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): May 2, 2022
(Exact Name of Registrants As Specified in its Charter)
| Boston Properties, Inc. | |||||||||||
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) | |||||||||
| Boston Properties Limited Partnership | |||||||||||
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) | |||||||||
(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):
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. | ||||||||||||||||||||
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 ☐
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 May 2, 2022, Boston Properties, Inc. (the “Company”), the general partner of Boston Properties Limited Partnership, issued a press release announcing its financial results for the first quarter of 2022. 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 | ||||||||
| *99.2 | ||||||||
| *101.SCH | Inline XBRL Taxonomy Extension Schema 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.
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: May 2, 2022
Exhibit 99.1
Supplemental Operating and Financial Data
for the Quarter Ended March 31, 2022
THE COMPANY
Boston Properties, Inc. (NYSE: BXP) (“BXP” or the “Company”) is the largest publicly traded developer, owner, and manager of Class A office properties in the United States, concentrated in six markets - Boston, Los Angeles, New York, San Francisco, Seattle, and Washington, DC. The Company is a fully integrated real estate company, organized as a real estate investment trust (REIT), that develops, manages, operates, acquires and owns a diverse portfolio of primarily Class A office space. Including properties owned by joint ventures, the Company’s complete portfolio totals 53.1 million square feet and 201 properties, including eleven properties under construction/redevelopment. The Company’s properties include 182 office properties, 12 retail properties, six residential properties and one hotel. BXP is well-known for its in-house building management expertise and responsiveness to tenants’ needs. The Company holds a superior track record of developing premium Central Business District (CBD) office buildings, successful mixed-use complexes, suburban office centers and build-to-suit projects for a diverse array of creditworthy tenants. BXP actively works to promote its growth and operations in a sustainable and responsible manner. The Company has earned a tenth consecutive GRESB “Green Star” recognition and the highest GRESB 5-star Rating. BXP, an S&P 500 company, was founded in 1970 by Mortimer B. Zuckerman and Edward H. Linde and became a public company in 1997.
FORWARD-LOOKING STATEMENTS
This Supplemental package contains “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. You can identify these statements by our use of the words “anticipates,” “believes,” “budgeted,” “could,” “estimates,” “expects,” “guidance,” “intends,” “may,” “might,” “plans,” “projects,” “should,” “will” and similar expressions that do not relate to historical matters. These statements are based on our current plans, expectations, projections and assumptions about future events. 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 BXP’s control. If our underlying assumptions prove inaccurate, or known or unknown risks or uncertainties materialize, actual results could differ materially from those expressed or implied by the forward-looking statement. These factors include, without limitation, uncertainties and risks related to the impact of (1) the COVID-19 global pandemic, including the emergence of additional variants, the effectiveness, availability and distribution of vaccines, including their efficacy against new variant strains and the willingness of individuals to be vaccinated, (2) the impact of geopolitical conflicts, including the ongoing war in Ukraine, and (3) the severity and duration of the indirect economic impacts of the foregoing, such as recession, supply chain disruptions, labor market disruptions, rising inflation, increasing interest rates, dislocation and volatility in capital markets, job losses, potential longer-term changes in consumer and tenant behavior, as well as possible future governmental responses; risks related to volatile or adverse global economic and geopolitical conditions, health crises and dislocations in the credit markets; risks associated with downturns in the national and local economies, increasing interest rates, and volatility in the securities markets; the Company’s 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 uncertainties of investing in new markets, the costs and availability of financing, the effectiveness of our interest rate hedging contracts, the ability of our joint venture partners to satisfy their obligations, the effects of acquisitions, dispositions 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. These forward-looking statements speak only as of the date of issuance of this report and are not guarantees of future results, performance or achievements. BXP does not undertake a duty to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as may be required by law.
NON-GAAP FINANCIAL MEASURES
This Supplemental package includes non-GAAP financial measures, which are accompanied by what the Company considers the most directly comparable financial measures calculated and presented in accordance with GAAP. Quantitative reconciliations of the differences between the most directly comparable GAAP financial measures and the non-GAAP financial measures presented are provided within this Supplemental package. Definitions of these non-GAAP financial measures and statements 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, and, if applicable, the other purposes for which management uses the measures, can be found in the Definitions section of this Supplemental starting on page 52.
The Company also presents “BXP’s Share” of certain of these measures, which are non-GAAP financial measures that are calculated as the consolidated amount calculated in accordance with GAAP, plus the Company’s share of the amount from the Company’s unconsolidated joint ventures (calculated based upon the Company’s percentage ownership interest and, in some cases, after priority allocations), minus the Company’s partners’ share of the amount from the Company’s consolidated joint ventures (calculated based upon the partners’ percentage ownership interests and, in some cases, after income allocation to private REIT shareholders and their share of fees due to the Company). Management believes that presenting “BXP’s Share” of these measures provides useful information to investors regarding the Company’s financial condition and/or results of operations because the Company has several significant joint ventures and, in some cases, the Company exercises significant influence over, but does not control, the joint venture, in which case GAAP requires that the Company account for the joint venture entity using the equity method of accounting and the Company does not consolidate it for financial reporting purposes. In other cases, GAAP requires that the Company consolidate the venture even though the Company’s partner(s) owns a significant percentage interest. As a result, management believes that presenting BXP’s Share of various financial measures in this manner can help investors better understand the Company’s financial condition and/or results of operations after taking into account its true economic interest in these joint ventures. The Company cautions investors that the ownership percentages used in calculating “BXP’s Share” of these measures may not completely and accurately depict all of the legal and economic implications of holding an interest in a consolidated or unconsolidated joint venture. For example, in addition to partners’ interests in profits and capital, venture agreements vary in the allocation of rights regarding decision making (both routine and major decisions), distributions, transferability of interests, financings and guarantees, liquidations and other matters. As a result, presentations of “BXP’s Share” of a financial measure should not be considered a substitute for, and should only be considered together with and as a supplement to, the Company’s financial information presented in accordance with GAAP. Unless noted otherwise, reconciliations of “BXP’s Share” of these financial measures can be found in the Reconciliations section of this Supplemental package starting on page 56.
GENERAL INFORMATION
| Corporate Headquarters | Trading Symbol | Investor Relations | Inquiries | ||||||||
| 800 Boylston Street | BXP | Boston Properties, Inc. | Inquiries should be directed to | ||||||||
| Suite 1900 | 800 Boylston Street, Suite 1900 | Helen Han | |||||||||
| Boston, MA 02199 | Stock Exchange Listing | Boston, MA 02199 | Vice President, Investor Relations | ||||||||
| www.bxp.com | New York Stock Exchange | investors.bxp.com | at 617.236.3429 or | ||||||||
| (t) 617.236.3300 | investorrelations@bxp.com | hhan@bxp.com | |||||||||
| (t) 617.236.3429 | |||||||||||
| Michael E. LaBelle | |||||||||||
| Executive Vice President, Chief Financial Officer | |||||||||||
| at 617.236.3352 or | |||||||||||
| mlabelle@bxp.com | |||||||||||
(Cover photo: Rendering of Platform 16, San Jose, CA)
| Q1 2022 | ||||
| Table of contents | |||||
| Page | |||||
| OVERVIEW | |||||
| Company Profile | |||||
| Guidance and assumptions | |||||
| FINANCIAL INFORMATION | |||||
| Financial Highlights | |||||
| Consolidated Balance Sheets | |||||
| Consolidated Income Statements | |||||
| Funds From Operations (FFO) | |||||
| Funds Available for Distribution (FAD) | |||||
| Net Operating Income (NOI) | |||||
| Same Property Net Operating Income (NOI) by Reportable Segment | |||||
| Capital Expenditures, Tenant Improvement Costs and Leasing Commissions | |||||
| Acquisitions and Dispositions | |||||
| DEVELOPMENT ACTIVITY | |||||
| Construction in Progress | |||||
| Land Parcels and Purchase Options | |||||
| LEASING ACTIVITY | |||||
| Leasing Activity | |||||
| PROPERTY STATISTICS | |||||
| Portfolio Overview | |||||
| Residential and Hotel Performance | |||||
| In-Service Property Listing | |||||
| Top 20 Tenants Listing and Portfolio Tenant Diversification | |||||
| Occupancy by Location | |||||
| DEBT AND CAPITALIZATION | |||||
| Capital Structure | |||||
| Debt Analysis | |||||
| Senior Unsecured Debt Covenant Compliance Ratios | |||||
Net Debt to EBITDAre | |||||
| Debt Ratios | |||||
| JOINT VENTURES | |||||
| Consolidated Joint Ventures | |||||
| Unconsolidated Joint Ventures | |||||
| LEASE EXPIRATION ROLL-OUT | |||||
| Total In-Service Properties | |||||
| Boston | |||||
| Los Angeles | |||||
| New York | |||||
| San Francisco | |||||
| Washington, DC | |||||
| CBD | |||||
| Suburban | |||||
| RESEARCH COVERAGE, DEFINITIONS AND RECONCILIATIONS | |||||
| Research Coverage | |||||
| Definitions | |||||
| Reconciliations | |||||
| Consolidated Income Statement - Prior Year | |||||
| Q1 2022 | ||||
| Company profile | |||||
SNAPSHOT
(as of March 31, 2022)
| Fiscal Year-End | December 31 | ||||
| Total Properties (includes unconsolidated joint ventures and properties under development/redevelopment) | 201 | ||||
| Total Square Feet (includes unconsolidated joint ventures and properties under development/redevelopment) | 53.1 million | ||||
Common shares outstanding, plus common units and LTIP units (other than unearned Multi-Year Long-Term Incentive Program (MYLTIP) Units) on an as-converted basis 1, 2 | 174.9 million | ||||
| Closing Price, at the end of the quarter | $128.80 per share | ||||
| Dividend - Quarter/Annualized | $0.98/$3.92 per share | ||||
| Dividend Yield | 3.0% | ||||
Consolidated Market Capitalization 2 | $35.5 billion | ||||
BXP’s Share of Market Capitalization 2, 3 | $35.6 billion | ||||
| Senior Debt Ratings | BBB+ (S&P); Baa1 (Moody’s) | ||||
STRATEGY
BXP’s primary business objective is to maximize return on investment in an effort to provide its investors with the greatest possible total return in all points of the economic cycle. To achieve this objective, the key tenets of our business strategy are 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, Seattle, and Washington, DC;
•invest in the highest quality buildings (primarily office) with unique amenities and desirable locations that are able to maintain high occupancy rates and achieve premium rental rates through economic cycles;
•maintain scale and a full-service real estate capability (leasing, development, construction and property management) in our markets 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 acquisitions, dispositions, repositioning and development, throughout the real estate investment cycle, (3) provide superior service to our tenants and (4) develop and manage our assets in the most sustainable manner possible;
•be astute in market timing for investment decisions by acquiring properties in times of opportunity, developing new properties in times of growth and selling assets at attractive prices, resulting in continuous portfolio refreshment;
•ensure a strong balance sheet to maintain consistent access to capital and the ability to make new investments at opportune times; and
•foster a culture and reputation of integrity, excellence and purposefulness, making us the employer of choice for talented real estate professionals, the landlord and developer of choice for our customers, as well as the counterparty of choice for real estate industry participants.
