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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
ý☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 2017March 31, 2020
or
¨☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from             to             
Commission File Number: 1-13087 (Boston Properties, Inc.)
Commission File Number: 0-50209 (Boston Properties Limited Partnership)
 
BOSTON PROPERTIES, INC.
BOSTON PROPERTIES LIMITED PARTNERSHIP
(Exact name of Registrants as specified in its charter)
 
Boston Properties, Inc.Delaware04-2473675
 (State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification Number)
   
Boston Properties Limited PartnershipDelaware04-3372948
 (State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification Number)
Prudential Center, 800 Boylston Street, Suite 1900, Boston, Massachusetts02199-8103
(Address of principal executive offices) (Zip Code)
(617) (617) 236-3300
(Registrants’ telephone number, including area code)
 
Securities registered pursuant to Section 12(b) of the Act:
RegistrantTitle of each classTrading Symbol(s)Name of each exchange on which registered
Boston Properties, Inc.Common Stock, par value $0.01 per shareBXPNew York Stock Exchange
Boston Properties, Inc.Depository Shares Each Representing 1/100th of a shareBXP PRBNew York Stock Exchange
of 5.25% Series B Cumulative Redeemable Preferred Stock, par value $0.01 per share

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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  
Boston Properties, Inc.:    Yesx   No  ¨ ☐         Boston Properties Limited Partnership:    Yesx    No  ¨☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    
Boston Properties, Inc.:    Yesx    No  ¨ ☐         Boston Properties Limited Partnership:    Yesx    No  ¨


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☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitionthe definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Boston Properties, Inc.:    
Large accelerated filerx         Accelerated filer  ¨☐         Non-accelerated filer  ¨
☐Smaller reporting company  ¨ ☐         Emerging growth company¨☐

Boston Properties Limited Partnership:
Large accelerated filer  ¨☐         Accelerated filer  ¨☐Non-accelerated filerx
Smaller reporting company  ¨☐           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 ¨☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    
Boston Properties, Inc.:    Yes  ¨☐    No  x        Boston Properties Limited Partnership:    Yes  ¨☐    No  x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Boston Properties, Inc.Common Stock, par value $0.01 per share154,322,266155,369,141
(Registrant)(Class)(Outstanding on November 2, 2017)May 5, 2020)
 



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EXPLANATORY NOTE
This report combines the quarterly reports on Form 10-Q for the period ended September 30, 2017March 31, 2020 of Boston Properties, Inc. and Boston Properties Limited Partnership. Unless stated otherwise or the context otherwise requires, references to “BXP” mean Boston Properties, Inc., a Delaware corporation and real estate investment trust (“REIT”), and references to “BPLP” and the “Operating Partnership” mean Boston Properties Limited Partnership, a Delaware limited partnership. Unless stated otherwise or the context requires, references to the “Company,” “we,” “us” and “our” mean collectively BXP, BPLP and those entities/subsidiaries consolidated by BXP.
BPLP is the entity through which BXP conducts substantially all of its business and owns, either directly or through subsidiaries, substantially all of its assets. BXP is the sole general partner and also a limited partner of BPLP. As the sole general partner of BPLP, BXP has exclusive control of BPLP’s day-to-day management. Therefore, unless stated otherwise or the context requires, references to the “Company,” “we,” “us” and “our” mean collectively BXP, BPLP and those entities/subsidiaries consolidated by BXP.
As of September 30, 2017,March 31, 2020, BXP owned an approximate 89.7% ownership interest in BPLP. The remaining approximate 10.3% interest iswas owned by limited partners. The other limited partners of BPLP are (1) persons who contributed their direct or indirect interests in properties to BPLP in exchange for common units or preferred units of limited partnership interest in BPLP and/or (2) recipients of long termlong-term incentive plan units of BPLP pursuant to BXP’s Stock Option and Incentive Plans. Under the limited partnership agreement of BPLP, unitholders may present their common units of BPLP for redemption at any time (subject to restrictions agreed upon at the time of issuance of the units that may restrict such right for a period of time, generally one year from issuance). Upon presentation of a common unit for redemption, BPLP must redeem the unit for cash equal to the then value of a share of BXP’s common stock. In lieu of a cash redemption by BPLP, however, BXP may elect to acquire any common units so tendered by issuing shares of BXP common stock in exchange for the common units. If BXP so elects, its common stock will be exchanged for common units on a one-for-one basis. This one-for-one exchange ratio is subject to specified adjustments to prevent dilution. BXP generally expects that it will elect to issue its common stock in connection with each such presentation for redemption rather than having BPLP pay cash. With each such exchange or redemption, BXP’s percentage ownership in BPLP will increase. In addition, whenever BXP issues shares of its common stock other than to acquire common units of BPLP, BXP must contribute any net proceeds it receives to BPLP and BPLP must issue to BXP an equivalent number of common units of BPLP. This structure is commonly referred to as an umbrella partnership REIT, or UPREIT.
The Company believes that combining the quarterly reports on Form 10-Q of BXP and BPLP into this single report provides the following benefits:
enhances investors’ understanding of BXP and BPLP by enabling investors to view the business as a whole in the same manner as management views and operates the business;
eliminates duplicative disclosure and provides a more concise and readable presentation because a substantial portion of the disclosure applies to both BXP and BPLP; and
creates time and cost efficiencies through the preparation of one combined report instead of two separate reports.
The Company believes it is important to understand the few differences between BXP and BPLP in the context of how BXP and BPLP operate as a consolidated company. The financial results of BPLP are consolidated into the financial statements of BXP. BXP does not have any other significant assets, liabilities or operations, other than its investment in BPLP, nor does it have employees of its own. BPLP, not BXP, generally executes all significant business relationships other than transactions involving the securities of BXP. BPLP holds substantially all of the assets of BXP, including ownership interests in joint ventures. BPLP conducts the operations of the business and is structured as a partnership with no publicly traded equity. Except for the net proceeds from equity offerings by BXP, which are contributed to the capital of BPLP in exchange for common or preferred units of partnership in BPLP, as applicable, BPLP generates all remaining capital required by the Company’s business. These sources include working capital, net cash provided by operating activities, borrowings under its credit facilities, the issuance of secured and unsecured debt and equity securities and proceeds received from the disposition of certain properties and interests in joint ventures.
Shareholders’ equity, partners’ capital and noncontrolling interests are the main areas of difference between the consolidated financial statements of BXP and BPLP. The limited partners of BPLP are accounted for as partners’ capital in BPLP’s financial statements and as noncontrolling interests in BXP’s financial statements. The noncontrolling interests in BPLP’s financial statements include the interests of unaffiliated partners in various consolidated partnerships. The noncontrolling interests in BXP’s financial statements include the same

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noncontrolling interests at BPLP’s level and limited partners of BPLP. The differences between shareholders’ equity and partners’ capital result from differences in the equity issued at BXP and BPLP levels.

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In addition, the consolidated financial statements of BXP and BPLP differ in total real estate assets resulting from previously applied acquisition accounting by BXP for the issuance of common stock in connection with non-sponsor redemptions of common units of BPLP. This accounting resulted in a step-up of the real estate assets at BXP. This resulted in a difference between the net real estate of BXP as compared to BPLP of approximately $320.8$280.0 million, or 2.0%1.6% at September 30, 2017March 31, 2020, and a corresponding difference in depreciation expense, impairment losses and gains on sales of real estate upon the sale of certain properties having an allocation of the real estate step-up. The acquisition accounting was nullified on a prospective basis beginning in 2009 as a result of the Company’s adoption of a new accounting standard requiring any future redemptions to be accounted for solely as an equity transaction.
To help investors better understand the key differences between BXP and BPLP, certain information for BXP and BPLP in this report has been separated, as set forth below:
Item 1. Financial Statements (unaudited), which includes the following specific disclosures for BXP and BPLP:
•Note 3. Real Estate;
•Note 6. Derivative Instruments and Hedging Activities;
•Note 8. Noncontrolling Interests;
•Note 9. Stockholders’ Equity / Partners’ Capital;
•Note 10.9. Earnings Per Share / Common Unit; and
•Note 12:11. Segment Information
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations includes information specific to each entity, where applicable; and
Item 2. Liquidity and Capital Resources includes separate reconciliations of amounts to each entity’s financial statements, where applicable.
This report also includes separate Part I - Item 4. Controls and Procedures and Part II - Item 2. Unregistered Sales of Equity Securities and Use of Proceeds sections for each of BXP and BPLP, as well as separate Exhibits 12, 31 and 32 calculation of ratios of earnings to fixed charges and certifications for each of BXP and BPLP.





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BOSTON PROPERTIES, INC. AND BOSTON PROPERTIES LIMITED PARTNERSHIP
FORM 10-Q
for the quarter ended September 30, 2017March 31, 2020
TABLE OF CONTENTS
   
  Page
PART I. FINANCIAL INFORMATION
 
ITEM 1.
Financial Statements (unaudited)
1
   
Boston Properties, Inc. 
 
a) Consolidated Balance Sheets as of September 30, 2017March 31, 2020 and December 31, 20162019
21
 
b) Consolidated Statements of Operations for the three and nine months ended September 30, 2017March 31, 2020 and 20162019
3
 
c) Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2017March 31, 2020 and 20162019
4
 
d) Consolidated Statements of Stockholders’ Equity for the ninethree months ended September 30, 2017March 31, 2020 and 20162019
5
 
e) Consolidated Statements of Cash Flows for the ninethree months ended September 30, 2017March 31, 2020 and 20162019
6
   
Boston Properties Limited Partnership 
 
a) Consolidated Balance Sheets as of September 30, 2017March 31, 2020 and December 31, 20162019
8
 
b) Consolidated Statements of Operations for the three and nine months ended September 30, 2017March 31, 2020 and 20162019
910
 
c) Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2017March 31, 2020 and 2016
10
d) Consolidated Statements of Partners’ Capital for the nine months ended September 30, 2017 and 20162019
11
 
d) Consolidated Statements of Capital and Noncontrolling Interests for the three months ended March 31, 2020 and 2019
12
e) Consolidated Statements of Cash Flows for the ninethree months ended September 30, 2017March 31, 2020 and 20162019
1213
   
Boston Properties, Inc. and Boston Properties Limited Partnership 
 
Notes to the Consolidated Financial Statements
1415
 


 
ITEM 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
4138
ITEM 3.
Quantitative and Qualitative Disclosures about Market Risk
8775
ITEM 4.
Controls and Procedures
8775
  
PART II. OTHER INFORMATION
 
ITEM 1.
Legal Proceedings
8976
ITEM 1A.
Risk Factors
8976
ITEM 2.
Unregistered Sales of Equity Securities and Use of Proceeds
8979
ITEM 3.
Defaults Upon Senior Securities
8980
ITEM 4.
Mine Safety Disclosures
8980
ITEM 5.
Other Information
8980
ITEM 6.
Exhibits
9081
  
SIGNATURES
9182



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PART I. FINANCIAL INFORMATION
ITEM 1—Financial Statements.



BOSTON PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited and in thousands, except for share and par value amounts)

  March 31,
2020		 December 31,
2019
ASSETS    
Real estate, at cost (amounts related to variable interest entities (“VIEs”) of $6,564,762 and $6,497,031 at March 31, 2020 and December 31, 2019, respectively) $22,342,209
 $22,502,976
Right of use assets - finance leases (amounts related to VIEs of $21,000 and $21,000 at March 31, 2020 and December 31, 2019, respectively) 237,394
 237,394
Right of use assets - operating leases 148,057
 148,640
Less: accumulated depreciation (amounts related to VIEs of $(1,082,486) and$(1,058,495) at March 31, 2020 and December 31, 2019, respectively) (5,209,487) (5,266,798)
Total real estate 17,518,173
 17,622,212
Cash and cash equivalents (amounts related to VIEs of $268,415 and $280,033 at March 31, 2020 and December 31, 2019, respectively) 660,733
 644,950
Cash held in escrows 197,845
 46,936
Investments in securities 28,101
 36,747
Tenant and other receivables, net (amounts related to VIEs of $19,954 and $28,918 at March 31, 2020 and December 31, 2019, respectively) 89,431
 112,807
Related party note receivable, net 78,800
 80,000
Note receivable, net 15,794
 15,920
Accrued rental income, net (amounts related to VIEs of $308,482 and $298,318 at March 31, 2020 and December 31, 2019, respectively) 1,059,677
 1,038,788
Deferred charges, net (amounts related to VIEs of $205,688 and $214,769 at March 31, 2020 and December 31, 2019, respectively) 667,076
 689,213
Prepaid expenses and other assets (amounts related to VIEs of $52,641 and $20,931 at March 31, 2020 and December 31, 2019, respectively) 136,730
 41,685
Investments in unconsolidated joint ventures 1,377,338
 955,647
Total assets $21,829,698
 $21,284,905
LIABILITIES AND EQUITY    
Liabilities:    
Mortgage notes payable, net (amounts related to VIEs of $2,916,068 and $2,918,806 at March 31, 2020 and December 31, 2019, respectively) $2,919,157
 $2,922,408
Unsecured senior notes, net 8,393,009
 8,390,459
Unsecured line of credit 250,000
 —
Unsecured term loan, net 499,058
 498,939
Lease liabilities - finance leases (amounts related to VIEs of $20,198 and $20,189 at March 31, 2020 and December 31, 2019, respectively) 227,067
 224,042
Lease liabilities - operating leases 200,573
 200,180
Accounts payable and accrued expenses (amounts related to VIEs of $28,437 and $45,777 at March 31, 2020 and December 31, 2019, respectively) 293,831
 377,553
Dividends and distributions payable 171,026
 170,713
Accrued interest payable 82,388
 90,016
Other liabilities (amounts related to VIEs of $142,381 and $140,110 at March 31, 2020 and December 31, 2019, respectively) 366,852
 387,994
Total liabilities 13,402,961
 13,262,304
Commitments and contingencies —
 —
     
Redeemable deferred stock units— 63,475 and 60,676 units outstanding at redemption value at March 31, 2020 and December 31, 2019, respectively 5,854
 8,365

1
BOSTON PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited and in thousands, except for share and par value amounts)

  March 31,
2020		 December 31,
2019
Equity:    
Stockholders’ equity attributable to Boston Properties, Inc.:    
Excess stock, $0.01 par value, 150,000,000 shares authorized, none issued or outstanding —
 —
Preferred stock, $0.01 par value, 50,000,000 shares authorized;    
5.25% Series B cumulative redeemable preferred stock, $0.01 par value, liquidation preference $2,500 per share, 92,000 shares authorized, 80,000 shares issued and outstanding at March 31, 2020 and December 31, 2019 200,000
 200,000
Common stock, $0.01 par value, 250,000,000 shares authorized, 155,393,455 and 154,869,198 issued and 155,314,555 and 154,790,298 outstanding at March 31, 2020 and December 31, 2019, respectively 1,553
 1,548
Additional paid-in capital 6,321,475
 6,294,719
Dividends in excess of earnings (416,740) (760,523)
Treasury common stock at cost, 78,900 shares at March 31, 2020 and December 31, 2019 (2,722) (2,722)
Accumulated other comprehensive loss (55,700) (48,335)
Total stockholders’ equity attributable to Boston Properties, Inc. 6,047,866
 5,684,687
Noncontrolling interests:    
Common units of Boston Properties Limited Partnership 636,572
 600,860
Property partnerships 1,736,445
 1,728,689
Total equity 8,420,883
 8,014,236
Total liabilities and equity $21,829,698
 $21,284,905


















The accompanying notes are an integral part of these consolidated financial statements.

BOSTON PROPERTIES, INC.
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CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited and in thousands, except for per share amounts)
BOSTON PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
 September 30, 2017 December 31, 2016
 (in thousands, except for share and par value amounts)
ASSETS   
Real estate, at cost (amounts related to variable interest entities (“VIEs”) of $7,084,588 and $6,760,078 at September 30, 2017 and December 31, 2016, respectively)$20,859,245
 $20,147,263
Less: accumulated depreciation (amounts related to VIEs of $(825,390) and $(758,640) at September 30, 2017 and December 31, 2016, respectively)(4,484,798) (4,222,235)
Total real estate16,374,447
 15,925,028
Cash and cash equivalents (amounts related to VIEs of $285,089 and $253,999 at September 30, 2017 and December 31, 2016, respectively)493,055
 356,914
Cash held in escrows (amounts related to VIEs of $6,179 and $4,955 at September 30, 2017 and December 31, 2016, respectively)83,779
 63,174
Investments in securities27,981
 23,814
Tenant and other receivables (amounts related to VIEs of $19,891 and $23,525 at September 30, 2017 and December 31, 2016, respectively)79,750
 92,548
Accrued rental income (amounts related to VIEs of $232,336 and $224,185 at September 30, 2017 and December 31, 2016, respectively)835,415
 799,138
Deferred charges, net (amounts related to VIEs of $268,727 and $290,436 at September 30, 2017 and December 31, 2016, respectively)657,474
 686,163
Prepaid expenses and other assets (amounts related to VIEs of $68,330 and $42,718 at September 30, 2017 and December 31, 2016, respectively)144,817
 129,666
Investments in unconsolidated joint ventures611,800
 775,198
Total assets$19,308,518
 $18,851,643
LIABILITIES AND EQUITY   
Liabilities:   
Mortgage notes payable, net (amounts related to VIEs of $2,941,550 and $2,018,483 at September 30, 2017 and December 31, 2016, respectively)$2,982,067
 $2,063,087
Unsecured senior notes, net7,252,567
 7,245,953
Unsecured line of credit—
 —
Unsecured term loan—
 —
Mezzanine notes payable (amounts related to VIEs of $0 and $307,093 at September 30, 2017 and December 31, 2016, respectively)—
 307,093
Outside members’ notes payable (amounts related to VIEs of $0 and $180,000 at September 30, 2017 and December 31, 2016, respectively)—
 180,000
Accounts payable and accrued expenses (amounts related to VIEs of $106,772 and $110,457 at September 30, 2017 and December 31, 2016, respectively)325,440
 298,524
Dividends and distributions payable130,434
 130,308
Accrued interest payable (amounts related to VIEs of $6,800 and $162,226 at September 30, 2017 and December 31, 2016, respectively)99,100
 243,933
Other liabilities (amounts related to VIEs of $146,517 and $175,146 at September 30, 2017 and December 31, 2016, respectively)419,215
 450,821
Total liabilities11,208,823
 10,919,719
Commitments and contingencies—
 —
Equity:   
Stockholders’ equity attributable to Boston Properties, Inc.:   
Excess stock, $0.01 par value, 150,000,000 shares authorized, none issued or outstanding—
 —
Preferred stock, $0.01 par value, 50,000,000 shares authorized;   
5.25% Series B cumulative redeemable preferred stock, $0.01 par value, liquidation preference $2,500 per share, 92,000 shares authorized, 80,000 shares issued and outstanding at September 30, 2017 and December 31, 2016200,000
 200,000
Common stock, $0.01 par value, 250,000,000 shares authorized, 154,401,166 and 153,869,075 issued and 154,322,266 and 153,790,175 outstanding at September 30, 2017 and December 31, 2016, respectively1,543
 1,538
Additional paid-in capital6,370,932
 6,333,424
Dividends in excess of earnings(692,739) (693,694)
Treasury common stock at cost, 78,900 shares at September 30, 2017 and December 31, 2016(2,722) (2,722)
Accumulated other comprehensive loss(51,796) (52,251)
Total stockholders’ equity attributable to Boston Properties, Inc.5,825,218
 5,786,295
Noncontrolling interests:   
Common units of Boston Properties Limited Partnership605,802
 614,982
Property partnerships1,668,675
 1,530,647
Total equity8,099,695
 7,931,924
Total liabilities and equity$19,308,518
 $18,851,643
 Three months ended March 31,
 2020 2019
Revenue   
Lease$710,111
 $679,251
Parking and other24,504
 24,906
Hotel6,825
 8,938
Development and management services7,879
 9,277
Direct reimbursements of payroll and related costs from management services contracts3,237
 3,395
Total revenue752,556
 725,767
Expenses   
Operating   
Rental262,966
 257,517
Hotel6,821
 7,863
General and administrative36,454
 41,762
Payroll and related costs from management services contracts3,237
 3,395
Transaction costs615
 460
Depreciation and amortization171,094
 164,594
Total expenses481,187
 475,591
Other income (expense)   
Income (loss) from unconsolidated joint ventures(369) 213
Gains (losses) on sales of real estate410,165
 (905)
Interest and other income3,017
 3,753
Gains (losses) from investments in securities(5,445) 2,969
Impairment loss—
 (24,038)
Interest expense(101,591) (101,009)
Net income577,146
 131,159
Net income attributable to noncontrolling interests   
Noncontrolling interests in property partnerships(19,486) (18,830)
Noncontrolling interest—common units of the Operating Partnership(57,539) (11,599)
Net income attributable to Boston Properties, Inc.500,121
 100,730
Preferred dividends(2,625) (2,625)
Net income attributable to Boston Properties, Inc. common shareholders$497,496
 $98,105
Basic earnings per common share attributable to Boston Properties, Inc. common shareholders:   
Net income$3.20
 $0.63
Weighted average number of common shares outstanding155,011
 154,525
Diluted earnings per common share attributable to Boston Properties, Inc. common shareholders:   
Net income$3.20
 $0.63
Weighted average number of common and common equivalent shares outstanding155,258
 154,844









The accompanying notes are an integral part of these consolidated financial statements.

BOSTON PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited and in thousands)
  Three months ended March 31,
  2020 2019
Net income $577,146
 $131,159
Other comprehensive (loss):    
Effective portion of interest rate contracts (9,720) (2,628)
Amortization of interest rate contracts (1) 1,666
 1,666
Other comprehensive (loss) (8,054) (962)
Comprehensive income 569,092
 130,197
Net income attributable to noncontrolling interests (77,025) (30,429)
Other comprehensive (income) loss attributable to noncontrolling interests 689
 (31)
Comprehensive income attributable to Boston Properties, Inc. $492,756
 $99,737
_______________
(1)Amounts reclassified from comprehensive income primarily to interest expense within Boston Properties, Inc.’s Consolidated Statements of Operations.

































The accompanying notes are an integral part of these consolidated financial statements.

2

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BOSTON PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 Three months ended September 30, Nine months ended September 30,
 2017 2016 2017 2016
 (in thousands, except for per share amounts)
Revenue       
Rental       
Base rent$513,269
 $489,312
 $1,537,373
 $1,518,826
Recoveries from tenants94,476
 92,560
 272,803
 267,852
Parking and other26,092
 24,638
 78,164
 75,576
Total rental revenue633,837
 606,510
 1,888,340
 1,862,254
Hotel revenue13,064
 12,354
 33,859
 33,919
Development and management services10,811
 6,364
 24,648
 18,586
Total revenue657,712
 625,228
 1,946,847
 1,914,759
Expenses       
Operating       
Rental237,341
 228,560
 696,082
 665,670
Hotel8,447
 8,118
 23,942
 23,730
General and administrative25,792
 25,165
 84,319
 79,936
Transaction costs239
 249
 572
 1,187
Impairment loss—
 1,783
 —
 1,783
Depreciation and amortization152,164
 203,748
 463,288
 516,371
Total expenses423,983
 467,623
 1,268,203
 1,288,677
Operating income233,729
 157,605
 678,644
 626,082
Other income (expense)       
Income from unconsolidated joint ventures843
 1,464
 7,035
 5,489
Interest and other income1,329
 3,628
 3,447
 6,657
Gains from investments in securities944
 976
 2,716
 1,713
Gains (losses) from early extinguishments of debt—
 (371) 14,354
 (371)
Losses from interest rate contracts—
 (140) —
 (140)
Interest expense(92,032) (104,641) (282,709) (314,953)
Income before gains on sales of real estate144,813
 58,521
 423,487
 324,477
Gains on sales of real estate2,891
 12,983
 6,791
 80,606
Net income147,704
 71,504
 430,278
 405,083
Net income attributable to noncontrolling interests       
Noncontrolling interests in property partnerships(14,340) 17,225
 (33,967) (53)
Noncontrolling interest—common units of Boston Properties Limited Partnership(13,402) (9,387) (40,350) (42,120)
Net income attributable to Boston Properties, Inc.119,962
 79,342
 355,961
 362,910
Preferred dividends(2,625) (2,589) (7,875) (7,796)
Net income attributable to Boston Properties, Inc. common shareholders$117,337
 $76,753
 $348,086
 $355,114
Basic earnings per common share attributable to Boston Properties, Inc. common shareholders:       
Net income$0.76
 $0.50
 $2.26
 $2.31
Weighted average number of common shares outstanding154,355
 153,754
 154,132
 153,681
Diluted earnings per common share attributable to Boston Properties, Inc. common shareholders:       
Net income$0.76
 $0.50
 $2.26
 $2.31
Weighted average number of common and common equivalent shares outstanding154,483
 154,136
 154,344
 153,971
        
Dividends per common share$0.75
 $0.65
 $2.25
 $1.95

BOSTON PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited and in thousands)

 Common Stock Preferred Stock Additional Paid-in Capital Dividends in Excess of Earnings 
Treasury Stock,
at cost
 Accumulated Other Comprehensive Loss Noncontrolling Interests - Common Units Noncontrolling Interests - Property Partnerships Total
 Shares Amount  
Equity, December 31, 2019154,790
 $1,548
 $200,000
 $6,294,719
 $(760,523) $(2,722) $(48,335) $600,860
 $1,728,689
 $8,014,236
Cumulative effect of a change in accounting principle—
 —
 —
 —
 (1,505) —
 —
 (174) —
 (1,679)
Redemption of operating partnership units to common stock462
 5
 —
 15,490
 —
 —
 —
 (15,495) —
 —
Allocated net income for the year—
 —
 —
 —
 500,121
 —
 —
 57,539
 19,486
 577,146
Dividends/distributions declared—
 —
 —
 —
 (154,833) —
 —
 (17,444) —
 (172,277)
Shares issued pursuant to stock purchase plan2
 —
 —
 325
 —
 —
 —
 —
 —
 325
Net activity from stock option and incentive plan61
 —
 —
 7,383
 —
 —
 —
 15,677
 —
 23,060
Contributions from noncontrolling interests in property partnerships—
 —
 —
 —
 —
 —
 —
 —
 3,876
 3,876
Distributions to noncontrolling interests in property partnerships—
 —
 —
 —
 —
 —
 —
 —
 (15,750) (15,750)
Effective portion of interest rate contracts—
 —
 —
 —
 —
 —
 (8,732) (988) —
 (9,720)
Amortization of interest rate contracts—
 —
 —
 —
 —
 —
 1,367
 155
 144
 1,666
Reallocation of noncontrolling interest—
 —
 —
 3,558
 —
 —
 —
 (3,558) —
 —
Equity, March 31, 2020155,315
 $1,553
 $200,000
 $6,321,475
 $(416,740) $(2,722) $(55,700) $636,572
 $1,736,445
 $8,420,883
                    
Equity, December 31, 2018154,458
 $1,545
 $200,000
 $6,407,623
 $(675,534) $(2,722) $(47,741) $619,352
 $1,711,445
 $8,213,968
Cumulative effect of a change in accounting principle—
 —
 —
 —
 (3,864) —
 —
 (445) (70) (4,379)
Redemption of operating partnership units to common stock14
 —
 —
 492
 —
 —
 —
 (492) —
 —
Allocated net income for the year—
 —
 —
 —
 100,730
 —
 —
 11,599
 18,830
 131,159
Dividends/distributions declared—
 —
 —
 —
 (149,415) —
 —
 (17,185) —
 (166,600)
Shares issued pursuant to stock purchase plan4
 —
 —
 373
 —
 —
 —
 —
 —
 373
Net activity from stock option and incentive plan39
 —
 —
 3,059
 —
 —
 —
 13,410
 —
 16,469
Contributions from noncontrolling interests in property partnerships—
 —
 —
 —
 —
 —
 —
 —
 4,387
 4,387
Distributions to noncontrolling interests in property partnerships—
 —
 —
 —
 —
 —
 —
 —
 (24,128) (24,128)
Effective portion of interest rate contracts—
 —
 —
 —
 —
 —
 (2,359) (269) —
 (2,628)
Amortization of interest rate contracts—
 —
 —
 —
 —
 —
 1,366
 156
 144
 1,666
Reallocation of noncontrolling interest—
 —
 —
 3,065
 —
 —
 —
 (3,065) —
 —
Equity, March 31, 2019154,515
 $1,545
 $200,000
 $6,414,612
 $(728,083) $(2,722) $(48,734) $623,061
 $1,710,608
 $8,170,287
The accompanying notes are an integral part of these consolidated financial statements.

3
BOSTON PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited and in thousands)

 For the three months ended March 31,
 2020 2019
Cash flows from operating activities:   
Net income$577,146
 $131,159
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization171,094
 164,594
Amortization of right of use assets - operating leases583
 605
Impairment loss—
 24,038
Non-cash compensation expense17,525
 15,050
Loss (income) from unconsolidated joint ventures369
 (213)
Distributions of net cash flow from operations of unconsolidated joint ventures5,917
 2,650
Losses (gains) from investments in securities5,445
 (2,969)
Non-cash portion of interest expense5,646
 5,447
(Gains) losses on sales of real estate(410,165) 905
Change in assets and liabilities:   
Tenant and other receivables, net17,784
 (14,000)
Note receivable, net(128) (125)
Accrued rental income, net(27,285) (15,570)
Prepaid expenses and other assets(93,819) (68,554)
Lease liabilities - operating leases393
 370
Accounts payable and accrued expenses(48,591) 258
Accrued interest payable(7,644) (160)
Other liabilities(21,296) (17,831)
Tenant leasing costs(17,777) (18,420)
Total adjustments(401,949) 76,075
Net cash provided by operating activities175,197
 207,234
Cash flows from investing activities:   
Acquisition of real estate—
 (43,061)
Construction in progress(143,160) (85,632)
Building and other capital improvements(39,154) (32,719)
Tenant improvements(64,172) (54,242)
Proceeds from sales of real estate259,489
 20,019
Capital contributions to unconsolidated joint ventures(89,997) (26,995)
Investments in securities, net3,201
 (885)
Net cash used in investing activities(73,793) (223,515)
    

BOSTON PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited and in thousands)

 For the three months ended March 31,
 2020 2019
Cash flows from financing activities:   
Repayments of mortgage notes payable(4,212) (5,645)
Borrowings on unsecured line of credit265,000
 50,000
Repayments of unsecured line of credit(15,000) (50,000)
Payments on finance lease obligations—
 (470)
Deferred financing costs(11) (186)
Net proceeds from equity transactions3,349
 1,792
Dividends and distributions(171,964) (166,362)
Contributions from noncontrolling interests in property partnerships3,876
 4,387
Distributions to noncontrolling interests in property partnerships(15,750) (24,128)
Net cash provided by (used in) financing activities65,288
 (190,612)
Net increase (decrease) in cash and cash equivalents and cash held in escrows166,692
 (206,893)
Cash and cash equivalents and cash held in escrows, beginning of year691,886
 639,191
Cash and cash equivalents and cash held in escrows, end of year$858,578
 $432,298
    
Reconciliation of cash and cash equivalents and cash held in escrows:   
Cash and cash equivalents, beginning of period$644,950
 $543,359
Cash held in escrows, beginning of period46,936
 95,832
Cash and cash equivalents and cash held in escrows, beginning of period$691,886
 $639,191
    
Cash and cash equivalents, end of period$660,733
 $360,091
Cash held in escrows, end of period197,845
 72,207
Cash and cash equivalents and cash held in escrows, end of period$858,578
 $432,298
    
Supplemental disclosures:   
Cash paid for interest$114,696
 $107,094
Interest capitalized$14,149
 $11,813
    
Non-cash investing and financing activities:   
Write-off of fully depreciated real estate$(38,782) $(31,640)
Change in real estate included in accounts payable and accrued expenses$(27,415) $49,689
Real estate acquired through finance lease$—
 $122,563
Accrued rental income, net deconsolidated$(4,558) $—
Tenant leasing costs, net deconsolidated$(3,462) $—
Building and other capital improvements, net deconsolidated$(111,889) $—
Tenant improvements, net deconsolidated$(12,331) $—
Investment in unconsolidated joint venture recorded upon deconsolidation$347,898
 $—
Dividends and distributions declared but not paid$171,026
 $165,352
Conversions of noncontrolling interests to stockholders’ equity$15,495
 $492
Issuance of restricted securities to employees$43,104
 $37,428

The accompanying notes are an integral part of these consolidated financial statements.

Table
BOSTON PROPERTIES LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
(Unaudited and in thousands, except for unit amounts)

  March 31,
2020		 December 31,
2019
ASSETS    
Real estate, at cost (amounts related to variable interest entities (“VIEs”) of $6,564,762 and $6,497,031 at March 31, 2020 and December 31, 2019, respectively) $21,959,932
 $22,107,755
Right of use assets - finance leases (amounts related to VIEs of $21,000 and $21,000 at March 31, 2020 and December 31, 2019, respectively) 237,394
 237,394
Right of use assets - operating leases 148,057
 148,640
Less: accumulated depreciation (amounts related to VIEs of $(1,082,486) and$(1,058,495) at March 31, 2020 and December 31, 2019, respectively) (5,107,243) (5,162,908)
Total real estate 17,238,140
 17,330,881
Cash and cash equivalents (amounts related to VIEs of $268,415 and $280,033 at March 31, 2020 and December 31, 2019, respectively) 660,733
 644,950
Cash held in escrows 197,845
 46,936
Investments in securities 28,101
 36,747
Tenant and other receivables, net (amounts related to VIEs of $19,954 and $28,918 at March 31, 2020 and December 31, 2019, respectively) 89,431
 112,807
Related party note receivable, net 78,800
 80,000
Note receivable, net 15,794
 15,920
Accrued rental income, net (amounts related to VIEs of $308,482 and $298,318 at March 31, 2020 and December 31, 2019, respectively) 1,059,677
 1,038,788
Deferred charges, net (amounts related to VIEs of $205,688 and $214,769 at March 31, 2020 and December 31, 2019, respectively) 667,076
 689,213
Prepaid expenses and other assets (amounts related to VIEs of $52,641 and $20,931 at March 31, 2020 and December 31, 2019, respectively) 136,730
 41,685
Investments in unconsolidated joint ventures 1,377,338
 955,647
Total assets $21,549,665
 $20,993,574
LIABILITIES AND CAPITAL    
Liabilities:    
Mortgage notes payable, net (amounts related to VIEs of $2,916,068 and $2,918,806 at March 31, 2020 and December 31, 2019, respectively) $2,919,157
 $2,922,408
Unsecured senior notes, net 8,393,009
 8,390,459
Unsecured line of credit 250,000
 —
Unsecured term loan, net 499,058
 498,939
Lease liabilities - finance leases (amounts related to VIEs of $20,198 and $20,189 at March 31, 2020 and December 31, 2019, respectively) 227,067
 224,042
Lease liabilities - operating leases 200,573
 200,180
Accounts payable and accrued expenses (amounts related to VIEs of $28,437 and $45,777 at March 31, 2020 and December 31, 2019, respectively) 293,831
 377,553
Dividends and distributions payable 171,026
 170,713
Accrued interest payable 82,388
 90,016
Other liabilities (amounts related to VIEs of $142,381 and $140,110 at March 31, 2020 and December 31, 2019, respectively) 366,852
 387,994
Total liabilities 13,402,961
 13,262,304
     
Commitments and contingencies —
 —
     
Redeemable deferred stock units— 63,475 and 60,676 units outstanding at redemption value at March 31, 2020 and December 31, 2019, respectively 5,854
 8,365

BOSTON PROPERTIES LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
(Unaudited and in thousands, except for unit amounts)

  March 31,
2020		 December 31,
2019
Noncontrolling interests:    
Redeemable partnership units— 16,421,888 and 16,764,466 common units and 1,343,299 and 1,143,215 long term incentive units outstanding at redemption value at March 31, 2020 and December 31, 2019, respectively 1,639,855
 2,468,753
Capital:    
5.25% Series B cumulative redeemable preferred units, liquidation preference $2,500 per unit, 80,000 units issued and outstanding at March 31, 2020 and December 31, 2019 193,623
 193,623
Boston Properties Limited Partnership partners’ capital— 1,730,797 and 1,726,980 general partner units and 153,583,758 and 153,063,318 limited partner units outstanding at March 31, 2020 and December 31, 2019, respectively 4,626,627
 3,380,175
Accumulated other comprehensive loss (55,700) (48,335)
Total partners’ capital 4,764,550
 3,525,463
Noncontrolling interests in property partnerships 1,736,445
 1,728,689
Total capital 6,500,995
 5,254,152
Total liabilities and capital $21,549,665
 $20,993,574





























The accompanying notes are an integral part of Contents
these consolidated financial statements.

BOSTON PROPERTIES INC.LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited and in thousands, except for per unit amounts)
 Three months ended March 31,
 2020 2019
Revenue   
Lease$710,111
 $679,251
Parking and other24,504
 24,906
Hotel6,825
 8,938
Development and management services7,879
 9,277
Direct reimbursements of payroll and related costs from management services contracts3,237
 3,395
Total revenue752,556
 725,767
Expenses   
Operating   
Rental262,966
 257,517
Hotel6,821
 7,863
General and administrative36,454
 41,762
Payroll and related costs from management services contracts3,237
 3,395
Transaction costs615
 460
Depreciation and amortization169,285
 162,682
Total expenses479,378
 473,679
Other income (expense)   
Income (loss) from unconsolidated joint ventures(369) 213
Gains (losses) on sales of real estate419,654
 (905)
Interest and other income3,017
 3,753
Gains (losses) from investments in securities(5,445) 2,969
Impairment loss—
 (22,272)
Interest expense(101,591) (101,009)
Net income588,444
 134,837
Net income attributable to noncontrolling interests   
Noncontrolling interests in property partnerships(19,486) (18,830)
Net income attributable to Boston Properties Limited Partnership568,958
 116,007
Preferred distributions(2,625) (2,625)
Net income attributable to Boston Properties Limited Partnership common unitholders$566,333
 $113,382
Basic earnings per common unit attributable to Boston Properties Limited Partnership   
Net income$3.28
 $0.66
Weighted average number of common units outstanding172,549
 172,131
Diluted earnings per common unit attributable to Boston Properties Limited Partnership   
Net income$3.27
 $0.66
Weighted average number of common and common equivalent units outstanding172,796
 172,450








The accompanying notes are an integral part of these consolidated financial statements.

