $20.2 million, or $0.52 per share basic and diluted for the quarter ended September 30, 1997. The weighted average number of basic and diluted shares outstanding totaled 63,467,722 and 63,991,255, respectively, for the quarter ended September 30, 1998 and 38,693,541 and 38,998,244, respectively, for the same quarter last year. FFO for the nine months ended September 30, 1998 were approximately $109.5 million, or $1.82 per share basic and $1.80 per share diluted, compared to FFO on a pro forma basis of approximately $56.0 million, or $1.45 per share basic and $1.44 per share diluted, for the nine months ended September 30, 1997. Revenues were approximately $140.2 million for the quarter and $343.8 million for the nine months ended September 30, 1998, compared to revenues of $63.0 million and $177.8 million (pro forma) for the same periods in 1997. Net income for the quarter was approximately $25.3 million and $74.9 million for the nine months ended September 30, 1998, compared to $13.7 million and $36.5 million (pro forma), respectively, for the same periods in 1997. Net income per share for the quarter was $0.40 per share basic and diluted, compared to $0.36 per share basic and $0.35 per share diluted last year, and was $1.25 per share basic and $1.23 per share diluted for the nine months ended September 30, 1998, compared to $0.94 per share basic and diluted on a pro forma basis last year. The reported results are unaudited and there can be no assurance that the results will not vary from the final audited information for the year ending December 31, 1998. In the opinion of management, all adjustments considered necessary for a fair presentation of these reported results have been made. Pro forma results are presented as if the Company's initial public offering of common stock and related formation transactions (which was completed on June 23, 1997) had occurred at the beginning of the relevant period. As of September 30, 1998, the Company's portfolio consisted of 114 properties comprising more than 25.5 million square feet, including 9 properties under development totaling approximately 1.9 million square feet. The overall occupancy rate for the properties in service as of September 30, 1998 was 98.5%. Additional highlights of the third quarter include: -- Acquisition of the Prudential Center, a 2.2-million-square-foot mixed- use urban center located in Boston, Mass., on July 2, 1998 for approximately $519.0 million for the commercial property and $27.0 million for development rights. -- Acquisition of Metropolitan Square, a 583,685-square-foot Class A office complex in Washington, D.C., on July 10, 1998 for approximately $175.0 million. -- Acquisition of the Candler Building, a 518,954-square-foot Class A office building in Baltimore, Md., on July 21, 1998 for approximately $61.0 million. -- Entry into a binding agreement to acquire the portfolio known as Embarcadero Center in San Francisco, Calif., on September 28, 1998, consisting of approximately 3.76 million square feet in six Class A buildings, for approximately $1.22 billion. Also in the third quarter, on August 18, 1998, the Company acquired 1301 New York Avenue, N.W., a 12-story 185,000-square-foot Class A office building located three blocks from the White House in Washington, D.C., for approximately $28.0 million, in the form of Operating Partnership Units in Boston Properties Limited Partnership and mortgage financing. The Company is in the process of renovating this property, which will be 100% occupied by the General Services Administration. Since September 30, 1998 the Company has obtained mortgage financing totaling $95.0 million secured by 100 East Pratt Street in Baltimore, Md. The proceeds were used to pay down a portion of the Company's unsecured line of credit. Boston Properties, Inc. is a fully integrated, self-administered and