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): JANUARY 26, 1999 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 January 26, 1999, announcing the Company's results for the fourth quarter ended December 31, 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 and the press release as Exhibit 99.2 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 December 31, 1998. 99.2 The Boston Properties, Inc. press release dated January 26, 1999 for the quarter and year ended December 31, 1998.
SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: January 27, 1999 BOSTON PROPERTIES, INC. By: /s/ DAVID G. GAW ------------------------ David G. Gaw Chief Financial Officer
Exhibit 99.1 BOSTON PROPERTIES, INC. Supplemental Operating and Financial Data for the Quarter Ended December 31, 1998
BOSTON PROPERTIES, INC. FOURTH QUARTER 1998 INDEX PAGE ---- COMPANY BACKGROUND 2 INVESTOR INFORMATION 3-4 FINANCIAL HIGHLIGHTS 5 CONSOLIDATED BALANCE SHEETS 6 CONSOLIDATED INCOME STATEMENTS 7 FUNDS FROM OPERATIONS 8 FINANCIAL RATIOS 9 CAPITAL STRUCTURE 10 DEBT ANALYSIS 11 PORTFOLIO OVERVIEW 12-13 PAGE ---- OCCUPANCY ANALYSIS - SAME PROPERTY 14 OFFICE PROPERTIES 15 R&D PROPERTIES 16 INDUSTRIAL PROPERTIES 17 GRAND TOTAL - OFFICE, R&D AND INDUSTRIAL PROPERTIES 18 SAME PROPERTY PERFORMANCE 19-21 CAPITAL EXPENDITURES 22 VALUE CREATION PIPELINE - ACQUISITIONS/REPOSITIONING 23 VALUE CREATION PIPELINE - DEVELOPMENT 24 VALUE CREATION PIPELINE - LAND PARCELS 25 ACQUISITION PROPERTY PROFILES 26-27 1
BOSTON PROPERTIES, INC. FOURTH 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, greater San Francisco, Baltimore, Maryland, Richmond, Virginia, and Princeton/East Brunswick, New Jersey. 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 over-allotment 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' over-allotment) 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 39 properties adding approximately 14.1 million square feet to its portfolio, representing an investment of approximately $3.6 billion. In addition, the Company is developing eight Class A Office Buildings and one 221 room hotel for a total anticipated investment of approximately $222.3 million. The Company owns or controls land where it can develop an additional 9.1 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. 2
BOSTON PROPERTIES, INC. FOURTH QUARTER 1998 INVESTOR INFORMATION -------------------- 8 Arlington Street Boston, MA 02116 (617) 859-2600 (617) 536-5087 (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 WILL BE ANNOUNCED ACCORDING TO THE FOLLOWING ANTICIPATED SCHEDULE: FIRST QUARTER EARLY MAY SECOND QUARTER EARLY AUGUST THIRD QUARTER EARLY NOVEMBER YEAR END LATE JANUARY 3
BOSTON PROPERTIES, INC. FOURTH 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: 4TH QUARTER 1998 4TH QUARTER 1997 ---------------- ---------------- HIGH PRICE $ 32.5000 $ 34.3750 LOW PRICE $ 26.6250 $ 30.0000 CLOSING PRICE $ 30.5000 $ 33.0625 DIVIDENDS PER SHARE - ANNUALIZED $ 1.70 $ 1.62 CLOSING DIVIDEND YIELD - ANNUALIZED 5.57% 4.90% CLOSING SHARES, COMMON UNITS AND PREFERRED UNITS (IF CONVERTED) OUTSTANDING (THOUSANDS) 97,780 55,651 CLOSING MARKET VALUE OF SHARES AND UNITS OUTSTANDING (THOUSANDS) $ 2,982,290 $ 1,893,989 4
BOSTON PROPERTIES, INC. FOURTH QUARTER 1998 FINANCIAL HIGHLIGHTS (UNAUDITED AND IN THOUSANDS) THREE MONTHS ENDED --------------------------------------------------- ACTUAL ACTUAL 31-DEC-98 31-DEC-97 % CHANGE INCOME ITEMS: ------------- ----------- ----------- --------- Revenues $ 170,026 $ 77,288 119.99% Net Income (1) $ 27,271 $ 12,372 120.43% Funds from Operations $ 59,711 $ 29,017 105.78% Company's share (76.79% and 70.66%) $ 43,607 $ 20,355 114.23% Funds from Operations per share - basic $ 0.69 $ 0.53 30.48% Funds from Operations per share - diluted $ 0.68 $ 0.52 30.76% Dividends per share $ 0.425 $ 0.405 4.94% RATIOS: ------- Interest Coverage Ratio (2) 2.41 2.37 1.78% Dividend Payout Ratio 62.51% 77.88% -19.74% (1) Net income is before net extraordinary items (2) FFO plus interest (excluding amortization)/interest (excluding amortization) DECEMBER 31, 1998 DECEMBER 31, 1997 % CHANGE ----------------- ----------------- -------- CAPITALIZATION: --------------- Total Debt $ 3,088,724 $ 1,332,253 131.84% Total Shares Outstanding @ Quarter End 63,528 38,694 64.18% Total Units Outstanding @ Quarter End 23,798 16,957 40.34% Total Preferred Units Outstanding @ Quarter End (if converted) 10,454 - - Price @ Quarter End $ 30.50 $ 33.0625 -7.75% Equity Value @ Quarter End $ 2,982,294 $ 1,839,961 62.08% Total Market Capitalization $ 6,071,018 $ 3,172,214 91.38% Debt/Total Market Capitalization 50.88% 42.00% 21.14% 5
BOSTON PROPERTIES, INC. FOURTH QUARTER 1998 CONSOLIDATED BALANCE SHEETS (UNAUDITED AND IN THOUSANDS) DECEMBER 31, 1998 DECEMBER 31, 1997 ----------------- ----------------- ASSETS ------ Real Estate and equipment $ 4,755,436 $ 1,778,973 Land and development in progress 191,436 17,527 Less accumulated depreciation (357,384) (294,218) ------------------- ------------------- Total real estate and equipment 4,559,809 1,502,282 Cash 12,166 17,560 Escrows 19,014 14,178 Notes receivable 420,143 - Tenant and other receivables 40,830 24,458 Accrued rental income 64,251 55,190 Deferred charges, net 46,029 35,485 Prepaid expenses and other assets 26,058 20,225 Investment in joint ventures 46,787 3,143 ------------------- ------------------- TOTAL ASSETS $ 5,235,087 $ 1,672,521 ------------------- ------------------- ------------------- ------------------- LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Liabilities: