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): February 15, 2007
BOSTON PROPERTIES LIMITED PARTNERSHIP
(Exact name of registrant as specified in charter)
| Delaware | 0-50209 | 04-3372948 | ||
| (State or Other Jurisdiction of Incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
111 Huntington Avenue, Suite 300, 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)) |
Item 2.01. Completion of Acquisition or Disposition of Assets
On February 15, 2007, Boston Properties Limited Partnership (the “Company”), through one of its wholly owned subsidiaries completed the sale of the Company’s long-term leasehold interest in 5 Times Square in New York City and related credits for approximately $1.28 billion in cash. The property was sold to AVR Crossroads LLC (“AVR”), an affiliate of AVR Realty Company, LLC. 5 Times Square is a Class A office tower that contains approximately 1,101,779 net rentable square feet and currently is 100% leased.
In connection with the disposition, the Company is hereby filing, as Exhibit 99.1 hereto, pro forma consolidated financial information of the Company as of and for the nine months ended September 30, 2006 and for the year ended December 31, 2005 as if the disposition had occurred as of the assumed dates set forth in such pro forma consolidated financial statements. Exhibit 99.1 is hereby incorporated by reference herein.
Item 9.01. Financial Statements and Exhibits.
| (a) | Financial Statements of Businesses Acquired. |
Not applicable.
| (b) | Pro Forma Financial Information. |
Pro forma financial information pursuant to Article 11 of Regulation S-X is attached hereto as Exhibit 99.1 and is incorporated by reference herein.
| (c) | Shell Company Transactions. |
Not applicable.
| (d) | Exhibits. |
| 2.1 | Purchase and Sale Agreement, dated as of November 17, 2006, between No. 5 Times Square Development LLC and AVR Crossroads LLC (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K of Boston Properties, Inc. filed on February 16, 2007). |
| 2.2 | Amendment to Purchase and Sale Agreement, dated as of February 15, 2007, between No. 5 Times Square Development LLC and AVR Crossroads LLC (incorporated by reference to Exhibit 2.2 to the Current Report on Form 8-K of Boston Properties, Inc. filed on February 16, 2007). |
| 2.3 | ESAC Receivable Sale Agreement, dated as of November 17, 2006, between No. 5 Times Square Development LLC and AVR Crossroads LLC (incorporated by reference to Exhibit 2.3 to the Current Report on Form 8-K of Boston Properties, Inc. filed on February 16, 2007). |
| 2.4 | Amendment to ESAC Receivable Sale Agreement, dated as of February 15, 2007, between No. 5 Times Square Development LLC and AVR Crossroads LLC (incorporated by reference to Exhibit 2.4 to the Current Report on Form 8-K of Boston Properties, Inc. filed on February 16, 2007). |
| 99.1 | Pro forma financial information of Boston Properties Limited Partnership. |
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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 LIMITED PARTNERSHIP | ||||
| By: | Boston Properties, Inc., its General Partner | |||
| Date: February 16, 2007 | By: | /s/ Douglas T. Linde | ||
| Douglas T. Linde | ||||
| Executive Vice President & | ||||
| Chief Financial Officer | ||||
Exhibit 99.1
BOSTON PROPERTIES LIMITED PARTNERSHIP
PRO FORMA CONSOLIDATED BALANCE SHEET
INTRODUCTION TO THE PRO FORMA CONSOLIDATED BALANCE SHEET
September 30, 2006
(Unaudited)
The accompanying unaudited Pro Forma Consolidated Balance Sheet of Boston Properties Limited Partnership (the “Company”) is presented as if the disposition of the long-term leasehold interest in 5 Times Square and related credits, which occurred on February 15, 2007, had been consummated on September 30, 2006. The Company completed the sale of the long-term leasehold interest in 5 Times Square and related credits for a gross sales price of approximately $1.28 billion in cash. 5 Times Square is a Class A office property with approximately 1,101,779 net rentable square feet located in New York City. In conjunction with the sale, the Company has agreed to provide to the buyer monthly revenue support from the closing date until December 31, 2008. The aggregate amount of the revenue support payments will be approximately $1.9 million.