self- managed real estate investment trust ("REIT") that develops, redevelops, acquires, manages, operates and owns a diverse portfolio of office, industrial and hotel properties predominantly located in Greater Boston; Greater Washington, D.C.; Midtown Manhattan; Baltimore, Md.; Richmond, Va. and Princeton/East Brunswick, N.J. The Company is one of the largest owners and developers of office properties in the United States. To receive Boston Properties' latest news and corporate developments via fax at no cost, please call 1-800-PRO-INFO; use company code BXP. Visit the Company's web site at http://www.bostonproperties.com. Also see http://www.frbinc.com. This press release contains forward-looking statements within the meaning of the Federal securities laws. Forward-looking statements are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy. Acquisitions that are pursued by Boston Properties may not be consummated for a variety of reasons, including a failure to reach agreement with the selling party regarding the acquisition price or other terms of a contribution or acquisition agreement. Agreements that the Company enters into may be terminated for a variety of reasons, including a failure by the Company or the other party to fulfill all conditions required for consummation of the agreements. BOSTON PROPERTIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited and in thousands, except per share data)
Three months ended Nine months ended September 30, September 30, ------------------ ------------------ 1998 1997 1998 1997 -------- -------- -------- -------- (pro forma) Revenue Rental: Base rent $119,535 $53,433 $286,610 $150,393 Recoveries from tenants 13,665 5,656 33,027 16,512 Parking and other 3,174 162 5,880 2,681 -------- -------- -------- -------- Total rental revenue 136,374 59,251 325,517 169,586 Development and management services 2,734 2,105 8,893 5,438 Interest and other 1,069 1,633 9,410 2,796 -------- -------- -------- -------- Total revenue 140,177 62,989 343,820 177,820 -------- -------- -------- -------- Expenses Rental: Operating 23,651 8,071 50,444 22,350 Real estate taxes 19,604 8,452 46,744 23,964 General and administrative 6,129 2,917 16,750 8,708 Interest 33,183 14,719 81,926 42,797 Depreciation and amortization 21,523 9,268 51,212 27,514 -------- -------- -------- -------- Total expenses 104,090 43,427 247,076 125,333 -------- -------- -------- -------- Income before minority interests 36,087 19,562 96,744 52,487 Minority interest in property partnership (161) (60) (390) (303) -------- -------- -------- -------- Income before minority interest in Operating Partnership 35,926 19,502 96,354 52,184 Minority interest in Operating Partnership (10,585) (5,722) (25,025) (15,687) -------- -------- -------- -------- Income before extraordinary items 25,341 13,780 71,329 36,497 Extraordinary gain (loss) on early debt extinguishments, net -- (58) 3,564 -- -------- -------- -------- -------- Net income $ 25,341 $13,722 $ 74,893 $ 36,497 ======== ======== ======== ======== Basic earnings per share: Income before extraordinary items $ 0.40 $ 0.36 $ 1.19 $ 0.94 Extraordinary gain (loss), net -- -- 0.06 -- -------- -------- -------- -------- Net income $ 0.40 $ 0.36 $ 1.25 $ 0.94 ======== ======== ======== ======== Weighted average number of common shares outstanding 63,468 38,694 60,101 38,694 Diluted earnings per share: Income before extraordinary items $ 0.40 $ 0.35 $ 1.17 $ 0.94 Extraordinary gain (loss), net -- -- 0.06 -- ======== ======== ======== ======== Net income $ 0.40 $ 0.35 $ 1.23 $ 0.94 Weighted average number of common shares outstanding 63,991 38,998 60,744 38,979 BOSTON PROPERTIES, INC. FUNDS FROM OPERATIONS (Unaudited) (A) Based on weighted average shares for the quarter. Company's share for the quarter ended 9/30/98 was 73.62% and 70.66% for the quarter ended 9/30/97.