BOSTON PROPERTIES LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)(Unaudited and in thousands)
 
 Three months ended September 30, Nine months ended September 30,
 2017 2016 2017 2016
 (in thousands)
Net income$147,704
 $71,504
 $430,278
 $405,083
Other comprehensive income (loss):       
Effective portion of interest rate contracts—
 5,712
 (6,133) (85,285)
Amortization of interest rate contracts (1)1,665
 1,190
 4,368
 2,445
Other comprehensive income (loss)1,665
 6,902
 (1,765) (82,840)
Comprehensive income149,369
 78,406
 428,513
 322,243
Net income attributable to noncontrolling interests(27,742) 7,838
 (74,317) (42,173)
Other comprehensive income (loss) attributable to noncontrolling interests(300) (1,097) 2,220
 23,011
Comprehensive income attributable to Boston Properties, Inc.$121,327
 $85,147
 $356,416
 $303,081
  Three months ended March 31,
  2020 2019
Net income $588,444
 $134,837
Other comprehensive (loss):    
Effective portion of interest rate contracts (9,720) (2,628)
Amortization of interest rate contracts (1) 1,666
 1,666
Other comprehensive (loss) (8,054) (962)
Comprehensive income 580,390
 133,875
Comprehensive income attributable to noncontrolling interests (19,630) (18,974)
Comprehensive income attributable to Boston Properties Limited Partnership $560,760
 $114,901
_______________
(1) Amounts reclassified from comprehensive income primarily to interest expense within the Boston Properties, Inc.’s
(1)Amounts reclassified from comprehensive income primarily to interest expense within Boston Properties Limited Partnership’s Consolidated Statements of Operations.






































































The accompanying notes are an integral part of these consolidated financial statements.

4

Table of Contents

BOSTON PROPERTIES LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CAPITAL AND NONCONTROLLING INTERESTS
(Unaudited and in thousands)

 Units Capital  
 General Partner Limited Partner Partners’ Capital (General and Limited Partners) Preferred Units 
Accumulated
Other
Comprehensive Loss
 
Noncontrolling
Interests - Property Partnerships
 Total Capital Noncontrolling Interests - Redeemable Partnership Units
    
Equity, December 31, 20191,727
 153,063
 $3,380,175
 $193,623
 $(48,335) $1,728,689
 $5,254,152
 $2,468,753
Cumulative effect of a change in accounting principle—
 —
 (1,505) —
 —
 —
 (1,505) (174)
Contributions1
 63
 6,712
 —
 —
 —
 6,712
 39,741
Allocated net income for the period—
 —
 508,794
 2,625
 —
 19,486
 530,905
 57,539
Distributions—
 —
 (152,208) (2,625) —
 —
 (154,833) (17,444)
Unearned compensation—
 —
 996
 —
 —
 —
 996
 (24,064)
Conversion of redeemable partnership units3
 458
 15,495
 —
 —
 —
 15,495
 (15,495)
Adjustment to reflect redeemable partnership units at redemption value—
 —
 868,168
 —
 —
 —
 868,168
 (868,168)
Effective portion of interest rate contracts—
 —
 —
 —
 (8,732) —
 (8,732) (988)
Amortization of interest rate contracts—
 —
 —
 —
 1,367
 144
 1,511
 155
Contributions from noncontrolling interests in property partnerships—
 —
 —
 —
 —
 3,876
 3,876
 —
Distributions to noncontrolling interests in property partnerships—
 —
 —
 —
 —
 (15,750) (15,750) —
Equity, March 31, 20201,731
 153,584
 $4,626,627
 $193,623
 $(55,700) $1,736,445
 $6,500,995
 $1,639,855
                
Equity, December 31, 20181,722
 152,736
 $4,054,996
 $193,623
 $(47,741) $1,711,445
 $5,912,323
 $2,000,591
Cumulative effect of a change in accounting principle—
 —
 (3,864) —
 —
 (70) (3,934) (445)
Contributions2
 41
 4,820
 —
 —
 —
 4,820
 34,400
Allocated net income for the year—
 —
 101,783
 2,625
 —
 18,830
 123,238
 11,599
Distributions—
 —
 (146,790) (2,625) —
 —
 (149,415) (17,185)
Unearned compensation—
 —
 (1,388) —
 —
 —
 (1,388) (20,990)
Conversion of redeemable partnership units1
 13
 492
 —
 —
 —
 492
 (492)
Adjustment to reflect redeemable partnership units at redemption value—
 —
 (406,875) —
 —
 —
 (406,875) 406,875
Effective portion of interest rate contracts—
 —
 —
 —
 (2,359) —
 (2,359) (269)
Amortization of interest rate contracts—
 —
 —
 —
 1,366
 144
 1,510
 156
Contributions from noncontrolling interests in property partnerships—
 —
 —
 —
 —
 4,387
 4,387
 —
Distributions to noncontrolling interests in property partnerships—
 —
 —
 —
 —
 (24,128) (24,128) —
Equity, March 31, 20191,725
 152,790
 $3,603,174
 $193,623
 $(48,734) $1,710,608
 $5,458,671
 $2,414,240
BOSTON PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited and in thousands)
 Common Stock Preferred Stock 
Additional
Paid-in
Capital
 
Dividends in
Excess of
Earnings
 
Treasury
Stock,
at cost
 
Accumulated
Other
Comprehensive Loss
 
Noncontrolling
Interests
 Total
 Shares Amount  
Equity, December 31, 2016153,790
 $1,538
 $200,000
 $6,333,424
 $(693,694) $(2,722) $(52,251) $2,145,629
 $7,931,924
Redemption of operating partnership units to common stock492
 5
 —
 16,807
 —
 —
 —
 (16,812) —
Allocated net income for the year—
 —
 —
 —
 355,961
 —
 —
 74,317
 430,278
Dividends/distributions declared—
 —
 —
 —
 (354,734) —
 —
 (40,292) (395,026)
Shares issued pursuant to stock purchase plan6
 —
 —
 795
 —
 —
 —
 —
 795
Net activity from stock option and incentive plan34
 —
 —
 2,920
 —
 —
 —
 26,271
 29,191
Cumulative effect of a change in accounting principle—
 —
 —
 —
 (272) —
 —
 (1,763) (2,035)
Contributions from noncontrolling interests in property partnerships—
 —
 —
 —
 —
 —
 —
 147,772
 147,772
Distributions to noncontrolling interests in property partnerships—
 —
 —
 —
 —
 —
 —
 (41,439) (41,439)
Effective portion of interest rate contracts—
 —
 —
 —
 —
 —
 (3,304) (2,829) (6,133)
Amortization of interest rate contracts—
 —
 —
 —
 —
 —
 3,759
 609
 4,368
Reallocation of noncontrolling interest—
 —
 —
 16,986
 —
 —
 —
 (16,986) —
Equity, September 30, 2017154,322
 $1,543
 $200,000
 $6,370,932
 $(692,739) $(2,722) $(51,796) $2,274,477
 $8,099,695
                  
Equity, December 31, 2015153,580
 $1,536
 $200,000
 $6,305,687
 $(780,952) $(2,722) $(14,114) $2,177,492
 $7,886,927
Redemption of operating partnership units to common stock173
 2
 —
 5,879
 —
 —
 —
 (5,881) —
Allocated net income for the year—
 —
 —
 —
 362,910
 —
 —
 42,173
 405,083
Dividends/distributions declared—
 —
 —
 —
 (307,480) —
 —
 (35,500) (342,980)
Shares issued pursuant to stock purchase plan6
 —
 —
 730
 —
 —
 —
 —
 730
Net activity from stock option and incentive plan14
 —
 —
 2,870
 —
 —
 —
 21,420
 24,290
Sale of interests in property partnerships—
 —
 —
 1,320
 —
 —
 —
 (1,320) —
Contributions from noncontrolling interests in property partnerships—
 —
 —
 —
 —
 —
 —
 6,737
 6,737
Distributions to noncontrolling interests in property partnerships—
 —
 —
 —
 —
 —
 —
 (38,694) (38,694)
Effective portion of interest rate contracts—
 —
 —
 —
 —
 —
 (62,022) (23,263) (85,285)
Amortization of interest rate contracts—
 —
 —
 —
 —
 —
 2,193
 252
 2,445
Reallocation of noncontrolling interest—
 —
 —
 10,094
 —
 —
 —
 (10,094) —
Equity, September 30, 2016153,773
 $1,538
 $200,000
 $6,326,580
 $(725,522) $(2,722) $(73,943) $2,133,322
 $7,859,253





The accompanying notes are an integral part of these consolidated financial statements.

5

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BOSTON PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 For the nine months ended September 30,
 2017 2016
 (in thousands)
Cash flows from operating activities:   
Net income$430,278
 $405,083
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization463,288
 516,371
Impairment loss—
 1,783
Non-cash compensation expense27,260
 25,290
Income from unconsolidated joint ventures(7,035) (5,489)
Distributions of net cash flow from operations of unconsolidated joint ventures8,563
 11,645
Gains from investments in securities(2,716) (1,713)
(Gains) losses from early extinguishments of debt(14,444) 371
Non-cash portion of interest expense(6,667) (27,386)
Gains on sales of real estate(6,791) (80,606)
Change in assets and liabilities:   
Cash held in escrows7,795
 1,675
Tenant and other receivables, net12,528
 22,135
Accrued rental income, net(36,012) (14,618)
Prepaid expenses and other assets(13,633) 4,883
Accounts payable and accrued expenses7,861
 16,852
Accrued interest payable(144,833) 44,242
Other liabilities(65,031) (114,321)
Tenant leasing costs(67,699) (62,412)
Total adjustments162,434
 338,702
Net cash provided by operating activities592,712
 743,785
Cash flows from investing activities:   
Acquisitions of real estate(15,953) (78,000)
Construction in progress(452,283) (359,716)
Building and other capital improvements(162,395) (81,842)
Tenant improvements(152,749) (167,762)
Proceeds from sales of real estate29,810
 122,750
Proceeds from sales of real estate placed in escrow(29,810) (122,647)
Proceeds from sales of real estate released from escrow16,640
 122,647
Cash released from escrow for investing activities9,638
 6,694
Cash released from escrow for land sale contracts—
 1,403
Cash placed in escrow for investment in unconsolidated joint venture(25,000) —
Capital contributions to unconsolidated joint ventures(89,874) (546,982)
Capital distributions from unconsolidated joint ventures251,000
 —
Investments in securities, net(1,451) (929)
Net cash used in investing activities(622,427) (1,104,384)
    
    
    

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BOSTON PROPERTIES LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited and in thousands)
 For the three months ended March 31,
 2020 2019
Cash flows from operating activities:   
Net income$588,444
 $134,837
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization169,285
 162,682
Amortization of right of use assets - operating leases583
 605
Impairment loss—
 22,272
Non-cash compensation expense17,525
 15,050
Loss (income) from unconsolidated joint ventures369
 (213)
Distributions of net cash flow from operations of unconsolidated joint ventures5,917
 2,650
Losses (gains) from investments in securities5,445
 (2,969)
Non-cash portion of interest expense5,646
 5,447
(Gains) losses on sales of real estate(419,654) 905
Change in assets and liabilities:   
Tenant and other receivables, net17,784
 (14,000)
Note receivable, net(128) (125)
Accrued rental income, net(27,285) (15,570)
Prepaid expenses and other assets(93,819) (68,554)
Lease liabilities - operating leases393
 370
Accounts payable and accrued expenses(48,591) 258
Accrued interest payable(7,644) (160)
Other liabilities(21,296) (17,831)
Tenant leasing costs(17,777) (18,420)
Total adjustments(413,247) 72,397
Net cash provided by operating activities175,197
 207,234
Cash flows from investing activities:   
Acquisition of real estate—
 (43,061)
Construction in progress(143,160) (85,632)
Building and other capital improvements(39,154) (32,719)
Tenant improvements(64,172) (54,242)
Proceeds from sales of real estate259,489
 20,019
Capital contributions to unconsolidated joint ventures(89,997) (26,995)
Investments in securities, net3,201
 (885)
Net cash used in investing activities(73,793) (223,515)
    

BOSTON PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 For the nine months ended September 30,
 2017 2016
 (in thousands)
Cash flows from financing activities:   
Proceeds from mortgage notes payable2,300,000
 —
Repayments of mortgage notes payable(1,313,890) (1,323,284)
Proceeds from unsecured senior notes—
 1,989,790
Borrowings on unsecured line of credit470,000
 —
Repayments of unsecured line of credit(470,000) —
Repayments of mezzanine notes payable(306,000) —
Repayments of outside members’ notes payable(70,424) —
Payments on capital lease obligations(373) —
Payments on real estate financing transactions(1,306) (4,712)
Deposit on mortgage note payable interest rate lock(23,200) —
Return of deposit on mortgage note payable interest rate lock23,200
 —
Deferred financing costs(44,083) (16,101)
Net proceeds from equity transactions241
 (270)
Dividends and distributions(394,900) (557,262)
Contributions from noncontrolling interests in property partnerships38,196
 6,737
Distributions to noncontrolling interests in property partnerships(41,605) (38,694)
Net cash provided by financing activities165,856
 56,204
Net increase (decrease) in cash and cash equivalents136,141
 (304,395)
Cash and cash equivalents, beginning of period356,914
 723,718
Cash and cash equivalents, end of period$493,055
 $419,323
Supplemental disclosures:   
Cash paid for interest$477,189
 $327,053
Interest capitalized$43,286
 $28,956
Non-cash investing and financing activities:   
Write-off of fully depreciated real estate$(103,972) $(168,861)
Additions to real estate included in accounts payable and accrued expenses$36,609
 $11,864
Real estate acquired through capital lease$28,962
 $—
Outside members’ notes payable contributed to noncontrolling interests in property partnerships$109,576
 $—
Dividends and distributions declared but not paid$130,434
 $113,038
Conversions of noncontrolling interests to stockholders’ equity$16,812
 $5,881
Issuance of restricted securities to employees$35,711
 $33,711
BOSTON PROPERTIES LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited and in thousands)
 For the three months ended March 31,
 2020 2019
Cash flows from financing activities:   
Repayments of mortgage notes payable(4,212) (5,645)
Borrowings on unsecured line of credit265,000
 50,000
Repayments of unsecured line of credit(15,000) (50,000)
Payments on finance lease obligations—
 (470)
Deferred financing costs(11) (186)
Net proceeds from equity transactions3,349
 1,792
Distributions(171,964) (166,362)
Contributions from noncontrolling interests in property partnerships3,876
 4,387
Distributions to noncontrolling interests in property partnerships(15,750) (24,128)
Net cash provided by (used in) financing activities65,288
 (190,612)
Net increase (decrease) in cash and cash equivalents and cash held in escrows166,692
 (206,893)
Cash and cash equivalents and cash held in escrows, beginning of year691,886
 639,191
Cash and cash equivalents and cash held in escrows, end of year$858,578
 $432,298
    
Reconciliation of cash and cash equivalents and cash held in escrows:   
Cash and cash equivalents, beginning of period$644,950
 $543,359
Cash held in escrows, beginning of period46,936
 95,832
Cash and cash equivalents and cash held in escrows, beginning of period$691,886
 $639,191
    
Cash and cash equivalents, end of period$660,733
 $360,091
Cash held in escrows, end of period197,845
 72,207
Cash and cash equivalents and cash held in escrows, end of period$858,578
 $432,298
    
Supplemental disclosures:   
Cash paid for interest$114,696
 $107,094
Interest capitalized$14,149
 $11,813
    
Non-cash investing and financing activities:   
Write-off of fully depreciated real estate$(38,782) $(31,640)
Change in real estate included in accounts payable and accrued expenses$(27,415) $49,689
Real estate acquired through finance lease$—
 $122,563
Accrued rental income, net deconsolidated$(4,558) $—
Tenant leasing costs, net deconsolidated$(3,462) $—
Building and other capital improvements, net deconsolidated$(111,889) $—
Tenant improvements, net deconsolidated$(12,331) $—
Investment in unconsolidated joint venture recorded upon deconsolidation$347,898
 $—
Distributions declared but not paid$171,026
 $165,352
Conversions of redeemable partnership units to partners’ capital$15,495
 $492
Issuance of restricted securities to employees$43,104
 $37,428




The accompanying notes are an integral part of these consolidated financial statements.

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BOSTON PROPERTIES LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
(Unaudited)
 September 30, 2017 December 31, 2016
 (in thousands, except for unit amounts)
ASSETS   
Real estate, at cost (amounts related to variable interest entities (“VIEs”) of $7,084,588 and $6,760,078 at September 30, 2017 and December 31, 2016, respectively)$20,447,767
 $19,733,872
Less: accumulated depreciation (amounts related to VIEs of $(825,390) and $(758,640) at September 30, 2017 and December 31, 2016, respectively)(4,394,077) (4,136,364)
Total real estate16,053,690
 15,597,508
Cash and cash equivalents (amounts related to VIEs of $285,089 and $253,999 at September 30, 2017 and December 31, 2016, respectively)493,055
 356,914
Cash held in escrows (amounts related to VIEs of $6,179 and $4,955 at September 30, 2017 and December 31, 2016, respectively)83,779
 63,174
Investments in securities27,981
 23,814
Tenant and other receivables (amounts related to VIEs of $19,891 and $23,525 at September 30, 2017 and December 31, 2016, respectively)79,750
 92,548
Accrued rental income (amounts related to VIEs of $232,336 and $224,185 at September 30, 2017 and December 31, 2016, respectively)835,415
 799,138
Deferred charges, net (amounts related to VIEs of $268,727 and $290,436 at September 30, 2017 and December 31, 2016, respectively)657,474
 686,163
Prepaid expenses and other assets (amounts related to VIEs of $68,330 and $42,718 at September 30, 2017 and December 31, 2016, respectively)144,817
 129,666
Investments in unconsolidated joint ventures611,800
 775,198
Total assets$18,987,761
 $18,524,123
LIABILITIES AND CAPITAL   
Liabilities:   
Mortgage notes payable, net (amounts related to VIEs of $2,941,550 and $2,018,483 at September 30, 2017 and December 31, 2016, respectively)$2,982,067
 $2,063,087
Unsecured senior notes, net7,252,567
 7,245,953
Unsecured line of credit—
 —
Unsecured term loan—
 —
Mezzanine notes payable (amounts related to VIEs of $0 and $307,093 at September 30, 2017 and December 31, 2016, respectively)—
 307,093
Outside members’ notes payable (amounts related to VIEs of $0 and $180,000 at September 30, 2017 and December 31, 2016, respectively)—
 180,000
Accounts payable and accrued expenses (amounts related to VIEs of $106,772 and $110,457 at September 30, 2017 and December 31, 2016, respectively)325,440
 298,524
Distributions payable130,434
 130,308
Accrued interest payable (amounts related to VIEs of $6,800 and $162,226 at September 30, 2017 and December 31, 2016, respectively)99,100
 243,933
Other liabilities (amounts related to VIEs of $146,517 and $175,146 at September 30, 2017 and December 31, 2016, respectively)419,215
 450,821
Total liabilities11,208,823
 10,919,719
Commitments and contingencies—
 —
Noncontrolling interests:   
Redeemable partnership units—16,812,329 and 17,079,511 common units and 816,982 and 904,588 long term incentive units outstanding at redemption value at September 30, 2017 and December 31, 2016, respectively2,166,290
 2,262,040
Capital:   
5.25% Series B cumulative redeemable preferred units, liquidation preference $2,500 per unit, 80,000 units issued and outstanding at September 30, 2017 and December 31, 2016193,623
 193,623
Boston Properties Limited Partnership partners’ capital—1,719,516 and 1,717,743 general partner units and 152,602,750 and 152,072,432 limited partner units outstanding at September 30, 2017 and December 31, 2016, respectively3,750,350
 3,618,094
Noncontrolling interests in property partnerships1,668,675
 1,530,647
Total capital5,612,648
 5,342,364
Total liabilities and capital$18,987,761
 $18,524,123
The accompanying notes are an integral part of these consolidated financial statements.

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BOSTON PROPERTIES LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 Three months ended September 30, Nine months ended September 30,
 2017 2016 2017 2016
 (in thousands, except for per unit amounts)
Revenue       
Rental       
Base rent$513,269
 $489,312
 $1,537,373
 $1,518,826
Recoveries from tenants94,476
 92,560
 272,803
 267,852
Parking and other26,092
 24,638
 78,164
 75,576
Total rental revenue633,837
 606,510
 1,888,340
 1,862,254
Hotel revenue13,064
 12,354
 33,859
 33,919
Development and management services10,811
 6,364
 24,648
 18,586
Total revenue657,712
 625,228
 1,946,847
 1,914,759
Expenses       
Operating       
Rental237,341
 228,560
 696,082
 665,670
Hotel8,447
 8,118
 23,942
 23,730
General and administrative25,792
 25,165
 84,319
 79,936
Transaction costs239
 249
 572
 1,187
Impairment loss—
 1,783
 —
 1,783
Depreciation and amortization150,210
 198,582
 457,102
 507,234
Total expenses422,029
 462,457
 1,262,017
 1,279,540
Operating income235,683
 162,771
 684,830
 635,219
Other income (expense)       
Income from unconsolidated joint ventures843
 1,464
 7,035
 5,489
Interest and other income1,329
 3,628
 3,447
 6,657
Gains from investments in securities944
 976
 2,716
 1,713
Gains (losses) from early extinguishments of debt—
 (371) 14,354
 (371)
Losses from interest rate contracts—
 (140) —
 (140)
Interest expense(92,032) (104,641) (282,709) (314,953)
Income before gains on sales of real estate146,767
 63,687
 429,673
 333,614
Gains on sales of real estate2,891
 12,983
 7,368
 82,775
Net income149,658
 76,670
 437,041
 416,389
Net income attributable to noncontrolling interests       
Noncontrolling interests in property partnerships(14,340) 17,225
 (33,967) (53)
Net income attributable to Boston Properties Limited Partnership135,318
 93,895
 403,074
 416,336
Preferred distributions(2,625) (2,589) (7,875) (7,796)
Net income attributable to Boston Properties Limited Partnership common unitholders$132,693
 $91,306
 $395,199
 $408,540
Basic earnings per common unit attributable to Boston Properties Limited Partnership common unitholders:       
Net income$0.77
 $0.53
 $2.30
 $2.38
Weighted average number of common units outstanding171,691
 171,379
 171,649
 171,353
Diluted earnings per common unit attributable to Boston Properties Limited Partnership common unitholders:       
Net income$0.77
 $0.53
 $2.30
 $2.38
Weighted average number of common and common equivalent units outstanding171,819
 171,761
 171,861
 171,643
        
Distributions per common unit$0.75
 $0.65
 $2.25
 $1.95
The accompanying notes are an integral part of these consolidated financial statements.

9

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BOSTON PROPERTIES LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 Three months ended September 30, Nine months ended September 30,
 2017 2016 2017 2016
 (in thousands)
Net income$149,658
 $76,670
 $437,041
 $416,389
Other comprehensive income (loss):       
Effective portion of interest rate contracts—
 5,712
 (6,133) (85,285)
Amortization of interest rate contracts (1)1,665
 1,190
 4,368
 2,445
Other comprehensive income (loss)1,665
 6,902
 (1,765) (82,840)
Comprehensive income151,323
 83,572
 435,276
 333,549
Comprehensive income attributable to noncontrolling interests(14,484) 16,812
 (31,695) 16,081
Comprehensive income attributable to Boston Properties Limited Partnership$136,839
 $100,384
 $403,581
 $349,630
_______________
(1) Amounts reclassified from comprehensive income primarily to interest expense within the Boston Properties Limited Partnership's Consolidated Statements of Operations.
































The accompanying notes are an integral part of these consolidated financial statements.

10

Table of Contents

BOSTON PROPERTIES LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016
(Unaudited and in thousands)
 Total Partners’ Capital
Balance at December 31, 2016$3,811,717
Contributions4,937
Net income allocable to general and limited partner units362,724
Distributions(354,734)
Accumulated other comprehensive income455
Cumulative effect of a change in accounting principle(272)
Unearned compensation(1,222)
Conversion of redeemable partnership units16,812
Adjustment to reflect redeemable partnership units at redemption value103,556
Balance at September 30, 2017$3,943,973
  
Balance at December 31, 2015$3,684,522
Contributions3,269
Net income allocable to general and limited partner units374,216
Distributions(307,480)
Accumulated other comprehensive loss(59,829)
Unearned compensation1,651
Conversion of redeemable partnership units5,881
Adjustment to reflect redeemable partnership units at redemption value(151,545)
Balance at September 30, 2016$3,550,685























The accompanying notes are an integral part of these consolidated financial statements.


11

Table of Contents

BOSTON PROPERTIES LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) 
 For the nine months ended September 30,
 2017 2016
 (in thousands)
Cash flows from operating activities:   
Net income$437,041
 $416,389
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization457,102
 507,234
Impairment loss—
 1,783
Non-cash compensation expense27,260
 25,290
Income from unconsolidated joint ventures(7,035) (5,489)
Distributions of net cash flow from operations of unconsolidated joint ventures8,563
 11,645
Gains from investments in securities(2,716) (1,713)
(Gains) losses from early extinguishments of debt(14,444) 371
Non-cash portion of interest expense(6,667) (27,386)
Gains on sales of real estate(7,368) (82,775)
Change in assets and liabilities:   
Cash held in escrows7,795
 1,675
Tenant and other receivables, net12,528
 22,135
Accrued rental income, net(36,012) (14,618)
Prepaid expenses and other assets(13,633) 4,883
Accounts payable and accrued expenses7,861
 16,852
Accrued interest payable(144,833) 44,242
Other liabilities(65,031) (114,321)
Tenant leasing costs(67,699) (62,412)
Total adjustments155,671
 327,396
Net cash provided by operating activities592,712
 743,785
Cash flows from investing activities:   
Acquisitions of real estate(15,953) (78,000)
Construction in progress(452,283) (359,716)
Building and other capital improvements(162,395) (81,842)
Tenant improvements(152,749) (167,762)
Proceeds from sales of real estate29,810
 122,750
Proceeds from sales of real estate placed in escrow(29,810) (122,647)
Proceeds from sales of real estate released from escrow16,640
 122,647
Cash released from escrow for investing activities9,638
 6,694
Cash released from escrow for land sale contracts—
 1,403
Cash placed in escrow for investment in unconsolidated joint venture(25,000) —
Capital contributions to unconsolidated joint ventures(89,874) (546,982)
Capital distributions from unconsolidated joint ventures251,000
 —
Investments in securities, net(1,451) (929)
Net cash used in investing activities(622,427) (1,104,384)
    
    

12

Table of Contents

BOSTON PROPERTIES LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) 
 For the nine months ended September 30,
 2017 2016
 (in thousands)
Cash flows from financing activities:   
Proceeds from mortgage notes payable2,300,000
 —
Repayments of mortgage notes payable(1,313,890) (1,323,284)
Proceeds from unsecured senior notes—
 1,989,790
Borrowings on unsecured line of credit470,000
 —
Repayments of unsecured line of credit(470,000) —
Repayments of mezzanine notes payable(306,000) —
Repayments of outside members’ notes payable(70,424) —
Payments on capital lease obligations(373) —
Payments on real estate financing transaction(1,306) (4,712)
Deposit on mortgage note payable interest rate lock(23,200) —
Return of deposit on mortgage note payable interest rate lock23,200
 —
Deferred financing costs(44,083) (16,101)
Net proceeds from equity transactions241
 (270)
Distributions(394,900) (557,262)
Contributions from noncontrolling interests in property partnerships38,196
 6,737
Distributions to noncontrolling interests in property partnerships(41,605) (38,694)
Net cash provided by financing activities165,856
 56,204
Net increase (decrease) in cash and cash equivalents136,141
 (304,395)
Cash and cash equivalents, beginning of period356,914
 723,718
Cash and cash equivalents, end of period$493,055
 $419,323
Supplemental disclosures:   
Cash paid for interest$477,189
 $327,053
Interest capitalized$43,286
 $28,956
Non-cash investing and financing activities:   
Write-off of fully depreciated real estate$(102,795) $(164,528)
Additions to real estate included in accounts payable and accrued expenses$36,609
 $11,864
Real estate acquired through capital lease$28,962
 $—
Outside members’ notes payable contributed to noncontrolling interests in property partnerships$109,576
 $—
Distributions declared but not paid$130,434
 $113,038
Conversions of redeemable partnership units to partners’ capital$16,812
 $5,881
Issuance of restricted securities to employees$35,711
 $33,711










The accompanying notes are an integral part of these consolidated financial statements.

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BOSTON PROPERTIES, INC. AND BOSTON PROPERTIES LIMITED PARTNERSHIP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Organization
Boston Properties, Inc., a Delaware corporation, is a fully integrated, self-administered and self-managed real estate investment trust (“REIT”). Boston Properties, Inc. is the sole general partner of Boston Properties Limited Partnership, its operating partnership, and at September 30, 2017March 31, 2020 owned an approximate 89.7% (89.5%(89.6% at December 31, 2016)2019) general and limited partnership interest in Boston Properties Limited Partnership. Unless stated otherwise or the context requires, the “Company” refers to Boston Properties, Inc. and its subsidiaries, including Boston Properties Limited Partnership and its consolidated subsidiaries. Partnership interests in Boston Properties Limited Partnership include:
common units of partnership interest (also referred to as “OP Units”),
long term incentive units of partnership interest (also referred to as “LTIP Units”), and
preferred units of partnership interest (also referred to as “Preferred Units”).
Unless specifically noted otherwise, all references to OP Units exclude units held by Boston Properties, Inc. A holder of an OP Unit may present such OP Unit to Boston Properties Limited Partnership for redemption at any time (subject to restrictions agreed upon at the time of issuance of OP Units to particular holders that may restrict such redemption right for a period of time, generally one1 year from issuance). Upon presentation of an OP Unit for redemption, Boston Properties Limited Partnership is obligated to redeem suchthe OP Unit for cash equal to the value of a share of common stock of Boston Properties, Inc. (“Common Stock”) at such time.. In lieu of a cash redemption, Boston Properties, Inc. may elect to acquire suchthe OP Unit for one1 share of Common Stock. Because the number of shares of Common Stock outstanding at all times equals the number of OP Units that Boston Properties, Inc. owns, one1 share of Common Stock is generally the economic equivalent of one1 OP Unit, and the quarterly distribution that may be paid to the holder of an OP Unit equals the quarterly dividend that may be paid to the holder of a share of Common Stock.
The Company uses LTIP Units as a form of equity-based award for annual long-termlong term incentive equity compensation. The Company has also issued LTIP Units to employees in the form of (1) 2012 outperformance plan awards (“2012 OPP Units”) and (2) 2013 2014, 2015, 2016 and 2017- 2020 multi-year, long-term incentive program awards (also referred to as “MYLTIP Units”), each of which, upon the satisfaction of certain performance and vesting conditions, is convertible into one OP Unit. The three-year measurement periods for the 2012 OPP Units and the 2013 - 2017 MYLTIP Units and 2014 MYLTIP Units expired on February 6, 2015, February 4, 2016 and February 3, 2017, respectively,have ended and Boston Properties, Inc.’s total stockholder return (“TSR”) was sufficient for employees to earn and therefore become eligible to vest in a portion of the awards. Unless and until they are earned, the rights, preferences and privileges of the 2015, 2016 and 20172018 - 2020 MYLTIP Units differ from other LTIP Units granted to employees (including the 2012 OPP Units and the 2013 MYLTIP Units and the 2014- 2017 MYLTIP Units, which have been earned). Therefore, unless specifically noted otherwise, all references to LTIP Units exclude the 2015, 2016 and 20172018 - 2020 MYLTIP Units. LTIP Units (including the earned 2012 OPP Units the 2013 MYLTIP Units and the 2014earned 2013 - 2017 MYLTIP Units), whether vested or not, will receive the same quarterly per unit distributions as OP Units, which equal per share dividends on Common Stock (See Notes 8, 97 and 11)10).
At September 30, 2017,March 31, 2020, there was one1 series of Preferred Units outstanding (i.e., Series B Preferred Units). The Series B Preferred Units were issued to Boston Properties, Inc. on March 27, 2013 in connection with the issuance of 80,000 shares (8,000,000 depositary shares each representing 1/100th of a share) of 5.25% Series B Cumulative Redeemable Preferred Stock (the “Series B Preferred Stock”). Boston Properties, Inc. contributed the net proceeds from the offering to Boston Properties Limited Partnership in exchange for 80,000 Series B Preferred Units having terms and preferences generally mirroring those of the Series B Preferred Stock (See Note 9)8).
Properties
At September 30, 2017,March 31, 2020, the Company owned or had interests in a portfolio of 177196 commercial real estate properties (the “Properties”) aggregating approximately 49.851.8 million net rentable square feet of primarily Class A office properties, including ten10 properties under construction/redevelopment totaling approximately 5.75.2 million net rentable square feet. At September 30, 2017,March 31, 2020, the Properties consisted of:

166 Office177 office properties (including seven8 properties under construction/redevelopment);
one hotel;
five12 retail properties; and
five6 residential properties (including three2 properties under construction).; and

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1 hotel.
The Company considers Class A office properties to be well-located buildings that are professionally managed and maintained, attract high-quality tenants and command upper-tier rental rates, and that are modern structures or have been modernized to compete with newer buildings.
2. Basis of Presentation and Summary of Significant Accounting Policies
Boston Properties, Inc. does not have any other significant assets, liabilities or operations, other than its investment in Boston Properties Limited Partnership, nor does it have employees of its own. Boston Properties Limited Partnership, not Boston Properties, Inc., generally executes all significant business relationships other than transactions involving securities of Boston Properties, Inc. All majority-owned subsidiaries and joint ventures over which the Company has financial and operating control and variable interest entities (“VIEs”) in which the Company has determined it is the primary beneficiary are included in the consolidated financial statements. All significant intercompany balances and transactions have been eliminated in consolidation. The Company accounts for all other unconsolidated joint ventures using the equity method of accounting. Accordingly, the Company’s share of the earnings of these joint ventures and companies is included in consolidated net income.
The accompanying interim financial statements are unaudited; however, the financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial information and in conjunction with the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the disclosures required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting solely of normal recurring matters) necessary for a fair statement of the financial statements for these interim periods have been included. The results of operations for the interim periods are not necessarily indicative of the results to be obtained for other interim periods or for the full fiscal year. The year-end consolidated balance sheet data was derived from audited financial statements, but does not include all disclosure required by GAAP.  These financial statements should be read in conjunction with the Company’s financial statements and notes thereto contained in the Company’s Annual Report in the Company’s Form 10-K for its fiscal year ended December 31, 2016.
Fair Value of Financial Instruments2019.
The Company determines the fair value of its unsecured senior notes using market prices. The inputs used in determining the fair value of the Company’s unsecured senior notes are categorized at a level 1 basis (as defined in the accounting standards for Fair Value Measurements and Disclosures) due to the fact that the Company uses quoted market rates to value these instruments. However, the inputs used in determining the fair value could be categorized at a level 2 basis (as defined in the accounting standards for Fair Value Measurements and Disclosures) if trading volumes are low. The Company determines the fair value of its mortgage notes payable using discounted cash flow analysis by discounting the spread between the future contractual interest payments and hypothetical future interest payments on mortgage debt based on current market rates for similar securities. In determining the current market rates, the Company addsbases its estimates of market spreads to the quoted yields on federal government treasury securities with similar maturity dates to its debt. The inputs used in determining the fair value of the Company’s mortgage notes payablehistorical experience and mezzanine notes payable are categorized at a level 3 basis (as defined in the accounting standards for Fair Value Measurements and Disclosures) due to the facton various other assumptions that the Companyit considers the rates used in the valuation techniques to be unobservable inputs. To the extent that there are outstanding borrowingsreasonable under the unsecured line of credit, the Company utilizes a discounted cash flow methodology in order to estimate the fair value. To the extent that credit spreads have changed since the origination, the net present value of the difference between future contractual interest payments and future interest payments based on the Company’s estimate of a current market rate would represent the difference between the book value and the fair value. The Company’s estimate of a current market rate is based upon the rate, considering current market conditions and the Company’s specific credit profile, at which it estimates it could obtain similar borrowings. To the extent there are outstanding borrowings, this current market rate is internally estimated and therefore would be primarily based upon a level 3 input.
Because the Company’s valuations of its financial instruments are based on these types of estimates, the actual fair values of its financial instruments may differ materially if the Company’s estimates do not prove to be accurate, and the Company’s estimated fair values for these instruments as of the end of the applicable reporting period are not necessarily indicative of estimated or actual fair values in future reporting periods. The following table presents the aggregate carrying value of the Company’s mortgage notes payable, net, mezzanine notes payable and unsecured senior notes, net and the Company’s corresponding estimate of fair value as of September 30, 2017 and December 31, 2016 (in thousands):

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 September 30, 2017 December 31, 2016
 
Carrying
Amount
   
Estimated
Fair Value
 
Carrying
Amount
   
Estimated
Fair Value
Mortgage notes payable, net$2,982,067
    $3,049,617
 $2,063,087
    $2,092,237
Mezzanine notes payable—
   —
 307,093
   308,344
Unsecured senior notes, net7,252,567
    7,533,164
 7,245,953
    7,428,077
Total$10,234,634
    $10,582,781
 $9,616,133
    $9,828,658
The Company uses interest rate swap agreements to manage its interest rate risk. The valuation of these instruments is determined using widely accepted valuation techniques,circumstances, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves. To comply with the provisions of Accounting Standards Codification (“ASC”) 820, the Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparties. The Company has assessed the significance of the impact of extraordinary events such as the credit valuation adjustments onnovel coronavirus (“COVID-19”) pandemic, the overall valuationresults of its derivative positionswhich form the basis for making significant judgments about the carrying values of assets and has determined that the credit valuation adjustments are not significant to the overall valuationliabilities, assessments of its derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2future collectability, and other areas of the fair value hierarchy.financial statements that are impact by the use of estimates. Actual results may differ from these estimates under different assumptions or conditions.
Variable Interest Entities (VIEs)
Consolidated VIEs are those wherefor which the Company is considered to be the primary beneficiary of a VIE. The primary beneficiary is the entity that has a controlling financial interest in the VIE, which is defined by the entity having both of the following characteristics: (1) the power to direct the activities that, when taken together, most significantly impact the VIE’s performance and (2) the obligation to absorb losses or the right to receive the returns from the VIE that could potentially be significant to the VIE. The Company has determined that it is the primary beneficiary for seven6 of the nine 7entities that are VIEs.
Consolidated Variable Interest Entities
As of September 30, 2017,March 31, 2020, Boston Properties, Inc. has identified seven6 consolidated VIEs, including Boston Properties Limited Partnership. TheExcluding Boston Properties Limited Partnership, the VIEs own (1)consisted of the following five5 in-service properties: 767 Fifth Avenue (the General Motors Building), Times Square Tower, 601 Lexington Avenue, Atlantic Wharf Office Building and 100 Federal Street and (2) Salesforce Tower, which is currently under development.Street.
The Company consolidates these VIEs because it is the primary beneficiary.  The third parties’ interests in these consolidated entities with the exception of(i.e., excluding Boston Properties Limited Partnership,Partnership’s interest) are reflected as noncontrolling interest in property partnerships in the accompanying Consolidated Financial Statementsconsolidated financial statements (See Note 8)7). 
In addition, Boston Properties, Inc.’s only significant asset is its investment in Boston Properties Limited Partnership and, consequently, substantially all of Boston Properties, Inc.’s assets and liabilities are the assets and liabilities of Boston Properties Limited Partnership. All of Boston Properties, Inc.’s debt is an obligation of Boston Properties Limited Partnership.