Mortgage notes payable $ 2,653,581 $ 1,099,253 Notes payable 420,143 - Unsecured line of credit 15,000 233,000 Accounts payable and accrued expenses 33,638 23,822 Dividends payable 40,494 22,539 Accrued interest payable 7,307 6,581 Other liabilities 37,209 11,642 ------------------- ------------------- Total liabilities 3,207,372 1,396,837 ------------------- ------------------- Commitments and contingencies - - ------------------- ------------------- Minority interests 1,105,864 100,636 ------------------- ------------------- 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, 63,527,552 and 38,694,041 issued and outstanding, respectively 635 387 Additional paid-in capital 929,081 172,347 Earnings in excess of dividends (7,865) 2,314 ------------------- ------------------- Total stockholders' equity 921,851 175,048 ------------------- ------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 5,235,087 $ 1,672,521 ------------------- ------------------- ------------------- ------------------- 6
BOSTON PROPERTIES, INC. FOURTH QUARTER 1998 CONSOLIDATED INCOME STATEMENTS (UNAUDITED AND IN THOUSANDS) THREE MONTHS ENDED ACTUAL ACTUAL 31-DEC-98 31-DEC-97 % CHANGE --------- --------- -------- Revenue: Rental income $162,060 $ 75,388 114.97% Development and management services 3,517 1,591 121.06% Interest and other 4,449 309 1339.81% -------- --------- -------- Total revenue 170,026 77,288 119.99% Operating Expenses: Rental expenses 53,303 22,201 140.09% General and administrative 5,753 3,525 63.21% Interest 42,934 22,214 93.27% Depreciation and amortization 24,205 11,565 109.30% -------- --------- -------- Total expenses 126,195 59,505 112.07% -------- --------- -------- Income before minority interests 43,831 17,783 146.48% Minority interest in property partnerships (2,163) (146) 1381.51% -------- --------- -------- Income before minority interest in Operating Partnership 41,668 17,637 136.25% Minority interest in Operating Partnership (14,397) (5,265) 173.45% -------- --------- -------- Net income before extraordinary items 27,271 12,372 120.43% Net extraordinay loss on early debt extinguishments, net of minority interest (9,045) - - -------- --------- -------- Net income $ 18,226 $ 12,372 47.32% -------- --------- -------- -------- --------- -------- INCOME PER SHARE OF COMMON STOCK Net income before extraordinary item $ 0.43 $ 0.32 34.26% -------- --------- -------- -------- --------- -------- Net income $ 0.29 $ 0.32 -10.34% -------- --------- -------- -------- --------- -------- 7
BOSTON PROPERTIES, INC. FOURTH QUARTER 1998 FUNDS FROM OPERATIONS (IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS) (UNAUDITED) THREE MONTHS ENDED ACTUAL ACTUAL 31-DEC-98 31-DEC-97 % CHANGE --------- --------- -------- Income from operations before minority interests $ 43,831 $ 17,783 146.48% Add: Real estate depreciation and amortization 23,930 11,395 110.00% Less: Minority property partnership's share of funds from operations (3,725) (161) 2213.66% --------- Preferred allocation (4,325) - - --------- -------- --------- Funds from Operations $ 59,711 $ 29,017 105.78% --------- -------- --------- --------- -------- --------- Company's share (1) $ 43,607 $ 20,355 114.23% --------- -------- --------- --------- -------- --------- Funds from Operations per share - basic $ 0.69 $ 0.53 30.48% --------- -------- --------- --------- -------- --------- Weighted average shares outstanding - basic 63,528 38,694 64.18% --------- -------- --------- --------- -------- --------- Funds from Operations per share - diluted $ 0.68 $ 0.52 30.76% --------- -------- --------- --------- -------- --------- Weighted average shares outstanding - diluted 68,432 39,108 74.98% --------- -------- --------- --------- -------- --------- (1) Based on weighted average shares for the quarter. Company's share for the quarter ended 12/31/98 was 73.03% and 70.15% for the quarter ended 12/31/97. 8
BOSTON PROPERTIES, INC. FOURTH QUARTER 1998 FINANCIAL RATIOS THREE MONTHS ENDED DECEMBER 31, 1998 ------------------ RATIOS COMPUTED FOR INDUSTRY COMPARISONS: (1) OPERATIONAL RATIOS (2) Debt Service Coverage Ratio 2.20 (Funds from Operations ("FFO")+Interest/Interest+Principal) Interest Coverage Ratio 2.41 (Funds from Operations+Interest/Interest) Return on Shareholder's Equity 24.74% (Funds from Operations/Average Equity (book value) ) (%) Return on Real Estate Investments 10.54% (Funds from Operations+Interest/Average Real Estate Investments (book value)) (%) FFO Payout Ratio 62.50% (Dividends Declared/Funds from Operations) (%) (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
BOSTON PROPERTIES, INC. FOURTH QUARTER 1998 CAPITAL STRUCTURE DEBT (IN THOUSANDS) AGGREGATE PRINCIPAL DECEMBER 31, 1998 ------------------- Mortgage Loans $ 2,653,581 Notes Payable 420,143 Unsecured Line of Credit 15,000 -------------------- Total Debt $ 3,088,724 -------------------- -------------------- EQUITY (IN THOUSANDS) COMMON SHARES & UNITS STOCK $ VALUE OUTSTANDING EQUIVALENTS EQUIVALENT (1) -------------- ----------- -------------- Common Stock 63,528 63,528 $ 1,937,598 Operating Partnership Units 23,798 23,798 725,839 Preferred Operating Partnership Units 8,754 10,454 318,856 ----------- ------------- Total Equity 97,780 $ 2,982,294 ----------- ------------- ----------- ------------- Total Market Capitalization $ 6,071,018 ------------- ------------- (1) Value based on December 31, 1998 closing price of $30.50. 10