MANAGEMENT
| Board of Directors | Management | |||||||||||||
| Joel I. Klein | Chairman of the Board | Owen D. Thomas | Chief Executive Officer | |||||||||||
| Owen D. Thomas | Chief Executive Officer | Douglas T. Linde | President | |||||||||||
| Douglas T. Linde | President | Raymond A. Ritchey | Senior Executive Vice President | |||||||||||
| Kelly A. Ayotte | Chair of Compensation Committee | Michael E. LaBelle | Executive Vice President, Chief Financial Officer and Treasurer | |||||||||||
| Bruce W. Duncan | Bryan J. Koop | Executive Vice President, Boston Region | ||||||||||||
| Carol B. Einiger | Robert E. Pester | Executive Vice President, San Francisco Region | ||||||||||||
| Diane J. Hoskins | Chair of Sustainability Committee | Hilary Spann | Executive Vice President, New York Region | |||||||||||
| Mary E. Kipp | Peter V. Otteni | Executive Vice President, Co-Head of the Washington, DC Region | ||||||||||||
| Matthew J. Lustig | Chair of Nominating & Corporate Governance Committee | John J. Stroman | Executive Vice President, Co-Head of the Washington, DC Region | |||||||||||
| David A. Twardock | Chair of Audit Committee | Jonathan D. Lange | Senior Vice President, Los Angeles Region | |||||||||||
| William H. Walton, III | Frank D. Burt | Senior Vice President, Chief Legal Officer | ||||||||||||
| Donna D. Garesche | Senior Vice President, Chief Human Resources Officer | |||||||||||||
| Michael R. Walsh | Senior Vice President, Chief Accounting Officer | |||||||||||||
| James J. Whalen | Senior Vice President, Chief Information & Technology Officer | |||||||||||||
____________________
1Common units and LTIP units are units of limited partnership interest in Boston Properties Limited Partnership, the entity through which the Company conducts substantially all of its business.
2For additional detail, see page 26.
3For the Company’s definitions and related disclosures, see the Definitions and Reconciliations sections of this Supplemental package starting on page 52.
1
| Q1 2022 | ||||
| Guidance and assumptions | |||||
GUIDANCE
The Company’s guidance for the second quarter and full year 2022 for diluted earnings per common share attributable to Boston Properties, Inc. (EPS) and diluted funds from operations (FFO) per common share attributable to Boston Properties, Inc. is set forth and reconciled below. Except as described below, the estimates reflect management’s view of current and future market conditions, including assumptions with respect to rental rates, occupancy levels, the timing of the lease-up of available space and the earnings impact of the events referenced in the Company’s earnings release issued on May 2, 2022 and those referenced during the Company’s conference call scheduled for May 3, 2022. Except as otherwise publicly disclosed, the estimates do not include the impacts of any potential (1) capital markets activity, (2) future write-offs or reinstatements of accounts receivable and accrued rent balances, or (3) future impairment charges. EPS estimates may be subject to fluctuations as a result of several factors, including changes in the recognition of depreciation and amortization expense, impairment losses on depreciable real estate 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, impairment losses on depreciable real estate, or gains or losses associated with disposition activities. For a complete definition of FFO and statements of the reasons why management believes it provides useful information to investors, see page 54. There can be no assurance that the Company’s actual results will not differ materially from the estimates set forth below.
| Second Quarter 2022 | Full Year 2022 | |||||||||||||||||||||||||||||||
| Low | High | Low | High | |||||||||||||||||||||||||||||
| Projected EPS (diluted) | $ | 0.79 | $ | 0.81 | $ | 5.32 | $ | 5.42 | ||||||||||||||||||||||||
| Add: | ||||||||||||||||||||||||||||||||
| Projected Company share of real estate depreciation and amortization | 1.05 | 1.05 | 4.30 | 4.30 | ||||||||||||||||||||||||||||
| Projected Company share of (gains)/losses on sales of real estate | — | — | (2.22) | (2.22) | ||||||||||||||||||||||||||||
| Projected FFO per share (diluted) | $ | 1.84 | $ | 1.86 | $ | 7.40 | $ | 7.50 | ||||||||||||||||||||||||
ASSUMPTIONS
(dollars in thousands)
| Full Year 2022 | |||||||||||||||||
| Low | High | ||||||||||||||||
| Operating property activity: | |||||||||||||||||
| Average In-service portfolio occupancy | 88.00 | % | 90.00 | % | |||||||||||||
Increase in BXP’s Share of Same Property net operating income (excluding termination income) | 2.75 | % | 3.75 | % | |||||||||||||
Increase in BXP’s Share of Same Property net operating income - cash (excluding termination income) | 5.00 | % | 6.00 | % | |||||||||||||
BXP’s Share of Non Same Properties’ incremental contribution to net operating income over prior year (excluding asset sales) | $ | 95,000 | $ | 105,000 | |||||||||||||
BXP’s Share of incremental net operating income related to asset sales over prior year | $ | (33,000) | $ | (27,000) | |||||||||||||
BXP’s Share of straight-line rent and fair value lease revenue (non-cash revenue) | $ | 120,000 | $ | 135,000 | |||||||||||||
| Termination income | $ | 3,000 | $ | 5,000 | |||||||||||||
| Other revenue (expense): | |||||||||||||||||
| Development, management services and other revenue | $ | 26,000 | $ | 33,000 | |||||||||||||
General and administrative expense 1 | $ | (157,000) | $ | (151,000) | |||||||||||||
| Net interest expense | $ | (420,000) | $ | (410,000) | |||||||||||||
| Noncontrolling interest: | |||||||||||||||||
| Noncontrolling interest in property partnerships’ share of FFO | $ | (144,000) | $ | (140,000) | |||||||||||||
_______________
1 Excludes estimated changes in the market value of the Company’s deferred compensation plan and gains (losses) from investments in securities.
2
| Q1 2022 | ||||
| Financial highlights | |||||
(unaudited and in thousands, except ratios and per share amounts)
| Three Months Ended | ||||||||||||||
| 31-Mar-22 | 31-Dec-21 | |||||||||||||
| Net income attributable to Boston Properties, Inc. | $ | 143,047 | $ | 184,537 | ||||||||||
| Net income attributable to Boston Properties, Inc. per share - diluted | $ | 0.91 | $ | 1.18 | ||||||||||
FFO attributable to Boston Properties, Inc. 1 | $ | 286,136 | $ | 242,963 | ||||||||||
Diluted FFO per share 1 | $ | 1.82 | $ | 1.55 | ||||||||||
| Dividends per common share | $ | 0.98 | $ | 0.98 | ||||||||||
Funds available for distribution to common shareholders and common unitholders (FAD) 2 | $ | 248,032 | $ | 143,195 | ||||||||||
| Selected items: | ||||||||||||||
| Revenue | $ | 754,307 | $ | 731,063 | ||||||||||
| Recoveries from tenants | $ | 115,910 | $ | 104,194 | ||||||||||
| Service income from tenants | $ | 1,787 | $ | 2,428 | ||||||||||
BXP’s Share of revenue 3 | $ | 735,572 | $ | 708,519 | ||||||||||
BXP’s Share of straight-line rent 3 | $ | 35,103 | $ | 30,129 | ||||||||||
BXP’s Share of fair value lease revenue 3, 4 | $ | 2,185 | $ | 2,058 | ||||||||||
BXP’s Share of termination income 3 | $ | 2,463 | $ | 76 | ||||||||||
| Losses from early extinguishments of debt | $ | — | $ | (44,284) | ||||||||||
| Ground rent expense | $ | 3,155 | $ | 3,192 | ||||||||||
| Capitalized interest | $ | 13,740 | $ | 13,839 | ||||||||||
| Capitalized wages | $ | 4,050 | $ | 3,594 | ||||||||||
| Income (loss) from unconsolidated joint ventures | $ | 2,189 | $ | (825) | ||||||||||
BXP’s share of FFO from unconsolidated joint ventures 5 | $ | 24,233 | $ | 19,576 | ||||||||||
| Net income attributable to noncontrolling interests in property partnerships | $ | 17,549 | $ | 18,204 | ||||||||||
FFO attributable to noncontrolling interests in property partnerships 6 | $ | 35,202 | $ | 35,686 | ||||||||||
| Balance Sheet items: | ||||||||||||||
| Above-market rents (included within Prepaid Expenses and Other Assets) | $ | 1,245 | $ | 1,457 | ||||||||||
| Below-market rents (included within Other Liabilities) | $ | 21,095 | $ | 22,962 | ||||||||||
| Accrued rental income liability (included within Other Liabilities) | $ | 118,460 | $ | 129,390 | ||||||||||
| Ratios: | ||||||||||||||
Interest Coverage Ratio (excluding capitalized interest) 7 | 4.16 | 4.00 | ||||||||||||
Interest Coverage Ratio (including capitalized interest) 7 | 3.60 | 3.50 | ||||||||||||
Fixed Charge Coverage Ratio 8 | 3.31 | 2.81 | ||||||||||||
BXP’s Share of Net Debt to BXP’s Share of EBITDAre (Annualized) 8 | 7.50 | 7.46 | ||||||||||||
Change in BXP’s Share of Same Store Net Operating Income (NOI) (excluding termination income) 9 | 5.5 | % | 17.9 | % | ||||||||||
Change in BXP’s Share of Same Store NOI (excluding termination income) - cash 9 | 4.8 | % | 10.2 | % | ||||||||||
FAD Payout Ratio 2 | 69.14 | % | 119.06 | % | ||||||||||
| Operating Margins [(rental revenue - rental expense)/rental revenue] | 63.5 | % | 64.0 | % | ||||||||||
| Occupancy of In-Service Properties | 89.1 | % | 88.8 | % | ||||||||||
| Capitalization: | ||||||||||||||
| Consolidated Debt | $ | 13,010,124 | $ | 12,896,609 | ||||||||||
BXP’s Share of Debt 10 | $ | 13,078,509 | $ | 12,923,917 | ||||||||||
| Consolidated Market Capitalization | $ | 35,542,525 | $ | 33,006,115 | ||||||||||
| Consolidated Debt/Consolidated Market Capitalization | 36.60 | % | 39.07 | % | ||||||||||
BXP’s Share of Market Capitalization 10 | $ | 35,610,910 | $ | 33,033,423 | ||||||||||
BXP’s Share of Debt/BXP’s Share of Market Capitalization 10 | 36.73 | % | 39.12 | % | ||||||||||
_____________
1For a quantitative reconciliation of FFO attributable to Boston Properties, Inc. and Diluted FFO per share, see page 6.