Variable Interest Entities Not Consolidated
The Company has determined that its BNY Towerthe Platform 16 Holdings LLCLP joint venture which owns Dock 72 at the Brooklyn Navy Yard, and its 7750 Wisconsin Avenue LLC joint venture, which owns 7750 Wisconsin Avenue, are VIEs.is a VIE. The Company does not consolidate these entities becausethis entity as the Company does not have the power to direct the activities that, when taken together, most significantly impact eachthe VIE’s performance and, therefore, the Company is not considered to be the primary beneficiary.
RecentFair Value of Financial Instruments
The Company follows the authoritative guidance for fair value measurements when valuing its financial instruments for disclosure purposes. The table below presents the financial instruments that are being valued for disclosure purposes as well as the Level they are categorized at (as defined in Accounting PronouncementsStandards Codification (“ASC”) 820 “Fair Value Measurements and Disclosures” (“ASC 820”)).
Financial InstrumentLevel
Unsecured senior notes (1)Level 1
Related party note receivableLevel 3
Note receivableLevel 3
Mortgage notes payableLevel 3
Unsecured term loan / line of creditLevel 3
_______________
(1) If trading value for the period is low, the valuation could be categorized as Level 2.
Because the Company’s valuations of its financial instruments are based on the above Levels and involve the use of estimates, the actual fair values of its financial instruments may differ materially from those estimates.
The following table identifies the range and weighted average of significant unobservable inputs for the Company’s Level 3 fair value measured instruments.
Financial InstrumentLevelRangeWeighted Average
Related party note receivableLevel 34.49%4.49%
Note receivableLevel 33.62%3.62%
Mortgage notes payableLevel 32.82% - 3.25%2.91%
Unsecured term loan / line of creditLevel 31.84%1.84%

In May 2014,addition, the Company’s estimated fair values for these instruments as of the end of the applicable reporting period are not projections of, nor necessarily indicative of, estimated or actual fair values in future reporting periods. The following table presents the aggregate carrying value of the Company’s related party note receivable, net, note receivable, net, mortgage notes payable, net, unsecured senior notes, net, unsecured line of credit and unsecured term loan, net and the Company’s corresponding estimate of fair value as of March 31, 2020 and December 31, 2019 (in thousands):
 March 31, 2020 December 31, 2019
 
Carrying
Amount
 
Estimated
Fair Value
 
Carrying
Amount
 
Estimated
Fair Value
Related party note receivable, net$78,800
 $83,707
 $80,000
 $81,931
Note receivable, net15,794
 15,593
 15,920
 14,978
Total$94,594
 $99,300
 $95,920
 $96,909
        
Mortgage notes payable, net$2,919,157
 $3,054,533
 $2,922,408
 $2,984,956
Unsecured senior notes, net8,393,009
 8,449,511
 8,390,459
 8,826,375
Unsecured line of credit250,000
 249,873
 —
 —
Unsecured term loan, net499,058
 500,506
 498,939
 500,561
Total$12,061,224
 $12,254,423
 $11,811,806
 $12,311,892


New Accounting Pronouncements Adopted
Financial Instruments - Credit Losses    
In June 2016, the Financial Accounting Standards Accounting Board (“FASB”) issued ASU 2014-09, “Revenue from Contracts with CustomersAccounting Standards Update (“ASU”) 2016-13, “Financial Instruments - Credit Losses (Topic 606)”326): Measurement of Credit Losses on Financial Instruments” (“ASU 2014-09”2016-13”). The objectiveASU 2016-13 is intended to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date by replacing the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. In November 2018, the FASB issued ASU 2014-09 is2018-19, “Codification Improvements to establish a single comprehensive model for entities to use in accounting for revenueTopic 326, Financial Instruments - Credit Losses” (“ASU 2018-19”). ASU 2018-19 clarifies that receivables arising from contracts with customers and will supersede most of the existing revenue recognition guidance, including industry-specific guidance. The core principle is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity

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expects to be entitled in exchange for those goods or services. In applying ASU 2014-09, companies will perform a five-step analysis of transactions to determine when and how revenue is recognized. ASU 2014-09 applies to all contracts with customers except those thatoperating leases are not within the scope of other topicsASC 326-20, “Financial Instruments - Credit Losses - Measured at Amortized Cost,” which addresses financial assets measured at amortized cost basis, including net investments in the FASB’s ASC. In August 2015, the FASBissued ASU 2015-14, “Revenueleases arising from Contractssales-type and direct financing leases. Instead, impairment of receivables arising from operating leases should be accounted for in accordance with Customers (Topic 606): Deferral of the Effective Date”ASC 842 - “Leases” (“ASU 2015-14”), which delayed the effective date of ASU 2014-09 by one year making it effective for the first interim period within annual reporting periods beginning after December 15, 2017. Early adoption is permitted as of the original effective date. In May 2016, the FASB issued ASU No. 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients” (“ASU 2016-12”ASC 842”). ASU 2016-12 is intended to clarify2016-13 and provide practical expedients for certain aspects of ASU 2014-09, which outlines a single comprehensive model for entities to use in accounting for revenues arising from contracts with customers and notes that lease contracts with customers are a scope exception. ASU 2014-09 is2018-19 were effective for the Company for reporting periods beginning after December 15, 2017. 2019, with early adoption permitted. ASU 2016-13 and ASU 2018-19 are applicable to the Company with respect to (1) certain of its accounts receivable, except for amounts arising from operating leases accounted for under ASC 842, (2) its related party note receivable, (3) its note receivable and (4) certain of its off-balance sheet credit exposures. The Company will adoptadopted ASU 2014-092016-13 and ASU 2018-19 effective January 1, 20182020 using the modified retrospective approach. The Company’s project team has completed the compilation of the inventory of the sources of revenue that will be impacted by the adoption of ASU 2014-09. The Company expects that executory costs2016-13 and certain non-lease components of revenue from leases (upon the adoption of ASU 2016-02), certain of its development and management services revenue and gains on sales of real estate may be impacted by the adoption of ASU 2014-09, although2018-19 resulted in the Company anticipates thatrecognizing an allowance for current expected credit losses associated with (1) its related party note receivable, (2) its note receivable and (3) an off-balance sheet loan commitment arrangement. As a result, the impact will be tomodified retrospective approach resulted in the pattern of revenue recognition and notCompany recognizing on January 1, 2020, the total revenue recognized over time. The Company is progressing with its analysis and evaluation of the impact that the adoption of ASU 2014-09 will have on the recognition pattern of each of its sources of revenue and is nearing completion of its assessment of the overall impactcumulative effect of adopting ASU 2014-09. The Company does not expect that2016-13 and ASU 2018-19 aggregating approximately $1.5 million to Dividends in Excess of Earnings of Boston Properties, Inc. and Partners’ Capital of Boston Properties Limited Partnership and approximately $0.2 million to Noncontrolling Interests - Common Units of Boston Properties, Inc. and Noncontrolling Interests - Redeemable Partnership Units of Boston Properties Limited Partnership on the adoption of ASU 2014-09 will have a material impact on its consolidated financial statements.corresponding Consolidated Balance Sheets.
Fair Value Measurement
In February 2016, August 2018, the FASB issued ASU 2016-02, “Leases2018-13, “Fair Value Measurement (Topic 842)”820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2016-02”2018-13”), which sets out. ASU 2018-13 is intended to improve the principles for the recognition, measurement, presentationeffectiveness of disclosures required by entities regarding recurring and disclosure of leases for both parties to a contract (i.e., lessees and lessors). nonrecurring fair value measurements. ASU 2016-02 requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases. ASU 2016-02 supersedes previous leasing standards. ASU 2016-02 is2018-13 was effective for the Company for reporting periods beginning after December 15, 2018,2019, with early adoption permitted. The Company will adoptadopted ASU 2016-022018-13 on January 1, 2020 and the adoption did not have a material impact on the Company’s consolidated financial statements.
Derivatives and Hedging
In October 2018, the FASB issued ASU 2018-16, “Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes” (“ASU 2018-16”). ASU 2018-16 permits the use of the overnight index swap rate based on the Secured Overnight Financing Rate (“SOFR”) to be used as a U.S. benchmark interest rate for purposes of applying hedge accounting under ASC 815, “Derivatives and Hedging (Topic 815)” . ASU 2018-16 was effective for the Company, which has already adopted ASU 2017-12, “Derivatives and Hedging (Topic 815):Targeted Improvements to Accounting for Hedging Activities” for reporting periods beginning after December 15, 2018 and was required to be adopted on a prospective basis for qualifying new or re-designated hedging relationships entered into on or after the date of adoption. The Company adopted ASU 2018-16 on January 1, 2019 usingand the modified retrospective approach.adoption did not have a material impact on the Company’s consolidated financial statements.
In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”). ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the three months ended March 31, 2020, the Company is in the process of evaluating whether it will electelected to apply the practical expedients. The Company is inhedge accounting expedients related to probability and the processassessments of adopting ASU 2016-02, with its project team compiling an inventory of its leaseseffectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be impacted bybased matches the adoptionindex on the corresponding derivatives.

Application of ASU 2016-02.these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to assessevaluate the impact of adopting ASU 2016-02. However, the Company will account for operating leases under which it isguidance and may apply other elections as applicable as additional changes in the lessor on its balance sheet in a manner similar to its current accounting with the underlying leased asset recognized as real estate. The Company expects that executory costs and certain other non-lease components will need to be accounted for separately from the lease component of the lease with the lease component continuing to be recognized on a straight-line basis over the lease term and the executory costs and certain other non-lease components being accounted for under the new revenue recognition guidance in ASU 2014-09. For leases in which the Company is the lessee, primarily consisting of ground leases, the Company will recognize a right-of-use asset and a lease liability equal to the present value of the minimum lease payments with rental payments being applied to the lease liability and to interest expense and the right-of-use asset being amortized to expense over the term of the lease. market occur.
Consolidation
In addition, under ASU 2016-02, lessors will only capitalize incremental direct leasing costs. As a result, the Company will no longer be able to capitalize legal costs and internal leasing wages and instead will be required to expense these and other non-incremental costs as incurred.
In March 2016,October 2018, the FASB issued ASU 2016-09, “Compensation - Stock Compensation2018-17, “Consolidation (Topic 718)810): Targeted Improvements to Employee Share-Based Payment Accounting”Related Party Guidance for Variable Interest Entities” (“ASU 2016-09”2018-17”). ASU 2016-092018-17 is intended to improve the accounting when considering indirect interests held through related parties under common control for share-based paymentsdetermining whether fees paid to decision makers and affects all organizations that issue share-based payment awards to their employees. Several aspects of the accounting for share-based payment awardsservice providers are simplified withvariable interests. ASU 2016-09, including income tax consequences, classification of awards as equity or liabilities and classification on the statement of cash flows. ASU 2016-09 is2018-17 was effective for the Company for reporting periods beginning after December 15, 2016,2019, with early adoption permitted. On January 1, 2017, theThe Company adopted ASU 2016-092018-17 on January 1, 2020 and elected to make an accounting policy change to its method of accounting for forfeitures on its awards of stock-based compensation including the issuance of shares of restricted common stock, LTIP Units and MYLTIP Units. The Company now accounts for forfeitures as they occur instead of estimating the number of forfeitures upon the issuance of such awards of stock-based compensation. The adoption resulted in the Company recognizing cumulative effect of a change in accounting principle adjustments to its consolidated balance sheets totaling approximately $0.3 million to Dividends in Excess of Earnings and Partners’ Capital for Boston Properties, Inc. and Boston Properties Limited Partnership,

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respectively, and approximately $1.8 million to noncontrolling interests - common units of Boston Properties Limited Partnership and noncontrolling interests - redeemable partnership units for Boston Properties, Inc. and Boston Properties Limited Partnership, respectively.
In January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business” (“ASU 2017-01”). ASU 2017-01 clarifies the framework for determining whether an integrated set of assets and activities meets the definition of a business. The revised framework establishes a screen for determining whether an integrated set of assets and activities is a business and narrows the definition of a business, which is expected to result in fewer transactions being accounted for as business combinations. Acquisitions of integrated sets of assets and activities that do not meet the definition of a business are accounted for as asset acquisitions. This update is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted for transactions that have not been reported in previously issued (or available to be issued) financial statements and shall be applied on a prospective basis. The Company early adopted ASU 2017-01 during the first quarter of 2017. The Company expects that acquisitions of real estate or in-substance real estate will not meet the revised definition of a business because substantially all of the fair value is concentrated in a single identifiable asset or group of similar identifiable assets (i.e. land, buildings, and related intangible assets) or because the acquisition does not include a substantive process in the form of an acquired workforce or an acquired contract that cannot be replaced without significant cost, effort or delay.
In February 2017, the FASB issued ASU No. 2017-05, “Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets” (“ASU 2017-05”). ASU 2017-05 updates the definition of an “in substance nonfinancial asset” and clarifies the derecognition guidance for nonfinancial assets to conform with the new revenue recognition standard. The effective date and transition methods of ASU 2017-05 are aligned with ASU 2014-09 described above and are effective for the first interim period within annual reporting periods beginning after December 15, 2017. The Company is currently assessing the potential impact that the adoption of ASU 2017-05 willdid not have a material impact on itsthe Company’s consolidated financial statements.
In May 2017, the FASB issued ASU 2017-09, “Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting” (“ASU 2017-09”). ASU 2017-09 is intended to provide clarity and reduce (1) diversity in practice, (2) cost and (3) complexity when applying the guidance in Topic 718 to a change to the terms or conditions of a share-based payment award. ASU 2017-09 is effective for public entities for fiscal years and interim periods beginning after December 15, 2017. The Company is currently assessing the potential impact that the adoption of ASU 2017-09 will have on its consolidated financial statements.
In August 2017, the FASB issued ASU 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities” (“ASU 2017-12”). ASU 2017-12 was issued with the objective of improving the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. ASU 2017-12 also makes certain targeted improvements to simplify the application of the hedge accounting guidance. ASU 2017-12 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently assessing the potential impact that the adoption of ASU 2017-12 will have on its consolidated financial statements.
3. Real Estate
Boston Properties, Inc.
Real estate consisted of the following at September 30, 2017March 31, 2020 and December 31, 20162019 (in thousands):
  March 31, 2020 December 31, 2019
Land $5,070,208
 $5,111,606
Right of use assets - finance leases 237,394
 237,394
Right of use assets - operating leases 148,057
 148,640
Land held for future development (1) 264,893
 254,828
Buildings and improvements 13,517,218
 13,646,054
Tenant improvements 2,641,448
 2,656,439
Furniture, fixtures and equipment 44,263
 44,313
Construction in progress 804,179
 789,736
Total 22,727,660
 22,889,010
Less: Accumulated depreciation (5,209,487) (5,266,798)
  $17,518,173
 $17,622,212

_______________
(1)Includes pre-development costs.
Boston Properties Limited Partnership
Real estate consisted of the following at March 31, 2020 and December 31, 2019 (in thousands):
September 30, 2017 December 31, 2016 March 31, 2020 December 31, 2019
Land$4,880,331
 $4,879,020
 $4,972,992
 $5,011,153
Right of use assets - finance leases 237,394
 237,394
Right of use assets - operating leases 148,057
 148,640
Land held for future development (1)212,585
 246,656
 264,893
 254,828
Buildings and improvements12,155,126
 11,890,626
 13,232,157
 13,351,286
Tenant improvements2,186,953
 2,060,315
 2,641,448
 2,656,439
Furniture, fixtures and equipment37,612
 32,687
 44,263
 44,313
Construction in progress1,386,638
 1,037,959
 804,179
 789,736
Total20,859,245
 20,147,263
 22,345,383
 22,493,789
Less: Accumulated depreciation(4,484,798) (4,222,235) (5,107,243) (5,162,908)
$16,374,447
 $15,925,028
 $17,238,140
 $17,330,881
_______________
(1)Includes pre-development costs.

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Boston Properties Limited Partnership
Real estate consisted of the following at September 30, 2017 and December 31, 2016 (in thousands):
 September 30, 2017 December 31, 2016
Land$4,775,955
 $4,774,460
Land held for future development (1)212,585
 246,656
Buildings and improvements11,848,024
 11,581,795
Tenant improvements2,186,953
 2,060,315
Furniture, fixtures and equipment37,612
 32,687
Construction in progress1,386,638
 1,037,959
Total20,447,767
 19,733,872
Less: Accumulated depreciation(4,394,077) (4,136,364)
 $16,053,690
 $15,597,508
_______________
(1)Includes pre-development costs.
Development
On April 6, 2017,January 28, 2020, the Company commencedexercised its option to acquire real property at 425 Fourth Street located in San Francisco, California for a purchase price totaling approximately $134.1 million. 425 Fourth Street is expected to support the development of 145 Broadway, a build-to-suit Class A office project with approximately 485,000 net rentable804,000 square feet located in Cambridge, Massachusetts.of primarily commercial office space. There can be no assurance that the acquisition will be consummated on the terms currently contemplated or at all.
On May 27, 2017,March 26, 2020, the Company completed and fully placed in-service Reservoir Place North,17Fifty Presidents Street located in Reston, Virginia. 17Fifty Presidents Street is a Class A office redevelopmentbuild-to-suit project with approximately 73,000 net rentable square feet located in Waltham, Massachusetts.
On August 24, 2017, the Company entered into a 15-year lease with the General Services Administration under which the Company will develop the new headquarters for the Transportation Security Administration (TSA). The TSA will occupy 100% of the approximately 623,000276,000 net rentable square feet of Class A office space that is 100% leased.
Dispositions
On January 28, 2020, the Company entered into a joint venture with a third party to own, operate and a parking garagedevelop properties at 6595 Springfield Center Driveits Gateway Commons complex located in Springfield, Virginia. ConcurrentlySouth San Francisco, California. The Company contributed its 601, 611 and 651 Gateway properties and development rights with an agreed upon value aggregating approximately $350.0 million for its 50% interest in the executionjoint venture. 601, 611 and 651 Gateway consist of the lease, the Company commenced development of the project and expects the building to be available for occupancy by the fourth quarter of 2020.
On September 16, 2017, the Company completed and fully placed in-service 888 Boylston Street, a3 Class A office and retail project withproperties aggregating approximately 417,000768,000 net rentable square feet locatedfeet. The partner contributed 3 properties and development rights with an agreed upon value aggregating approximately $280.8 million at closing and will contribute cash totaling approximately $69.2 million in Boston, Massachusetts.
Ground Lease
On June 29, 2017, the Company executedfuture for its 50% ownership interest in the joint venture. As a 99-year ground lease (including extension options), with the right to purchase prior to 10 years after stabilizationresult of the development project as defined in the lease, land adjacent to the MacArthur BART station located in Oakland, California. The Company has commenced development of a 402-unit residential building and supporting retail space on the site. The Company’s option to purchase the land, is considered a bargain purchase option and as a result,partner’s deferred contribution, the Company has concluded thatan initial approximately 55% interest in the lease shouldjoint venture. Future development projects will be accountedowned 49% by the Company and 51% by its partner. Upon the third party’s contribution, the Company ceased accounting for the joint venture entity on a consolidated basis and is accounting for the joint venture entity on an unconsolidated basis using the equity method of accounting, as it has reduced its ownership interest in the joint venture entity and no longer has a capital lease. Atcontrolling financial or operating interest in the inceptionjoint venture entity (See Note 5). The Company recognized a gain on the retained and sold interest in the real estate contributed to the joint venture totaling approximately $217.7 million for Boston Properties, Inc. and $222.4 million for Boston Properties Limited Partnership during the three months ended March 31, 2020 within Gains (Losses) on Sales of Real Estate on the respective Consolidated Statements of Operations, as the fair value of the ground lease, the Company recorded an approximately $29.0 million capital lease assetreal estate exceeded its carrying value. 601, 611 and liability, which is reflected within Construction in Progress and Other Liabilities on the Company’s Consolidated Balance Sheets. Capital lease assets and liabilities are accounted for at the lower of fair market value or the present value of future minimum lease payments. This capital lease is for land only, therefore, the Company will not be depreciating the capital lease asset, because land is assumed to have an indefinite life.

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As of June 29, 2017, future minimum lease payments related to this capital lease are as follows (in thousands):
Period from June 29, 2017 through December 31, 2017$5
201810
201910
202010
202113
Thereafter38,778
Total expected minimum obligations38,826
Interest portion(9,864)
Present value of net expected minimum payments$28,962
Acquisitions
On May 15, 2017, the Company acquired 103 Carnegie Center located in Princeton, New Jersey for a purchase price of approximately $15.8 million in cash. 103 Carnegie Center is an approximately 96,000 net rentable square foot Class A office property. The following table summarizes the allocation of the aggregate purchase price, including transaction costs, of 103 Carnegie Center at the date of acquisition (in thousands). 
Land$2,890
Building and improvements11,229
Tenant improvements871
In-place lease intangibles2,389
Below-market lease intangible(1,426)
Net assets acquired$15,953
The following table summarizes the estimated annual amortization of the acquired below-market lease intangibles and the acquired in-place lease intangibles for 103 Carnegie Center for the remainder of 2017 and each of the next four succeeding fiscal years (in thousands).
 
Acquired In-Place
Lease Intangibles  
 
Acquired Below-
Market Lease Intangibles  
Period from May 15, 2017 through December 31, 2017$660
 $(248)
2018590
 (363)
2019367
 (337)
2020243
 (308)
202196
 (105)

103 Carnegie Center651 Gateway contributed approximately $1.1$0.2 million of revenue and approximately ($0.1 million) of earningsnet income to the Company for the period from May 15, 2017January 1, 2020 through September 30, 2017.
DispositionsJanuary 27, 2020 and contributed approximately $2.9 million of net income to the Company for the three months ended March 31, 2019.
On April 19, 2017,February 20, 2020, the Company completed the sale of an approximately 9.5-acre parcel of land at 30 Shattuck RoadNew Dominion Technology Park located in Andover, MassachusettsHerndon, Virginia for a gross sale price of $5.0$256.0 million. Net cash proceeds totaled approximately $5.0$254.0 million, resulting in a gain on sale of real estate totaling approximately $3.7 million.
On June 13, 2017, the Company completed the sale of 40 Shattuck Road located in Andover, Massachusetts for a gross sale price of $12.0 million. Net cash proceeds totaled approximately $11.9$192.3 million resulting in a gain on sale of real estate totaling approximately $28,000 for Boston Properties, Inc. and approximately $0.6$197.1 million for Boston Properties Limited Partnership. 40 Shattuck RoadNew Dominion Technology Park is ancomprised of 2 Class A office properties aggregating approximately 122,000493,000 net rentable square foot Class A office property. 40 Shattuck Roadfeet. New Dominion Technology Park contributed approximately $(28,000)$1.6 million of net lossincome to the Company for the period from January 1, 20172020 through June 13, 2017February 19, 2020 and contributed approximately $(33,000) and $(18,000)$2.1 million of net lossincome to the Company for the three and nine months ended September 30, 2016, respectively.

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On August 30, 2017, the Company completed the sale of its Reston Eastgate property located in Reston, Virginia for a gross sale price of $14.0 million.  Net cash proceeds totaled approximately $13.2 million, resulting in a gain on sale of real estate totaling approximately $2.8 million. Reston Eastgate is a parcel of land containing approximately 21.7 acres located at 11011 Sunset Hills Road.March 31, 2019.
4. Leases
The Company must make estimates as to the collectability of its accrued rent and accounts receivable related to lease revenue. Management analyzes accrued rent and accounts receivable by considering tenant creditworthiness, current economic trends, including the impact of COVID-19 on tenants’ businesses, and changes in tenants’ payment patterns when evaluating the collectability of the tenant’s receivable balance, including the accrued rent receivable.

The following table summarizes the components of lease revenue recognized during the three months ended March 31, 2020 and 2019 included within the Company's Consolidated Statements of Operations (in thousands):
  Three months ended March 31,
Lease Revenue 2020 2019
Fixed contractual payments $586,957
 $553,986
Variable lease payments 123,154
 125,265
  $710,111
 $679,251

5. Investments in Unconsolidated Joint Ventures
The investments in unconsolidated joint ventures consist of the following at September 30, 2017March 31, 2020 and December 31, 2016:
2019:
 
Nominal %
Ownership
 Carrying Value of Investment (1)   Carrying Value of Investment (1)
Entity Properties  September 30, 2017 December 31, 2016 Properties 
Nominal %
Ownership
 March 31,
2020		 December 31,
2019
   (in thousands)   (in thousands)
Square 407 Limited Partnership Market Square North 50.0% $(8,474) $(8,134) Market Square North 50.0% $(4,469) $(4,872)
The Metropolitan Square Associates LLC Metropolitan Square 20.0% 2,537
 2,004
BP/CRF 901 New York Avenue LLC 901 New York Avenue 25.0%(2) (10,747) (10,564)
BP/CRF Metropolitan Square, LLC Metropolitan Square 20.0% 13,130
 9,134
901 New York, LLC 901 New York Avenue 25.0%(2) (12,069) (12,113)
WP Project Developer LLC Wisconsin Place Land and Infrastructure 33.3%(3) 40,158
 41,605
 Wisconsin Place Land and Infrastructure 33.3%(3) 36,446
 36,789
Annapolis Junction NFM, LLC Annapolis Junction 50.0%(4) 18,771
 20,539
Annapolis Junction NFM LLC Annapolis Junction 50.0%(4) 25,461
 25,391
540 Madison Venture LLC 540 Madison Avenue 60.0% 67,046
 67,816
 540 Madison Avenue 60.0%(5) 2,961
 2,953
500 North Capitol Venture LLC 500 North Capitol Street, NW 30.0% (3,642) (3,389) 500 North Capitol Street, NW 30.0% (5,688) (5,439)
501 K Street LLC 1001 6th Street 50.0%(5) 42,442
 42,528
 1001 6th Street 50.0%(6) 42,774
 42,496
Podium Developer LLC The Hub on Causeway 50.0% 55,917
 29,869
 The Hub on Causeway - Podium 50.0% 49,605
 49,466
Residential Tower Developer LLC The Hub on Causeway - Residential 50.0% 25,811
 20,803
 Hub50House 50.0% 54,414
 55,092
Hotel Tower Developer LLC The Hub on Causeway - Hotel 50.0% 1,596
 933
 The Hub on Causeway - Hotel Air Rights 50.0% 9,889
 9,883
Office Tower Developer LLC 100 Causeway Street 50.0% 57,079
 56,606
1265 Main Office JV LLC 1265 Main Street 50.0% 4,686
 4,779
 1265 Main Street 50.0% 3,636
 3,780
BNY Tower Holdings LLC Dock 72 at the Brooklyn Navy Yard 50.0%(6)67,901
 33,699
 Dock 72 50.0% 95,362
 94,804
BNYTA Amenity Operator LLC Dock 72 50.0% —
 —
CA-Colorado Center Limited Partnership Colorado Center 50.0% 263,834
 510,623
 Colorado Center 50.0% 251,146
 252,069
7750 Wisconsin Avenue LLC 7750 Wisconsin Avenue 50.0%(6)21,101
 N/A
 7750 Wisconsin Avenue 50.0% 57,003
 56,247
BP-M 3HB Venture LLC 3 Hudson Boulevard 25.0% 84,301
 67,499
SMBP Venture LP Santa Monica Business Park 55.0% 151,997
 163,937
Platform 16 Holdings LP Platform 16 55.0%(7)93,991
 29,501
Gateway Portfolio Holdings LLC Gateway Commons 50.0%(8)348,143
 N/A
   $588,937
 $753,111
   $1,355,112
 $933,223
 _______________
(1)Investments with deficit balances aggregating approximately $22.9$22.2 million and $22.1$22.4 million at September 30, 2017March 31, 2020 and December 31, 2016,2019, respectively, have been reflectedare included within Other Liabilities in the Company’s Consolidated Balance Sheets.
(2)The Company’s economic ownership has increased based on the achievement of certain return thresholds. At March 31, 2020 and December 31, 2019, the Company’s economic ownership was approximately 50%.
(3)The Company’s wholly-owned entitysubsidiary that owns the office component of the projectWisconsin Place Office also owns a 33.3% interest in the joint venture entity owningthat owns the land, parking garage and infrastructure of the project.
(4)
The joint venture owns four3 in-service buildings and two2 undeveloped land parcels.
(5)
The property was sold on June 27, 2019. As of March 31, 2020 and December 31, 2019, the investment is comprised of undistributed cash.

(6)Under the joint venture agreement for this land parcel, the partner will be entitled to up to two2 additional payments from the venture based on increases in total entitled square footage of the project above 520,000 square feet and achieving certain project returns at stabilization.
(6)(7)TheThis entity is a VIE (See Note 2).
(8)As a result of the partner’s deferred contribution, the Company has an initial approximately 55% interest in the joint venture. Future development projects will be owned 49% by the Company and 51% by its partner.
Certain of the Company’s unconsolidated joint venture agreements include provisions whereby, at certain specified times, each partner has the right to initiate a purchase or sale of its interest in the joint ventures. With limited exception,exceptions under these provisions, the Company is not compelled to purchase the interest of its outside joint venture partners. Under certain of the Company’s joint venture agreements, if certain return thresholds are achieved, the partners or the Company will be entitled to an additional promoted interest or payments.

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The combined summarized balance sheets of the Company’s unconsolidated joint ventures are as follows:
September 30, 2017 December 31, 2016March 31,
2020		 December 31,
2019
(in thousands)(in thousands)
ASSETS      
Real estate and development in process, net(1)$1,716,447
 $1,519,217
$4,469,460
 $3,904,400
Other assets374,484
 297,263
578,468
 502,706
Total assets$2,090,931
 $1,816,480
$5,047,928
 $4,407,106
LIABILITIES AND MEMBERS’/PARTNERS’ EQUITY      
Mortgage and notes payable, net$1,411,401
 $865,665
$2,312,938
 $2,218,853
Other liabilities(2)86,971
 67,167
638,892
 749,675
Members’/Partners’ equity592,559
 883,648
2,096,098
 1,438,578
Total liabilities and members’/partners’ equity$2,090,931
 $1,816,480
$5,047,928
 $4,407,106
Company’s share of equity$291,029
 $450,662
$956,136
 $591,905
Basis differentials (1)(3)297,908
 302,449
398,976
 341,318
Carrying value of the Company’s investments in unconsolidated joint ventures (2)(4)$588,937
 $753,111
$1,355,112
 $933,223
 _______________
(1)At March 31, 2020 and December 31, 2019, this amount includes right of use assets - finance leases totaling approximately $248.9 million and $383.9 million, respectively, and right of use assets - operating leases totaling approximately $11.9 million and $12.1 million, respectively.
(2)At March 31, 2020 and December 31, 2019, this amount includes lease liabilities - finance leases totaling approximately $391.0 million and $510.8 million, respectively, and lease liabilities - operating leases totaling approximately $17.4 million and $17.3 million, respectively.
(3)This amount represents the aggregate difference between the Company’s historical cost basis and the basis reflected at the joint venture level, which is typically amortized over the life of the related assets and liabilities. Basis differentials result from impairments of investments, acquisitions through joint ventures with no change in control and upon the transfer of assets that were previously owned by the Company into a joint venture. In addition, certain acquisition, transaction and other costs may not be reflected in the net assets at the joint venture level. At September 30, 2017March 31, 2020 and December 31, 2016,2019, there was an aggregate basis differential of approximately $324.4$310.1 million and $328.8$311.3 million, respectively, between the carrying value of the Company’s investment in the joint venture that owns Colorado Center and the joint venture’s basis in the assets and liabilities, whichliabilities. At March 31, 2020, there was an aggregate basis differential of approximately $55.7 million between the carrying value of the Company’s investment in the joint venture that owns Gateway Commons and the joint venture’s basis in the assets and liabilities. These basis differentials (excluding land) shall be amortized over the remaining lives of the related assets and liabilities.
(2)(4)Investments with deficit balances aggregating approximately $22.9$22.2 million and $22.1$22.4 million at September 30, 2017March 31, 2020 and December 31, 2016,2019, respectively, have been reflected within Other Liabilities in the Company’s Consolidated Balance Sheets.

The combined summarized statements of operations of the Company’s unconsolidated joint ventures are as follows:
Three months ended September 30, Nine months ended September 30,Three months ended March 31,
2017 2016 2017 20162020 2019
(in thousands)(in thousands)
Total revenue (1)$55,516
 $49,002
 $166,139
 $125,039
$93,203
 $82,955
Expenses          
Operating23,128
 21,753
 67,310
 54,779
35,401
 30,499
Depreciation and amortization16,440
 12,038
 44,973
 30,306
32,035
 28,646
Total expenses39,568
 33,791
 112,283
 85,085
67,436
 59,145
Operating income15,948
 15,211
 53,856
 39,954
Other expense       
Other income (expense)   
Interest expense13,088
 8,400
 31,815
 25,172
(22,583) (20,757)
Net income$2,860
 $6,811
 $22,041
 $14,782
$3,184

$3,053
          
Company’s share of net income$2,909
 $3,179
 $11,576
 $6,830
$1,252
 $1,584
Basis differential (2)(2,066) (1,715) (4,541) (1,341)(1,621) (1,371)
Income from unconsolidated joint ventures$843
 $1,464
 $7,035
 $5,489
Income (loss) from unconsolidated joint ventures$(369) $213
_______________ 
(1)Includes straight-line rent adjustments of approximately $5.1$9.7 million and $5.2$5.8 million for the three months ended September 30, 2017March 31, 2020 and 2016, respectively, and $16.4 million and $11.0 million for the nine months ended September 30, 2017 and 2016,2019, respectively.

