UNITED STATES

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): July 22, 2008

 

 

BOSTON PROPERTIES, INC.

(Exact name of registrant as specified in charter)

 

 

 

Delaware		1-13087		04-2473675
(State or Other Jurisdiction of Incorporation)		(Commission File Number)		(IRS Employer Identification No.)

800 Boylston Street, Suite 1900, Boston, Massachusetts 02199

(Address of Principal Executive Offices) (Zip Code)

(617) 236-3300

(Registrant’s telephone number, including area code)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

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Item 1.01.

Entry into a Material Definitive Agreement.

 

Item 2.03.

Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

On July 21, 2008, Boston Properties Limited Partnership a Delaware limited partnership and the entity through which Boston Properties, Inc. (the “Company”) conducts substantially all of its business, utilized an accordion feature under its Fifth Amended and Restated Revolving Credit Agreement with a consortium of lenders to increase the current maximum borrowing amount under the facility from $923.3 million to $1.0 billion. All other material terms under the facility remain unchanged.

 

Item 2.02.

Results of Operations and Financial Condition.

The information in this Item 2.02—“Results of Operations and Financial Condition” is being furnished. Such information, including Exhibits 99.1 and 99.2 hereto, shall not be deemed “filed” for any purpose, including for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section. The information in this Item 2.02, including Exhibits 99.1 and 99.2, shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act regardless of any general incorporation language in such filing.

On July 22, 2008, the Company issued a press release announcing its financial results for the second quarter of 2008. That press release referred to certain supplemental information that is available on the Company’s website. The text of the supplemental information and the press release are attached hereto as Exhibits 99.1 and 99.2, respectively, and are incorporated by reference herein.

 

Item 9.01.

Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit No.		Description
*10.1		Commitment Increase Agreement, dated as of July 21, 2008, among Boston Properties Limited Partnership and the lenders identified therein.
*99.1		Boston Properties, Inc. Supplemental Operating and Financial Data for the quarter ended June 30, 2008.
*99.2		Press release dated July 22, 2008.

 

*	Filed herewith.

 

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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.

 

				BOSTON PROPERTIES, INC.
Date: July 22, 2008				By:		/s/ Michael E. LaBelle
						Michael E. LaBelle
						Senior Vice President, Chief Financial Officer

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EXHIBIT INDEX

 

Exhibit No.		Description
*10.1		Commitment Increase Agreement, dated as of July 21, 2008, among Boston Properties Limited Partnership and the lenders identified therein.
*99.1		Boston Properties, Inc. Supplemental Operating and Financial Data for the quarter ended June 30, 2008.
*99.2		Press release dated July 22, 2008.

 

*	Filed herewith.

Exhibit 10.1

EXECUTION COPY

COMMITMENT INCREASE AGREEMENT AND ASSIGNMENT

This Commitment Increase Agreement and Assignment (this “Agreement”) is made as of the 21st day of July, 2008. Reference is made to that certain Fifth Amended and Restated Revolving Credit Agreement, dated as of August 3, 2006, among Boston Properties Limited Partnership, a Delaware limited partnership (the “Borrower”), JPMorgan Chase Bank, N.A. (“JPChase”), Bank of America, N.A. (“BOA”) and the other lending institutions listed on Schedule 1 thereto (the “Banks”), BOA, as Administrative Agent (the “Administrative Agent”), JPChase, as Syndication Agent, Eurohypo AG, New York Branch, KeyBank National Association and Wells Fargo Bank, National Association, as Co-Documentation Agents, and The Bank of New York, Citicorp North America, Inc., RBS Citizens, National Association, successor by merger to Citizens Bank of Massachusetts, Deutsche Bank Trust Company Americas and PNC Bank, National Association, as Co-Managing Agents (as amended, the “Credit Agreement”).

WHEREAS, Section 2.10 of the Credit Agreement provides that the Borrower may request that the Total Commitment be increased to a Total Commitment of up to $1,000,000,000;

WHEREAS, the Borrower has requested that the Total Commitment be increased by $76,700,000 (the “Increase”) to $1,000,000,000;

WHEREAS, TD Bank, N.A. and The Bank of Nova Scotia (the “New Lenders”) have each agreed to provide new Commitments to the Borrower in connection with the Increase and to become parties to the Credit Agreement on the terms set forth herein (the Assigning Lenders, the New Lenders, the Increase Lender and each other financial institution which is a party to the Credit Agreement immediately prior to the effectiveness hereof are referred to collectively herein as the “Banks”);

WHEREAS, Union Bank of California, N.A. (the “Increase Lender”) has agreed to provide an additional Commitment in connection with the Increase, a portion of which will be a new Commitment under the Increase and a portion of which will be effected by way of assignment from BOA and JPChase, as more fully described below;

WHEREAS, BOA and JPChase (the “Assigning Lenders”) have each agreed to assign $1,650,000 of its Commitment (each, an “Assigned Portion” and collectively, the “Assigned Portions”) to the Increase Lender (collectively, the “Assignments”);

WHEREAS, the Commitments and the Commitment Percentages of the Banks, after giving effect to the Increase and the Assignments, will be adjusted as reflected on Annex 1 attached hereto, such that, after giving effect to the Increase and the Assignments, the Total Commitment will be $1,000,000,000; and

 

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WHEREAS, the Administrative Agent is willing to give effect to the Increase and the Assignments provided that the Borrower, the Administrative Agent, the Assigning Lenders, the Increase Lender and the New Lenders enter into this Agreement;

NOW THEREFORE, the parties hereto hereby agree as follows:

All capitalized terms used herein without definition shall have the meanings given such terms in the Credit Agreement.

1. Funding of Commitment Increase. Pursuant to Section 2.10 of the Credit Agreement, the Increase Lender and the New Lenders hereby agree to fund the Increase (which such Increase is not required to be in an increment of $50,000,000) and the Increase Lender agrees to purchase the Assigned Portions, with each Bank having the resulting Commitment and Commitment Percentage set forth on Annex 1 attached hereto.

2. Amendment of Schedule 1. Schedule 1 to the Credit Agreement is hereby amended to reflect the Banks’ adjusted Commitments and Commitment Percentages and the increase in the Total Commitment, as set forth on Annex 1 attached hereto. The Administrative Agent shall make such arrangements with the Banks as shall be necessary to provide that each Bank shall hold its Commitment Percentage of the outstanding Revolving Credit Loans after giving effect to this Agreement, with all Eurodollar Breakage Costs and other amounts payable under Section 5.8 of the Credit Agreement, if any, to be borne by the Borrower.

3. Affirmation and Acknowledgment. The Borrower hereby ratifies and confirms all of its Obligations to the Banks, including, without limitation, the Loans, the Notes, the other Loan Documents, and the Borrower hereby affirms its absolute and unconditional promise to pay to the Banks all Obligations under (and as defined in) and upon the terms and conditions set forth in the Credit Agreement.

4. Assignment Provisions. For an agreed consideration, each Assigning Lender hereby irrevocably sells and assigns to the Increase Lender, and the Increase Lender hereby irrevocably purchases and assumes from such Assigning Lender, its respective Assigned Portion, subject to and in accordance with the terms hereof and of the Credit Agreement, as of the Effective Date, including (i) all of such Assigning Lender’s rights and obligations as a Bank under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to its Assigned Portion and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of such Assigning Lender (in its capacity as a Bank) against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above, in each case to the extent relating to its Assigned Portion. Such sale and assignment is without recourse to such Assigning Lender and, except as expressly provided in this Agreement, without representation or warranty by such Assigning Lender.

 

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5. Assigning Lender; Increase Lender and New Lender Provisions. (a) Solely with respect to its Assigned Portion, each Assigning Lender (i) represents and warrants that (A) it is the legal and beneficial owner of its respective Assigned Portion, (B) its respective Assigned Portion is free and clear of any lien, encumbrance or other adverse claim created by such Assigning Lender and (C) it has full power and authority, and has taken all action necessary, to execute and deliver this Agreement and to consummate the transactions contemplated hereby; and (ii) assumes no responsibility with respect to (A) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document, (B) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (C) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (D) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.

(b) Subject to the terms and conditions of this Agreement, the Increase Lender and each New Lender hereby agree to lend, without recourse to the Banks or the Administrative Agent, on and after the Effective Date, that portion of the Total Commitment, as the case may be, equal to the amount set forth on Annex 1 attached hereto opposite its name, in accordance with the terms and conditions set forth herein and in the Credit Agreement, and acknowledge, without limitation, that the Borrower may from time to time borrow, repay and reborrow such amounts from each such Bank as provided in the Credit Agreement. Each New Lender hereby agrees to be bound by, and shall be entitled to the benefits of and, to the extent of its Commitment, shall be bound by the obligations of, the terms and conditions of the Credit Agreement as if such New Lender had been one of the lending institutions originally executing the Credit Agreement as a “Bank”; provided that nothing herein shall be construed as making any of the New Lenders liable to the Borrower or the other Banks in respect of any acts or omissions of any party to the Credit Agreement or in respect of any other event occurring prior to the Effective Date.

(c) Each New Lender (i) represents and warrants that it has full power and authority, and has taken all action necessary, to execute and deliver this Agreement and to consummate the transactions contemplated hereby and to become a Bank under the Credit Agreement; (ii) confirms that it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered pursuant to Section 8.4 of the Credit Agreement and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Agreement; (iii) agrees that it will, independently and without reliance upon the Banks or the Administrative Agent and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement; (iv) represents and warrants that it is an Eligible Assignee; (v) appoints and authorizes the Administrative Agent to take such action as Administrative Agent on its behalf and to exercise such powers under the Credit Agreement and the other Loan Documents as are delegated to the Administrative Agent by the terms thereof, together with such powers as are reasonably incidental thereto; and (vi) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Credit Agreement are required to be performed by it as a Bank.

 

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5. Representations and Warranties. The Borrower hereby represents and warrants to the Banks as follows:

(a) The execution and delivery by the Borrower of this Agreement, and the performance by the Borrower of its obligations and agreements under this Agreement and the Credit Agreement, are within the authority of the Borrower, have been duly authorized by all necessary proceedings on behalf of the Borrower and do not and will not materially contravene any provision of law, statute, rule or regulation to which the Borrower is subject or the Borrower’s agreement of limited partnership or its certificate of limited partnership or of any agreement or other instrument binding upon the Borrower (except for any such failure to comply under any such agreement or other instrument as would not materially and adversely affect the condition (financial or otherwise), properties, business or results of operations of the Borrower).

(b) This Agreement and the Credit Agreement constitute legal, valid and binding obligations of the Borrower, enforceable in accordance with their respective terms, except as limited by bankruptcy, insolvency, reorganization, moratorium or other laws relating to or affecting generally the enforcement of creditors’ rights and except to the extent that availability of the remedy of specific performance or injunctive relief is subject to the discretion of the court before which any proceeding therefor may be brought.

(c) Other than approvals or consents which have been obtained or those which would not have a material adverse effect on the Borrower, no approval or consent of any governmental agency or authority is required to make valid and legally binding the execution, delivery or performance by the Borrower of this Agreement; and no filing with any governmental agency or authority is required in connection with the execution, delivery or performance by the Borrower of this Agreement, other than filings which will be made with the SEC when and as required by law or deemed appropriate by the Borrower.

(d) The representations and warranties contained in Section 7 of the Credit Agreement and in the other Loan Documents are true and correct on and as of the Effective Date (except (i) to the extent of changes resulting from transactions contemplated or not prohibited by this Agreement or the other Loan Documents and changes occurring in the ordinary course of business and (ii) to the extent that such representations and warranties relate expressly to an earlier date).

(e) No Default or Event of Default has occurred and is continuing (both before and after giving effect to the Increase).

6. Conditions Precedent. This Agreement shall be deemed to be effective as of the date first written above (the “Effective Date”), subject to the execution and delivery of the following documents, each in form and substance satisfactory to the Administrative Agent, and the payment of certain fees and expenses noted below on or before such date:

(a) this Agreement executed by the Borrower, each Assigning Lender, each New Lender, the Increase Lender and the Administrative Agent;

 

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(b) an Allonge amending each of the Revolving Credit Notes, duly executed, authorized and delivered by the Borrower in favor of the Increase Lender and each Assigning Lender;

(c) a Revolving Credit Note issued in favor of each New Lender in the original principal amount of such New Lender’s Commitment, duly executed, authorized and delivered by the Borrower;

(d) a certificate dated as of the date hereof signed by a Responsible Officer of the Borrower (i) certifying that the Increase is duly authorized by the Borrower and attaching the resolutions evidencing such authorization, and (ii) certifying that the Increase Conditions have been satisfied and setting forth the applicable conditions; and

(e) payment by the Borrower in immediately available funds of the fees agreed to in the fee letter entered into in connection with the Increase.

7. Payments to New Lenders. From and after the Effective Date, the Borrower shall make all payments in respect of any New Lender’s Commitment, including payments of principal, interest, fees and other amounts payable under the Credit Agreement, to the Administrative Agent for the account of such New Lender in accordance with the terms of the Credit Agreement.

8. Miscellaneous Provisions.

(a) This Agreement is intended to take effect as an agreement under seal and shall be construed according to and governed by the laws of the Commonwealth of Massachusetts.

(b) This Agreement may be executed in any number of counterparts, but all such counterparts shall together constitute but one instrument. In making proof of this Agreement it shall not be necessary to produce or account for more than one counterpart signed by each party hereto by and against which enforcement hereof is sought. Delivery of an executed counterpart of a signature page of this Agreement by facsimile shall be as effective as delivery of an original executed counterpart of this Agreement.

(c) The Borrower hereby agrees to pay to the Administrative Agent, on demand by the Administrative Agent, all reasonable out-of-pocket costs and expenses incurred or sustained by the Administrative Agent in connection with the preparation of this Agreement (including reasonable legal fees).

 

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IN WITNESS WHEREOF, the Borrower, the Assigning Lenders, the New Lenders, the Increase Lender and the Administrative Agent have duly executed this Agreement as of the date first above written.

 

						BOSTON PROPERTIES LIMITED PARTNERSHIP
						By:		Boston Properties, Inc., its sole general partner
						By:		/s/ Michael E. LaBelle (SEAL)
						Name:		Michael E. LaBelle
						Title:		Chief Financial Officer
ACKNOWLEDGED AND AGREED:
BOSTON PROPERTIES, INC.
By:		/s/ Michael E. LaBelle (SEAL)
Name:		Michael E. LaBelle
Title:		Chief Financial Officer

Signature Page to July 2008 Commitment Increase Agreement and Assignment

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Signature Page to July 2008 Commitment Increase Agreement and Assignment

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Signature Page to July 2008 Commitment Increase Agreement and Assignment

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Signature Page to July 2008 Commitment Increase Agreement and Assignment

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Signature Page to July 2008 Commitment Increase Agreement and Assignment

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Signature Page to July 2008 Commitment Increase Agreement and Assignment

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Signature Page to July 2008 Commitment Increase Agreement and Assignment

Exhibit 99.1

Supplemental Operating and Financial Data

for the Quarter Ended June 30, 2008

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Boston Properties, Inc.

Second Quarter 2008

Table of Contents

 

		Page
Company Profile		3
Investor Information		4
Research Coverage		5
Financial Highlights		6
Consolidated Balance Sheets		7
Consolidated Income Statements		8
Funds From Operations		9
Reconciliation to Diluted Funds From Operations		10
Funds Available for Distribution and Interest Coverage Ratios		11
Discontinued Operations		12
Capital Structure		13
Debt Analysis		14-16
Unconsolidated Joint Ventures		17-18
Value-Added Fund		19
Portfolio Overview-Square Footage		20
In-Service Property Listing		21-23
Top 20 Tenants and Tenant Diversification		24
Office Properties-Lease Expiration Roll Out		25
Office/Technical Properties-Lease Expiration Roll Out		26
Retail Properties - Lease Expiration Roll Out		27
Grand Total - Office, Office/Technical, Industrial and Retail Properties		28
Greater Boston Area Lease Expiration Roll Out		29-30
Washington, D.C. Area Lease Expiration Roll Out		31-32
San Francisco Area Lease Expiration Roll Out		33-34
Midtown Manhattan Area Lease Expiration Roll Out		35-36
Princeton Area Lease Expiration Roll Out		37-38
CBD/Suburban Lease Expiration Roll Out		39-40
Hotel Performance and Occupancy Analysis		41
Same Property Performance		42
Reconciliation to Same Property Performance and Net Income		43-44
Leasing Activity		45
Capital Expenditures, Tenant Improvements and Leasing Commissions		46
Acquisitions/Dispositions		47
Value Creation Pipeline - Construction in Progress		48
Value Creation Pipeline - Land Parcels and Purchase Options		49
Definitions		50

This supplemental package contains forward-looking statements within the meaning of the Federal securities laws. You can identify these statements by our use of the words “assumes,” “believes,” “estimates,” “expects,” “guidance,” “intends,” “plans,” “projects,” and similar expressions that do not relate to historical matters. You should exercise caution in interpreting and relying on forward-looking statements because they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond Boston Properties’ control and could materially affect actual results, performance or achievements. These factors include, without limitation, the ability of our joint venture partners to satisfy their obligations, the ability to enter into new leases or renew leases on favorable terms, dependence on tenants’ financial condition, the uncertainties of real estate development, acquisition and disposition activity, the ability to effectively integrate acquisitions, the costs and availability of financing (including the impact of interest rates on our hedging program), the effects of local economic and market conditions, the effects of acquisitions and dispositions (including the exact amount and timing of any related special dividend and possible impairment charges) on our operating results, the impact of newly adopted accounting principles on the Company’s accounting policies and on period-to-period comparisons of financial results, regulatory changes and other risks and uncertainties detailed from time to time in the Company’s filings with the Securities and Exchange Commission. Boston Properties does not undertake a duty to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

 

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Boston Properties, Inc.

Second Quarter 2008

 

COMPANY PROFILE

The Company

Boston Properties, Inc. (the “Company”), a self-administered and self-managed real estate investment trust (REIT), is one of the largest owners, managers, and developers of first-class office properties in the United States, with a significant presence in five markets: Boston, Washington, D.C., Midtown Manhattan, San Francisco, and Princeton, N.J. The Company was founded in 1970 by Mortimer B. Zuckerman and Edward H. Linde in Boston, where it maintains its headquarters. Boston Properties became a public company in June 1997. The Company acquires, develops, and manages its properties through full-service regional offices. Its property portfolio is comprised primarily of first-class office space and also includes one hotel. Boston Properties is well-known for its in-house building management expertise and responsiveness to tenants’ needs. The Company holds a superior track record in developing premium Central Business District (CBD) office buildings, suburban office centers and build-to-suit projects for the U.S. government and a diverse array of creditworthy tenants.

Management

Boston Properties’ senior management team is among the most respected and accomplished in the REIT industry. Our deep and talented team of thirty-two individuals average twenty-five years of real estate experience and fifteen years with Boston Properties. We believe that our size, management depth, financial strength, reputation, and relationships of key personnel provide a competitive advantage to realize growth through property development and acquisitions. Boston Properties benefits from the reputation and relationships of key personnel, including Mortimer B. Zuckerman, Chairman of our Board of Directors, Edward H. Linde, Chief Executive Officer, and Douglas T. Linde, our President. Each has a national reputation, which attracts business and investment opportunities. In addition, our two Executive Vice Presidents and other senior officers that serve as Regional Managers have strong reputations that aid us in identifying and closing on new opportunities, having opportunities brought to us, and negotiating with tenants and build-to-suit prospects. Boston Properties’ Board of Directors consists of nine distinquished members, the majority of which serve as Independent Directors.

Strategy

Boston Properties’ primary business objective is to maximize return on investment in an effort to provide its stockholders with the greatest possible total return. To achieve this objective, the Company maintains a consistent strategy, which includes: concentrating on a few carefully selected markets - characterized by high barriers to the creation of new supply and strong real estate fundamentals - where tenants have demonstrated a preference for high-quality office buildings and other facilities; selectively acquiring assets which increase its penetration in these select markets; taking on complex, technically-challenging projects that leverage the skills of its management team to successfully develop, acquire, and reposition properties; exploring joint-venture opportunities with partners who seek to benefit from the Company’s depth of development and management expertise; pursuing the sale of properties (on a selective basis) to take advantage of its value creation and the demand for its premier properties; and continuing to enhance the Company’s balanced capital structure through its access to a variety of capital sources.

Snapshot

(as of June 30, 2008)

 

Corporate Headquarters		Boston, Massachusetts
Markets		Boston, Midtown Manhattan, Washington, D.C., San Francisco, and Princeton, N.J.
Fiscal Year-End		December 31
Total Properties		142
Total Square Feet		46.8 million
Common Shares and Units Outstanding (as converted, but excluding outperformance plan units)		142.4 million
Dividend—Quarter/Annualized		$0.68/$2.72
Dividend Yield		3.01%
Total Combined Market Capitalization		$19.6 billion
Senior Debt Ratings		Baa2 (Moody’s); BBB (Fitch); A- (S&P)

 

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Boston Properties, Inc.

Second Quarter 2008

 

INVESTOR INFORMATION

 

Board of Directors				Management
Mortimer B. Zuckerman Chairman of the Board		Carol B. Einiger Director		Douglas T. Linde President		Mitchell S. Landis Senior Vice President and Regional Manager of Princeton
Edward H. Linde Chief Executive Officer and Director		Alan J. Patricof Director, Chair of Audit Committee		E. Mitchell Norville Executive Vice President, Chief Operating Officer		Robert E. Pester Senior Vice President and Regional Manager of San Francisco
Lawrence S. Bacow Director		Richard E. Salomon Director, Chair of Compensation Committee		Raymond A. Ritchey Executive Vice President, National Director of Acquisitions & Development		Robert E. Selsam Senior Vice President and Regional Manager of New York
Zoë Baird Director, Chair of Nominating & Corporate Governance Committee		Martin Turchin Director		Michael LaBelle Senior Vice President, Chief Financial Officer		Frank D. Burt Senior Vice President, General Counsel
		David A. Twardock Director		Peter D. Johnston Senior Vice President and Regional Manager of Washington, D.C.		Michael Walsh Senior Vice President, Finance
				Bryan J. Koop Senior Vice President and Regional Manager of Boston		Arthur S. Flashman Vice President, Controller

Company Information

 

Corporate Headquarters 800 Boylston Street Suite 1900 Boston, MA 02199 (t) 617.236.3300 (f) 617.236.3311		Trading Symbol BXP		Investor Relations Boston Properties, Inc. 800 Boylston Street, Suite 1900 Boston, MA 02199 (t) 617.236.3322		Inquires Inquiries should be directed to Michael Walsh, Senior Vice President, Finance at 617.236.3410 or mwalsh@bostonproperties.com
		Stock Exchange Listing		(f) 617.236.3311
		New York Stock Exchange		www.bostonproperties.com		Arista Joyner, Investor Relations Manager at 617.236.3343 or ajoyner@bostonproperties.com

Common Stock Data (NYSE: BXP)

Boston Properties’ common stock has the following characteristics (based on information reported by the New York Stock Exchange):

 

		Q2 2008				Q1 2008				Q4 2007				Q3 2007				Q2 2007
High Closing Price		$	105.04			$	98.39			$	113.60			$	106.20			$	119.47
Low Closing Price		$	90.07			$	82.10			$	88.71			$	92.82			$	100.07
Average Closing Price		$	97.79			$	89.38			$	100.95			$	100.08			$	112.73
Closing Price, at the end of the quarter		$	90.22			$	92.07			$	91.81			$	103.90			$	102.13
Dividends per share—annualized (1)		$	2.72			$	2.72			$	2.72			$	2.72			$	2.72
Closing dividend yield—annualized (1)			3.01	%			2.95	%			2.96	%			2.62	%			2.66	%
Closing common shares outstanding, plus common, preferred and LTIP units on an as-converted basis (but excluding outperformance plan units) (thousands) (2)			142,447				142,182				141,910				141,676				141,666
Closing market value of outstanding shares and units (thousands)		$	12,851,568			$	13,090,697			$	13,028,757			$	14,720,136			$	14,468,349

 

(1)	Excludes special dividend of $5.98 per share paid on January 30, 2008.

(2)	For additional detail, see page 13.

Timing

Quarterly results for 2008 will be announced according to the following schedule:

 

Third Quarter		Late October 2008
Fourth Quarter		Late January 2009

 

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Boston Properties, Inc.

Second Quarter 2008

 

RESEARCH COVERAGE

 

Equity Research Coverage				Debt Research Coverage
Mitchell Germain / Ian Hunter		Anthony Paolone / Michael Mueller		Thomas Cook		Rating Agencies:
Banc of America Securities		J.P. Morgan Securities		Citigroup Global Markets
646.855.1794 / 646.855.0305		212.622.6682 / 212.622.6689		212.723.1112		Janice Svec
						Fitch Ratings
Michael Bilerman / Irwin Guzman		Jordan Sadler / Craig Mailman		Matthew Lynch		212.908.0304
Citigroup Global Markets		KeyBanc Capital Markets		Credit Suisse Securities
212.816.1383 / 212.816.1685		917.368.2280 / 917.368.2316		212.325.6456		Karen Nickerson
						Moody’s Investors Service
Steve Benyik		Steve Sakwa / Ian Weissman		Mark Streeter		212.553.4924
Credit Suisse North America		Merrill Lynch & Company		J.P. Morgan Securities
212.538.0239		212.449.0335 / 212.449.6255		212.834.5086		James Fielding
						Standard & Poor’s
Lou Taylor / Kristin Brown		David Rogers / Mike Carroll		Thierry Perrein / Jason Jones		212.438.2452
Deutsche Bank Securities		RBC Capital Markets		Wachovia
203.863.2381 / 212.250.6799		440.715.2647 / 440.715.2649		704.715.8455 / 704.715.7932
Wilkes Graham		John Guinee / Erin Aslakson
Friedman, Billings, Ramsey		Stifel, Nicolaus & Company
703.312.9737		443.224.1307 / 443.224.1350
Jay Habermann / Sloan Bohlen		James Feldman
Goldman Sachs & Company		UBS Investment Research
917.343.4260 / 212.902.2796		212.713.4932
Michael Knott
Green Street Advisors
949.640.8780

With the exception of Green Street Advisors, an independent research firm, the equity analysts listed above are those analysts that, according to First Call Corporation, have published research material on the Company and are listed as covering the Company. Please note that any opinions, estimates or forecasts regarding Boston Properties’ performance made by the analysts listed above do not represent the opinions, estimates or forecasts of Boston Properties or its management. Boston Properties does not by its reference above imply its endorsement of or concurrence with any information, conclusions or recommendations made by any of such analysts.

 

5

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Boston Properties, Inc.