2For the three months ended December 31, 2021, includes approximately $42.9 million of cash losses related to the early extinguishment of debt in connection with the early redemption of the Company’s $1.0 billion aggregate principal amount of 3.85% unsecured senior notes that were scheduled to mature in February 2023. For a quantitative reconciliation of FAD, see page 7. FAD Payout Ratio equals distributions to common shareholders and unitholders (excluding any special distributions) divided by FAD.
3See the Definitions and Reconciliations sections of this Supplemental package starting on page 52.
4Represents 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.
5For a quantitative reconciliation for the three months ended March 31, 2022, see page 35.
6For a quantitative reconciliation for the three months ended March 31, 2022, see page 32.
7For a quantitative reconciliation for the three months ended March 31, 2022 and December 31, 2021, see page 30.
8For a quantitative reconciliation for the three months ended March 31, 2022 and December 31, 2021, see page 29.
9For a quantitative reconciliation for the three months ended March 31, 2022 and December 31, 2021, see pages 10, 62 and 63.
10For a quantitative reconciliation for March 31, 2022, see page 26.
3
| Q1 2022 | ||||
| Consolidated Balance Sheets | |||||
(unaudited and in thousands)
| 31-Mar-22 | 31-Dec-21 | |||||||||||||
| ASSETS | ||||||||||||||
| Real estate | $ | 22,472,940 | $ | 22,298,103 | ||||||||||
| Construction in progress | 846,775 | 894,172 | ||||||||||||
| Land held for future development | 582,511 | 560,355 | ||||||||||||
| Right of use assets - finance leases | 237,501 | 237,507 | ||||||||||||
| Right of use assets - operating leases | 169,248 | 169,778 | ||||||||||||
| Less accumulated depreciation | (5,995,760) | (5,883,961) | ||||||||||||
| Total real estate | 18,313,215 | 18,275,954 | ||||||||||||
| Cash and cash equivalents | 436,271 | 452,692 | ||||||||||||
| Cash held in escrows | 46,072 | 48,466 | ||||||||||||
| Investments in securities | 36,032 | 43,632 | ||||||||||||
| Tenant and other receivables, net | 56,132 | 70,186 | ||||||||||||
| Related party note receivable, net | 78,544 | 78,336 | ||||||||||||
| Notes receivable, net | 9,674 | 9,641 | ||||||||||||
| Accrued rental income, net | 1,243,395 | 1,226,745 | ||||||||||||
| Deferred charges, net | 609,205 | 618,798 | ||||||||||||
| Prepaid expenses and other assets | 128,472 | 57,811 | ||||||||||||
| Investments in unconsolidated joint ventures | 1,518,622 | 1,482,997 | ||||||||||||
| Total assets | $ | 22,475,634 | $ | 22,365,258 | ||||||||||
| LIABILITIES AND EQUITY | ||||||||||||||
| Liabilities: | ||||||||||||||
| Mortgage notes payable, net | $ | 3,268,745 | $ | 3,267,914 | ||||||||||
| Unsecured senior notes, net | 9,486,379 | 9,483,695 | ||||||||||||
| Unsecured line of credit | 255,000 | 145,000 | ||||||||||||
| Lease liabilities - finance leases | 245,554 | 244,421 | ||||||||||||
| Lease liabilities - operating leases | 204,677 | 204,561 | ||||||||||||
| Accounts payable and accrued expenses | 304,576 | 320,775 | ||||||||||||
| Dividends and distributions payable | 170,869 | 169,859 | ||||||||||||
| Accrued interest payable | 90,861 | 94,796 | ||||||||||||
| Other liabilities | 396,283 | 391,441 | ||||||||||||
| Total liabilities | 14,422,944 | 14,322,462 | ||||||||||||
| Commitments and contingencies | — | — | ||||||||||||
| Redeemable deferred stock units | 11,031 | 9,568 | ||||||||||||
| Equity: | ||||||||||||||
| Stockholders’ equity attributable to Boston Properties, Inc.: | ||||||||||||||
| Excess stock, $0.01 par value, 150,000,000 shares authorized, none issued or outstanding | — | — | ||||||||||||
Common stock, $0.01 par value, 250,000,000 shares authorized, 156,790,614 and 156,623,749 issued and 156,711,714 and 156,544,849 outstanding at March 31, 2022 and December 31, 2021, respectively | 1,567 | 1,565 | ||||||||||||
| Additional paid-in capital | 6,509,663 | 6,497,730 | ||||||||||||
| Dividends in excess of earnings | (636,421) | (625,891) | ||||||||||||
Treasury common stock at cost, 78,900 shares at March 31, 2022 and December 31, 2021 | (2,722) | (2,722) | ||||||||||||
| Accumulated other comprehensive loss | (28,485) | (36,662) | ||||||||||||
| Total stockholders’ equity attributable to Boston Properties, Inc. | 5,843,602 | 5,834,020 | ||||||||||||
| Noncontrolling interests: | ||||||||||||||
| Common units of the Operating Partnership | 649,602 | 642,655 | ||||||||||||
| Property partnerships | 1,548,455 | 1,556,553 | ||||||||||||
| Total equity | 8,041,659 | 8,033,228 | ||||||||||||
| Total liabilities and equity | $ | 22,475,634 | $ | 22,365,258 | ||||||||||
4
| Q1 2022 | ||||
| Consolidated Income Statements | |||||
(unaudited and in thousands, except per share amounts)
| Three Months Ended | ||||||||||||||
| 31-Mar-22 | 31-Dec-21 | |||||||||||||
| Revenue | ||||||||||||||
| Lease | $ | 718,120 | $ | 690,912 | ||||||||||
| Parking and other | 21,734 | 23,087 | ||||||||||||
| Hotel revenue | 4,557 | 6,227 | ||||||||||||
| Development and management services | 5,831 | 7,516 | ||||||||||||
| Direct reimbursements of payroll and related costs from management services contracts | 4,065 | 3,321 | ||||||||||||
| Total revenue | 754,307 | 731,063 | ||||||||||||
| Expenses | ||||||||||||||
| Operating | 138,723 | 129,615 | ||||||||||||
| Real estate taxes | 131,527 | 127,125 | ||||||||||||
| Demolition costs | 5 | 38 | ||||||||||||
| Hotel operating | 4,840 | 5,005 | ||||||||||||
General and administrative 1 | 43,194 | 33,649 | ||||||||||||
| Payroll and related costs from management services contracts | 4,065 | 3,321 | ||||||||||||
| Transaction costs | — | 2,066 | ||||||||||||
| Depreciation and amortization | 177,624 | 177,521 | ||||||||||||
| Total expenses | 499,978 | 478,340 | ||||||||||||
| Other income (expense) | ||||||||||||||
| Income (loss) from unconsolidated joint ventures | 2,189 | (825) | ||||||||||||
| Gains on sales of real estate | 22,701 | 115,556 | ||||||||||||
Gains (losses) from investments in securities 1 | (2,262) | 1,882 | ||||||||||||
| Interest and other income (loss) | 1,228 | 1,564 | ||||||||||||
| Losses from early extinguishments of debt | — | (44,284) | ||||||||||||
| Interest expense | (101,228) | (103,331) | ||||||||||||
| Net income | 176,957 | 223,285 | ||||||||||||
| Net income attributable to noncontrolling interests | ||||||||||||||
| Noncontrolling interest in property partnerships | (17,549) | (18,204) | ||||||||||||
Noncontrolling interest - common units of the Operating Partnership 2 | (16,361) | (20,544) | ||||||||||||
| Net income attributable to Boston Properties, Inc. | $ | 143,047 | $ | 184,537 | ||||||||||
| INCOME PER SHARE OF COMMON STOCK (EPS) | ||||||||||||||
| Net income attributable to Boston Properties, Inc. per share - basic | $ | 0.91 | $ | 1.18 | ||||||||||
| Net income attributable to Boston Properties, Inc. per share - diluted | $ | 0.91 | $ | 1.18 | ||||||||||
_____________
1General and administrative expense includes $(2.3) million and $1.9 million and Gains (losses) from investments in securities include $(2.3) million and $1.9 million for the three months ended March 31, 2022 and December 31, 2021, respectively, related to the Company’s deferred compensation plan.
2For additional detail, see page 6.