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(2)Includes straight-line rent adjustments of approximately $0.7$0.5 million and $0.7$0.5 million for the three months ended September 30, 2017March 31, 2020 and 2016, respectively, and $2.2 million and $0.7 million for the nine months ended September 30, 2017 and 2016,2019, respectively. Also includes net above-/below-market rent adjustments of approximately $0.4$0.3 million and $0.5$0.4 million for the three months ended September 30, 2017March 31, 2020 and 2016, respectively, and $1.3 million and $0.5 million for the nine months ended September 30, 2017 and 2016,2019, respectively.
On July 10, 2017, the Company acquired an additional 0.2% interest in the unconsolidated joint venture that owns Colorado Center located in Santa Monica, California for approximately $2.1 million in cash. Following the acquisition, the Company owns a 50% interest in the joint venture. The Company continues to account for the joint venture under the equity method of accounting as there were no changes to the rights of the members as a result of the acquisition. On July 28, 2017, the unconsolidated joint venture obtained mortgage financing collateralized by the property totaling $550.0 million. The mortgage financing bears interest at a fixed rate of 3.56% per annum and matures on August 9, 2027. The loan requires interest-only payments during the 10-year term of the loan, with the entire principal amount due at maturity. The joint venture distributed to the partners the net proceeds from the financing totaling $502.0 million, of which the Company’s share was $251.0 million. Colorado Center is a six-building office complex that sits on a 15-acre site and contains an aggregate of approximately 1,118,000 net rentable square feet with an underground parking garage for 3,100 vehicles.
On August 7, 2017,January 28, 2020, the Company entered into a joint venture with a third party to own, operate and develop properties at its Gateway Commons complex located in South San Francisco, California. The Bernstein Companies to developCompany contributed its 601, 611 and 651 Gateway properties and development rights with an agreed upon value aggregating approximately 722,000$350.0 million for its 50% interest in the joint venture (See Note 3). 601, 611 and 651 Gateway consist of three Class A office properties aggregating approximately 768,000 net rentable square feet. The partner contributed 3 properties and development rights with an agreed upon value aggregating approximately $280.8 million at closing and will contribute cash totaling approximately $69.2 million in the future for its 50% ownership interest in the joint venture. As a result of the partner’s deferred contribution, the Company has an initial approximately 55% interest in the joint venture. Future development projects will be owned 49% by the Company and 51% by its partner.
On January 28, 2020, a joint venture in which the Company has a 55% interest commenced development of the first phase of its Platform 16 project located in San Jose, California. The first phase of the Platform 16 development project consists of an approximately 390,000 net rentable square foot (subject to adjustment based on finalized building design) build-to-suit Class A office building and a below-grade parking garage at 7750 Wisconsin Avenuegarage. Though the joint venture has completed site preparation work, in Bethesda, Maryland.consultation with the Company’s partner, the joint venture has paused construction activities and it will revisit its plans once the economic impact of COVID-19 becomes clearer. On February 20, 2020, the joint venture acquired the land underlying the ground lease for a purchase price totaling approximately $134.8 million. The joint venture entered intohad previously made a lease agreement with an affiliatedeposit totaling $15.0 million, which deposit was credited against the purchase price. Platform 16 consists of Marriott International, Inc. under which Marriott will lease 100%a parcel of land totaling approximately 5.6 acres that is expected to support the development of approximately 1.1 million square feet of commercial office building and garage for a term of 20 years, and the building will serve as Marriott’s new worldwide headquarters. Marriott has agreed to fund 100% of the related tenant improvement costs and leasing commissions for the office building. The Company will serve as co-development manager for the venture and expects to commence construction in 2018. The Company and The Bernstein Companies each own a 50% interest in the joint venture. For its initial contribution, The Bernstein Companies contributed land with an initial fair value of $72.0 million and cash and improvements aggregating approximately $4.9 million. The Company contributed cash and improvements aggregating approximately $20.8 million for its initial contribution, of which $11.0 million was distributed to The Bernstein Companies. In addition, the Company was required to fund $25.0 million into an escrow account to be used by the joint venture to fund future development costs. See also Note 7.space.
On September 6, 2017,March 18, 2020, a joint venture in which the Company has a 50% interest obtained construction financing with a total commitment of $204.6 millionextended the mortgage loan collateralized by its Hub on Causeway development project.  The construction financing bearsAnnapolis Junction Building Seven and Building Eight. At the time of the extension, the outstanding balance of the loan totaled approximately $34.6 million, bore interest at a variable rate equal to LIBOR plus 2.25%2.35% per annum and matured on March 6, 2020. The extended loan matures on September 6, 2021,June 30, 2020. Annapolis Junction Building Seven and Building Eight are Class A office properties with two, one-year extension options, subject to certain conditions.  As of September 30, 2017, the venture had not drawn any funds under the loan. The Hub on Causeway is an approximately 385,000127,000 and 126,000 net rentable square foot project containing retail and office spacefeet, respectively, located in Boston, Massachusetts. In connection with the construction financing, the Company obtained the right to complete the construction of the garage underneath the project being developed by an affiliate of its joint venture partner and obtain funding from the garage construction lender.  The Company agreed to guaranty completion of the garage to the construction lender and an affiliate of its partner agreed to reimburse the Company for the partner’s share of any payments made under the guaranty.
5. Debt
Mortgage Notes Payable, Net, Mezzanine Notes Payable and Outside Members’ Notes Payable
On June 7, 2017, the Company’s consolidated entity in which it has a 60% ownership interest and that owns 767 Fifth Avenue (the General Motors Building) located in New York City completed the refinancing of the indebtedness that had been secured by direct and indirect interests in the property. The new mortgage financing has a principal amount of $2.3 billion, bears interest at a fixed interest rate of 3.43% per annum and matures on June 9, 2027. The loan requires monthly interest-only payments during the 10-year term of the loan, with the entire principal amount being due at maturity.
The refinanced indebtedness consisted of (1) mortgage loans payable collateralized by the property aggregating $1.3 billion, (2) mezzanine loans payable aggregating $306.0 million, (3) additional mezzanine loans payable aggregating $294.0 million and (4) member loans aggregating $450.0 million with outstanding accrued interest payable totaling approximately $425.0 million. The mortgage loans required monthly interest-only payments at a weighted-average fixed interest rate of 5.95% per annum and were scheduled to mature on October 7, 2017. The mezzanine loans required interest-only payments at a weighted-average fixed interest rate of 6.02% per annum and were scheduled to mature on October 7, 2017. In addition, a subsidiary of the consolidated entity had acquired a lender’s interest in certain other mezzanine loans assumed during the acquisition of the property having an aggregate principal amount of $294.0 million and a stated interest rate of 6.02% per annum for a purchase price of approximately $263.1 million in cash. These mezzanine loans payable had been eliminated inAnnapolis, Maryland.

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consolidation and were canceled upon the refinancing of the indebtedness. The member loans bore interest at a fixed rate of 11.0% per annum and were scheduled to mature on June 9, 2017. A portion of the original purchase price of the property was financed with loans from the members on a pro rata basis equal to their percentage interest in the consolidated entity. The Company had eliminated in consolidation its member loan totaling $270.0 million and its share of the related accrued interest payable of approximately $255.0 million at the date of the refinancing. The remaining outside members’ notes payable and related accrued interest payable totaling $180.0 million and approximately $170.0 million, respectively, at the date of the refinancing had been reflected as Outside Members’ Notes Payable and within Accrued Interest Payable, respectively, on the Company’s Consolidated Balance Sheets. The net proceeds from the new financing were used to repay all of the outstanding accrued interest payable on the member loans and a portion of the outstanding principal balance of the member loans totaling approximately $176.1 million. In connection with the refinancing, the members of the Company’s consolidated entity contributed the remaining balance of the member notes payable totaling approximately $273.9 million (of which the Company’s share of approximately $164.4 million had been eliminated in consolidation) to equity in the consolidated entity (See Note 8). There was no prepayment penalty associated with the repayments. The Company recognized a gain from early extinguishment of debt totaling approximately $14.6 million primarily consisting of the acceleration of the remaining balance related to historical fair value debt adjustments.
Credit Facility
On April 24, 2017, Boston Properties Limited Partnership amended and restated its revolving credit agreement (as amended and restated, the “2017 Credit Facility”). Among other things, the 2017 Credit Facility (1) increased the total commitment of the revolving line of credit (the “Revolving Facility”) from $1.0 billion to $1.5 billion, (2) extended the maturity date from July 26, 2018 to April 24, 2022, (3) reduced the per annum variable interest rates, and (4) added a $500.0 million delayed draw term loan facility (the “Delayed Draw Facility”) that permits Boston Properties Limited Partnership, until the first anniversary of the closing date, to draw upon up to four times a minimum of $50.0 million (or, if less, the unused delayed draw term commitments), provided that amounts drawn under the Delayed Draw Facility and subsequently repaid may not be borrowed again. In addition, Boston Properties Limited Partnership may increase the total commitment under the 2017 Credit Facility by up to $500.0 million through increases in the Revolving Facility or the Delayed Draw Facility, or both, subject to syndication of the increase and other conditions.
At Boston Properties Limited Partnership’s option, loans under the Revolving Facility and Delayed Draw Facility will bear interest at a rate per annum equal to (1) (a) in the case of loans denominated in Dollars, Euro or Sterling, LIBOR, and (b) in the case of loans denominated in Canadian Dollars, CDOR, in each case, plus a margin ranging from 77.5 to 155 basis points for the Revolving Commitment and 85 to 175 basis points for the Delayed Draw Facility, based on Boston Properties Limited Partnership’s credit rating or (2) an alternate base rate equal to the greatest of (x) the Administrative Agent’s prime rate, (y) the Federal Funds rate plus 0.50% or (z) LIBOR for a one-month period plus 1.00%, in each case, plus a margin ranging from 0 to 55 basis points for the Revolving Facility and 0 to 75 basis points for the Delayed Draw Facility, based on Boston Properties Limited Partnership’s credit rating. The 2017 Credit Facility also contains a competitive bid option for up to 65% of the Revolving Facility that allows banks that are part of the lender consortium to bid to make loan advances to Boston Properties Limited Partnership at a reduced interest rate.
In addition, Boston Properties Limited Partnership is obligated to pay (1) in quarterly installments a facility fee on the total commitment under the Revolving Facility at a rate per annum ranging from 0.10% to 0.30% based on Boston Properties Limited Partnership’s credit rating, (2) an annual fee on the undrawn amount of each letter of credit equal to the LIBOR margin on the Revolving Facility and (3) a fee on the unused commitments under the Delayed Draw Facility equal to 0.15% per annum.
Based on Boston Properties Limited Partnership’s current credit rating, (1) the applicable Eurocurrency margins for the Revolving Facility and Delayed Draw Facility are 87.5 basis points and 95 basis points, respectively, (2) the alternate base rate margin is zero basis points for each of the Revolving Facility and Delayed Draw Facility and (3) the facility fee on the Revolving Facility commitment is 0.15% per annum.
The 2017 Credit Facility contains customary representations and warranties, affirmative and negative covenants and events of default provisions, including failure to pay indebtedness, breaches of covenants, and bankruptcy and other insolvency events, which could result in the acceleration of all amounts and cancellation of all commitments outstanding under the Credit Agreement. Among other covenants, the 2017 Credit Facility requires that Boston Properties Limited Partnership maintain on an ongoing basis: (1) a leverage ratio not to exceed 60%, however, the leverage ratio may increase to no greater than 65% provided that it is reduced back to 60% within one year, (2) a secured debt leverage ratio not to exceed 55%, (3) a fixed charge coverage ratio of at least 1.40, (4) an unsecured debt leverage ratio not to exceed 60%, however, the unsecured debt leverage ratio may increase to no greater than 65% provided that it is reduced to 60% within one year, (5) an unsecured debt interest coverage ratio of at least 1.75 and (6) limitations on permitted investments.

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6. Derivative Instruments and Hedging Activities
During the year ended December 31, 2015, Boston Properties Limited Partnership commenced a planned interest rate hedging program and entered into 17 forward-starting interest rate swap contracts that fixed the 10-year swap rate at a weighted-average rate of approximately 2.423% per annum on notional amounts aggregating $550.0 million. These interest rate swap contracts were entered into in advance of a financing with a target commencement date in September 2016 and maturity in September 2026. On August 17, 2016, in conjunction with Boston Properties Limited Partnership’s offering of its 2.750% senior unsecured notes due 2026, the Company terminated the forward-starting interest rate swap contracts and cash-settled the contracts by making cash payments to the counterparties aggregating approximately $49.3 million. The Company recognized approximately $0.1 million of losses on interest rate contracts during the year ended December 31, 2016 related to the partial ineffectiveness of the interest rate contracts. The Company is reclassifying into earnings, as an increase to interest expense, approximately $49.2 million (or approximately $4.9 million per year over the 10-year term of the 2.750% senior unsecured notes due 2026) of the amounts recorded in the consolidated balance sheets within accumulated other comprehensive loss, which represents the effective portion of the applicable interest rate contracts. In addition, 767 Fifth Partners LLC, which is a subsidiary of the consolidated entity in which the Company has a 60% interest and owns 767 Fifth Avenue (the General Motors Building) in New York City, entered into 16 forward-starting interest rate swap contracts (including two contracts entered into during the nine months ended September 30, 2016 with notional amounts aggregating $50.0 million) that fix the 10-year swap rate at a weighted-average rate of approximately 2.619% per annum on notional amounts aggregating $450.0 million. These interest rate swap contracts were entered into in advance of a financing with a target commencement date in June 2017 and maturity in June 2027. On April 24, 2017, the consolidated entity that owns 767 Fifth Avenue (the General Motors Building) located in New York City entered into an interest rate lock and commitment agreement with a group of lenders on a ten-year financing totaling $2.3 billion at a fixed interest rate of 3.43% per annum (See Note 5). In conjunction with the interest rate lock and commitment agreement, 767 Fifth Partners LLC terminated the forward-starting interest rate swap contracts and cash-settled the contracts by making cash payments to the counterparties aggregating approximately $14.4 million. 767 Fifth Partners LLC did not record any hedge ineffectiveness. The Company is reclassifying into earnings, as an increase to interest expense, approximately $14.4 million (or approximately $1.4 million per year over the 10-year term of the financing) of the amounts recorded in the Consolidated Balance Sheets within Accumulated Other Comprehensive Loss, which represents the effective portion of the applicable interest rate contracts.
At September 30, 2017, there were no outstanding interest rate swap contracts. 767 Fifth Partners LLC’s interest rate swap contracts consisted of the following at December 31, 2016 (dollars in thousands):
Derivative Instrument Aggregate Notional Amount Effective Date Maturity Date Strike Rate Range Balance Sheet Location Fair Value
    Low High  
             
Interest Rate Swaps $350,000
 June 7, 2017 June 7, 2027 2.418%-2.950% Other Liabilities $(8,773)
Interest Rate Swaps 100,000
 June 7, 2017 June 7, 2027 2.336%-2.388% Prepaid Expenses and Other Assets 509
  $450,000
           $(8,264)
Boston Properties Limited Partnership entered into the interest rate swap contracts designated and qualifying as cash flow hedges to reduce its exposure to the variability in future cash flows attributable to changes in the 10-year swap rate in contemplation of obtaining 10-year fixed-rate financing in September 2016. The Company’s 767 Fifth Partners LLC consolidated entity entered into the interest rate swap contracts designated and qualifying as cash flow hedges to reduce its exposure to the variability in future cash flows attributable to changes in the 10-year swap rate in contemplation of obtaining 10-year fixed-rate financing in June 2017. Boston Properties Limited Partnership has formally documented all of its relationships between hedging instruments and hedged items, as well as its risk-management objective and strategy for undertaking various hedge transactions. Boston Properties Limited Partnership also assesses and documents, both at the hedging instrument’s inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flows associated with the hedged items. All components of the forward-starting interest rate swap contracts were included in the assessment of hedge effectiveness. The Company accounts for the effective portion of changes in the fair value of a derivative in accumulated other comprehensive loss and subsequently reclassifies the effective portion to earnings over the term that the hedged transaction affects earnings. The Company accounts for the ineffective portion of changes in the fair value of a derivative directly in earnings. The Company classifies cash flows related to derivative instruments within its Consolidated Statements of Cash Flows consistent with the nature of the hedged item.

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The following table presents the location in the financial statements of the gains (losses) recognized related to the Company’s cash flow hedges for the three and nine months ended September 30, 2017 and 2016:
  Three months ended September 30, Nine months ended September 30,
  2017 2016 2017 2016
  (in thousands)
Amount of gain (loss) related to the effective portion recognized in other comprehensive loss $—
 $5,712
 $(6,133) $(85,285)
Amount of loss related to the effective portion subsequently reclassified to earnings $(1,665) $(1,190) $(4,368) $(2,445)
Amount of loss related to the ineffective portion and amount excluded from effectiveness testing $—
 $(140) $—
 $(140)
Boston Properties, Inc.
The following table reflects the changes in accumulated other comprehensive loss for the nine months ended September 30, 2017 and 2016 (in thousands):
Balance at December 31, 2016 $(52,251)
Effective portion of interest rate contracts (6,133)
Amortization of interest rate contracts 4,368
Other comprehensive loss attributable to noncontrolling interests 2,220
Balance at September 30, 2017 $(51,796)
   
Balance at December 31, 2015 $(14,114)
Effective portion of interest rate contracts (85,285)
Amortization of interest rate contracts 2,445
Other comprehensive loss attributable to noncontrolling interests 23,011
Balance at September 30, 2016 $(73,943)
Boston Properties Limited Partnership
The following table reflects the changes in accumulated other comprehensive loss for the nine months ended September 30, 2017 and 2016 (in thousands):
Balance at December 31, 2016 $(60,853)
Effective portion of interest rate contracts (6,133)
Amortization of interest rate contracts 4,368
Other comprehensive loss attributable to noncontrolling interests 2,272
Balance at September 30, 2017 $(60,346)
   
Balance at December 31, 2015 $(18,337)
Effective portion of interest rate contracts (85,285)
Amortization of interest rate contracts 2,445
Other comprehensive loss attributable to noncontrolling interests 16,134
Balance at September 30, 2016 $(85,043)


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7. Commitments and Contingencies
General
In the normal course of business, the Company guarantees its performance of services or indemnifies third parties against its negligence. In addition, in the normal course of business, the Company guarantees to certain tenants the obligations of its subsidiaries for the payment of tenant improvement allowances and brokerage commissions in connection with their leases and limited costs arising from delays in delivery of their premises. 
The Company has letter of credit and performance obligations related to lender and development requirements that total approximately $9.1$21.7 million.
Certain of the Company’s joint venture agreements include provisions whereby, at certain specified times, each partner has the right to initiate a purchase or sale of its interest in the joint ventures. With limited exception, under these provisions, the Company is not compelled to purchase the interest of its outside joint venture partners. From time to time, under certain of the Company’s joint venture agreements, if certain return thresholds are achieved, either the Company or its partners willmay be entitled to an additional promoted interest or payments. See also Note 8.
From time to time, the Company (or ventures in which the Company has an ownership interest) has agreed, and may in the future agree, to (1) guarantee portions of the principal, interest and other amounts in connection with their borrowings, (2) provide customary environmental indemnifications and nonrecourse carve-outs (e.g., guarantees against fraud, misrepresentation and bankruptcy) in connection with their borrowings and (3) provide guarantees to lenders, tenants and other third parties for the completion of development projects. The Company has agreements with its outside partners whereby the partners agree to reimburse the joint venture for their share of any payments made under the guarantee. In some cases, the Company earns a fee from the applicable joint venture for providing the guarantee.
In connection with the refinancing of 767 Fifth Avenue’s (the General Motors Building) secured loan by the Company’s consolidated joint venture entity, 767 Venture, LLC, the Company guaranteed the consolidated entity’s obligation to fund various reserves for tenant improvement costs and allowances, leasing commissions and free rent obligations in lieu of cash deposits. As of September 30, 2017,March 31, 2020, the maximum funding obligation under the guarantee was approximately $222.7$57.1 million. The Company earns a fee from the joint venture for providing the guarantee and has an agreement with the outside partners to reimburse the joint venture for their share of any payments made under the guarantee. As of September 30, 2017,March 31, 2020, no amounts related to the guarantee are recorded as liabilities in the Company’s consolidated financial statements.
Pursuant to the lease agreement with Marriott, the Company has guaranteed the completion of the office building and parking garage on behalf of its 7750 Wisconsin Avenue joint venture and has also agreed to provide anyprovided a financing guaranty that may beas required with respect to the third-party construction financing.  The Company earns a feefees from the joint venture for providing the guarantees and any amounts the Company pays under the guarantee(s) will be deemed to be capital contributions by the Company to the joint venture.  The Company has also agreed to fund construction costs through capital contributions to the joint venture in the event of unavailability or insufficiency of third-party construction financing.  In addition, the Company has guaranteed to Marriott, as hotel manager, the completion of a hotel being developed by an affiliate of The Bernstein Companies (the Company’s partner in the 7750 Wisconsin Avenue joint venture) adjacent to the office property, for which the Company earns a fee from the affiliate of The Bernstein Companies.  In addition, the Company entered into agreements with affiliates of The Bernstein Companies whereby the Company could be required to act as a mezzanine and/or mortgage lender and finance the construction of the hotel property.  An affiliate of The Bernstein Companies has exercised an option to borrow up to $15.0 million from the Company under such agreements. As of March 31, 2020, 0 funding request has been received by the Company. To secure such financing arrangements, affiliates of The Bernstein Companies are required to provide certain security, which varies depending on the specific loan, by pledges of their equity interest in the office property, a fee mortgage on the hotel property, or both. As of September 30, 2017, noMarch 31, 2020, 0 amounts related to the contingent aspect of any of the guarantees are recorded as liabilities in the Company’s consolidated financial statements. See also Note 4.
In connection with the sale and development of the Company’s 6595 Springfield Center Drive development project, the Company has guaranteed the completion of the project and the payment of certain cost overruns in accordance with the development management agreement with the buyer. Although the project has been sold and the lease with the Federal Government tenant has been assigned to the buyer, pursuant to the terms of the Federal Government lease, the Federal Government tenant is not obligated to release the prior owner/landlord from such landlord’s obligations under the lease until completion of the construction. As a result, the entity which previously

owned the land remains liable to the Federal Government tenant for the completion of the construction obligations under the lease.  The buyer is obligated to fund the balance of the costs to meet such construction obligations, subject to the Company’s obligation to fund cost overruns (if any), as noted above. An affiliate of the buyer has provided a guaranty of the obligations of the buyer to fund such construction costs and the buyer has agreed to use commercially reasonable efforts to require the construction lender to provide certain remedies to the Company in the event the buyer does not fund such construction obligations. As of March 31, 2020, 0 amounts related to the contingent aspect of the guarantee are recorded as a liability in the Company’s consolidated financial statements.
In connection with the redevelopment of the Company’s 325 Main Street property located in Cambridge, Massachusetts, the Company is required, pursuant to the local zoning ordinance, to commence construction of a residential building of at least 200,000 square feet with 25% of the project designated as income-restricted (with a minimum of 20% of the square footage devoted to home ownership units) prior to the occupancy of the 325 Main Street property. 325 Main Street consisted of an approximately 115,000 net rentable square foot Class A office property that was demolished and is being developed into an approximately 420,000 net rentable square foot Class A office property, including approximately 41,000 net rentable square feet of retail space.
In 2009, the Company filed a general unsecured creditor’s claim against Lehman Brothers, Inc. for approximately $45.3 million related to its rejection of a lease at 399 Park Avenue in New York City. On January 10, 2014, the trustee for the liquidation of the business of Lehman Brothers allowed the Company’s claim in the amount of approximately $45.2 million. During the years 2014 and 2015,through 2018, the Company received distributions ofaggregating approximately $7.7 million and $8.1 million, respectively. On July 5, 2016, the Company received a fourth interim distribution totaling approximately $1.4 million. On May 19, 2017, the Company received a fifth interim distribution totaling approximately $0.4$18.0 million, leaving a remaining claim of approximately $27.6$27.2 million. The Company will continue to evaluate whether to attempt to sell the remaining claim or wait until the trustee distributes proceeds from the Lehman Brothers estate. Given the inherent uncertainties in bankruptcy proceedings, there can be no assurance as to the timing or amount of additional proceeds, if any, that the Company may ultimately realize on the remaining claim, whether by sale to a third party or by one or more distributions from the trustee. Accordingly, the Company has not recorded any estimated recoveries associated with this gain contingency within its Consolidated Financial Statements at September 30, 2017.

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March 31, 2020.
Insurance
The Company carries insurance coverage on its properties, including those under development, of types and in amounts and with deductibles that it believes are in line with coverage customarily obtained by owners of similar properties. Certain properties owned in joint ventures with third parties are insured by the third party partner with insurance coverage of types and in amounts and with deductibles the Company believes are in line with coverage customarily obtained by owners of similar properties. In response to the uncertainty in the insurance market following the terrorist attacks of September 11, 2001, the Federal Terrorism Risk Insurance Act (as amended, “TRIA”) was enacted in November 2002 to require regulated insurers to make available coverage for “certified” acts of terrorism (as defined by the statute). The expiration date of TRIA was extended to December 31, 2014 by the Terrorism Risk Insurance Program Reauthorization Act of 2007 and further extended to December 31, 2020 by the Terrorism Risk Insurance Program Reauthorization Act of 2015 (“TRIPRA”), and the Company can provide no assurance that it will be extended further. Currently, the Company’s property insurance program per occurrence limits are $1.0 billion for its portfolio insurance program, including coverage for acts of terrorism other than nuclear, biological, chemical or radiological terrorism (“Terrorism Coverage”). The Company also carries $250 million of Terrorism Coverage for 601 Lexington Avenue, New York, New York (“601 Lexington Avenue”) in excess of the $1.0 billionof coverage in the Company’s property insurance program. Certain properties, including the General Motors Building located at 767 Fifth Avenue in New York, New York (“767 Fifth Avenue”), are currently insured in separate insurance programs. The property insurance program per occurrence limits for 767 Fifth Avenue are $1.625 billion, including Terrorism Coverage. The Company also currently carries nuclear, biological, chemical and radiological terrorism insurance coverage for acts of terrorism certified under TRIAthe Federal Terrorism Risk Insurance Act (as amended, “TRIA”) (“NBCR Coverage”), which is provided by IXP as a direct insurer, for the properties in ourthe Company’s portfolio, including 767 Fifth Avenue, but excluding certain other properties owned in joint ventures with third parties or which the Company manages. The per occurrence limit for NBCR Coverage is $1.0 billion. Under TRIA, after the payment of the required deductible and coinsurance, the NBCR Coverage provided by IXP is backstopped by the Federal Government if the aggregate industry insured losses resulting from a certified act of terrorism exceed a “program trigger.” In 2017, theThe program trigger is $140$200 million, and the coinsurance is 17%, however, both will increase in subsequent years pursuant20% and the deductible is 20% of the premiums earned by the insurer for the year prior to TRIPRA.a claim. If the Federal Government pays out for a loss under TRIA, it is mandatory that the Federal Government recoup the full amount of the loss from insurers offering TRIA coverage after the payment of the loss pursuant to a formula in TRIPRA.TRIA. The Company may elect to terminate the NBCR Coverage if the Federal Government seeks recoupment for losses paid under TRIA, if TRIA is not extended after its expiration on December 31, 2027, if there is a change in its portfolio or for any other reason. The Company intends to continue to monitor the scope, nature and cost of available terrorism insurance and maintain terrorism insurance in amounts and on terms that are commercially reasonable.insurance.
The Company also currently carries earthquake insurance on its properties located in areas known to be subject to earthquakes in an amount and subject to self-insurance that the Company believes is commercially reasonable.earthquakes. In addition, this insurance is subject to a deductible in the amount of 3% of the value of the affected property. Specifically, the Company currently carries earthquake insurance which covers its San Francisco (including Salesforce Tower) and Los Angeles regions with a $240 million (increased from $170 million on March 1, 2017) per occurrence limit, and a $240 million (increased from $170 million on March 1, 2017) annual aggregate limit, $20 million of which is provided by IXP, as a direct insurer. Prior to March 1, 2017, the builders risk policy maintained for the development of Salesforce Tower in San Francisco included a $60 million per occurrence and annual aggregate limit of earthquake coverage. The amount of the Company’s earthquake insurance coverage may not be sufficient to cover losses from earthquakes. In addition, the amount of earthquake coverage could impact the Company’s ability to finance properties subject to earthquake risk. The Company may discontinue

earthquake insurance or change the structure of its earthquake insurance program on some or all of its properties in the future if the premiums exceed the Company’s estimation of the value of the coverage.
IXP, a captive insurance company which is a wholly-owned subsidiary of the Company, acts as a direct insurer with respect to a portion of the Company’s earthquake insurance coverage for its Greater San Francisco and Los Angeles properties and the Company’s NBCR Coverage. Insofar as the Company owns IXP, it is responsible for its liquidity and capital resources, and the accounts of IXP are part of the Company’s consolidated financial statements. In particular, if a loss occurs which is covered by the Company’s NBCR Coverage but is less than the applicable program trigger under TRIA, IXP would be responsible for the full amount of the loss without any backstop by the Federal Government. IXP would also be responsible for any recoupment charges by the Federal Government in the event losses are paid out and its insurance policy is maintained after the payout by the Federal Government. If the Company experiences a loss and IXP is required to pay under its insurance policy, the Company would ultimately record the loss to the extent of the required payment. Therefore, insurance coverage provided by IXP should not be considered as the equivalent of third-party insurance, but rather as a modified form of self-insurance. In addition, Boston Properties Limited Partnership has issued a guarantee to cover liabilities of IXP in the amount of $20.0 million.
The mortgages onDue to the current COVID-19 pandemic, the Company anticipates the possibility of business interruption, loss of lease revenue and/or other associated expenses related to the Company’s properties typically contain requirements concerningoperations across its portfolio. Because this is an ongoing situation it is not yet possible to quantify the financial ratingsCompany’s losses and expenses, which continue to develop. Because of the insurers who provide policies covering the property. The Company provides the lenders on a regular basis with the identitycomplexity of the insurance companies in the Company’s insurance programs. The ratings of somepolicies and limited precedent for claims being made related to pandemics, it is not yet possible to determine if such losses and expenses will be covered by the Company’s insurance policies. Therefore, at this time, the Company is providing notice to the applicable insurers of the Company’s insurers are below the

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rating requirementspotential for claims in some oforder to protect the Company’s loan agreements and the lenders for these loans could attempt to claim that an event of default has occurredrights under the loan. The Company believes it could obtain insurance with insurers which satisfy the rating requirements. Additionally, in the future, the Company’s ability to obtain debt financing secured by individual properties, or the terms of such financing, may be adversely affected if lenders generally insist on ratings for insurers or amounts of insurance which are difficult to obtain or which result in a commercially unreasonable premium. There can be no assurance that a deficiency in the financial ratings of one or more of the Company’s insurers will not have a material adverse effect on the Company.its policies.
The Company continues to monitor the state of the insurance market in general, and the scope and costs of coverage for acts of terrorism, and California earthquake risk and pandemics, in particular, but the Company cannot anticipate what coverage will be available on commercially reasonable terms in future policy years. There are other types of losses, such as from wars, for which the Company cannot obtain insurance at all or at a reasonable cost. With respect to such losses and losses from acts of terrorism, earthquakes or other catastrophic events, if the Company experiences a loss that is uninsured or that exceeds policy limits, the Company could lose the capital invested in the damaged properties, as well as the anticipated future revenues from those properties. Depending on the specific circumstances of each affected property, it is possible that the Company could be liable for mortgage indebtedness or other obligations related to the property. Any such loss could materially and adversely affect the Company’s business and financial condition and results of operations.
8.7. Noncontrolling Interests
Noncontrolling interests relate to the interests in Boston Properties Limited Partnership not owned by Boston Properties, Inc. and interests in consolidated property partnerships not wholly-owned by the Company. As of September 30, 2017,March 31, 2020, the noncontrolling interests in Boston Properties Limited Partnership consisted of 16,812,32916,421,888 OP Units, 816,9821,343,299 LTIP Units (including 118,067105,080 2012 OPP Units, 85,40564,468 2013 MYLTIP Units, and 25,10723,100 2014 MYLTIP Units), 366,618Units, 28,724 2015 MYLTIP Units, 473,36089,791 2016 MYLTIP Units and 400,000116,167 2017 MYLTIP Units), 336,195 2018 MYLTIP Units, 220,734 2019 MYLTIP Units and 203,278 2020 MYLTIP Units held by parties other than Boston Properties, Inc.
Noncontrolling Interest—Common Units
During the ninethree months ended September 30, 2017, 492,617March 31, 2020, 461,856 OP Units were presented by the holders for redemption (including 33,46671,303 OP Units issued upon conversion of LTIP Units, 2012 OPP Units, 2013 MYLTIP Units, 2014 MYLTIP Units, 2016 MYLTIP Units and 20142017 MYLTIP Units) and were redeemed by Boston Properties, Inc. in exchange for an equal number of shares of Common Stock.
At September 30, 2017,March 31, 2020, Boston Properties Limited Partnership had outstanding 366,618 2015336,195 2018 MYLTIP Units, 473,360 2016220,734 2019 MYLTIP Units and 400,000 2017203,278 2020 MYLTIP Units. Prior to the applicable measurement date (February 4,5, 2021 for 2018 for 2015 MYLTIP Units, February 9,4, 2022 for 2019 for 2016 MYLTIP Units and February 6,3, 2023 for 2020 for 2017 MYLTIP Units), holders of MYLTIP Units will be entitled to receive per unit distributions equal to one-tenth (10%) of the regular quarterly distributions payable on an OP Unit, but will not be entitled to receive any special distributions. After the measurement date, the number of MYLTIP Units, both vested and unvested, that MYLTIP award recipients

have earned, if any, based on the establishment of a performance pool, will be entitled to receive distributions in an amount per unit equal to distributions, both regular and special, payable on an OP Unit.
On February 3, 2017,6, 2020, the measurement period for the Company’s 20142017 MYLTIP awards ended and, based on Boston Properties, Inc.’s relative TSR performance, the final awards were determined to be 27.7%83.8% of target or an aggregate of approximately $3.5$17.6 million(after giving effect to voluntary employee separations and the unallocated reserve)separations). As a result, an aggregate of 447,386 2014270,942 2017 MYLTIP Units that had been previously granted were automatically forfeited.
The following table presents Boston Properties Limited Partnership’s distributions on the OP Units and LTIP Units (including the 2012 OPP Units, and 2013 - 2016 MYLTIP Units and, after the February 3, 20176, 2020 measurement date, the 20142017 MYLTIP Units) and its distributions on the 20142017 MYLTIP Units (prior to the February 3, 20176, 2020 measurement date), 20152018 MYLTIP Units, 20162019 MYLTIP Units and 20172020 MYLTIP Units (after the February 7, 20174, 2020 issuance date) paid in 2017:that occurred during the three months ended March 31, 2020:
Record Date Payment Date Distributions per OP Unit and LTIP Unit Distributions per MYLTIP Unit
March 31, 2020 April 30, 2020 
$0.98
 
$0.098
December 31, 2019 January 30, 2020 
$0.98
 
$0.098

Record Date Payment Date Distributions per OP Unit and LTIP Unit Distributions per MYLTIP Unit
September 29, 2017 October 31, 2017 
$0.75
 
$0.075
June 30, 2017 July 31, 2017 
$0.75
 
$0.075
March 31, 2017 April 28, 2017 
$0.75
 
$0.075
December 31, 2016 January 30, 2017 
$0.75
 
$0.075

The following table presents Boston Properties Limited Partnership’s distributions on the OP Units and LTIP Units (including the 2012 OPP Units, 2013 - 2015 MYLTIP Units and, after the February 9, 2019 measurement date, the 2016 MYLTIP Units) and its distributions on the 2016 MYLTIP Units (prior to the February 9, 2019 measurement date), 2017 MYLTIP Units, 2018 MYLTIP Units and 2019 MYLTIP Units (after the February 5, 2019 issuance date) that occurred during the three months ended March 31, 2019:
29
Record Date Payment Date Distributions per OP Unit and LTIP Unit Distributions per MYLTIP Unit
March 29, 2019 April 30, 2019 
$0.95
 
$0.095
December 31, 2018 January 30, 2019 
$0.95
 
$0.095


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A holder of an OP Unit may present the OP Unit to Boston Properties Limited Partnership for redemption at any time (subject to restrictions agreed upon at the time of issuance of OP Units to particular holders that may restrict such redemption right for a period of time, generally one1 year from issuance). Upon presentation of an OP Unit for redemption, Boston Properties Limited Partnership must redeem the OP Unit for cash equal to the then value of a share of common stockCommon Stock of Boston Properties, Inc. Boston Properties, Inc. may, in its sole discretion, elect to assume and satisfy the redemption obligation by paying either cash or issuing one1 share of Common Stock. The value of the OP Units not(not owned by Boston Properties, Inc. and LTIP Units (including the 2012 OPP Units, 2013 MYLTIP Units and 2014- 2017 MYLTIP Units), assuming that all conditions had been met for the conversion thereof,thereof) had all of such units been redeemed at September 30, 2017March 31, 2020 was approximately $2.2$1.6 billion based on the last reported price of a share of Common Stock on the New York Stock Exchange of $122.88$92.23 per share on September 30, 2017.
Boston Properties Limited Partnership
The following table reflects the activity of noncontrolling interests—redeemable partnership units of Boston Properties Limited Partnership for the nine months ended September 30, 2017 and 2016 (in thousands):
Balance at December 31, 2016$2,262,040
Contributions31,465
Net income40,350
Distributions(40,292)
Conversion of redeemable partnership units(16,812)
Unearned compensation(5,194)
Cumulative effect of a change in accounting principle(1,763)
Accumulated other comprehensive income52
Adjustment to reflect redeemable partnership units at redemption value(103,556)
Balance at September 30, 2017$2,166,290
  
Balance at December 31, 2015$2,286,689
Contributions31,492
Net income42,120
Distributions(35,500)
Conversion of redeemable partnership units(5,881)
Unearned compensation(10,072)
Accumulated other comprehensive loss(6,877)
Adjustment to reflect redeemable partnership units at redemption value151,545
Balance at September 30, 2016$2,453,516
March 31, 2020.
Noncontrolling Interests—Property Partnerships
The noncontrolling interests in property partnerships consist of the outside equity interests in ventures that are consolidated with the financial results of the Company because the Company exercises control over the entities that own the properties. The equity interests in these ventures that are not owned by the Company, totaling approximately $1.7 billion at September 30, 2017 and $1.5$1.7 billion at March 31, 2020 and December 31, 2016,2019, are included in Noncontrolling Interests—Property Partnerships inon the accompanying Consolidated Balance Sheets.
On May 12, 2016, the partners in the Company’s consolidated entity that owns Salesforce Tower located in San Francisco, California amended the venture agreement. Under the venture agreement, if the Company elects to fund the construction of Salesforce Tower without a construction loan (or a construction loan of less than 50% of project costs) and the venture has commenced vertical construction of the project, then the partner’s capital funding obligation shall be limited, in which event the Company shall fund up to 2.5% of the total project costs (i.e., 50% of the partner’s 5% interest in the venture) in the form of a loan to the partner. This loan would bear interest at the then prevailing market interest rates for construction loans. Under the amended agreement, the partners have agreed to structure this funding by the Company as preferred equity rather than a loan. The preferred equity contributed by the Company shall earn a preferred return equal to LIBOR plus 3.00% per annum and shall be payable to the Company out of any distributions to which the partner would otherwise be entitled until such preferred equity and preferred return have been repaid to the Company. As of September 30, 2017, the Company had contributed an aggregate of approximately $15.2 million of preferred equity to the venture. Also, under the agreement, (1) the

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partner has the right to cause the Company to purchase the partner’s interest after the defined stabilization date and (2) the Company has the right to acquire the partner’s interest on the third anniversary of the stabilization date, in each case at an agreed upon purchase price or appraised value; provided, however, if certain return thresholds are achieved the partner will be entitled to an additional promoted interest.
On June 6, 2017, in conjunction with the refinancing of the indebtedness of the Company’s consolidated entity in which it has a 60% interest and that owns 767 Fifth Avenue (the General Motors Building) located in New York City, the members of the consolidated entity amended the limited liability company agreement to provide for the contribution of the remaining unpaid principal balance of the members’ notes payable totaling approximately $273.9 million (of which the Company’s share of approximately $164.4 million is eliminated in consolidation) to equity in the consolidated entity, resulting in an increase of approximately $109.6 million to Noncontrolling Interests in Property Partnerships on the Company’s Consolidated Balance Sheets (See Note 5). There were no changes to the ownership interests or rights of the members as a result of the amendment.
The following table reflects the activity of the noncontrolling interests in property partnerships for the nine months ended September 30, 2017 and 2016 (in thousands):
Balance at December 31, 2016$1,530,647
Capital contributions (1)147,772
Net income33,967
Accumulated other comprehensive loss(2,272)
Distributions(41,439)
Balance at September 30, 2017$1,668,675
  
Balance at December 31, 2015$1,574,400
Capital contributions5,417
Net income53
Accumulated other comprehensive loss(16,134)
Distributions(38,694)
Balance at September 30, 2016$1,525,042
 _______________
(1)Includes the contribution of the remaining unpaid principal balance of the members’ notes payable totaling $109,576 to equity in the consolidated entity that owns 767 Fifth Avenue (the General Motors Building).

