falsefalse00010375400001043121 0001037540 2019-10-29 2019-10-29 0001037540 srt:SubsidiariesMember 2019-10-29 2019-10-29 0001037540 us-gaap:CommonStockMember 2019-10-29 2019-10-29 0001037540 bxp:A5.25SeriesBCumulativeRedeemablePreferredStockparvalue0.01pershareMember 2019-10-29 2019-10-29

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): October 29, 2019

BOSTON PROPERTIES, INC.

BOSTON PROPERTIES LIMITED PARTNERSHIP

(Exact Name of Registrants As Specified in its Charter)

Boston Properties, Inc.	Delaware	1-13087	04-2473675
	(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)
Boston Properties Limited Partnership	Delaware	0-50209	04-3372948
	(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

(Registrants’ 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 registrants 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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Securities registered pursuant to Section 12(b) of the Act:
Registrant	Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Boston Properties, Inc.	Common Stock, par value $0.01 per share	BXP	New York Stock Exchange
Boston Properties, Inc.	Depository Shares Each Representing 1/100th of a share	BXP PRB	New York Stock Exchange
	of 5.25% Series B Cumulative Redeemable Preferred Stock, par value $0.01 per share

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

  

Boston Properties, Inc.:

Emerging growth company ☐

Boston Properties Limited Partnership:

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Boston Properties, Inc. ☐         Boston Properties Limited Partnership ☐

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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 October 29, 2019, Boston Properties, Inc. (the “Company”), the general partner of Boston Properties Limited Partnership, issued a press release announcing its financial results for the third quarter of 2019. 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
*99.1		Boston Properties, Inc. Supplemental Operating and Financial Data for the quarter ended September 30, 2019.
*99.2		Press release dated October 29, 2019.
*101.SCH		Inline XBRL Taxonomy Extension Schema Document.
*101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.
*101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.
*101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.
*101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.
*104		Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101.*).

______________

* Filed herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned hereunto duly authorized.

BOSTON PROPERTIES, INC.
By:	/s/    MICHAEL E. LABELLE
	Michael E. LaBelle
	Executive Vice President, Chief Financial Officer
	and Treasurer
BOSTON PROPERTIES LIMITED PARTNERSHIP
By: Boston Properties, Inc., its General Partner
By:	/s/    MICHAEL E. LABELLE
	Michael E. LaBelle
	Executive Vice President, Chief Financial Officer
	and Treasurer

    

Date: October 29, 2019

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•	to maintain a keen focus on select markets that exhibit the strongest economic growth and investment characteristics over time - currently Boston, Los Angeles, New York, San Francisco and Washington, DC;

•	to invest in the highest quality buildings (primarily office) with unique amenities and locations that are able to maintain high occupancy, achieve premium rental rates through economic cycles and that advance our commitment to sustainable development and operations;

•

in our core markets, to maintain scale and a full-service real estate capability (development, construction, leasing and property management) to ensure we (1) see all relevant investment deal flow, (2) maintain an ability to execute on all types of real estate opportunities, such as development, repositioning, acquisitions and dispositions, throughout the real estate investment cycle and (3) provide superior service to our tenants;

•	to be astute in market timing for investment decisions by developing into economic growth, acquiring properties in times of opportunity and selling assets at attractive prices, resulting in continuous portfolio refreshment;

•	to ensure a strong balance sheet to maintain consistent access to capital and the resultant ability to make opportunistic investments; and

•	to foster a culture and reputation of integrity, excellence and purposefulness, making us the employer of choice for talented real estate professionals and the counterparty of choice for tenants and real estate industry participants.

1	For additional detail, see page 28.

2	For the Company’s definitions and related disclosures, see the Definitions and Reconciliations sections of this Supplemental package starting on page 55.

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1	Excludes estimated changes in the market value of the Company’s Deferred Compensation Plan and Gains from investments in securities.