5
| Q1 2022 | ||||
Funds from operations (FFO) 1 | |||||
(unaudited and dollars in thousands, except per share amounts)
| Three Months Ended | ||||||||||||||
| 31-Mar-22 | 31-Dec-21 | |||||||||||||
| Net income attributable to Boston Properties, Inc. | $ | 143,047 | $ | 184,537 | ||||||||||
| Add: | ||||||||||||||
| Noncontrolling interest - common units of the Operating Partnership | 16,361 | 20,544 | ||||||||||||
| Noncontrolling interests in property partnerships | 17,549 | 18,204 | ||||||||||||
| Net income | 176,957 | 223,285 | ||||||||||||
| Add: | ||||||||||||||
| Depreciation and amortization expense | 177,624 | 177,521 | ||||||||||||
Noncontrolling interests in property partnerships' share of depreciation and amortization 2 | (17,653) | (17,482) | ||||||||||||
BXP's share of depreciation and amortization from unconsolidated joint ventures 3 | 22,044 | 20,401 | ||||||||||||
| Corporate-related depreciation and amortization | (404) | (426) | ||||||||||||
| Less: | ||||||||||||||
| Gains on sales of real estate | 22,701 | 115,556 | ||||||||||||
| Noncontrolling interests in property partnerships | 17,549 | 18,204 | ||||||||||||
| FFO attributable to the Operating Partnership (including Boston Properties, Inc.) (Basic FFO) | 318,318 | 269,539 | ||||||||||||
| Less: | ||||||||||||||
| Noncontrolling interest - common units of the Operating Partnership’s share of FFO | 32,182 | 26,576 | ||||||||||||
| FFO attributable to Boston Properties, Inc. | $ | 286,136 | $ | 242,963 | ||||||||||
| Boston Properties, Inc.’s percentage share of Basic FFO | 89.89 | % | 90.14 | % | ||||||||||
| Noncontrolling interest’s - common unitholders percentage share of Basic FFO | 10.11 | % | 9.86 | % | ||||||||||
| Basic FFO per share | $ | 1.83 | $ | 1.55 | ||||||||||
| Weighted average shares outstanding - basic | 156,650 | 156,297 | ||||||||||||
| Diluted FFO per share | $ | 1.82 | $ | 1.55 | ||||||||||
| Weighted average shares outstanding - diluted | 157,004 | 156,654 | ||||||||||||
RECONCILIATION TO DILUTED FFO
| Three Months Ended | ||||||||||||||
| 31-Mar-22 | 31-Dec-21 | |||||||||||||
| Basic FFO | $ | 318,318 | $ | 269,539 | ||||||||||
| Add: | ||||||||||||||
| Effect of dilutive securities - stock-based compensation | — | — | ||||||||||||
| Diluted FFO | 318,318 | 269,539 | ||||||||||||
| Less: | ||||||||||||||
| Noncontrolling interest - common units of the Operating Partnership’s share of diluted FFO | 32,118 | 29,389 | ||||||||||||
| Boston Properties, Inc.’s share of Diluted FFO | $ | 286,200 | $ | 240,150 | ||||||||||
RECONCILIATION OF SHARES/UNITS FOR DILUTED FFO
| Three Months Ended | ||||||||||||||
| 31-Mar-22 | 31-Dec-21 | |||||||||||||
| Shares/units for Basic FFO | 174,276 | 173,390 | ||||||||||||
| Add: | ||||||||||||||
| Effect of dilutive securities - stock-based compensation (shares/units) | 354 | 357 | ||||||||||||
| Shares/units for Diluted FFO | 174,630 | 173,747 | ||||||||||||
| Less: | ||||||||||||||
| Noncontrolling interest - common units of the Operating Partnership’s share of Diluted FFO (shares/units) | 17,626 | 17,093 | ||||||||||||
| Boston Properties, Inc.’s share of shares/units for Diluted FFO | 157,004 | 156,654 | ||||||||||||
| Boston Properties, Inc.’s percentage share of Diluted FFO | 89.91 | % | 90.16 | % | ||||||||||
_____________
1See the Definitions and Reconciliations sections of this Supplemental package starting on page 52.
2For a quantitative reconciliation for the three months ended March 31, 2022, see page 32.
3For a quantitative reconciliation for the three months ended March 31, 2022, see page 35.
6
| Q1 2022 | ||||
Funds available for distributions (FAD) 1 | |||||
(dollars in thousands)
| Three Months Ended | ||||||||||||||
| 31-Mar-22 | 31-Dec-21 | |||||||||||||
| Net income attributable to Boston Properties, Inc. | $ | 143,047 | $ | 184,537 | ||||||||||
| Add: | ||||||||||||||
| Noncontrolling interest - common units of the Operating Partnership | 16,361 | 20,544 | ||||||||||||
| Noncontrolling interests in property partnerships | 17,549 | 18,204 | ||||||||||||
| Net income | 176,957 | 223,285 | ||||||||||||
| Add: | ||||||||||||||
| Depreciation and amortization expense | 177,624 | 177,521 | ||||||||||||
Noncontrolling interests in property partnerships’ share of depreciation and amortization 2 | (17,653) | (17,482) | ||||||||||||
BXP’s share of depreciation and amortization from unconsolidated joint ventures 3 | 22,044 | 20,401 | ||||||||||||
| Corporate-related depreciation and amortization | (404) | (426) | ||||||||||||
| Less: | ||||||||||||||
| Gains on sales of real estate | 22,701 | 115,556 | ||||||||||||
| Noncontrolling interests in property partnerships | 17,549 | 18,204 | ||||||||||||
| Basic FFO | 318,318 | 269,539 | ||||||||||||
| Add: | ||||||||||||||
BXP’s Share of lease transaction costs that qualify as rent inducements 1, 4 | (1,769) | 3,408 | ||||||||||||
BXP’s Share of hedge amortization 1 | 1,446 | 1,446 | ||||||||||||
BXP’s Share of straight-line ground rent expense adjustment 1, 5 | 889 | 877 | ||||||||||||
| Stock-based compensation | 20,914 | 7,466 | ||||||||||||
| Non-real estate depreciation | 404 | 426 | ||||||||||||
Unearned portion of capitalized fees from consolidated joint ventures 6 | 593 | 1,598 | ||||||||||||
| Non-cash losses from early extinguishments of debt | — | 1,433 | ||||||||||||
| Less: | ||||||||||||||
BXP’s Share of straight-line rent 1 | 35,103 | 30,129 | ||||||||||||
BXP’s Share of fair value lease revenue 1, 7 | 2,185 | 2,058 | ||||||||||||
BXP’s Share of 2nd generation tenant improvements and leasing commissions 1 | 45,591 | 83,011 | ||||||||||||
BXP’s Share of maintenance capital expenditures 1, 8 | 9,848 | 27,743 | ||||||||||||
| Hotel improvements, equipment upgrades and replacements | 36 | 57 | ||||||||||||
Funds available for distribution to common shareholders and common unitholders (FAD) (A) 9 | $ | 248,032 | $ | 143,195 | ||||||||||
Distributions to common shareholders and unitholders (excluding any special distributions) (B) | $ | 171,497 | $ | 170,492 | ||||||||||
FAD Payout Ratio1 (B÷A) | 69.14 | % | 119.06 | % | ||||||||||
_____________
1See the Definitions and Reconciliations sections of this Supplemental package starting on page 52.
2For a quantitative reconciliation for the three months ended March 31, 2022, see page 32.
3For a quantitative reconciliation for the three months ended March 31, 2022, see page 35.
4Consists 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.
5Includes 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 2024 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.
6See page 58 for additional information.
7Represents 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.
8Maintenance capital expenditures do not include capital expenditures that are planned at the time of acquisition or capital expenditures incurred in connection with repositioning activities.
9For the three months ended December 31, 2021, includes approximately $42.9 million of cash losses related to the early extinguishment of debt in connection with the early redemption of the Company’s $1.0 billion aggregate principal amount of 3.85% unsecured senior notes that were scheduled to mature in February 2023.
7
| Q1 2022 | ||||
| Reconciliation of net income attributable to Boston Properties, Inc. common shareholders to BXP’s Share of same property net operating income (NOI) | |||||
(in thousands)
| Three Months Ended | ||||||||||||||
| 31-Mar-22 | 31-Mar-21 | |||||||||||||
| Net income attributable to Boston Properties, Inc. common shareholders | $ | 143,047 | $ | 91,624 | ||||||||||
| Preferred stock redemption charge | — | 6,412 | ||||||||||||
| Preferred dividends | — | 2,560 | ||||||||||||
| Net income attributable to Boston Properties, Inc. | 143,047 | 100,596 | ||||||||||||
| Net income attributable to noncontrolling interests: | ||||||||||||||
| Noncontrolling interest - common units of the Operating Partnership | 16,361 | 11,084 | ||||||||||||
| Noncontrolling interest in property partnerships | 17,549 | 16,467 | ||||||||||||
| Net income | 176,957 | 128,147 | ||||||||||||
| Add: | ||||||||||||||
| Interest expense | 101,228 | 107,902 | ||||||||||||
| Losses from early extinguishments of debt | — | 898 | ||||||||||||
| Depreciation and amortization expense | 177,624 | 176,565 | ||||||||||||
| Transaction costs | — | 331 | ||||||||||||
| Payroll and related costs from management services contracts | 4,065 | 3,505 | ||||||||||||
| General and administrative expense | 43,194 | 44,959 | ||||||||||||
| Less: | ||||||||||||||
| Interest and other income (loss) | 1,228 | 1,168 | ||||||||||||
| Gains (losses) from investments in securities | (2,262) | 1,659 | ||||||||||||
| Gains on sales of real estate | 22,701 | — | ||||||||||||
| Income from unconsolidated joint ventures | 2,189 | 5,225 | ||||||||||||
| Direct reimbursements of payroll and related costs from management services contracts | 4,065 | 3,505 | ||||||||||||
| Development and management services revenue | 5,831 | 6,803 | ||||||||||||
| Net Operating Income (NOI) | 469,316 | 443,947 | ||||||||||||
| Add: | ||||||||||||||
BXP’s share of NOI from unconsolidated joint ventures 1 | 37,321 | 24,795 | ||||||||||||
| Less: | ||||||||||||||
Partners’ share of NOI from consolidated joint ventures (after income allocation to private REIT shareholders) 2 | 47,055 | 44,376 | ||||||||||||
| BXP’s Share of NOI | 459,582 | 424,366 | ||||||||||||
| Less: | ||||||||||||||
| Termination income | 2,078 | 4,269 | ||||||||||||
BXP’s share of termination income from unconsolidated joint ventures 1 | 606 | — | ||||||||||||
| Add: | ||||||||||||||
Partners’ share of termination income (loss) from consolidated joint ventures 2 | 221 | (6) | ||||||||||||
| BXP’s Share of NOI (excluding termination income) | $ | 457,119 | $ | 420,091 | ||||||||||
| Net Operating Income (NOI) | $ | 469,316 | $ | 443,947 | ||||||||||
| Less: | ||||||||||||||
| Termination income | 2,078 | 4,269 | ||||||||||||
NOI from non Same Properties (excluding termination income) 3 | 13,396 | 7,273 | ||||||||||||
| Same Property NOI (excluding termination income) | 453,842 | 432,405 | ||||||||||||
| Less: | ||||||||||||||
Partners’ share of NOI from consolidated joint ventures (excluding termination income and after income allocation to private REIT shareholders) 2 | 46,834 | 44,382 | ||||||||||||
| Add: | ||||||||||||||
Partners’ share of NOI from non Same Properties from consolidated joint ventures (excluding termination income and after income allocation to private REIT shareholders) 3 | 1,590 | 880 | ||||||||||||
BXP’s share of NOI from unconsolidated joint ventures (excluding termination income) 1 | 36,715 | 24,795 | ||||||||||||
| Less: | ||||||||||||||
BXP’s share of NOI from non Same Properties from unconsolidated joint ventures (excluding termination income) 3 | 10,155 | 1,173 | ||||||||||||
| BXP’s Share of Same Property NOI (excluding termination income) | $ | 435,158 | $ | 412,525 | ||||||||||
_____________
1For a quantitative reconciliation for the three months ended March 31, 2022, see page 61.