9.8. Stockholders’ Equity / Partners’ Capital
Boston Properties, Inc.
As of September 30, 2017,March 31, 2020, Boston Properties, Inc. had 154,322,266155,314,555 shares of Common Stock outstanding.
As of September 30, 2017,March 31, 2020, Boston Properties, Inc. owned 1,719,5161,730,797 general partnership units and 152,602,750153,583,758 limited partnership units ofin Boston Properties Limited Partnership.

On June 2, 2017, Boston Properties, Inc. renewed its “at the market” (“ATM”) stock offering program through which it may sell from time to time up to an aggregate of $600.0 million of its common stock through sales agents over a three-year3-year period. This program replacesreplaced the Company’s prior $600.0 million ATM stock offering program that was scheduled to expire on June 3, 2017. The Company intends to use the net proceeds from any offering for general business purposes, which may include investment opportunities and debt reduction. No shares of common stock have been issued under this ATM stock offering program.
During the ninethree months ended September 30, 2017,March 31, 2020, Boston Properties, Inc. issued 492,61743,792 shares of Common Stock upon the exercise of options to purchase Common Stock.
During the three months ended March 31, 2020, Boston Properties, Inc. issued 461,856 shares of Common Stock, in connection with the redemption of an equal number of redeemable OP Units from limited partners.

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The following table presents Boston Properties, Inc.’s dividends per share and Boston Properties Limited Partnership’s distributions per OP Unit and LTIP Unit paid or declared in 2017:2020 and during the three months ended March 31, 2019:
Record Date Payment Date Dividend (Per Share)
 Distribution (Per Unit)
March 31, 2020 April 30, 2020 
$0.98
 
$0.98
December 31, 2019 January 30, 2020 
$0.98
 
$0.98
       
March 29, 2019 April 30, 2019 
$0.95
 
$0.95
December 31, 2018 January 30, 2019 
$0.95
 
$0.95
Record Date Payment Date Dividend (Per Share)
 Distribution (Per Unit)
September 29, 2017 October 31, 2017 
$0.75
 
$0.75
June 30, 2017 July 31, 2017 
$0.75
 
$0.75
March 31, 2017 April 28, 2017 
$0.75
 
$0.75
December 31, 2016 January 30, 2017 
$0.75
 
$0.75

Preferred Stock
As of September 30, 2017,March 31, 2020, Boston Properties, Inc. had 80,000 shares (8,000,000 depositary shares each representing 1/100th of a share) outstanding of its 5.25% Series B Cumulative Redeemable Preferred Stock with a liquidation preference of $2,500.00 per share ($25.00 per depositary share). Boston Properties, Inc. pays cumulative cash dividends on the Series B Preferred Stock at a rate of 5.25% per annum of the $2,500.00$2,500.00 liquidation preference per share. Boston Properties, Inc. maydid not have the right to redeem the Series B Preferred Stock prior to March 27, 2018, except in certain circumstances relating to the preservation of Boston Properties, Inc.’s REIT status. On orand after March 27, 2018, Boston Properties, Inc., at its option, may redeem the Series B Preferred Stock for a cash redemption price of $2,500.00$2,500.00 per share ($($25.00 per depositary share), plus all accrued and unpaid dividends. The Series B Preferred Stock is not redeemable by the holders, has no maturity date and is not convertible into any other security of Boston Properties, Inc. or its affiliates.
The following table presents Boston Properties Inc.’s dividends per share on its outstanding Series B Preferred Stock paid or declared during 2017:2020 and during the three months ended March 31, 2019:
Record Date Payment Date Dividend (Per Share)
November 3, 2017November 15, 2017
$32.8125
August 4, 2017August 15, 2017
$32.8125

May 5, 20171, 2020 May 15, 20172020 

$32.8125

February 4, 2020February 18, 2020
$32.8125
May 3, 20172019May 15, 2019
$32.8125
February 4, 2019 February 15, 20172019 

$32.8125



10.9. Earnings Per Share / Common Unit
Boston Properties, Inc.
The following table provides a reconciliation of both the net income attributable to Boston Properties, Inc. common shareholders and the number of common shares used in the computation of basic earnings per share (“EPS”), which is calculated by dividing net income attributable to Boston Properties, Inc. common shareholders by the weighted-average number of common shares outstanding during the period. Unvested share-based payment

awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are also participating securities. As such, unvested restricted common stock of the Company,Boston Properties, Inc. and Boston Properties Limited Partnership’s LTIP Units, 2012 OPP Units and MYLTIP Units are considered participating securities. Participating securities are included in the computation of basic EPS of the CompanyBoston Properties, Inc. using the two-classtwo-class method. Participating securities are included in the computation of diluted EPS of the CompanyBoston Properties, Inc. using the if-converted method if the impact is dilutive. Because the 2012 OPP Units and 2013 MYLTIP Units and 2014- 2017 MYLTIP Units required, and the 2015-20172018 - 2020 MYLTIP Units require, the CompanyBoston Properties, Inc. to outperform absolute and relative return thresholds, unless such thresholds have been met by the end of the applicable reporting period, the CompanyBoston Properties, Inc. excludes such units from the diluted EPS calculation. Other potentially dilutive common shares, including stock options, restricted stock and other securities of Boston Properties Limited Partnership that are exchangeable for the Boston Properties, Inc.’s Common Stock, and the related impact on earnings, are considered when calculating diluted EPS.
 Three months ended March 31, 2020
 
Income
(Numerator)
 
Shares
(Denominator)
 
Per Share
Amount
 (in thousands, except for per share amounts)
Basic Earnings:     
Net income attributable to Boston Properties, Inc. common shareholders$497,496
 155,011
 $3.21
Allocation of undistributed earnings to participating securities(1,011) —
 (0.01)
Net income attributable to Boston Properties, Inc. common shareholders$496,485
 155,011
 $3.20
Effect of Dilutive Securities:     
Stock Based Compensation—
 247
 —
Diluted Earnings:     
Net income attributable to Boston Properties, Inc. common shareholders$496,485
 155,258
 $3.20
      
 Three months ended March 31, 2019
 
Income
(Numerator)
 
Shares
(Denominator)
 
Per Share
Amount
 (in thousands, except for per share amounts)
Basic Earnings:     
Net income attributable to Boston Properties, Inc. common shareholders$98,105
 154,525
 $0.63
Effect of Dilutive Securities:     
Stock Based Compensation—
 319
 —
Diluted Earnings:     
Net income attributable to Boston Properties, Inc. common shareholders$98,105
 154,844
 $0.63





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 Three months ended September 30, 2017
 
Income
(Numerator)
 
Shares
(Denominator)
 
Per Share
Amount
 (in thousands, except for per share amounts)
Basic Earnings:     
Net income attributable to Boston Properties, Inc. common shareholders$117,337
 154,355
 $0.76
Allocation of undistributed earnings to participating securities(7) —
 —
Net income attributable to Boston Properties, Inc. common shareholders$117,330
 154,355
 $0.76
Effect of Dilutive Securities:     
Stock Based Compensation—
 128
 —
Diluted Earnings:     
Net income attributable to Boston Properties, Inc. common shareholders$117,330
 154,483
 $0.76
      
 Three months ended September 30, 2016
 
Income
(Numerator)
 
Shares
(Denominator)
 
Per Share
Amount
 (in thousands, except for per share amounts)
Basic Earnings:     
Net income attributable to Boston Properties, Inc. common shareholders$76,753
 153,754
 $0.50
Effect of Dilutive Securities:     
Stock Based Compensation—
 382
 —
Diluted Earnings:     
Net income attributable to Boston Properties, Inc. common shareholders$76,753
 154,136
 $0.50
      
 Nine months ended September 30, 2017
 
Income
(Numerator)
 
Shares
(Denominator)
 
Per Share
Amount
 (in thousands, except for per share amounts)
Basic Earnings:     
Net income attributable to Boston Properties, Inc. common shareholders$348,086
 154,132
 $2.26
Allocation of undistributed earnings to participating securities(15) —
 —
Net income attributable to Boston Properties, Inc. common shareholders$348,071
 154,132
 $2.26
Effect of Dilutive Securities:     
Stock Based Compensation—
 212
 —
Diluted Earnings:     
Net income attributable to Boston Properties, Inc. common shareholders$348,071
 154,344
 $2.26
      

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 Nine months ended September 30, 2016
 
Income
(Numerator)
 
Shares
(Denominator)
 
Per Share
Amount
 (in thousands, except for per share amounts)
Basic Earnings:     
Net income attributable to Boston Properties, Inc. common shareholders$355,114
 153,681
 $2.31
Allocation of undistributed earnings to participating securities(189) —
 —
Net income attributable to Boston Properties, Inc. common shareholders$354,925
 153,681
 $2.31
Effect of Dilutive Securities:     
Stock Based Compensation—
 290
 —
Diluted Earnings:     
Net income attributable to Boston Properties, Inc. common shareholders$354,925
 153,971
 $2.31
Boston Properties Limited Partnership
The following table provides a reconciliation of both the net income attributable to Boston Properties Limited Partnership common unitholders and the number of common units used in the computation of basic earnings per common unit, which is calculated by dividing net income attributable to Boston Properties Limited Partnership common unitholders by the weighted-average number of common units outstanding during the period. Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are also participating securities. As such, unvested restricted common stock of Boston Properties, Inc. and Boston Properties Limited Partnership’s LTIP Units, 2012 OPP Units and MYLTIP Units are considered participating securities. Participating securities are included in the computation of basic earnings per common unit using the two-classtwo-class method. Participating securities are included in the computation of diluted earnings per common unit using the if-converted method if the impact is dilutive. Because the 2012 OPP Units and 2013 MYLTIP Units and 2014- 2017 MYLTIP Units required, and the 2015-20172018 - 2020 MYLTIP Units require, Boston Properties, Inc. to outperform absolute and relative return thresholds, unless such thresholds have been met by the end of the applicable reporting period, Boston Properties Limited Partnership excludes such units from the diluted earnings per common unit calculation. Other potentially dilutive common units and the related impact on earnings are considered when calculating diluted earnings per common unit. Included in the number of units (the denominator) below are approximately 17,336,00017,538,000 and 17,625,00017,606,000 redeemable common units for the three months ended September 30, 2017March 31, 2020 and 2016, respectively, and 17,517,000 and 17,672,000 redeemable common units for the nine months ended September 30, 2017 and 2016,2019, respectively.
Three months ended September 30, 2017Three months ended March 31, 2020
Income
(Numerator)
 
Units
(Denominator)
 
Per Unit
Amount
Income
(Numerator)
 
Units
(Denominator)
 
Per Unit
Amount
(in thousands, except for per unit amounts)(in thousands, except for per unit amounts)
Basic Earnings:          
Net income attributable to Boston Properties Limited Partnership common unitholders$132,693
 171,691
 $0.77
$566,333
 172,549
 $3.28
Allocation of undistributed earnings to participating securities(8) —
 —
(1,126) —
 —
Net income attributable to Boston Properties Limited Partnership common unitholders$132,685
 171,691
 $0.77
$565,207
 172,549
 $3.28
Effect of Dilutive Securities:          
Stock Based Compensation—
 128
 —
—
 247
 (0.01)
Diluted Earnings:          
Net income attributable to Boston Properties Limited Partnership common unitholders$132,685
 171,819
 $0.77
$565,207
 172,796
 $3.27
34
 Three months ended March 31, 2019
 
Income
(Numerator)
 
Units
(Denominator)
 
Per Unit
Amount
 (in thousands, except for per unit amounts)
Basic Earnings:     
Net income attributable to Boston Properties Limited Partnership common unitholders$113,382
 172,131
 $0.66
Effect of Dilutive Securities:     
Stock Based Compensation—
 319
 —
Diluted Earnings:     
Net income attributable to Boston Properties Limited Partnership common unitholders$113,382
 172,450
 $0.66

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 Three months ended September 30, 2016
 
Income
(Numerator)
 
Units
(Denominator)
 
Per Unit
Amount
 (in thousands, except for per unit amounts)
Basic Earnings:     
Net income attributable to Boston Properties Limited Partnership common unitholders$91,306
 171,379
 $0.53
Effect of Dilutive Securities:     
Stock Based Compensation—
 382
 —
Diluted Earnings:     
Net income attributable to Boston Properties Limited Partnership common unitholders$91,306
 171,761
 $0.53
      
 Nine months ended September 30, 2017
 
Income
(Numerator)
 
Units
(Denominator)
 
Per Unit
Amount
 (in thousands, except for per unit amounts)
Basic Earnings:     
Net income attributable to Boston Properties Limited Partnership common unitholders$395,199
 171,649
 $2.30
Allocation of undistributed earnings to participating securities(17) —
 —
Net income attributable to Boston Properties Limited Partnership common unitholders$395,182
 171,649
 $2.30
Effect of Dilutive Securities:     
Stock Based Compensation—
 212
 —
Diluted Earnings:     
Net income attributable to Boston Properties Limited Partnership common unitholders$395,182
 171,861
 $2.30
      
 Nine months ended September 30, 2016
 
Income
(Numerator)
 
Units
(Denominator)
 
Per Unit
Amount
 (in thousands, except for per unit amounts)
Basic Earnings:     
Net income attributable to Boston Properties Limited Partnership common unitholders$408,540
 171,353
 $2.38
Allocation of undistributed earnings to participating securities(210) —
 —
Net income attributable to Boston Properties Limited Partnership common unitholders$408,330
 171,353
 $2.38
Effect of Dilutive Securities:     
Stock Based Compensation—
 290
 —
Diluted Earnings:     
Net income attributable to Boston Properties Limited Partnership common unitholders$408,330
 171,643
 $2.38
      

11.10. Stock Option and Incentive Plan
On January 25, 2017,February 4, 2020, Boston Properties, Inc.’s Compensation Committee approved the 20172020 MYLTIP awards under the Boston Properties, Inc.’s 2012 Stock Option and Incentive Plan (the “2012 Plan”) to certain officers and employees of Boston Properties, Inc. The 20172020 MYLTIP awards utilize Boston Properties, Inc.’s total stockholder return (“TSR”)TSR over a three-yearthree-

year measurement period, on an annualized, compounded basis, as the performance metric. Earned awards will be based on Boston

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Properties, Inc.’s TSR relative to (i) the Cohen & Steers Realty Majors Portfolio Index (50% weight) and (ii) the NAREITFTSE Russell Nareit Office Index, adjusted to include Vornado Realty Trust (50% weight).Trust. Earned awards will range from zero0 to a maximum of approximately $42.7 million203,278 LTIP Units depending on Boston Properties, Inc.’s TSR relative to the two indices,FTSE Russell Nareit Office Index, adjusted to include Vornado Realty Trust, with four tiers (threshold:a target of approximately $10.7 million; target: approximately $21.3 million; high: approximately $32.0 million; exceptional: approximately $42.7 million)101,638 LTIP Units and linear interpolation between tiers. Earned awards measured on the basis of relative TSR performance are subject to an absolute TSR component in the form of relatively simple modifiers that (A) reduce the level of earned awards in the event Boston Properties, Inc.’s annualized TSR is less than 0%zero and (B) cause some awards to be earned in the event Boston Properties, Inc.’s annualized TSR is more than 12% even though on a relative basis alone Boston Properties, Inc.’s TSR would not result in any earned awards.
maximum. Earned awards (if any) will vest 50% on February 6, 20203, 2023 and 50% on February 6, 2021,3, 2024, based on continued employment. Vesting will be accelerated in the event of a change in control, termination of employment by Boston Properties, Inc. without cause, or termination of employment by the award recipient for good reason, death, disability or retirement. If there is a change of control prior to February 6, 2020,3, 2023, earned awards will be calculated based on TSR performance up to the date of the change of control. The 20172020 MYLTIP awards are in the form of LTIP Units issued on the grant date which (i) are subject to forfeiture to the extent awards are not earned and (ii) prior to the performance measurement date are only entitled to one-tenth (10%) of the regular quarterly distributions payable on common partnership units and no special distributions.
units.Under ASC 718 “Compensation - Stock Compensation,” the 20172020 MYLTIP awards have an aggregate value of approximately $17.7$13.7 million, which amount will generally be amortized into earnings over the four-year plan period under the graded vesting method.
On February 3, 2017,6, 2020, the measurement period for the Company’s 20142017 MYLTIP awards ended and, based on Boston Properties, Inc.’s relative TSR performance, the final awards were determined to be 27.7%83.8% of target or an aggregate of approximately $3.5$17.6 million(after giving effect to voluntary employee separations and the unallocated reserve)separations). As a result, an aggregate of 447,386 2014270,942 2017 MYLTIP Units that had been previously granted were automatically forfeited.
During the ninethree months ended September 30, 2017,March 31, 2020, Boston Properties, Inc. issued 37,41424,503 shares of restricted common stock and Boston Properties Limited Partnership issued 111,488196,927 LTIP Units and 400,000 2017203,278 2020 MYLTIP Units to employees and non-employee directors under the 2012 Plan. Employees and non-employee directors paid $0.01 per share of restricted common stock and $0.25 per LTIP Unit and 20172020 MYLTIP Unit. When issued, LTIP Units are not economically equivalent in value to a share of Common Stock, but over time can increase in value to one-for-one parity with Common Stock if there is sufficient appreciation in the value of the Company’s assets. The aggregate value of the LTIP Units is included in noncontrolling interests in the Consolidated Balance Sheets. GrantsSheets of Boston Properties, Inc. and Boston Properties Limited Partnership. A substantial majority of the grants of restricted common stock and LTIP Units to employees vest in four equal annual installments. Restricted common stock is measured at fair value on the date of grant based on the number of shares granted and the closing price of Boston Properties, Inc.’s Common Stock on the date of grant as quoted on the New York Stock Exchange. Such value is recognized as an expense ratably over the corresponding employee service period. The shares of restricted common stock granted during the ninethree months ended September 30, 2017March 31, 2020 were valued at approximately $4.9$3.5 million ($130.32143.45 per share weighted-average). The LTIP Units granted were valued at approximately $13.3$25.5 million (approximately $119.52$129.65 per unit weighted-average fair value) using a Monte Carlo simulation method model. The per unit fair values of the LTIP Units granted were estimated on the dates of grant and for a substantial majority of such units were valued using the following assumptions: an expected life of 5.7 years, a risk-free interest rate of 2.14%1.47% and an expected price volatility of 28.0%18.0%. AsBecause the 2012 OPP Units, 2013 MYLTIP Units, 2014 MYLTIP Units, 2015 MYLTIP Units, 2016 MYLTIP Units, 2017 MYLTIP Units, 2018 MYLTIP Units, 2019 MYLTIP Units and 20172020 MYLTIP Units are subject to both a service condition and a market condition, the Company recognizes the related compensation expense related to the 2012 OPP Units, 2013 MYLTIP Units, 2014 MYLTIP Units, 2015 MYLTIP Units, 2016 MYLTIP Units and 2017 MYLTIP Units under the graded vesting attribution method. Under the graded vesting attribution method, each portion of the award that vests at a different date is accounted for as a separate award and recognized over the period appropriate to that portion so that the compensation cost for each portion should be recognized in full by the time that portion vests. The Company recognizes forfeitures as they occur on its awards of stock-based compensation (See Note 2).compensation. Dividends paid on both vested and unvested shares of restricted stock are charged directly to Dividends in Excess of Earnings in Boston Properties, Inc.’s Consolidated Balance Sheets and Partners’ Capital in Boston Properties Limited Partnership’s Consolidated Balance Sheets. Aggregate stock-based compensation expense associated with restricted stock, non-qualified stock options, LTIP Units, 2012 OPP Units, 2013 MYLTIP Units, 2014 MYLTIP Units, 2015 MYLTIP Units, 2016 MYLTIP Units, 2017 MYLTIP Units, 2018 MYLTIP Units, 2019 MYLTIP Units and 20172020 MYLTIP Units was approximately $7.5$17.2 million and $7.1$14.8 million for the three months ended September 30, 2017March 31, 2020 and 2016, respectively, and $25.6 million and $23.6 million for the nine months ended September 30, 2017 and 2016,2019, respectively. At September 30, 2017,March 31, 2020, there was (1) an aggregate of approximately $22.8$42.2 million of unrecognized compensation expense related to unvested restricted stock, LTIP Units 2013 MYLTIP Units and 20142017 MYLTIP Units and (2) an aggregate of approximately $24.7$19.8 million of unrecognized compensation expense related to unvested 20152018 MYLTIP Units, 20162019 MYLTIP Units and 20172020 MYLTIP Units that is expected to be recognized over a weighted-average period of approximately 2.52.6 years.

12.11. Segment Information
The following tables present reconciliations of Net Income Attributable to Boston Properties, Inc. Common Shareholders to the Company’s share of Net Operating Income and Net Income Attributable to Boston Properties Limited Partnership Common Unitholders to the Company’s share of Net Operating Income for the three and nine months ended September 30, 2017March 31, 2020 and 2016.

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2019.
Boston Properties, Inc.
 Three months ended September 30, Nine months ended September 30,
 2017 2016 2017 2016
 (in thousands)
Net income attributable to Boston Properties, Inc. common shareholders$117,337
 $76,753
 $348,086
 $355,114
Add:       
Preferred dividends2,625
 2,589
 7,875
 7,796
Noncontrolling interest—common units of Boston Properties Limited Partnership13,402
 9,387
 40,350
 42,120
Noncontrolling interests in property partnerships14,340
 (17,225) 33,967
 53
Interest expense92,032
 104,641
 282,709
 314,953
Losses from interest rate contracts—
 140
 —
 140
Depreciation and amortization expense152,164
 203,748
 463,288
 516,371
Impairment loss—
 1,783
 —
 1,783
Transaction costs239
 249
 572
 1,187
General and administrative expense25,792
 25,165
 84,319
 79,936
Less:       
Gains on sales of real estate2,891
 12,983
 6,791
 80,606
Gains (losses) from early extinguishments of debt—
 (371) 14,354
 (371)
Gains from investments in securities944
 976
 2,716
 1,713
Interest and other income1,329
 3,628
 3,447
 6,657
Income from unconsolidated joint ventures843
 1,464
 7,035
 5,489
Development and management services revenue10,811
 6,364
 24,648
 18,586
Net Operating Income$401,113
 $382,186
 $1,202,175
 $1,206,773

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  Three months ended March 31,
  2020 2019
  (in thousands)
Net income attributable to Boston Properties, Inc. common shareholders $497,496
 $98,105
Add:    
Preferred dividends 2,625
 2,625
Noncontrolling interest—common units of the Operating Partnership 57,539
 11,599
Noncontrolling interests in property partnerships 19,486
 18,830
Interest expense 101,591
 101,009
Impairment loss —
 24,038
Net operating income from unconsolidated joint ventures 28,758
 25,349
Depreciation and amortization expense 171,094
 164,594
Transaction costs 615
 460
Payroll and related costs from management services contracts 3,237
 3,395
General and administrative expense 36,454
 41,762
Less:    
Net operating income attributable to noncontrolling interests in property partnerships 47,661
 47,085
Gains (losses) from investments in securities (5,445) 2,969
Interest and other income 3,017
 3,753
Gains (losses) on sales of real estate 410,165
 (905)
Income (loss) from unconsolidated joint ventures (369) 213
Direct reimbursements of payroll and related costs from management services contracts 3,237
 3,395
Development and management services revenue 7,879
 9,277
Company’s share of Net Operating Income $452,750
 $425,979

Boston Properties Limited Partnership
Three months ended September 30, Nine months ended September 30, Three months ended March 31,
2017 2016 2017 2016 2020 2019
(in thousands) (in thousands)
Net income attributable to Boston Properties Limited Partnership common unitholders$132,693
 $91,306
 $395,199
 $408,540
 $566,333
 $113,382
Add:           
Preferred distributions2,625
 2,589
 7,875
 7,796
 2,625
 2,625
Noncontrolling interests in property partnerships14,340
 (17,225) 33,967
 53
 19,486
 18,830
Interest expense92,032
 104,641
 282,709
 314,953
 101,591
 101,009
Losses from interest rate contracts—
 140
 —
 140
Impairment loss —
 22,272
Net operating income from unconsolidated joint ventures 28,758
 25,349
Depreciation and amortization expense150,210
 198,582
 457,102
 507,234
 169,285
 162,682
Impairment loss—
 1,783
 —
 1,783
Transaction costs239
 249
 572
 1,187
 615
 460
Payroll and related costs from management services contracts 3,237
 3,395
General and administrative expense25,792
 25,165
 84,319
 79,936
 36,454
 41,762
Less:           
Gains on sales of real estate2,891
 12,983
 7,368
 82,775
Gains (losses) from early extinguishments of debt—
 (371) 14,354
 (371)
Gains from investments in securities944
 976
 2,716
 1,713
Net operating income attributable to noncontrolling interests in property partnerships 47,661
 47,085
Gains (losses) from investments in securities (5,445) 2,969
Interest and other income1,329
 3,628
 3,447
 6,657
 3,017
 3,753
Income from unconsolidated joint ventures843
 1,464
 7,035
 5,489
Gains (losses) on sales of real estate 419,654
 (905)
Income (loss) from unconsolidated joint ventures (369) 213
Direct reimbursements of payroll and related costs from management services contracts 3,237
 3,395
Development and management services revenue10,811
 6,364
 24,648
 18,586
 7,879
 9,277
Net Operating Income$401,113
 $382,186
 $1,202,175
 $1,206,773
Company’s share of Net Operating Income $452,750
 $425,979
Net operating income (“NOI”) is a non-GAAP financial measure equal to net income attributable to Boston Properties, Inc. common shareholders and net income attributable to Boston Properties Limited Partnership common unitholders, as applicable, the most directly comparable GAAP financial measures, plus (1) preferred dividends/distributions, net income attributable to noncontrolling interests, interest expense, losses from interest rate contracts,impairment loss, depreciation and amortization expense, impairment loss, transaction costs, payroll and related costs from management services contracts and corporate general and administrative expense less (2) gains on sales of real estate, gains (losses) from early extinguishments of debt, gains from investments in securities, interest and other income, gains (losses) on sales of real estate, income (loss) from unconsolidated joint ventures, direct reimbursements of payroll and related costs from management services contracts and development and management services revenue. The Company believes NOI is useful to investors as a performance measure and believes it provides useful information to investors regarding its financial condition and results of operations and financial condition because, when compared across periods, it reflects the impact on operations from trends in occupancy rates, rental rates, operating costs and acquisition and development activity on an unleveraged basis, providing perspective not immediately apparent from net income attributable to Boston Properties, Inc. common shareholders orand net income attributable to Boston Properties Limited Partnership common unitholders. For example, interest expense is not necessarily linked to the operating performance of a real estate asset and is often incurred at the corporate level as opposed to the property level. Similarly, interest expense may be incurred at the property level even though the financing proceeds may be used at the corporate level (e.g., used for other investment activity). In addition, depreciation and amortization expense, because of historical cost accounting and useful life estimates, depreciation and amortization may distort operating performance measures at the property level. NOI presented by the Company may not be comparable to NOI reported by other REITs or real estate companies that define NOI differently.
The Company’s internal reporting utilizes its share of NOI, which includes its share of NOI from consolidated and unconsolidated joint ventures, which is a non-GAAP financial measure that is calculated as the consolidated

amount, plus the Company’s share of the amount from the Company’s unconsolidated joint ventures (calculated based upon the Company’s economic 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’ economic percentage ownership interests and, in some cases, after priority allocations, income allocation to private REIT shareholders and their share of fees due to the Company). The Company’s share of NOI from unconsolidated joint ventures does not include its share of gains on sale of real estate from unconsolidated joint ventures, which is included within Income (Loss) From Unconsolidated Joint Ventures in the Company’s Consolidated Statements of Operations.  Management utilizes its share of NOI in assessing its performance as 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, the presentations of the Company’s share of NOI 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.
Asset information by segment is not reported because the Company does not use this measure to assess performance. Therefore, depreciation and amortization expense is not allocated among segments. Preferred dividends/distributions, noncontrolling interests, gains on sales of real estate, interest expense, lossesimpairment loss, depreciation and amortization expense, transaction costs, payroll and related costs from interest ratemanagement services contracts, corporate general and administrative expense, gains (losses) from early extinguishments of debt, gains from investments in securities, interest and other income, incomegains (losses) on sales of real estate, direct reimbursements of payroll and related costs from unconsolidated joint ventures, depreciation and amortization expense, impairment loss, transaction costs, general and administrative expensesmanagement services contracts and development and management services revenue are not included in Net Operating IncomeNOI and are provided as internal reporting addresses thesereconciling items on a corporate level.

38

Tableto the Company’s reconciliations of Contents

its share of NOI to net income attributable to common shareholders/unitholders.
The Company’s segments are based on the Company’s method of internal reporting which classifies its operations by both geographic area and property type.area. The Company’s segments by geographic area are Boston, Los Angeles, New York, San Francisco and Washington, DC. SegmentsThe Company also presents information for each segment by property type, include:including Office, Residential and Hotel.
Included within the Office property type are commercial office and retail leases, as well as parking revenue.  Upon the adoption of ASC 842, any write-off for bad debt, including accrued rent, will be shown as a reduction to lease revenue.  The degree to which our commercial and retail tenants’ and parking operators’ businesses are or will continue to be negatively impacted by the ongoing COVID-19 pandemic by measures intended to reduce its spread, such as mandatory business closures and “stay-at-home” orders, could result in a reduction in the Company’s cash flows or require that the Company write-off a tenant’s accrued rent balance, and this could have a material adverse effect on lease revenue and thus the results of the Company’s Office property type. 
In addition, as a result of COVID-19, the Boston Marriott Cambridge was closed in March 2020.  The Company is uncertain as to when the hotel will re-open, and the continued closure is expected to have a material impact on the hotel’s operations and thus the results of the Company’s Hotel property type.  See Item 1A: “Risk Factors” for additional details.

Information by geographic area and property type (dollars in thousands):
For the three months ended September 30, 2017:March 31, 2020:
Boston New York San Francisco Washington, DC TotalBoston Los Angeles New York San Francisco Washington, DC Total
Rental Revenue:(1)                    
Office$196,687
 $242,071
 $87,162
 $103,622
 $629,542
$239,498
 $—
 $255,286
 $136,739
 $93,136
 $724,659
Residential1,228
 —
 —
 3,067
 4,295
4,068
 —
 —
 —
 5,888
 9,956
Hotel13,064
 —
 —
 —
 13,064
6,825
 —
 —
 —
 —
 6,825
Total210,979
 242,071
 87,162
 106,689
 646,901
250,391
 —
 255,286
 136,739
 99,024
 741,440
% of Grand Totals32.61% 37.43% 13.47% 16.49% 100.00%33.77% —% 34.43% 18.44% 13.36% 100.00%
Rental Expenses:                    
Office76,086
 95,775
 26,792
 37,111
 235,764
82,545
 —
 99,140
 42,569
 34,648
 258,902
Residential512
 —
 —
 1,065
 1,577
1,340
 —
 —
 —
 2,724
 4,064
Hotel8,447
 —
 —
 —
 8,447
6,821
 —
 —
 —
 —
 6,821
Total85,045
 95,775
 26,792
 38,176
 245,788
90,706
 —
 99,140
 42,569
 37,372
 269,787
% of Grand Totals34.60% 38.97% 10.90% 15.53% 100.00%33.62% —% 36.75% 15.78% 13.85% 100.00%
Net operating income$125,934
 $146,296
 $60,370
 $68,513
 $401,113
$159,685
 $—
 $156,146
 $94,170
 $61,652
 $471,653
% of Grand Totals31.40% 36.47% 15.05% 17.08% 100.00%33.85% —% 33.11% 19.97% 13.07% 100.00%
Less: Net operating income attributable to noncontrolling interests in property partnerships(10,663) —
 (36,998) —
 —
 (47,661)
Add: Company’s share of net operating income from unconsolidated joint ventures3,099
 15,930
 756
 3,159
 5,814
 28,758
Company’s share of net operating income$152,121
 $15,930
 $119,904
 $97,329
 $67,466
 $452,750
% of Grand Totals33.60% 3.52% 26.48% 21.50% 14.90% 100.00%
  _______________
(1)Rental Revenue is equal to Total Revenue per the Company’s Consolidated Statements of Operations, less Development and Management Services Revenue and Direct Reimbursements of Payroll and Related Costs from Management Services Contracts Revenue per the Consolidated Statements of Operations.

For the three months ended September 30, 2016:March 31, 2019:
Boston New York San Francisco Washington, DC TotalBoston Los Angeles New York San Francisco Washington, DC Total
Rental Revenue:(1)                    
Office$183,975
 $237,262
 $80,235
 $100,666
 $602,138
$217,411
 $—
 $258,631
 $124,055
 $96,345
 $696,442
Residential1,227
 —
 —
 3,145
 4,372
2,701
 —
 —
 —
 5,014
 7,715
Hotel12,354
 —
 —
 —
 12,354
8,938
 —
 —
 —
 —
 8,938
Total197,556
 237,262
 80,235
 103,811
 618,864
229,050
 —
 258,631
 124,055
 101,359
 713,095
% of Grand Totals31.92% 38.34% 12.96% 16.78% 100.00%32.12% —% 36.27% 17.40% 14.21% 100.00%
Rental Expenses:                    
Office71,254
 95,073
 26,037
 33,973
 226,337
79,500
 —
 96,971
 41,125
 36,147
 253,743
Residential1,141
 —
 —
 1,082
 2,223
1,206
 —
 —
 —
 2,568
 3,774
Hotel8,118
 —
 —
 —
 8,118
7,863
 —
 —
 —
 —
 7,863
Total80,513
 95,073
 26,037
 35,055
 236,678
88,569
 —
 96,971
 41,125
 38,715
 265,380
% of Grand Totals34.02% 40.17% 11.00% 14.81% 100.00%33.37% —% 36.54% 15.50% 14.59% 100.00%
Net operating income$117,043
 $142,189
 $54,198
 $68,756
 $382,186
$140,481
 $—
 $161,660
 $82,930
 $62,644
 $447,715
% of Grand Totals30.62% 37.21% 14.18% 17.99% 100.00%31.38% —% 36.11% 18.52% 13.99% 100.00%
Less: Net operating income attributable to noncontrolling interests in property partnerships(9,373) —
 (37,264) (448) —
 (47,085)
Add: Company’s share of net operating income from unconsolidated joint ventures772
 15,708
 1,786
 —
 7,083
 25,349
Company’s share of net operating income$131,880
 $15,708
 $126,182
 $82,482
 $69,727
 $425,979
% of Grand Totals30.96% 3.69% 29.62% 19.36% 16.37% 100.00%
  _______________
(1)Rental Revenue is equal to total Revenue per the Company’s Consolidated Statements of Operations, less Development and Management Services Revenue and Direct Reimbursements of Payroll and Related Costs from Management Services Contracts Revenue per the Consolidated Statements of Operations.


12. Subsequent Events
There are many uncertainties regarding COVID-19, and the Company is closely monitoring the impact of the pandemic on all aspects of its business, including how it will impact its tenants, employees, contractors, lenders, suppliers, vendors and joint venture partners. The Company is unable to predict the impact that COVID-19 will have on its future financial position and operating results due to numerous uncertainties.
The Company has received requests from many of its retail and some of its office tenants seeking either rent concessions, deferrals, rent abatements related to lease provision interpretations, or other relief, in each case, as a result of COVID-19. The Company is evaluating these requests on a case-by-case basis and is considering a number of factors to determine the appropriate response. The Company expects to continue to assess the evolving impact of COVID-19 and intends to make adjustments to its responses accordingly.
On April 22, 2020, a joint venture in which the Company has a 20% interest extended the mortgage loan collateralized by Metropolitan Square located in Washington, DC. At the time of the extension, the outstanding balance of the loan totaled approximately $156.4 million and was scheduled to mature on May 5, 2020. The extended loan continues to bear interest at a fixed rate of 5.75% per annum and matures on August 5, 2020. Metropolitan Square is a Class A office property with approximately 654,000 net rentable square feet.