BOSTON PROPERTIES, INC. FOURTH QUARTER 1998 DEBT ANALYSIS Long-Term Debt Maturities and Principal Payments (in thousands) YEAR 1999 2000 2001 2002 2003 THEREAFTER TOTAL ---- ---- ---- ---- ---- ---------- ----- Amount $ 26,940 233,075 146,059 385,394 206,853 2,090,403 $ 3,088,724 UNSECURED LINE OF CREDIT - DUE JUNE 23, 2000 (in thousands) FACILITY OUTSTANDING @ 12/31/98 REMAINING CAPACITY -------- ---------------------- ------------------ $ 500,000 15,000 $ 485,000 UNSECURED AND SECURED DEBT ANALYSIS WEIGHTED AVERAGE WEIGHTED AVERAGE % OF DEBT RATE MATURITY --------- ---------------- ---------------- Unsecured Debt 14.09% 5.79% 1.7 years Secured Debt 85.91% 7.04% 6.5 years ------ ---- --------- Total Debt 100.00% 6.87% 5.6 years ------ ---- --------- ------ ---- --------- FLOATING AND FIXED RATE DEBT ANALYSIS WEIGHTED AVERAGE WEIGHTED AVERAGE % OF DEBT RATE MATURITY --------- ---------------- ---------------- Floating Rate Debt 14.46% 5.81% 0.2 years Fixed Rate Debt 85.54% 7.05% 6.6 years ------ ----- --------- Total Debt 100.00% 6.87% 5.6 years ------ ----- --------- ------ ----- --------- 11
BOSTON PROPERTIES, INC. FOURTH QUARTER 1998 PORTFOLIO OVERVIEW Rentable Square Feet of In-Service Properties by Location and Type of Property GEOGRAPHIC AREA OFFICE * R&D INDUSTRIAL TOTAL % OF TOTAL --------------- -------- ------- ---------- ------ ----------- Greater Boston 5,008,699 545,206 247,318 5,801,223 26.17% Greater Washington, D.C. 4,161,795 1,383,442 236,743 5,781,980 26.08% Greater San Francisco 3,701,118 144,479 281,000 4,126,597 18.61% Midtown Manhattan 2,880,508 - - 2,880,508 12.99% Princeton/East Brunswick, NJ 1,366,360 - - 1,366,360 6.16% Baltimore, MD 1,152,436 - - 1,152,436 5.19% Richmond, VA 899,720 - - 899,720 4.06% Bucks County, PA - - 161,000 161,000 0.73% ---------- --------- --------- ---------- -------- Total 19,170,636 2,073,127 926,061 22,169,824 100.00% ---------- --------- --------- ---------- -------- ---------- --------- --------- ---------- -------- % of Total 86.48% 9.35% 4.18% 100.00% * Includes retail square footage. HOTEL PROPERTIES 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 --------- ------- --------- ------- GARAGE PROPERTY AND STRUCTURED PARKING NUMBER OF SQUARE SPACES FEET GARAGE PROPERTIES --------- ------ ----------------- Cambridge Center North Garage 1,170 332,442 STRUCTURED PARKING 15,997 5,802,711 ------- --------- TOTAL GARAGE PROPERTY AND STRUCTURED PARKING 17,167 6,135,153 ------- --------- ------- --------- 12
BOSTON PROPERTIES, INC. FOURTH QUARTER 1998 PORTFOLIO OVERVIEW PERCENTAGE OF PROPERTY FUNDS FROM OPERATIONS* FOR IN-SERVICE PROPERTIES BY LOCATION and Type of Property for Quarter Ended December 31, 1998 GEOGRAPHIC AREA OFFICE (1) R&D INDUSTRIAL HOTEL GARAGE TOTAL --------------- ------- --- ---------- ----- ------ ----- Greater Boston 21.5% (2) 1.0% 0.3% 5.3% 0.3% 28.4% Greater Washington, D.C. 24.7% 3.6% 0.2% n/a n/a 28.5% Greater San Francisco 6.8% (3) 0.3% 0.2% n/a n/a 7.3% Midtown Manhattan 21.2% n/a n/a n/a n/a 21.2% Baltimore 5.0% n/a n/a n/a n/a 5.0% Richmond 3.8% n/a n/a n/a n/a 3.8% Princeton/East Brunswick, NJ 5.7% n/a n/a n/a n/a 5.7% Bucks County, PA n/a n/a 0.1% n/a n/a 0.1% ------- ------ ----- ------ ---- ------ Total 88.7% 4.9% 0.8% 5.3% 0.3% 100.0% ------- ------ ----- ------ ---- ------ ------- ------ ----- ------ ---- ------ (1) Includes Retail Center FFO (Prudential Center Boston and Embarcadero Center). (2) Includes Reservoir Place since its acquisition on November 3, 1998. (3) Includes Embarcadero Center since phase 1 of the acquisition on November 12, 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
BOSTON PROPERTIES, INC. FOURTH QUARTER 1998 OCCUPANCY ANALYSIS SAME PROPERTY OCCUPANCY - BY LOCATION LOCATION 31-DEC-98 31-DEC-97 -------- --------- --------- Greater Boston, MA 95.1% 98.3% Greater Washington, D.C. 98.0% 97.2% Midtown Manhattan, NY 99.9% 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 95.0% 98.4% Bucks County, PA 100.0% 100.0% ------- ----- Total Portfolio 97.5% 98.0% ------- ----- ------- ----- SAME PROPERTY - BY TYPE OF PROPERTY 31-DEC-98 31-DEC-97 --------- --------- Total Office Portfolio 98.1% 99.0% Total R&D Portfolio 99.8% 96.9% Total Industrial Portfolio 89.3% 93.4% ------- ----- Total Portfolio 97.5% 98.0% ------- ----- ------- ----- 14
BOSTON PROPERTIES, INC. FOURTH QUARTER 1998 IN-SERVICE OFFICE PROPERTIES LEASE EXPIRATIONS 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 ------------- ------------------- --------------- ------------------------------ 1999 1,372,073 37,469,294 6.15% 2000 1,406,569 39,803,309 6.54% 2001 2,264,138 64,950,377 10.67% 2002 2,247,533 101,767,905 16.71% 2003 1,739,987 52,615,550 8.64% 2004 1,900,942 50,633,360 8.32% 2005 1,316,652 33,646,533 5.53% 2006 2,303,485 77,823,860 12.78% 2007 1,684,849 53,126,078 8.73% Thereafter 2,707,074 97,054,930 15.94% OCCUPANCY BY LOCATION 31-DEC-98 31-DEC-97 --------- --------- Greater Boston, MA 96.9% 98.5% Greater Washington, D.C. 99.8% 99.2% Midtown Manhattan, NY 99.9% 95.2% Baltimore, MD 99.8% 98.0% Richmond, VA 98.8% n/a Princeton/East Brunswick, NJ 98.7% n/a Greater San Francisco, CA 98.9% n/a Bucks County, PA n/a n/a -------- ------ Total Office Portfolio 98.8% 97.6% -------- ------ -------- ------ 15