2For a quantitative reconciliation for the three months ended March 31, 2022, see pages 58-59.
3Pages 20-23 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 March 31, 2022 and therefore are no longer a part of the Company’s property portfolio.
8
| Q1 2022 | ||||
| Reconciliation of net income attributable to Boston Properties, Inc. common shareholders to BXP’s Share of same property net operating income (NOI) - cash | |||||
(in thousands)
| Three Months Ended | ||||||||||||||
| 31-Mar-22 | 31-Mar-21 | |||||||||||||
| Net income attributable to Boston Properties, Inc. common shareholders | $ | 143,047 | $ | 91,624 | ||||||||||
| Preferred stock redemption charge | — | 6,412 | ||||||||||||
| Preferred dividends | — | 2,560 | ||||||||||||
| Net income attributable to Boston Properties, Inc. | 143,047 | 100,596 | ||||||||||||
| Net income attributable to noncontrolling interests: | ||||||||||||||
| Noncontrolling interest - common units of the Operating Partnership | 16,361 | 11,084 | ||||||||||||
| Noncontrolling interest in property partnerships | 17,549 | 16,467 | ||||||||||||
| Net income | 176,957 | 128,147 | ||||||||||||
| Add: | ||||||||||||||
| Interest expense | 101,228 | 107,902 | ||||||||||||
| Losses from early extinguishments of debt | — | 898 | ||||||||||||
| Depreciation and amortization expense | 177,624 | 176,565 | ||||||||||||
| Transaction costs | — | 331 | ||||||||||||
| Payroll and related costs from management services contracts | 4,065 | 3,505 | ||||||||||||
| General and administrative expense | 43,194 | 44,959 | ||||||||||||
| Less: | ||||||||||||||
| Interest and other income (loss) | 1,228 | 1,168 | ||||||||||||
| Gains (losses) from investments in securities | (2,262) | 1,659 | ||||||||||||
| Gains on sales of real estate | 22,701 | — | ||||||||||||
| Income from unconsolidated joint ventures | 2,189 | 5,225 | ||||||||||||
| Direct reimbursements of payroll and related costs from management services contracts | 4,065 | 3,505 | ||||||||||||
| Development and management services revenue | 5,831 | 6,803 | ||||||||||||
| Net Operating Income (NOI) | 469,316 | 443,947 | ||||||||||||
| Less: | ||||||||||||||
| Straight-line rent | 22,186 | 7,730 | ||||||||||||
| Fair value lease revenue | 1,655 | 653 | ||||||||||||
| Termination income | 2,078 | 4,269 | ||||||||||||
| Add: | ||||||||||||||
Straight-line ground rent expense adjustment 1 | 576 | 765 | ||||||||||||
Lease transaction costs that qualify as rent inducements 2 | (4,583) | 1,859 | ||||||||||||
| NOI - cash (excluding termination income) | 439,390 | 433,919 | ||||||||||||
| Less: | ||||||||||||||
NOI - cash from non Same Properties (excluding termination income) 3 | 5,827 | 23,829 | ||||||||||||
| Same Property NOI - cash (excluding termination income) | 433,563 | 410,090 | ||||||||||||
| Less: | ||||||||||||||
Partners’ share of NOI - cash from consolidated joint ventures (excluding termination income and after income allocation to private REIT shareholders) 4 | 43,366 | 49,973 | ||||||||||||
| Add: | ||||||||||||||
Partners’ share of NOI - cash from non Same Properties from consolidated joint ventures (excluding termination income and after income allocation to private REIT shareholders) 3 | 1,161 | 8,517 | ||||||||||||
BXP’s share of NOI - cash from unconsolidated joint ventures (excluding termination income) 5 | 22,759 | 25,363 | ||||||||||||
| Less: | ||||||||||||||
BXP’s share of NOI - cash from non Same Properties from unconsolidated joint ventures (excluding termination income) 3 | 2,227 | 1,121 | ||||||||||||
| BXP’s Share of Same Property NOI - cash (excluding termination income) | $ | 411,890 | $ | 392,876 | ||||||||||
_____________
1In 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 $168 and $167 for the three months ended March 31, 2022 and 2021, respectively. As of March 31, 2022, the Company has remaining lease payments aggregating approximately $25.4 million, all of which it expects to incur by the end of 2024 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 2024 may vary significantly.
2Consist 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 7.
3Pages 20-23 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 March 31, 2022 and therefore are no longer a part of the Company’s property portfolio.
4For a quantitative reconciliation for the three months ended March 31, 2022, see page 59.
5For a quantitative reconciliation for the three months ended March 31, 2022, see page 61.
9
| Q1 2022 | ||||
| Same property net operating income (NOI) by reportable segment | |||||
(dollars in thousands)
Office 1 | Hotel & Residential | ||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended | $ | % | Three Months Ended | $ | % | ||||||||||||||||||||||||||||||||||||||||||
| 31-Mar-22 | 31-Mar-21 | Change | Change | 31-Mar-22 | 31-Mar-21 | Change | Change | ||||||||||||||||||||||||||||||||||||||||
Rental Revenue 2 | $ | 708,288 | $ | 682,889 | $ | 17,523 | $ | 9,807 | |||||||||||||||||||||||||||||||||||||||
| Less: Termination income | 2,078 | 4,269 | — | — | |||||||||||||||||||||||||||||||||||||||||||
Rental revenue (excluding termination income) 2 | 706,210 | 678,620 | $ | 27,590 | 4.1 | % | 17,523 | 9,807 | $ | 7,716 | 78.7 | % | |||||||||||||||||||||||||||||||||||
| Less: Operating expenses and real estate taxes | 258,619 | 247,844 | 10,775 | 4.3 | % | 11,272 | 8,178 | 3,094 | 37.8 | % | |||||||||||||||||||||||||||||||||||||
NOI (excluding termination income) 2, 3 | $ | 447,591 | $ | 430,776 | $ | 16,815 | 3.9 | % | $ | 6,251 | $ | 1,629 | $ | 4,622 | 283.7 | % | |||||||||||||||||||||||||||||||
Rental revenue (excluding termination income) 2 | $ | 706,210 | $ | 678,620 | $ | 27,590 | 4.1 | % | $ | 17,523 | $ | 9,807 | $ | 7,716 | 78.7 | % | |||||||||||||||||||||||||||||||
| Less: Straight-line rent and fair value lease revenue | 16,216 | 24,907 | (8,691) | (34.9) | % | 56 | 33 | 23 | 69.7 | % | |||||||||||||||||||||||||||||||||||||
Add: Lease transaction costs that qualify as rent inducements 4 | (4,583) | 1,859 | (6,442) | (346.5) | % | — | — | — | — | % | |||||||||||||||||||||||||||||||||||||
| Subtotal | 685,411 | 655,572 | 29,839 | 4.6 | % | 17,467 | 9,774 | 7,693 | 78.7 | % | |||||||||||||||||||||||||||||||||||||
| Less: Operating expenses and real estate taxes | 258,619 | 247,844 | 10,775 | 4.3 | % | 11,272 | 8,178 | 3,094 | 37.8 | % | |||||||||||||||||||||||||||||||||||||
Add: Straight-line ground rent expense 5 | 576 | 766 | (190) | (24.8) | % | — | — | — | — | % | |||||||||||||||||||||||||||||||||||||
NOI - cash (excluding termination income) 2, 3 | $ | 427,368 | $ | 408,494 | $ | 18,874 | 4.6 | % | $ | 6,195 | $ | 1,596 | $ | 4,599 | 288.2 | % | |||||||||||||||||||||||||||||||
Consolidated Total 1 (A) | BXP’s share of Unconsolidated Joint Ventures (B) | ||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended | $ | % | Three Months Ended | $ | % | ||||||||||||||||||||||||||||||||||||||||||
| 31-Mar-22 | 31-Mar-21 | Change | Change | 31-Mar-22 | 31-Mar-21 | Change | Change | ||||||||||||||||||||||||||||||||||||||||
Rental Revenue 2 | $ | 725,811 | $ | 692,696 | $ | 44,541 | $ | 39,985 | |||||||||||||||||||||||||||||||||||||||
| Less: Termination income | 2,078 | 4,269 | 606 | — | |||||||||||||||||||||||||||||||||||||||||||
Rental revenue (excluding termination income) 2 | 723,733 | 688,427 | $ | 35,306 | 5.1 | % | 43,935 | 39,985 | $ | 3,950 | 9.9 | % | |||||||||||||||||||||||||||||||||||