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TableOn May 5, 2020, Boston Properties Limited Partnership completed a public offering of Contents

For$1.25 billion in aggregate principal amount of its 3.250% unsecured senior notes due 2031. The notes were priced at 99.850% of the nine months ended Septemberprincipal amount to yield an effective rate (including financing fees) of approximately 3.343% per annum to maturity. The notes will mature on January 30, 2017:
 Boston New York San Francisco Washington, DC Total
Rental Revenue:         
Office$573,883
 $735,485
 $257,286
 $309,225
 $1,875,879
Residential3,520
 —
 —
 8,941
 12,461
Hotel33,859
 —
 —
 —
 33,859
Total611,262
 735,485
 257,286
 318,166
 1,922,199
% of Grand Totals31.80% 38.27% 13.38% 16.55% 100.00%
Rental Expenses:         
Office225,502
 280,569
 77,204
 108,044
 691,319
Residential1,552
 —
 —
 3,211
 4,763
Hotel23,942
 —
 —
 —
 23,942
Total250,996
 280,569
 77,204
 111,255
 720,024
% of Grand Totals34.86% 38.97% 10.72% 15.45% 100.00%
Net operating income$360,266
 $454,916
 $180,082
 $206,911
 $1,202,175
% of Grand Totals29.97% 37.84% 14.98% 17.21% 100.00%
For2031, unless earlier redeemed. The aggregate net proceeds from the nine months ended September 30, 2016:
 Boston New York San Francisco Washington, DC Total
Rental Revenue:         
Office$540,850
 $773,077
 $235,076
 $300,742
 $1,849,745
Residential3,578
 —
 —
 8,931
 12,509
Hotel33,919
 —
 —
 —
 33,919
Total578,347
 773,077
 235,076
 309,673
 1,896,173
% of Grand Totals30.50% 40.77% 12.40% 16.33% 100.00%
Rental Expenses:         
Office210,695
 272,620
 75,412
 101,514
 660,241
Residential2,174
 —
 —
 3,255
 5,429
Hotel23,730
 —
 —
 —
 23,730
Total236,599
 272,620
 75,412
 104,769
 689,400
% of Grand Totals34.32% 39.54% 10.94% 15.20% 100.00%
Net operating income$341,748
 $500,457
 $159,664
 $204,904
 $1,206,773
% of Grand Totals28.32% 41.47% 13.23% 16.98% 100.00%


40

Table of Contents
offering were approximately $1.24 billion after deducting underwriting discounts and estimated transaction expenses.

ITEM 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this report.
TheseThis Quarterly ReportsReport on Form 10-Q, including the documents incorporated by reference, contains forward-lookingcontain forward-looking statements within the meaning of the federal securities laws, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and are including this statement for purposes of complying with those safe harbor provisions.provisions, in each case, to the extent applicable. Such statements are contained principally, but not only, under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” We caution investors that any such forward-looking statements are based on current beliefs or expectations of future events and on assumptions made by, and information currently available to, our management. When used, the words “anticipate,” “believe,” “budget,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “project,” “should,” “will” and similar expressions whichthat do not relate solely to historical matters are intended to identify forward-looking statements. Such statements are subject to risks, uncertainties and assumptions and are not guarantees of future performance or occurrences, which may be affected by known and unknown risks, trends, uncertainties and factors that are, in some cases, beyond our control. Should one or more of these known or unknown risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimatedexpressed or projectedimplied by the forward-looking statements. We caution you that, while forward-looking statements reflect our good-faith beliefs when we make them, they are not guarantees of future performance or occurrences and are impacted by actual events when they occur after we make such statements. Accordingly, investors should use caution in relying on forward-looking statements, which are based on results and trends at the time they are made, to anticipate future results or trends.
One of the most significant factors that may cause actual results to differ materially from those expressed or implied by the forward-looking statements is the ongoing impact of the global COVID-19 pandemic on the U.S. and global economies, which has impacted, and is likely to continue to impact, us and, directly or indirectly, many of the other important factors below and the risks described in (i) our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 including those described under the caption “Risk Factors,” (ii) our subsequent filings under the Exchange Act and (iii) the risk factors set forth in this Form 10-Q in Part II, Item 1A.
Some of the risks and uncertainties that may cause our actual results, performance or achievements to differ materially from those expressed or implied by forward-looking statements include, among others, the following:
if there is a negative change in the economy, including, without limitation, a reversal of current job growth trends and an increase in unemployment, it could have a negative effect on the following, among other things:
the fundamentalsrisks and uncertainties related to the impact of the COVID-19 global pandemic, including the duration, scope and severity of the pandemic domestically and internationally; federal, state and local government actions or restrictive measures implemented in response to COVID-19, the effectiveness of such measures and the direct and indirect impact of such measures on our and our tenants' businesses, financial condition, results of operation, cash flows, liquidity and performance, and the U.S. and international economy and economic activity generally; whether new or existing actions and measures continue to result in increasing unemployment that impacts the ability of our business, including overall market occupancy, tenant space utilizationresidential tenants to generate sufficient income to pay, or make them unwilling to pay rent in a timely manner, in full or at all; the health, continued service and rental rates;
the financial conditionavailability of our personnel, including our key personnel and property management teams; and the effectiveness or lack of effectiveness of governmental relief in providing assistance to individuals and large and small businesses, including our tenants, many of which are financial, legal, media/telecommunication, technology and other professional firms, our lenders, counterparties to our derivative financial instruments and institutions that hold our cash balances and short-term investments, which may expose us to increased risks of default by these parties; and
the value of our real estate assets, which may limit our ability to dispose of assets at attractive prices or obtain or maintain debt financing secured by our properties or on an unsecured basis;have suffered significant adverse effects from COVID-19;
volatile or adverse global economic and political conditions, health crises and dislocations in the credit markets could adversely affect our access to cost-effective capital and have a resulting material adverse effect on our business opportunities, results of operations and financial condition;
general risks affecting the real estate industry (including, without limitation, the inability to enter into or renew leases, tenant space utilization, dependence on tenants’ financial condition, and competition from other developers, owners and operators of real estate);
•
general risks affecting the real estate industry (including, without limitation, the inability to enter into or renew leases, tenant space utilization, dependence on tenants’ financial condition, and competition from other developers, owners and operators of real estate);
failure to manage effectively our growth and expansion into new markets and sub-markets or to integrate acquisitions and developments successfully;
the ability of our joint venture partners to satisfy their obligations;

risks and uncertainties affecting property development and construction (including, without limitation, construction delays, increased construction costs, cost overruns, inability to obtain necessary permits, tenant accounting considerations that may result in negotiated lease provisions that limit a tenant’s liability during construction, and public opposition to such activities);
risks associated with the availability and terms of financing and the use of debt to fund acquisitions and developments and/or refinance existing indebtedness, including the impact of higher interest rates on the cost and/or availability of financing;
risks associated with forward interest rate contracts and the effectiveness of such arrangements;
risks associated with downturns in the national and local economies, increases in interest rates, and volatility in the securities markets;
risks associated with actual or threatened terrorist attacks;
costs of compliance with the Americans with Disabilities Act and other similar laws;
potential liability for uninsured losses and environmental contamination;

41

Tablerisks associated with the physical effects of Contents

climate change;
risks associated with security breaches through cyber attacks, cyber intrusions or otherwise, as well as other significant disruptions of our information technology (IT) networks and related systems, which support our operations and our buildings;
risks associated with BXP’s potential failure to qualify as a REIT under the Internal Revenue Code of 1986, as amended;
possible adverse changes in tax and environmental laws;
the impact of newly adopted accounting principles on our accounting policies and on period-to-period comparisons of financial results;
risks associated with possible state and local tax audits;
risks associated with our dependence on key personnel whose continued service is not guaranteed; and
the other risk factors identified in our most recently filed Annual ReportsReport on Form 10-K for the fiscal year ended December 31, 2019 or described herein, including those described under the caption “Risk Factors.”
The risks set forth above are not exhaustive. Other sections of this report may include additional factors that could adversely affect our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment.environment, particularly in light of the rapidly developing circumstances relating to COVID-19. New risk factors emerge from time to time and it is not possible for management to predict all risk factors, nor can we assess the impact of all risk factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. Investors should also refer to our most recent Annual ReportsReport on Form 10-K and our Quarterly Reports on Form 10-Q for future periods and Current Reports on Form 8-K as we file them with the SEC, and to other materials we may furnish to the public from time to time through FormsCurrent Reports on Form 8-K or otherwise, for a discussion of risks and uncertainties that may cause actual results, performance or achievements to differ materially from those expressed or implied by forward-looking statements. We expressly disclaim any responsibility to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events, or otherwise, and you should not rely upon these forward-looking statements after the date of this report.
Overview
BXP is a fully integrated, self-administered and self-managed REIT and one of the largest owners, managerspublicly-traded office real estate investment trusts (REIT) (based on total market capitalization) as of March 31, 2020 in the United States that develops, owns and developers ofmanages primarily Class A office properties concentrated in five markets in the United States.States - Boston, Los Angeles, New York, San Francisco and Washington, DC. BPLP is the entity through which BXP conducts substantially all of its business and owns (either directly or through subsidiaries) substantially all of its assets. Our properties are concentrated in five markets - Boston, Los Angeles, New York, San Francisco and Washington, DC. We generate revenue and cash primarily by leasing Class A office space to our tenants. When making leasing decisions, we consider, among other things, the

creditworthiness of the tenant, the length of the lease, the rental rate to be paid at inception and throughout the lease term, the costs of tenant improvements and other landlord concessions, anticipated operating expenses and real estate taxes, current and anticipated vacancy, current and expected future demand for the space, the impact of any expansion rights and general economic factors.
Our core strategy has always been to develop, acquire and operatemanage high-quality properties in supply-constrained markets with high barriers-to-entry and to focus on executing long-term leases with financially strong tenants. Our tenant base is diverse across market sectors and the weighted-average lease term for our in-place leases was approximately 8.3 years, as of March 31, 2020, including leases at our unconsolidated joint ventures. The weighted-average lease term for our top 20 office tenant leases was approximately 11.9 years. Historically, this combination has tended to reducethese factors have minimized our exposure in downweaker economic cycles and enhanceenhanced revenues as market conditions improve. To be successful in any leasing environment, we believe we must consider all aspects of the tenant-landlord relationship. In this regard, we believe that our competitive advantage is based on the following attributes:
our understanding of tenants’ short- and long-term space utilization and amenity needs in the local markets, our relationships with local brokers, markets;
our reputation as a premier developer, owner and operatormanager of primarily Class A office properties, properties;
our financial strength and our ability to maintain high building standards providestandards;
our focus on developing and operating in a sustainable and responsible manner; and
our relationships with local brokers.
Outlook
In the first quarter of 2020 macroeconomic conditions were favorable and positive until COVID-19 began to escalate into a national and global pandemic in mid-March. In the first two months of the quarter, U.S. GDP remained stable and job creation remained steady. Starting in March, COVID-19 caused a precipitous drop in economic activity globally with significant negative impacts on businesses across the U.S. As the number of unemployment claims rose and the economy slowed, the Federal Reserve and U.S. Treasury implemented aggressive monetary and fiscal stimulus policies, including the CARES Act, to bring needed financial support to small businesses, individuals and industries most affected by the crisis. Also, the Federal Reserve quickly reduced the federal funds rate to zero.
The effects of COVID-19 began to have an impact on us and our tenants near the end of the first quarter. As governments across all of our regions implemented social distancing and stay-at-home policies, we and our tenants migrated employees to a work-from-home model. All office properties throughout our portfolio remain open for tenants, although physical occupancy remains low due to these measures. By the end of March, construction of our development projects paused in Boston, New York and San Francisco to comply with municipal social distancing policies, although construction continued in the Washington, DC region. Despite the work-stoppages at our development projects, we remain on schedule to meet all required delivery milestones in our leases and within budget. Our broad and deep experience as developers extends to our budgeting and planning, which have left us with a competitive advantage.
Outlook
Economic growthample time in our development schedules. However, we cannot be certain that work-stoppages will not extend beyond current expectations or, if they do, that we will meet the United States continuesmilestones and budgets. Leasing discussions remained active for leases that were in negotiation prior to be tepid yet consistent resulting inCOVID-19, but we have experienced a slight decrease in new leasing requirements and physical tours are on hold.
Our most important activity at this time is planning for the unemployment ratehealth and safety of our tenants and employees and preparing our buildings in October 2017accordance with the policies, protocols and applicable legal requirements in our regions. In early April 2020, we formed an internal Health Security Task force composed of Boston Properties’ employees, as well as outside experts in health care, industrial hygiene, cleaning and security. We designed standard operating procedures that include, but are not limited to, 4.1%air filtration, water quality, janitorial products and procedures, social separation and screening during building access and use of vertical transportation, the use of personal protective equipment, signage, and management of construction activities. We began communicating the operating procedures with tenants in early May.

Rent Collections
Cash rent payments for a particular month are generally due on the first day of that month (although tenants have varying grace periods). The Federal Reserve has increased interest rates three times since December 2016 with indications of more increases to come, yet interest rates remain relatively lowCash rent amounts are based on all rent billed by historical standards. Given the pace of GDP growth, low inflationus, including all amounts from consolidated operations and the uncertainty associated with Federal Reserve fiscal policy and tax reform,all unconsolidated joint ventures, other than Gateway Commons for which we do not expecthandle billing.
Our April 2020 rent collections among all tenants were approximately 93%, a sharp increasereduction from prior levels as a result of COVID-19, primarily due to certain retail tenants.  Collections from our office tenants in long-term interest ratesApril remained strong.  During the first quarter of 2020, approximately 87% of the aggregate amount of our consolidated revenues were derived from office leases. For the month of April, we collected approximately 97% of our total commercial rent payments due April 1 from office tenants. In some of these cases, the tenant paid its rent, but reserved its right to assert that the terms of its lease do not require the tenant to pay. Office tenants in the flexible office use and expect reasonably healthy operatingmanufacturing/retail industries, which represent 3% and 5% of our office rents, respectively, present a heightened concern for rent collection, as we collected approximately 78% and 73%, respectively, from these tenants for the month of April. Unpaid April rent was approximately $1.3 million and $2.9 million for flexible office and manufacturing/retail, respectively. In addition, our share of the accrued rent for tenants in these groups is approximately $3.9 million and $7.2 million, respectively. For clarity, manufacturing/retail includes retail and consumer products office tenants.
In addition, during the first quarter of 2020, approximately 7.2% of the aggregate amount of our consolidated revenues were derived from retail leases. For the month of April, we collected approximately 36% of our total commercial rent payments due from retail tenants for rents due April 1. We are actively working on lease amendments with retail tenants in this category that we believe have justifiable financial market conditionsneeds.  Of the retail tenants that did not pay rent for April, our share of the accrued rent balance for these tenants is approximately $25.1 million.
We continue to analyze our accounts receivable, tenant creditworthiness and current economic trends to evaluate the adequacy of the collectability of our tenants’ total accounts receivable balances, including lease revenue, and if considered uncollectible, we will write-off the receivable and accrued rent balances associated with the leases, and record future lease revenue on a cash basis.
During 2019, our total parking revenue was approximately $100 million and our share of total parking revenue from unconsolidated joint ventures was approximately $13 million. Approximately $40 million of this aggregate amount of consolidated and unconsolidated parking revenue was derived from hourly/daily parking. The remainder of the aggregate amount of parking revenue was derived from monthly parking revenues, some of which are contractual agreements embedded in our leases, and some are at will individual agreements. In April, with stay-at-home orders and business closures, we generated minimal hourly/daily parking revenue and this trend may continue for as long as these stay-at-home orders and business closures continue.

Approximately 2% of our total revenue in 2019 was from our hotel, the Boston Marriott Cambridge. The hotel property has been closed since March 22, 2020 and is currently running at a monthly deficit. It is unclear when the hotel will open.
42As a result of the impact of the current environment, we expect our 2020 revenues to be impacted from (1) lower collections, primarily from our retail tenants, parking and hotel operators, (2) a slowdown in new leasing activity for vacant and expiring space and (3) delayed revenue recognition related to tenants who are currently building out space as a result of construction delays.

TableDespite the near-term challenges of Contents
COVID-19, we remain confident in our ability to weather the current market downturn and manage our business throughout uncertain future market conditions.

In this economic climate, we continue to focus on:As a leading developer, owner and manager of marquee Class A office properties in the U.S., our priorities during and following COVID-19 remain focused on the following:
ensuring tenant satisfaction;satisfaction by keeping our properties safe, open and available for occupancy;
implementing measures to ensure tenant and employee health security;
communicating openly with tenants to provide assurance before and during re-occupancy;
leasing available space in our in-service and development properties, as well as focusing on sizable future lease expirations well in advance;properties;
resuming and completing the construction of our development properties as conditions allow;

•
continuing and completing the redevelopment and repositioning of several key properties to increase future revenue and asset values over the long-term;
maintaining our conservative balance sheet and redevelopment properties;managing our near-term debt maturities;
continuingactively managing our operations in a safe, sustainable and completing the redevelopmentresponsible manner; and repositioning of several key properties to increase future revenues and asset values over the long-term, despite the adverse impact on near-term revenue and earnings;
maintaining discipline in our underwriting of investment opportunities by (1) seeking significant pre-leasing commitments before beginning new construction,opportunities.
Following is an overview of portfolio activity and (2) targeting acquisitionleasing activity in non-stabilized assets near innovation centers where we see the best prospects forfirst quarter of 2020, recognizing that both leasing activities and construction activities had slowed in the majority of our regions by the end of the first quarter due to COVID-19.
The overall growthoccupancy of our in-service office and our operational expertise can create value; and
managing our near-term debt maturities and maintaining our conservative balance sheet.
retail properties was 92.9% at March 31, 2020, a slight decrease of 10 basis points as compared to December 31, 2019. During the thirdfirst quarter of 2017,2020, we signed leases across our portfolio totaling approximately 2.6 million702,000 square feet which is higher than our trailing 10-year historical quarterly average of 1.4 million, and we commenced revenue recognition on approximately 1.3 million995,000 square feet of leases in second-generationsecond generation space. Of these second-generationsecond generation leases, approximately 1.0 million727,000 square feet had been vacant for less than one year and, in the aggregate, they had a slightrepresent an increase in net rental obligations (gross rent less operating expenses) of approximately 2%.93% over the prior leases. The muted increase in net rents was primarily due to tworental obligations included the commencement of a retail lease renewals in ourthe New York region and onethat had a significant impact on net rents. Excluding this lease, renewalincrease in our Washington, DC region. Across our portfolio we continue to experience increases in construction costs, which generally result in increased tenant allowances and costs to build out tenant spaces. However, this quarter’s statistics include several larger renewals with lower tenant allowance costs resulting in total transaction costs per square foot that do not reflect this trend. The overall occupancy of our in-service properties decreased to 90.2% at September 30, 2017 from 90.8% at June 30, 2017 due mainly to expected lease expirations at our 399 Park Avenue property.
Our investment strategy remains mostly unchanged. Other than possible acquisitions of value-add assets, such as those requiring lease-up or repositioning like Colorado Center in Santa Monica, California, we intend to continue to invest primarily in higher yielding new developments with significant pre-leasing commitments and redevelopment opportunities rather than lower yielding acquisitions of stabilized assets for which demand and pricing remain strong.
Our development activity remains vibrant. During the third quarter, we commenced development on two new build-to-suit office headquarters projects for Marriott International, Inc. and the Transportation Security Administration (TSA). We expect these office buildings to consist of an aggregate of approximately 1.4 million square feet and we expect our share of the estimated development costs to total approximately $525 million. In addition, during the third quarter we completed and fully placed in-service 888 Boylston Street, a Class A office and retail project with approximately 417,000 square feet located within our Prudential Center complex in Boston, Massachusetts. Including leases with future commencement dates, the project is 93% leased.
As of September 30, 2017, our development pipeline consists of eleven development/redevelopment projects representing approximately 5.7 million net rentable square feet. Our share of the total budgeted cost for these projects is approximately $3.1 billion, of which approximately $1.4 billion remained to be invested as of September 30, 2017. As of November 2, 2017, approximately 75% of the commercial space in these development projects is pre-leased.
During the third quarter, we further enhanced our liquidity through two secured debt financings aggregating $754.6 million in gross commitments with the $550 million mortgage financing placed on Colorado Center located in Santa Monica, California and a $204.6 million construction commitment collateralized by our Hub on Causeway development project located in Boston, Massachusetts. As a result of the Colorado Center financing the joint venture distributed $502.0 million to the partners, of which our share was $251.0 million. We own a 50% interest in Colorado Center and the Hub on Causeway joint ventures.
Given the relatively low interest rates currently available to usrental obligations in the debt markets, we may elect to supplement our liquidity position to provide additional capacity to fund our remaining capital requirements for existing development and redevelopment projects, refinance debt before maturity and pursue other attractive investment opportunities. Depending on the type and timingfirst quarter of financing, raising capital may result in us carrying additional cash and cash equivalents pending our use of the proceeds.
The same factors that create challenges to acquiring assets present opportunities for us to continue to review our portfolio to identify properties as potential sales candidates because they may no longer fit within our portfolio strategy or they could attract premium pricing in the current market environment. We expect to sell a modest number of non-core assets in 2017, subject to market conditions.

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2020 was 25%.
A brief overview of each of our markets follows.
Boston
The greaterOur Boston region continues to attract life science and established technology companies, as well as start-up technology and maker organizations. The Boston Central Business Districtcentral business district (“CBD”) submarket continues to be driven by lease expirations from traditional financial and professional services tenants and a steady flowin-service portfolio was approximately 99% leased as of new technology companies moving intoMarch 31, 2020. During the CBD. We made significant progress leasing the vacant space at our 200 Clarendon Street property by signingfirst quarter of 2020, we executed approximately 167,00093,000 square feet of leases during the third quarter, and we have signed a lease for an additionalhad approximately 60,000 square feet during October 2017. Our most active leasing opportunity is at the first phase of our Hub on Causeway development project with negotiations ongoing for approximately 140,000 of the 175,000267,000 square feet of leases commence in the Boston region. Approximately 183,000 square feet of the leases that commenced had been vacant for less than one year and represent an increase in net rental obligations of approximately 43% over the prior leases. For the majority of the first quarter of 2020, we continued development of 100 Causeway Street, an approximately 632,000 net rentable square foot office spacetower located in Boston, Massachusetts, of which we own 50%, that is not yet leased. We expect to complete the development95% pre-leased, as of this phase of the project in 2019.May 5, 2020.
The Cambridge office market continues to generate strong rental rates. Our approximately 1.62.0 million square foot in-service office portfolio in Cambridge was 99.5% leased, as of March 31, 2020. For the majority of the first quarter of 2020, we continued the development of 325 Main Street at Kendall Center in Cambridge, Massachusetts, which is dominated by large users and is 100% occupied. Our90% pre-leased to a tenant for a term of 15 years.
In our suburban Waltham/Lexington submarket continuesportfolio, we continued the redevelopment of a portion of 200 West Street, an approximately 261,000 net rentable square foot Class A office property in Waltham, Massachusetts. The redevelopment is a conversion of a portion of the property to strengthen duelaboratory space to meet growing demand in the organic growthlife sciences sector.
Construction of our existing tenant baseBoston and other tenants inCambridge developments/redevelopments has temporarily stopped to comply with the market looking for space to accommodate their expanding workforces. One examplesocial distancing policies and directives of this is a build-to-suit proposal for 50-60% of our 200,000 square foot CityPoint project. If completed, we would commence construction in early 2018 for delivery in late 2019.the cities.
Los Angeles
Our Los Angeles (“LA”) portfolio is currently focused on West LA and includes an approximately 1.1 million square foot property, Colorado Center, joint venture asset inof which we own 50%, and Santa Monica California isBusiness Park, a 21-building, approximately 93.7% leased, including leases with future commencement dates, as1.2 million square foot property of September 30, 2017. In our first year of ownership, our approach to property management, leasing and commitment to invest capital has transformed this once under-leased asset into a top-tier property in the marketplace. As a result, on July 28, 2017, the joint venture, in which we haveown 55%. We believe both properties provide us with ample opportunity for future growth, as a 50% interest, placed a $550.0 million, 10-year mortgagemajority of the current leases are at below-market rents. As of March 31, 2020, our LA in-service properties was approximately 96% leased. Depending on this previously unencumbered asset. We continue to execute on our repositioning plans and are currently working with local permitting authorities to commence construction on an amenities enhancement project in late 2017.
We are committed to growing our presence and portfolio in the Los Angeles market andconditions, we expect to continue to underwrite investmentexplore opportunities to increase our presence in thisthe LA market while maintainingby seeking investments where our disciplined investment approach.financial, operational, redevelopment and development expertise provide the opportunity to achieve accretive returns.

New York
Our overall expectations for the midtown Manhattan office market and the leasing activity in our portfolio are generally consistent with recent quarters. New supply continues to come into the market in the formAs of new deliveries and large lease expirations. As a result, tenants have increasing options, and therefore we do not expect significant growth in office rents in the near-term, and we are experiencing higher tenant concessions. However, we are encouraged, in the third quarter, by continued leasing by tenants of high-end space at rental rates in excess of $100 per square foot. As expected,March 31, 2020, our New York CityCBD in-service portfolio occupancy decreased to 90.0% aswas approximately 96% leased. In the first quarter of September 30, 2017 from 92.9% as of June 30, 2017 due mainly to lease expirations at 399 Park Avenue. We signed a full-floor lease and have good activity on the remaining space with tours and proposals. We do not expect revenue from replacement tenants to begin prior to 2019.
During the third quarter,2020, we completed a lease renewal with Aramis (Estee Lauder) at 767 Fifth Avenue (the General Motors Building). They are currently ancommenced approximately 295,000 square foot tenant and have committed to a minimum of 220,000 square feet with a right to expand. This transaction limits the available space in the building for the next several years. In addition, on November 1, 2017, we completed a long-term lease renewal with Ann Taylor at Times Square Tower for their 2020 lease expiration.
San Francisco
The San Francisco CBD leasing market remains healthy and among the strongest markets in the United States. We continue to benefit from this strength as evidenced by the approximately 170,000263,000 square feet of second generation leases that commenced duringin the third quarter of 2017, which haveNew York region. Of these leases, approximately 143,000 square feet had been vacant for less than one year and providerepresent an average increase in net rental obligations of approximately 24.3%205% over the prior leases. Excluding the commencement of a retail lease that had a significant impact on leases, the increase in net rental obligations was 3.9%. Although the pace of new leasing activities in our New York region slowed by the end of the first quarter due to COVID-19, in April 2020, we signed an approximately 24,000 square foot lease at 399 Park Avenue bringing the office portion of that property to 100% leased, and we also signed an approximately 27,000 square foot lease at Times Square Tower with a law firm.
San Francisco
Our near-term leasingSan Francisco CBD in-service properties were approximately 98% leased as of March 31, 2020. During the first quarter of 2020, we commenced approximately 169,000 square feet of leases in the San Francisco region. Of these leases, approximately 111,000 square feet had been vacant for less than one year and represent an increase in net rental obligations of approximately 50% over the prior leases.
In our Silicon Valley portfolio, on February 20, 2020, we completed the acquisition of land underlying the ground lease at Platform 16 in San Jose. Platform 16 is a joint venture in which we own 55% and consists of a parcel of land totaling approximately 5.6 acres that is expected to support the development of approximately 1.1 million square feet of commercial office space. On January 28, 2020, the joint venture commenced site preparation work at Platform 16. Due to the uncertainty related to COVID-19, and in consultation with our partner, the joint venture has paused construction activities and will revisit its plans once the economic impact of COVID-19 becomes clearer.
On January 28, 2020, we entered into a joint venture with a partner to own, operate and develop approximately 1.1 million square feet of existing office and lab properties in South San Francisco, California, with the opportunity for approximately 640,000 square feet of additional future development.  Upon completion, the joint venture is expected to own an approximately 1.7 million square foot life sciences campus, including a mix of office and lab buildings.  Under the joint venture agreement, we contributed 601, 611 and 651 Gateway Boulevard, three existing office properties that total approximately 768,000 net rentable square feet, and developable land for our 50% ownership interest in the joint venture.  The partner contributed approximately 313,000 square feet of properties (including one property under construction) consisting of lab, office and amenity buildings, and developable land and will contribute cash totaling approximately $69.2 million in the future for its 50% ownership interest in the joint venture.  As a result of the partner’s deferred contribution, we have an initial approximately 55% interest in the joint venture. The South San Francisco market has experienced strong demand from companies in the life sciences sector. Depending on market conditions, we expect this joint venture will allow us to expand the amount of developable land on the combined site and efficiently capitalize on tenant demand in the life sciences sector.
Washington, DC
In the Washington, DC region, our focus remains on (1) expanding our development potential in Reston, Virginia, where demand from technology and cybersecurity tenants remains strong, (2) divesting of assets in Washington, DC and select suburban markets and (3) matching development sites with tenants to begin development with significant pre-leasing commitments. During the lease upfirst quarter of Salesforce Tower, for which2020, we signed leases totalingcommenced approximately 350,000600,000 square feet in 2017. As of November 2, 2017, Salesforce Tower is 87% leased. We are in lease negotiations for another five floors totaling approximately 152,000 square feet which, if signed, would bring the project to approximately 98% leased and tour activity remains active. We received our temporary certificate of occupancy during the third quarter 2017 and expect the first tenant to occupy this building in January 2018.

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Washington, DC
Overall market conditionsleases in the Washington, DC region. Of these leases, approximately 275,000 square feet had been vacant for less than one year and represent an increase in net rental obligations of approximately 13% over the prior leases.
In our Reston, Virginia portfolio, in the first quarter of 2020, we placed in service 17Fifty Presidents Street, a build-to-suit project with approximately 276,000 net rentable square feet of Class A office space that is 100% leased to an affiliate of Leidos Holdings, Inc. We also continued development of Reston Gateway, our mixed-use development project, which will consist of an aggregate of approximately 4.5 million net rentable square feet. The initial phase is approximately 1.1 million net rentable square feet, of which approximately 72% is pre-leased to Fannie Mae. Our Reston, Virginia in-service portfolio was approximately 87% leased as of March 31, 2020 and continues to be the strongest submarket in the region.

In the first quarter of 2020, we completed the sale of New Dominion Technology Park located in Herndon, Virginia for a gross sale price of $256.0 million, resulting in net proceeds of approximately $254.0 million and reported gain on sale of approximately $192.3 million for BXP and approximately $197.1 million for BPLP. New Dominion Technology Park is comprised of two Class A office properties aggregating approximately 493,000 net rentable square feet.
Our Washington, DC CBD in-service properties were approximately 85% leased, as of March 31, 2020, with modest near-term exposure and we have not changedreduced our exposure in any meaningful waythe Washington, DC CBD market significantly over the past few quarters. years through dispositions of assets.
Leasing activity remains very competitive primarily because there has been no significant increase in demand, yet supply has increased. Outside of the district, our Reston Town Center properties are approximately 97.3% leased, and leasing activity is healthy for our available and near-term expiring space.Statistics
Our development activities are active as we secured two significant commitments during the third quarter of 2017 aggregating approximately 1.4 million square feet of new build-to-suit projects - Marriott’s worldwide headquarters in Bethesda, Maryland, and the new headquarters for the Transportation Security Administration (TSA) in Springfield, Virginia. In addition, we are working to secure anchor tenancies for four tenant requirements totaling approximately 2.1 million square feet, which would support the construction of four additional projects - two in Washington, DC and two in Reston, Virginia.
The table below details the leasing activity, including 100% of the unconsolidated joint ventures, that commenced during the three and nine months ended September 30, 2017:March 31, 2020:
  Three months ended September 30, 2017 Nine months ended September 30, 2017
  (Square Feet)
Vacant space available at the beginning of the period 3,952,331
 4,196,275
Property dispositions/properties taken out of service —
 (115,289)
Properties acquired vacant space —
 15,944
Properties placed in-service 303,861
 386,599
Leases expiring or terminated during the period 1,523,017
 3,628,613
Total space available for lease 5,779,209
 8,112,142
1st generation leases
 225,125
 302,578
2nd generation leases with new tenants
 624,427
 2,064,896
2nd generation lease renewals
 671,715
 1,486,726
Total space leased (1) 1,521,267
 3,854,200
Vacant space available for lease at the end of the period 4,257,942
 4,257,942
     
Leases executed during the period, in square feet (2) 2,565,971
 4,058,416
     
Second generation leasing information: (3)
    
Leases commencing during the period, in square feet 1,296,142
 3,551,622
Weighted Average Lease Term 93 Months
 95 Months
Weighted Average Free Rent Period 102 Days
 111 Days
Total Transaction Costs Per Square Foot (4) 
$43.66
 
$54.48
Increase in Gross Rents (5) 1.34% 10.44%
Increase in Net Rents (6) 1.54% 15.97%
Three Months Ended March 31, 2020
Total Square Feet
Vacant space available at the beginning of the period3,135,170
Vacant space in properties acquired—
Properties placed (and partially placed) in-service (1)280,965
Leases expiring or terminated during the period1,085,416
Total space available for lease4,501,551
1st generation leases
321,456
2nd generation leases with new tenants
566,136
2nd generation lease renewals
428,887
Total space leased (2)1,316,479
Vacant space available for lease at the end of the period3,185,072

Leases executed during the period, in square feet (3)701,730
Second generation leasing information: (4)
Leases commencing during the period, in square feet995,023
Weighted Average Lease Term99 Months
Weighted Average Free Rent Period108 Days
Total Transaction Costs Per Square Foot (5)
$71.96
Increase in Gross Rents (6)62.08%
Increase in Net Rents (7)93.22%
_____________________________________________
(1)Total square feet of properties placed (and partially placed) in-service during the three months ended March 31, 2020 consists of 5,156 at 145 Broadway and 275,809 at 17Fifty Presidents Street.
(2)Represents leases for which rentallease revenue recognition has commenced in accordance with GAAP during the three and nine months ended September 30, 2017.March 31, 2020.
(2)(3)Represents leases executed during the three and nine months ended September 30, 2017March 31, 2020 for which we either (1) commenced rentallease revenue recognition in such period or (2) will commence rentallease revenue recognition in subsequent periods, in accordance with GAAP, and includes leases at properties currently under development. The total square feet of leases executed and recognized in the three and nine months ended September 30, 2017March 31, 2020 is 263,439 and 673,055, respectively.244,020.
(3)(4)Second generation leases are defined as leases for space that had previously been leased by us. Of the 1,296,142 and 3,551,622995,023 square feet of second generation leases that commenced during the three and nine months ended September 30, 2017, respectively,March 31, 2020, leases for 1,032,703 and 2,878,567756,159 square feet were signed in prior periods.
(4)(5)Total transaction costs include tenant improvements and leasing commissions, andbut exclude free rent concessions and other inducements in accordance with GAAP.
(5)(6)Represents the increase in gross rent (base rent plus expense reimbursements) on the new versus expired leases on the 1,005,495 and 2,641,599727,342 square feet of second generation leases that had been occupied within the prior 12 months

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months for the three and nine months ended September 30, 2017, respectively;March 31, 2020; excludes leases that management considers temporary because the tenant is not expected to occupy the space on a long-term basis.
(6)(7)Represents the increase in net rent (gross rent less operating expenses) on the new versus expired leases on the 1,005,495 and 2,641,599727,342 square feet of second generation leases that had been occupied within the prior 12 months for the three and nine months ended September 30, 2017, respectively;March 31, 2020; excludes leases that management considers temporary because the tenant is not expected to occupy the space on a long-term basis.
Transactions during the three months ended September 30, 2017March 31, 2020 included the following:
Development activitiesDevelopment/redevelopment
On August 7, 2017,January 28, 2020, we entered into a joint venture with The Bernstein Companiesexercised our option to develop an approximately 722,000 net rentable square foot (subject to adjustment based on finalized building design) build-to-suit Class A office building and below-grade parking garageacquire real property at 7750 Wisconsin Avenue425 Fourth Street located in Bethesda, Maryland. The joint venture entered into a lease agreement with an affiliate of Marriott International, Inc., under which Marriott will lease 100% of the office building and garageSan Francisco, California for a termpurchase price totaling approximately $134.1 million. 425 Fourth Street is expected to support the development of 20 years, andapproximately 804,000 square feet of primarily commercial office space. There can be no assurance that the buildingacquisition will serve as Marriott’s new worldwide headquarters. Marriott has agreed to fund 100% ofbe consummated on the related tenant improvement costs and leasing commissions for the office building. We will serve as co-development manager for the venture and expect to commence construction in 2018. We and The Bernstein Companies each own a 50% interest in the joint venture. (See Notes 4 and 7 to the Consolidated Financial Statements).terms currently contemplated or at all.
On August 24, 2017,March 26, 2020, we entered intocompleted and fully placed in-service 17Fifty Presidents Street located in Reston, Virginia. 17Fifty Presidents Street is a 15-year leasebuild-to-suit project with the General Services Administration under which we will develop the new headquarters for the TSA. The TSA will occupy 100% of the approximately 623,000276,000 net rentable square feet of Class A office space that is 100% leased.
Dispositions
On January 28, 2020, we entered into a joint venture with a third party to own, operate and a parking garagedevelop properties at 6595 Springfield Center Driveour Gateway Commons complex located in Springfield, Virginia. ConcurrentlySouth San Francisco, California. We contributed our 601, 611 and 651 Gateway properties and development rights with an agreed upon value aggregating approximately $350.0 million for our 50% interest in the executionjoint venture. 601, 611 and 651 Gateway consist of the lease, we commenced development of the project and expect the building to be available for occupancy by the fourth quarter of 2020.
On September 16, 2017, we completed and fully placed in-service 888 Boylston Street, athree Class A office and retail project withproperties aggregating approximately 417,000768,000 net rentable square feet locatedfeet. The partner contributed three properties and development rights with an agreed upon value aggregating approximately $280.8 million at closing and will contribute cash totaling approximately $69.2 million in Boston, Massachusetts. The property is 93% leased.
Acquisitionthe future for its 50% ownership interest in the joint venture. As a result of the partner’s deferred contribution, we have an initial approximately 55% interest in the joint venture. Future development projects will be owned 49% by us and disposition activities51% by the partner. We recognized a gain on the retained and sold interest in the real estate contributed to the joint venture totaling approximately $217.7 million for BXP and $222.4 million for BPLP during the three months ended March 31, 2020, within Gains (Losses) on Sales of Real Estate on the respective Consolidated Statements of Operations, as the fair value of the real estate exceeded its carrying value (See Notes 3 and 5 to the Consolidated Financial Statements).
On August 30, 2017,February 20, 2020, we completed the sale of our Reston Eastgate propertyNew Dominion Technology Park located in Reston,Herndon, Virginia for a gross sale price of $14.0$256.0 million. Net cash proceeds totaled approximately $13.2$254.0 million, resulting in a gain on sale of real estate totaling approximately $2.8 million. Reston Eastgate$192.3 million for BXP and approximately $197.1 million for BPLP. New Dominion Technology Park is a parcelcomprised of land containingtwo Class A office properties aggregating approximately 21.7 acres located at 11011 Sunset Hills Road.493,000 net rentable square feet.
JointUnconsolidated joint venture activities
•
On January 28, 2020, we entered into a joint venture with a third party to own, operate and develop properties at its Gateway Commons complex located in South San Francisco, California. We will have a 50% interest in the joint venture. See “Dispositions” above for additional information.
On July 10, 2017, we acquired an additional 0.2% interest in the unconsolidated joint venture that owns Colorado Center located in Santa Monica, California for approximately $2.1 million in cash. Following the acquisition, we own a 50% interest in the joint venture.
Capital markets activities
On JulyJanuary 28, 2017,2020, a joint venture in which we ownhave a 50%55% interest obtained mortgage financing collateralized bycommenced development of the first phase of its Colorado Center propertyPlatform 16 project located in Santa Monica, California totaling $550.0 million.San Jose, California. The mortgage financing bears interest at a fixed rate of 3.56% per annum and matures on August 9, 2027. The loan requires interest-only payments during the 10-year termfirst phase of the loan,Platform 16 development project consists of an approximately 390,000 net rentable square foot Class A office building and a below-grade parking garage. Though the joint venture has completed site preparation work, in consultation with our partner, the entire principal amount due at maturity.joint venture has paused construction activities and it will revisit its plans once the economic impact of COVID-19 becomes clearer. On February 20, 2020, the joint venture acquired the land underlying the ground lease for a purchase price totaling approximately $134.8 million. The joint venture distributed $502.0had previously made a deposit totaling $15.0 million,

which deposit was credited against the purchase price. Platform 16 consists of a parcel of land totaling approximately 5.6 acres that is expected to support the partners, of which our share was $251.0 million. Colorado Center is a six-building office complex that sits on a 15-acre site and contains an aggregatedevelopment of approximately 1,118,000 net rentable1.1 million square feet with an underground parking garage for 3,100 vehicles.of commercial office space.
On September 6, 2017,March 18, 2020, a joint venture in which we have a 50% interest obtained construction financing with a total commitment of $204.6 millionextended the mortgage loan collateralized by its Hub on Causeway development project.  The construction financing bearsAnnapolis Junction Building Seven and Building Eight. At the time of the extension, the outstanding balance of the loan totaled approximately $34.6 million, bore interest at a variable rate equal to LIBOR plus 2.25%2.35% per annum and matured on March 6, 2020. The extended loan matures on June 30, 2020. Annapolis Junction Building Seven and Building Eight are Class A office properties with approximately 127,000 and 126,000 net rentable square feet, respectively, located in Annapolis, Maryland.
Transactions completed subsequent to March 31, 2020 included the following:
On April 22, 2020, a joint venture in which we have a 20% interest extended the mortgage loan collateralized by Metropolitan Square located in Washington, DC. At the time of the extension, the outstanding balance of the loan totaled approximately $156.4 million and was scheduled to mature on May 5, 2020. The extended loan continues to bear interest at a fixed rate of 5.75% per annum and matures on September 6, 2021,August 5, 2020. Metropolitan Square is a Class A office property with two, one-year extension options, subject to certain conditions.  As of September 30, 2017, the venture had not drawn any funds under the loan. The Hub on Causeway is an approximately 385,000654,000 net rentable square foot project containing retail and office space located in Boston, Massachusetts.feet.