In addition, on January 30, 2007, the Company paid a special cash distribution of $5.40 per common unit to unitholders of record as of the close of business on December 29, 2006. The decision to pay a special cash distribution was the result of the sales of assets in 2006, including 280 Park Avenue, which sale was reported on Form 8-K dated June 6, 2006. Holders of Series Two Preferred Units of limited partnership interest will participate in the special cash distribution on an as-converted basis in connection with their regular May 2007 distribution payment as provided in the Company’s partnership agreement. The Company has reflected the payment of the special cash distribution under “Other Adjustments” within the accompanying unaudited Pro Forma Consolidated Balance Sheet.
Such pro forma information is based on the historical consolidated balance sheet of the Company as of that date, giving effect to the disposition of the long-term leasehold interest in 5 Times Square and related credits and the payment of the special cash distribution. This unaudited Pro Forma Consolidated financial information should be read in conjunction with Form 10-Q for the nine months ended September 30, 2006 (unaudited). In management’s opinion, all adjustments necessary to reflect the above transactions have been made.
The following unaudited Pro Forma Consolidated Balance Sheet is not necessarily indicative of what the actual financial position would have been assuming the disposition of the long-term leasehold interest in 5 Times Square and related credits and the payment of the special cash distribution had been consummated on September 30, 2006, nor does it purport to represent the future financial position of the Company.
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BOSTON PROPERTIES LIMITED PARTNERSHIP
PRO FORMA CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except for unit amounts)
| September 30, 2006 |
Disposition of 5 Times Square |
Other Adjustments (F) |
Pro Forma | |||||||||||||
| ASSETS |
||||||||||||||||
| Real estate, at cost |
$ | 8,720,546 | $ | (451,357 | )(A) | $ | — | $ | 8,269,189 | |||||||
| Construction in process |
57,392 | — | — | 57,392 | ||||||||||||
| Land held for future development |
206,431 | — | — | 206,431 | ||||||||||||
| Less: accumulated depreciation |
(1,364,547 | ) | 38,844 | (A) | — | (1,325,703 | ) | |||||||||
| Total real estate |
7,619,822 | (412,513 | ) | — | 7,207,309 | |||||||||||
| Cash and cash equivalents |
1,049,026 | 1,234,529 | (B) | (761,932 | ) | 1,521,623 | ||||||||||
| Cash held in escrows |
21,436 | — | — | 21,436 | ||||||||||||
| Tenant and other receivables, net |
42,128 | (2,702 | )(C) | — | 39,426 | |||||||||||
| Accrued rental income, net |
310,560 | (48,620 | )(C) | — | 261,940 | |||||||||||
| Deferred charges, net |
263,675 | (30,277 | )(D) | — | 233,398 | |||||||||||
| Prepaid expenses and other assets |
72,033 | (574 | )(C) | — | 71,459 | |||||||||||
| Investments in unconsolidated joint ventures |
83,485 | — | — | 83,485 | ||||||||||||
| Total assets |
$ | 9,462,165 | $ | 739,843 | $ | (761,932 | ) | $ | 9,440,076 | |||||||
| LIABILITIES, REDEEMABLE PARTNERSHIP UNITS AND PARTNERS’ CAPITAL |
||||||||||||||||
| Liabilities: |
||||||||||||||||
| Mortgage notes payable |
$ | 2,811,953 | $ | — | $ | — | $ | 2,811,953 | ||||||||
| Unsecured senior notes, net of discount |
1,471,370 | — | — | 1,471,370 | ||||||||||||
| Unsecured exchangeable senior notes |
450,000 | — | — | 450,000 | ||||||||||||
| Unsecured line of credit |
— | — | — | — | ||||||||||||
| Accounts payable and accrued expenses |
103,581 | (861 | )(C) | — | 102,720 | |||||||||||
| Dividends and distributions payable |
95,607 | — | — | 95,607 | ||||||||||||
| Accrued interest payable |
45,703 | — | — | 45,703 | ||||||||||||
| Other liabilities |
236,350 | 897 | (C) | — | 237,247 | |||||||||||
| Total liabilities |
5,214,564 | 36 | — | 5,214,600 | ||||||||||||
| Commitments and contingencies |
— | — | — | — | ||||||||||||
| Minority interests in property partnerships |
12,324 | — | — | 12,324 | ||||||||||||
| Redeemable partnership units - 1,739,066 preferred units outstanding (2,282,240 common units at redemption value, if converted) and 21,555,637 common units outstanding at redemption value |
2,463,406 | — | (E) | — | 2,463,406 | |||||||||||
| Partners’ capital - 1,381,527 general partner units and 115,215,508 limited partner units outstanding (such amount is inclusive of accumulated other comprehensive loss of $807 |
1,771,871 | 739,807 | (E) | (761,932 | ) | 1,749,746 | ||||||||||
| Total liabilities, redeemable partnership units and partners’ capital |
$ | 9,462,165 | $ | 739,843 | $ | (761,932 | ) | $ | 9,440,076 | |||||||
The accompanying notes are an integral part of these financial statements.