2	Full year 2019 assumptions includes the $28 million loss from the early extinguishment of debt recognized during the third quarter of 2019. The full year 2020 assumptions excludes approximately $9 million of incremental interest expense associated with our unconsolidated joint ventures and contained within income (loss) from unconsolidated joint ventures.

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1	For a quantitative reconciliation of FFO attributable to Boston Properties, Inc. common shareholders and Diluted FFO per share, see page 7.

2	For a quantitative reconciliation of FAD, see page 8. FAD Payout Ratio equals distributions to common shareholders and unitholders (excluding any special distributions) divided by FAD.

3	Upon the adoption of ASU 2016-02 - “Leases” on January 1, 2019, Recoveries from tenants are included in Lease revenue.

4	Upon the adoption of ASU 2016-02 - “Leases” on January 1, 2019, Service income from tenants are included in Lease revenue. Prior to adoption, these amounts were included within the line Development and management services revenue.

5	See the Definitions and Reconciliations sections of this Supplemental package starting on page 55.

6	For the three months ended September 30, 2019, includes the straight-line impact related to deferred revenue from a tenant.

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7	Represents the straight-line impact related to deferred revenue from a tenant. For additional information, see page 59.

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

9	For the three months ended June 30, 2019, includes the Company’s share of the gain on sale of 540 Madison Avenue totaling approximately $47.8 million.

10	For a quantitative reconciliation for the three months ended September 30, 2019, see page 37.

11	For a quantitative reconciliation for the three months ended September 30, 2019, see page 34.

12	For a quantitative reconciliation for the three months ended September 30, 2019 and June 30, 2019, see page 32.

13	For a quantitative reconciliation for the three months ended September 30, 2019 and June 30, 2019, see page 31.

14	For a quantitative reconciliation for the three months ended September 30, 2019, see page 12.

15	For a quantitative reconciliation for September 30, 2019, see page 28.

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1	General and administrative expense includes $0.1 million and $1.2 million and Gains from investments in securities include $0.1 million and $1.2 million for the three months ended September 30, 2019 and June 30, 2019, respectively, related to the Company’s deferred compensation plan.

2	For additional detail, see page 7.

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1	See the Definitions and Reconciliations sections of this Supplemental package starting on page 55.

2	For a quantitative reconciliation for the three months ended September 30, 2019, see page 34.

3	For a quantitative reconciliation for the three months ended September 30, 2019, see page 37.

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1	See the Definitions and Reconciliations sections of this Supplemental package starting on page 55.

2	For a quantitative reconciliation for the three months ended September 30, 2019, see page 34.

3	For a quantitative reconciliation for the three months ended September 30, 2019, see page 37.

4	Consists of lease transaction costs that qualify as rent inducements in accordance with GAAP. Lease transaction costs are generally included in 2nd generation tenant improvements and leasing commissions in the period the lease commences.

5

Includes the straight-line impact of the Company’s 99-year ground and air rights lease related to the Company’s 100 Clarendon Street garage and Back Bay Transit Station. The Company has allocated contractual ground lease payments aggregating approximately $34.4 million, which it expects to incur by the end of 2023 with no payments thereafter. The Company is recognizing this expense on a straight-line basis over the 99-year term of the ground and air rights lease, see page 3.

6	See page 61 for additional information.

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

8	Maintenance capital expenditures do not include planned capital expenditures related to acquisitions and repositioning capital expenditures.

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1	For a quantitative reconciliation for the three months ended September 30, 2019, see page 64.

2	For a quantitative reconciliation for the three months ended September 30, 2019, see page 62.

3	Pages 22-25 indicate by footnote the properties that are not included as part of Same Property NOI. In addition, Same Properties exclude properties that were sold prior to September 30, 2019 and therefore are no longer a part of the Company’s property portfolio.

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1	Represents the straight-line impact related to deferred revenue from a tenant.  The tenant paid for improvements to a long-lived asset of the Company resulting in deferred revenue for the period until the asset was substantially complete, which occurred in the third quarter 2019.