BOSTON PROPERTIES, INC. FOURTH QUARTER 1998 IN-SERVICE R&D PROPERTIES LEASE EXPIRATIONS 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 ------------- ------------------ --------------- ------------------------------ 1999 220,556 2,444,286 8.89% 2000 403,559 3,631,373 13.20% 2001 264,891 2,081,579 7.57% 2002 266,460 4,620,591 16.80% 2003 94,495 1,180,220 4.29% 2004 47,641 704,767 2.56% 2005 148,330 1,847,469 6.72% 2006 150,000 1,622,501 5.90% 2007 107,895 2,294,165 8.34% Thereafter 345,209 7,080,818 25.74% OCCUPANCY BY LOCATION 31-DEC-98 31-DEC-97 --------- --------- Greater Boston, MA 100.0% 100.0% Greater Washington, D.C. 99.0% 95.8% 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% 95.2% Bucks County, PA n/a n/a ------ ------- Total R&D Portfolio 99.2% 97.3% ------ ------- ------ ------- 16
BOSTON PROPERTIES, INC. FOURTH QUARTER 1998 IN-SERVICE INDUSTRIAL PROPERTIES LEASE EXPIRATIONS 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 ------------- ------------------- --------------- ------------------------------ 1999 147,512 1,473,292 27.69% 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% OCCUPANCY BY LOCATION 31-DEC-98 31-DEC-97 ---------- --------- Greater Boston, MA 93.0% 93.0% Greater Washington, D.C. 73.9% 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 92.9% 100.0% Bucks County, PA 100.0% 100.0% ---------- --------- Total Industrial Portfolio 89.3% 93.4% ---------- --------- ---------- --------- 17
BOSTON PROPERTIES, INC. FOURTH QUARTER 1998 GRAND TOTAL OF ALL IN-SERVICE PROPERTIES LEASE EXPIRATION 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 ------------- --------------------- --------------- ------------------------------- 1999 1,740,141 41,386,872 6.45% 2000 2,059,408 44,903,811 7.00% 2001 2,599,858 67,389,049 10.50% 2002 2,513,993 106,388,496 16.58% 2003 1,977,587 54,771,215 8.54% 2004 2,143,659 52,273,612 8.15% 2005 1,485,482 35,604,153 5.55% 2006 2,453,485 79,446,361 12.38% 2007 1,792,744 55,420,243 8.64% Thereafter 3,052,283 104,135,748 16.23% OCCUPANCY BY LOCATION 31-DEC-98 31-DEC-97 --------- --------- Greater Boston, MA 97.0% 98.3% Greater Washington, D.C. 98.5% 97.3% Midtown Manhattan, NY 99.9% 95.2% Baltimore, MD 99.8% 98.0% Richmond, VA 98.8% n/a Princeton/East Brunswick, NJ 98.7% n/a Greater San Francisco, CA 98.5% 98.4% Bucks County, PA 100.0% 100.0% --------- --------- Total Portfolio 98.4% 97.2% --------- --------- --------- --------- 18
BOSTON PROPERTIES, INC. FOURTH QUARTER 1998 SAME PROPERTY PERFORMANCE Hotel Properties LONG WHARF MARRIOTT - BOSTON 1/1/98- 1/1/97- PERCENT 10/1/98 10/1/97 PERCENT 12/31/98 12/31/97 CHANGE 12/31/98 12/31/97 CHANGE -------- -------- ------- -------- -------- ------- Occupancy 87.5% 87.1% 0.46% 82.6% 84.3% -2.02% Average Daily Rate $ 226.46 $ 218.23 3.77% $ 218.90 $ 230.09 -4.86% REVPAR $ 198.15 $ 190.08 4.25% $ 180.81 $ 193.97 -6.78% CAMBRIDGE CENTER MARRIOTT 1/1/98- 1/1/97- PERCENT 10/1/98 10/1/97 PERCENT 12/31/98 12/31/97 CHANGE 12/31/98 12/31/97 CHANGE -------- -------- ------- -------- -------- ------- Occupancy 83.6% 85.3% -1.99% 76.0% 74.8% 1.60% Average Daily Rate $ 181.15 $ 163.77 10.61% $ 179.32 $ 170.32 5.28% REVPAR $ 151.44 $ 139.70 8.40% $ 136.28 $ 127.34 7.02% TOTAL HOTEL PERFORMANCE 1/1/98- 1/1/97- PERCENT 10/1/98 10/1/97 PERCENT 12/31/98 12/31/97 CHANGE 12/31/98 12/31/97 CHANGE -------- -------- ------- -------- -------- ------- Occupancy 85.5% 86.2% -0.81% 79.2% 79.4% -0.25% Average Daily Rate $ 203.02 $ 190.05 6.82% $ 198.42 $ 199.16 -0.37% REVPAR $ 173.98 $ 164.01 6.08% $ 157.77 $ 159.50 -1.08% 19
BOSTON PROPERTIES, INC. FOURTH QUARTER 1998 SAME PROPERTY PERFORMANCE OFFICE, R&D, INDUSTRIAL AND HOTEL PROPERTIES OFFICE R&D INDUSTRIAL HOTEL TOTAL -------- ------- ------------ ------- ------- Number of Properties 33 23 9 2 67 Square feet 5,641,474 1,323,693 926,061 750,400 8,641,628 Percent of in-service properties 29.4% 63.9% 100.0% 100.0% Occupancy @ 12/31/97 99.0% 96.9% 93.4% 98.0% Occupancy @ 12/31/98 98.1% 99.8% 89.3% 97.1% Percent change from 4th quarter 1998 over 4th quarter 1997: Revenue 7.3% 6.1% 4.6% 10.8% 7.3% Expense 7.8% 21.1% 27.3% 35.8% 10.0% Net Operating Income 7.0% 1.9% -4.9% 6.5% 6.2% SAME PROPERTY LEASE ANALYSIS - QUARTER ENDED DECEMBER 31, 1998 OFFICE R&D INDUSTRIAL TOTAL -------- ------- ------------ -------- Vacant space available @ 10/1/98 (sf) 43,584 35,867 46,222 125,673 Square footage of leases expiring or terminated 10/1/98 - 12/31/98 149,992 11,271 136,358 297,621 -------- ------- -------- ------- Total space for lease (sf) 193,576 47,138 182,580 423,294 -------- ------- -------- ------- -------- ------- -------- ------- New tenants (sf) 32,685 36,040 - 68,725 Renewals (sf) 31,367 8,000 83,608 122,975 -------- ------- -------- ------- Total space leased (sf) 64,052 44,040 83,608 191,700 -------- ------- -------- ------- -------- ------- -------- ------- Space available @ 12/31/98 (sf) 129,524 3,098 98,972 231,594 -------- ------- -------- ------- -------- ------- -------- ------- Net increase (decrease) in leased space (sf) (85,940) 32,769 (52,750) (105,921) Average lease term (months) 39 66 12 33 2nd generation TI/Comm PSF $ 13.54 $ 3.34 $ 0.72 $ 5.61 Increase in 2nd generation net rents (2) 10.4% 10.3% 0.0% 6.7% (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
BOSTON PROPERTIES, INC. FOURTH QUARTER 1998 SAME PROPERTY LEASE ANALYSIS - YEAR TO DATE 1/1/98 - 12/31/98 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- 12/31/98 418,421 73,783 358,358 850,562 -------- -------- -------- --------- Total space for lease (sf) 472,744 115,437 419,580 1,007,761 -------- -------- -------- --------- -------- -------- -------- --------- New tenants (sf) 183,200 72,494 56,000 311,694 Renewals (sf) 162,745 39,354 264,608 466,707 -------- -------- -------- --------- Total space leased (sf) 345,945 111,848 320,608 778,401 -------- -------- -------- --------- -------- -------- -------- --------- Space available @ 12/31/98 (sf) 126,799 3,098 98,972 228,869 -------- -------- -------- --------- -------- -------- -------- --------- Net increase/(decrease) in leased space (sf) (72,476) 38,556 (37,750) (71,670) Average lease term (months) 64 67 29 50 2nd generation TI/Comm PSF $ 13.66 $ 3.32 $ 1.13 $ 7.01 Increase in 2nd generation net rents (1) 17.0% 12.6% -9.2% 9.9% (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). 21