Second Quarter 2008

 

FINANCIAL HIGHLIGHTS

(unaudited and in thousands, except per share amounts)

This section includes non-GAAP financial measures, which are accompanied by what we consider the most directly comparable financial measures calculated and presented in accordance with GAAP. Quantitative reconciliations of the differences between the non-GAAP financial measures presented and the most directly comparable GAAP financial measures are shown on pages 9 through 11. A description of the non-GAAP financial measures we present and a statement of the reasons why management believes the non-GAAP measures provide useful information to investors about the Company’s financial condition and results of operations can be found on page 50.

 

		Three Months Ended
		30-Jun-08				31-Mar-08				31-Dec-07				30-Sep-07				30-Jun-07
Income Items:
Revenue		$	368,520			$	370,559			$	380,790			$	368,584			$	372,213
Straight-line rent (SFAS 13) (1)		$	11,220			$	13,073			$	9,256			$	8,245			$	8,851
Fair value lease revenue (SFAS 141) (1) (2)		$	7,105			$	1,372			$	1,341			$	1,232			$	1,280
Company share of funds from operations from unconsolidated joint ventures		$	9,011			$	4,305			$	2,879			$	3,379			$	3,915
Lease termination fees (included in revenue) (1)		$	1,509			$	4,005			$	2,881			$	742			$	729
Capitalized interest		$	9,736			$	9,485			$	10,419			$	8,375			$	7,944
Capitalized wages		$	3,012			$	3,211			$	3,271			$	2,603			$	2,814
Operating Margins [(rental revenue—rental expense)/rental revenue] (3)			67.7	%			67.8	%			67.5	%			67.6	%			67.8	%
Net income available to common shareholders		$	79,534			$	88,461			$	123,790			$	242,370			$	102,344
Funds from operations (FFO) available to common shareholders after a supplemental adjustment to exclude losses from early extinguishments of debt associated with the sales of real estate (4)		$	145,001			$	134,723			$	147,534			$	139,054			$	142,944
FFO per share after a supplemental adjustment to exclude losses from early extinguishments of debt associated with the sales of real estate—diluted		$	1.19			$	1.11			$	1.22			$	1.15			$	1.18
Net income available to common shareholders per share—basic		$	0.66			$	0.74			$	1.04			$	2.02			$	0.86
Net income available to common shareholders per share—diluted		$	0.66			$	0.73			$	1.02			$	1.99			$	0.84
Dividends per common share (5)		$	0.68			$	0.68			$	6.66			$	0.68			$	0.68
Funds available for distribution to common shareholders and common unitholders (FAD) (6)		$	141,106			$	119,831			$	119,993			$	123,557			$	134,197
Ratios:
Interest Coverage Ratio (excluding capitalized interest)—cash basis (7)			3.53				3.33				3.50				3.30				3.24
Interest Coverage Ratio (including capitalized interest)—cash basis (7)			3.06				2.91				3.03				2.94				2.92
FFO Payout Ratio (8)			57.14	%			61.26	%			55.74	%			59.13	%			57.63	%
FAD Payout Ratio (9)			67.92	%			79.92	%			79.59	%			77.07	%			70.94	%
		30-Jun-08				31-Mar-08				31-Dec-07				30-Sep-07				30-Jun-07
Capitalization:
Common Stock Price @ Quarter End		$	90.22			$	92.07			$	91.81			$	103.90			$	102.13
Equity Value @ Quarter End		$	12,851,568			$	13,090,697			$	13,028,757			$	14,720,136			$	14,468,349
Total Consolidated Debt		$	5,503,889			$	5,527,832			$	5,492,166			$	5,409,268			$	5,619,602
Total Consolidated Market Capitalization		$	18,355,457			$	18,618,529			$	18,520,923			$	20,129,404			$	20,087,951
Consolidated Debt/Total Consolidated Market Capitalization (10)			29.99	%			29.69	%			29.65	%			26.87	%			27.97	%
BXP's Share of Joint Venture Debt		$	1,200,731			$	236,648			$	202,471			$	236,111			$	226,161
Total Combined Debt		$	6,704,620			$	5,764,480			$	5,694,637			$	5,645,379			$	5,845,763
Total Combined Market Capitalization (11)		$	19,556,189			$	18,855,177			$	18,723,394			$	20,365,515			$	20,314,112
Combined Debt/Combined Total Market Capitalization (11) (12)			34.28	%			30.57	%			30.41	%			27.72	%			28.78	%

 

(1)	Includes the Company’s share of unconsolidated joint venture amounts. For additional detail, see page 18.

(2)	Represents the net adjustment for above- and below-market leases that are being amortized over the terms of the respective leases in place at the property acquisition dates.

(3)

Rental Expense consists of operating expenses and real estate taxes. Amounts are exclusive of the gross up of reimbursable electricity and other amounts totaling $9,860, $9,180, $8,403, $9,556 and $8,755 for the three months ended June 30, 2008, March 31, 2008, December 31, 2007, September 30, 2007 and June 30, 2007, respectively.

(4)

For a quantitative reconciliation of the differences between FFO after a supplemental adjustment to exclude losses from early extinguishments of debt associated with the sales of real estate and net income available to common shareholders, see page 9. The supplemental adjustment is only applicable for the three months ended September 30, 2007.

(5)	For the three months ended December 31, 2007, dividends per share includes the $5.98 per common share special dividend paid on January 30, 2008.

(6)	For a quantitative reconciliation of the differences between FAD and FFO after a supplemental adjustment to exclude losses from early extinguishments of debt associated with the sales of real estate, see page 11.

(7)	For additional detail, see page 11.

(8)

Dividends per common share divided by FFO per share after a supplemental adjustment to exclude losses from early extinguishments of debt associated with the sales of real estate—diluted. For the three months ended December 31, 2007, excludes the $5.98 per share special dividend paid on January 30, 2008.

(9)	Gross dividends to common shareholders plus distributions to common Operating Partnership unitholders divided by FAD. For the three months ended December 31, 2007, excludes the $5.98 per share special dividend paid on January 30, 2008.

(10)	For disclosures relating to our definition of Consolidated Debt to Total Consolidated Market Capitalization, see page 50.

(11)	For additional detail, see page 13.

(12)	For disclosures relating to our definition of Combined Debt to Total Combined Market Capitalization, see page 50.

 

6

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Boston Properties, Inc.

Second Quarter 2008

 

CONSOLIDATED BALANCE SHEETS

(unaudited and in thousands)

 

		30-Jun-08				31-Mar-08				31-Dec-07				30-Sep-07				30-Jun-07
ASSETS
Real estate		$	9,277,500			$	9,231,874			$	9,077,528			$	8,961,830			$	9,037,468
Development in progress			735,372				619,165				700,762				629,138				584,620
Land held for future development			253,313				266,555				249,999				212,801				189,698
Real estate held for sale			—				—				221,606	(1)			—				—
Less accumulated depreciation			(1,647,145	)			(1,589,686	)			(1,531,707	)			(1,488,077	)			(1,474,771	)
Total real estate			8,619,040				8,527,908				8,718,188				8,315,692				8,337,015
Cash and cash equivalents			112,110				794,643				1,506,921				1,894,198				1,885,318
Cash held in escrows			59,644				57,640				186,839				17,835				22,665
Marketable securities			20,372				23,404				22,584				—				—
Tenant and other receivables, net			42,116				34,580				58,074				43,199				48,398
Note receivable			270,000	(2)			100,000	(3)			—				—				—
Accrued rental income, net			326,149				313,011				300,594				299,082				296,424
Deferred charges, net			305,287				294,002				287,199				257,469				264,664
Prepaid expenses and other assets			26,511				51,357				30,566				55,658				47,174
Investments in unconsolidated joint ventures			606,696				152,942				81,672				102,488				92,944
Total assets		$	10,387,925			$	10,349,487			$	11,192,637			$	10,985,621			$	10,994,602
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Mortgage notes payable		$	2,535,496			$	2,760,620			$	2,726,127			$	2,644,393			$	2,855,889
Unsecured senior notes, net of discount			1,472,141				1,472,027				1,471,913				1,471,801				1,471,691
Unsecured exchangeable senior notes, net of discount			1,296,252				1,295,185				1,294,126				1,293,074				1,292,022
Unsecured line of credit			200,000				—				—				—				—
Accounts payable and accrued expenses			183,192				128,769				145,692				133,714				123,910
Dividends and distributions payable			96,451				105,150				944,870				96,152				96,192
Accrued interest payable			55,979				47,355				54,487				46,671				59,105
Other liabilities (4)			187,104				221,432				232,705				198,314				201,406
Total liabilities			6,026,615				6,030,538				6,869,920				5,884,119				6,100,215
Commitments and contingencies			—				—				—				—				—
Minority interests			663,313				654,512				653,892				753,620				731,043
Stockholders’ Equity:
Excess stock, $.01 par value, 150,000,000 shares authorized, none issued or outstanding			—				—				—				—				—
Preferred stock, $.01 par value, 50,000,000 shares authorized, none issued or outstanding			—				—				—				—				—
Common stock, $.01 par value, 250,000,000 shares authorized, 119,756,240, 119,669,070, 119,502,485, 119,253,212 and 119,028,081 outstanding, respectively			1,198				1,197				1,195				1,193				1,190
Additional paid-in capital			3,341,887				3,317,643				3,305,219				3,289,760				3,263,797
Earnings in excess of dividends			399,502				401,410				394,324				1,065,993				904,417
Treasury common stock, at cost			(2,722	)			(2,722	)			(2,722	)			(2,722	)			(2,722	)
Accumulated other comprehensive loss			(41,868	)			(53,091	)			(29,191	)			(6,342	)			(3,338	)
Total stockholders’ equity			3,697,997				3,664,437				3,668,825				4,347,882				4,163,344
Total liabilities and stockholders’ equity		$	10,387,925			$	10,349,487			$	11,192,637			$	10,985,621			$	10,994,602

 

(1)	At December 31, 2007, Real Estate Held for Sale consisted of the Mountain View Research Park and Technology Park properties, which were transferred into the Company’s Value-Added Fund on January 7, 2008.

(2)	At June 30, 2008, Note receivable represents a partner loan from the Company to the joint venture that owns the General Motors Building (See page 17).

(3)

Represents the balance of the promissory note due from the Value-Added Fund related to the transfer by the Company of the Mountain View properties to the Value-Added Fund in January 2008. The promissory note bore interest at a rate of 7% per annum and was scheduled to mature in October 2008, subject to extension at the option of the Value-Added Fund until April 2009. The Value-Added Fund obtained third-party financing secured by the Mountain View Research Park properties on May 30, 2008 and repaid the remaining outstanding balance on the note to the Company.

(4)

At June 30, 2008, March 31, 2008, December 31, 2007, September 30, 2007 and June 30, 2007, Other Liabilities included approximately $1.8 million, $2.3 million, $26.1 million, $26.5 million and $26.9 million and approximately $3.1 million, $4.6 million, $6.1 million, $8.4 million and $10.7 million consisting of the master lease and revenue support obligations, respectively, related to the sale of 280 Park Avenue, approximately $25.0 million, $24.8 million, $24.4 million, $24.0 million and $23.7 million, respectively, related to the redemption of the outside members’ equity interests in the entity that owns Citigroup Center and the fair values of the Company’s interest rate hedging contracts of approximately $8.2 million, $53.2 million, $25.7 million, $3.5 million and $0, respectively.

 

7

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Boston Properties, Inc.

Second Quarter 2008

 

CONSOLIDATED INCOME STATEMENTS

(in thousands, except for per share amounts)

(unaudited)

 

		Three Months Ended
		30-Jun-08				31-Mar-08				31-Dec-07				30-Sep-07				30-Jun-07
Revenue:
Rental
Base Rent		$	281,072			$	281,394			$	277,088			$	268,277			$	268,272
Recoveries from tenants			49,848				48,884				46,926				44,934				46,783
Parking and other			17,317				16,501				16,845				16,328				16,488
Total rental revenue			348,237				346,779				340,859				329,539				331,543
Hotel revenue			9,708				6,524				13,121				8,646				9,335
Development and management services			6,460				5,477				5,378				5,318				5,130
Interest and other (1)			4,115				11,779				21,432				25,081				26,205
Total revenue			368,520				370,559				380,790				368,584				372,213
Expenses:
Operating			71,227				70,369				68,610				68,647				68,797
Real estate taxes			47,876				47,364				47,855				44,859				44,201
Hotel operating			6,449				5,897				9,059				6,275				6,417
General and administrative (1) (2)			17,467				19,588				16,594				20,189				16,291
Interest (3)			64,564				67,839				68,289				69,929				73,743
Depreciation and amortization			74,389				74,671				71,421				70,916				73,921
Net derivative losses			(257	)			3,788				—				—				—
Losses from early extinguishments of debt (4)			—				—				—				2,695				—
Total expenses			281,715				289,516				281,828				283,510				283,370
Income before income from unconsolidated joint ventures			86,805				81,043				98,962				85,074				88,843
Minority interests in property partnerships			(420	)			(625	)			(84	)			—				—
Income from unconsolidated joint ventures (5)			1,855				1,042				805				1,390				17,268
Income before minority interest in Operating Partnership			88,240				81,460				99,683				86,464				106,111
Minority interest in Operating Partnership (6)			(14,009	)			(13,024	)			(23,181	)			(13,946	)			(16,840	)
Income before gains on sales of real estate			74,231				68,436				76,502				72,518				89,271
Gains on sales of real estate, net of minority interest			5,303				20,025				—				168,495				—
Income before discontinued operations			79,534				88,461				76,502				241,013				89,271
Income from discontinued operations, net of minority interest			—				—				862				1,357				1,357
Gains on sales of real estate from discontinued operations, net of minority interest			—				—				46,426				—				11,716
Net income available to common shareholders		$	79,534			$	88,461			$	123,790			$	242,370			$	102,344
INCOME PER SHARE OF COMMON STOCK (EPS)
Net income available to common shareholders per share—basic		$	0.66			$	0.74			$	1.04			$	2.02			$	0.86
Net income available to common shareholders per share—diluted		$	0.66			$	0.73			$	1.02			$	1.99			$	0.84

 

(1)

Interest and other includes $(160), $(597), $(294), $31 and $471, and general and administrative expenses includes $(138), $(657), $(245), $43 and $448 for the three months ended June 30, 2008, March 31, 2008, December 31, 2007, September 30, 2007 and June 30, 2007, respectively, related to the Company’s deferred compensation plan.

(2)	General and administrative expenses includes a write-off of approximately $1.4 million and $4.5 million of costs related to abandoned development projects for the three months ended March 31, 2008 and September 30, 2007, respectively.

(3)	Interest expense is reported net of capitalized interest of $9,736, $9,485, $10,419, $8,375 and $7,944 for the three months ended June 30, 2008, March 31, 2008, December 31, 2007, September 30, 2007 and June 30, 2007, respectively.

(4)	Includes an approximately $2.7 million loss from the early extinguishment of debt associated with the sale of real estate for the three months ended September 30, 2007.

(5)	Includes our share of the gain on sale of Worldgate Plaza totaling approximately $15.5 million for the three months ended June 30, 2007.

(6)

Equals minority interest share of 14.51%, 14.56%, 14.58%, 14.62% and 14.62% of income before minority interest in Operating Partnership after deduction for preferred distributions for the three months ended June 30, 2008, March 31, 2008, December 31, 2007, September 30, 2007 and June 30, 2007, respectively.

Certain prior period amounts have been reclassified to conform to current period presentation.

 

8

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Boston Properties, Inc.

Second Quarter 2008

 

FUNDS FROM OPERATIONS (FFO)

(in thousands, except for per share amounts)

(unaudited)

 

		Three Months Ended
		30-Jun-08			31-Mar-08			31-Dec-07				30-Sep-07			30-Jun-07
Net income available to common shareholders		$	79,534		$	88,461		$	123,790			$	242,370		$	102,344
Add:
Minority interest in Operating Partnership			14,009			13,024			23,181				13,946			16,840
Minority interests in property partnerships			420			625			84				—			—
Less:
Income from unconsolidated joint ventures			1,855			1,042			805				1,390			17,268
Gains on sales of real estate, net of minority interest			5,303			20,025			—				168,495			—
Income from discontinued operations, net of minority interest			—			—			862				1,357			1,357
Gains on sales of real estate from discontinued operations, net of minority interest			—			—			46,426				—			11,716
Income before minority interests and income from unconsolidated joint ventures			86,805			81,043			98,962				85,074			88,843
Add:
Real estate depreciation and amortization (1)			82,838			77,619			73,306				73,195			76,264
Income from discontinued operations			—			—			1,009				1,589			1,589
Income from unconsolidated joint ventures			1,855			1,042			805				1,390			1,815	(2)
Less:
Minority property partnerships’ share of funds from operations			928			1,111			437				—			—
Preferred distributions			949			905			926	(3)			1,054			1,084
Funds from operations (FFO)			169,621			157,688			172,719				160,194			167,427
Add:
Losses from early extinguishments of debt associated with the sales of real estate			—			—			—				2,675			—
FFO after a supplemental adjustment to exclude losses from early extinguishments of debt associated with the sales of real estate			169,621			157,688			172,719				162,869			167,427
Less:
Minority interest in Operating Partnership’s share of funds from operations after a supplemental adjustment to exclude losses from early extinguishments of debt associated with the sales of real estate			24,620			22,965			25,185				23,815			24,483
FFO available to common shareholders after a supplemental adjustment to exclude losses from early extinguishments of debt associated with the sales of real estate (4)		$	145,001		$	134,723		$	147,534			$	139,054		$	142,944
FFO per share after a supplemental adjustment to exclude losses from early extinguishments of debt associated with the sales of real estate—basic		$	1.21		$	1.13		$	1.24			$	1.17		$	1.20
FFO per share—basic		$	1.21		$	1.13		$	1.24			$	1.15		$	1.20
Weighted average shares outstanding—basic			119,753			119,536			119,249				119,010			118,961
FFO per share after a supplemental adjustment to exclude losses from early extinguishments of debt associated with the sales of real estate—diluted		$	1.19		$	1.11		$	1.22			$	1.15		$	1.18
FFO per share—basic		$	1.19		$	1.11		$	1.22			$	1.13		$	1.18
Weighted average shares outstanding—diluted			122,776			122,483			122,338				122,298			122,660

 

(1)

Real estate depreciation and amortization consists of depreciation and amortization from the consolidated statements of operations of $74,389, $74,671, $71,421, $70,916 and $73,921, our share of unconsolidated joint venture real estate depreciation and amortization of $8,972, $3,263, $2,074, $1,989 and $2,085 and depreciation and amortization from discontinued operations of $0, $0, $234, $700 and $700, less corporate related depreciation of $523, $315, $423, $410 and $442 for the three months ended June 30, 2008, March 31, 2008, December 31, 2007, September 30, 2007 and June 30, 2007, respectively.

(2)	Excludes our share of the gain on sale of Worldgate Plaza totaling approximately $15.5 million for the three months ended June 30, 2007.

(3)	Excludes approximately $8.7 million for the three months ended December 31, 2007 of income allocated to the holders of Series Two Preferred Units to account for their right to participate on an as-converted basis in the special dividend that followed previously completed sales of real estate.

(4)	Based on weighted average shares for the quarter. Company’s share for the quarter ended June 30, 2008, March 31, 2008, December 31, 2007, September 30, 2007 and June 30, 2007 was 85.49%, 85.44%, 85.42%, 85.38% and 85.38%, respectively.

 

9

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Boston Properties, Inc.

Second Quarter 2008

 

RECONCILIATION TO DILUTED FUNDS FROM OPERATIONS

(in thousands, except for per share amounts)

(unaudited)

 

		June 30, 2008					March 31, 2008					December 31, 2007						September 30, 2007					June 30, 2007
		Income (Numerator)			Shares (Denominator)		Income (Numerator)			Shares (Denominator)		Income (Numerator)				Shares (Denominator)		Income (Numerator)			Shares (Denominator)		Income (Numerator)			Shares (Denominator)
Basic FFO after a supplemental adjustment to exclude losses from early extinguishments of debt associated with the sales of real estate		$	169,621		140,086		$	157,688		139,911		$	172,719			139,605		$	162,869		139,392		$	167,427		139,336
Effect of Dilutive Securities
Convertible Preferred Units			949		1,461			905		1,461			926	(1)		1,460			1,054		1,644			1,084		1,676
Stock Options and Exchangeable Notes			—		1,562			—		1,486			—			1,629			—		1,645			—		2,023
Diluted FFO after a supplemental adjustment to exclude losses from early extinguishments of debt associated with the sales of real estate		$	170,570		143,109		$	158,593		142,858		$	173,645			142,694		$	163,923		142,681		$	168,511		143,035
Less:
Minority interest in Operating Partnership’s share of diluted funds from operations after a supplemental adjustment to exclude losses from early extinguishments of debt associated with the sales of real estate			24,235		20,333			22,620		20,375			24,772			20,356			23,416		20,382			24,004		20,375
Company’s share of diluted FFO after a supplemental adjustment to exclude losses from early extinguishments of debt associated with the sales of real estate (2)		$	146,335		122,776		$	135,973		122,483		$	148,873			122,338		$	140,507		122,299		$	144,507		122,660
FFO per share after a supplemental adjustment to exclude losses from early extinguishments of debt associated with the sales of real estate - basic		$	1.21				$	1.13				$	1.24					$	1.17				$	1.20
FFO per share after a supplemental adjustment to exclude losses from early extinguishments of debt associated with the sales of real estate - diluted		$	1.19				$	1.11				$	1.22					$	1.15				$	1.18

 

(1)	Excludes approximately $8.7 million for the three months ended December 31, 2007 of income allocated to the holders of Series Two Preferred Units to account for their right to participate on an as-converted basis in the special dividend that followed previously completed sales of real estate.

(2)	Based on weighted average diluted shares for the quarter. Company’s share for the quarter ended June 30, 2008, March 31, 2008, December 31, 2007, September 30, 2007 and June 30, 2007 was 85.79%, 85.74%, 85.73%, 85.72% and 85.76%, respectively.

 

10

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Boston Properties, Inc.

Second Quarter 2008

 

Funds Available for Distribution (FAD)

(in thousands)

 

		Three Months Ended
		30-Jun-08				31-Mar-08				31-Dec-07				30-Sep-07				30-Jun-07
Basic FFO after a supplemental adjustment to exclude losses from early extinguishments of debt associated with the sales of real estate (see page 9)		$	169,621			$	157,688			$	172,719			$	162,869			$	167,427
2nd generation tenant improvements and leasing commissions			(10,281	)			(26,600	)			(28,553	)			(22,192	)			(19,024	)
Straight-line rent (1)			(11,220	)			(13,073	)			(9,256	)			(8,245	)			(8,851	)
Recurring capital expenditures			(5,075	)			(4,296	)			(16,217	)			(10,498	)			(6,676	)
Fair value interest adjustment (1)			(627	)			(809	)			(789	)			(725	)			(451	)
Fair value lease revenue (SFAS 141) (1)			(7,105	)			(1,372	)			(1,341	)			(1,232	)			(1,280	)
Hotel improvements, equipment upgrades and replacements			(289	)			(993	)			(67	)			(214	)			(565	)
Non real estate depreciation			523				315				423				410				442
Stock-based compensation			5,631				5,183				3,040				3,047				3,058
Net derivative losses			(257	)			3,788				—				—				—
Partners’ share of joint venture 2nd generation tenant improvement and leasing commissions			185				—				34				337				117
Funds available for distribution to common shareholder and common unitholders (FAD)		$	141,106			$	119,831			$	119,993			$	123,557			$	134,197

Interest Coverage Ratios

(in thousands, except for ratio amounts)

 

		Three Months Ended
		30-Jun-08				31-Mar-08				31-Dec-07				30-Sep-07				30-Jun-07
Excluding Capitalized Interest
Income before minority interests and income from unconsolidated joint ventures		$	86,805			$	81,043			$	98,962			$	85,074			$	88,843
Interest expense			64,564				67,839				68,289				69,929				73,743
Losses from early extinguishments of debt associated with the sales of real estate			—				—				—				2,675				—
Net derivative losses			(257	)			3,788				—				—				—
Depreciation and amortization expense			74,389				74,671				71,421				70,916				73,921
Depreciation from joint ventures			8,972				3,263				2,074				1,989				2,085
Income from unconsolidated joint ventures			1,855				1,042				805				1,390				1,815
Stock-based compensation			5,631				5,183				3,040				3,047				3,058
Discontinued operations—depreciation expense			—				—				234				700				700
Discontinued operations			—				—				1,009				1,589				1,589
Straight-line rent (1)			(11,220	)			(13,073	)			(9,256	)			(8,245	)			(8,851	)
Fair value lease revenue (SFAS 141) (1)			(7,105	)			(1,372	)			(1,341	)			(1,232	)			(1,280	)
Subtotal			223,634				222,384				235,237				227,832				235,623
Divided by:
Interest expense (1)			63,364				66,833				67,294				69,012				72,829
Interest Coverage Ratio			3.53				3.33				3.50				3.30				3.24
Including Capitalized Interest
Income before minority interests and income from unconsolidated joint ventures		$	86,805			$	81,043			$	98,962			$	85,074			$	88,843
Interest expense			64,564				67,839				68,289				69,929				73,743
Losses from early extinguishments of debt associated with the sales of real estate			—				—				—				2,675				—
Net derivative losses			(257	)			3,788				—				—				—
Depreciation and amortization expense			74,389				74,671				71,421				70,916				73,921
Depreciation from joint ventures			8,972				3,263				2,074				1,989				2,085
Income from unconsolidated joint ventures			1,855				1,042				805				1,390				1,815
Stock-based compensation			5,631				5,183				3,040				3,047				3,058
Discontinued operations—depreciation expense			—				—				234				700				700
Discontinued operations			—				—				1,009				1,589				1,589
Straight-line rent (1)			(11,220	)			(13,073	)			(9,256	)			(8,245	)			(8,851	)
Fair value lease revenue (SFAS 141) (1)			(7,105	)			(1,372	)			(1,341	)			(1,232	)			(1,280	)
Subtotal			223,634				222,384				235,237				227,832				235,623
Divided by:
Interest expense (2) (3)			73,100				76,318				77,713				77,387				80,773
Interest Coverage Ratio			3.06				2.91				3.03				2.94				2.92

 

(1)	Includes the Company’s share of unconsolidated joint venture amounts.

(2)	Excludes amortization of financing costs of $1,200, $1,006, $995, $917 and $914 for the three months ended June 30, 2008, March 31, 2008, December 31, 2007, September 30, 2007 and June 30, 2007, respectively.