2

In light of the front-ended, uneven rental payments required by the Company’s 99-year ground and air rights lease for the 100 Clarendon Street garage and Back Bay Transit Station in Boston, MA, and to make period-to-period comparisons more meaningful to investors, the adjustment does not include the straight-line impact of approximately $176 and $175 for the three months ended September 30, 2019 and 2018, respectively. As of September 30, 2019, the Company has remaining lease payments aggregating approximately $26.0 million, all of which it expects to incur by the end of 2023 with no payments thereafter. Under GAAP, the Company recognizes expense of $(87) per quarter on a straight-line basis over the term of the lease. However, unlike more traditional ground and air rights leases, the timing and amounts of the rental payments by the Company correlate to the uneven timing and funding by the Company of capital expenditures related to improvements at Back Bay Transit Station. As a result, the amounts excluded from the adjustment each quarter through 2023 may vary significantly.

3	Consists of lease transaction costs that qualify as rent inducements in accordance with GAAP. Lease transaction costs are generally included in 2nd generation tenant improvements and leasing commissions in the Company’s FAD calculation on page 8.

4	Pages 22-25 indicate by footnote the properties that are not included as part of Same Property NOI. In addition, Same Properties exclude properties that were sold prior to September 30, 2019 and therefore are no longer a part of the Company’s property portfolio.

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5	For a quantitative reconciliation for the three months ended September 30, 2019, see page 62.

6	For a quantitative reconciliation for the three months ended September 30, 2019, see page 64.

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1	Includes 100% share of consolidated joint ventures that are a Same Property.

2	See the Definitions and Reconciliations sections of this Supplemental package starting on page 55.

3	For a quantitative reconciliation of net income attributable to Boston Properties, Inc. common shareholders to net operating income (NOI) (excluding termination income) and NOI - cash (excluding termination income), see pages 9-10.

4	For the three months ended September 30, 2019, excludes the straight-line impact of approximately $(36.9) million for Office and Consolidated Total, $(14.7) million for Partners’ share of Consolidated Joint Ventures and $(22.2) million for BXP’s Share in connection with the deferred revenue received from a tenant. For additional information, see page 10.

5	Consists of lease transaction costs that qualify as rent inducements in accordance with GAAP. Lease transaction costs are generally included in 2nd generation tenant improvements and leasing commissions in the Company’s FAD calculation on page 8.

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6	Excludes the straight-line impact of approximately $176 and $175 for the three months ended September 30, 2019 and 2018, respectively, in connection with the Company’s 99-year ground and air rights lease at 100 Clarendon Street garage and Back Bay Transit Station. For additional information, see page 10.

7	BXP’s Share equals (A) + (B) - (C).

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1	See the Definitions and Reconciliations sections of this Supplemental package starting on page 55.

2	Includes 100% of unconsolidated joint ventures.

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1

Consists of the acquisition of the partner's 5% ownership interest and promoted profits interest for cash totaling approximately $210.9 million, which amount was reduced by approximately $24.1 million to $186.8 million to reflect the repayment of the Company's preferred equity and preferred return in the venture. The partner was entitled to receive an additional promoted payment based on the success of the property, which was included in the total consideration.

2	Excludes approximately $0.4 million of losses on sales of real estate recognized during the nine months ended September 30, 2019 related to loss amounts from sales of real estate occurring in prior years.

3

The gross sale price of approximately $310.3 million includes the assumption by the buyer of the mortgage loan collateralized by the property totaling $120.0 million. Net cash proceeds totaled approximately $178.7 million, of which the Company’s share was approximately $107.1 million, net of transaction costs. The Company’s share of the gain on sale of real estate totaling approximately $47.3 million is included in Income from Unconsolidated Joint Ventures in the Company’s Consolidated Statements of Operations.