BOSTON PROPERTIES, INC. FOURTH QUARTER 1998 HISTORICALLY GENERATED CAPITAL EXPENDITURES, TENANT IMPROVEMENT COSTS AND LEASING COMMISSIONS HISTORICAL CAPITAL EXPENDITURES 1992 1993 1994 1995 1996 1997 1998 ---- ---- ---- ---- ---- ---- ---- Recurring capital expenditures $ 1,547 $ 1,425 $1,812 $ 1,618 $ 1,083 $ 1,125 $ 3,543 -------- -------- ------- -------- --------- -------- -------- -------- -------- ------- -------- --------- -------- -------- Hotel improvements, equipment upgrades $ 3,182 $ 836 $1,917 $ 4,420 $ 3,041 $ 2,625 $ 3,872 and replacements -------- -------- ------- -------- --------- -------- -------- -------- -------- ------- -------- --------- -------- -------- 2ND GENERATION TENANT IMPROVEMENTS AND LEASING COMMISSIONS 1992 1993 1994 1995 1996 1997 1998 ---- ---- ---- ---- ---- ---- ---- Office Square feet 673,138 451,295 690,459 768,459 970,072 1,016,427 648,291 ------- ------- ------- ------- ------- --------- -------- Tenant improvement and lease commissions p.s.f. $ 7.85 $ 8.45 $ 9.45 $ 10.66 $ 11.40 $ 10.83 $ 9.82 ------- ------- ------- ------- ------- --------- -------- R&D Square feet 185,070 166,957 276,332 177,073 337,676 169,878 113,428 ------- ------- ------- ------- ------- --------- -------- Tenant improvement and lease commissions p.s.f. $ 3.82 $ 5.53 $ 0.68 $ 6.99 $ 10.45 $ 2.22 $ 3.32 ------- ------- ------- ------- ------- --------- -------- Industrial Square feet 44,473 241,500 132,521 308,388 128,148 258,795 320,608 ------- ------- ------- ------- ------- --------- -------- Tenant improvement and lease commissions p.s.f. $ 2.31 $ 0.28 $ 3.32 $ 1.00 $ 1.71 $ 0.99 $ 1.13 ------- ------- ------- ------- ------- --------- -------- Average tenant improvement and lease commission p.s.f. $ 6.75 $ 5.59 $ 6.51 $ 7.77 $ 10.31 $ 8.06 $ 6.57 ------- ------- ------- ------- ------- --------- -------- ------- ------- ------- ------- ------- --------- -------- 22
BOSTON PROPERTIES, INC. FOURTH QUARTER 1998 VALUE CREATION PIPELINE - ACQUISITIONS/REPOSITIONING AS OF DECEMBER 31,1998 (IN THOUSANDS) ANTICIPATED DATE PLACED INITIAL FUTURE TOTAL CURRENT PROPERTY IN SERVICE SQUARE FEET INVESTMENT INVESTMENT INVESTMENT OCCUPANCY -------- ---------- ----------- ---------- ---------- ---------- --------- ACQUISITIONS CLASS A OFFICE BUILDINGS Reservoir Place Nov-98 529,992 $ 96,000 $ 1,676 $ 97,676 99% Embarcadero Center Nov-98 3,701,118 1,216,000 37,710 1,253,710 98% --------- ----------- --------- ----------- ------ Subtotal 4,231,110 1,312,000 39,386 1,351,386 99% REPOSITIONING 1301 New York Avenue Mar-99 185,000 28,000 18,200 46,200 100% (1) --------- ----------- --------- ----------- ------ TOTAL VALUE CREATION PIPELINE - ACQUISITIONS/REPOSITIONING 4,416,110 $ 1,340,000 $ 57,586 $ 1,397,586 99% --------- ----------- --------- ----------- ------ --------- ----------- --------- ----------- ------ (1) As of March 1, 1999 23
BOSTON PROPERTIES, INC. FOURTH QUARTER 1998 VALUE CREATION PIPELINE - CONSTRUCTION IN PROGRESS AS OF DECEMBER 31, 1998 ESTIMATED PLACED # OF INVESTMENT DEVELOPMENT PROPERTIES IN SERVICE DATE LOCATION BUILDINGS SQUARE FEET TO DATE - ---------------------- --------------- -------- --------- ----------- ------- CLASS A OFFICE BUILDINGS 200 West Street Q2 1999 Waltham, MA 1 250,000 $ 25,604,410 Eight Cambridge Center Q2 1999 Cambridge, MA 1 175,000 15,704,068 One Freedom Square (25% ownership) Q4 1999 Reston, VA 1 406,980 3,711,969 One and Two Reston Overlook (25% ownership) Q1-Q2 1999 Reston, VA 2 444,000 4,626,104 The Arboretum Q3 1999 Reston, VA 1 96,000 10,208,022 181 Spring Street Q2 1999 Lexington, MA 1 52,000 8,854,583 Market Square North Q4 2000 Washington, DC 1 409,843 37,361,361 ------ ---------- ------------- TOTAL CLASS A OFFICE BUILDINGS 8 1,833,823 106,070,517 HOTELS Residence Inn by Marriott Q1 1999 Cambridge, MA 1 187,474 21,887,954 ------ ---------- ------------- TOTAL DEVELOPMENT PROPERTIES 9 2,021,297 $ 127,958,471 ------ ---------- ------------- ------ ---------- ------------- TOTAL PERCENTAGE DEVELOPMENT PROPERTIES INVESTMENT LEASED - ---------------------- ---------- ------ CLASS A OFFICE BUILDINGS 200 West Street $ 43,423,000 79% Eight Cambridge Center 26,000,000 100% One Freedom Square (25% ownership) 19,150,000 (1) 73% One and Two Reston Overlook (25% ownership) 18,100,000 (1) 100% The Arboretum 15,265,000 100% 181 Spring Street 10,871,085 0% Market Square North 57,500,000 (2) 0% ------------ ------- TOTAL CLASS A OFFICE BUILDINGS 190,309,085 66% HOTELS Residence Inn by Marriott 32,000,000 n/a ------------ ------- TOTAL DEVELOPMENT PROPERTIES $ 222,309,085 66% ------------ ------- ------------ ------- (1) Represents 25% of the total anticipated project-level investment. (2) Represents 50% of the total anticipated project-level investment. 24