(3)	Includes capitalized interest of $9,736, $9,485, $10,419, $8,375 and $7,944 for the three months ended June 30, 2008, March 31, 2008, December 31, 2007, September 30, 2007 and June 30, 2007, respectively.

 

11

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Boston Properties, Inc.

Second Quarter 2008

 

DISCONTINUED OPERATIONS

(in thousands, unaudited)

Effective January 1, 2002, the Company adopted the provisions of SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” The Company’s application of SFAS No. 144 results in the presentation of the net operating results of qualifying properties sold or held for sale during the applicable period as income from discontinued operations for all periods presented. The following table summarizes income from discontinued operations (net of minority interest) for the three months ended June 30, 2008, March 31, 2008, December 31, 2007, September 30, 2007, and June 30, 2007, respectively.

 

		Three Months Ended
		30-Jun-08			31-Mar-08			31-Dec-07			30-Sep-07			30-Jun-07
Total Revenue (1)		$	—		$	—		$	1,612		$	2,923		$	2,963
Expenses:
Operating			—			—			369			634			674
Hotel operating			—			—			—			—			—
Depreciation and amortization			—			—			234			700			700
Total Expenses			—			—			603			1,334			1,374
Income before minority interest in Operating Partnership			—			—			1,009			1,589			1,589
Minority interest in Operating Partnership			—			—			147			232			232
Income from discontinued operations (net of minority interest)		$	—		$	—		$	862		$	1,357		$	1,357
Properties (2):									Orbital Sciences Campus			Orbital Sciences Campus			Orbital Sciences Campus
									Broad Run, Building E			Broad Run, Building E			Broad Run, Building E
															Newport Office Park

 

(1)	The impact of the straight-line rent adjustment increased revenue by $0, $0, $34, $68 and $106 for the three months ended June 30, 2008, March 31, 2008, December 31, 2007, September 30, 2007 and June 30, 2007, respectively.

(2)	Discontinued operations does not include the operations of Democracy Center due to the Company’s continuing involvement in the management, for a fee, of this property subsequent to the sale through an agreement with the buyer.

 

12

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Boston Properties, Inc.

Second Quarter 2008

 

CAPITAL STRUCTURE

Consolidated Debt

(in thousands)

 

		Aggregate Principal
		June 30, 2008
Mortgage Notes Payable		$	2,535,496
Unsecured Line of Credit			200,000
Unsecured Senior Notes, net of discount			1,472,141
Unsecured Exchangeable Senior Notes			1,296,252
Total Consolidated Debt		$	5,503,889

Boston Properties Limited Partnership Unsecured Senior Notes

 

Settlement Date		5/22/03				3/18/03				1/17/03				12/13/02				Total/ Average
Principal Amount		$	250,000			$	300,000			$	175,000			$	750,000			$	1,475,000
Yield (on issue date)			5.075	%			5.636	%			6.280	%			6.296	%			5.95	%
Coupon			5.000	%			5.625	%			6.250	%			6.250	%			5.91	%
Discount			99.329	%			99.898	%			99.763	%			99.650	%			99.66	%
Ratings:
Moody’s			Baa2 (stable	)			Baa2 (stable	)			Baa2 (stable	)			Baa2 (stable	)
S&P			A-(stable	)			A-(stable	)			A-(stable	)			A-(stable	)
Fitch			BBB (stable	)			BBB (stable	)			BBB (stable	)			BBB (stable	)
Maturity Date			6/1/2015				4/15/2015				1/15/2013				1/15/2013
Discount		$	1,088			$	196			$	236			$	1,339				2,859
Unsecured Senior Notes, net of discount		$	248,912			$	299,804			$	174,764			$	748,661			$	1,472,141
Boston Properties Limited Partnership Unsecured Exchangeable Senior Notes
Settlement Date		2/6/2007				4/6/2006
Principal Amount		$	862,500			$	450,000											$	1,312,500
Yield (on issue date)			3.438	%			3.750	%											3.545	%
Coupon			2.875	%			3.750	%
Exchange Rate			7.0430	(1)			10.0066	(2)
First Optional Redemption Date			2/20/2012				5/18/2013
Maturity Date			2/15/2037				5/15/2036
Discount			16,248				—												16,248
Unsecured Senior Exchangeable Notes		$	846,252			$	450,000											$	1,296,252

 

(1)

In connection with the special dividend of $5.98 per share of common stock declared on December 17, 2007, the exchange rate was adjusted from 6.6090 to 7.0430 shares per $1,000 principal amount of notes effective as of December 31, 2007, resulting in an exchange price of approximately $141.98 per share of Boston Properties, Inc.’s common stock.

(2)

In connection with the special dividend of $5.98 per share of common stock declared on December 17, 2007, the exchange rate was adjusted from 9.3900 to 10.0066 shares per $1,000 principal amount of notes effective as of December 31, 2007, resulting in an exchange price of approximately $99.93 per share of Boston Properties, Inc.’s common stock.

Equity

(in thousands)

 

		Shares/Units Outstanding as of 6/30/08		Common Stock Equivalents			Equivalent (3)
Common Stock		119,756		119,756	(4)		$	10,804,386
Common Operating Partnership Units		21,230		21,230	(5)			1,915,371
Series Two Preferred Operating Partnership Units		1,113		1,461				131,811
Total Equity				142,447			$	12,851,568
Total Consolidated Debt							$	5,503,889
Total Consolidated Market Capitalization								18,355,457
BXP’s Share of Joint Venture Debt								1,200,731	(6)
Total Combined Debt								6,704,620
Total Combined Market Capitalization								19,556,189

 

(3)	Value based on June 30, 2008 closing price of $90.22 per share of common stock.

(4)	Includes 35 shares of restricted stock.

(5)	Includes 946 long-term incentive plan units, but excludes 1,086 unvested outperformance plan units.

(6)	Excludes the Company’s share ($270,000) of the aggregate of $450,000 of loans made to the joint venture that owns the General Motors Building by its partners.

 

13

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Boston Properties, Inc.

Second Quarter 2008

 

DEBT ANALYSIS

Debt Maturities and Principal Payments

(in thousands)

 

		2008				2009				2010				2011				2012				Thereafter				Total
Floating Rate Debt		$	—			$	168,468			$	207,744			$	53,173			$	—			$	—			$	429,385
Fixed Rate Debt			306,209				95,442				132,870				545,153				945,924				3,048,906				5,074,504
Total Consolidated Debt		$	306,209			$	263,910			$	340,614			$	598,326			$	945,924			$	3,048,906			$	5,503,889
GAAP Weighted Average Floating Rate Debt			—				5.28	%			3.57	%			4.12	%			—				—				4.31	%
GAAP Weighted Average Fixed Rate Debt			6.84	%			6.38	%			7.86	%			7.02	%			3.69	%			5.55	%			5.52	%
Total GAAP Weighted Average Rate			6.84	%			5.68	%			5.24	%			6.76	%			3.69	%			5.55	%			5.42	%

Unsecured Debt

Unsecured Line of Credit - Matures August 3, 2010

(in thousands)

 

														Remaining
						Outstanding				Letters of				Capacity
		Facility				@ 6/30/2008				Credit				@ 6/30/2008
		$	923,300	(1)		$	200,000			$	91,684			$	631,616
Unsecured and Secured Debt Analysis
						Stated Weighted				GAAP Weighted				Weighted Average
		% of Total Debt				Average Rate				Average Rate				Maturity
Unsecured Debt			53.93	%			4.70	%			4.79	%			4.8 years
Secured Debt			46.07	%			6.31	%			6.16	%			5.0 years
Total Consolidated Debt			100.00	%			5.44	%			5.42	%			4.8 years
Floating and Fixed Rate Debt Analysis
						Stated Weighted				GAAP Weighted				Weighted Average
		% of Total Debt				Average Rate (2)				Average Rate				Maturity
Floating Rate Debt			7.80	%			3.92	% (2)			4.31	% (2)			1.9 years
Fixed Rate Debt			92.20	%			5.57	%			5.52	%			5.0 years
Total Consolidated Debt			100.00	%			5.44	%			5.42	%			4.8 years

Interest Rate Hedging Instruments (3)

(in thousands)

 

					Weighted Average			Settlement
		Notional Amount			10 Year Treasury Rate			Date
Treasury Locks		$	325,000		4.74	%		4/1/2008	(4)
Treasury Locks			50,000		4.28	%		7/31/2008
Forward-starting interest rate swaps			150,000		4.51	%		7/31/2008
Total		$	525,000		4.63	%

 

(1)	Effective July 21, 2008, the total commitment under the Line of Credit was increased to $1.0 billion.

(2)	The Company has entered into an interest rate swap contract to fix the one-month LIBOR index rate at 4.57% per annum plus a credit spread of 1.25% on a notional amount of $96.7 million. The swap contract went into effect on October 22, 2007 and expires on October 29, 2008.

(3)	The Company has entered into a series of interest rate hedges to lock in the 10-year treasury rate and 10-year swap spread in contemplation of obtaining long-term fixed rate financing to finance or refinance properties in the Company’s existing portfolio.

(4)	On April 1, 2008, the Company cash-settled these Treasury Locks and made cash payments to the counterparties totaling approximately $33.5 million.

 

14

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Boston Properties, Inc.

Second Quarter 2008

 

DEBT MATURITIES AND PRINCIPAL PAYMENTS (1)

(in thousands)

 

Property		2008				2009				2010				2011				2012				Thereafter				Total
599 Lexington Avenue		$	—			$	—			$	—			$	—			$	—			$	750,000			$	750,000
Citigroup Center			4,485				9,453				10,136				456,898				—				—				480,972
Embarcadero Center One and Two			275,824				—				—				—				—				—				275,824
South of Market			—				168,468				—				—				—				—				168,468
505 9th Street			—				—				—				—				—				130,000				130,000
One Freedom Square			1,138				2,375				2,513				2,660				66,093				—				74,779
New Dominion Technology Park, Building Two			—				—				—				—				—				63,000				63,000
202, 206 & 214 Carnegie Center			467				994				56,306				—				—				—				57,767
140 Kendrick Street			785				1,637				1,730				1,828				1,932				48,359				56,271
New Dominion Technology Park, Building One			755				1,595				1,716				1,846				1,987				45,416				53,315
Wisconsin Place Office			—				—				—				53,173				—				—				53,173
1330 Connecticut Avenue			1,240				2,577				2,701				45,021				—				—				51,539
Reservoir Place			939				48,592				—				—				—				—				49,531
Kingstowne Two and Retail			826				1,499				1,585				1,676				1,773				35,064				42,423
10 & 20 Burlington Mall Rd & 91 Hartwell			473				994				1,069				32,524				—				—				35,060
10 Cambridge Center			430				916				29,677				—				—				—				31,023
Sumner Square			353				747				804				865				930				22,896				26,595
Montvale Center			—				—				—				—				25,000				—				25,000
Eight Cambridge Center			385				819				22,911				—				—				—				24,115
1301 New York Avenue			908				21,628				—				—				—				—				22,536
Kingstowne One			345				624				659				696				736				17,031				20,091
University Place			471				992				1,063				1,139				1,221				14,999				19,885
Bedford Business Park			16,385				—				—				—								—				16,385
Democracy Tower (formerly South of Market - Phase II)			—				—				7,744				—				—				—				7,744
			306,209				263,910				140,614				598,326				99,672				1,126,765				2,535,496
Unsecured Senior Notes (2)			—				—				—				—				846,252				1,922,141				2,768,393
Unsecured Line of Credit			—				—				200,000				—				—				—				200,000
		$	306,209			$	263,910			$	340,614			$	598,326			$	945,924			$	3,048,906			$	5,232,175
% of Total Consolidated Debt			5.56	%			4.79	%			6.19	%			10.87	%			17.19	%			55.40	%			100.00	%
Balloon Payments		$	288,977			$	236,712			$	315,083			$	581,870			$	935,958			$	2,873,575			$	5,032,175
Scheduled Amortization		$	17,232			$	27,198			$	225,531			$	16,456			$	9,966			$	175,331			$	471,714

 

(1)	Excludes unconsolidated joint ventures.

(2)	For our unsecured exchangeable notes, amounts are included in the year in which the first optional redemption date occurs rather than their stated maturity dates.

 

15

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Boston Properties, Inc.

Second Quarter 2008

 

Senior Unsecured Debt Covenant Compliance Ratios

(in thousands)

In the fourth quarter of 2002, the Company’s operating partnership (Boston Properties Limited Partnership) received investment grade ratings on its senior unsecured debt securities and thereafter issued unsecured notes. The notes were issued under an indenture, dated as of December 13, 2002, by and between Boston Properties Limited Partnership and The Bank of New York, as trustee, as supplemented, which, among other things, requires us to comply with the following limitations on incurrence of debt: Limitation on Outstanding Debt; Limitation on Secured Debt; Ratio of Annualized Consolidated EBITDA to Annualized Interest Expense; and Maintenance of Unencumbered Assets. Compliance with these restrictive covenants requires us to apply specialized terms the meanings of which are described in detail in our filings with the SEC, and to calculate ratios in the manner prescribed by the indenture.

This section presents such ratios as of June 30, 2008 to show that the Company’s operating partnership was in compliance with the terms of the indenture, as amended, which has been filed with the SEC. This section also presents certain other indenture-related data which we believe assists investors in the Company’s unsecured debt securities. Management is not presenting these ratios and the related calculations for any other purpose or for any other period, and is not intending for these measures to otherwise provide information to investors about the Company’s financial condition or results of operations. Investors should not rely on these measures other than for purposes of testing our compliance with the indenture.

 

		June 30, 2008
Total Assets:
Capitalized Property Value (1)		$	13,779,832
Cash and Cash Equivalents			112,110
Investments in Marketable Securities			20,372
Undeveloped Land, at Cost			253,313
Development in Process, at Cost (including Joint Venture %)			1,017,945
Total Assets		$	15,183,572
Unencumbered Assets		$	8,723,417
Secured Debt (Fixed and Variable) (2)		$	2,520,078
Joint Venture Debt			1,200,731
Contingent Liabilities & Letters of Credit			97,930
Unsecured Debt (3)			2,987,500
Total Outstanding Debt		$	6,806,239
Consolidated EBITDA:
Income before minority interests and income from unconsolidated joint ventures (per Consolidated Income Statement)		$	86,605
Add: Interest Expense (per Consolidated Income Statement)			64,564
Add: Depreciation and Amortization (per Consolidated Income Statement)			74,389
Add: Loss from early extinguishment of debt			—
EBITDA			225,758
Add: Company share of unconsolidated joint venture EBITDA			17,742
Consolidated EBITDA		$	243,500
Adjusted Interest Expense:
Interest Expense (per Consolidated Income Statement)		$	64,564
Add: Company share of unconsolidated joint venture interest expense			7,544
Less: Amortization of financing costs			(1,200	)
Less: Interest expense funded by construction loan draws			(3,422	)
Adjusted Interest Expense		$	67,486

 

		Test			Actual
Covenant Ratios and Related Data
Total Outstanding Debt/Total Assets		Less than 60	%			44.8	%
Secured Debt/Total Assets		Less than 50	%			24.5	%
Interest Coverage (Annualized Consolidated EBITDA to Annualized Interest Expense)		Greater than 1.50x				3.61
Unencumbered Assets/ Unsecured Debt		Greater than 150	%			292.0	%
Unencumbered Consolidated EBITDA					$	157,883
Unencumbered Interest Coverage (Unencumbered Consolidated EBITDA to Unsecured Interest Expense)						4.73
% of unencumbered Consolidated EBITDA to Consolidated EBITDA						64.8	%
# of unencumbered properties						92

 

(1)	Capitalized Property Value is determined for each property and is the greater of (A) annualized EBITDA capitalized at an 8.5% rate for CBD properties and a 9.0% rate for non-CBD properties, and (B) the undepreciated book value as determined under GAAP.

(2)	Excludes Fair Value Adjustment of $15,418

(3)	Excludes Debt Discount of $19,107

 

16

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Boston Properties, Inc.

Second Quarter 2008

 

UNCONSOLIDATED JOINT VENTURE DEBT ANALYSIS (*)

Debt Maturities and Principal Payments by Property

(in thousands)

 

Property		2008				2009				2010				2011				2012				Thereafter				Total
General Motors Building (60%)		$	—			$	—			$	—			$	—			$	—			$	963,600			$	963,600	(1)
Metropolitan Square (51%)			541				1,152				63,437				—				—				—				65,130
Market Square North (50%)			594				1,260				41,549				—				—				—				43,403
901 New York Avenue (25%)			306				635				669				704				742				39,195				42,251
Eighth Avenue and 46th Street (50%)			—				11,800				—				—				—				—				11,800
Annapolis Junction (50%)			—				—				10,128				—				—				—				10,128
Wisconsin Place Retail (5%)			—				—				1,855				—				—				—				1,855
		$	1,441			$	14,847			$	117,638			$	704			$	742			$	1,002,795			$	1,138,167
GAAP Weighted Average Rate			7.40	%			5.96	%			7.63	%			5.27	%			5.27	%			5.28	%			6.71	%
% of Total Debt			0.13	%			1.30	%			10.34	%			0.06	%			0.07	%			88.10	%			100.00	%

Floating and Fixed Rate Debt Analysis

 

		% of Total Debt			Stated Weighted Average Rate (1)			GAAP Weighted Average Rate			Weighted Average Maturity
Floating Rate Debt		2.09	%		4.42	%		4.89	%		1.5 years
Fixed Rate Debt		97.91	%		6.14	%		6.75	%		8.5 years
Total Debt		100.00	%		6.10	%		6.71	%		8.3 years

 

(*)	All amounts represent the Company’s share. Amounts exclude the Value-Added Fund. See page 19 for additional information on debt pertaining to the Value-Added Fund.

(1)	Excludes the Company’s share ($270,000) of the aggregate of $450,000 of loans made to the joint venture by its partners.

 

17

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Boston Properties, Inc.

Second Quarter 2008

 

UNCONSOLIDATED JOINT VENTURES

Balance Sheet Information

(unaudited and in thousands)

as of June 30, 2008

 

		General Motors Building				Market Square North				Metropolitan Square				901 New York Avenue				Wisconsin Place (1)(2)				Annapolis Junction (1)				Value-Added Fund (3)(4)				Eighth Avenue and 46th Street (1)				Combined
Investment (5)		$	718,215	(7)		$	6,233			$	37,568			$	(394	)		$	46,580			$	7,710			$	42,951			$	17,833			$	876,696
Note Receivable (7)			270,000				—				—				—				—				—				—				—				270,000
Net Equity		$	448,215			$	6,233			$	37,568			$	(394	)		$	46,580			$	7,710			$	42,951			$	17,833			$	606,696
Mortgage/Construction loans payable (5)		$	963,600			$	43,403			$	65,130			$	42,251			$	1,855			$	10,128			$	62,564			$	11,800			$	1,200,731
BXP's nominal ownership percentage			60.00	%			50.00	%			51.00	%			25.00	%			23.89	%			50.00	%			36.92	%			50.00	%

Results of Operations

(unaudited and in thousands)

for the three months ended June 30, 2008

 

		General Motors Building				Market Square North				Metropolitan Square				901 New York Avenue				Wisconsin Place (1)(2)				Annapolis Junction (1)				Value-Added Fund (3)(4)				Eighth Avenue and 46th Street (1)			Combined
REVENUE
Rental		$	12,151			$	6,026			$	10,747			$	7,868			$	266			$	—			$	3,820			$	—		$	40,878
Straight-line rent (SFAS 13)			646				(66	)			(148	)			236				—				—				277				—			945
Fair value lease revenue (SFAS 141)			8,645				—				—				—				—				—				1,086				—			9,731
Total revenue			21,442				5,960				10,599				8,104				266				—				5,183				—			51,554
EXPENSES
Operating			5,294				2,296				3,168				2,916				642				7				1,859				—			16,182
NET OPERATING INCOME			16,148				3,664				7,431				5,188				(376	)			(7	)			3,324				—			35,372
Interest			6,312				1,684				2,631				2,221				70				—				2,711				—			15,629
Interest other—partner loans			3,025				—				—				—				—				—				—				—			3,025
Depreciation and amortization			9,786				1,135				1,654				1,562				280				—				3,206				—			17,623
SUBTOTAL			19,123				2,819				4,285				3,783				350				—				5,917				—			36,277
Gains on sale of real estate			—				—				—				—				—				—				—				—			—
Losses from early extinguishment of debt			—				—				—				—				112				—				—							112
NET INCOME/(LOSS)		$	(2,975	)		$	845			$	3,146			$	1,405			$	(838	)		$	(7	)		$	(2,593	)		$	—		$	(1,017	)
BXP's share of net income/(loss)		$	(1,785	)		$	424			$	1,604			$	869	(6)		$	(176	)		$	(4	)		$	(892	)		$	—		$	40
Elimination of inter-entity interest on partner loan			1,815				—				—				—				—				—				—				—			1,815
Income from unconsolidated joint ventures		$	30			$	424			$	1,604			$	869			$	(176	)		$	(4	)		$	(892	)		$	—		$	1,855
BXP's share of depreciation & amortization			5,872				567				844				403				93				—				1,193				—			8,972
BXP's share of Funds from Operations (FFO)		$	5,902			$	991			$	2,448			$	1,272			$	(83	)		$	(4	)		$	301			$	—		$	10,827
BXP's share of net operating income/(loss)		$	9,689			$	1,832			$	3,790			$	1,297			$	(44	)		$	(4	)		$	1,255			$	—		$	17,815

 

(1)	Property is currently not in service (i.e., under construction or undeveloped land).

(2)

Represents the Company’s interest in the joint venture entity that owns the land and infrastructure, as well as a nominal interest in the retail component of the project. The entity that will develop the office component of the project, of which the Company has a 66.67% interest, has been consolidated within the accounts of the Company.

(3)	For additional information on the Value-Added Fund, see page 19. Information presented includes costs which relate to the organization and operations of the Value-Added Fund.

(4)	Represents the Company’s 25% interest in 300 Billerica Road and Circle Star, as well as a 39.5% interest in Mountain View Research Park and Mountain View Technology Park.

(5)	Represents the Company’s share.

(6)	Reflects the changes in the allocation percentages pursuant to the achievement of specified investment return thresholds as provided for in the joint venture agreement.

(7)	Includes the Company’s ($270,000) share of the aggregate of $450,000 of loans made to the joint venture by its partners.

 

18

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Boston Properties, Inc.

Second Quarter 2008

 

Boston Properties Office Value-Added Fund, L.P.

On October 25, 2004, the Company formed Boston Properties Office Value-Added Fund, L.P. (the “Value-Added Fund”), a strategic partnership with third parties, to pursue the acquisition of value-added investments in non-core office assets within the Company’s existing markets. The Value-Added Fund had total equity commitments of $140 million. The Company receives asset management, property management, leasing and redevelopment fees and, if certain return thresholds are achieved, will be entitled to an additional promoted interest.

On January 7, 2008, the Company transferred the Mountain View properties to its Value-Added Fund. In connection with the transfer of the Research Park and Technology Park properties to the Value-Added Fund, the Company and its partners agreed to certain modifications to the Value-Added Fund’s original terms, including bifurcating the Value-Added Fund’s promote structure such that Research Park and Technology Park will be accounted for separately from the non-Mountain View properties currently owned by the Value-Added Fund (i.e., Circle Star and 300 Billerica Road). As a result of the modifications, the Company’s interest in the Mountain View properties is approximately 39.5% and its interest in the non-Mountain View properties is 25%. The Company does not expect that the Value-Added Fund will make any future investments in new properties. The investments held by the Value-Added Fund are not included in the Company’s portfolio information tables or any other portfolio level statistics and therefore are presented below.

Property Information

 

Property Name		Number of Buildings		Square Feet		Leased %			Annual Revenue per leased SF (1)			Mortgage Notes Payable (2)
300 Billerica Road, Chelmsford, MA		1		110,882		100.0	%			7.51			1,875	(3)
Circle Star, San Carlos, CA		2		206,945		45.2	%			20.49			10,500	(4)
Mountain View Research Park, Mountain View, CA		16		600,989		66.4	%			28.02			40,705	(5)
Mountain View Technology Park, Mountain View, CA		7		135,279		76.6	%			22.77			9,485	(6)
Total		26		1,054,095		67.1	%		$	23.04		$	62,564

Results of Operations

(unaudited and in thousands)

for the three months ended June 30, 2008

 

		Value-Added Fund
REVENUE
Rental		$	3,820
Straight-line rent (SFAS 13)			277
Fair value lease revenue (SFAS 141)			1,086
Total revenue			5,183
EXPENSES
Operating			1,859
SUBTOTAL			3,324
Interest			2,711
Depreciation and amortization			3,206
SUBTOTAL			5,917
Gains on sale of real estate			—
Loss from early extinguishment of debt			—
NET INCOME		$	(2,593	)
Company’s share of net income		$	(892	)
Company’s share of depreciation & amortization			1,193
Company’s share of Funds from Operations (FFO)		$	301
The Company’s Equity in the Value-Added Fund		$	42,951

 

(1)	For disclosures relating to our definition of Annualized Revenue, see page 50.

(2)	Represents the Company’s share.

(3)	The mortgage bears interest at a fixed rate of 5.69% and matures on January 1, 2016.

(4)	The mortgage bears interest at a fixed rate of 6.57% and matures on September 1, 2013.

(5)

The mortgage bears interest at a variable rate of LIBOR plus 1.75% and matures on May 31, 2011, with two, one-year extension options. The Value-Added Fund has entered into three (3) interest rate swap contracts to fix the one-month LIBOR index rate at 3.63% per annum on an aggregate notional amount of $103 million. The swap contracts went into effect on June 2, 2008 and expire on April 1, 2011.

(6)

The mortgage bears interest at a variable rate of LIBOR plus 1.50% and matures on March 31, 2011, with two, one-year extension options. The Value-Added Fund has entered into an interest rate swap contract to fix the one-month LIBOR index rate at 4.085% per annum on a notional amount of $24 million. The swap contract went into effect on June 12, 2008 and expires on March 31, 2011.

 

19

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Boston Properties, Inc.