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There were no transactions completed subsequent to September 30, 2017.
•
On May 5, 2020, BPLP completed a public offering of $1.25 billion in aggregate principal amount of its 3.250% unsecured senior notes due 2031. The notes were priced at 99.850% of the principal amount to yield an effective rate (including financing fees) of approximately 3.343% per annum to maturity. The notes will mature on January 30, 2031, unless earlier redeemed. The aggregate net proceeds from the offering were approximately $1.24 billion after deducting underwriting discounts and estimated transaction expenses.
Critical Accounting Policies
Management’s Discussion and Analysis of Financial Condition and Results of Operations discuss our Consolidated Financial Statements, which have been prepared in accordance with generally accepted accounting principles (“GAAP”). The preparation of these financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Certain accounting policies are considered to be critical accounting policies, as they require management to make assumptions about matters that are highly uncertain at the time the estimate is made and changes in accounting estimate are reasonably likely to occur from period to period. Management bases its estimates and assumptions on historical experience and current economic conditions. On an on-going basis, management evaluates its estimates and assumptions including those related to revenue, impairment of long-lived assets and the allowance for doubtful accounts. Actual results may differ from those estimates and assumptions.
Our Annual Report on Form 10-K for the year ended December 31, 20162019 contains a discussion of our critical accounting policies, except for our policies established following the adoption of each ofAccounting Standards Update (“ASU”) ASU 2016-092016-13, ASU 2018-13, ASU 2018-17 and ASU 2017-01.2020-04. The adoption of each of ASU 2016-09 and ASU 2017-01the pronouncements is discussed in Note 2 to our Consolidated Financial Statements. Management discusses and reviews our critical accounting policies and management’s judgments and estimates with BXP’s Audit Committee.
Results of Operations for the Nine the Three Months EndedSeptember 30, 2017 March 31, 2020 and2016 2019
The full extent of the impact of COVID-19 on our business, operations and financial results will depend on numerous evolving factors that we may not be able to accurately predict. In addition, we cannot predict the impact that COVID-19 will have on our tenants, employees, contractors, lenders, suppliers, vendors and joint venture partners; any material effect on these parties could also have a material adverse effect on us. The impact of COVID-19 on our revenue, in particular lease and parking revenue for the second quarter of 2020 and thereafter, also cannot be determined at present. The situation surrounding COVID-19 remains fluid, and we are actively managing our response in collaboration with tenants, government officials and joint venture partners and assessing potential impacts to our financial position and operating results, as well as potential adverse developments in our business. See Item 1A: “Risk Factors” for additional details.

Net income attributable to Boston Properties, Inc. common shareholders and net income attributable to Boston Properties Limited Partnership common unitholders decreasedincreased approximately $7.0$399.4 million and $13.3$453.0 million for the ninethree months ended September 30, 2017March 31, 2020 compared to 2016,2019, respectively, as detailed in the following tables and for the reasons discussed below under the heading “Comparison of the ninethree months ended September 30, 2017March 31, 2020 to the ninethree months ended September 30, 2016” March 31, 2019”within “Item “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations.Operations.”
The following are reconciliations of net income attributableNet Income Attributable to Boston Properties, Inc. common shareholders Common Shareholders to net operating incomeNet Operating Income and net income attributableNet Income Attributable to Boston Properties Limited Partnership common unitholdersCommon Unitholders to net operating incomeNet Operating Income for the ninethree months ended September 30, 2017March 31, 2020 and 20162019 (in thousands):


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Boston Properties, Inc.
 Total Property Portfolio Three months ended March 31,
 2017 2016 Increase/
(Decrease)		 %
Change		 2020 2019 Increase/
(Decrease)		 %
Change
Net Income Attributable to Boston Properties, Inc. Common Shareholders $348,086
 $355,114
 $(7,028) (1.98)% $497,496
 $98,105
 $399,391
 407.11 %
Preferred dividends 7,875
 7,796
 79
 1.01 % 2,625
 2,625
 —
 — %
Net Income Attributable to Boston Properties, Inc. 355,961
 362,910
 (6,949) (1.91)% 500,121
 100,730
 399,391
 396.50 %
Net Income Attributable to Noncontrolling Interests:                
Noncontrolling interest—common units of the Operating Partnership 40,350
 42,120
 (1,770) (4.20)% 57,539
 11,599
 45,940
 396.07 %
Noncontrolling interests in property partnerships 33,967
 53
 33,914
 63,988.68 % 19,486
 18,830
 656
 3.48 %
Net Income 430,278
 405,083
 25,195
 6.22 % 577,146
 131,159
 445,987
 340.04 %
Gains on sales of real estate 6,791
 80,606
 (73,815) (91.58)%
Income Before Gains on Sales of Real Estate 423,487
 324,477
 99,010
 30.51 %
Other Expenses:                
Add:                
Losses from interest rate contracts
—
 140
 (140) (100.00)%
Interest expense 282,709
 314,953
 (32,244) (10.24)% 101,591
 101,009
 582
 0.58 %
Impairment loss —
 24,038
 (24,038) (100.00)%
Other Income:     

 
        
Less:                
Gains (losses) from early extinguishments of debt 14,354
 (371) 14,725
 3,969.00 %
Gains from investments in securities 2,716
 1,713
 1,003
 58.55 %
Gains (losses) from investments in securities (5,445) 2,969
 (8,414) (283.40)%
Interest and other income 3,447
 6,657
 (3,210) (48.22)% 3,017
 3,753
 (736) (19.61)%
Income from unconsolidated joint ventures 7,035
 5,489
 1,546
 28.17 %
Operating Income 678,644
 626,082
 52,562
 8.40 %
Gains (losses) on sales of real estate 410,165
 (905) 411,070
 45,422.10 %
Income (loss) from unconsolidated joint ventures (369) 213
 (582) (273.24)%
Other Expenses:                
Add:                
Depreciation and amortization expense 463,288
 516,371
 (53,083) (10.28)% 171,094
 164,594
 6,500
 3.95 %
Impairment loss —
 1,783
 (1,783) (100.00)%
Transaction costs 572
 1,187
 (615) (51.81)% 615
 460
 155
 33.70 %
Payroll and related costs from management services contracts 3,237
 3,395
 (158) (4.65)%
General and administrative expense 84,319
 79,936
 4,383
 5.48 % 36,454
 41,762
 (5,308) (12.71)%
Other Revenue:     

 

        
Less:                
Direct reimbursements of payroll and related costs from management services contracts 3,237
 3,395
 (158) (4.65)%
Development and management services revenue 24,648
 18,586
 6,062
 32.62 % 7,879
 9,277
 (1,398) (15.07)%
Net Operating Income $1,202,175
 $1,206,773
 $(4,598) (0.38)% $471,653
 $447,715
 $23,938
 5.35 %


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Boston Properties Limited Partnership
 Total Property Portfolio Three months ended March 31,
 2017 2016 Increase/
(Decrease)		 %
Change		 2020 2019 Increase/
(Decrease)		 %
Change
Net Income Attributable to Boston Properties Limited Partnership Common Unitholders $395,199
 $408,540
 $(13,341) (3.27)% $566,333
 $113,382
 $452,951
 399.49 %
Preferred distributions 7,875
 7,796
 79
 1.01 % 2,625
 2,625
 —
 — %
Net Income Attributable to Boston Properties Limited Partnership 403,074
 416,336
 (13,262) (3.19)% 568,958
 116,007
 452,951
 390.45 %
Net Income Attributable to Noncontrolling Interests:                
Noncontrolling interests in property partnerships 33,967
 53
 33,914
 63,988.68 % 19,486
 18,830
 656
 3.48 %
Net Income 437,041
 416,389
 20,652
 4.96 % 588,444
 134,837
 453,607
 336.41 %
Gains on sales of real estate 7,368
 82,775
 (75,407) (91.10)%
Income Before Gains on Sales of Real Estate 429,673
 333,614
 96,059
 28.79 %
Other Expenses:                
Add:                
Losses from interest rate contracts —
 140
 (140) (100.00)%
Interest expense 282,709
 314,953
 (32,244) (10.24)% 101,591
 101,009
 582
 0.58 %
Impairment loss —
 22,272
 (22,272) (100.00)%
Other Income:                
Less:                
Gains (losses) from early extinguishments of debt 14,354
 (371) 14,725
 3,969.00 %
Gains from investments in securities 2,716
 1,713
 1,003
 58.55 %
Gains (losses) from investments in securities (5,445) 2,969
 (8,414) (283.40)%
Interest and other income 3,447
 6,657
 (3,210) (48.22)% 3,017
 3,753
 (736) (19.61)%
Income from unconsolidated joint ventures 7,035
 5,489
 1,546
 28.17 %
Operating Income 684,830
 635,219

49,611
 7.81 %
Gains (losses) on sales of real estate 419,654
 (905) 420,559
 46,470.61 %
Income (loss) from unconsolidated joint ventures (369) 213
 (582) (273.24)%
Other Expenses:                
Add:                
Depreciation and amortization expense 457,102
 507,234
 (50,132) (9.88)% 169,285
 162,682
 6,603
 4.06 %
Impairment loss —
 1,783
 (1,783) (100.00)%
Transaction costs 572
 1,187
 (615) (51.81)% 615
 460
 155
 33.70 %
Payroll and related costs from management services contracts 3,237
 3,395
 (158) (4.65)%
General and administrative expense 84,319
 79,936
 4,383
 5.48 % 36,454
 41,762
 (5,308) (12.71)%
Other Revenue:                
Less:                
Direct reimbursements of payroll and related costs from management services contracts 3,237
 3,395
 (158) (4.65)%
Development and management services revenue 24,648
 18,586
 6,062
 32.62 % 7,879
 9,277
 (1,398) (15.07)%
Net Operating Income $1,202,175
 $1,206,773
 $(4,598) (0.38)% $471,653
 $447,715
 $23,938
 5.35 %


At September 30, 2017March 31, 2020 and September 30, 2016,2019, we owned or had interests in a portfolio of 177 and 174196 commercial real estate properties respectively (in each case, the “Total Property Portfolio”). As a result of changes within our Total Property Portfolio, the financial data presented below shows significant changes in revenue and expenses from period-to-period. Accordingly, we do not believe that our period-to-period financial data with respect to the Total Property Portfolio is necessarily meaningful. Therefore, the comparison of operating results for the three and nine months ended September 30, 2017March 31, 2020 and 20162019 show separately the changes attributable to the properties that were owned by us and in-service throughout each period compared (the “Same Property Portfolio”) and the changes attributable to the properties included in the Acquired, Placed In-Service, Acquired, Development or Redevelopment andor Sold Portfolios.
In our analysis of operating results, particularly to make comparisons of net operating income between periods meaningful, it is important to provide information for properties that were in-service and owned by us throughout each period presented. We refer to properties acquired or placed in-service prior to the beginning of the earliest period presented and owned by us and in-service through the end of the latest period presented as our Same Property Portfolio. The Same Property Portfolio therefore excludes properties acquired, placed in-service acquired or in development or redevelopment after the beginning of the earliest period presented or disposed of prior to the end of the latest period presented.

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Net operating income (“NOI”) is a non-GAAP financial measure equal to net income attributable to Boston Properties, Inc. common shareholders orand net income attributable to Boston Properties Limited Partnership common unitholders, as applicable, the most directly comparable GAAP financial measures, plus (1) preferred dividends/distributions, net income attributable to noncontrolling interests, losses from interest rate contracts, interest expense, impairment loss, depreciation and amortization expense, impairment losses, transaction costs, payroll and related costs from management services contracts and corporate general and administrative expense less (2) gains on sales of real estate, gains (losses) from early extinguishments of debt, gains from investments in securities, interest and other income, gains (losses) on sales of real estate, income (loss) from unconsolidated joint ventures, direct reimbursements of payroll and related costs from management services contracts and development and management services revenue. We use NOI internally as a performance measure and believe it provides useful information to investors regarding our financial condition and results of operations and financial condition because, when compared across periods, it reflects the impact on operations from trends in occupancy rates, rental rates, operating costs and acquisition and development activity on an unleveraged basis, providing perspective not immediately apparent from net income attributable to Boston Properties, Inc. common shareholders and net income attributable to Boston Properties Limited Partnership common unitholders. For example, interest expense is not necessarily linked to the operating performance of a real estate asset and is often incurred at the corporate level as opposed to the property level. Similarly, interest expense may be incurred at the property level even though the financing proceeds may be used at the corporate level (e.g., used for other investment activity). In addition, depreciation and amortization expense, because of historical cost accounting and useful life estimates, depreciation and amortization expense may distort operating performance measures at the property level. NOI presented by us may not be comparable to NOI reported by other REITs or real estate companies that define NOI differently.
We believe that, in order to facilitate a clear understanding of our operating results, NOI should be examined in conjunction with net income attributable to Boston Properties, Inc. common shareholders and net income attributable to Boston Properties Limited Partnership common unitholders as presented in our Consolidated Financial Statements. NOI should not be considered as a substitute for net income attributable to Boston Properties, Inc. common shareholders or net income attributable to Boston Properties Limited Partnership common unitholders (determined in accordance with GAAP) or any other GAAP financial measures and should only be considered together with and as a supplement to our financial information prepared in accordance with GAAP.
The gains on sales of real estate, and depreciation expense and impairment losses may differ between BXP and BPLP as a result of previously applied acquisition accounting by BXP for the issuance of common stock in connection with non-sponsor OP Unit redemptions by BPLP. This accounting resulted in a step-up of the real estate assets at BXP that was allocated to certain properties. The difference between the real estate assets of BXP as compared to BPLP for certain properties having an allocation of the real estate step-up will result in a corresponding difference in the gains on sales of real estate, and depreciation expense and impairment losses, when those properties are sold. For additional information see the Explanatory Note that follows the cover page of this Quarterly Report on Form 10-Q.
Comparison of the ninethree months ended September 30, 2017March 31, 2020 to the ninethree months ended September 30, 2016.March 31, 2019
The table below shows selected operating information for the Same Property Portfolio and the Total Property Portfolio. The Same Property Portfolio consists of 144140 properties totaling approximately 38.639.1 million net rentable square feet, of space, excluding unconsolidated joint ventures. The Same Property Portfolio includes properties acquired or fully placed in-service on or prior to January 1, 20162019 and owned and in-servicein service through September 30, 2017.March 31, 2020. The Total Property Portfolio includes the effects of the other properties either acquired, placed in-service, acquired or in development or redevelopment after January 1, 20162019 or disposed of on or prior to September 30, 2017.March 31, 2020. This table includes a reconciliation from the Same Property Portfolio to the Total Property Portfolio by also providing information for the ninethree months ended September 30, 2017March 31, 2020 and 20162019 with respect to the properties that were acquired, placed in-service, acquired, in development or redevelopment or sold.


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 Same Property Portfolio 
Properties
Placed In-Service
Portfolio
 Properties
Acquired Portfolio		 
Properties in
Development or
Redevelopment
Portfolio
 Properties Sold Portfolio Total Property Portfolio
(dollars in thousands)2017 2016 
Increase/
(Decrease)
 
%
Change
 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 
Increase/
(Decrease)
 
%
Change
Rental Revenue:                               
Rental Revenue$1,793,037
 $1,737,375
 $55,662
 3.20 % $50,727
 $30,682
 $5,447
 $2,447
 $3,520
 $17,220
 $846
 $3,231
 $1,853,577
 $1,790,955
 $62,622
 3.50 %
Termination Income23,730
 59,681
 (35,951) (60.24)% —
 —
 —
 —
 (1,428) (892) —
 —
 22,302
 58,789
 (36,487) (62.06)%
Total Rental Revenue1,816,767
 1,797,056
 19,711
 1.10 % 50,727
 30,682
 5,447
 2,447
 2,092
 16,328
 846
 3,231
 1,875,879
 1,849,744
 26,135
 1.41 %
Real Estate Operating Expenses664,110
 641,839
 22,271
 3.47 % 14,640
 7,476
 1,320
 565
 10,560
 8,834
 689
 1,526
 691,319
 660,240
 31,079
 4.71 %
Net Operating Income (Loss), excluding residential and hotel1,152,657
 1,155,217
 (2,560) (0.22)% 36,087
 23,206
 4,127
 1,882
 (8,468)—
7,494
 157
 1,705
 1,184,560
 1,189,504
 (4,944) (0.42)%
Residential Net Operating Income (1)7,691
 7,703
 (12) (0.16)% —
 —
 —
 —
 7
 (623) —
 —
 7,698
 7,080
 618
 8.73 %
Hotel Net Operating Income (1)9,917
 10,189
 (272) (2.67)% —
 —
 —
 —
 —
 —
 —
 —
 9,917
 10,189
 (272) (2.67)%
Net Operating Income (Loss) (1)$1,170,265
 $1,173,109
 $(2,844) (0.24)% $36,087
 $23,206
 $4,127
 $1,882
 $(8,461) $6,871
 $157
 $1,705
 $1,202,175
 $1,206,773
 $(4,598) (0.38)%
 Same Property Portfolio Properties
Acquired Portfolio		 Properties
Placed In-Service
Portfolio		 
Properties in
Development or
Redevelopment
Portfolio
 Properties Sold Portfolio Total Property Portfolio
 2020 2019 
Increase/
(Decrease)
 
%
Change
 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 Increase/
(Decrease)		 %
Change
 (dollars in thousands)
Rental Revenue: (1)                               
Lease Revenue (Excluding Termination Income)$674,879
 $647,031
 $27,848
 4.30 % $3,553
 $—
 $12,843
 $—
 $2,148
 $4,331
 $4,496
 $13,371
 $697,919
 $664,733
 $33,186
 4.99 %
Termination Income2,399
 6,956
 (4,557) (65.51)% —
 —
 —
 —
 —
 —
 —
 (20) 2,399
 6,936
 (4,537) (65.41)%
Lease Revenue677,278

653,987

23,291
 3.56 % 3,553

—

12,843

—

2,148

4,331

4,496

13,351

700,318

671,669

28,649
 4.27 %
Parking and Other23,820
 24,757
 (937) (3.78)% —
 —
 514
 —
 6
 6
 1
 10
 24,341
 24,773
 (432) (1.74)%
Total Rental Revenue (1)701,098
 678,744
 22,354
 3.29 % 3,553
 —
 13,357
 —
 2,154
 4,337
 4,497
 13,361
 724,659
 696,442
 28,217
 4.05 %
Real Estate Operating Expenses252,219
 246,071
 6,148
 2.50 % 1,466
 —
 2,009
 —
 1,555
 2,360
 1,653
 5,312
 258,902
 253,743
 5,159
 2.03 %
Net Operating Income, Excluding Residential and Hotel448,879
 432,673
 16,206
 3.75 % 2,087
 —
 11,348
 —
 599
 1,977
 2,844
 8,049
 465,757
 442,699
 23,058
 5.21 %
Residential Net Operating Income (2)5,892
 3,941
 1,951
 49.51 % —
 —
 —
 —
 —
 —
 —
 —
 5,892
 3,941
 1,951
 49.51 %
Hotel Net Operating Income (2)4
 1,075
 (1,071) (99.63)% —
 —
 —
 —
 —
 —
 —
 —
 4
 1,075
 (1,071) (99.63)%
Net Operating Income$454,775
 $437,689
 $17,086
 3.90 % $2,087
 $—
 $11,348
 $—
 $599
 $1,977
 $2,844
 $8,049
 $471,653
 $447,715
 $23,938
 5.35 %
_______________
(1)Rental Revenue is equal to Revenue less Development and Management Services Revenue and Direct Reimbursements of Payroll and Related Costs from Management Services Revenue per the Consolidated Statements of Operations, excluding the residential and hotel revenue that is noted below. We use Rental Revenue internally as a performance measure and in calculating other non-GAAP financial measures (e.g., NOI), which provides investors with information regarding our performance that is not immediately apparent from the comparable non-GAAP measures and allows investors to compare operating performance between periods.
(2)For a detailed discussion of NOI, including the reasons management believes NOI is useful to investors, see page 50.49. Residential Net Operating Income for the ninethree months ended September 30, 2017March 31, 2020 and 20162019 is comprised of Residential Revenue of $12,461$9,956 and $12,509,$7,715 less Residential Expenses of $4,763$4,064 and $5,429,$3,774, respectively. Hotel Net Operating Income for the ninethree months ended September 30, 2017March 31, 2020 and 20162019 is comprised of Hotel Revenue of $33,859$6,825 and $33,919$8,938 less Hotel Expenses of $23,942$6,821 and $23,730,$7,863, respectively, per the Consolidated Statements of Operations.

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Same Property Portfolio
RentalLease Revenue (Excluding Termination Income)
RentalLease revenue from the Same Property Portfolio increased by approximately $55.7$27.8 million for the ninethree months ended September 30, 2017March 31, 2020 compared to 2016.2019. The increase was primarily the result of an increase in revenue from our leases and parking and other income of approximately $54.0 million and $3.2 million, respectively, partially offset by a decrease in other tenant recoveries of approximately $1.5 million. Rental revenue from our leases increased approximately $54.0 million as a result of our average revenue per square foot increasing by approximately $2.02, which contributed$2.32, contributing approximately $54.8$22.4 million, partially offset by a decrease ofand an approximately $0.8$5.4 million increase due to a decrease inour average occupancy increasing from 91.58%93.6% to 91.53%94.4%.
Upon the adoption of Accounting Standards Codification (“ASC”) 842 - Leases, any write-off for bad debt, including accrued rent, will be shown as a reduction to lease revenue. However, the degree to which our tenants’ businesses are negatively impacted by COVID-19 could result in a reduction in our cash flows or require that we write-off a tenant’s accrued rent balance and this could have a material adverse effect on lease revenue. See Item 1A: “Risk Factors” for additional details.
Termination Income
Termination income decreased by approximately $36.0$4.6 million for the ninethree months ended September 30, 2017March 31, 2020 compared to 2016.2019.
Termination income for the ninethree months ended September 30, 2017March 31, 2020 related to twenty-nine15 tenants across the Same Property Portfolio and totaled approximately $23.7$2.4 million, of which approximately $14.2 million and $5.1 millionwas primarily related to tenants that terminated leases early at 767 Fifth Avenue (the General Motors Building) and 399 Park Avenue, respectively. Both of these buildings are located in New York City. In addition, we receivedCity and the fifth interim distribution from our unsecured creditor's claim against Lehman Brothers, Inc. of approximately $0.4 million (See Note 7 to the Consolidated Financial Statements). Recently, claims of similar priority to that of our remaining claim were quoted privately reflecting a value for our remaining claim of approximately $1.0 million; however, there can be no assurance as to the timing or amount of additional proceeds, if any, that we may receive.Boston region.
Termination income for the ninethree months ended September 30, 2016March 31, 2019 related to thirty11 tenants across the Same Property Portfolio and totaled approximately $59.7$7.0 million, of which approximately $58.8$4.9 million wasis from our New York region. On February 3, 2016, we entered into a lease termination agreement with a tenant for an approximately 85,000 square foot leasetwo tenants that terminated leases early at our 250 West 55th Street property located399 Park Avenue in New York City.  The lease was scheduled to expire on February 28, 2035.  In consideration
Parking and Other Revenue
Parking and other revenue decreased by approximately $0.9 million for the terminationthree months ended March 31, 2020 compared to 2019, primarily due to a decrease in transient parking. Due to COVID-19, we expect to see a decrease in parking revenue, for fiscal year 2020, as a result of the lease, the tenant paid usmandatory business closures and “stay-at-home” orders. See Item 1A: “Risk Factors” for additional details.
Parking revenue generally consists of two primary components: revenue from monthly passes and hourly/daily parking revenue. During 2019, total parking revenue was approximately $45.0$100 million and our share of total parking revenue from unconsolidated joint ventures was approximately $13 million. The remaining approximately $12.4Approximately $40 million of termination incomethis aggregate amount of consolidated and unconsolidated parking revenue was derived from the New York region was primarily related to negotiated early releaseshourly/daily parking. In April, with three other tenants. In addition, during the nine months ended September 30, 2016,stay-at-home orders and business closures, we received the fourth interim distribution fromgenerated minimal hourly/daily parking revenue and this trend may continue for as long as these stay-at-home orders and business closures continue. Some of our unsecured creditor’s claim against Lehman Brothers, Inc. of approximately $1.4 million (See Note 7 to the Consolidated Financial Statements).monthly parking revenues are contractual agreements embedded in our leases, and some are at will individual agreements.
Real Estate Operating Expenses
Real estate operating expenses from the Same Property Portfolio increased by approximately $22.3$6.1 million, or 2.5%, for the ninethree months ended September 30, 2017March 31, 2020 compared to 20162019, due primarily to increases in real estate taxes and other real estate operating expenses of approximately $15.8$5.3 million, or 5.1%4.2%, and $6.5$0.8 million, or 1.9%0.7%, respectively. The increase in real estate taxes was primarily experienced in the New York CBD properties.
Properties Acquired Portfolio
The table below lists the properties acquired between January 1, 2019 and March 31, 2020. Rental revenue and real estate operating expenses increased by approximately $3.6 million and $1.5 million, respectively, for the three months ended March 31, 2020 compared to 2019, as detailed below.
    Square Feet Rental Revenue Real Estate Operating Expenses
Name Date acquired  2020 2019 Change 2020 2019 Change
      (dollars in thousands)
880 and 890 Winter Street August 27, 2019 392,568
 $3,553
 $—
 $3,553
 $1,466
 $—
 $1,466
    392,568
 $3,553
 $—
 $3,553
 $1,466
 $—
 $1,466

Properties Placed In-Service Portfolio
The table below lists the properties that were placed in-service or partially placed in-service frombetween January 1, 2016 through September 30, 2017.2019 and March 31, 2020. Rental revenue and real estate operating expenses from our Properties Placed In-Service Portfolio increased by approximately $20.0$13.4 million and $7.2$2.0 million, respectively, for the ninethree months ended September 30, 2017March 31, 2020 compared to 20162019, as detailed below.


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  Quarter Initially Placed In-Service Quarter Fully Placed In-Service   Rental Revenue Real Estate Operating Expenses
Name   Square Feet 2017 2016 Change 2017 2016 Change
        (dollars in thousands)
601 Massachusetts Avenue Third Quarter, 2015 Second Quarter, 2016 478,818
 $27,716
 $24,938
 $2,778
 $6,871
 $5,568
 $1,303
804 Carnegie Center Second Quarter, 2016 Second Quarter, 2016 130,000
 4,195
 2,576
 1,619
 1,024
 1,066
 (42)
10 CityPoint Second Quarter, 2016 Second Quarter, 2016 241,460
 8,661
 3,002
 5,659
 2,563
 789
 1,774
Reservoir Place North Second Quarter, 2016 Second Quarter, 2017 73,258
 —
 (8) 8
 225
 34
 191
888 Boylston Street Third Quarter, 2016 Third Quarter, 2017 417,000
 10,155
 174
 9,981
 3,957
 19
 3,938
      1,340,536
 $50,727
 $30,682
 $20,045
 $14,640
 $7,476
 $7,164
  Quarter Initially Placed In-Service Quarter Fully Placed In-Service   Rental Revenue Real Estate Operating Expenses
Name   Square Feet 2020 2019 Change 2020 2019 Change
        (dollars in thousands)
20 CityPoint Second Quarter, 2019 N/A 211,000
 $1,849
 $—
 $1,849
 $588
 $—
 $588
145 Broadway Fourth Quarter, 2019 Fourth Quarter, 2019 488,862
 10,910
 —
 10,910
 1,188
 —
 1,188
17Fifty Presidents Street First Quarter, 2020 First Quarter, 2020 275,809
 598
 —
 598
 233
 —
 233
      975,671

$13,357

$—

$13,357

$2,009

$—

$2,009
Properties Acquiredin Development or Redevelopment Portfolio
The table below lists the properties acquiredthat were in development or redevelopment between January 1, 20162019 and September 30, 2017.March 31, 2020. Rental revenue and real estate operating expenses increased by approximately $3.0 million and $0.8 million, respectively for the nine months ended September 30, 2017 compared to 2016, as detailed below.
      Rental Revenue Real Estate Operating Expenses
Name Date acquired Square Feet 2017 2016 Change 2017 2016 Change
      (dollars in thousands)
3625-3635 Peterson Way April 22, 2016 218,366
 $4,395
 $2,447
 $1,948
 $876
 $565
 $311
103 Carnegie Center May 15, 2017 96,332
 1,052
 —
 1,052
 444
 —
 444
    314,698
 $5,447
 $2,447
 $3,000
 $1,320
 $565
 $755
Properties in Development or Redevelopment Portfolio
The table below lists the properties we placed in development or redevelopment between January 1, 2016 and September 30, 2017. Rental revenue decreased by approximately $14.2 million and real estate operating expenses increased by approximately $1.7 million, from our Properties in Development or Redevelopment Portfolio decreased by approximately $2.2 million and $0.8 million, respectively, for the ninethree months ended September 30, 2017March 31, 2020 compared to 2016, as detailed below.2019.
   Rental Revenue Real Estate Operating Expenses   Rental Revenue Real Estate Operating Expenses
Name Date commenced development / redevelopment Square Feet 2017 2016 Change 2017 2016 Change Date Commenced Development / Redevelopment Square Feet 2020 2019 Change 2020 2019 Change
   (dollars in thousands)   (dollars in thousands)
One Five Nine East 53rd Street (1) August 19, 2016 220,000
 $1,350
 $10,707
 $(9,357) $6,562
 $6,100
 $462
 August 19, 2016 220,000
 $886
 $873
 $13
 $563
 $559
 $4
191 Spring Street (2) December 29, 2016 160,000
 —
 2,652
 (2,652) 2,821
 1,511
 1,310
145 Broadway (3) April 6, 2017 79,616
 742 2,969
 (2,227) 1,177
 1,223
 (46)
325 Main Street (1) May 9, 2019 115,000
 —
 1,200
 (1,200) 149
 493
 (344)
200 West Street (2) September 30, 2019 261,000
 1,268
 2,264
 (996) 843
 1,308
 (465)
 459,616
 $2,092
 $16,328
 $(14,236) $10,560
 $8,834
 $1,726
 596,000
 $2,154
 $4,337
 $(2,183) $1,555
 $2,360
 $(805)
__________________________
(1)
This is the low-rise portion of 601 Lexington Avenue in New York City. Rental revenue includes termination income of approximately $(1.4) million and $(0.9) million for the nine months ended September 30, 2017 and 2016, respectively. In addition, real estate operating expense includes demolition costs of approximately $5.4 million and $0.7 million for the nine months ended September 30, 2017 and 2016, respectively.
(2)Real estate operating expenses for the ninethree months ended September 30, 2017March 31, 2020 includes approximately $2.8$0.1 million of demolition costs.
(3)(2)On April 6, 2017, we commenced the development of 145 Broadway, a build-to-suit Class A office project with approximately 485,000 net rentable square feet located in Cambridge, Massachusetts. RealRental revenue and real estate operating expenses for the ninethree months ended September 30, 2017 includes approximately $0.8 millionMarch 31, 2019 are related to the entire building. The redevelopment is a conversion of demolition costs.a 126,000 square foot portion of the property to laboratory space.


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In addition, during the nine months ended September 30, 2017 and 2016, we had approximately $(7,000) and $0.6 million, respectively, of demolition costs related to our Proto Kendall Square residential development project.
Properties Sold Portfolio
The table below lists the properties we sold between January 1, 20162019 and September 30, 2017.March 31, 2020. Rental revenue and real estate operating expenses from our Properties Sold Portfolio decreased by approximately $2.4$8.9 million and $0.8$3.7 million, respectively, for the ninethree months ended September 30, 2017March 31, 2020 compared to 20162019, as detailed below.
        Rental Revenue Real Estate Operating Expenses
Name Date Sold Property Type Square Feet 2017 2016 Change 2017 2016 Change
        (dollars in thousands)
415 Main Street February 1, 2016 Office 231,000
 $—
 $1,675
 $(1,675) $—
 $412
 $(412)
30 Shattuck Road April 19, 2017 Land N/A
 —
 —
 —
 14
 35
 (21)
40 Shattuck Road June 13, 2017 Office 122,000
 846 1,556
 (710) 599
 981
 (382)
Reston Eastgate August 30, 2017 Land N/A
 —
 —
 —
 76
 98
 (22)
      353,000
 $846
—
$3,231
—
$(2,385) $689
 $1,526
 $(837)
        Rental Revenue Real Estate Operating Expenses
Name Date Sold Property Type Square Feet 2020 2019 Change 2020 2019 Change
        (dollars in thousands)
2600 Tower Oaks Boulevard January 24, 2019 Office 179,000
 $—
 $159
 $(159) $—
 $189
 $(189)
One Tower Center June 3, 2019 Office 410,000
 —
 1,205
 (1,205) —
 1,176
 (1,176)
164 Lexington Road June 28, 2019 Office 64,000
 —
 —
 —
 —
 43
 (43)
Washingtonian North December 20, 2019 Land N/A
 —
 —
 —
 —
 36
 (36)
601, 611 and 651 Gateway January 28, 2020 Office 768,000
 1,946
 7,135
 (5,189) 881
 2,464
 (1,583)
New Dominion Technology Park February 20, 2020 Office 493,000
 2,551
 4,862
 (2,311) 772
 1,404
 (632)
      1,914,000
 $4,497
 $13,361
 $(8,864) $1,653
 $5,312
 $(3,659)
For additional information on the sale of the above properties and land parcel refer to “Results of Operations—Other Income and Expense Items - Gains (Losses) on Sales of Real Estate” within “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Residential Net Operating Income
Net operating income for our residential same properties decreasedincreased by approximately $12,000$2.0 million for the ninethree months ended September 30, 2017March 31, 2020 compared to 2016.2019.
The following reflects our occupancy and rate information for The Lofts at Atlantic Wharf, and The Avant at Reston Town Center, Signature at Reston and Proto Kendall Square for the ninethree months ended September 30, 2017March 31, 2020 and 2016.