BOSTON PROPERTIES, INC. FOURTH QUARTER 1998 VALUE CREATION PIPELINE - OWNED LAND PARCELS as of December 31, 1998 NO. OF DEVELOPABLE LOCATION PARCELS ACREAGE SQUARE FEET -------- ------- ------- ----------- Dulles, VA 6 91.1 1,200,000 Rockville, MD 7 128.3 2,331,000 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) -------- ------- ----------- 21 300.1 6,776,000 -------- ------- ----------- -------- ------- ----------- (1) Parcels and acreage have not yet been determined at this time. (2) Boston Properties has a 50% ownership interest. VALUE CREATION PIPELINE - LAND PURCHASE OPTIONS NO. OF DEVELOPABLE LOCATION PARCELS ACREAGE SQUARE FEET -------- ------- ------- ----------- Princeton, NJ 16 167.1 2,100,000 Cambridge, MA 1 2.6 209,000 -------- ------- ----------- 17 169.7 2,309,000 -------- ------- ----------- -------- ------- ----------- 25
BOSTON PROPERTIES, INC. FOURTH QUARTER 1998 ACQUISITION PROPERTY PROFILE PROPERTY NAME: Reservoir Place PRODUCT TYPE: Class A Office Building LOCATION: Waltham, MA DESCRIPTION: Class A office complex, located directly off Route 128, consists of two connected buildings and a two-level underground parking garage. SIZE: Approximately 530,000 net rentable square feet YEAR CONSTRUCTED: 1955/1987 PURCHASE PRICE: $96 Million CLOSING DATE: November 3, 1998 FUTURE INVESTMENT: $1.7 million OCCUPANCY LEVEL: 99% NUMBER OF TENANTS: 71 FUNDING SOURCE: Common Operating Partnership Units, Assumption of Debt and Cash. LARGEST TENANTS: COMPANY: EDS Personal Communications SIZE: 77,341 LEASE EXPIRATION: 12/31/99 COMPANY: Information Resources, Inc. SIZE: 71,954 LEASE EXPIRATION: 6/30/04 COMPANY: Parexel Int'l Corp. SIZE: 71,691 LEASE EXPIRATION: 8/31/01 26
BOSTON PROPERTIES, INC. FOURTH QUARTER 1998 ACQUISITION PROPERTY PROFILE PROPERTY NAME: Embarcadero Center PRODUCT TYPE: Multi-use LOCATION: San Francisco, California DESCRIPTION: The largest mixed-use business complex in the western United States, comprised of 6 multi-tenant Class-A office towers as well as retail shops, restaurants, entertainment facilities and parking. YEAR CONSTRUCTED: Embarcadero Centers 1-4 and West Tower - 1971-1989 The Old Federal Reserve Building - 1924/1988 PURCHASE PRICE: $1.2 Billion CLOSING DATE: November 12, 1998 (Phase One) February 10, 1999 (Phase Two) FUTURE INVESTMENT: $32.7 million OCCUPANCY LEVEL: 98.9% NUMBER OF TENANTS: 320 FUNDING SOURCE: Cash, Preferred Operating Partnership Units, Debt Financing LARGEST TENANTS: Company: Orrick, Herrington & Sutcliffe Size: 146,013 Lease Expiration: 7/31/04 Company: Industrial Indemnity Company Size: 103,567 Lease Expiration: 5/31/04 Company: Peat Marwick, KPMG Size: 98,598 Lease Expiration: 12/31/09 Company: Dresdner RCM Global Investors Size: 91,040 Lease Expiration: 10/31/01 27
Exhibit 99.2 BOSTON PROPERTIES, INC. 8 ARLINGTON STREET BOSTON, MA 02116 (NYSE: BXP) AT THE COMPANY AT THE FINANCIAL RELATIONS BOARD - -------------- -------------------------------- Edward H. Linde Marianne Stewart - General Info. (212) 661-8030 President, CEO & Director Claire Koeneman - Analyst (312) 266-7800 David G. Gaw Judith Sylk-Siegel - Media (212) 661-8030 SVP & CFO (617) 859-2600 FOR IMMEDIATE RELEASE: - ---------------------- January 26, 1999 -- BOSTON PROPERTIES, INC. ANNOUNCES FOURTH QUARTER AND YEAR END 1998 RESULTS BOSTON, MA, JANUARY 26, 1999 - Boston Properties, Inc. (NYSE: BXP) today reported results for the fourth quarter and the year ended December 31, 1998. Funds from Operations (FFO) for the quarter ended December 31, 1998 were approximately $43.6 million, or $0.69 per share basic and $0.68 per share diluted, compared to FFO of approximately $20.4 million, or $0.53 per share basic and $0.52 per share diluted for the quarter ended December 31, 1997. The weighted average number of basic and diluted shares outstanding totaled 63,527,666 and 68,432,476, respectively, for the quarter ended December 31, 1998 and 38,693,930 and 39,107,768, respectively, for the same quarter last year. FFO for the year ended December 31, 1998 were approximately $153.0 million, or $2.52 per share basic and $2.50 per share diluted, compared to FFO on a pro forma basis of approximately $76.5 million, or $1.98 per share basic and $1.96 per share diluted, for the year ended December 31, 1997. Revenues were approximately $170.0 million for the quarter and $513.8 million for the year ended December 31, 1998, compared to revenues of approximately $77.3 million and $255.1 million (pro forma) for the same periods in 1997. Income before extraordinary items was approximately $27.3 million for the quarter and $98.6 million for the year ended December 31, 1998, compared to $12.4 million and $48.9 million (pro forma), respectively, for the same periods in 1997. Income before extraordinary items per share for the quarter was $0.43 basic and diluted, compared to $0.32 basic and diluted last year, and for the year ended December 31, 1998 was $1.62 basic and diluted, compared to $1.26 basic and $1.25 diluted on a pro forma basis last year. -MORE-
Boston Properties, Inc. Announces 4Q98 and Year End Results Page 2 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 ended 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 were completed on June 23, 1997) had occurred at the beginning of the relevant period. As of December 31, 1998, the Company's portfolio consisted of 122 properties comprising more than 31.0 million square feet, including nine properties under development totaling approximately 2.0 million square feet. The overall occupancy rate for the properties in service as of December 31, 1998 was 98.4%. Additional highlights of the fourth quarter, as previously announced, include: - - Closing of the first phase of Embarcadero Center, an approximately 3.7 million-square-foot mixed-use urban center located in San Francisco, California, on November 12, 1998 for approximately $1.2 billion. - - Acquisition of Reservoir Place, a 529,992-square-foot Class A office building in Waltham, Massachusetts, on November 3, 1998 for approximately $96.0 million. Transactions announced since the quarter ended December 31, 1998 include: - - Signing of a binding agreement to acquire, between now and January 2001, the leasehold interest in the remaining two development sites in New York City's Times Square for a total purchase price of $312.25 million. Prudential Insurance Company of America, the seller, will also retain the right to become a 33.33% equity participant in the development ventures by contributing, upon an election to participate, its proportionate share of the total project equity. 