| Less: Operating expenses and real estate taxes | 269,891 | 256,022 | 13,869 | 5.4 | % | 17,375 | 16,363 | 1,012 | 6.2 | % | |||||||||||||||||||||||||||||||||||||
NOI (excluding termination income) 2, 3 | $ | 453,842 | $ | 432,405 | $ | 21,437 | 5.0 | % | $ | 26,560 | $ | 23,622 | $ | 2,938 | 12.4 | % | |||||||||||||||||||||||||||||||
Rental revenue (excluding termination income) 2 | $ | 723,733 | $ | 688,427 | $ | 35,306 | 5.1 | % | $ | 43,935 | $ | 39,985 | $ | 3,950 | 9.9 | % | |||||||||||||||||||||||||||||||
| Less: Straight-line rent and fair value lease revenue | 16,272 | 24,940 | (8,668) | (34.8) | % | 6,531 | 1,033 | 5,498 | 532.2 | % | |||||||||||||||||||||||||||||||||||||
Add: Lease transaction costs that qualify as rent inducements 4 | (4,583) | 1,859 | (6,442) | (346.5) | % | 358 | 1,419 | (1,061) | (74.8) | % | |||||||||||||||||||||||||||||||||||||
| Subtotal | $ | 702,878 | $ | 665,346 | 37,532 | 5.6 | % | 37,762 | 40,371 | (2,609) | (6.5) | % | |||||||||||||||||||||||||||||||||||
| Less: Operating expenses and real estate taxes | 269,891 | 256,022 | 13,869 | 5.4 | % | 17,375 | 16,363 | 1,012 | 6.2 | % | |||||||||||||||||||||||||||||||||||||
Add: Straight-line ground rent expense 5 | 576 | 766 | (190) | (24.8) | % | 145 | 234 | (89) | (38.0) | % | |||||||||||||||||||||||||||||||||||||
NOI - cash (excluding termination income) 2, 3 | $ | 433,563 | $ | 410,090 | $ | 23,473 | 5.7 | % | $ | 20,532 | $ | 24,242 | $ | (3,710) | (15.3) | % | |||||||||||||||||||||||||||||||
Partners’ share of Consolidated Joint Ventures (C) | BXP’s Share 3, 6, 7, 8 | ||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended | $ | % | Three Months Ended | $ | % | ||||||||||||||||||||||||||||||||||||||||||
| 31-Mar-22 | 31-Mar-21 | Change | Change | 31-Mar-22 | 31-Mar-21 | Change | Change | ||||||||||||||||||||||||||||||||||||||||
Rental Revenue 2 | $ | 75,130 | $ | 74,072 | $ | 695,222 | $ | 658,609 | |||||||||||||||||||||||||||||||||||||||
| Less: Termination income | 221 | (6) | 2,463 | 4,275 | |||||||||||||||||||||||||||||||||||||||||||
Rental revenue (excluding termination income) 2 | 74,909 | 74,078 | $ | 831 | 1.1 | % | 692,759 | 654,334 | $ | 38,425 | 5.9 | % | |||||||||||||||||||||||||||||||||||
| Less: Operating expenses and real estate taxes | 29,665 | 30,576 | (911) | (3.0) | % | 257,601 | 241,809 | 15,792 | 6.5 | % | |||||||||||||||||||||||||||||||||||||
NOI (excluding termination income) 2, 3 | $ | 45,244 | $ | 43,502 | $ | 1,742 | 4.0 | % | $ | 435,158 | $ | 412,525 | $ | 22,633 | 5.5 | % | |||||||||||||||||||||||||||||||
Rental revenue (excluding termination income) 2 | $ | 74,909 | $ | 74,078 | $ | 831 | 1.1 | % | $ | 692,759 | $ | 654,334 | $ | 38,425 | 5.9 | % | |||||||||||||||||||||||||||||||
| Less: Straight-line rent and fair value lease revenue | 596 | 2,297 | (1,701) | (74.1) | % | 22,207 | 23,676 | (1,469) | (6.2) | % | |||||||||||||||||||||||||||||||||||||
Add: Lease transaction costs that qualify as rent inducements 4 | (2,443) | 251 | (2,694) | (1,073.3) | % | (1,782) | 3,027 | (4,809) | (158.9) | % | |||||||||||||||||||||||||||||||||||||
| Subtotal | 71,870 | 72,032 | (162) | (0.2) | % | 668,770 | 633,685 | 35,085 | 5.5 | % | |||||||||||||||||||||||||||||||||||||
| Less: Operating expenses and real estate taxes | 29,665 | 30,576 | (911) | (3.0) | % | 257,601 | 241,809 | 15,792 | 6.5 | % | |||||||||||||||||||||||||||||||||||||
Add: Straight-line ground rent expense 5 | — | — | — | — | % | 721 | 1,000 | (279) | (27.9) | % | |||||||||||||||||||||||||||||||||||||
NOI - cash (excluding termination income) 2, 3 | $ | 42,205 | $ | 41,456 | $ | 749 | 1.8 | % | $ | 411,890 | $ | 392,876 | $ | 19,014 | 4.8 | % | |||||||||||||||||||||||||||||||
___________________
1Includes 100% share of consolidated joint ventures that are a Same Property.
2See the Definitions and Reconciliations sections of this Supplemental package starting on page 52.
3For 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 8-9.
4Consist 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 7.
5Excludes the straight-line impact of approximately $168 and $167 for the three months ended March 31, 2022 and 2021, respectively, in connection with the Company’s 99-year ground and air rights lease at 100 Clarendon Street garage and Back Bay Transit Station.
10
| Q1 2022 | ||||
| Same property net operating income (NOI) by reportable segment (continued) | |||||
6BXP’s Share equals (A) + (B) - (C).
7BXP’s Share of Same Store NOI (excluding termination income) increased $22,633, compared to Q1 2021. Included in Q1 2022 is BXP’s Share of approximately $2,249 associated with the reinstatement of accrued rent balances that the Company determined were probable of collection. Included in the Q1 2021 comparison are approximately $693 in write-offs associated with accrued rent, net and $(200) in write-offs associated with associated with accounts receivable, net. These items increased BXP’s Share of Same Store NOI (excluding termination income) by $2,742. For additional information, see page 56.
8BXP’s Share of Same Store NOI-cash (excluding termination income) increased $19,014, compared to Q1 2021. Included in Q1 2021 is BXP’s Share of $(200) of write-offs associated with accounts receivable, net. Cash rent abatements and deferrals primarily related to COVID-19 decreased approximately $7,489 in Q1 2022 compared to Q1 2021. These items increased BXP’s Share of Same Store NOI-cash (excluding termination income) by $7,289. For additional information, see page 56.
11
| Q1 2022 | ||||
| Capital expenditures, tenant improvement costs and leasing commissions | |||||
(dollars in thousands, except PSF amounts)
CAPITAL EXPENDITURES
| Three Months Ended | ||||||||||||||
| 31-Mar-22 | 31-Dec-21 | |||||||||||||
| Maintenance capital expenditures | $ | 10,652 | $ | 33,919 | ||||||||||
| Planned capital expenditures associated with acquisition properties | — | — | ||||||||||||
| Repositioning capital expenditures | 6,243 | — | ||||||||||||
| Hotel improvements, equipment upgrades and replacements | 36 | 57 | ||||||||||||
| Subtotal | 16,931 | 33,976 | ||||||||||||
| Add: | ||||||||||||||
| BXP’s share of maintenance capital expenditures from unconsolidated joint ventures (JVs) | 719 | 180 | ||||||||||||
| BXP’s share of planned capital expenditures associated with acquisition properties from unconsolidated JVs | — | 1,023 | ||||||||||||
| BXP’s share of repositioning capital expenditures from unconsolidated JVs | — | — | ||||||||||||
| Less: | ||||||||||||||
| Partners’ share of maintenance capital expenditures from consolidated JVs | 1,523 | 6,356 | ||||||||||||
| Partners’ share of planned capital expenditures associated with acquisition properties from consolidated JVs | — | — | ||||||||||||
| Partners’ share of repositioning capital expenditures from consolidated JVs | 2,223 | — | ||||||||||||
BXP’s Share of Capital Expenditures 1 | $ | 13,904 | $ | 28,823 | ||||||||||
2nd GENERATION TENANT IMPROVEMENTS AND LEASING COMMISSIONS 2
| Three Months Ended | ||||||||||||||
| 31-Mar-22 | 31-Dec-21 | |||||||||||||
| Square feet | 1,057,074 | 1,422,236 | ||||||||||||
| Tenant improvements and lease commissions PSF | $ | 54.99 | $ | 75.03 | ||||||||||
___________________
1See the Definitions and Reconciliations sections of this Supplemental package starting on page 52.
2Includes 100% of unconsolidated joint ventures.