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BOSTON PROPERTIES LIMITED PARTNERSHIP
NOTES TO THE PRO FORMA
CONSOLIDATED BALANCE SHEET
September 30, 2006
(Unaudited)
| (A) | Represents the elimination of the net book value of the long-term leasehold interest in 5 Times Square and related credits at September 30, 2006. |
| (B) | Represents the estimated net cash proceeds from the sale of the long-term leasehold interest in 5 Times Square after the payment of transfer taxes, leasehold transfer payments, broker’s fees and other customary closing costs. |
| (C) | Represents the elimination of certain assets and liabilities of 5 Times Square as of September 30, 2006. Other liabilities consists of an approximately $1.9 million revenue support obligation and approximately $4.7 million of deferred management fees, offset by the elimination of approximately $5.7 million of other liabilities as of September 30, 2006 of 5 Times Square. |
| (D) | Represents the elimination of the net book value of deferred leasing costs of 5 Times Square as of September 30, 2006. |
| (E) | Represents the net increase in Partners’ Capital and the rebalancing of Redeemable Partnership Units as a result of the sale of the long-term leasehold interest in 5 Times Square and related credits. |
| (F) | Other Adjustments reflects the payment of the special cash distribution declared by Boston Properties, Inc., as general partner of the Company, on December 15, 2006 and the resulting rebalancing of Redeemable Partnership Units. The special cash distribution of $5.40 per common unit was paid on January 30, 2007 to unitholders of record as of the close of business on December 29, 2006. The decision to declare a special cash distribution was the result of the sales of assets in 2006, including 280 Park Avenue, which sale was reported on Form 8-K dated June 6, 2006. Holders of Series Two Preferred Units will participate in the special cash distribution on an as-converted basis in connection with their regular May 2007 distribution payment as provided for in the Company’s partnership agreement. |
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BOSTON PROPERTIES LIMITED PARTNERSHIP
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
For the nine months ended September 30, 2006 and the year ended December 31, 2005
(Unaudited)
The accompanying unaudited Pro Forma Consolidated Statements of Operations for the nine months ended September 30, 2006 and for the year ended December 31, 2005 are presented as if the disposition of the long-term leasehold interest in 5 Times Square and related credits, which occurred on February 15, 2007, had occurred on January 1, 2005. Due to the Company’s continuing involvement through an agreement with the buyer to manage 5 Times Square for a fee after the sale, 5 Times Square will not been categorized as discontinued operations in the Company’s Consolidated Statements of Operations. A nonrecurring gain on sale of real estate of approximately $736.0 million has not been included in the unaudited Pro Forma Consolidated Statements of Operations but is expected to be reflected in the Company’s Consolidated Statements of Operations to be included in the Company’s Form 10-Q for the quarter ending March 31, 2007.
In addition, on June 6, 2006, the Company completed the sale of 280 Park Avenue, a Class A office property with approximately 1,179,000 net rentable square feet located in midtown Manhattan, for a gross sales price of approximately $1.2 billion. The pro forma effects of the sale of 280 Park Avenue have previously been included in a Form 8-K dated June 6, 2006. The Company has reflected these pro forma results of operations under “Other Adjustments” within the accompanying unaudited Pro Forma Consolidated Statement of Operations for the year ended December 31, 2005 and has reflected the results of operations of 280 Park Avenue for the period from January 1, 2006 through June 6, 2006 (the sale date) under “Other Adjustments” within the accompanying unaudited Pro Forma Consolidated Statement of Operations for the nine months ended September 30, 2006.
These unaudited Pro Forma Consolidated Statements of Operations should be read in conjunction with the historical consolidated financial statements and notes thereto of the Company, reported on Form 10-K for the year ended December 31, 2005 and on Form 10-Q for the nine months ended September 30, 2006.