4

On September 20, 2019, the Company entered into a joint venture with Canada Pension Plan Investment Board (“CPPIB”) to develop Platform 16 located in San Jose. The Company contributed the ground lease interest and improvements totaling approximately $28.2 million for its initial 55% interest in the joint venture. CPPIB contributed cash totaling approximately $23.1 million for its initial 45% interest in the joint venture. The Company did not recognize a gain on the retained or sold interest in the real estate contributed to the joint venture as the fair value of the real estate approximated its carrying value.

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1	A project is classified as Construction in Progress when (1) construction or supply contracts have been signed, physical improvements have commenced or a lease has been signed and (2) capitalized interest has commenced.

2	Includes income (loss) and interest carry on debt and equity investment.

3	Represents percentage leased as of October 25, 2019, including leases with future commencement dates.

4	Represents the portion of the project that no longer qualifies for capitalization of interest in accordance with GAAP.

5	Amounts represent Net Operating Income (Loss) for the three months ended September 30, 2019. See the Definitions and Reconciliations sections of this Supplemental package starting on page 55.

6	Project is subject to a 99-year ground lease (including extension options) with an option to purchase in the future.

7	Represents a portion of the property under redevelopment for conversion to laboratory space.

8	Excludes residential units.

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1	Represents 100%.

2	Excludes the existing square footage at in-service properties being held for future re-development as listed and noted on page 24.

3	Subject to a 65-year ground lease with an option to purchase in the future.

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1	Total square feet of available space associated with properties taken out of service in Q3 2019 consists of 104,084 at 200 West Street.

2	Total square feet of property partially placed in-service in Q3 2019 consists of 131,949 at 20 CityPoint and 69,372 at The Hub on Causeway - Podium.

3	Second generation leases are defined as leases for space that had previously been leased by the Company. Of the 1,516,332 square feet of second generation leases that commenced in Q3 2019, leases for 1,121,324 square feet were signed in prior periods.

4	Total transaction costs include tenant improvements and leasing commissions, but exclude free rent concessions.

5

Represents the increase/(decrease) in gross rent (base rent plus expense reimbursements) on the new vs. expired leases on the 1,285,645 square feet of second generation leases that had been occupied within the prior 12 months; excludes leases that management considers temporary because the tenant is not expected to occupy the space on a long-term basis (e.g., the tenant is occupying “swing space”).

6	Represents the increase/(decrease) in net rent (gross rent less operating expenses) on the new vs. expired leases on the 1,285,645 square feet of second generation leases that had been occupied within the prior 12 months; excludes leases that management considers temporary because the tenant is not expected to occupy the space on a long-term basis (e.g., the tenant is occupying “swing space”).

7	Represents leases for which rental revenue recognition commenced in accordance with GAAP during the quarter.

8

Represents leases executed in the quarter for which the Company either (1) commenced rental revenue recognition in such quarter or (2) will commence rental revenue recognition in subsequent quarters, in accordance with GAAP, and includes leases at properties currently under development. The total square feet of leases executed in the current quarter for which the Company recognized rental revenue in the current quarter is 402,699.

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1	See the Definitions and Reconciliations sections of this Supplemental package starting on page 55.

2	Includes 100% of the rentable square footage of the Company’s In-Service Properties. For additional detail relating to the Company’s In-Service Properties, see pages 22-25.

3	Excludes approximately $86 of revenue from retail tenants that is included in Retail.

4	See page 62 for additional information.

5	See page 64 for additional information.

6	BXP’s Share of NOI (excluding termination income) is a non-GAAP financial measure. For a quantitative reconciliation of net income attributable to Boston Properties, Inc. common shareholders to BXP’s Share of NOI (excluding termination income), see page 9.

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1	Includes retail space.

2	See the Definitions and Reconciliations sections of this Supplemental package starting on page 55.

3	Excludes retail space.

4	This property was completed and fully placed in-service on June 7, 2018 and is in its initial lease-up period with expected stabilization in the second quarter of 2020.

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1	Represents signed leases for which revenue recognition has commenced in accordance with GAAP.