12
| Q1 2022 | ||||
| Acquisitions and dispositions | |||||
For the period from January 1, 2022 through March 31, 2022
(dollars in thousands)
ACQUISITIONS
| Investment | |||||||||||||||||||||||||||||||||||||||||||||||
| Property | Location | Date Acquired | Square Feet | Initial | Anticipated Future | Total | In-service Leased (%) | ||||||||||||||||||||||||||||||||||||||||
| N/A | — | $ | — | $ | — | $ | — | — | % | ||||||||||||||||||||||||||||||||||||||
| Total Acquisitions | — | $ | — | $ | — | $ | — | — | % | ||||||||||||||||||||||||||||||||||||||
DISPOSITIONS
| Property | Location | Date Disposed | Square Feet | Gross Sales Price | Net Cash Proceeds | Book Gain | ||||||||||||||||||||||||||||||||||||||
| 195 West Street | Waltham, MA | March 31, 2022 | 63,500 | $ | 37,700 | $ | 35,397 | $ | 22,701 | |||||||||||||||||||||||||||||||||||
| Total Dispositions | 63,500 | $ | 37,700 | $ | 35,397 | $ | 22,701 | |||||||||||||||||||||||||||||||||||||
13
| Q1 2022 | ||||
| Construction in progress | |||||
as of March 31, 2022
(dollars in thousands)
CONSTRUCTION IN PROGRESS 1
| Actual/Estimated | BXP’s share | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Initial Occupancy | Stabilization Date | Square Feet | Investment to Date 2 | Estimated Total Investment 2 | Total Financing | Amount Drawn at 3/31/2022 | Estimated Future Equity Requirement 2 | Percentage Leased 3 | Percentage placed in-service 4 | Net Operating Income (Loss) 5 (BXP’s share) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Construction Properties | Location | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Office | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 325 Main Street | Q3 2022 | Q3 2022 | Cambridge, MA | 420,000 | $ | 328,547 | $ | 418,400 | $ | — | $ | — | $ | 89,853 | 90 | % | — | % | N/A | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reston Next | Q4 2021 | Q4 2023 | Reston, VA | 1,062,000 | 538,075 | 715,300 | — | — | 177,225 | 87 | % | 67 | % | $ | 4,776 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2100 Pennsylvania Avenue | Q3 2022 | Q3 2024 | Washington, DC | 480,000 | 252,049 | 356,100 | — | — | 104,051 | 61 | % | — | % | N/A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
360 Park Avenue South (42% ownership) 6 | Q3 2023 | Q1 2025 | New York, NY | 450,000 | 195,333 | 219,000 | 92,774 | 85,588 | 16,481 | — | % | — | % | N/A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Platform16 Building A (55% ownership) 7 | Q2 2025 | Q4 2026 | San Jose, CA | 389,500 | 65,199 | 231,900 | — | — | 166,701 | — | % | — | % | N/A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Office Properties under Construction | 2,801,500 | 1,379,203 | 1,940,700 | 92,774 | 85,588 | 554,311 | 57 | % | 25 | % | $ | 4,776 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Lab/Life Sciences | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 880 Winter Street (Redevelopment) | Q4 2022 | Q1 2023 | Waltham, MA | 244,000 | 47,522 | 108,000 | — | — | 60,478 | 85 | % | — | % | N/A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 751 Gateway (49% ownership) | Q2 2024 | Q2 2024 | South San Francisco, CA | 231,000 | 55,892 | 127,600 | — | — | 71,708 | 100 | % | — | % | N/A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 103 CityPoint | Q4 2023 | Q3 2024 | Waltham, MA | 113,000 | 16,156 | 115,100 | — | — | 98,944 | — | % | — | % | N/A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 180 CityPoint | Q4 2023 | Q4 2024 | Waltham, MA | 329,000 | 66,272 | 274,700 | — | — | 208,428 | 43 | % | — | % | N/A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 651 Gateway (50% ownership) | Q4 2023 | Q4 2025 | South San Francisco, CA | 327,000 | 5,227 | 146,500 | — | — | 141,273 | — | % | — | % | N/A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Lab/Life Sciences Properties under Construction | 1,244,000 | 191,069 | 771,900 | — | — | 580,831 | 47 | % | — | % | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| View Boston Observatory at The Prudential Center (Redevelopment) | Q2 2023 | N/A | Boston, MA | 59,000 | 81,617 | 182,300 | — | — | 100,683 | N/A | — | % | N/A | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Properties Under Construction | 4,104,500 | $ | 1,651,889 | $ | 2,894,900 | $ | 92,774 | $ | 85,588 | $ | 1,235,825 | 54 | % | 8 | 17 | % | $ | 4,776 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
________________
1A 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.
2Includes income (loss) and interest carry on debt and equity investment.
3Represents percentage leased as of April 29, 2022, including leases with future commencement dates.
4Represents the portion of the project that no longer qualifies for capitalization of interest in accordance with GAAP.
5Amounts represent Net Operating Income (Loss) for the three months ended March 31, 2022. For partially owned properties, amount represents BXP’s share based on its ownership percentage. See the Definitions and Reconciliations sections of this supplemental package starting on page 52.
6Investment to Date includes all related costs incurred prior to the contribution of the property by the Company to the joint venture on December 15, 2021 totaling approximately $107 million and the Company’s proportionate share of the loan. The Company’s joint venture partners will fund required capital until their aggregate investment is approximately 58% of all capital contributions; thereafter, the joint venture partners will fund required capital according to their percentage interests.
7Estimated total investment represents the costs to complete Building A, a 389,500 square foot building, and Building A’s proportionate share of land and garage costs. In conjunction with the construction of Building A, garage and site work will be completed for Phase II, which will support approximately 700,000 square feet of development in two office buildings, budgeted to be an incremental $141 million.
8Total percentage leased excludes Other.
14
| Q1 2022 | ||||
| Land parcels and purchase options | |||||
as of March 31, 2022
OWNED LAND PARCELS
| Location | Approximate Developable Square Feet 1 | |||||||
Reston, VA 2 | 2,938,000 | |||||||
San Jose, CA 3 | 2,199,000 | |||||||
| New York, NY (25% Ownership) | 2,000,000 | |||||||
| Princeton, NJ | 1,650,000 | |||||||
| San Francisco, CA | 850,000 | |||||||
| San Jose, CA (55% Ownership) | 698,000 | |||||||
| Santa Clara, CA | 632,000 | |||||||
| Washington, DC (50% ownership) | 520,000 | |||||||
| South San Francisco, CA (50% Ownership) | 451,000 | |||||||
| Springfield, VA | 422,000 | |||||||
| Waltham, MA | 365,000 | |||||||
| Dulles, VA | 310,000 | |||||||
| El Segundo, CA (50% Ownership) | 275,000 | |||||||
Rockville, MD 3, 4 | 202,000 | |||||||
Total | 13,512,000 | |||||||
VALUE CREATION PIPELINE - LAND PURCHASE OPTIONS
| Location | Approximate Developable Square Feet 1 | |||||||
| Cambridge, MA | 1,400,000 | |||||||
| Boston, MA | 1,300,000 | |||||||
Waltham, MA 5 | 1,200,000 | |||||||
| Total | 3,900,000 | |||||||
__________________
1Represents 100% of consolidated and unconsolidated projects.
2During the fourth quarter of 2020, a ground lease commenced with a hotel developer to lease approximately 200,000 square feet from the Company. Construction is contingent on the developer’s ability to obtain construction financing.
3Excludes the existing square footage at in-service properties being held for future re-development as listed and noted on pages 20-23.
4Includes three buildings that are currently vacant at Shady Grove Innovation District in Rockville, Maryland. The Company intends to reposition these three vacant buildings, totaling 202,000 square feet, to support life science uses. These three buildings are not included in the Company’s in-service portfolio.
5The Company expects to be a 50% partner in the future development of these sites.
15
| Q1 2022 | ||||
| Leasing activity | |||||
for the three months ended March 31, 2022
ALL IN-SERVICE PROPERTIES
| Net (increase)/decrease in available space (SF) | Total | ||||
| Vacant space available at the beginning of the period | 5,340,029 | ||||
| Less: | |||||
Property dispositions/properties taken out of service 1 | 95,180 | ||||
| Add: | |||||
Properties placed (and partially placed) in-service 2 | 410,690 | ||||
| Leases expiring or terminated during the period | 1,097,803 | ||||
| Total space available for lease | 6,753,342 | ||||
| 1st generation leases | 552,730 | ||||
| 2nd generation leases with new tenants | 687,656 | ||||
| 2nd generation lease renewals | 369,418 | ||||
| Total space leased | 1,609,804 | ||||
| Vacant space available for lease at the end of the period | 5,143,538 | ||||
| Net (increase)/decrease in available space | 196,491 | ||||
Second generation leasing information: 3 | |||||
| Leases commencing during the period (SF) | 1,057,074 | ||||
| Weighted average lease term (months) | 71 | ||||
| Weighted average free rent period (days) | 135 | ||||
Total transaction costs per square foot 4 | $54.99 | ||||
Increase (decrease) in gross rents 5 | (2.36) | % | |||
Increase (decrease) in net rents 6 | (4.34) | % | |||
| All leases (SF) | Incr (decr) in 2nd generation cash rents | Total square feet of leases executed in the quarter 8 | |||||||||||||||||||||||||||||||||
| 1st generation | 2nd generation | total 7 | gross 5 | net 6 | |||||||||||||||||||||||||||||||
| Boston | 140,944 | 227,829 | 368,773 | 5.53 | % | 7.72 | % | 350,767 | |||||||||||||||||||||||||||
| Los Angeles | — | 79,996 | 79,996 | 0.69 | % | 1.04 | % | 12,306 | |||||||||||||||||||||||||||
| New York | — | 267,169 | 267,169 | (10.14) | % | (20.12) | % | 434,340 | |||||||||||||||||||||||||||
| San Francisco | — | 181,943 | 181,943 | 6.07 | % | 8.18 | % | 199,268 | |||||||||||||||||||||||||||
| Seattle | — | 3,397 | 3,397 | — | — | — | |||||||||||||||||||||||||||||
| Washington, DC | 411,786 | 296,740 | 708,526 | (1.98) | % | (2.19) | % | 182,911 | |||||||||||||||||||||||||||
| Total / Weighted Average | 552,730 | 1,057,074 | 1,609,804 | (2.36) | % | (4.34) | % | 1,179,592 | |||||||||||||||||||||||||||
_____________
1Total square feet of properties taken out of service in Q1 2022 consists of 95,180 at 651 Gateway.
2Total square feet of properties placed (and partially placed) in-service in Q1 2022 consists of 410,690 at Reston Next.
3Second generation leases are defined as leases for space that had previously been leased by the Company. Of the 1,057,074 square feet of second generation leases that commenced in Q1 2022, leases for 735,157 square feet were signed in prior periods.
4Total transaction costs include tenant improvements and leasing commissions, but exclude free rent concessions.