Second Quarter 2008

 

PORTFOLIO OVERVIEW

Rentable Square Footage and Percentage of Consolidated Net Operating Income of In-Service Properties by Location and Type of Property

for the Quarter Ended June 30, 2008 (1) (2)

 

								Square Feet Office/ Technical			% of NOI Office/ Technical (4)
		Square Feet Office (3)			% of NOI Office (4)									Square Feet Total (3)			Square Feet % of Total			% of NOI Hotel (4)			% of NOI Total (4)
Geographic Area
Greater Boston		7,984,472			22.3	%		834,062			2.1	%		8,818,534			27.8	%		1.3	%		25.7	%
Greater Washington		7,484,000	(5)		22.7	%		825,232			1.2	%		8,309,232	(5)		26.2	%		—			23.9	%
Greater San Francisco		4,973,390			12.4	%		—			—			4,973,390			15.7	%		—			12.4	%
Midtown Manhattan		7,330,981	(6)		34.8	%		—			—			7,330,981	(6)		23.1	%		—			34.8	%
Princeton/East Brunswick, NJ		2,323,518			3.2	%		—			—			2,323,518			7.3	%		—			3.2	%
		30,096,361			95.4	%		1,659,294			3.3	%		31,755,655			100.0	%		1.3	%		100.0	%
% of Total		94.8	%					5.2	%					100.0	%

Percentage of Net Operating Income of In-Service Properties

by Location and Type of Property (2) (4)

 

Geographic Area		CBD			Suburban			Total
Greater Boston		19.1	%		6.6	%		25.7	%
Greater Washington		10.3	%		13.6	%		23.9	%
Greater San Francisco		9.8	%		2.6	%		12.4	%
Midtown Manhattan		34.8	%		—			34.8	%
Princeton/East Brunswick, NJ		—			3.2	%		3.2	%
Total		74.0	%		26.0	%		100.0	%

Hotel Properties

 

		Number of Rooms		Square Feet
Hotel Properties
Cambridge Center Marriott, Cambridge, MA		431		330,400
Total Hotel Properties		431		330,400
Structured Parking
		Number of		Square
		Spaces		Feet
Total Structured Parking		32,414		10,286,047

 

(1)	For disclosures relating to our definition of In-Service Properties, see page 50.

(2)	Net Operating Income is a non-GAAP financial measure. For a quantitative reconciliation of consolidated NOI to net income available to common shareholders, see page 43. For disclosures relating to our use of NOI see page 50.

(3)	Includes approximately 1,600,000 square feet of retail space.

(4)	The calculation for percentage of Net Operating Income excludes termination income and includes the Company’s share of each unconsolidated joint venture.

(5)	Includes 586,887 square feet at Metropolitan Square which is 51% owned by Boston Properties, 401,279 square feet at Market Square North which is 50% owned by Boston Properties and 539,229 square feet at 901 New York Avenue which is 25% owned by Boston Properties.

(6)	Includes 1,786,637 square feet at General Motors Building which is 60% owned by Boston Properties.

 

20

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Boston Properties, Inc.

Second Quarter 2008

 

In-Service Property Listing

as of June 30, 2008

 

		Sub Market		Number of Buildings		Square Feet		Leased %			Annualized Revenue Per Leased SF (1)			Encumbered with secured debt (Y/N)		Central Business District (CBD) or Suburban (S)
Greater Boston
Office
800 Boylston Street - The Prudential Center		CBD Boston MA		1		1,190,403		94.1	%		$	41.89		N		CBD
111 Huntington Avenue - The Prudential Center		CBD Boston MA		1		859,642		99.3	%			61.54		N		CBD
101 Huntington Avenue - The Prudential Center		CBD Boston MA		1		505,939		100.0	%			39.21		N		CBD
The Shops at the Prudential Center		CBD Boston MA		1		505,960		97.3	%			69.82		N		CBD
Shaws Supermarket at the Prudential Center		CBD Boston MA		1		57,235		100.0	%			52.67		N		CBD
One Cambridge Center		East Cambridge MA		1		215,385		80.4	%			38.20		N		CBD
Three Cambridge Center		East Cambridge MA		1		108,152		100.0	%			34.87		N		CBD
Four Cambridge Center		East Cambridge MA		1		198,295		92.8	%			40.69		N		CBD
Five Cambridge Center		East Cambridge MA		1		240,480		99.3	%			42.61		N		CBD
Eight Cambridge Center		East Cambridge MA		1		177,226		100.0	%			35.51		Y		CBD
Ten Cambridge Center		East Cambridge MA		1		152,664		100.0	%			39.91		Y		CBD
Eleven Cambridge Center		East Cambridge MA		1		79,616		100.0	%			44.60		N		CBD
University Place		Mid-Cambridge MA		1		195,282		100.0	%			38.14		Y		CBD
Reservoir Place		Route 128 Mass Turnpike MA		1		527,121		88.6	%			30.19		Y		S
Reservoir Place North		Route 128 Mass Turnpike MA		1		73,258		100.0	%			34.44		N		S
140 Kendrick Street		Route 128 Mass Turnpike MA		3		380,987		100.0	%			29.36		Y		S
230 CityPoint (formerly Prospect Place)		Route 128 Mass Turnpike MA		1		297,695		84.2	%			31.72		N		S
Waltham Office Center		Route 128 Mass Turnpike MA		3		129,041		63.2	%			23.52		N		S
195 West Street		Route 128 Mass Turnpike MA		1		63,500		100.0	%			53.21		N		S
200 West Street		Route 128 Mass Turnpike MA		1		248,311		100.0	%			34.19		N		S
Waltham Weston Corporate Center		Route 128 Mass Turnpike MA		1		306,789		98.1	%			35.78		N		S
10 & 20 Burlington Mall Road		Route 128 Northwest MA		2		153,180		89.7	%			23.80		Y		S
Bedford Business Park		Route 128 Northwest MA		1		92,207		98.4	%			21.97		Y		S
32 Hartwell Avenue		Route 128 Northwest MA		1		69,154		100.0	%			31.95		N		S
91 Hartwell Avenue		Route 128 Northwest MA		1		121,425		71.0	%			25.42		Y		S
92 Hayden Avenue		Route 128 Northwest MA		1		31,100		100.0	%			25.25		N		S
100 Hayden Avenue		Route 128 Northwest MA		1		55,924		100.0	%			32.90		N		S
33 Hayden Avenue		Route 128 Northwest MA		1		80,128		100.0	%			31.29		N		S
Lexington Office Park		Route 128 Northwest MA		2		166,689		99.5	%			25.09		N		S
191 Spring Street		Route 128 Northwest MA		1		158,900		100.0	%			31.63		N		S
181 Spring Street		Route 128 Northwest MA		1		55,793		100.0	%			34.91		N		S
201 Spring Street		Route 128 Northwest MA		1		106,300		100.0	%			30.31		N		S
40 Shattuck Road		Route 128 Northwest MA		1		120,773		67.7	%			20.48		N		S
Quorum Office Park		Route 128 Northwest MA		2		259,918		100.0	%			23.74		N		S
				41		7,984,472		95.0	%		$	40.26
Office/Technical
Seven Cambridge Center		East Cambridge MA		1		231,028		100.0	%			81.18		N		CBD
Fourteen Cambridge Center		East Cambridge MA		1		67,362		100.0	%			24.48		N		CBD
103 Fourth Avenue		Route 128 Mass Turnpike MA		1		62,476		58.5	%			20.93		N		S
Bedford Business Park		Route 128 Northwest MA		2		379,056		62.7	%			18.54		Y		S
17 Hartwell Avenue		Route 128 Northwest MA		1		30,000		100.0	%			15.25		N		S
164 Lexington Road		Route 128 Northwest MA		1		64,140		0.0	%			—		N		S
				7		834,062		72.3	%		$	43.20
		Total Greater Boston:		48		8,818,534		92.8	%		$	40.47

 

21

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Boston Properties, Inc.

Second Quarter 2008

 

In-Service Property Listing (continued)

as of June 30, 2008

 

											Annualized			Encumbered		Central
											Revenue			with secured		Business
				Number of							Per			debt		District (CBD) or
		Sub Market		Buildings		Square Feet		Leased %			Leased SF (1)			(Y/N)		Suburban (S)
Greater Washington, DC
Office
Capital Gallery		Southwest Washington DC		1		619,222		97.9	%		$	45.67		N		CBD
500 E Street, S. W.		Southwest Washington DC		1		248,336		100.0	%			44.88		N		CBD
Metropolitan Square (51% ownership)		East End Washington DC		1		586,887		100.0	%			49.60		Y		CBD
1301 New York Avenue		East End Washington DC		1		188,358		100.0	%			31.28		Y		CBD
Market Square North (50% ownership)		East End Washington DC		1		401,279		100.0	%			56.15		Y		CBD
(2) 505 9th Street, N.W. (50% ownership)		CBD Washington DC		1		321,807		100.0	%			52.53		Y		CBD
901 New York Avenue (25% ownership)		CBD Washington DC		1		539,229		99.4	%			56.19		Y		CBD
1333 New Hampshire Avenue		CBD Washington DC		1		315,371		100.0	%			48.73		N		CBD
1330 Connecticut Avenue		CBD Washington DC		1		252,136		100.0	%			56.39		Y		CBD
Sumner Square		CBD Washington DC		1		208,665		100.0	%			44.79		Y		CBD
Montvale Center		Montgomery County MD		1		122,808		82.5	%			26.73		Y		S
2600 Tower Oaks Boulevard		Montgomery County MD		1		178,887		85.2	%			40.63		N		S
Kingstowne One		Fairfax County VA		1		150,838		100.0	%			33.82		Y		S
Kingstowne Two		Fairfax County VA		1		156,251		95.7	%			34.16		Y		S
Kingstowne Retail		Fairfax County VA		1		88,288		94.3	%			29.59		Y		S
One Freedom Square		Fairfax County VA		1		414,487		100.0	%			40.14		Y		S
Two Freedom Square		Fairfax County VA		1		421,676		98.8	%			42.65		N		S
One Reston Overlook		Fairfax County VA		1		312,685		100.0	%			28.75		N		S
Two Reston Overlook		Fairfax County VA		1		134,615		93.8	%			30.60		N		S
One and Two Discovery Square		Fairfax County VA		2		366,990		100.0	%			44.46		N		S
New Dominion Technology Park - Building One		Fairfax County VA		1		235,201		100.0	%			32.95		Y		S
New Dominion Technology Park - Building Two		Fairfax County VA		1		257,400		100.0	%			41.64		Y		S
Reston Corporate Center		Fairfax County VA		2		261,046		100.0	%			33.71		N		S
12290 Sunrise Valley		Fairfax County VA		1		182,424		100.0	%			36.28		N		S
12300 Sunrise Valley		Fairfax County VA		1		255,244		100.0	%			34.33		N		S
12310 Sunrise Valley		Fairfax County VA		1		263,870		100.0	%			34.68		N		S
				28		7,484,000		98.8	%		$	43.18
Office/Technical
6601 Springfield Center Drive		Fairfax County VA		1		26,388		100.0	%			13.31		N		S
6605 Springfield Center Drive		Fairfax County VA		1		68,907		0.0	%			—		N		S
7435 Boston Boulevard		Fairfax County VA		1		103,557		100.0	%			19.80		N		S
7451 Boston Boulevard		Fairfax County VA		1		47,001		100.0	%			22.53		N		S
7450 Boston Boulevard		Fairfax County VA		1		62,402		100.0	%			19.50		N		S
7374 Boston Boulevard		Fairfax County VA		1		57,321		100.0	%			16.38		N		S
8000 Grainger Court		Fairfax County VA		1		88,775		100.0	%			18.21		N		S
7500 Boston Boulevard		Fairfax County VA		1		79,971		100.0	%			15.02		N		S
7501 Boston Boulevard		Fairfax County VA		1		75,756		100.0	%			28.89		N		S
7601 Boston Boulevard		Fairfax County VA		1		103,750		100.0	%			14.35		N		S
7375 Boston Boulevard		Fairfax County VA		1		26,865		100.0	%			19.99		N		S
8000 Corporate Court		Fairfax County VA		1		52,539		100.0	%			17.35		N		S
7300 Boston Boulevard		Fairfax County VA		1		32,000		100.0	%			26.05		N		S
				13		825,232		91.6	%		$	19.03
		Total Greater Washington:		41		8,309,232		98.1	%		$	40.94

 

22

---

Boston Properties, Inc.

Second Quarter 2008

 

In-Service Property Listing (continued)

as of June 30, 2008

 

		Sub Market		Number of Buildings		Square Feet		Leased %			Annualized Revenue Per Leased SF (1)			Encumbered with secured debt (Y/N)		Central Business District (CBD) or Suburban (S)
Midtown Manhattan
Office
599 Lexington Avenue		Park Avenue NY		1		1,027,878		100.0	%		$	72.33		Y		CBD
Citigroup Center		Park Avenue NY		1		1,578,386		99.7	%			74.45		Y		CBD
399 Park Avenue		Park Avenue NY		1		1,699,253		100.0	%			86.03		N		CBD
Times Square Tower		Times Square NY		1		1,238,827		100.0	%			65.94		N		CBD
(2) General Motors Building (60% ownership)		Plaza District NY		1		1,786,637		99.4	%			98.63		Y		CBD
		Total Midtown Manhattan:		5		7,330,981		99.8	%		$	81.29
Princeton/East Brunswick, NJ
Office
101 Carnegie Center		Princeton NJ		1		123,659		100.0	%		$	28.77		N		S
104 Carnegie Center		Princeton NJ		1		102,827		94.4	%			34.19		N		S
105 Carnegie Center		Princeton NJ		1		69,955		48.9	%			24.22		N		S
201 Carnegie Center		Princeton NJ		—		6,500		100.0	%			28.39		N		S
202 Carnegie Center		Princeton NJ		1		130,582		81.1	%			32.71		Y		S
206 Carnegie Center		Princeton NJ		1		161,763		100.0	%			31.51		Y		S
210 Carnegie Center		Princeton NJ		1		161,776		93.4	%			34.85		N		S
211 Carnegie Center		Princeton NJ		1		47,025		100.0	%			30.73		N		S
212 Carnegie Center		Princeton NJ		1		149,354		97.3	%			36.36		N		S
214 Carnegie Center		Princeton NJ		1		150,774		79.8	%			32.12		Y		S
302 Carnegie Center		Princeton NJ		1		64,726		85.4	%			35.77		N		S
502 Carnegie Center		Princeton NJ		1		116,855		100.0	%			35.85		N		S
504 Carnegie Center		Princeton NJ		1		121,990		100.0	%			33.48		N		S
506 Carnegie Center		Princeton NJ		1		136,213		100.0	%			34.65		N		S
508 Carnegie Center		Princeton NJ		1		132,653		56.1	%			31.60		N		S
510 Carnegie Center		Princeton NJ		1		234,160		100.0	%			27.23		N		S
				15		1,910,812		90.6	%		$	32.34
One Tower Center		East Brunswick NJ		1		412,706		43.1	%			36.24		N		S
				1		412,706		43.1	%		$	36.24
		Total Princeton/East Brunswick, NJ:		16		2,323,518		82.2	%		$	32.70
Greater San Francisco
Office
Embarcadero Center One		CBD San Francisco CA		1		830,290		83.7	%		$	48.22		Y		CBD
Embarcadero Center Two		CBD San Francisco CA		1		778,337		98.7	%			51.89		Y		CBD
Embarcadero Center Three		CBD San Francisco CA		1		774,810		83.9	%			42.14		N		CBD
Embarcadero Center Four		CBD San Francisco CA		1		936,228		96.1	%			61.31		N		CBD
				4		3,319,665		90.8	%		$	51.69
611 Gateway		South San Francisco CA		1		256,302		100.0	%			33.56		N		S
601 and 651 Gateway		South San Francisco CA		2		506,028		97.4	%			30.05		N		S
(2) North First Business Park		San Jose, CA		5		190,636		66.4	%			13.03		N		S
303 Almaden		San Jose, CA		1		156,859		94.1	%		$	32.25		N		CBD
3200 Zanker Road		San Jose, CA		4		543,900		100.0	%		$	14.34		N		S
				13		1,653,725		94.8	%		$	24.01
		Total Greater San Francisco:		17		4,973,390		92.1	%		$	42.18
		Total In-Service Properties:		127		31,755,655		94.9	%		$	50.27

 

(1)	For disclosures relating to our definition of Annualized Revenue, see page 50.

(2)	Not included in Same Property analysis.

 

23

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Boston Properties, Inc.

Second Quarter 2008

 

TOP 20 TENANTS LISTING AND PORTFOLIO TENANT DIVERSIFICATION

TOP 20 TENANTS BY SQUARE FEET LEASED

		Tenant		Sq. Ft.			% of Portfolio
1		US Government		1,709,223	(1)		5.38	%
2		Lockheed Martin		1,292,429			4.07	%
3		Citibank		1,085,570	(2)		3.42	%
4		Genentech		546,750			1.72	%
5		Gillette		484,051			1.52	%
6		Weil Gotshal		479,599	(3)		1.51	%
7		Kirkland & Ellis		473,160	(4)		1.49	%
8		Shearman & Sterling		472,808			1.49	%
9		O’Melveny & Myers		446,039			1.40	%
10		Lehman Brothers		436,723			1.38	%
11		Parametric Technology		380,987			1.20	%
12		Accenture		378,867			1.19	%
13		Finnegan Henderson Farabow		356,195	(5)		1.12	%
14		Ann Taylor		338,942			1.07	%
15		Northrop Grumman		327,677			1.03	%
16		Biogen Idec		317,341			1.00	%
17		MIT		308,274			0.97	%
18		Washington Group International		299,079			0.94	%
19		Estee Lauder		296,004	(6)		0.93	%
20		Bingham McCutchen		291,415			0.92	%
		Total % of Portfolio Square Feet					33.76	%
		Total % of Portfolio Revenue					40.76	%

Notable Signed Deals (7)

Tenant		Property		Sq. Ft.
Ropes & Gray LLP		Prudential Tower (8)		470,000
Wellington Management		280 Congress Street (Russia Wharf)		450,000
Akamai Technology		Four & Eight Cambridge Center		230,678
Gibson, Dunn & Crutcher LLP		250 W 55th Street		221,510

 

(1)	Includes 68,282 and 28,384 square feet of space in properties in which Boston Properties has a 51% and 50% interest respectively.

(2)	Includes 10,080 and 2,761 square feet of space in properties in which Boston Properties has a 60% and 51% interest respectively.

(3)	Includes 479,599 square feet of space in a property in which Boston Properties has a 60%.

(4)	Includes 218,134 square feet of space in a property in which Boston Properties has a 51% interest.

(5)	Includes 258,990 square feet of space in a property in which Boston Properties has a 25% interest.

(6)	Includes 296,004 square feet of space in a property in which Boston Properties has a 60% interest.

(7)	Represents leases signed with occupancy commencing in the future.

(8)	The space is currently occupied by Gillette.

TENANT DIVERSIFICATION (GROSS RENT) *

 

*	The classification of the Company’s tenants is based on the U.S. Government’s North American Industry Classification System (NAICS), which has replaced the Standard Industrial Classification (SIC) system.

 

24

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Boston Properties, Inc.

Second Quarter 2008

 

IN-SERVICE OFFICE PROPERTIES

Lease Expirations (1)(2)

 

Year of Lease Expiration		Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Current Annualized Revenues Under Expiring Leases p.s.f.			Annualized Revenues Under Expiring Leases with future step-ups			Annualized Revenues Under Expiring Leases with future step-ups - p.s.f.			Percentage of Total Square Feet
2008		450,687		$	20,502,876		$	45.49		$	20,637,662		$	45.79		1.57	%
2009		2,114,811			83,715,786			39.59			84,254,129			39.84		7.39	%
2010		2,624,591			104,788,182			39.93			108,099,376			41.19		9.17	%
2011		3,032,420			139,819,964			46.11			144,907,909			47.79		10.60	%
2012		2,506,351			112,248,695			44.79			117,790,436			47.00		8.76	%
2013		922,373			37,853,893			41.04			44,453,296			48.19		3.22	%
2014		2,239,149			88,944,439			39.72			95,206,343			42.52		7.82	%
2015		1,536,841			67,299,448			43.79			75,362,363			49.04		5.37	%
2016		2,446,399			140,865,828			57.58			151,045,980			61.74		8.55	%
2017		2,531,201			163,707,338			64.68			185,303,173			73.21		8.84	%
Thereafter		6,598,179			388,722,948			58.91			485,926,961			73.65		23.05	%

Occupancy By Location (3)

 

		CBD						Suburban						Total
Location		30-Jun-08			30-Jun-07			30-Jun-08			30-Jun-07			30-Jun-08			30-Jun-07
Midtown Manhattan		99.8	%		99.5	%		n/a			n/a			99.8	%		99.5	%
Greater Boston		96.7	%		96.1	%		92.8	%		89.9	%		95.0	%		93.4	%
Greater Washington		99.6	%		97.8	%		98.1	%		97.0	%		98.8	%		97.3	%
Greater San Francisco		90.9	%		87.0	%		94.9	%		97.0	%		92.1	%		89.7	%
Princeton/East Brunswick, NJ		n/a			n/a			82.2	%		86.7	%		82.2	%		86.7	%
Total Portfolio		97.4	%		95.7	%		92.7	%		92.9	%		95.6	%		94.5	%

 

(1)	For disclosures relating to our definition of Annualized Revenue, see page 50.

(2)	Includes 100% of unconsolidated joint venture properties.

(3)	Includes approximately 1,600,000 square feet of retail space.

 

25

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Boston Properties, Inc.

Second Quarter 2008

 

IN-SERVICE OFFICE/TECHNICAL PROPERTIES

Lease Expirations (1)(2)

 

Year of Lease Expiration		Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Current Annualized Revenues Under Expiring Leases p.s.f.			Annualized Revenues Under Expiring Leases with future step-ups			Annualized Revenues Under Expiring Leases with future step-ups - p.s.f.			Percentage of Total Square Feet
2008		115,228		$	2,268,517		$	19.69		$	2,268,517		$	19.69		6.94	%
2009		69,581			1,498,010			21.53			1,523,624			21.90		4.19	%
2010		183,376			3,130,045			17.07			3,308,733			18.04		11.05	%
2011		57,321			939,059			16.38			939,059			16.38		3.45	%
2012		132,820			2,897,697			21.82			2,914,985			21.95		8.00	%
2013		—			—			—			—			—		0.00	%
2014		247,668			4,247,076			17.15			4,584,411			18.51		14.93	%
2015		—			—			—			—			—		0.00	%
2016		225,532			18,394,229			81.56			18,694,187			82.89		13.59	%
2017		75,756			2,188,701			28.89			2,188,701			28.89		4.57	%
Thereafter		237,776			4,126,603			17.36			4,445,491			18.70		14.33	%

Occupancy By Location

 

		CBD						Suburban						Total
Location		30-Jun-08			30-Jun-07			30-Jun-08			30-Jun-07			30-Jun-08			30-Jun-07
Midtown Manhattan		n/a			n/a			n/a			n/a			n/a			n/a
Greater Boston		100.0	%		100.0	%		56.8	%		48.9	%		72.3	%		67.2	%
Greater Washington		n/a			n/a			91.6	%		100.0	%		91.6	%		100.0	%
Greater San Francisco		n/a			n/a			n/a			n/a			n/a			n/a
Princeton/East Brunswick, NJ		n/a			n/a			n/a			n/a			n/a			n/a
Total Portfolio		100.0	%		100.0	%		77.9	%		81.6	%		81.9	%		84.7	%

 

(1)	For disclosures relating to our definition of Annualized Revenue, see page 50.

(2)	Includes 100% of unconsolidated joint venture properties.

 

26

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Boston Properties, Inc.

Second Quarter 2008

 

IN-SERVICE RETAIL PROPERTIES

Lease Expirations (1)(2)

 

Year of Lease Expiration		Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Current Annualized Revenues Under Expiring Leases p.s.f.				Annualized Revenues Under Expiring Leases with future step-ups			Annualized Revenues Under Expiring Leases with future step-ups - p.s.f.				Percentage of Total Square Feet
2008		27,849		$	2,637,027		$	94.69	(3)		$	2,640,077		$	94.80	(2)		1.89	%
2009		44,783			3,193,081			71.30	(4)			3,132,450			69.95	(3)		3.03	%
2010		59,462			4,956,745			83.36				5,001,830			84.12			4.03	%
2011		69,941			4,826,031			69.00				5,026,945			71.87			4.74	%
2012		183,928			13,111,958			71.29				13,352,493			72.60			12.46	%
2013		70,948			5,646,090			79.58				5,865,338			82.67			4.80	%
2014		37,104			3,888,222			104.79				4,253,382			114.63			2.51	%
2015		134,832			10,122,359			75.07				11,662,012			86.49			9.13	%
2016		130,101			12,262,182			94.25				17,518,533			134.65			8.81	%
2017		119,995			8,195,344			68.30				8,849,582			73.75			8.13	%
Thereafter		597,753			37,443,126			62.64				47,261,596			79.07			40.48	%

 

(1)	For disclosures relating to our definition of Annualized Revenue, see page 50.

(2)	Includes 100% of unconsolidated joint venture properties.

(3)	Excluding kiosks with one square foot at the Prudential Center, current and future expiring rents would be $59.27 and $58.04 in 2008.

(4)	Excluding kiosks with one square foot at the Prudential Center, current and future expiring rents would be $58.20 and $58.30 in 2009.

 

27

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Boston Properties, Inc.

Second Quarter 2008

 

GRAND TOTAL OF ALL

IN-SERVICE PROPERTIES

Lease Expirations (1)(2)

 

Year of Lease Expiration		Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Current Annualized Revenues Under Expiring Leases p.s.f.			Annualized Revenues Under Expiring Leases with future step-ups			Annualized Revenues Under Expiring Leases with future step-ups - p.s.f.			Percentage of Total Square Feet
2008		593,764		$	25,408,420		$	42.79		$	25,546,256		$	43.02		1.9	%
2009		2,229,175			88,406,878			39.66			88,910,202			39.88		7.0	%
2010		2,867,429			112,874,972			39.36			116,409,939			40.60		9.0	%
2011		3,159,682			145,585,054			46.08			150,873,913			47.75		9.9	%
2012		2,823,099			128,258,350			45.43			134,057,913			47.49		8.9	%
2013		993,321			43,499,984			43.79			50,318,633			50.66		3.1	%
2014		2,523,921			97,079,738			38.46			104,044,137			41.22		7.9	%
2015		1,671,673			77,421,806			46.31			87,024,375			52.06		5.3	%
2016		2,802,032			171,522,240			61.21			187,258,700			66.83		8.8	%
2017		2,726,952			174,091,383			63.84			196,341,456			72.00		8.6	%
Thereafter		7,433,708			430,292,678			57.88			537,634,048			72.32		23.4	%

Occupancy By Location

 

		CBD						Suburban						Total
Location		30-Jun-08			30-Jun-07			30-Jun-08			30-Jun-07			30-Jun-08			30-Jun-07
Midtown Manhattan		99.8	%		99.5	%		n/a			n/a			99.8	%		99.5	%
Greater Boston		96.9	%		96.4	%		88.0	%		84.5	%		92.8	%		90.9	%
Greater Washington		99.6	%		97.8	%		96.9	%		97.5	%		98.1	%		97.6	%
Greater San Francisco		90.9	%		87.0	%		94.9	%		97.0	%		92.1	%		89.7	%
Princeton/East Brunswick, NJ		n/a			n/a			82.2	%		86.7	%		82.2	%		86.7	%
Total Portfolio		97.4	%		95.8	%		91.0	%		91.7	%		94.9	%		94.0	%

 

(1)	For disclosures relating to our definition of Annualized Revenue, see page 50.