2	See the Definitions and Reconciliations sections of this Supplemental package starting on page 55.

3	This is a retail property.

4	Not included in the Same Property analysis.

5	During the three months ended September 30, 2019, the Company commenced the redevelopment of a portion of 200 West Street. For additional detail, see page 16.

6	This is an unconsolidated joint venture property.

7	Property held for redevelopment.

8	Excludes Hotel and Residential properties. For additional detail, see page 21.

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1	See the Definitions and Reconciliations sections of this Supplemental package starting on page 55.

2	Represents leases signed with occupancy commencing in the future. The number of square feet is an estimate.

3	As of September 30, 2019, the Company had commenced revenue recognition on approximately 180,000 square feet of the approximately 309,000 square feet leased to Millennium Management.

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1	Represents signed leases for which revenue recognition has commenced in accordance with GAAP. Includes 100% of joint venture properties. Does not include residential units and hotel.

2	See the Definitions and Reconciliations sections of this Supplemental package starting on page 55.

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1	All unsecured senior notes are rated A- (stable), BBB+ (stable) and Baa1 (stable) by S&P, Fitch and Moody’s, respectively.

2	Values based on September 30, 2019 closing price of $129.66 per share of common stock, except the Series B Preferred Stock is valued at its fixed liquidation preference.

3	Amount is calculated based on the Company’s percentage ownership interest in the unconsolidated joint venture entities. For additional detail, see page 35.

4	Amount is calculated based on the outside partners’ percentage ownership interest in the consolidated joint venture entities. For additional detail, see page 33.

5	See the Definitions and Reconciliations sections of this Supplemental package starting on page 55.

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1	Excludes unconsolidated joint ventures. For information on BXP’s share of unconsolidated joint venture debt, see page 35.

2	The GAAP interest rate differs from the stated interest rate due to the inclusion of the amortization of financing charges and the effects of hedging transactions.

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1

Capitalized Property Value for senior notes issued prior to December 4, 2017 is determined for each property and is the greater of (A) annualized EBITDA capitalized at an 8.0% rate for CBD properties and a 9.0% rate for non-CBD properties, and (B) the undepreciated book value as determined under GAAP. Capitalized property value for senior notes issued on or after December 4, 2017 is determined for each property and is the greater of (x) annualized EBITDA capitalized at 7.0% and (y) the undepreciated book value as determined under GAAP.

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1	See the Definitions and Reconciliations sections of this Supplemental package starting on page 55.

2	For disclosures related to the calculation of BXP’s share from unconsolidated joint ventures for the three months ended September 30, 2019, see pages 35 and 63.

3	For disclosures related to the calculation of Partners’ share from consolidated joint ventures for the three months ended September 30, 2019, see pages 33 and 61.

4	Represents the straight-line impact related to deferred revenue from a tenant. For additional information, see page 59.

5	BXP’s Share of EBITDAre is annualized and calculated as the product of such amount for the quarter multiplied by four (4).

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1	See the Definitions and Reconciliations sections of this Supplemental package starting on page 55.

2	For a qualitative reconciliation of BXP’s Share of EBITDAre – cash, see page 31.

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1	Certain balances contain amounts that eliminate in consolidation.

2	Amount excludes preferred shareholders’ capital of approximately $0.1 million.

3	Amounts represent the partners’ share based on their respective ownership percentages.

4	Amounts adjusted for basis differentials.

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1	Lease revenue includes recoveries from tenants and service income from tenants.

2	Includes deferred revenue from a tenant. For additional information, see page 59.

3	See the Definitions and Reconciliations sections of this Supplemental package starting on page 55.

4	Amounts represent the partners’ share based on their respective ownership percentage and is adjusted for basis differentials and the allocations of management and other fees and interest to BXP.

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1	Amounts represent BXP’s share based on its ownership percentage.

2	The GAAP interest rate differs from the stated interest rate due to the inclusion of the amortization of financing charges, which includes mortgage recording fees.