5Represents the increase/(decrease) in gross rent (base rent plus expense reimbursements) on the new vs. expired leases on the 734,025 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.
6Represents the increase/(decrease) in net rent (gross rent less operating expenses) on the new vs. expired leases on the 734,025 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.
7Represents leases for which rental revenue recognition commenced in accordance with GAAP during the quarter.
8Represents 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 321,917.
16
| Q1 2022 | ||||
| Portfolio overview | |||||
for the three months ended March 31, 2022
(dollars in thousands)
Rentable square footage of in-service properties by location and unit type 1, 2
| Office | Retail | Residential | Hotel | Total | ||||||||||||||||||||||||||||
| Boston | 14,099,481 | 1,056,365 | 550,114 | 330,000 | 16,035,960 | |||||||||||||||||||||||||||
| Los Angeles | 2,183,318 | 126,377 | — | — | 2,309,695 | |||||||||||||||||||||||||||
| New York | 11,334,521 | 417,849 | — | — | 11,752,370 | |||||||||||||||||||||||||||
| San Francisco | 6,994,229 | 351,284 | 318,171 | — | 7,663,684 | |||||||||||||||||||||||||||
| Seattle | 748,462 | 18,761 | — | — | 767,223 | |||||||||||||||||||||||||||
| Washington, DC | 9,016,767 | 672,330 | 822,436 | — | 10,511,533 | |||||||||||||||||||||||||||
| Total | 44,376,778 | 2,642,966 | 1,690,721 | 330,000 | 49,040,465 | |||||||||||||||||||||||||||
| % of Total | 90.49 | % | 5.39 | % | 3.45 | % | 0.67 | % | 100.00 | % | ||||||||||||||||||||||
Rental revenue of in-service properties by unit type 1
| Office | Retail | Residential | Hotel 3 | Total | ||||||||||||||||||||||||||||
| Consolidated | $ | 674,058 | $ | 53,573 | $ | 12,323 | $ | 4,457 | $ | 744,411 | ||||||||||||||||||||||
Less: | ||||||||||||||||||||||||||||||||
Partners’ share from consolidated joint ventures 4 | 68,293 | 8,856 | — | — | 77,149 | |||||||||||||||||||||||||||
Add: | ||||||||||||||||||||||||||||||||
BXP’s share from unconsolidated joint ventures 5 | 52,200 | 3,410 | 2,444 | — | 58,054 | |||||||||||||||||||||||||||
BXP’s Share of Rental revenue 1 | $ | 657,965 | $ | 48,127 | $ | 14,767 | $ | 4,457 | $ | 725,316 | ||||||||||||||||||||||
| % of Total | 90.71 | % | 6.64 | % | 2.04 | % | 0.61 | % | 100.00 | % | ||||||||||||||||||||||
Percentage of BXP’s Share of net operating income (NOI) (excluding termination income) by location 1, 6
| CBD | Suburban | Total | |||||||||||||||
| Boston | 25.90 | % | 7.06 | % | 32.96 | % | |||||||||||
| Los Angeles | 3.00 | % | — | % | 3.00 | % | |||||||||||
| New York | 24.99 | % | 2.24 | % | 27.23 | % | |||||||||||
| San Francisco | 17.79 | % | 2.33 | % | 20.12 | % | |||||||||||
| Seattle | 0.43 | % | — | % | 0.43 | % | |||||||||||
| Washington, DC | 4.81 | % | 11.45 | % | 16.26 | % | |||||||||||
| Total | 76.92 | % | 23.08 | % | 100.00 | % | |||||||||||
_____________
1See the Definitions and Reconciliations sections of this Supplemental package starting on page 52.
2Includes 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 20-23.
3Excludes approximately $100 of revenue from retail tenants that is included in Retail.
4See page 59 for additional information.
5See page 61 for additional information.
6BXP’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. to BXP’s Share of NOI (excluding termination income), see page 8.
17
| Q1 2022 | ||||
| Residential and hotel performance | |||||
(dollars in thousands, except rental rates)
RESULTS OF OPERATIONS
Residential 1 | Hotel | ||||||||||||||||||||||
| Three Months Ended | Three Months Ended | ||||||||||||||||||||||
| 31-Mar-22 | 31-Dec-21 | 31-Mar-22 | 31-Dec-21 | ||||||||||||||||||||
Rental Revenue 2 | $ | 12,966 | $ | 12,836 | $ | 4,557 | $ | 6,227 | |||||||||||||||
| Less: Operating expenses and real estate taxes | 6,432 | 6,344 | 4,840 | 5,005 | |||||||||||||||||||
Net Operating Income (NOI) 2 | 6,534 | 6,492 | (283) | 1,222 | |||||||||||||||||||
| Add: BXP’s share of NOI from unconsolidated joint ventures | 1,647 | 1,288 | N/A | N/A | |||||||||||||||||||
BXP’s Share of NOI 2 | $ | 8,181 | $ | 7,780 | $ | (283) | $ | 1,222 | |||||||||||||||
Rental Revenue 2 | $ | 12,966 | $ | 12,836 | $ | 4,557 | $ | 6,227 | |||||||||||||||
| Less: Straight line rent and fair value lease revenue | 54 | (26) | 2 | 5 | |||||||||||||||||||
| Add: Lease transaction costs that qualify as rent inducements | — | — | — | — | |||||||||||||||||||
| Subtotal | 12,912 | 12,862 | 4,555 | 6,222 | |||||||||||||||||||
| Less: Operating expenses and real estate taxes | 6,432 | 6,344 | 4,840 | 5,005 | |||||||||||||||||||
NOI - cash basis 2 | 6,480 | 6,518 | (285) | 1,217 | |||||||||||||||||||
| Add: BXP’s share of NOI-cash from unconsolidated joint ventures | 1,647 | 1,288 | N/A | N/A | |||||||||||||||||||
BXP’s Share of NOI - cash basis 2 | $ | 8,127 | $ | 7,806 | $ | (285) | $ | 1,217 | |||||||||||||||
RENTAL RATES AND OCCUPANCY - Year-over-Year
| Residential Units | Three Months Ended | Percent Change | |||||||||||||||||||||
| 31-Mar-22 | 31-Mar-21 | ||||||||||||||||||||||
| BOSTON | |||||||||||||||||||||||
Hub50House (50% ownership), Boston, MA 2 | 440 | ||||||||||||||||||||||
| Average Monthly Rental Rate | $ | 3,890 | $ | 3,260 | 19.33 | % | |||||||||||||||||
| Average Rental Rate Per Occupied Square Foot | $ | 5.42 | $ | 4.52 | 19.91 | % | |||||||||||||||||
| Average Physical Occupancy | 94.09 | % | 56.82 | % | 65.59 | % | |||||||||||||||||
| Average Economic Occupancy | 92.20 | % | 49.78 | % | 85.21 | % | |||||||||||||||||
Proto Kendall Square, Cambridge, MA 2, 3 | 280 | ||||||||||||||||||||||
| Average Monthly Rental Rate | $ | 2,743 | $ | 2,585 | 6.11 | % | |||||||||||||||||
| Average Rental Rate Per Occupied Square Foot | $ | 5.04 | $ | 4.78 | 5.44 | % | |||||||||||||||||
| Average Physical Occupancy | 93.57 | % | 90.36 | % | 3.55 | % | |||||||||||||||||
| Average Economic Occupancy | 93.14 | % | 88.81 | % | 4.88 | % | |||||||||||||||||
The Lofts at Atlantic Wharf, Boston, MA 2, 3 | 86 | ||||||||||||||||||||||
| Average Monthly Rental Rate | $ | 3,933 | $ | 3,474 | 13.21 | % | |||||||||||||||||
| Average Rental Rate Per Occupied Square Foot | $ | 4.36 | $ | 3.99 | 9.27 | % | |||||||||||||||||
| Average Physical Occupancy | 96.12 | % | 87.60 | % | 9.73 | % | |||||||||||||||||
| Average Economic Occupancy | 95.61 | % | 84.00 | % | 13.82 | % | |||||||||||||||||
Boston Marriott Cambridge (437 rooms), Cambridge, MA 3 | N/A | ||||||||||||||||||||||
| Average Occupancy | 40.40 | % | 10.90 | % | 270.64 | % | |||||||||||||||||
| Average Daily Rate | $ | 266.10 | $ | 123.11 | 116.15 | % | |||||||||||||||||
| Revenue Per Available Room | $ | 91.38 | $ | 13.43 | 580.42 | % | |||||||||||||||||
| SAN FRANCISCO | |||||||||||||||||||||||
The Skylyne, Oakland, CA 2, 4 | 402 | ||||||||||||||||||||||
| Average Monthly Rental Rate | $ | 3,342 | $ | 2,953 | 13.17 | % | |||||||||||||||||
| Average Rental Rate Per Occupied Square Foot | $ | 4.03 | $ | 3.55 | 13.52 | % | |||||||||||||||||
| Average Physical Occupancy | 71.48 | % | 15.84 | % | 351.26 | % | |||||||||||||||||
| Average Economic Occupancy | 68.59 | % | 9.08 | % | 655.40 | % | |||||||||||||||||
18
| Q1 2022 | ||||
| Residential and hotel performance (continued) | |||||
RENTAL RATES AND OCCUPANCY - Year-over-Year
| Residential Units | Three Months Ended | Percent Change | |||||||||||||||||||||
| 31-Mar-22 | 31-Mar-21 | ||||||||||||||||||||||
| WASHINGTON, DC | |||||||||||||||||||||||
Signature at Reston, Reston, VA 2, 3 | 508 | ||||||||||||||||||||||
| Average Monthly Rental Rate | $ | 2,580 | $ | 2,265 | 13.91 | % | |||||||||||||||||
| Average Rental Rate Per Occupied Square Foot | $ | 2.66 | $ | 2.36 | 12.71 | % | |||||||||||||||||
| Average Physical Occupancy | 94.16 | % | 80.05 | % | 17.63 | % | |||||||||||||||||
| Average Economic Occupancy | 93.50 | ||||||||||||||||||||||