(2)	Includes 100% of unconsolidated joint venture properties.

 

28

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Boston Properties, Inc.

Second Quarter 2008

 

IN-SERVICE GREATER BOSTON PROPERTIES

Lease Expirations - Greater Boston (1)(2)

 

		OFFICE														OFFICE/TECHNICAL
Year of Lease Expiration		Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Per Square Foot			Annualized Revenues Under Expiring Leases with future step-ups			Per Square Foot			Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Per Square Foot			Annualized Revenues Under Expiring Leases with future step-ups			Per Square Foot
2008		245,635		$	9,470,762		$	38.56		$	9,470,762		$	38.56		—		$	—		$	—		$	—		$	—
2009		814,007			28,214,607			34.66			28,364,302			34.85		—			—			—			—			—
2010		570,298			18,147,923			31.82			18,746,796			32.87		36,528			764,518			20.93			892,366			24.43
2011		1,287,043			56,375,204			43.80			58,187,266			45.21		—			—			—			—			—
2012		1,132,287			43,258,448			38.20			45,205,233			39.92		67,362			1,649,088			24.48			1,649,088			24.48
2013		339,666			13,291,757			39.13			15,215,444			44.80		—			—			—			—			—
2014		602,933			24,965,159			41.41			25,200,935			41.80		30,000			457,500			15.25			457,500			15.25
2015		327,241			11,555,900			35.31			12,912,380			39.46		—			—			—			—			—
2016		271,096			8,427,473			31.09			9,478,317			34.96		225,532			18,394,229			81.56			18,694,187			82.89
2017		194,775			6,276,273			32.22			7,493,659			38.47		—			—			—			—			—
Thereafter		964,678			40,427,655			41.91			65,345,431			67.74		237,776			4,126,603			17.36			4,445,491			18.70

 

		Retail															Total Property Types
Year of Lease Expiration		Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Per Square Foot			Annualized Revenues Under Expiring Leases with future step-ups			Per Square Foot				Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Per Square Foot			Annualized Revenues Under Expiring Leases with future step-ups			Per Square Foot
2008		1,316		$	1,132,550		$	860.60		$	1,169,990		$	889.05	(3)		246,951		$	10,603,312		$	42.94		$	10,640,752		$	43.09
2009		12,759			1,957,035			153.38			1,891,839			148.27	(4)		826,766			30,171,642			36.49			30,256,141			36.60
2010		2,829			641,403			226.72			646,984			228.70			609,655			19,553,844			32.07			20,286,145			33.27
2011		12,049			1,346,068			111.72			1,449,518			120.30			1,299,092			57,721,272			44.43			59,636,784			45.91
2012		63,676			2,721,098			42.73			2,724,098			42.78			1,263,325			47,628,634			37.70			49,578,419			39.24
2013		28,461			3,349,827			117.70			3,405,600			119.66			368,127			16,641,585			45.21			18,621,044			50.58
2014		7,769			1,584,193			203.91			1,648,724			212.22			640,702			27,006,853			42.15			27,307,159			42.62
2015		81,252			6,154,654			75.75			6,440,588			79.27			408,493			17,710,554			43.36			19,352,968			47.38
2016		14,617			1,991,269			136.23			2,128,006			145.58			511,245			28,812,971			56.36			30,300,510			59.27
2017		56,845			4,201,684			73.91			4,525,686			79.61			251,620			10,477,957			41.64			12,019,345			47.77
Thereafter		367,812			13,983,189			38.02			15,638,904			42.52			1,570,266			58,537,447			37.28			85,429,826			54.40

 

(1)	For disclosures relating to our definition of Annualized Revenue, see page 50.

(2)	Includes 100% of unconsolidated joint venture properties.

(3)	Excluding kiosks with one square feet at the Prudential Center, current and future expiring rents would be $124.69 and $124.69 in 2008.

(4)	Excluding kiosks with one square feet at the Prudential Center, current and future expiring rents would be $107.45 and $107.45 in 2009.

 

29

---

Boston Properties, Inc.

Second Quarter 2008

 

IN-SERVICE GREATER BOSTON PROPERTIES

Quarterly Lease Expirations - Greater Boston (1)(2)

 

		OFFICE														OFFICE/TECHNICAL
Lease Expiration by Quarter		Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Per Square Foot			Annualized Revenues Under Expiring Leases with future step-ups			Per Square Foot			Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Per Square Foot			Annualized Revenues Under Expiring Leases with future step-ups			Per Square Foot
Q1 2008		—		$	—		$	—		$	—		$	—		—		$	—		$	—		$	—		$	—
Q2 2008		—			—			—			—			—		—			—			—			—			—
Q3 2008		149,245			5,663,697			37.95			5,663,697			37.95		—			—			—			—			—
Q4 2008		96,390			3,807,066			39.50			3,807,066			39.50		—			—			—			—			—
Total 2008		245,635		$	9,470,762		$	38.56		$	9,470,762		$	38.56		—			—			—			—			—
Q1 2009		56,982		$	1,841,702		$	32.32		$	1,841,702		$	32.32		—		$	—		$	—		$	—		$	—
Q2 2009		202,174			6,868,715			33.97			6,878,616			34.02		—			—			—			—			—
Q3 2009		218,648			6,675,994			30.53			6,776,353			30.99		—			—			—			—			—
Q4 2009		336,203			12,828,196			38.16			12,867,631			38.27		—			—			—			—			—
Total 2009		814,007		$	28,214,607		$	34.66		$	28,364,302		$	34.85		—			—			—			—			—

 

		Retail															Total Property Types
Lease Expiration by Quarter		Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Per Square Foot			Annualized Revenues Under Expiring Leases with future step-ups			Per Square Foot				Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Per Square Foot			Annualized Revenues Under Expiring Leases with future step-ups			Per Square Foot
Q1 2008		—		$	—		$	—		$	—		$	—			—		$	—		$	—		$	—		$	—
Q2 2008		—			—			—			—			—			—			—			—			—			—
Q3 2008		1,201			799,430			665.64			799,430			665.64			150,446			6,463,126			42.96			6,463,126			42.96
Q4 2008		115			333,120			2,896.70			370,560			3,222.26			96,505			4,140,186			42.90			4,177,626			43.29
Total 2008		1,316			1,132,550		$	860.60		$	1,169,990		$	889.05	(3)		246,951		$	10,603,312		$	42.94		$	10,640,752		$	43.09
Q1 2009		9,563		$	1,272,744.24		$	133.09			1,239,144		$	129.58			66,545		$	3,114,446		$	46.80		$	3,080,846		$	46.30
Q2 2009		4			179,004			44,751.00			145,404			36,351.00			202,178			7,047,719			34.86			7,024,020			34.74
Q3 2009		2,969			391,286			131.79			391,286			131.79			221,617			7,067,281			31.89			7,167,639			32.34
Q4 2009		223			114,000			511.21			116,004			520.20			336,426			12,942,196			38.47			12,983,635			38.59
Total 2009		12,759		$	1,957,035		$	153.38		$	1,891,839		$	148.27	(4)		826,766		$	30,171,642		$	36.49		$	30,256,141		$	36.60

 

(1)	For disclosures relating to our definition of Annualized Revenue, see page 50.

(2)	Includes 100% of unconsolidated joint venture properties.

(3)	Excluding kiosks with one square feet at the Prudential Center, current and future expiring rents would be $124.69 and $124.69 in 2008.

(4)	Excluding kiosks with one square feet at the Prudential Center, current and future expiring rents would be $107.45 and $107.45 in 2009.

 

30

---

Boston Properties, Inc.

Second Quarter 2008

 

IN-SERVICE GREATER WASHINGTON PROPERTIES

Lease Expirations - Greater Washington (1)(2)

 

		OFFICE														OFFICE/TECHNICAL
Year of Lease Expiration		Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Per Square Foot			Annualized Revenues Under Expiring Leases with future step-ups			Per Square Foot			Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Per Square Foot			Annualized Revenues Under Expiring Leases with future step-ups			Per Square Foot
2008		18,492		$	657,842		$	35.57		$	657,842		$	35.57		115,228		$	2,268,517		$	19.69		$	2,268,517		$	19.69
2009		746,037			28,212,009			37.82			28,422,631			38.10		69,581			1,498,010			21.53			1,523,624			21.90
2010		769,969			33,368,901			43.34			34,137,413			44.34		146,848			2,365,528			16.11			2,416,368			16.45
2011		766,828			29,296,129			38.20			31,021,632			40.45		57,321			939,059			16.38			939,059			16.38
2012		871,605			35,836,072			41.12			37,857,798			43.43		65,458			1,248,609			19.07			1,265,896			19.34
2013		141,156			4,866,659			34.48			5,293,072			37.50		—			—			—			—			—
2014		447,657			17,099,722			38.20			19,349,506			43.22		217,668			3,789,576			17.41			4,126,911			18.96
2015		561,899			25,327,290			45.07			29,021,965			51.65		—			—			—			—			—
2016		187,575			6,780,953			36.15			8,317,665			44.34		—			—			—			—			—
2017		805,237			42,500,210			52.78			47,130,281			58.53		75,756			2,188,701			28.89			2,188,701			28.89
Thereafter		1,791,730			83,962,150			46.86			105,554,201			58.91		—			—			—			—			—

 

		Retail														Total Property Types
Year of Lease Expiration		Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Per Square Foot			Annualized Revenues Under Expiring Leases with future step-ups			Per Square Foot			Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Per Square Foot			Annualized Revenues Under Expiring Leases with future step-ups			Per Square Foot
2008		18,152		$	849,740		$	46.81		$	849,740		$	46.81		151,872		$	3,776,099		$	24.86		$	3,776,099		$	24.86
2009		8,344			391,373			46.90			394,960			47.33		823,962			30,101,392			36.53			30,341,215			36.82
2010		13,587			647,559			47.66			663,755			48.85		930,404			36,381,988			39.10			37,217,535			40.00
2011		18,533			893,913			48.23			907,911			48.99		842,682			31,129,101			36.94			32,868,602			39.00
2012		12,736			530,699			41.67			559,571			43.94		949,799			37,615,380			39.60			39,683,266			41.78
2013		8,199			382,728			46.68			422,897			51.58		149,355			5,249,387			35.15			5,715,968			38.27
2014		9,602			469,568			48.90			523,465			54.52		674,927			21,358,866			31.65			23,999,882			35.56
2015		24,704			1,126,570			45.60			1,229,651			49.78		586,603			26,453,860			45.10			30,251,616			51.57
2016		17,696			866,427			48.96			975,702			55.14		205,271			7,647,380			37.26			9,293,367			45.27
2017		24,412			1,072,327			43.93			1,190,204			48.75		905,405			45,761,238			50.54			50,509,187			55.79
Thereafter		119,488			3,585,712			30.01			4,334,127			36.27		1,911,218			87,547,862			45.81			109,888,329			57.50

 

(1)	For disclosures relating to our definition of Annualized Revenue, see page 50.

(2)	Includes 100% of unconsolidated joint venture properties.

 

31

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Boston Properties, Inc.

Second Quarter 2008

 

IN-SERVICE GREATER WASHINGTON PROPERTIES

Quarterly Lease Expirations - Greater Washington (1)(2)

 

		OFFICE														OFFICE/TECHNICAL
Lease Expiration by Quarter		Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Per Square Foot			Annualized Revenues Under Expiring Leases with future step-ups			Per Square Foot			Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Per Square Foot			Annualized Revenues Under Expiring Leases with future step-ups			Per Square Foot
Q1 2008		—		$	—		$	—		$	—		$	—		—		$	—		$	—		$	—		$	—
Q2 2008		—			—			—			—			—		—			—			—			—			—
Q3 2008		165			3,669			22.23			3,669			22.23		68,227			1,209,680			17.73			1,209,680			17.73
Q4 2008		18,327			654,173			35.69			654,173			35.69		47,001			1,058,837			22.53			1,058,837			22.53
Total 2008		18,492		$	657,842		$	35.57		$	657,842		$	35.57		115,228		$	2,268,517		$	19.69		$	2,268,517		$	19.69
Q1 2009		220,462		$	7,134,709		$	32.36		$	7,155,211		$	32.46		25,829		$	636,626		$	24.65		$	639,899		$	24.77
Q2 2009		58,592			2,467,223			42.11			2,469,677			42.15		—			—			—			—			—
Q3 2009		47,025			1,994,818			42.42			2,048,114			43.55		33,400			635,146			19.02			650,699			19.48
Q4 2009		419,958			16,615,259			39.56			16,749,629			39.88		10,352			226,238			21.85			233,025			22.51
Total 2009		746,037		$	28,212,009		$	37.82		$	28,422,631		$	38.10		69,581		$	1,498,010		$	21.53		$	1,523,624		$	21.90

 

		Retail														Total Property Types
Lease Expiration by Quarter		Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Per Square Foot			Annualized Revenues Under Expiring Leases with future step-ups			Per Square Foot			Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Per Square Foot			Annualized Revenues Under Expiring Leases with future step-ups			Per Square Foot
Q1 2008		—		$	—		$	—		$	—		$	—		—		$	—		$	—		$	—		$	—
Q2 2008		—			—			—			—			—		—			—			—			—			—
Q3 2008		18,152			849,740			46.81			849,740			46.81		86,544			2,063,088			23.84			2,063,088			23.84
Q4 2008		—			—			—			—			—		65,328			1,713,011			26.22			1,713,011			26.22
Total 2008		18,152		$	849,740		$	46.81			849,740		$	46.81		151,872		$	3,776,099		$	24.86		$	3,776,099		$	24.86
Q1 2009		—		$	—		$	—		$	—		$	—		246,291		$	7,771,335		$	31.55		$	7,795,110		$	31.65
Q2 2009		—			—			—			—			—		58,592			2,467,223			42.11			2,469,677			42.15
Q3 2009		8,336			391,333			46.94			394,920			47.38		88,761			3,021,298			34.04			3,093,734			34.85
Q4 2009		8			40			5.00			40			5.00		430,318			16,841,537			39.14			16,982,694			39.47
Total 2009		8,344		$	391,373		$	46.90		$	394,960		$	47.33		823,962		$	30,101,392		$	36.53		$	30,341,215		$	36.82

 

(1)	For disclosures relating to our definition of Annualized Revenue, see page 50.

(2)	Includes 100% of unconsolidated joint venture properties.

 

32

---

Boston Properties, Inc.

Second Quarter 2008

 

IN-SERVICE GREATER SAN FRANCISCO PROPERTIES

Lease Expirations - Greater San Francisco (1)(2)

 

		OFFICE														OFFICE/TECHNICAL
Year of Lease Expiration		Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Per Square Foot			Annualized Revenues Under Expiring Leases with future step-ups			Per Square Foot			Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Per Square Foot			Annualized Revenues Under Expiring Leases with future step-ups			Per Square Foot
2008		83,384		$	2,904,185		$	34.83		$	3,105,965		$	37.25		—		$	—		$	—		$	—		$	—
2009		211,602			9,076,206			42.89			9,235,368			43.64		—			—			—			—			—
2010		733,101			17,414,674			23.75			18,186,763			24.81		—			—			—			—			—
2011		373,068			24,111,283			64.63			25,132,607			67.37		—			—			—			—			—
2012		252,539			12,824,798			50.78			13,598,180			53.85		—			—			—			—			—
2013		195,159			8,830,989			45.25			9,472,463			48.54		—			—			—			—			—
2014		471,350			18,278,843			38.78			19,674,944			41.74		—			—			—			—			—
2015		342,418			12,131,451			35.43			13,835,604			40.41		—			—			—			—			—
2016		936,359			36,970,957			39.48			39,878,238			42.59		—			—			—			—			—
2017		171,279			7,864,922			45.92			8,521,521			49.75		—			—			—			—			—
Thereafter		512,104			27,431,040			53.57			31,060,882			60.65		—			—			—			—			—

 

		Retail														Total Property Types
Year of Lease Expiration		Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Per Square Foot			Annualized Revenues Under Expiring Leases with future step-ups			Per Square Foot			Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Per Square Foot			Annualized Revenues Under Expiring Leases with future step-ups			Per Square Foot
2008		7,480		$	506,719		$	67.74		$	472,329		$	63.15		90,864		$	3,410,904		$	37.54		$	3,578,294		$	39.38
2009		23,680			844,674			35.67			845,651			35.71		235,282			9,920,879			42.17			10,081,019			42.85
2010		35,048			1,744,187			49.77			1,767,496			50.43		768,149			19,158,862			24.94			19,954,259			25.98
2011		24,809			1,103,013			44.46			1,124,200			45.31		397,877			25,214,296			63.37			26,256,807			65.99
2012		35,001			2,520,183			72.00			2,646,395			75.61		287,540			15,344,981			53.37			16,244,575			56.50
2013		32,606			1,836,273			56.32			1,844,408			56.57		227,765			10,667,262			46.83			11,316,871			49.69
2014		8,365			567,810			67.88			606,798			72.54		479,715			18,846,653			39.29			20,281,742			42.28
2015		23,376			1,552,702			66.42			1,703,340			72.87		365,794			13,684,153			37.41			15,538,944			42.48
2016		7,887			444,176			56.32			492,530			62.45		944,246			37,415,133			39.62			40,370,768			42.75
2017		12,053			673,537			55.88			732,038			60.73		183,332			8,538,459			46.57			9,253,559			50.47
Thereafter		23,212			1,257,164			54.16			1,420,377			61.19		535,316			28,688,204			53.59			32,481,259			60.68

 

(1)	For disclosures relating to our definition of Annualized Revenue, see page 50.

(2)	Includes 100% of unconsolidated joint venture properties.

 

33

---

Boston Properties, Inc.

Second Quarter 2008

 

IN-SERVICE GREATER SAN FRANCISCO PROPERTIES

Quarterly Lease Expirations - Greater San Francisco (1)(2)

 

		OFFICE														OFFICE/TECHNICAL
Lease Expiration by Quarter		Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Per Square Foot			Annualized Revenues Under Expiring Leases with future step-ups			Per Square Foot			Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Per Square Foot			Annualized Revenues Under Expiring Leases with future step-ups			Per Square Foot
Q1 2008		—		$	—		$	—		$	—		$	—		—		$	—		$	—		$	—		$	—
Q2 2008		—			—			—			—			—		—			—			—			—			—
Q3 2008		40,123			1,321,303			32.93			1,523,083			37.96		—			—			—			—			—
Q4 2008		43,261			1,582,883			36.59			1,582,883			36.59		—			—			—			—			—
Total 2008		83,384		$	2,904,185		$	34.83		$	3,105,965		$	37.25		—			—			—			—			—
Q1 2009		16,177		$	534,489		$	33.04		$	534,489		$	33.04		—		$	—		$	—		$	—		$	—
Q2 2009		27,070			808,146			29.85			920,265			34.00		—			—			—			—			—
Q3 2009		72,400			2,730,544			37.71			2,776,069			38.34		—			—			—			—			—
Q4 2009		95,955			5,003,027			52.14			5,004,545			52.16		—			—			—			—			—
Total 2009		211,602		$	9,076,206		$	42.89		$	9,235,368		$	43.64		—			—			—			—			—
		Retail														Total Property Types
Lease Expiration by Quarter		Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Per Square Foot			Annualized Revenues Under Expiring Leases with future step-ups			Per Square Foot			Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Per Square Foot			Annualized Revenues Under Expiring Leases with future step-ups			Per Square Foot
Q1 2008		—		$	—		$	—		$	—		$	—		—		$	—		$	—		$	—		$	—
Q2 2008		—			—			—			—			—		—			—			—			—			—
Q3 2008		2,094			184,046			87.89			149,656			71.47		42,217			1,505,349			35.66			1,672,739			39.62
Q4 2008		5,386			322,672			59.91			322,672			59.91		48,647			1,905,555			39.17			1,905,555			39.17
Total 2008		7,480		$	506,719		$	67.74		$	472,329		$	63.15		90,864		$	3,410,904		$	37.54		$	3,578,294		$	39.38
Q1 2009		22,658		$	741,799		$	32.74		$	741,799		$	32.74		38,835		$	1,276,287		$	32.86		$	1,276,287			32.86
Q2 2009		1,022			102,875			100.66			103,852			101.62		28,092			911,021			32.43			1,024,117			36.46
Q3 2009		—			—			—			—			—		72,400			2,730,544			37.71			2,776,069			38.34
Q4 2009		—			—			—			—			—		95,955			5,003,027			52.14			5,004,545			52.16
Total 2009		23,680		$	844,674		$	35.67		$	845,651		$	35.71		235,282		$	9,920,879		$	42.17		$	10,081,019		$	42.85

 

(1)	For disclosures relating to our definition of Annualized Revenue, see page 50.

(2)	Includes 100% of unconsolidated joint venture properties.

 

34

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Boston Properties, Inc.

Second Quarter 2008

 

IN-SERVICE MIDTOWN MANHATTAN PROPERTIES

Lease Expirations - Midtown Manhattan (1)(2)

 

		OFFICE														OFFICE/TECHNICAL
Year of Lease Expiration		Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Per Square Foot			Annualized Revenues Under Expiring Leases with future step-ups			Per Square Foot			Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Per Square Foot			Annualized Revenues Under Expiring Leases with future step-ups			Per Square Foot
2008		98,475		$	7,325,002		$	74.38		$	7,328,008		$	74.41		—		$	—		$	—		$	—		$	—
2009		122,607			10,108,733			82.45			10,127,596			82.60		—			—			—			—			—
2010		414,883			30,902,666			74.49			32,047,457			77.24		—			—			—			—			—
2011		172,814			15,155,232			87.70			15,415,434			89.20		—			—			—			—			—
2012		200,672			18,677,730			93.08			19,438,255			96.87		—			—			—			—			—
2013		68,542			5,165,873			75.37			8,356,397			121.92		—			—			—			—			—
2014		80,484			8,844,157			109.89			9,666,244			120.10		—			—			—			—			—
2015		151,131			13,730,661			90.85			14,515,071			96.04		—			—			—			—			—
2016		1,051,369			88,686,445			84.35			93,371,761			88.81		—			—			—			—			—
2017		1,279,064			104,364,702			81.59			119,154,899			93.16		—			—			—			—			—
Thereafter		3,329,667			236,902,103			71.15			283,966,447			85.28		—			—			—			—			—
		Retail														Total Property Types
Year of Lease Expiration		Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Per Square Foot			Annualized Revenues Under Expiring Leases with future step-ups			Per Square Foot			Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Per Square Foot			Annualized Revenues Under Expiring Leases with future step-ups			Per Square Foot
2008		901		$	148,018		$	164.28		$	148,018		$	164.28		99,376		$	7,473,020		$	75.20		$	7,476,026		$	75.23
2009		—			—			—			—			—		122,607			10,108,733			82.45			10,127,596			82.60
2010		7,998			1,923,595			240.51			1,923,595			240.51		422,881			32,826,261			77.63			33,971,052			80.33
2011		14,550			1,483,037			101.93			1,545,315			106.21		187,364			16,638,269			88.80			16,960,750			90.52
2012		72,515			7,339,978			101.22			7,422,429			102.36		273,187			26,017,708			95.24			26,860,684			98.32
2013		1,682			77,263			45.94			192,434			114.41		70,224			5,243,136			74.66			8,548,831			121.74
2014		11,368			1,266,652			111.42			1,474,396			129.70		91,852			10,110,809			110.08			11,140,639			121.29
2015		5,500			1,288,433			234.26			2,288,433			416.08		156,631			15,019,094			95.89			16,803,504			107.28
2016		89,901			8,960,310			99.67			13,922,294			154.86		1,141,270			97,646,756			85.56			107,294,055			94.01
2017		26,685			2,247,795			84.23			2,401,654			90.00		1,305,749			106,612,497			81.65			121,556,553			93.09
Thereafter		87,241			18,617,061			213.40			25,868,187			296.51		3,416,908			255,519,164			74.78			309,834,635			90.68

 

(1)	For disclosures relating to our definition of Annualized Revenue, see page 50.

(2)	Includes 100% of unconsolidated joint venture properties.

 

35

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Boston Properties, Inc.

Second Quarter 2008

 

IN-SERVICE MIDTOWN MANHATTAN PROPERTIES

Quarterly Lease Expirations - Midtown Manhattan (1)(2)

 

		OFFICE														OFFICE/TECHNICAL
Lease Expiration by Quarter		Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Per Square Foot			Annualized Revenues Under Expiring Leases with future step-ups			Per Square Foot			Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Per Square Foot			Annualized Revenues Under Expiring Leases with future step-ups			Per Square Foot
Q1 2008		—		$	—		$	—		$	—		$	—		—		$	—		$	—		$	—		$	—
Q2 2008		—			—			—			—			—		—			—			—			—			—
Q3 2008		66,066			5,033,661			76.19			5,036,667			76.24		—			—			—			—			—
Q4 2008		32,409			2,291,341			70.70			2,291,341			70.70		—			—			—			—			—
Total 2008		98,475		$	7,325,002		$	74.38		$	9,830,596		$	74.41		—		$	—		$	—		$	—		$	—
Q1 2009		2,109		$	121,870		$	57.79		$	121,870		$	57.79		—		$	—		$	—			—		$	—
Q2 2009		32,272			2,905,829			90.04			2,917,339			90.40		—			—			—			—			—
Q3 2009		76,186			6,310,653			82.83			6,312,942			82.86		—			—			—			—			—
Q4 2009		12,040			770,380			63.99			775,444			64.41		—			—			—			—			—
Total 2009		122,607		$	10,108,733		$	82.45		$	10,127,596		$	82.60		—		$	—		$	—		$	—		$	—
		Retail														Total Property Types
Lease Expiration by Quarter		Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Per Square Foot			Annualized Revenues Under Expiring Leases with future step-ups			Per Square Foot			Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Per Square Foot			Annualized Revenues Under Expiring Leases with future step-ups			Per Square Foot
Q1 2008		—		$	—		$	—		$	—		$	—		—		$	—		$	—		$	—		$	—
Q2 2008		—			—			—			—			—		—			—			—			—			—
Q3 2008		350			26,070			74.49			26,070			74.49		66,416			5,059,731			76.18			5,062,737			76.23
Q4 2008		551			121,948			221.32			121,948			221.32		32,960			2,413,289			73.22			2,413,289			75.22
Total 2008		901		$	148,018		$	164.28		$	148,018		$	164.28		99,376		$	7,473,020		$	75.20		$	7,476,026		$	75.23
Q1 2009		—		$	—		$	—			—		$	—		2,109		$	121,870		$	57.79		$	121,870		$	57.79
Q2 2009		—			—			—			—			—		32,272			2,905,829			90.04			2,917,339			90.40
Q3 2009		—			—			—			—			—		76,186			6,310,653			82.83			6,312,942			82.86
Q4 2009		—			—			—			—			—		12,040			770,380			63.99			775,444			64.41
Total 2009		—		$	—		$	—		$	—		$	—		122,607		$	10,108,733		$	82.45		$	10,127,596		$	82.60

 

(1)	For disclosures relating to our definition of Annualized Revenue, see page 50.