Three Months Ended September 30, ------------------ 1998 1997 % Change -------- -------- -------- (Actual) (Actual) Income from operations before minority interests $36,087 $19,562 84.48% Add: Real estate depreciation and amortization 21,359 9,143 133.61% Less: Preferred allocation (1,505) -- -- Minority property partnership's share of Funds from Operations (178) (117) 52.14% -------- -------- -------- Funds from Operations $55,763 $28,588 95.06% ======== ======== ======== Company's share (A) $41,053 $20,200 103.23% ======== ======== ======== Funds from Operations per share - basic $ 0.65 $ 0.52 23.90% ======== ======== ======== Weighted average shares outstanding - basic 63,468 38,694 64.03% ======== ======== ======== Funds from Operations per share - diluted $ 0.64 $ 0.52 23.85% ======== ======== ======== Weighted average shares outstanding - diluted 63,991 38,998 64.09% ======== ======== ========
Nine Months Ended September 30, ------------------ 1998 1997 % Change -------- -------- -------- (Actual) (Pro forma) Income from operations before minority interests $ 96,744 $52,487 84.32% Add: Real estate depreciation and amortization 50,718 27,132 86.93% Less: Preferred allocation (1,505) -- -- Minority property partnership's share of Funds from Operations (460) (368) 25.00% -------- -------- -------- Funds from Operations $145,497 $79,251 83.59% ======== ======== ======== Company's share $109,472 $55,999 95.49% ======== ======== ======== Funds from Operations per share - basic $ 1.82 $ 1.45 25.86% ======== ======== ======== Weighted average shares outstanding - basic 60,101 38,694 55.32% ======== ======== ======== Funds from Operations per share - diluted $ 1.80 $ 1.44 25.44% ======== ======== ======== Weighted average shares outstanding - diluted 60,744 38,979 55.84% ======== ======== ======== BOSTON PROPERTIES, INC. CONSOLIDATED BALANCE SHEETS (unaudited and in thousands)
September 30, December 31, 1998 1997 ------------ ------------ ASSETS Real estate: $3,562,645 $1,796,500 Less: accumulated depreciation (335,821) (294,218) ------------ ------------ Total real estate 3,226,824 1,502,282 Cash and cash equivalents 15,544 17,560 Escrows 19,668 14,178 Tenant and other receivables, net 33,160 24,458 Accrued rental income, net 67,692 55,190 Deferred charges, net 41,244 35,485 Prepaid expenses and other assets 23,064 20,225 Investment in joint ventures 32,136 3,143 ------------ ------------ Total assets $3,459,332 $1,672,521 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Mortgage notes payable $1,752,430 $1,099,253 Unsecured line of credit 195,000 233,000 Accounts payable and accrued expenses 41,502 23,822 Dividends payable -- 22,539 Accrued interest payable 4,784 6,581 Other liabilities 26,357 11,642 ------------ ------------ Total liabilities 2,020,073 1,396,837 ------------ ------------ Commitments and contingencies -- -- ------------ ------------ Minority interests 462,015 100,636 ------------ ------------ Stockholders' equity: Preferred stock, $.01 par value, 50,000,000 shares authorized, none issued or outstanding -- -- Excess stock, $.01 par value, 150,000,000 shares authorized, none issued or outstanding -- -- Common stock, $.01 par value, 250,000,000 shares authorized, 63,526,785 issued and outstanding 635 387 Additional paid-in capital 949,972 172,347 Earnings in excess of dividends 26,357 2,314 ------------ ------------ Total stockholders' equity 977,244 175,048 ------------ ------------ Total liabilities and stockholders' equity $3,459,332 $1,672,521 ============ ============ BOSTON PROPERTIES, INC. PORTFOLIO OCCUPANCY (Unaudited) Occupancy by Location --------------------- September 30, 1998 December 31, 1997 ------------------ ----------------- Greater Boston, MA 99.0% 98.3% Greater Washington, DC 98.5% 97.3% Midtown Manhattan, NY 99.6% 95.2% Baltimore, MD 99.2% 98.0% Richmond, VA 98.8% n/a Princeton/East Brunswick, NJ 100.0% n/a Greater San Francisco, CA 99.7% 98.4% Bucks County, PA 100.0% 100.0% ------------------ ----------------- Total Portfolio 98.5% 97.2% ================== ================= Occupancy by Type ----------------- Class A Office Portfolio 98.9% 97.6% R&D Portfolio 98.2% 97.3% Industrial Portfolio 95.0% 93.4% ------------------ ----------------- Total Portfolio 98.5% 97.2% ================== ================= SOURCE Boston Properties, Inc. Web site: http://www.bostonproperties.com CONTACT: Edward H. Linde, President, CEO & Director, or David G. Gaw, SVP & CFO, both of Boston Properties, 617-859-2600; or Marianne Stewart, General Info., 212-661-8030, Claire Koeneman, Analysts, 312-266-7800, or Judith Sylk-Siegel, Media, 212-661-8030, all of The Financial Relations Board