The unaudited Pro Forma Consolidated financial information prepared by Boston Properties’ management is not necessarily indicative of what the actual results of operations would have been for the nine months ended September 30, 2006 or for the year ended December 31, 2005, had the disposition of the long-term leasehold interest in 5 Times Square and related credits and the disposition of 280 Park Avenue actually occurred on January 1, 2005 and the effect thereof carried forward through the nine-month period ended September 30, 2006, nor do they purport to present the future results of operations of the Company.
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BOSTON PROPERTIES LIMITED PARTNERSHIP
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
(in thousands, except for per unit amounts)
| Nine Months Ended September 30, 2006 |
Disposition of 5 Times Square |
Other Adjustments (C) |
Pro Forma | |||||||||||||
| Revenue |
||||||||||||||||
| Rental: |
||||||||||||||||
| Base rent |
$ | 826,587 | $ | (43,141 | )(A) | $ | (26,805 | ) | $ | 756,641 | ||||||
| Recoveries from tenants |
138,653 | (12,864 | )(A) | (5,358 | ) | 120,431 | ||||||||||
| Parking and other |
42,479 | (23 | )(A) | (44 | ) | 42,412 | ||||||||||
| Total rental revenue |
1,007,719 | (56,028 | ) | (32,207 | ) | 919,484 | ||||||||||
| Hotel revenue |
51,864 | — | — | 51,864 | ||||||||||||
| Development and management services |
14,164 | — | — | 14,164 | ||||||||||||
| Interest and other |
25,166 | (415 | )(A) | (51 | ) | 24,700 | ||||||||||
| Total revenue |
1,098,913 | (56,443 | ) | (32,258 | ) | 1,010,212 | ||||||||||
| Expenses |
||||||||||||||||
| Operating: |
||||||||||||||||
| Rental |
334,440 | (11,198 | )(A) | (14,280 | ) | 308,962 | ||||||||||
| Hotel |
38,146 | — | — | 38,146 | ||||||||||||
| General and administrative |
43,177 | — | — | 43,177 | ||||||||||||
| Interest |
226,837 | — | (8,476 | ) | 218,361 | |||||||||||
| Depreciation and amortization |
203,689 | (7,905 | )(B) | (3,502 | ) | 192,282 | ||||||||||
| Loss from early extinguishment of debt |
32,132 | — | (31,444 | ) | 688 | |||||||||||
| Total expenses |
878,421 | (19,103 | ) | (57,702 | ) | 801,616 | ||||||||||
| Income before minority interest in property partnership, income from unconsolidated joint ventures, preferred distributions and gains on sales of real estate |
220,492 | (37,340 | ) | 25,444 | 208,596 | |||||||||||
| Minority interest in property partnership |
2,013 | — | — | 2,013 | ||||||||||||
| Income from unconsolidated joint ventures |
23,167 | — | — | 23,167 | ||||||||||||
| Income before preferred distributions and gains on sales of real estate |
245,672 | (37,340 | ) | 25,444 | 233,776 | |||||||||||
| Preferred distributions |
(9,010 | ) | — | — | (9,010 | ) | ||||||||||
| Income before gains on sales of real estate |
$ | 236,662 | $ | (37,340 | ) | $ | 25,444 | $ | 224,766 | |||||||
| Basic earnings per common unit: |
||||||||||||||||
| Income available to common unitholders before gains on sales of real estate |
$ | 1.75 | $ | 1.66 | ||||||||||||
| Weighted average number of common units outstanding |
135,290 | 135,290 | ||||||||||||||
| Diluted earnings per common unit: |
||||||||||||||||
| Income available to common unitholders before gains on sales of real estate |
$ | 1.72 | $ | 1.63 | ||||||||||||
| Weighted average number of common and common equivalent units outstanding |
137,666 | 137,666 | ||||||||||||||
The accompanying notes are an integral part of these financial statements.