(2)	Includes 100% of unconsolidated joint venture properties.

 

36

---

Boston Properties, Inc.

Second Quarter 2008

 

IN-SERVICE PRINCETON/EAST BRUNSWICK PROPERTIES

Lease Expirations - Princeton/East Brunswick (1)(2)

 

		OFFICE														OFFICE/TECHNICAL
Year of Lease Expiration		Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Per Square Foot			Annualized Revenues Under Expiring Leases with future step-ups			Per Square Foot			Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Per Square Foot			Annualized Revenues Under Expiring Leases with future step-ups			Per Square Foot
2008		4,701		$	145,085		$	30.86		$	75,085		$	15.97		—		$	—		$	—		$	—		$	—
2009		220,558			8,104,232			36.74			8,104,232			36.74		—			—			—			—			—
2010		136,340			4,954,018			36.34			4,980,948			36.53		—			—			—			—			—
2011		432,667			14,882,115			34.40			15,150,970			35.02		—			—			—			—			—
2012		49,248			1,651,647			33.54			1,690,970			34.34		—			—			—			—			—
2013		177,850			5,698,615			32.04			6,115,920			34.39		—			—			—			—			—
2014		636,725			19,756,557			31.03			21,314,715			33.48		—			—			—			—			—
2015		154,152			4,554,145			29.54			5,077,343			32.94		—			—			—			—			—
2016		—			—			—			—			—		—			—			—			—			—
2017		80,846			2,701,231			33.41			3,002,812			37.14		—			—			—			—			—
Thereafter		—			—			—			—			—		—			—			—			—			—
		Retail														Total Property Types
Year of Lease Expiration		Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Per Square Foot			Annualized Revenues Under Expiring Leases with future step-ups			Per Square Foot			Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Per Square Foot			Annualized Revenues Under Expiring Leases with future step-ups			Per Square Foot
2008		—		$	—		$	—		$	—		$	—		4,701		$	145,085		$	30.86		$	75,085		$	15.97
2009		—			—			—			—			—		220,558			8,104,232			36.74			8,104,232			36.74
2010		—			—			—			—			—		136,340			4,954,018			36.34			4,980,948			36.53
2011		—			—			—			—			—		432,667			14,882,115			34.40			15,150,970			35.02
2012		—			—			—			—			—		49,248			1,651,647			33.54			1,690,970			34.34
2013		—			—			—			—			—		177,850			5,698,615			32.04			6,115,920			34.39
2014		—			—			—			—			—		636,725			19,756,557			31.03			21,314,715			33.48
2015		—			—			—			—			—		154,152			4,554,145			29.54			5,077,343			32.94
2016		—			—			—			—			—		—			—			—			—			—
2017		—			—			—			—			—		80,846			2,701,231			33.41			3,002,812			37.14
Thereafter		—			—			—			—			—		—			—			—			—			—

 

(1)	For disclosures relating to our definition of Annualized Revenue, see page 50.

(2)	Includes 100% of unconsolidated joint venture properties.

 

37

---

Boston Properties, Inc.

Second Quarter 2008

 

IN-SERVICE PRINCETON/EAST BRUNSWICK PROPERTIES

Quarterly Lease Expirations - Princeton/East Brunswick (1)(2)

 

		OFFICE														OFFICE/TECHNICAL
Lease Expiration by Quarter		Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Per Square Foot			Annualized Revenues Under Expiring Leases with future step-ups			Per Square Foot			Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Per Square Foot			Annualized Revenues Under Expiring Leases with future step-ups			Per Square Foot
Q1 2008		—		$	—		$	—		$	—		$	—		—		$	—		$	—		$	—		$	—
Q2 2008		—			—			—			—			—		—			—			—			—			—
Q3 2008		—			—			—			—			—		—			—			—			—			—
Q4 2008		4,701			145,085			30.86			75,085			15.97		—			—			—			—			—
Total 2008		4,701		$	145,085		$	30.86		$	75,085		$	15.97		—		$	—		$	—		$	—		$	—
Q1 2009		79,649		$	3,109,973		$	39.05		$	3,109,973		$	39.05		—		$	—		$	—		$	—		$	—
Q2 2009		11,085			346,400			31.25			346,400			31.25		—			—			—			—			—
Q3 2009		24,797			891,425			35.95			891,425			35.95		—			—			—			—			—
Q4 2009		105,027			3,756,434			35.77			3,756,434			35.77		—			—			—			—			—
Total 2009		220,558		$	8,104,232		$	36.74		$	8,104,232		$	36.74		—		$	—		$	—		$	—		$	—
		Retail														Total Property Types
Lease Expiration by Quarter		Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Per Square Foot			Annualized Revenues Under Expiring Leases with future step-ups			Per Square Foot			Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Per Square Foot			Annualized Revenues Under Expiring Leases with future step-ups			Per Square Foot
Q1 2008		—		$	—		$	—		$	—		$	—		—		$	—		$	—		$	—		$	—
Q2 2008		—			—			—			—			—		—			—			—			—			—
Q3 2008		—			—			—			—			—		—			—			—			—			—
Q4 2008		—			—			—			—			—		4,701			145,085			30.86			75,085			15.97
Total 2008		—		$	—		$	—		$	—		$	—		4,701		$	145,085		$	30.86		$	75,085		$	15.97
Q1 2009		—		$	—		$	—		$	—		$	—		79,649		$	3,109,973		$	39.05		$	3,109,973		$	39.05
Q2 2009		—			—			—			—			—		11,085			346,400			31.25			346,400			31.25
Q3 2009		—			—			—			—			—		24,797			891,425			35.95			891,425			35.95
Q4 2009		—			—			—			—			—		105,027			3,756,434			35.77			3,756,434			35.77
Total 2009		—		$	—		$	—		$	—		$	—		220,558		$	8,104,232		$	36.74		$	8,104,232		$	36.74

 

(1)	For disclosures relating to our definition of Annualized Revenue, see page 50.

(2)	Includes 100% of unconsolidated joint venture properties.

 

38

---

Boston Properties, Inc.

Second Quarter 2008

 

CBD PROPERTIES

Lease Expirations (1)(2)

 

		Greater Boston															Greater Washington
Year of Lease Expiration		Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Per Square Foot			Annualized Revenues Under Expiring Leases with future step-ups			Per Square Foot				Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Per Square Foot			Annualized Revenues Under Expiring Leases with future step-ups			Per Square Foot
2008		102,082		$	5,691,635		$	55.76		$	5,729,075		$	56.12	(3)		23,698		$	1,136,794		$	47.97		$	1,136,794		$	47.97
2009		264,648			11,998,514			45.34			11,938,708			45.11			394,372			15,935,577		$	40.41			16,110,314			40.85
2010		109,491			4,970,020			45.39			5,025,583			45.90			357,055			18,054,016		$	50.56			18,610,691			52.12
2011		805,024			44,333,226			55.07			45,983,367			57.12			140,677			7,722,765		$	54.90			8,085,888			57.48
2012		504,334			24,580,698			48.74			24,788,779			49.15			167,676			7,278,927		$	43.41			7,398,731			44.13
2013		244,820			13,513,352			55.20			14,915,376			60.92			28,633			1,342,994		$	46.90			1,469,220			51.31
2014		504,753			23,504,589			46.57			23,396,963			46.35			54,268			2,690,728		$	49.58			3,009,904			55.46
2015		320,562			15,668,909			48.88			16,851,377			52.57			337,833			18,360,523		$	54.35			20,822,887			61.64
2016		296,421			21,946,900			74.04			22,636,123			76.36			57,782			2,696,311		$	46.66			3,170,178			54.86
2017		106,064			6,278,228			59.19			6,848,641			64.57			753,605			40,166,057		$	53.30			44,124,864			58.55
Thereafter		1,268,990			51,032,010			40.21			78,208,751			61.63			1,344,381			66,959,071		$	49.81			89,928,074			66.89
		New York															San Francisco
Year of Lease Expiration		Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Per Square Foot			Annualized Revenues Under Expiring Leases with future step-ups			Per Square Foot				Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Per Square Foot			Annualized Revenues Under Expiring Leases with future step-ups			Per Square Foot
2008		99,376		$	7,473,020		$	75.20		$	7,476,026		$	75.23			53,910		$	2,430,204		$	45.08		$	2,597,595		$	48.18
2009		122,607			10,108,733			82.45			10,127,596			82.60			152,420			7,412,879			48.63			7,416,544			48.66
2010		422,881			32,826,261			77.63			33,971,052			80.33			194,852			10,657,127			54.69			10,982,853			56.37
2011		187,364			16,638,269			88.80			16,960,750			90.52			312,976			23,856,593			76.22			24,415,297			78.01
2012		273,187			26,017,708			95.24			26,860,684			98.32			265,533			14,651,591			55.18			15,479,480			58.30
2013		70,224			5,243,136			74.66			8,548,831			121.74			217,754			10,364,781			47.60			10,970,048			50.38
2014		91,852			10,110,809			110.08			11,140,639			121.29			223,413			10,245,285			45.86			10,942,224			48.98
2015		156,631			15,019,094			95.89			16,803,504			107.28			143,832			6,821,765			47.43			7,376,942			51.29
2016		1,141,270			97,646,756			85.56			107,294,055			94.01			815,858			34,393,770			42.16			36,713,056			45.00
2017		1,305,749			106,612,497			81.65			121,556,553			93.09			183,332			8,538,459			46.57			9,253,559			50.47
Thereafter		3,416,908			255,519,164			74.78			309,834,635			90.68			535,316			28,688,204			53.59			32,481,259			60.68
		Princeton/East Brunswick															Other
Year of Lease Expiration		Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Per Square Foot			Annualized Revenues Under Expiring Leases with future step-ups			Per Square Foot				Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Per Square Foot			Annualized Revenues Under Expiring Leases with future step-ups			Per Square Foot
2008		—		$	—		$	—		$	—		$	—			—		$	—		$	—		$	—		$	—
2009		—			—			—			—			—			—			—			—			—			—
2010		—			—			—			—			—			—			—			—			—			—
2011		—			—			—			—			—			—			—			—			—			—
2012		—			—			—			—			—			—			—			—			—			—
2013		—			—			—			—			—			—			—			—			—			—
2014		—			—			—			—			—			—			—			—			—			—
2015		—			—			—			—			—			—			—			—			—			—
2016		—			—			—			—			—			—			—			—			—			—
2017		—			—			—			—			—			—			—			—			—			—
Thereafter		—			—			—			—			—			—			—			—			—			—

 

(1)	For disclosures relating to our definition of Annualized Revenue, see page 50.

(2)	Includes 100% of unconsolidated joint venture properties.

(3)	Includes 4,626 square feet of retail space and kiosks. Excluding this space, current rent on expiring leases is $45.24 and rent on expiring leases with future step-up is $45.24 per square foot in 2008.

 

39

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Boston Properties, Inc.

Second Quarter 2008

 

SUBURBAN PROPERTIES

Lease Expirations (1)(2)

 

		Greater Boston														Greater Washington
Year of Lease Expiration		Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Per Square Foot			Annualized Revenues Under Expiring Leases with future step-ups			Per Square Foot			Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Per Square Foot			Annualized Revenues Under Expiring Leases with future step-ups			Per Square Foot
2008		144,869		$	4,911,677		$	33.90		$	4,911,677		$	33.90		128,174		$	2,639,305		$	20.59		$	2,639,305		$	20.59
2009		562,118			18,173,127			32.33			18,317,433			32.59		429,590			14,165,816			32.98			14,230,901			33.13
2010		500,164			14,583,824			29.16			15,260,562			30.51		573,349			18,327,972			31.97			18,606,844			32.45
2011		494,068			13,388,047			27.10			13,653,417			27.63		702,005			23,406,336			33.34			24,782,714			35.30
2012		758,991			23,047,936			30.37			24,789,640			32.66		782,123			30,336,453			38.79			32,284,535			41.28
2013		123,307			3,128,233			25.37			3,705,668			30.05		120,722			3,906,393			32.36			4,246,748			35.18
2014		135,949			3,502,263			25.76			3,910,196			28.76		620,659			18,668,139			30.08			20,989,978			33.82
2015		87,931			2,041,645			23.22			2,501,591			28.45		248,770			8,093,337			32.53			9,428,730			37.90
2016		214,824			6,866,071			31.96			7,664,387			35.68		147,489			4,951,069			33.57			6,123,189			41.52
2017		145,556			4,199,730			28.85			5,170,704			35.52		151,800			5,595,181			36.86			6,384,323			42.06
Thereafter		301,276			7,505,437			24.91			7,221,075			23.97		566,837			20,588,791			36.32			19,960,254			35.21
		New York														San Francisco
Year of Lease Expiration		Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Per Square Foot			Annualized Revenues Under Expiring Leases with future step-ups			Per Square Foot			Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Per Square Foot			Annualized Revenues Under Expiring Leases with future step-ups			Per Square Foot
2008		—		$	—		$	—		$	—		$	—		36,954		$	980,700		$	26.54		$	980,700		$	26.54
2009		—			—			—			—			—		82,862			2,508,000			30.27			2,664,475			32.16
2010		—			—			—			—			—		573,297			8,501,734			14.83			8,971,406			15.65
2011		—			—			—			—			—		84,901			1,357,702			15.99			1,841,509			21.69
2012		—			—			—			—			—		22,007			693,390			31.51			765,095			34.77
2013		—			—			—			—			—		10,011			302,480			30.21			346,823			34.64
2014		—			—			—			—			—		256,302			8,601,368			33.56			9,339,517			36.44
2015		—			—			—			—			—		221,962			6,862,388			30.92			8,162,001			36.77
2016		—			—			—			—			—		128,388			3,021,363			23.53			3,657,712			28.49
2017		—			—			—			—			—		—			—			—			—			—
Thereafter		—			—			—			—			—		—			—			—			—			—
		Princeton/East Brunswick														Other
Year of Lease Expiration		Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Per Square Foot			Annualized Revenues Under Expiring Leases with future step-ups			Per Square Foot			Rentable Square Footage Subject to Expiring Leases		Current Annualized Revenues Under Expiring Leases			Per Square Foot			Annualized Revenues Under Expiring Leases with future step-ups			Per Square Foot
2008		4,701		$	145,085		$	30.86		$	75,085		$	15.97		—		$	—		$	—		$	—		$	—
2009		220,558			8,104,232			36.74			8,104,232			36.74		—			—			—			—			—
2010		136,340			4,954,018			36.34			4,980,948			36.53		—			—			—			—			—
2011		432,667			14,882,115			34.40			15,150,970			35.02		—			—			—			—			—
2012		49,248			1,651,647			33.54			1,690,970			34.34		—			—			—			—			—
2013		177,850			5,698,615			32.04			6,115,920			34.39		—			—			—			—			—
2014		636,725			19,756,557			31.03			21,314,715			33.48		—			—			—			—			—
2015		154,152			4,554,145			29.54			5,077,343			32.94		—			—			—			—			—
2016		—			—			—			—			—		—			—			—			—			—
2017		80,846			2,701,231			33.41			3,002,812			37.14		—			—			—			—			—
Thereafter		—			—			—			—			—		—			—			—			—			—

 

(1)	For disclosures relating to our definition of Annualized Revenue, see page 50.

(2)	Includes 100% of unconsolidated joint venture properties.

 

40

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Boston Properties, Inc.

Second Quarter 2008

 

HOTEL PERFORMANCE

Cambridge Center Marriott

 

		Second Quarter 2008				Second Quarter 2007				Percent Change			Year to Date 2008				Year To Date 2007				Percent Change
Occupancy			83.7	%			82.9	%		0.9	%			76.2	%			78.4	%		-2.9	%
Average Daily Rate		$	236.58			$	229.81			2.9	%		$	208.59			$	202.76			2.9	%
Revenue per available room		$	197.94			$	190.52			3.9	%		$	161.32			$	158.86			1.5	%
OCCUPANCY ANALYSIS   Same Property Occupancy(1) - By Location
		CBD								Suburban							Total
Location		30-Jun-08				30-Jun-07				30-Jun-08			30-Jun-07				30-Jun-08				30-Jun-07
Greater Boston			96.9	%			96.4	%		88.0	%			84.5	%			92.8	%		90.9	%
Greater Washington			99.5	%			97.8	%		96.9	%			99.2	%			98.0	%		98.6	%
Midtown Manhattan			99.9	%			99.5	%		n/a				n/a				99.9	%		99.5	%
Princeton/East Brunswick, NJ			n/a				n/a			82.2	%			86.7	%			82.2	%		86.7	%
Greater San Francisco			90.9	%			87.0	%		99.0	%			97.0	%			93.1	%		89.7	%
Total Portfolio			97.2	%			95.8	%		91.4	%			91.8	%			94.8	%		94.1	%
Same Property Occupancy(1) - By Type of Property
		CBD								Suburban							Total
		30-Jun-08				30-Jun-07				30-Jun-08			30-Jun-07				30-Jun-08				30-Jun-07
Total Office Portfolio			97.1	%			95.7	%		93.1	%			93.3	%			95.5	%		94.7	%
Total Office/Technical Portfolio			100.0	%			100.0	%		77.9	%			79.9	%			81.9	%		83.5	%
Total Portfolio			97.2	%			95.8	%		91.4	%			91.8	%			94.8	%		94.1	%

 

(1)	For disclosures related to our definition of Same Property, see page 50.

 

41

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Boston Properties, Inc.

Second Quarter 2008

 

SAME PROPERTY PERFORMANCE

Office, Office/Technical and Hotel Properties

 

		Office			Office/Technical				Hotel (1)				Total
Number of Properties		100				20				1				121
Square feet		27,797,281				1,659,294				330,400				29,786,975
Percent of in-service properties		92.4	%			100.0	%			100.0	%			92.8	%
Occupancy @ 6/30/2007		94.7	%			83.5	%			—				94.1	%
Occupancy @ 6/30/2008		95.5	%			81.9	%			—				94.8	%
Percent change from 2nd quarter 2008 over 2nd quarter 2007 (2):
Rental revenue		3.6	%			4.1	%			3.9	%
Operating expenses and real estate taxes		3.9	%			2.4	%			0.6	%
Net Operating Income (3)—excluding hotel and unconsolidated joint ventures														3.5	%(2)
Net Operating Income (3)—Hotel														11.1	%(2)
Net Operating Income—BXP’s share of joint ventures														-7.3	% (2)
Net Operating Income—Total														3.3	%
Rental revenue—cash basis		3.6	%			1.5	%			3.9	%
Net Operating Income (3)—cash basis (4) excluding unconsolidated joint ventures		3.4	%			1.1	%							3.3	%(2)
Net Operating Income (3)—cash basis (4)—Hotel														11.1	%(2)
Net Operating Income—cash basis (4)—BXP’s share of joint ventures														0.6	%(2)
Net Operating Income—Total														3.3	%
Same Property Lease Analysis - quarter ended June 30, 2008
					Office				Office/Technical				Total
Vacant space available @ 4/1/2008 (sf)						1,310,245				300,275				1,610,520
Square footage of leases expiring or terminated 4/1/2008-6/30/2008						630,575				—				630,575
Total space for lease (sf)						1,940,820				300,275				2,241,095
New tenants (sf)						357,728				—				357,728
Renewals (sf)						109,401				—				109,401
Total space leased (sf)						467,129				—				467,129
Space available @ 6/30/2008 (sf)						1,473,691				300,275				1,773,966
Net (increase)/decrease in available space (sf)						(163,446	)			—				(163,446	)
2nd generation Average lease term (months)						65				—				65
2nd generation Average free rent (days)						44				—				44
2nd generation TI/Comm PSF					$	22.01			$	—			$	—
Increase (decrease) in 2nd generation gross rents						12.10	%			0.00	%			12.10	%
Increase (decrease) in 2nd generation net rents						17.16	%			0.00	%			17.16	%

 

(1)	Includes revenue and expenses from retail tenants at the hotel properties.

(2)	See page 44 for a quantitative reconciliation of Same Property Net Operating Income (NOI) by reportable segment.

(3)	For a quantitative reconciliation of NOI to net income available to common shareholders, see page 43. For disclosures relating to our use of NOI, see page 50.

(4)	Represents change in rents on a “cash to cash” basis (actual rent at time of expiration vs. initial rent of new lease) and for only 2nd generation space after eliminating any space vacant for more than 12 months. The total footage being weighted is 350,616 square feet.

 

42

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Boston Properties, Inc.

Second Quarter 2008

 

Reconciliation of Net Operating Income to Net Income

 

		For the three months ended
		6/30/2008				6/30/2007
		(in thousands)
Net income available to common shareholders		$	79,534			$	102,344
Gains on sales of real estate from discontinued operations, net of minority interest			—				(11,716	)
Income from discontinued operations, net of minority interest			—				(1,357	)
Gains on sales of real estate, net of minority interest			(5,303	)			—
Minority interest in Operating Partnership			14,009				16,840
Income from unconsolidated joint ventures			(1,855	)			(17,268	)
Minority interest in property partnership			420				—
Income before minority interest in property partnership, income from unconsolidated joint ventures, minority interest in Operating Partnership, gains on sales of real estate and discontinued operations			86,805				88,843
Add:
Losses from early entinguishments of debt							—
Net derivative losses			(257	)			—
Depreciation and amortization			74,389				73,921
Interest expense			64,564				73,743
General and administrative expense			17,467				16,291
Subtract:
Interest and other income			(4,115	)			(26,205	)
Development and management services income			(6,460	)			(5,130	)
Consolidated Net Operating Income		$	232,393			$	221,463
Income from unconsolidated joint ventures (BXP’s share)			16,560				5,862
Combined Net Operating Income			248,953				227,325
Same Property Net Operating Income		$	234,040			$	226,541
Net operating income from non Same Properties (1)			13,404				56
Termination income			1,509				728
Consolidated Net Operating Income		$	248,953			$	227,325
Same Property Net Operating Income		$	234,040			$	226,541
Less straight-line rent and fair value lease revenue			11,067				10,719
Same Property Net Operating Income—cash basis		$	222,973			$	215,822

 

(1)	See pages 21-23 for properties which are not included as part of Same Property Net Operating Income.

 

43

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Boston Properties, Inc.

Second Quarter 2008

 

Same Property Net Operating Income by Reportable Segment

(in thousands)

 

		Office														Office/Technical
		For the three months ended							$				%			For the three months ended								$			%
		30-Jun-08				30-Jun-07			Change				Change			30-Jun-08				30-Jun-07				Change			Change
Rental Revenue		$	331,553			$	320,715									$	11,266			$	10,818
Less Termination Income			—				728										—				—
Rental revenue—subtotal			331,553				319,987			11,566			3.6	%			11,266				10,818				448		4.1	%
Operating expenses and real estate taxes			114,303				109,962			4,341			3.9	%			3,142				3,068				74		2.4	%
Net Operating Income (1)		$	217,250			$	210,025		$	7,225			3.4	%		$	8,124			$	7,750			$	374		4.8	%
Rental revenue—subtotal		$	331,553			$	319,987									$	11,266			$	10,818
Less straight line rent and fair value lease revenue			10,817				10,300			517			5.0	%			300				12				288		2400.0	%
Rental revenue—cash basis			320,736				309,687			11,049			3.6	%			10,966				10,806				160		1.5	%
Less:
Operating expenses and real estate taxes			114,303				109,962			4,341			3.9	%			3,142				3,068				74		2.4	%
Net Operating Income (2)—cash basis		$	206,433			$	199,725		$	6,708			3.4	%		$	7,824			$	7,738			$	86		1.1	%
		Sub-Total														Hotel
		For the three months ended							$				%			For the three months ended								$			%
		30-Jun-08				30-Jun-07			Change				Change			30-Jun-08				30-Jun-07				Change			Change
Rental Revenue		$	342,819			$	331,533									$	9,708			$	9,345
Less Termination Income			—				728										—				—
Rental revenue—subtotal			342,819				330,805			12,014			3.6	%			9,708				9,345			$	363		3.9	%
Operating expenses and real estate taxes			117,445				113,030			4,415			3.9	%			6,449				6,412				37		0.6	%
Net Operating Income (1)		$	225,374			$	217,775		$	7,599			3.5	%		$	3,259			$	2,933			$	326		11.1	%
Rental revenue—subtotal		$	342,819			$	330,805									$	9,708			$	9,345
Less straight line rent and fair value lease revenue			11,117				10,312			805			7.8	%			(1	)			(1	)			—		0.0	%
Rental revenue—cash basis			331,702				320,493			11,209			3.5	%			9,709				9,346				363		3.9	%
Less:
Operating expenses and real estate taxes			117,445				113,030			4,415			3.9	%			6,449				6,412				37		0.6	%
Net Operating Income (2)—cash basis		$	214,257			$	207,463		$	6,794			3.3	%		$	3,260			$	2,934			$	326		11.1	%
		Joint Venture														Total
		For the three months ended							$				%			For the three months ended								$			%
		30-Jun-08				30-Jun-07			Change				Change			30-Jun-08				30-Jun-07				Change			Change
Rental Revenue		$	10,412			$	8,967									$	362,939			$	349,845
Less Termination Income			1,509				—										1,509				728
Rental revenue—subtotal			8,903				8,967		$	(64	)		-0.7	%			361,430				349,117				12,313		3.5	%
Operating expenses and real estate taxes			3,496				3,134			362			11.6	%			127,390				122,576				4,814		3.9	%
Net Operating Income (1)		$	5,407			$	5,833		$	(426	)		-7.3	%		$	234,040			$	226,541			$	7,499		3.3	%
Rental revenue—subtotal		$	8,903			$	8,967									$	361,430			$	349,117
Less straight line rent and fair value lease revenue			(49	)			408			(457	)		-112.0	%			11,067				10,719				348		3.2	%
Rental revenue—cash basis			8,952				8,559			393			4.6	%			350,363				338,398				11,965		3.5	%
Less:
Operating expenses and real estate taxes			3,496				3,134			362			11.6	%			127,390				122,576				4,814		3.9	%
Net Operating Income (2)—cash basis		$	5,456			$	5,425		$	31			0.6	%		$	222,973			$	215,822			$	7,151		3.3	%

 

(1)	For a quantitative reconciliation of net operating income (NOI) to net income available to common shareholders, see page 43. For disclosures relating to our use of NOI see page 50.