3	The property was sold on June 27, 2019. For additional detail see, page 15.

4	On September 5, 2019, the joint venture obtained construction financing with a total commitment of $400.0 million.

5	The Company has provided $80.0 million of mortgage financing to the joint venture. The loan has been reflected as Related Party Note Receivable on the Company’s Consolidated Balance Sheets.

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1	Annapolis Junction includes three in-service properties and two undeveloped land parcels.

2	Includes 1001 6th Street, Dock 72, 7750 Wisconsin Avenue, 1265 Main Street, Wisconsin Place Parking Facility, 3 Hudson Boulevard, 540 Madison Avenue and Platform 16.

3	Lease revenue includes recoveries from tenants and service income from tenants.

4	See the Definitions and Reconciliations sections of this Supplemental package starting on page 55.

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

6	The Company’s purchase price allocation under ASC 805 for Colorado Center differs from the historical basis of the venture resulting in the majority of the basis differential for this venture.

7	Represents adjustments related to the carrying values and depreciation of certain of the Company’s investment in unconsolidated joint ventures.

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1	For the Company’s definitions and related disclosures, see the Definitions section of this Supplemental package starting on page 55.

2	Includes partially placed in-service leased space. Does not include residential units and hotel.

3	Does not include data for leases expiring in a particular year when leases for the same space have already been signed with replacement tenants with future commencement dates. In those cases, the data is included in the year in which the future lease expires.

4	Includes square feet expiring on the last day of the current quarter.

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1	For the Company’s definitions and related disclosures, see the Definitions section of this Supplemental package starting on page 55.

2	Includes partially placed in-service leased space. Does not include residential units and hotel.

3	Does not include data for leases expiring in a particular year when leases for the same space have already been signed with replacement tenants with future commencement dates. In those cases, the data is included in the year in which the future lease expires.

4	Includes square feet expiring on the last day of the current quarter.

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1	For the Company’s definitions and related disclosures, see the Definitions section of this Supplemental package starting on page 55.

2	Includes partially placed in-service leased space. Does not include residential units and hotel.

3	Does not include data for leases expiring in a particular year when leases for the same space have already been signed with replacement tenants with future commencement dates. In those cases, the data is included in the year in which the future lease expires.

4	Includes square feet expiring on the last day of the current quarter.

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1	For the Company’s definitions and related disclosures, see the Definitions section of this Supplemental package starting on page 55.

2	Includes partially placed in-service leased space. The Company owns 50% of Colorado Center and 55% of Santa Monica Business Park.

3	Does not include data for leases expiring in a particular year when leases for the same space have already been signed with replacement tenants with future commencement dates. In those cases, the data is included in the year in which the future lease expires.

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1	For the Company’s definitions and related disclosures, see the Definitions section of this Supplemental package starting on page 55.

2	Includes partially placed in-service leased space. The Company owns 50% of Colorado Center and 55% of Santa Monica Business Park.

3	Does not include data for leases expiring in a particular year when leases for the same space have already been signed with replacement tenants with future commencement dates. In those cases, the data is included in the year in which the future lease expires.

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1	For the Company’s definitions and related disclosures, see the Definitions section of this Supplemental package starting on page 55.

2	Includes partially placed in-service leased space.

3	Does not include data for leases expiring in a particular year when leases for the same space have already been signed with replacement tenants with future commencement dates. In those cases, the data is included in the year in which the future lease expires.

4	Includes square feet expiring on the last day of the current quarter.

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1	For the Company’s definitions and related disclosures, see the Definitions section of this Supplemental package starting on page 55.

2	Includes partially placed in-service leased space.

3	Does not include data for leases expiring in a particular year when leases for the same space have already been signed with replacement tenants with future commencement dates. In those cases, the data is included in the year in which the future lease expires.

4	Includes square feet expiring on the last day of the current quarter.

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1	For the Company’s definitions and related disclosures, see the Definitions section of this Supplemental package starting on page 55.

2	Includes partially placed in-service leased space.

3	Does not include data for leases expiring in a particular year when leases for the same space have already been signed with replacement tenants with future commencement dates. In those cases, the data is included in the year in which the future lease expires.