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BOSTON PROPERTIES LIMITED PARTNERSHIP
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
(in thousands, except for per unit amounts)
| Year Ended December 31, 2005 |
Disposition of 5 Times Square |
Other Adjustments (C) |
Pro Forma | |||||||||||||
| Revenue |
||||||||||||||||
| Rental: |
||||||||||||||||
| Base rent |
$ | 1,110,212 | $ | (57,823 | )(A) | $ | (65,713 | ) | $ | 986,676 | ||||||
| Recoveries from tenants |
173,254 | (17,528 | )(A) | (12,463 | ) | 143,263 | ||||||||||
| Parking and other |
55,567 | (29 | )(A) | (71 | ) | 55,467 | ||||||||||
| Total rental revenue |
1,339,033 | (75,380 | ) | (78,247 | ) | 1,185,406 | ||||||||||
| Hotel revenue |
69,277 | — | — | 69,277 | ||||||||||||
| Development and management services |
17,310 | — | — | 17,310 | ||||||||||||
| Interest and other |
12,015 | (645 | )(A) | (28 | ) | 11,342 | ||||||||||
| Total revenue |
1,437,635 | (76,025 | ) | (78,275 | ) | 1,283,335 | ||||||||||
| Expenses |
||||||||||||||||
| Operating |
||||||||||||||||
| Rental |
438,335 | (15,171 | )(A) | (32,419 | ) | 390,745 | ||||||||||
| Hotel |
51,689 | — | — | 51,689 | ||||||||||||
| General and administrative |
55,471 | — | — | 55,471 | ||||||||||||
| Interest |
308,091 | — | (19,777 | ) | 288,314 | |||||||||||
| Depreciation and amortization |
264,182 | (10,514 | )(B) | (11,631 | ) | 242,037 | ||||||||||
| Losses from early extinguishments of debt |
12,896 | — | — | 12,896 | ||||||||||||
| Total expenses |
1,130,664 | (25,685 | ) | (63,827 | ) | 1,041,152 | ||||||||||
| Income before minority interest in property partnership, income from unconsolidated joint ventures, preferred distributions, gains on sales of real estate, discontinued operations and cumulative effect of a change in accounting principle |
306,971 | (50,340 | ) | (14,448 | ) | 242,183 | ||||||||||
| Minority interest in property partnership |
6,017 | — | — | 6,017 | ||||||||||||
| Income from unconsolidated joint ventures |
4,829 | — | — | 4,829 | ||||||||||||
| Income before preferred distributions, gains on sales of real estate, discontinued operations and cumulative effect of a change in accounting principle |
317,817 | (50,340 | ) | (14,448 | ) | 253,029 | ||||||||||
| Preferred distributions |
(26,780 | ) | — | — | (26,780 | ) | ||||||||||
| Income available to common unitholders before gains on sales of real estate, discontinued operations and cumulative effect of a change in accounting principle |
$ | 291,037 | $ | (50,340 | ) | $ | (14,448 | ) | $ | 226,249 | ||||||
| Basic earnings per common unit: |
||||||||||||||||
| Income available to common unitholders before gains on sales of real estate, discontinued operations and cumulative effect of a change in accounting principle |
$ | 2.19 | $ | 1.70 | ||||||||||||
| Weighted average number of common units outstanding |
132,881 | 132,881 | ||||||||||||||
| Diluted earnings per common unit: |
||||||||||||||||
| Income available to common unitholders before gains on sales of real estate, discontinued operations and cumulative effect of a change in accounting principle |
$ | 2.15 | $ | 1.67 | ||||||||||||
| Weighted average number of common and common equivalent units outstanding |
135,166 | 135,166 | ||||||||||||||
The accompanying notes are an integral part of these financial statements.
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BOSTON PROPERTIES LIMITED PARTNERSHIP
NOTES TO THE PRO FORMA
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands)
The unaudited Pro Forma Consolidated Statements of Operations reflect the historical results of operations of 5 Times Square for the year ended December 31, 2005 and the nine months ended September 30, 2006 (unaudited). Due to the Company’s continuing involvement through an agreement with the buyer to manage 5 Times Square for a fee after the sale, 5 Times Square will not been categorized as discontinued operations in the Company’s Consolidated Statements of Operations.
| (A) | Reflects the elimination of rental revenue and operating expenses of 5 Times Square. |
| (B) | Reflects elimination of the depreciation and amortization expense related to the disposition of the long-term leasehold interest in 5 Times Square. |
| (C) | Other Adjustments reflects the elimination of the historical results of operations of 280 Park Avenue for the year ended December 31, 2005 (as previously reported on Form 8-K dated June 6, 2006) and for the period from January 1, 2006 through June 6, 2006 (the sale date). |
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