(2)	For a quantitative reconciliation of NOI to NOI on a cash basis see page 43. For disclosures relating to our use of NOI see page 50.

 

44

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Boston Properties, Inc.

Second Quarter 2008

 

LEASING ACTIVITY

All In-Service Properties - quarter ended June 30, 2008

 

		Office				Office/Technical				Total
Vacant space available @ 4/1/2008 (sf)			1,119,861				300,275				1,420,136
Property dispositions/ assets taken out of service (sf)			—				—				—
Property acquisitions/ assets placed in-service (sf)			11,541				—				11,541
Leases expiring or terminated 4/1/2008-6/30/2008 (sf)			652,235				—				652,235
Total space for lease (sf)			1,783,637				300,275				2,083,912
New tenants (sf)			361,267				—				361,267
Renewals (sf)			109,401				—				109,401
Total space leased (sf)			470,668				—				470,668	(1)
Space available @ 6/30/2008 (sf)			1,312,969				300,275				1,613,244
Net (increase)/decrease in available space (sf)			(193,108	)			—				(193,108	)
2nd generation Average lease term (months)			66				—				66
2nd generation Average free rent (days)			45				—				45
2nd generation TI/Comm PSF		$	22.00			$	—			$	22.00
Increase (decrease) in 2nd generation gross rents (2)			12.53	%			0.00	%			12.53	%
Increase (decrease) in 2nd generation net rents (3)			17.74	%			0.00	%			17.74	%

 

		All leases 1st Generation		All leases 2nd Generation		Incr (decr) in 2nd gen. gross cash rents (2)			Incr (decr) in 2nd gen. net cash rents (3)			Total Leased (4)		Total square feet of leases executed in the quarter (5)
Boston		—		230,665		11.72	%		19.30	%		230,665		645,205
Washington		3,361		88,490		-4.59	%		-7.38	%		91,851		162,732
New York		—		9,352		110.85	%		162.50	%		9,352		5,459
San Francisco		—		59,865		20.91	%		29.83	%		59,865		104,460
Princeton		—		78,935		3.01	%		1.40	%		78,935		18,016
		3,361		467,307		12.53	%		17.74	%		470,668		935,872

 

(1)	Details of 1st and 2nd generation space is located in chart below.

(2)	Represents increase (decrease) in gross rent (total base rent and expense reimbursements), comparing the change in rent at lease expiration vs. initial rent of the new lease for 2nd generation space that has been vacant for less than twelve months. The total footage being weighted is 350,794.

(3)	Represents increase (decrease) in net rent (base rent less base year expense), comparing the rent at lease expiration vs. initial rent of the new lease for 2nd generation space that has been vacant for less than twelve months. The total footage being weighted is 350,794.

(4)	Represents leases for which rental revenue has commenced in accordance with GAAP during the quarter.

(5)	Represents leases executed in the quarter for which the GAAP impact may be recognized in the current or future quarter, including properties currently under development.

 

45

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Boston Properties, Inc.

Second Quarter 2008

 

HISTORICALLY GENERATED CAPITAL EXPENDITURES,

TENANT IMPROVEMENT COSTS AND LEASING COMMISSIONS

Historical Capital Expenditures

(in thousands)

 

		Q2 2008			Q1 2008				2007			2006				2005
Recurring capital expenditures		$	5,075		$	4,296			$	36,599		$	25,718			$	22,369
Planned non-recurring capital expenditures associated with acquisition properties			644			15				1,490			3,869				2,957
Hotel improvements, equipment upgrades and replacements			289			993	(1)			1,127			7,969	(2)			4,097
		$	6,008		$	5,304			$	39,216		$	37,556			$	29,423

2nd Generation Tenant Improvements and Leasing Commissions

 

		Q2 2008			Q1 2008			2007			2006			2005
Office
Square feet			467,307			744,687			3,201,812			2,972,996			2,749,079
Tenant improvement and lease commissions PSF		$	22.00		$	35.72		$	23.88		$	29.14		$	28.75
Office/Technical
Square feet			—			—			226,692			33,400			82,753
Tenant improvement and lease commissions PSF		$	—		$	—		$	26.62		$	—		$	2.89
Average tenant improvement and lease commissions PSF		$	22.00		$	35.72		$	24.06		$	28.82		$	28.00

 

(1)	Includes approximately $723,000 of costs related to suites renovation at Cambridge Center Marriott.

(2)	Includes approximately $5.6 million of costs related to a room renovation project at Cambridge Center Marriott.

 

46

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Boston Properties, Inc.

Second Quarter 2008

 

ACQUISITIONS/DISPOSITIONS

as of June 30, 2008

ACQUISITIONS

For the period from January 1, 2008 through June 30, 2008

 

Property		Date Acquired		Square Feet		Initial Investment			Anticipated Future Investment				Total Investment			Percentage Leased
250 West 55th Street (Development Rights)		May-08		N/A		$	34,200,000		$	—	(1)		$	34,200,000			N/A
The General Motors Building (60% ownership interest)		Jun-08		1,786,637			1,675,000,000			—				1,675,000,000			99	%
Total Acquisitions				1,786,637		$	1,709,200,000		$	—			$	1,709,200,000			99	%
DISPOSITIONS For the period from January 1, 2008 through June 30, 2008
Property						Date Disposed			Square Feet				Gross Sales Price			Book Gain
280 Park Avenue (2)							Jun-06			—			$	—		$	23,438,000
Mountain View Research/Technology Parks (3)							Jan-08			736,268				221,600,000			—
20 F Street Land (4)							Apr-08			—				33,700,000			6,203,000
Total Dispositions										736,268			$	255,300,000		$	29,641,000

 

(1)	Anticipated future investment on development projects are not included.

(2)

280 Park Avenue was sold in June 2006. The Company entered into a 74,340 net rentable square foot master lease obligation with the buyer resulting in the deferral of approximately $67.3 million of the book gain. Subsequent to the sale during 2006, the Company signed qualifying leases for 26,281 net rentable square feet and recognized approximately $21.0 million of additional book gain. During the year ended December 31, 2007, the Company signed an additional qualifying lease for 22,250 net rentable square feet resulting in the recognition of approximately $18.0 million of additional book gain. During the three months ended March 31, 2008, the Company signed an additional qualifying lease for 17,454 net rentable square feet resulting in the recognition of approximately $23.4 million of additional book gain. As of March 31, 2008, the master lease obligation totaled approximately $2.3 million.

(3)	On January 7, 2008, the Company transferred at cost the Mountain View properties to the Value-Added Fund.

(4)

On April 14, 2008, the Company sold a parcel of land located in Washington, D.C. for approximately $33.7 million. The Company had previously entered into a development agreement with the buyer to develop a Class A office property on the parcel totaling approximately 165,000 net rentable square feet. The estimated gain on sale totaling approximately $22.3 million has been deferred and will be recognized over the construction period.

 

47

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Boston Properties, Inc.

Second Quarter 2008

 

VALUE CREATION PIPELINE - CONSTRUCTION IN PROGRESS (1)

as of June 30, 2008

 

Construction Properties		Initial Occupancy		Estimated Stabilization Date		Location		# of Buildings		Square feet		Investment to Date (2) (3)			Estimated Total Investment (2) (3)			Total Construction Loan (2)			Amount Drawn at 6/30/2008(2)			Estimated Future Equity Requirement (2)			Percentage Leased (4)
77 CityPoint (formerly 77 Fourth Avenue)		Q1 2008		Q4 2008		Waltham, MA		1		210,000			68,522,779			79,707,173			—			—			11,184,394		100	%
South of Market (Phase I)		Q1 2008		Q3 2009		Reston, VA		3		652,000			183,786,628			213,800,000			200,000,000			168,467,650			—		83	%
One Preserve Parkway		Q2 2008		Q4 2009		Rockville, MD		1		183,000			43,203,486			60,536,931			—			—			17,333,445		20	%
Annapolis Junction (50% ownership)		Q4 2008		Q4 2009		Annapolis, MD		1		117,600			22,884,258			32,600,000			22,750,000			14,416,436			1,382,178		0	%
Wisconsin Place (66.67% ownership) (5)		Q2 2009		Q4 2010		Chevy Chase, MD		1		290,000			58,559,588			93,500,000			79,970,501			37,576,412			—		55	%
Democracy Tower (formerly South of Market—Phase II)		Q3 2009		Q3 2010		Reston, VA		1		225,000			32,021,835			87,200,000			65,000,000			7,744,191			—		77	%
701 Carnegie Center		Q4 2009		Q4 2009		Princeton, NJ		1		120,000			8,123,919			34,000,000			—			—			25,876,081		100	%
250 West 55th		Q1 2010		Q4 2010		New York, NY		1		1,000,000			378,697,214			910,000,000			—			—			531,302,786		22	%
280 Congress Street (Russia Wharf) (6)		Q1 2011		Q1 2012		Boston, MA		2		815,000			171,688,230			550,000,000			—			—			378,311,770		78	% (8)
2200 Pennsylvania Avenue (7)		Q2 2011		Q2 2012		Washington, DC		2		780,000			17,889,389			380,000,000			—			—			360,346,611		0	%
Total Properties under Construction								14		4,392,600		$	985,377,326		$	2,441,344,104		$	367,720,501		$	228,204,689		$	1,325,737,265		50	% (8)

PROJECTS PLACED-IN-SERVICE DURING 2008

 

		Initial In Service Date		Estimated Stabilization Date		Location		# of Buildings		Square feet		Investment to Date (3)			Estimated Total Investment (3)			Debt			Drawn at June 30, 2008			Estimated Future Equity Requirement			Percentage Leased
505 9th Street (50% ownership)		Q4 2007		Q1 2008		Washington, D.C.		1		323,000		$	66,695,305		$	65,000,000		$	65,000,000		$	65,000,000			—		100	%
Total Projects Placed in Service								1		323,000		$	66,695,305		$	65,000,000		$	65,000,000		$	65,000,000		$	—		100	%

IN-SERVICE PROPERTIES HELD FOR RE-DEVELOPMENT

 

		Sub Market		Number of Buildings		Square Feet		Leased %			Annualized Revenue Per Leased SF (9)			Encumbered with secured debt (Y/N)		Central Business District (CBD) or Suburban (S)		Estimated Future SF (10)
103 Fourth Avenue		Route 128 Mass Turnpike MA		1		62,476		58.5	%		$	20.93		N		S		265,000
Waltham Office Center		Route 128 Mass Turnpike MA		3		129,041		63.2	%			23.52		N		S		414,000
6601 Springfield Center Drive		Fairfax County VA		1		26,388		100.0	%			13.31		N		S		86,000
6605 Springfield Center Drive		Fairfax County VA		1		68,907		0.0	%			—		N		S		300,000
North First Business Park		San Jose, CA		5		190,636		66.4	%			13.03		N		S		683,000
Total Properties held for Re-Development				11		477,448		56.8	%		$	17.28						1,748,000

 

(1)	A project is classified as Construction in Progress when construction or supply contracts have been signed, physical improvements have commenced or a lease has been signed.

(2)	Represents the Company’s share.

(3)	Includes net revenue during lease up period.

(4)	Represents percentage leased as of July 21, 2008.

(5)	Includes approximately $34.5 million of land and infrastructure costs invested to date.

(6)	Includes 235,000 square feet of residential space for rent or for sale and 28,000 square feet of retail space.

(7)	Includes 330,000 square feet of residential space for rent or sale.

(8)	Percentage Leased excludes 235,000 square feet of residential space and includes 28,000 square feet of retail space.

(9)	For disclosures relating to our definition of Annualized Revenue, see page 50.

(10)	Included in developable square feet of Value Creation Pipeline—Owned Land Parcels on page 49.

 

48

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Boston Properties, Inc.

Second Quarter 2008

 

VALUE CREATION PIPELINE - OWNED LAND PARCELS

as of June 30, 2008

 

Location		Acreage		Approximate Developable Square Feet
San Jose, CA (1) (2)		44.0		2,600,000
Waltham, MA (1)		25.4		1,150,000
Reston, VA		33.8		910,000
Dulles, VA		76.6		850,000
Gaithersburg, MD		27.0		850,000
Springfield, VA (1)		17.8		800,000
Rockville, MD		58.1		759,000
Boston, MA (3)		1.2		546,000
Marlborough, MA		50.0		400,000
Weston, MA		74.0		350,000
Annapolis, MD (50% ownership)		20.0		300,000
Andover, MA		10.0		110,000
		437.9		9,625,000

VALUE CREATION PIPELINE—LAND PURCHASE OPTIONS

as of June 30, 2008

 

				Approximate Developable
Location		Acreage		Square Feet
Princeton, NJ (4)		143.1		1,780,000
New York, NY (50% ownership)		1.0		850,000
Cambridge, MA (5)		—		200,000
		144.1		2,830,000

 

(1)	Properties on-site are held for future re-development and are referenced on page 48.

(2)	Includes an additional 460,000 square feet of developable square footage at our 3200 Zanker Road project.

(3)	Includes approximately 250,000 square feet of Residential development.

(4)	$30.50 per square foot and $125,000 per annum non-refundable payment.

(5)	The Company has the option to purchase additional residential rights.

 

49

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Boston Properties, Inc.

Second Quarter 2008

 

Definitions

This section contains an explanation of certain non-GAAP financial measures we provide in other sections of this document, as well as the reasons why management believes these measures provide useful information to investors about the Company’s financial condition or results of operations. Additional detail can be found in the Company’s most recent annual report on Form 10-K and other documents filed with the SEC from time to time.

Funds from Operations

Pursuant to the revised definition of Funds from Operations adopted by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”), we calculate Funds from Operations, or “FFO,” by adjusting net income (loss) (computed in accordance with GAAP, including non-recurring items) for gains (or losses) from sales of properties, real estate related depreciation and amortization, and after adjustment for unconsolidated partnerships and joint ventures. FFO is a non-GAAP financial measure. The use of FFO, combined with the required primary GAAP presentations, has been fundamentally beneficial in improving the understanding of operating results of REITs among the investing public and making comparisons of REIT operating results more meaningful. Management generally considers FFO to be a useful measure for reviewing our comparative operating and financial performance because, by excluding gains and losses related to sales of previously depreciated operating real estate assets and excluding real estate asset depreciation and amortization (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates), FFO can help one compare the operating performance of a company’s real estate between periods or as compared to different companies. Our computation of FFO may not be comparable to FFO reported by other REITs or real estate companies that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently.

In addition to presenting FFO in accordance with the NAREIT definition, we also disclose FFO after a specific and defined supplemental adjustment to exclude losses from early extinguishments of debt associated with the sales of real estate. The adjustment to exclude losses from early extinguishments of debt results when the sale of real estate encumbered by debt requires us to pay the extinguishment costs prior to the debt’s stated maturity and to write-off unamortized loan costs at the date of the extinguishment. Such costs are excluded from the gains on sales of real estate reported in accordance with GAAP. However, we view the losses from early extinguishments of debt associated with the sales of real estate as an incremental cost of the sale transactions because we extinguished the debt in connection with the consummation of the sale transactions and we had no intent to extinguish the debt absent such transactions. We believe that this supplemental adjustment more appropriately reflects the results of our operations exclusive of the impact of our sale transactions.

Although our FFO as adjusted clearly differs from NAREIT’s definition of FFO, and may not be comparable to that of other REITs and real estate companies, we believe it provides a meaningful supplemental measure of our operating performance because we believe that, by excluding the effects of the losses from early extinguishments of debt associated with the sales of real estate, management and investors are presented with an indicator of our operating performance that more closely achieves the objectives of the real estate industry in presenting FFO.

Neither FFO nor FFO as adjusted should be considered as an alternative to net income (determined in accordance with GAAP) as an indication of our performance. Neither FFO nor FFO as adjusted represents cash generated from operating activities determined in accordance with GAAP, and neither is a measure of liquidity or an indicator of our ability to make cash distributions. We believe that to further understand our performance, FFO and FFO as adjusted should be compared with our reported net income and considered in addition to cash flows in accordance with GAAP, as presented in our consolidated financial statements.

Funds Available for Distribution (FAD)

In addition to FFO, we present Funds Available for Distribution (FAD) by (1) adding to FFO as adjusted non-real estate depreciation and net derivative losses, (2) eliminating the effect of straight-line rent, and (3) subtracting: recurring capital expenditures; hotel improvements, equipment upgrades and replacements; and second generation tenant improvement and leasing commissions. In addition, this calculation includes all non-cash compensation expense related to restricted securities. Although our FAD may not be comparable to that of other REITs and real estate companies, we believe it provides a meaningful indicator of our ability to fund cash needs and to make cash distributions to equity owners. In addition, we believe that to further understand our liquidity, FAD should be compared with our cash flows in accordance with GAAP, as presented in our consolidated financial statements. FAD does not represent cash generated from operating activities determined in accordance with GAAP, and FAD should not be considered as an alternative to net income (determined in accordance with GAAP) as an indication of our performance, as an alternative to net cash flows from operating activities (determined in accordance with GAAP), or as a measure of our liquidity.

Consolidated Debt to Total Market Capitalization Ratio

Consolidated debt to total consolidated market capitalization ratio, defined as total consolidated debt as a percentage of the market value of our outstanding equity securities plus our total consolidated debt, is a measure of leverage commonly used by analysts in the REIT sector. Total consolidated market capitalization is the sum of (A) our total consolidated indebtedness outstanding plus (B) the market value of our outstanding equity securities calculated using the closing price per share of common stock of the Company multiplied by the sum of (1) the actual aggregate number of outstanding common partnership units of our operating partnership (including common partnership units held by the company), (2) the number of common partnership units issuable upon conversion of all outstanding long term incentive plan units of our operating partnership, or LTIP units, but excluding unearned outperformance plan units, assuming all conditions have been met for the conversion of the LTIP units, and (3) the number of common partnership units issuable upon conversion of preferred partnership units of our operating partnership. We are presenting this ratio because our degree of leverage could affect our ability to obtain additional financing for working capital, capital expenditures, acquisitions, development or other general corporate purposes. Investors should understand that our consolidated debt to total consolidated market capitalization ratio is in part a function of the market price of the common stock of Boston Properties, Inc., and as such will fluctuate with changes in such price and does not necessarily reflect our capacity to incur additional debt to finance our activities or our ability to manage our existing debt obligations. However, for a company like ours, whose assets are primarily income-producing real estate, the consolidated debt to total consolidated market capitalization ratio may provide investors with an alternate indication of leverage, so long as it is evaluated along with the ratio of indebtedness to other measures of asset value used by financial analysts and other financial ratios, as well as the various components of our outstanding indebtedness.

Combined Debt to Total Market Capitalization Ratio

Combined debt to total combined market capitalization ratio, defined as total combined debt (which equals our total consolidated debt plus our share of unconsolidated joint venture debt) as a percentage of the market value of our outstanding equity securities plus our total combined debt, is an alternative measure of leverage used by some analysts in the REIT sector. Total combined market capitalization is the sum of (A) our total combined debt plus (B) the market value of our outstanding equity securities calculated using the closing price per share of common stock of the Company multiplied by the sum of (1) the actual aggregate number of outstanding common partnership units of our operating partnership (including common partnership units held by the Company), (2) the number of common partnership units issuable upon conversion of all outstanding long term incentive plan units of our operating partnership, or LTIP units, but excluding unearned outperformance plan units, assuming all conditions have been met for the conversion of the LTIP units, and (3) the number of common partnership units issuable upon conversion of preferred partnership units of our operating partnership. We are presenting this ratio because our degree of leverage (including our share of unconsolidated joint venture debt) could affect our ability to obtain additional financing for working capital, capital expenditures, acquisitions, development or other general corporate purposes. Investors should understand that our combined debt to total combined market capitalization ratio is in part a function of the market price of the common stock of Boston Properties, Inc., and as such will fluctuate with changes in such price and does not necessarily reflect our capacity to incur additional debt to finance our activities or our ability to manage our existing debt obligations. However, for a company like ours, whose assets are primarily income-producing real estate, the combined debt to total combined market capitalization ratio may provide investors with an alternate indication of leverage, so long as it is evaluated along with the ratio of indebtedness to other measures of asset value used by financial analysts and other financial ratios, as well as the various components of our outstanding indebtedness.

Net Operating Income (NOI)

NOI is a non-GAAP financial measure equal to net income available to common shareholders, the most directly comparable GAAP financial measure, plus corporate general and administrative expense, depreciation and amortization, interest expense, minority interest in Operating Partnership and losses from early extinguishment of debt, less interest income, development and management income, gains from property dispositions, gains on sale from discontinued operations, income from discontinued operations, income from unconsolidated joint ventures and minority interest in property partnerships. In some cases we also present NOI on a cash basis, which is NOI after eliminating the effects of straight-lining of rent. We use NOI internally as a performance measure and believe NOI provides useful information to investors regarding our financial condition and results of operations because it reflects only those income and expense items that are incurred at the property level. Therefore, we believe NOI is a useful measure for evaluating the operating performance of our real estate assets. Our management also uses NOI to evaluate regional property level performance and to make decisions about resource allocations. Further, we believe NOI is useful to investors as a performance measure because, when compared across periods, NOI reflects the impact on operations from trends in occupancy rates, rental rates, operating costs and acquisition and development activity on an unleveraged basis, providing perspective not immediately apparent from net income. NOI excludes certain components from net income in order to provide results that are more closely related to a property’s results of operations. For example, interest expense is not necessarily linked to the operating performance of a real estate asset and is often incurred at the corporate level as opposed to the property level. In addition, depreciation and amortization, because of historical cost accounting and useful life estimates, may distort operating performance at the property level. NOI presented by us may not be comparable to NOI reported by other REITs that define NOI differently. We believe that in order to facilitate a clear understanding of our operating results, NOI should be examined in conjunction with net income as presented in our consolidated financial statements. NOI should not be considered as an alternative to net income as an indication of our performance or to cash flows as a measure of our liquidity or ability to make distributions.

In-Service Properties

In-service properties includes unconsolidated joint ventures. We treat a property as being “in-service” upon the earlier of (i) lease-up and completion of tenant improvements or (ii) one year after cessation of major construction activity under GAAP. The determination as to when a property should be treated as “in-service” involves a degree of judgment and is made by management based on the relevant facts and circumstances of the particular property. For portfolio operating and occupancy statistics we specify a single date for treating a property as “in-service” which is generally later than the date the property is placed in-service for GAAP. Under GAAP a property may be placed in service in stages as construction is completed and the property is held available for occupancy. In accordance with GAAP, when a portion of a property has been substantially completed and occupied or held available for occupancy, we cease capitalization on that portion, though we may not treat the property as being “in-service,” and continue to capitalize only those costs associated with the portion still under construction.

Same Properties

In our analysis of NOI, particularly to make comparisons of NOI between periods meaningful, it is important to provide information for properties that were in-service and owned by us throughout each period presented. We refer to properties acquired or placed in-service prior to the beginning of the earliest period presented and owned by us through the end of the latest period presented as “Same Properties.” “Same Properties” therefore exclude properties placed in-service, acquired or repositioned after the beginning of the earliest period presented or disposed of prior to the end of the latest period presented. Accordingly, it takes at least one year and one quarter after a property is acquired or treated as “in-service” for that property to be included in “Same Properties.” See pages 21-23 for “In-Service Properties” which are not included in “Same Properties.”

Annualized Revenue

Contractual rental obligations at the end of the reporting period, including contractual reimbursements, on an annualized cash basis.

Future Annualized Revenue

Contractual rental obligations at lease expiration, including current contractual reimbursements, on an annualized cash basis.

 

50

Exhibit 99.2

 

800 Boylston Street
Boston, MA 02199

 

AT THE COMPANY		AT FINANCIAL RELATIONS BOARD
Michael Walsh		Marilynn Meek – General Information
Senior Vice President, Finance		(212) 827-3773
(617) 236-3410
Arista Joyner
Investor Relations Manager
(617) 236-3343

BOSTON PROPERTIES, INC. ANNOUNCES

SECOND QUARTER 2008 RESULTS

 

Reports diluted FFO per share of $1.19		Reports diluted EPS of $0.66

BOSTON, MA, July 22, 2008 – Boston Properties, Inc. (NYSE: BXP), a real estate investment trust, reported results today for the second quarter ended June 30, 2008.

Funds from Operations (FFO) for the quarter ended June 30, 2008 were $145.0 million, or $1.21 per share basic and $1.19 per share diluted. This compares to FFO for the quarter ended June 30, 2007 of $142.9 million, or $1.20 per share basic and $1.18 per share diluted. The weighted average number of basic and diluted shares outstanding totaled 119,752,889 and 122,775,797, respectively, for the quarter ended June 30, 2008 and 118,961,276 and 122,660,356, respectively, for the quarter ended June 30, 2007.

Net income available to common shareholders was $79.5 million for the quarter ended June 30, 2008, compared to $102.3 million for the quarter ended June 30, 2007. Net income available to common shareholders per share (EPS) for the quarter ended June 30, 2008 was $0.66 basic and $0.66 on a diluted basis. This compares to EPS for the second quarter of 2007 of $0.86 basic and $0.84 on a diluted basis. EPS includes $0.04 and $0.11, on a diluted basis, related to gains on sales of real estate and discontinued operations for the quarters ended June 30, 2008 and 2007, respectively. The gains on sales of real estate for the quarter ended June 30, 2007 primarily resulted from the sales of Newport Office Park for a gross sale price of $37.0 million and our share of the gain on sale of Worldgate Plaza of approximately $15.5 million, which is included in income from unconsolidated joint ventures, for a gross sale price of $109.0 million.

The reported results are unaudited and there can be no assurance that the results will not vary from the final information for the quarter ended June 30, 2008. In the opinion of management, all adjustments considered necessary for a fair presentation of these reported results have been made.

As of June 30, 2008, the Company’s portfolio consisted of 142 properties comprising approximately 46.8 million square feet, including 14 properties under construction totaling 4.4 million square feet and one hotel. The overall percentage of leased space for the 127 properties in service as of June 30, 2008 was 94.9%.

 

1

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Significant events during the second quarter included:

 

•

On April 1, 2008, the Company used available cash to repay the mortgage loan collateralized by its Prudential Center property located in Boston, Massachusetts totaling approximately $258.2 million. There was no prepayment penalty associated with the repayment. The mortgage loan bore interest at a fixed rate of 6.72% per annum and was scheduled to mature on July 1, 2008.

 

•

On April 1, 2008, the Company cash-settled at maturity nine of its treasury lock contracts with notional amounts aggregating $325.0 million and made cash payments to the counterparties totaling approximately $33.5 million.