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1	For the Company’s definitions and related disclosures, see the Definitions section of this Supplemental package starting on page 55.

2	Includes partially placed in-service leased space.

3	Does not include data for leases expiring in a particular year when leases for the same space have already been signed with replacement tenants with future commencement dates. In those cases, the data is included in the year in which the future lease expires.

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1	For the Company’s definitions and related disclosures, see the Definitions section of this Supplemental package starting on page 55.

2	Includes partially placed in-service leased space. Does not include residential units.

3	Does not include data for leases expiring in a particular year when leases for the same space have already been signed with replacement tenants with future commencement dates. In those cases, the data is included in the year in which the future lease expires.

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1	For the Company’s definitions and related disclosures, see the Definitions section of this Supplemental package starting on page 55.

2	Includes partially placed in-service leased space. Does not include residential units.

3	Does not include data for leases expiring in a particular year when leases for the same space have already been signed with replacement tenants with future commencement dates. In those cases, the data is included in the year in which the future lease expires.

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1	For the Company’s definitions and related disclosures, see the Definitions section of this Supplemental package starting on page 55.

2	Includes partially placed in-service leased space. Does not include residential units and hotel.

3	Does not include data for leases expiring in a particular year when leases for the same space have already been signed with replacement tenants with future commencement dates. In those cases, the data is included in the year in which the future lease expires.

4	Includes square feet expiring on the last day of the current quarter.

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1	For the Company’s definitions and related disclosures, see the Definitions section of this Supplemental package starting on page 55.

2	Includes partially placed in-service leased space. Does not include residential units and hotel.

3	Does not include data for leases expiring in a particular year when leases for the same space have already been signed with replacement tenants with future commencement dates. In those cases, the data is included in the year in which the future lease expires.

4	Includes square feet expiring on the last day of the current quarter.

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1	Represents the straight-line impact related to deferred revenue from a tenant.  The tenant paid for improvements to a long-lived asset of the Company resulting in deferred revenue for the period until the asset was substantially complete, which occurred in the third quarter 2019.

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	Consists of lease transaction costs that qualify as rent inducements in accordance with GAAP. Lease transaction costs are generally included in 2nd generation tenant improvements and leasing commissions in the period the lease commences.

4	Maintenance capital expenditures do not include planned capital expenditures related to acquisitions and repositioning capital expenditures.

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1	Lease revenue includes recoveries from tenants and service income from tenants.

2	Includes deferred revenue from a tenant. For additional information, see page 59.

3	See the Definitions and Reconciliations sections of this Supplemental package starting on page 55.

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1	Annapolis Junction includes three in-service properties and two undeveloped land parcels.

2	Includes 1001 6th Street, Dock 72, 7750 Wisconsin Avenue, 1265 Main Street, Wisconsin Place Parking Facility, 3 Hudson Boulevard, 540 Madison Avenue and Platform 16.

3	Lease revenue includes recoveries from tenants and service income from tenants.

4	See the Definitions and Reconciliations sections of this Supplemental package starting on page 55.

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

6	The Company’s purchase price allocation under ASC 805 for Colorado Center differs from the historical basis of the venture resulting in the majority of the basis differential for this venture.

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•	Revenue grew more than 8% to $743.6 million as compared to revenue of $686.3 million for the quarter ended September 30, 2018.

•	Net income was $107.8 million, or $0.70 per diluted share (EPS), compared to $119.1 million, or $0.77 per diluted share, for the quarter ended September 30, 2018. The decrease was primarily due to a $0.16 per share loss related to the early redemption of $700.0 million of 5.625% senior notes due 2020 as disclosed in its September 16, 2019 press release.

•	Funds from Operations (FFO) was $253.6 million, or $1.64 per diluted share, compared to FFO of $253.8 million, or $1.64 per diluted share, for the quarter ended September 30, 2018.