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 located predominantly in the Greater Boston; Greater Washington, D.C.; midtown Manhattan; Greater San Francisco; Baltimore, Maryland; Princeton/East Brunswick, New Jersey; and Richmond, Virginia markets. The Company is one of the largest owners and developers of office properties in the United States. Financial tables follow. 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. Or visit The Financial Relations Board's web site at http://www.frbinc.com. -MORE-
Boston Properties, Inc. Announces 4Q98 and Year End Results Page 3 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. Announces 4Q98 and Year End Results Page 4 BOSTON PROPERTIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED AND IN THOUSANDS, EXCEPT PER SHARE DATA) Three months ended Year ended December 31, December 31, ------------------------------- ------------------------------- 1998 1997 1998 1997 --------------- -------------- -------------- --------------- REVENUE (Pro forma) Rental: Base rent $ 140,109 $ 68,509 $426,874 $218,902 Recoveries from tenants 15,671 6,421 48,543 22,933 Parking and other 6,280 458 12,160 3,139 --------------- -------------- -------------- --------------- Total rental revenue 162,060 75,388 487,577 244,974 Development and management services 3,517 1,591 12,411 7,029 Interest and other 4,449 309 13,859 3,105 --------------- -------------- -------------- --------------- Total revenue 170,026 77,288 513,847 255,108 --------------- -------------- -------------- --------------- EXPENSES Rental: Operating 30,451 10,764 80,894 33,114 Real estate taxes 22,852 11,437 69,596 35,401 General and administrative 5,753 3,525 22,504 12,233 Interest 42,934 22,214 124,860 65,011 Depreciation and amortization 24,205 11,565 75,418 39,079 --------------- -------------- -------------- --------------- Total expenses 126,195 59,505 373,272 184,838 --------------- -------------- -------------- --------------- Income before minority interests 43,831 17,783 140,575 70,270 Minority interest in property partnerships (2,163) (146) (2,555) (449) --------------- -------------- -------------- --------------- Income before minority interest in Operating Partnership 41,668 17,637 138,020 69,821 Minority interest in Operating Partnership (14,397) (5,265) (39,427) (20,952) --------------- -------------- -------------- --------------- Income before extraordinary items 27,271 12,372 98,593 48,869 Extraordinary loss on early debt extinguishments, net (9,045) - (5,481) - --------------- -------------- -------------- --------------- Net income $ 18,226 $ 12,372 $ 93,112 $ 48,869 --------------- -------------- -------------- --------------- --------------- -------------- -------------- --------------- Basic earnings per share: Income before extraordinary items $ 0.43 $ 0.32 $ 1.62 $ 1.26 Extraordinary loss, net (0.14) - (0.09) - --------------- -------------- -------------- --------------- Net income $ 0.29 $ 0.32 $ 1.53 $ 1.26 --------------- -------------- -------------- --------------- --------------- -------------- -------------- --------------- Weighted average number of common shares outstanding 63,528 38,694 60,776 38,694 Diluted earnings per share: Income before extraordinary items $ 0.43 $ 0.32 $ 1.62 $ 1.25 Extraordinary loss, net (0.13) - (0.09) - --------------- -------------- -------------- --------------- Net income $ 0.30 $ 0.32 $ 1.53 $ 1.25 --------------- -------------- -------------- --------------- --------------- -------------- -------------- --------------- Weighted average number of common shares outstanding 68,432 39,108 62,443 39,108
Boston Properties, Inc. Announces 4Q98 and Year End Results Page 5 BOSTON PROPERTIES, INC. CONSOLIDATED BALANCE SHEETS (unaudited and in thousands, except share and per share data) December 31, 1998 December 31, 1997 -------------------------- ------------------------ ASSETS Real estate: $ 4,917,193 $ 1,796,500 Less: accumulated depreciation (357,384) (294,218) -------------------------- ------------------------ Total real estate 4,559,809 1,502,282 Cash and cash equivalents 12,166 17,560 Escrows 19,014 14,178 Notes receivable 420,143 - Tenant and other receivables, net 40,830 24,458 Accrued rental income, net 64,251 55,190 Deferred charges, net 46,029 35,485 Prepaid expenses and other assets 26,058 20,225 Investment in joint ventures 46,787 3,143 -------------------------- ------------------------ Total assets $ 5,235,087 $ 1,672,521 -------------------------- ------------------------ -------------------------- ------------------------ LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Mortgage notes payable $ 2,653,581 $ 1,099,253 Notes payable 420,143 - Unsecured line of credit 15,000 233,000 Accounts payable and accrued expenses 33,638 23,822 Dividends payable 40,494 22,539 Accrued interest payable 7,307 6,581 Other liabilities 