 

•

On April 14, 2008, the Company sold a parcel of land located in Washington, D.C. for approximately $33.7 million. The Company had previously entered into a development management agreement with the buyer to develop a Class A office property on the parcel totaling approximately 165,000 net rentable square feet.

 

•

On April 22, 2008, the Company executed a 15-year lease with Wellington Management Company, LLP for its development project located at 280 Congress Street (Russia Wharf) in Boston, Massachusetts. Wellington Management will occupy approximately 450,000 square feet out of the approximately 552,000 square feet of office space (82%) in this approximately 815,000 net rentable square foot mixed-use project. The lease is scheduled to commence in the spring of 2011.

 

•

On April 29, 2008, the Company’s Wisconsin Place joint venture entity that owns and is developing the land and infrastructure components of the project (a joint venture entity in which the Company owns an effective interest of approximately 23.89%) repaid the balance of its construction loan totaling approximately $29.6 million. The loan was scheduled to mature in March 2009. Wisconsin Place is a mixed-use development project consisting of office, retail and residential properties located in Chevy Chase, Maryland.

 

•

On May 12, 2008, the Company acquired the remaining development rights for its 250 West 55th Street development project located in New York City for an aggregate purchase price of approximately $34.2 million. The acquisition was financed with approximately $19.2 million of cash and the issuance to the selling entity of 150,000 common units of limited partnership interest in the Company’s Operating Partnership.

 

•

On May 30, 2008, the Company’s Value-Added Fund obtained mortgage financing totaling $120.0 million (of which $103.0 million was drawn at closing, with the remaining $17.0 million available to fund future tenant and capital costs) collateralized by its Mountain View Research Park properties. Mountain View Research Park consists of sixteen Class A office and office/technical properties aggregating approximately 601,000 net rentable square feet located in Mountain View, California. The mortgage financing bears interest at a variable rate equal to LIBOR plus 1.75% per annum and matures on April 1, 2011 with two, one-year extension options. The Value-Added Fund entered into three interest rate swap contracts with notional amounts aggregating $103.0 million to fix the one-month LIBOR index rate at 3.63% per annum through maturity. The proceeds of the mortgage financing were used to repay the remaining $100.0 million of financing provided by the Company to the Value- Added

 

2

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Fund in connection with the Company’s transfer of the Mountain View Research and Technology Park properties to the Value-Added Fund in January 2008. In addition, on June 12, 2008, the Value-Added Fund entered into an interest rate swap contract related to the mortgage loan collateralized by its Mountain View Technology Park properties with a notional amount of $24.0 million to fix the one-month LIBOR index rate at 4.085% per annum through maturity on March 31, 2011.

 

•

On June 6, 2008, the Company’s Operating Partnership utilized an accordion feature under its unsecured revolving credit facility with a consortium of lenders to increase the current maximum borrowing amount under the facility from $605.0 million to $923.3 million. On July 21, 2008, the Company’s Operating Partnership further increased the maximum borrowing amount to $1.0 billion. All other material terms under the facility remain unchanged.

 

•

On June 9, 2008, the Company completed the acquisition of the General Motors Building in New York City for a purchase price of approximately $2.8 billion. The General Motors Building is an approximately 2,000,000 (as remeasured) rentable square foot office building located at the corner of 5th Avenue and Central Park South in New York City. The acquisition was completed through a joint venture among the Company, US Real Estate Opportunities I, L.P., which is a partnership managed by Goldman Sachs, and Meraas Capital LLC, a Dubai-based private equity firm. The Company has a 60% interest in the venture and will provide customary property management and leasing services for the venture. The purchase price consisted of approximately $890 million of cash, the issuance to the selling entity of 102,883 common units of limited partnership interest in the Company’s Operating Partnership and the assumption of approximately $1.9 billion of secured and mezzanine loans having a weighted average fixed interest rate of 5.97% per annum, all of which mature in September 2017. In addition, the venture acquired the lenders’ interest in a portion of the assumed mezzanine loans having an aggregate principal amount of $294.0 million and a stated interest rate of 6.02% per annum. The Company expects that the acquired mezzanine loans will remain outstanding pending a decision to either sell them or retire them. The Company now projects its share of the General Motors Building’s annualized 2008 Unleveraged Cash Return, including fee income, to be approximately 4.6% and its share of the property’s annualized 2008 Unleveraged FFO Return, including fee income, to be approximately 10.0%. The Company now projects its share of the General Motors Building’s 2009 Unleveraged Cash Return, including fee income, to be approximately 5.0% and its share of the property’s 2009 Unleveraged FFO Return, including fee income, to be approximately 10.3%. The calculation of the updated projected returns and related disclosures are presented on the accompanying table entitled “Projected 2008 and 2009 Returns on Acquisition.” There can be no assurances that actual returns will not differ materially from these projections.

The Company expects to consummate the previously announced acquisitions of 540 Madison Avenue, 125 West 55th Street and Two Grand Central Tower, also located in New York City, through joint ventures in each of which the Company will own a 60% interest. 540 Madison Avenue is a 39-story building located at Madison Avenue at 55th Street that contains approximately 292,000 rentable square feet. 125 West 55th Street is a 23-story building, spanning from 55th to 56th Streets between Avenue of the Americas and Seventh Avenue, that contains approximately 591,000 rentable square feet. Two Grand Central Tower is a 44-story mid-block

 

3

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tower that runs from 44th to 45th Street between Lexington and Third Avenue and contains approximately 664,000 rentable square feet. The purchase prices for these properties are: 540 Madison Avenue, $277.1 million; 125 West 55th Street, $444.0 million; and Two Grand Central Tower, $427.9 million. The debt that is expected to be assumed as part of the transactions consists of the following: 540 Madison Avenue—two secured loans having an aggregate principal amount of $120 million and a weighted average interest rate of 5.28% per annum, each of which matures in July 2013; 125 West 55th Street—an aggregate principal amount of $263.5 million of secured and mezzanine loans having a weighted average interest rate of 6.31% per annum, all of which mature in March 2010; and Two Grand Central Tower—a $190 million secured loan having a per annum interest rate of 5.10%, which matures in July 2010. Upon the closing of the General Motors Building, the deposit on these assets (which are in the form of letters of credit) was increased by an aggregate of $20 million, bringing the total remaining deposit to $75 million. The closings of the remaining acquisitions are expected to occur in multiple steps and are subject to customary conditions and termination rights for transactions of this type. There can be no assurance that the closings will occur on the terms currently contemplated or at all.

 

•

On June 19, 2008, the Company obtained construction financing totaling $65.0 million collateralized by its Democracy Tower (formerly South of Market — Phase II) development project located in Reston, Virginia. The Democracy Tower development project consists of a Class A office property with approximately 225,000 net rentable square feet. The construction financing bears interest at a variable rate equal to LIBOR plus 1.75% per annum and matures on December 19, 2010 with two, one-year extension options.

 

•

During the quarter ended June 30, 2008, the Company commenced construction on its mixed-use project at Pennsylvania Avenue and Washington Circle in the District of Columbia comprised of approximately 450,000 square feet of office space and 330,000 square feet of residential space. In February 2008, the Company had executed a 60-year ground lease with The George Washington University for the redevelopment of the site.

EPS and FFO per Share Guidance:

The Company’s guidance for the third quarter and full year 2008 for EPS (diluted) and FFO per share (diluted) is set forth and reconciled below.

 

		Third Quarter 2008								Full Year 2008
		Low			-		High			Low			-		High
Projected EPS (diluted)		$	0.53		-		$	0.54		$	2.60		-		$	2.66
Add:
Projected Company Share of Real Estate Depreciation and Amortization			0.70		-			0.70			2.50		-			2.50
Less:
Projected Company Share of Gains on Sales of Real Estate			0.01		-			0.01			0.24		-			0.24
Projected FFO per Share (diluted)		$	1.22		-		$	1.23		$	4.86		-		$	4.92

 

4

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Except as described below, the foregoing estimates reflect management’s view of current and future market conditions, including assumptions with respect to rental rates, occupancy levels and the earnings impact of the events referenced in this release and previously disclosed. The estimates do not include the impact on operating results from the anticipated acquisitions of 540 Madison Avenue, 125 West 55^th Street and Two Grand Central Tower. The estimates also do not include possible future gains or losses or the impact on operating results from other possible future property acquisitions or dispositions. EPS estimates may be subject to fluctuations as a result of several factors, including changes in the recognition of depreciation and amortization expense and any gains or losses associated with disposition activity. The Company is not able to assess at this time the potential impact of these factors on projected EPS. By definition, FFO does not include real estate-related depreciation and amortization or gains or losses associated with disposition activities. There can be no assurance that the Company’s actual results will not differ materially from the estimates set forth above.

On May 9, 2008, the Financial Accounting Standards Board (the “FASB”) issued FASB Staff Position No. APB 14-1 “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)” (“FSP No. APB 14-1”) that requires the liability and equity components of convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement) to be separately accounted for in a manner that reflects the issuer’s nonconvertible debt borrowing rate. FSP No. APB 14-1 requires that the initial debt proceeds from the sale of Boston Properties Limited Partnership’s (“BPLP”) $862.5 million of 2.875% exchangeable senior notes due 2037 and $450.0 million of 3.75% exchangeable senior notes due 2036 be allocated between a liability component and an equity component in a manner that reflects interest expense at the interest rate of similar nonconvertible debt. The resulting debt discount will be amortized over the period during which the debt is expected to be outstanding (i.e., through the first optional redemption dates) as additional non-cash interest expense. Based on the Company’s understanding of the application of FSP No. APB 14-1, this will result in an aggregate of approximately $0.13 - $0.14 per share (net of incremental capitalized interest) of additional non-cash interest expense for fiscal 2008. Excluding the impact of capitalized interest, the additional non-cash interest expense will be approximately $0.15 - $0.16 per share for fiscal 2008, and this amount (before netting) will increase in subsequent reporting periods through the first optional redemption dates as the debt accretes to its par value over the same period. FSP No. APB 14-1 is effective for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. Early adoption is not permitted. Upon adoption, FSP No. APB 14-1 requires companies to retrospectively apply the requirements of the pronouncement to all periods presented. The guidance set forth in the table above does not include the impact of FSP No. APB 14-1 as the Company is not permitted to early adopt the pronouncement. However, commencing in 2009, the Company will present prior period comparative results reflecting the impact of FSP No. APB 14-1.

Boston Properties will host a conference call on Wednesday, July 23, 2008 at 10:00 AM Eastern Time, open to the general public, to discuss the second quarter 2008 results, the 2008 projections and related assumptions, and other related matters that may be of interest to investors. The number to call for this interactive teleconference is (800) 240-5318 (Domestic) or (303) 262-2004 (International); no passcode required. A replay of the conference call will be available through July 30, 2008, by dialing (800) 405-2236 (Domestic) or (303) 590-3000 (International) and entering the passcode 11116665. There will also be a live audio webcast of the call which may be accessed on the Company’s website at www.bostonproperties.com in the Investor Relations

 

5

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section. Shortly after the call a replay of the webcast will be available in the Investor Relations section of the Company’s website, and archived for up to twelve months following the call.

Additionally, a copy of Boston Properties’ second quarter 2008 “Supplemental Operating and Financial Data” and this press release are available in the Investor Relations section of the Company’s website at www.bostonproperties.com.

Boston Properties is a fully integrated, self-administered and self-managed real estate investment trust that develops, redevelops, acquires, manages, operates and owns a diverse portfolio of Class A office properties and one hotel. The Company is one of the largest owners and developers of Class A office properties in the United States, concentrated in five markets – Boston, Midtown Manhattan, Washington, D.C., San Francisco and Princeton, N.J.

This press release contains forward-looking statements within the meaning of the Federal securities laws. You can identify these statements by our use of the words “assumes,” “believes,” “estimates,” “expects,” “guidance,” “intends,” “plans,” “projects” and similar expressions that do not relate to historical matters. You should exercise caution in interpreting and relying on forward-looking statements because they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond Boston Properties’ control and could materially affect actual results, performance or achievements. These factors include, without limitation, the ability of our joint venture partners to satisfy their obligations, the ability to enter into new leases or renew leases on favorable terms, dependence on tenants’ financial condition, the uncertainties of real estate development, acquisition and disposition activity, the ability to effectively integrate acquisitions, the costs and availability of financing, the effectiveness of our interest rate hedging program, the effects of local economic and market conditions, the effects of acquisitions and dispositions (including possible impairment charges) on our operating results, the impact of newly adopted accounting principles on the Company’s accounting policies and on period-to-period comparisons of financial results, regulatory changes and other risks and uncertainties detailed from time to time in the Company’s filings with the Securities and Exchange Commission. Boston Properties does not undertake a duty to update or revise any forward-looking statement, including its guidance for the third quarter and full fiscal year 2008, whether as a result of new information, future events or otherwise.

Financial tables follow.

 

6

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BOSTON PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

 

		Three months ended June 30,								Six months ended June 30,
		2008				2007				2008				2007
		(in thousands, except for per share amounts)
		(unaudited)
Revenue
Rental:
Base rent		$	281,072			$	268,272			$	562,466			$	538,944
Recoveries from tenants			49,848				46,783				98,732				93,069
Parking and other			17,317				16,488				33,818				31,809
Total rental revenue			348,237				331,543				695,016				663,822
Hotel revenue			9,708				9,335				16,232				16,044
Development and management services			6,460				5,130				11,937				9,857
Interest and other			4,115				26,205				15,894				43,193
Total revenue			368,520				372,213				739,079				732,916
Expenses
Operating:
Rental			119,103				112,998				236,836				225,869
Hotel			6,449				6,417				12,346				12,431
General and administrative			17,467				16,291				37,055				33,099
Interest			64,564				73,743				132,403				147,669
Depreciation and amortization			74,389				73,921				149,060				143,693
Net derivative losses			(257	)			—				3,531				—
Losses from early extinguishments of debt			—				—				—				722
Total expenses			281,715				283,370				571,231				563,483
Income before minority interests in property partnerships, income from unconsolidated joint ventures, minority interest in Operating Partnership, gains on sales of real estate and discontinued operations			86,805				88,843				167,848				169,433
Minority interests in property partnerships			(420	)			—				(1,045	)			—
Income from unconsolidated joint ventures			1,855				17,268				2,897				18,233
Income before minority interest in Operating Partnership, gains on sales of real estate and discontinued operations			88,240				106,111				169,700				187,666
Minority interest in Operating Partnership			(14,009	)			(16,840	)			(27,044	)			(27,798	)
Income before gains on sales of real estate and discontinued operations			74,231				89,271				142,656				159,868
Gains on sales of real estate, net of minority interest			5,303				—				25,331				620,262
Income before discontinued operations			79,534				89,271				167,987				780,130
Discontinued operations:
Income from discontinued operations, net of minority interest			—				1,357				—				3,985
Gains on sales of real estate from discontinued operations, net of minority interest			—				11,716				—				173,815
Net income available to common shareholders		$	79,534			$	102,344			$	167,987			$	957,930
Basic earnings per common share:
Income available to common shareholders before discontinued operations		$	0.66			$	0.75			$	1.40			$	6.49
Discontinued operations, net of minority interest			—				0.11				—				1.50
Net income available to common shareholders		$	0.66			$	0.86			$	1.40			$	7.99
Weighted average number of common shares outstanding			119,753				118,961				119,644				118,565
Diluted earnings per common share:
Income available to common shareholders before discontinued operations		$	0.66			$	0.73			$	1.39			$	6.37
Discontinued operations, net of minority interest			—				0.11				—				1.47
Net income available to common shareholders		$	0.66			$	0.84			$	1.39			$	7.84
Weighted average number of common and common equivalent shares outstanding			121,315				120,984				121,168				120,811

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BOSTON PROPERTIES, INC.

CONSOLIDATED BALANCE SHEETS

 

		June 30, 2008				December 31, 2007
		(in thousands, except for share amounts)
		(unaudited)
ASSETS
Real estate		$	9,277,500			$	9,077,528
Real estate held for sale, net			—				221,606
Construction in progress			735,372				700,762
Land held for future development			253,313				249,999
Less: accumulated depreciation			(1,647,145	)			(1,531,707	)
Total real estate			8,619,040				8,718,188
Cash and cash equivalents			112,110				1,506,921
Cash held in escrows			59,644				186,839
Marketable securities			20,372				22,584
Tenant and other receivables, net of allowance for doubtful accounts of $1,545 and $1,901, respectively			42,116				58,074
Note receivable			270,000				—
Accrued rental income, net of allowance of $1,164 and $829, respectively			326,149				300,594
Deferred charges, net			305,287				287,199
Prepaid expenses and other assets			26,511				30,566
Investments in unconsolidated joint ventures			606,696				81,672
Total assets		$	10,387,925			$	11,192,637
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Mortgage notes payable		$	2,535,496			$	2,726,127
Unsecured senior notes, net of discount			1,472,141				1,471,913
Unsecured exchangeable senior notes, net of discount			1,296,252				1,294,126
Unsecured line of credit			200,000				—
Accounts payable and accrued expenses			183,192				145,692
Dividends and distributions payable			96,451				944,870
Accrued interest payable			55,979				54,487
Other liabilities			187,104				232,705
Total liabilities			6,026,615				6,869,920
Commitments and contingencies			—				—
Minority interests			663,313				653,892
Stockholders’ equity:
Excess stock, $.01 par value, 150,000,000 shares authorized, none issued or outstanding			—				—
Preferred stock, $.01 par value, 50,000,000 shares authorized, none issued or outstanding			—				—
Common stock, $.01 par value, 250,000,000 shares authorized, 119,835,140 and 119,581,385 shares issued and 119,756,240 and 119,502,485 shares outstanding in 2008 and 2007, respectively			1,198				1,195
Additional paid-in capital			3,341,887				3,305,219
Earnings in excess of dividends			399,502				394,324
Treasury common stock, at cost			(2,722	)			(2,722	)
Accumulated other comprehensive loss			(41,868	)			(29,191	)
Total stockholders’ equity			3,697,997				3,668,825
Total liabilities and stockholders’ equity		$	10,387,925			$	11,192,637

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BOSTON PROPERTIES, INC.

FUNDS FROM OPERATIONS (1)

 

		Three months ended June 30,								Six months ended June 30,
		2008				2007				2008				2007
		(in thousands, except for per share amounts)
		(unaudited)
Net income available to common shareholders		$	79,534			$	102,344			$	167,987			$	957,930
Add:
Minority interest in Operating Partnership			14,009				16,840				27,044				27,798
Minority interests in property partnerships			420				—				1,045				—
Less:
Income from unconsolidated joint ventures			1,855				17,268				2,897				18,233
Gains on sales of real estate, net of minority interest			5,303				—				25,331				620,262
Income from discontinued operations, net of minority interest			—				1,357				—				3,985
Gains on sales of real estate from discontinued operations, net of minority interest			—				11,716				—				173,815
Income before minority interests in property partnerships, income from unconsolidated joint ventures, minority interest in Operating Partnership, gains on sales of real estate and discontinued operations			86,805				88,843				167,848				169,433
Add:
Real estate depreciation and amortization (2)			82,838				76,264				160,457				149,134
Income from discontinued operations			—				1,589				—				4,675
Income from unconsolidated joint ventures (3)			1,855				1,815				2,897				2,780
Less:
Minority interests in property partnerships’ share of funds from operations			928				—				2,039				—
Preferred distributions (4)			949				1,084				1,854				2,286
Funds from operations (FFO)			169,621				167,427				327,309				323,736
Less:
Minority interest in the Operating Partnership’s share of funds from operations			24,620				24,483				47,587				47,795
Funds from operations available to common shareholders		$	145,001			$	142,944			$	279,722			$	275,941
Our percentage share of funds from operations - basic			85.49	%			85.38	%			85.46	%			85.24	%
Weighted average shares outstanding - basic			119,753				118,961				119,644				118,565
FFO per share basic		$	1.21			$	1.20			$	2.34			$	2.33
Weighted average shares outstanding - diluted			122,776				122,660				122,629				122,609
FFO per share diluted		$	1.19			$	1.18			$	2.30			$	2.28

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(1)

Pursuant to the revised definition of Funds from Operations adopted by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”), we calculate Funds from Operations, or “FFO,” by adjusting net income (loss) (computed in accordance with GAAP, including non-recurring items) for gains (or losses) from sales of properties, real estate related depreciation and amortization, and after adjustment for unconsolidated partnerships and joint ventures. FFO is a non-GAAP financial measure. The use of FFO, combined with the required primary GAAP presentations, has been fundamentally beneficial in improving the understanding of operating results of REITs among the investing public and making comparisons of REIT operating results more meaningful. Management generally considers FFO to be a useful measure for reviewing our comparative operating and financial performance because, by excluding gains and losses related to sales of previously depreciated operating real estate assets and excluding real estate asset depreciation and amortization (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates), FFO can help one compare the operating performance of a company’s real estate between periods or as compared to different companies. Our computation of FFO may not be comparable to FFO reported by other REITs or real estate companies that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently.

FFO should not be considered as an alternative to net income (determined in accordance with GAAP) as an indication of our performance. FFO does not represent cash generated from operating activities determined in accordance with GAAP, and is not a measure of liquidity or an indicator of our ability to make cash distributions. We believe that to further understand our performance, FFO should be compared with our reported net income and considered in addition to cash flows in accordance with GAAP, as presented in our consolidated financial statements.

(2)

Real estate depreciation and amortization consists of depreciation and amortization from the Consolidated Statements of Operations of $74,389, $73,921, $149,060 and $143,693, our share of unconsolidated joint venture real estate depreciation and amortization of $8,972, $2,085, $12,235 and $4,184 and depreciation and amortization from discontinued operations of $0, $700, $0 and $2,014, less corporate-related depreciation and amortization of $523, $442, $838 and $757 for the three months and six months ended June 30, 2008 and 2007, respectively.

(3)	Excludes approximately $15.5 million related to our share of the gain on sale and related loss from early extinguishment of debt associated with the sale of Worldgate Plaza for the three months and six months ended June 30, 2007.

(4)

Excludes an adjustment of approximately $3.1 million for the six months ended June 30, 2007 to the income allocated to the holders of Series Two Preferred Units to account for their right to participate on an as-converted basis in the special dividend that followed previously completed sales of real estate.

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BOSTON PROPERTIES, INC.

PROJECTED 2008 AND 2009 RETURNS ON ACQUISITION

(dollars in thousands)

 

		The General Motors Building
		Six Months 2008				Year 2009
Base rent and recoveries from tenants		$	94,030			$	198,800
Straight-line rent			4,950				8,850
Fair value lease revenue			70,410				138,110
Parking and other			3,540				7,020
Total rental revenue			172,930				352,780
Operating Expenses			36,370				74,830
Revenue less Operating Expenses			136,560				277,950
Interest expense (1)			72,650				139,410
Fair value interest expense			3,920				8,270
Depreciation and amortization			79,050				151,300
Net loss		$	(19,060	)		$	(21,030	)
Add:
Interest expense (1)			72,650				139,410
Fair value interest expense			3,920				8,270
Depreciation and amortization			79,050				151,300
Unleveraged FFO (2)		$	136,560			$	277,950
Less:
Straight-line rent			(4,950	)			(8,850	)
Fair value lease revenue			(70,410	)			(138,110	)
Unleveraged Cash		$	61,200			$	130,990
Purchase Price		$	2,800,000
Closing costs			(9,000	)
Total Unleveraged Investment		$	2,791,000
Unleveraged FFO Return (2)			10.0	%			10.3	%
Unleveraged Cash Return (3)			4.6	%			5.0	%

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(1) Projected interest expense includes interest on partner loans totaling $450 million, of which approximately $294 million has been projected to be refinanced with third-party debt in the first quarter of 2009.

(2) Pursuant to the revised definition of Funds from Operations adopted by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”), we calculate Funds from Operations, or “FFO,” by adjusting net income (loss) (computed in accordance with GAAP, including non-recurring items) for gains (or losses) from sales of properties, real estate related depreciation and amortization, and after adjustment for unconsolidated partnerships and joint ventures. FFO is a non-GAAP financial measure. Unleveraged FFO excludes, among other items, interest expense, which may vary depending on the level of corporate debt or property-specific debt. Unleveraged FFO Return is also a non-GAAP financial measure that is determined by dividing (A) the Company’s share (60%) of Unleveraged FFO (based on the projected results for the six months ending December 31, 2008 (annualized) and the year ending December 31, 2009) plus the Company’s share of fee income by (B) the Company’s share of Total Unleveraged Investment. Management believes projected Unleveraged FFO Return is a useful measure in the real estate industry when determining the appropriate purchase price for a property or estimating a property’s value. When evaluating acquisition opportunities, management considers, among other factors, projected Unleveraged FFO Return because it excludes, among other items, interest expense (which may vary depending on the level of corporate debt or property-specific debt), as well as depreciation and amortization expense (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates). Other factors that management considers include its cost of capital and available financing alternatives. Other companies may compute FFO, Unleveraged FFO and Unleveraged FFO Return differently and these are not indicators of a real estate asset’s capacity to generate cash flow.

(3) Unleveraged Cash Return is a non-GAAP financial measure that is determined by dividing (A) the Company’s share of Unleveraged Cash (based on the projected results for the six months ending December 31, 2008 (annualized) and the year ending December 31, 2009) plus the Company’s share of fee income by (B) the Company’s share of the Total Unleveraged Investment. Other real estate companies may calculate this return differently. Management believes that projected Unleveraged Cash Return is also a useful measure of a property’s value when used in addition to Unleveraged FFO Return because, by eliminating the effect of straight-lining of rent and the SFAS No. 141 treatment of in-place above- and below-market leases, it enables an investor to assess the projected cash on cash return from the property over the forecasted period.

Management is presenting these projected returns and related calculations to assist investors in analyzing the Company’s recent acquisition. Management does not intend to present this data for any other purpose, for any other period or for its other properties, and is not intending for these measures to otherwise provide information to investors about the Company’s financial condition or results of operations. The Company does not undertake a duty to update any of these projections.

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BOSTON PROPERTIES, INC.

PORTFOLIO LEASING PERCENTAGES

 

		% Leased by Location
		June 30, 2008			December 31, 2007
Greater Boston		92.8	%		93.3	%
Greater Washington, D.C.		98.1	%		99.1	%
Midtown Manhattan		99.8	%		99.5	%
Princeton/East Brunswick, NJ		82.2	%		83.3	%
Greater San Francisco		92.1	%		91.1	%
Total Portfolio		94.9	%		94.9	%
		% Leased by Type
		June 30, 2008			December 31, 2007
Class A Office Portfolio		95.6	%		95.4	%
Office/Technical Portfolio		81.9	%		86.1	%
Total Portfolio		94.9	%		94.9	%