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FFO in the third quarter of $1.64 per diluted share was $0.04 per share greater than the mid-point of the Company’s third quarter guidance provided on July 30, as updated on September 16, 2019 when the Company announced the $0.16 per share loss related to the early redemption of $700.0 million of 5.625% senior notes due 2020, due to $0.02 per share of greater-than-projected portfolio performance and $0.02 per share of greater-than-projected management and service fee income.

•	Projected EPS for 2020 of $3.45 - $3.65 per diluted share, reflecting 8% year-over-year growth at the midpoint;

•	Projected FFO for 2020 of $7.45 - $7.65 per diluted share, reflecting 8% year-over-year growth at the midpoint.

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•	Increased portfolio occupancy to 92.6% in the Company’s in-service office properties, an increase of 150 bps from third quarter of 2018.

•	Partially placed in-service the following development projects:

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The Hub on Causeway - Residential, a 320,000 square foot property comprised of 440 residential units located next to the North Station transit center in Boston, Massachusetts.  The Hub on Causeway - Residential is part of a 1.3 million square foot, mixed-use development project that includes multi-level retail, restaurants and amenities. The project also includes a podium of creative office space that is 91% leased (including retail) and a 632,000 square foot office tower that is 87% pre-leased and will deliver in 2021. The Company has a 50% ownership interest in the development project.

◦	Dock 72, a 670,000 square foot Class A office property in Brooklyn, New York. The Company has a 50% ownership interest in the property. The property is 33% leased.

◦	20 CityPoint, a 211,000 square foot, Class A office property in Waltham, Massachusetts. The property is 63% leased.

•

Entered into a joint venture with Canada Pension Plan Investment Board (CPPIB) to develop Platform 16 in San Jose, California. Platform 16 consists of approximately 5.6 acres that will support the development of a 1.1 million square foot, Class A urban office campus near Diridon Station in downtown San Jose, California. CPPIB has a 45% ownership interest in the Platform 16 joint venture. Boston Properties continues to own the remaining 55% ownership stake and provide customary development, property management and leasing services.

•	Acquired 880 and 890 Winter Street in Waltham, Massachusetts for $106 million on August 27, 2019. 880 and 890 Winter Street consists of two Class A office properties aggregating approximately 392,000 square feet, and is 82% leased.

•	Commenced the redevelopment of a portion of 200 West Street, a 261,000 square foot Class A office property in Waltham, Massachusetts. The 126,000 square foot redevelopment is a conversion to laboratory space.

•	Completed a $700 million bond offering of 2.900% unsecured senior notes due 2030 and utilized the proceeds to redeem $700 million of 5.625% unsecured senior notes due in 2020.

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A joint venture in which the Company has a 50% interest obtained construction financing with a total loan commitment of $400 million for its 100 Causeway Street development project. The 632,000 square foot, Class A office building is located in Boston, Massachusetts and is 87% pre-leased. The construction financing bears interest at a variable rate equal to LIBOR plus 1.50% per annum and matures in September 2023.

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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) attributable to Boston Properties, Inc. common shareholders (computed in accordance with GAAP) for gains (or losses) from sales of properties, impairment losses on depreciable real estate consolidated on our balance sheet, impairment losses on our investments in unconsolidated joint ventures driven by a measurable decrease in the fair value of depreciable real estate held by the unconsolidated joint ventures and real estate-related depreciation and amortization. FFO is a non-GAAP financial measure, but we believe the presentation of FFO, combined with the presentation of required GAAP financial measures, has improved the understanding of operating results of REITs among the investing public and has helped make comparisons of REIT operating results more meaningful. Management generally considers FFO and FFO per share to be useful measures for understanding and comparing our operating results because, by excluding gains and losses related to sales of previously depreciated operating real estate assets, impairment losses and real estate asset depreciation and amortization (which can differ across owners of similar assets in similar condition based on historical cost accounting and useful life estimates), FFO and FFO per share can help investors compare the operating performance of a company’s real estate across reporting periods and to the operating performance of other companies.

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