37,209 11,642 -------------------------- ------------------------ Total liabilities 3,207,372 1,396,837 -------------------------- ------------------------ Commitments and contingencies - - -------------------------- ------------------------ Minority interests 1,105,864 100,636 -------------------------- ------------------------ 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, 63,527,552 and 38,694,041 issued and outstanding, respectively 635 387 Additional paid-in capital 929,081 172,347 Dividends in excess of earnings (7,865) 2,314 -------------------------- ------------------------ Total stockholders' equity 921,851 175,048 -------------------------- ------------------------ -------------------------- ------------------------ Total liabilities and stockholders' equity $ 5,235,087 $ 1,672,521 -------------------------- ------------------------ -------------------------- ------------------------
Boston Properties, Inc. Announces 4Q98 and Year End Results Page 6 BOSTON PROPERTIES, INC. FUNDS FROM OPERATIONS (Unaudited and in thousands) Three Months Ended ------------------------------------------------- Actual Actual December 31, 1998 December 31, 1997 % Change ----------------------- ----------------------- ------------- Income from operations before minority interests $ 43,831 $ 17,783 146.48% Add: Real estate depreciation and amortization 23,930 11,395 110.00% Less: Preferred allocation (4,325) - - Minority property partnerships' share of Funds from Operations (3,725) (161) 2213.66% ----------------------- ----------------------- ------------- Funds from Operations $ 59,711 $ 29,017 105.78% ----------------------- ----------------------- ------------- ----------------------- ----------------------- ------------- Company's share (1) $ 43,607 $ 20,355 114.23% ----------------------- ----------------------- ------------- ----------------------- ----------------------- ------------- Funds from Operations per share - basic $ 0.69 $ 0.53 30.48% ----------------------- ----------------------- ------------- ----------------------- ----------------------- ------------- Weighted average shares outstanding - basic 63,528 38,694 64.18% ----------------------- ----------------------- ------------- ----------------------- ----------------------- ------------- Funds from Operations per share - diluted $ 0.68 $ 0.52 30.65% ----------------------- ----------------------- ------------- ----------------------- ----------------------- ------------- Weighted average shares outstanding - diluted 68,432 39,108 74.98% ----------------------- ----------------------- ------------- ----------------------- ----------------------- ------------- (1) Based on weighted average shares for the quarter. Company's share for the quarter ended 12/31/98 was 73.03% and 70.15% for the quarter ended 12/31/97. Year Ended ------------------------------------------------- Actual Pro Forma December 31, 1998 December 31, 1997 % Change ----------------------- ----------------------- ------------- Income from operations before minority interests $ 140,575 $ 70,270 100.05% Add: Real estate depreciation and amortization 74,649 38,527 93.76% Less: Preferred allocation (5,830) - - Minority property partnerships' share of Funds from Operations (4,185) (554) 655.42% ----------------------- ----------------------- ------------- Funds from Operations $ 205,209 $ 108,243 89.58% ----------------------- ----------------------- ------------- ----------------------- ----------------------- ------------- Company's share (2) $ 153,045 $ 76,485 100.10% ----------------------- ----------------------- ------------- ----------------------- ----------------------- ------------- Funds from Operations per share - basic $ 2.52 $ 1.98 27.40% ----------------------- ----------------------- ------------- ----------------------- ----------------------- ------------- Weighted average shares outstanding - basic 60,776 38,694 57.07% ----------------------- ----------------------- ------------- ----------------------- ----------------------- ------------- Funds from Operations per share - diluted $ 2.50 $ 1.96 27.83% ----------------------- ----------------------- ------------- ----------------------- ----------------------- ------------- Weighted average shares outstanding - diluted 62,443 39,108 59.67% ----------------------- ----------------------- ------------- ----------------------- ----------------------- ------------- (2) Based on weighted average shares for the year. Company's share for the year ended 12/31/98 was 74.58% and 70.66% for the pro forma year ended 12/31/97.
Boston Properties, Inc. Announces 4Q98 and Year End Results Page 7 BOSTON PROPERTIES, INC. PORTFOLIO OCCUPANCY (UNAUDITED) OCCUPANCY BY LOCATION December 31, 1998 December 31, 1997 ------------------------- ------------------------- Greater Boston, MA 97.0% 98.3% Greater Washington, DC 98.5% 97.3% Midtown Manhattan, NY 99.9% 95.2% Baltimore, MD 99.8% 98.0% Richmond, VA 98.8% n/a Princeton/East Brunswick, NJ 98.7% n/a Greater San Francisco, CA 98.5% 98.4% Bucks County, PA 100.0% 100.0% ------------------------- ------------------------- Total Portfolio 98.4% 97.2% ------------------------- ------------------------- ------------------------- ------------------------- OCCUPANCY BY TYPE Class A Office Portfolio 98.8% 97.6% R&D Portfolio 99.2% 97.3% Industrial Portfolio 89.3% 93.4% ------------------------- ------------------------- Total Portfolio 98.4% 97.2% ------------------------- ------------------------- ------------------------- -------------------------