2019.
 The Lofts at Atlantic Wharf The Avant at Reston Town Center The Lofts at Atlantic Wharf The Avant at Reston Town Center Signature at Reston Proto Kendall Square
 2017 2016 Percentage
Change		 2017 2016 Percentage
Change		 2020 2019 Change (%) 2020 2019 Change (%) 2020 2019 Change (%) 2020 2019 Change (%)
Average Monthly Rental Rate (1) $4,248
 $4,150
 2.4 % $2,391
 $2,375
 0.7 % $4,510
 $4,433
 1.7 % $2,419
 $2,352
 2.8% $2,342
 $2,260
 3.6% $3,027
 $2,705
 11.9%
Average Rental Rate Per Occupied Square Foot $4.71
 $4.59
 2.6 % $2.63
 $2.61
 0.8 % $5.04
 $4.86
 3.7 % $2.67
 $2.57
 3.9% $2.51
 $2.47
 1.6% $5.56
 $5.07
 9.7%
Average Physical Occupancy (2) 94.4% 96.3% (2.0)% 93.8% 94.2% (0.4)% 95.0% 94.6% 0.4 % 91.5% 90.3% 1.3% 82.2% 53.3% 54.2% 95.5% 63.5% 50.4%
Average Economic Occupancy (3) 95.3% 97.3% (2.1)% 92.9% 94.1% (1.3)% 94.3% 95.0% (0.7)% 90.3% 89.3% 1.1% 76.9% 46.4% 65.7% 95.2% 58.2% 63.6%
__________________________  
(1)Average Monthly Rental Rate is definedcalculated as the average of the quotients obtained by dividing (A) rental revenue as determined in accordance with GAAP, divided by (B) the weighted monthly average number of occupied units. units for each month within the applicable fiscal period.
(2)Average Physical Occupancy is defined as (1) the average number of occupied units divided by (2) the total number of units, expressed as a percentage.
(3)Average Economic Occupancy is defined as (1) total possible revenue less vacancy loss divided by (2) total possible revenue, expressed as a percentage. Total possible revenue is determined by valuing average occupied units at contract rates and average vacant units at Market Rents. Vacancy loss is determined by valuing vacant units at current Market Rents. By measuring vacant units at their Market Rents, Average Economic Occupancy takes into account the fact that units of different sizes and locations within a residential property have different economic impacts on a residential property’s total possible gross revenue. Market Rents used by us in calculating Economic Occupancy are based on the current market rates set by the managers of our residential properties based on their experience in renting their residential property’s units and publicly available market data. TrendsActual market rents and trends in marketsuch rents for a region as reported by others could vary.may vary materially from Market Rents used by us. Market Rents for a period are based on the average Market Rents during that period and do not reflect any impact for cash concessions.

Hotel Net Operating Income
Net operating income for the Boston Marriott Cambridge hotel property decreased by approximately $0.3$1.1 million for the ninethree months ended September 30, 2017March 31, 2020 compared to 2016, which was partially due to the hotel undergoing a rooms renovation project on all of its 437 rooms that was completed during the nine months ended September 30, 2017. We expect our hotel to contribute between $13 million and $15 million to net operating income for 2017 and 2018.

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2019.
The following reflects our occupancy and rate information for the Boston Marriott Cambridge hotel for the ninethree months ended September 30, 2017March 31, 2020 and 2016.
2019.
 2017 2016 
Percentage
Change
 2020 2019 

Change (%)
Occupancy 81.0% 82.2% (1.5)% 59.6% 80.2% (25.7)%
Average daily rate $273.96
 $269.10
 1.8 % $211.35
 $221.39
 (4.5)%
Revenue per available room, REVPAR $221.98
 $221.28
 0.3 %
REVPAR $126.00
 $177.63
 (29.1)%

As a result of COVID-19, the Boston Marriott Cambridge was closed in March 2020 and is running at a monthly deficit. We do not know when the hotel will re-open and its closure will have a material adverse effect on the hotel’s contribution to our results of operations during the closure. See Item 1A: "Risk Factors" for additional details.
Other Operating IncomeRevenue and Expense Items
Development and Management Services Revenue
Development and management services revenue increaseddecreased by an aggregate of approximately $6.1$1.4 million for the ninethree months ended September 30, 2017March 31, 2020 compared to 2016.2019. Development andservices revenue decreased by approximately $1.5 million while management services revenue increased by approximately $3.6$0.1 million. The decrease in development services revenue was primarily related to a decrease of approximately $2.7 million in development fees and $2.5fees associated with tenant improvement projects earned in the Boston region offset by an increase of $0.6 million respectively.in development fees earned in the San Francisco region and an increase of $0.6 million in development fees associated with a tenant improvement project earned in the Washington, DC region. The increase in developmentmanagement services revenue iswas primarily related to an approximately $2.5 million development fee we received as a result of a third-party terminating their development agreement with us. The remaining increase in the development fees earned was from a third-party development agreement in the Boston region and from our New York unconsolidated joint venture that is developing Dock 72 in Brooklyn, New York. Management services revenue increased primarily due to property management fees we earned from our unconsolidated joint venture, that acquired Colorado Center in Santa Monica, California on July 1, 2016, as well as an increase in service income that we earned from our tenants in our New Yorkthe Los Angeles region. We expect our development and management services revenue to contribute between $32 million and $34 million for 2017 and between $29 million and $34 million for 2018.
General and Administrative Expense
General and administrative expense increaseddecreased by approximately $4.4$5.3 million for the ninethree months ended September 30, 2017March 31, 2020 compared to 20162019 primarily due to a decrease in compensation expense and other general and administrative expenses increasing by approximately $3.5 million and $0.9 million, respectively.expense. The increasedecrease in compensation expense was primarily related to (1) an approximately $1.0$8.4 million increasedecrease in the value of our deferred compensation plan (2)partially offset by an approximately $2.2$3.1 million difference between the unrecognized expense remaining from the 2014 MYLTIP Units compared to the expense that was recognized during the nine months ended September 30, 2017 for the newly issued 2017 MYLTIP Units (See Notes 8 and 11 to the Consolidated Financial Statements) and (3) an increase in other compensation related expenses of approximately $0.9 million. These increases were partially offset by an increase in capitalized wages of approximately $0.6 million. The increase in capitalized wages is shown as a decrease in general and administrative expense, as these costs are capitalized and included in real estate assets or deferred charges on our Consolidated Balance Sheets (see below). The increase in other general and administrative expenses was primarily related towhich includes the write-off of the remaining feesexpense associated with BXP’s ATM stock offering programour equity compensation programs, which includes the acceleration of amortization that expired on June 3, 2017occurred for employees that reached a certain age and an increasenumber of years of service and therefore became vested in other professional fees. We expect our general and administrative expenses to be between $110 million and $115 million for 2017 and between $115 million and $120 million for 2018.these awards sooner.
Wages directly related to the development and leasing of rental properties are capitalized and included in real estate assets or deferred charges on our Consolidated Balance Sheets, and amortized over the useful lives of the applicable asset or lease term. Capitalized wages for the ninethree months ended September 30, 2017March 31, 2020 and 20162019 were approximately $13.6$2.8 million and $13.0$2.9 million, respectively. These costs are not included in the general and administrative expenses discussed above.
Transaction Costs
Transaction costs decreasedincreased by approximately $0.6$0.2 million for the ninethree months ended September 30, 2017March 31, 2020 compared to 2016. This decrease was2019 due primarily to transaction costs related to the acquisitionpursuit and formation of 3625-3635 Peterson Way in Santa Clara, California, which was completed on April 22, 2016, and the acquisition of a 49.8% interest in an existingnew joint venture that owns and operates Colorado Center in Santa Monica, California on July 1, 2016.ventures. In general, transaction costs relaterelating to the formation of new and pending joint ventures pending and completed asset sales and the pursuit of other transactions including acquisitions. However, in January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business” (“ASU 2017-01”) and we chose to early adopt it during the first quarter of 2017. We expect that acquisitions of real estate or in-substance real estate will not meet the revised definition of a business andare expensed as such we expect we will no longer be required to expense transaction costs for acquisitions or costs related to the successful acquisition of a property (See Note 2 to the Consolidated Financial Statements).

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Impairment Loss
On September 27, 2016, we executed a letter of intent for the sale of the remaining parcel of land at our Washingtonian North property located in Gaithersburg, Maryland. The letter of intent caused us to reevaluate our strategy for the land and based on a shorter than expected hold period, we reduced the carrying value of the land to the estimated net sales price and recognized an impairment loss of approximately $1.8 million during the nine months ended September 30, 2016.incurred.
Depreciation and Amortization Expense
Depreciation expense may differ between BXP and BPLP as a result of previously applied acquisition accounting by BXP for the issuance of common stock in connection with non-sponsor OP Unit redemptions by BPLP.  This accounting resulted in a step-up of the real estate assets at BXP that was allocated to certain

properties.  The difference between the real estate assets of BXP as compared to BPLP for certain properties having an allocation of the real estate step-up will result in a corresponding difference in depreciation expense. For additional information see the Explanatory Note that follows the cover page of this Quarterly Report on Form 10-Q.
Boston Properties, Inc.
Depreciation and amortization expense decreasedincreased by approximately $53.1$6.5 million for the ninethree months ended September 30, 2017March 31, 2020 compared to 2016,2019, as detailed below.
 Depreciation and Amortization Expense for the nine months ended September 30,
2017 2016 Change
Portfolio Depreciation and Amortization for the three months ended March 31,
2020 2019 Change
 (in thousands) (in thousands)
Same Property Portfolio $445,553
 $454,110
 $(8,557) $164,216
 $160,407
 $3,809
Properties Acquired Portfolio 2,564
 —
 2,564
Properties Placed in-Service Portfolio 10,881
 5,741
 5,140
 2,959
 —
 2,959
Properties Acquired Portfolio 3,658
 1,719
 1,939
Properties in Development or Redevelopment Portfolio (1) 2,924
 54,093
 (51,169) 468
 673
 (205)
Properties Sold Portfolio 272
 708
 (436) 887
 3,514
 (2,627)
 $463,288
 $516,371
 $(53,083) $171,094
 $164,594
 $6,500
___________
(1)
On August 19, 2016, the consolidated entity in which we have a 55% interest and that owns 601 Lexington Avenue located in New York City commenced the redevelopment of the six-story, low-rise office and retail building component of the complex. The redeveloped portion of the low-rise building will contain approximately 195,000 net rentable square feet of Class A office space and approximately 25,000 net rentable square feet of retail space. We recorded approximately $50.8 million, including $3.2 million related to the step-up of real estate assets, of accelerated depreciation expense for the portion of the complex demolished.
Boston Properties Limited Partnership
Depreciation and amortization expense decreasedincreased by approximately $50.1$6.6 million for the ninethree months ended September 30, 2017March 31, 2020 compared to 2016,2019, as detailed below.
 Depreciation and Amortization Expense for the nine months ended September 30,
2017 2016 Change
Portfolio Depreciation and Amortization for the three months ended March 31,
2020 2019 Change
 (in thousands) (in thousands)
Same Property Portfolio $439,367
 $448,155
 $(8,788) $162,407
 $158,495
 $3,912
Properties Acquired Portfolio 2,564
 —
 2,564
Properties Placed in-Service Portfolio 10,881
 5,741
 5,140
 2,959
 —
 2,959
Properties Acquired Portfolio 3,658
 1,719
 1,939
Properties in Development or Redevelopment Portfolio (1) 2,924
 50,911
 (47,987) 468
 673
 (205)
Properties Sold Portfolio 272
 708
 (436) 887
 3,514
 (2,627)
 $457,102
 $507,234
 $(50,132) $169,285
 $162,682
 $6,603
___________
(1)On August 19, 2016, the consolidated entity in which we have a 55% interest and that owns 601 Lexington Avenue located in New York City commenced the redevelopment of the six-story, low-rise office and retail building component of the complex. The redeveloped portion of the low-rise building will contain approximately 195,000 net rentable square feet of Class A office space and


56Direct Reimbursements of Payroll and Related Costs From Management Services Contracts and Payroll and Related Costs From Management Service Contracts

TableWe have determined that amounts reimbursed for payroll and related costs received from third parties in connection with management services contracts should be reflected on a gross basis instead of Contents

approximately 25,000on a net rentable square feet of retail space.basis as we have determined that we are the principal under these arrangements. We recorded approximately $47.6 million of accelerated depreciation expense for the portion of the complex demolished.anticipate that these two financial statement line items will generally offset each other.
Hotel Net Operating Income
Net operating income for the Boston Marriott Cambridge hotel property decreased by approximately $1.1 million for the three months ended March 31, 2020 compared to 2019.
The following reflects our occupancy and rate information for the Boston Marriott Cambridge hotel for the three months ended March 31, 2020 and 2019.
  2020 2019 

Change (%)
Occupancy 59.6% 80.2% (25.7)%
Average daily rate $211.35
 $221.39
 (4.5)%
REVPAR $126.00
 $177.63
 (29.1)%

As a result of COVID-19, the Boston Marriott Cambridge was closed in March 2020 and is running at a monthly deficit. We do not know when the hotel will re-open and its closure will have a material adverse effect on the hotel’s contribution to our results of operations during the closure. See Item 1A: "Risk Factors" for additional details.
Other IncomeOperating Revenue and Expense Items
Income from Unconsolidated Joint VenturesDevelopment and Management Services Revenue
Income from unconsolidated joint ventures increasedDevelopment and management services revenue decreased by approximately $1.4 million for the three months ended March 31, 2020 compared to 2019. Development services revenue decreased by approximately $1.5 million for the nine months ended September 30, 2017 compared to 2016 due primarily to an increase in our share of net income from Colorado Center in Santa Monica, California, which we acquired on July 1, 2016, partially offsetwhile management services revenue increased by a decrease in our share of net income from our Annapolis Junction and 540 Madison Avenue joint ventures.approximately $0.1 million. The decrease in our share of net income from our Annapolis Junction joint venture isdevelopment services revenue was primarily duerelated to a decrease of approximately $2.7 million in occupancydevelopment fees and fees associated with tenant improvement projects earned in the Boston region offset by an increase of $0.6 million in development fees earned in the San Francisco region and an increase of $0.6 million in interest expense related to Annapolis Junction Building One’s mortgage loan having an event of default and, commencing October 17, 2016, being charged interest atdevelopment fees associated with a tenant improvement project earned in the default interest rate.Washington, DC region. The decreaseincrease in net income from our 540 Madison Avenue joint venturemanagement services revenue was primarily related to an increase in interestproperty management fees earned from the Los Angeles region.
General and Administrative Expense
General and administrative expense as the mortgage loan that encumbers the property bears interest at a variable rate. On July 28, 2017, the joint venture that owns Colorado Center obtained mortgage loan financing, the result of which increased interest expense, which reduced the net income for the joint venture. For additional information pertaining to the Annapolis Junction Building One mortgage loan refer to “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Capitalization—Off-Balance Sheet Arrangements—Joint Venture Indebtedness.”
Interest and Other Income
Interest and other income decreased by approximately $3.2$5.3 million for the ninethree months ended September 30, 2017March 31, 2020 compared to 2016 due primarily to decreases in other income and interest income of approximately $3.0 million and $0.2 million, respectively. During the nine months ended September 30, 2017, the decrease in other income was2019 primarily due to a decrease in compensation expense. The decrease in compensation expense was related to an approximately $1.3$8.4 million tax credit that we received from our Washington, DC region and approximately $1.7 million related to the sale of historic tax credits at The Lofts at Atlantic Wharf in Boston, Massachusetts. Both of these items did not recur during 2017.
On October 20, 2010, we closed a transaction with a financial institution (the “HTC Investor”) related to the historic rehabilitation of The Lofts at Atlantic Wharf in Boston, Massachusetts. The HTC Investor has contributed an aggregate of approximately $15 million to the project. As part of its contribution, the HTC Investor received substantially all of the benefits derived from the tax credits. Beginning in July 2012 through July 2016, we recognized the cash received as revenue over the five-year tax credit recapture period as defineddecrease in the Internal Revenue Code.
Gains (Losses) from Early Extinguishmentsvalue of Debt
On June 7, 2017, our consolidated entity in which we have a 60% ownership interest and that owns 767 Fifth Avenue (the General Motors Building) located in New York City completed the refinancing of approximately $1.6 billion of indebtedness that had been secured by direct and indirect interests in 767 Fifth Avenue. The new mortgage financing has a principal amount of $2.3 billion, bears interest at a fixed interest rate of 3.43% per annum and matures on June 9, 2027. The loan requires interest-only payments during the 10-year term of the loan, with the entire principal amount due at maturity. The extinguished debt bore interest at a weighted-average rate of approximately 5.96% per annum, an effective GAAP interest rate of approximately 3.03% per annum and was scheduled to mature on October 7, 2017. There was no prepayment penalty associated with the repayment of the prior indebtedness. We recognized a net gain from early extinguishment of debt totaling approximately $14.6 million primarily consisting of the acceleration of the remaining balance related to the historical fair value debt adjustment.
On April 24, 2017, BPLP entered into the 2017 Credit Facility (See Note 5 to the Consolidated Financial Statements). Certain lenders, under the prior credit facility, chose to not participate in the 2017 Credit Facility and as such we recognized a loss on early extinguishment of debt of approximately $0.3 million related to the acceleration of finance fees associated with the prior credit agreement.
On September 1, 2016, we used a portion of the net proceeds from BPLP’s offering of senior unsecured notes and available cash to repay the mortgage loan collateralized by our 599 Lexington Avenue property located in New York City totaling $750.0 million. The mortgage loan bore interest at a fixed rate of 5.57% per annum (5.41% per annum GAAP interest rate) and was scheduled to mature on March 1, 2017. There was no prepayment penalty. We recognized a gain from early extinguishment of debt totaling approximately $0.4 million consisting of the acceleration of the remaining balance related to the effective portion of a previous interest rate hedging program included within accumulated other comprehensive loss, offset by the write-off of unamortized deferred financing costs.

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On September 1, 2016, we used a portion of the net proceeds from BPLP’s offering of senior unsecured notes and available cash to repay the mortgage loan collateralized by our Embarcadero Center Four property located in San Francisco, California totaling approximately $344.8 million. The mortgage loan bore interest at a fixed rate of 6.10% per annum (7.02% per annum GAAP interest rate) and was scheduled to mature on December 1, 2016. There was no prepayment penalty. We recognized a loss from early extinguishment of debt totaling approximately $0.7 million consisting of the write-off of unamortized deferred financing costs and the acceleration of the remaining balance related to the effective portion of a previous interest rate hedging program included within accumulated other comprehensive loss.
Gains from Investments in Securities
Gains from investments in securities for the nine months ended September 30, 2017 and 2016 related to investments that we have made to reduce our market risk relating to a deferred compensation plan that we maintain for BXP’s officers. Under this deferred compensation plan, each officer who is eligible to participate is permitted to defer a portion of the officer’s current income on a pre-tax basis and receive a tax-deferred return on these deferrals based on the performance of specific investments selected by the officer. In order to reduce our market risk relating to this plan, we typically acquire, in a separate account that is not restricted as to its use, similar or identical investments as those selected by each officer. This enables us to generally match our liabilities to BXP’s officers under the deferred compensation plan with equivalent assets and thereby limit our market risk. The performance of these investments is recorded as gains from investments in securities. During the nine months ended September 30, 2017 and 2016, we recognized gains of approximately $2.7 million and $1.7 million, respectively, on these investments. By comparison, our general and administrative expense increased by approximately $2.7 million and $1.7 million during the nine months ended September 30, 2017 and 2016, respectively, as a result of an increase in our liability under our deferred compensation plan that werepartially offset by an approximately $3.1 million increase in other compensation expense, which includes the expense associated with our equity compensation programs, which includes the performanceacceleration of the specific investments selected by our officers participatingamortization that occurred for employees that reached a certain age and number of years of service and therefore became vested in the plan.these awards sooner.
Interest Expense
Interest expense decreased by approximately $32.2 million for the nine months ended September 30, 2017 compared to 2016 as detailed below.
Component Change in interest
expense for the nine months ended
September 30, 2017 compared to September 30, 2016
  (in thousands)
Increases to interest expense due to:  
Issuance of $1.0 billion in aggregate principal of 2.750% senior notes due 2026 on August 17, 2016 $20,797
Refinancing of the debt collateralized by 767 Fifth Avenue (the General Motors Building) (1) 10,251
Issuance of $1.0 billion in aggregate principal of 3.650% senior notes due 2026 on January 20, 2016 1,953
Utilization of the Unsecured Line of Credit as well as an increase in capacity due to the execution of the 2017 Credit Facility (1) 1,879
Amortization of deferred financing fees for BPLP’s unsecured debt and credit facility 1,036
Other interest expense (excluding senior notes) 203
Total increases to interest expense 36,119
Decreases to interest expense due to:  
Repayment of mortgage financings (2) (44,900)
Increase in capitalized interest (3) (14,330)
Decrease in the interest for the Outside Members’ Notes Payable for the 767 Fifth Avenue (the General Motors Building) (4) (9,133)
Total decreases to interest expense (68,363)
Total change in interest expense $(32,244)
___________  
(1)See Note 5 to the Consolidated Financial Statements.
(2)Includes the repayment of the mortgage loans collateralized Fountain Square, Embarcadero Center Four and 599 Lexington Avenue.

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(3)
The increase was primarily due to the commencement and continuation of several development projects. For a list of development projects refer to “Liquidity and Capital Resources” within “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
(4)
The related interest expense from the Outside Members’ Notes Payable totaled approximately $16.3 million and $25.4 million for the nine months ended September 30, 2017 and 2016, respectively. These amounts are allocated to the outside joint venture partners as an adjustment to Noncontrolling Interests in Property Partnerships in our Consolidated Statements of Operations. On June 7, 2017, a portion of the outside members’ notes payable was repaid and the remaining portion was contributed as equity in the consolidated entity (See Notes 5 and 8 to the Consolidated Financial Statements).

Interest expenseWages directly related to the development of rental properties isare capitalized and included in real estate assets on our Consolidated Balance Sheets, and amortized over the useful lives of the real estateapplicable asset or lease term. As portions of properties are placed in-service, we cease capitalizing interest on that portion and interest is then expensed. Interest capitalizedCapitalized wages for the ninethree months ended September 30, 2017March 31, 2020 and 2016 was2019 were approximately $43.3$2.8 million and $29.0$2.9 million, respectively. These costs are not included in the interest expense referencedgeneral and administrative expenses discussed above.
We estimate net interest expense, which includes debt extinguishmentTransaction Costs
Transaction costs will be between $355 million to $360increased by approximately $0.2 million for 2017 and between $375 million to $390 million for 2018. For both years, these amounts are net of approximately $50 million to $60 million of estimated capitalized interest. In addition, if we refinance, prepay or repurchase existing indebtedness prior to its maturity, we may incur prepayment penalties, realize the acceleration of amortized costs, and our actual interest expense may differ materially from the estimates above.
At September 30, 2017, our variable rate debt consisted of BPLP’s $2.0 billion 2017 Credit Facility, of which no amount was outstanding at September 30, 2017. For a summary of our consolidated debt as of September 30, 2017 and September 30, 2016 refer to the heading “Liquidity and Capital Resources—Capitalization—Debt Financing” within “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Losses from Interest Rate Contracts
On August 17, 2016, in conjunction with BPLP’s offering of senior unsecured notes, we terminated forward-starting interest rate swap contracts that fixed the 10-year swap rate at a weighted-average rate of approximately 2.423% per annum on notional amounts aggregating $550.0 million. We cash-settled the contracts and made cash payments to the counterparties aggregating approximately $49.3 million. We recognized approximately $0.1 million of losses on interest rate contracts during the ninethree months ended September 30, 2016March 31, 2020 compared to 2019 due primarily to transaction costs related to the partial ineffectivenesspursuit and formation of new joint ventures. In general, transaction costs relating to the interest rate contracts. We will reclassify into earnings overformation of new and pending joint ventures and the 10-year termpursuit of the 2.750% senior unsecured notes due 2026other transactions are expensed as an increase to interestincurred.
Depreciation and Amortization Expense
Depreciation expense approximately $49.2 million (or approximately $4.9 million per year) of the amounts recorded on our consolidated balance sheets within accumulated other comprehensive loss, which represents the effective portion of the applicable interest rate contracts.
Gains on Sales of Real Estate
The gains on sales of real estate may differ between BXP and BPLP as a result of previously applied acquisition accounting by BXP for the issuance of common stock in connection with non-sponsor OP Unit redemptions by BPLP.  This accounting resulted in a step-up of the real estate assets at BXP that was allocated to certain

properties.  The difference between the real estate assets of BXP as compared to BPLP for certain properties having an allocation of the real estate step-up will result in a corresponding difference in the gains on sales of real estate when those properties are sold.depreciation expense. For additional information see the Explanatory Note that follows the cover page of this Quarterly Report on Form 10-Q.

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Boston Properties, Inc.
Gains on sales of real estate decreased by approximately $73.8 million for the nine months ended September 30, 2017 compared to 2016, respectively, as detailed below.
Name Date Sold Property Type Square Feet Sale Price Cash Proceeds Gain on Sale of Real Estate 
        (dollars in millions) 
2017             
30 Shattuck Road April 19, 2017 Land N/A $5.0
 $5.0
 $3.7
 
40 Shattuck Road June 13, 2017 Office 122,000 12.0
 11.9
 —
(1)
Reston Eastgate August 30, 2017 Land N/A 14.0
 13.2
 2.8
 
        $31.0
 $30.1
 $6.5
(2)
2016             
415 Main Street February 1, 2016 Office 231,000 $105.4
 $104.9
 $60.8
 
Broad Run Business Park August 16, 2016 Land N/A 18.0
 17.9
 13.0
 
        $123.4
 $122.8
 $73.8
(3)
___________  
(1)The gain on sale of real estate for this property was $28,000.
(2)Excludes approximately $58,000 and $0.1 million of gains on sale of real estate recognized during the nine months ended September 30, 2017 related to a previously deferred gain amount from 2016 and 2015 sales, respectively.
(3)Excludes approximately $6.8 million of a gain on sale of real estate recognized during the nine months ended September 30, 2016 related to a previously deferred gain amount from the 2014 sale of Patriots Park located in Reston, Virginia.

Boston Properties Limited Partnership
Gains on sales of real estate decreased by approximately $75.4 million for the nine months ended September 30, 2017 compared to 2016, respectively, as detailed below.
Name Date Sold Property Type Square Feet Sale Price Cash Proceeds Gain on Sale of Real Estate 
        (dollars in millions) 
2017             
30 Shattuck Road April 19, 2017 Land N/A $5.0
 $5.0
 $3.7
 
40 Shattuck Road June 13, 2017 Office 122,000 12.0
 11.9
 0.6
 
Reston Eastgate August 30, 2017 Land N/A 14.0
 13.2
 2.8
 
        $31.0
 $30.1
 $7.1
(1)
2016             
415 Main Street February 1, 2016 Office 231,000 $105.4
 $104.9
 $63.0
 
Broad Run Business Park August 16, 2016 Land N/A 18.0
 17.9
 13.0
 
        $123.4
 $122.8
 $76.0
(2)
___________  
(1)Excludes approximately $58,000 and $0.1 million of gains on sale of real estate recognized during the nine months ended September 30, 2017 related to a previously deferred gain amount from 2016 and 2015 sales, respectively.
(2)Excludes approximately $6.8 million of a gain on sale of real estate recognized during the nine months ended September 30, 2016 related to a previously deferred gain amount from the 2014 sale of Patriots Park located in Reston, Virginia.


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Noncontrolling interests in property partnerships
Noncontrolling interests in property partnershipsDepreciation and amortization expense increased by approximately $33.9 million for the nine months ended September 30, 2017 compared to 2016 as detailed below.
Property Noncontrolling Interests in Property Partnerships for the nine months ended September 30,
2017 2016 Change
  (in thousands)
Salesforce Tower $(355) $(3) $(352)
767 Fifth Avenue (the General Motors Building) (1) (1,779) (15,477) 13,698
Times Square Tower 20,002
 20,110
 (108)
601 Lexington Avenue (2) 6,597
 (14,221) 20,818
100 Federal Street 2,483
 2,683
 (200)
Atlantic Wharf Office 7,019
 6,961
 58
  $33,967
 $53
 $33,914
___________
(1)
On June 7, 2017, our consolidated entity in which we have a 60% interest completed the refinancing of indebtedness that had been secured by direct and indirect interests in 767 Fifth Avenue. Prior to this quarter, the net loss allocation was primarily due to the partners’ share of the interest expense for the outside members’ notes payable which was $16.3 million and $25.4 million for the nine months ended September 30, 2017 and 2016, respectively. On June 7, 2017, a portion of the outside members’ notes payable was repaid and the remaining portion was contributed as equity in the consolidated entity (See Notes 5 and 8 to the Consolidated Financial Statements).
(2)On August 19, 2016, the consolidated entity in which we have a 55% interest and that owns this property commenced the redevelopment of the six-story low-rise office and retail building component of the complex. The redeveloped portion of the low-rise building will contain approximately 195,000 net rentable square feet of Class A office space and approximately 25,000 net rentable square feet of retail space. We will capitalize incremental costs during the redevelopment. BXP and BPLP recognized approximately $50.8 million and $47.6 million, respectively, of depreciation expense associated with the acceleration of depreciation on the assets being removed from service and demolished as part of the redevelopment of the property. Approximately $21.4 million of those amounts was allocated to the outside partners.
Noncontrolling interest - Common Units of the Operating Partnership
For BXP, noncontrolling interest–common units of the Operating Partnership decreased by approximately $1.8 million for the nine months ended September 30, 2017 compared to 2016 due primarily to decreases in allocable income and in the noncontrolling interest’s ownership percentage. Due to our UPREIT ownership structure, there is no corresponding line item on BPLP’s financial statements.
Results of Operations for the Three Months Ended September 30, 2017 and 2016
Net income attributable to Boston Properties, Inc. common shareholders and net income attributable to Boston Properties Limited Partnership common unitholders increased approximately $40.6 million and $41.4$6.5 million for the three months ended September 30, 2017March 31, 2020 compared to 2016, respectively,2019, as detailed in the following tables and for the reasons discussed below under the heading “Comparison of the three months ended September 30, 2017 to the three months ended September 30, 2016” within “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Below are reconciliations of net income attributable to Boston Properties, Inc. common shareholders to NOI and net income attributable to Boston Properties Limited Partnership common unitholders to NOI for the three months ended September 30, 2017 and 2016. For a detailed discussion of NOI, including the reasons management believes NOI is useful to investors, see page 50.



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Boston Properties, Inc.below.
  Total Property Portfolio
  2017 2016 Increase/
(Decrease)		 %
Change
  (in thousands)
Net Income Attributable to Boston Properties, Inc. Common Shareholders $117,337
 $76,753
 $40,584
 52.88 %
Preferred dividends 2,625
 2,589
 36
 1.39 %
Net Income Attributable to Boston Properties, Inc. 119,962
 79,342
 40,620
 51.20 %
Net Income Attributable to Noncontrolling Interests:        
Noncontrolling interest—common units of Boston Properties Limited Partnership 13,402
 9,387
 4,015
 42.77 %
Noncontrolling interests in property partnerships 14,340
 (17,225) 31,565
 183.25 %
Net Income 147,704
 71,504
 76,200
 106.57 %
Gains on sales of real estate 2,891
 12,983
 (10,092) (77.73)%
Income Before Gains on Sales of Real Estate 144,813
 58,521
 86,292
 147.45 %
Other Expenses:        
Add:        
Losses from interest rate contracts —
 140
 (140) (100.00)%
Losses from early extinguishments of debt —
 371
 (371) (100.00)%
Interest expense 92,032
 104,641
 (12,609) (12.05)%
Other Income:        
Less:        
Gains from investments in securities 944
 976
 (32) (3.28)%
Interest and other income 1,329
 3,628
 (2,299) (63.37)%
Income from unconsolidated joint ventures 843
 1,464
 (621) (42.42)%
Operating Income 233,729
 157,605
 76,124
 48.30 %
Other Expenses:        
Add:        
Depreciation and amortization expense 152,164
 203,748
 (51,584) (25.32)%
Impairment loss —
 1,783
 (1,783) (100.00)%
Transaction costs 239
 249
 (10) (4.02)%
General and administrative expense 25,792
 25,165
 627
 2.49 %
Other Revenue:        
Less:        
Development and management services revenue 10,811
 6,364
 4,447
 69.88 %
Net Operating Income $401,113
 $382,186
 $18,927
 4.95 %




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Portfolio Depreciation and Amortization for the three months ended March 31,
2020 2019 Change
  (in thousands)
Same Property Portfolio $164,216
 $160,407
 $3,809
Properties Acquired Portfolio 2,564
 —
 2,564
Properties Placed in-Service Portfolio 2,959
 —
 2,959
Properties in Development or Redevelopment Portfolio 468
 673
 (205)
Properties Sold Portfolio 887
 3,514
 (2,627)
  $171,094
 $164,594
 $6,500
Boston Properties Limited Partnership
  Total Property Portfolio
  2017 2016 Increase/
(Decrease)		 %
Change
  (in thousands)
Net Income Attributable to Boston Properties Limited Partnership Common Unitholders $132,693
 $91,306
 $41,387
 45.33 %
Preferred distributions 2,625
 2,589
 36
 1.39 %
Net Income Attributable to Boston Properties Limited Partnership 135,318
 93,895
 41,423
 44.12 %
Net Income Attributable to Noncontrolling Interests:        
Noncontrolling interests in property partnerships 14,340
 (17,225) 31,565
 183.25 %
Net Income 149,658
 76,670
 72,988
 95.20 %
Gains on sales of real estate 2,891
 12,983
 (10,092) (77.73)%
Income Before Gains on Sales of Real Estate 146,767
 63,687
 83,080
 130.45 %
Other Expenses:        
Add:        
Losses from interest rate contracts —
 140
 (140) (100.00)%
Losses from early extinguishments of debt —
 371
 (371) (100.00)%
Interest expense 92,032
 104,641
 (12,609) (12.05)%
Other Income:        
Less:        
Gains from investments in securities 944
 976
 (32) (3.28)%
Interest and other income 1,329
 3,628
 (2,299) (63.37)%
Income from unconsolidated joint ventures 843
 1,464
 (621) (42.42)%
Operating Income 235,683
 162,771
 72,912
 44.79 %
Other Expenses:        
Add:        
Depreciation and amortization expense 150,210
 198,582
 (48,372) (24.36)%
Impairment loss —
 1,783
 (1,783) (100.00)%
Transaction costs 239
 249
 (10) (4.02)%
General and administrative expense 25,792
 25,165
 627
 2.49 %
Other Revenue:        
Less:        
Development and management services revenue 10,811
 6,364
 4,447
 69.88 %
Net Operating Income $401,113
 $382,186
 $18,927
 4.95 %

Comparison of the three months ended September 30, 2017 to the three months ended September 30, 2016.
The table below shows selected operating information for the Same Property PortfolioDepreciation and the Total Property Portfolio. The Same Property Portfolio consists of 148 properties totaling approximately 39.7 million net rentable square feet of space, excluding unconsolidated joint ventures. The Same Property Portfolio includes properties acquired or fully placed in-service on or prior to July 1, 2016 and owned and in-service through September 30, 2017. The Total Property Portfolio includes the effects of the other properties either placed in-service, acquired or in development or redevelopment after July 1, 2016 or disposed of on or prior to September 30, 2017. This table includes a reconciliation from the Same Property Portfolio to the Total Property Portfolio by also providing information for the three months ended September 30, 2017 and 2016 with respect to the properties that were placed in-service, acquired, in development or redevelopment or sold.


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 Same Property Portfolio 
Properties
Placed In-Service
Portfolio
 Properties Acquired Portfolio Properties in
Development or
Redevelopment
Portfolio		 Properties Sold Portfolio Total Property Portfolio
(dollars in thousands)2017 2016 
Increase/
(Decrease)
 
%
Change
 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 Increase/
(Decrease)		 %
Change
Rental Revenue:                               
Rental Revenue$618,930
 $599,451
 $19,479
 3.25 % $4,267
 $174
 $689
 $—
 $873
 $2,233
 $—
 $450
 $624,759
 $602,308
 $22,451
 3.73%
Termination Income4,740
 836
 3,904
 466.99 % —
 —
 —
 —
 43
 (1,006) —
 —
 4,783
 (170) 4,953
 2,913.53%
Total Rental Revenue623,670
 600,287
 23,383
 3.90 % 4,267
 174
 689
 —
 916
 1,227
 —
 450
 629,542
 602,138
 27,404
 4.55%
Real Estate Operating Expenses231,351
 223,024
 8,327
 3.73 % 1,674
 53
 269
 —
 2,452
 2,920
 18
 340
 235,764
 226,337
 9,427
 4.17%
Net Operating Income (Loss), excluding residential and hotel392,319
 377,263
 15,056
 3.99 % 2,593
 121
 420
 —
 (1,536) (1,693) (18) 110
 393,778
 375,801
 17,977
 4.78%
Residential Net Operating Income (1)2,711
 2,772
 (61) (2.20)% —
 —
 —
 —
 7
 (623) —
 —
 2,718
 2,149
 569
 26.48%
Hotel Net Operating Income (1)4,617
 4,236
 381
 8.99 % —
 —
 —
 —
 —
 —
 —
 —
 4,617
 4,236
 381
 8.99%
Net Operating Income (Loss) (1)$399,647
 $384,271
 $15,376
 4.00 % $2,593
 $121
 $420
 $—
 $(1,529) $(2,316) $(18) $110
 $401,113
 $382,186
 $18,927
 4.95%
_______________  
(1)
For a detailed discussion of NOI, including the reasons management believes NOI is useful to investors, see page 50. Residential Net Operating Income for the three months ended September 30, 2017 and 2016 is comprised of Residential Revenue of $4,295 and $4,372, less Residential Expenses of $1,577 and $2,223, respectively. Hotel Net Operating Income for the three months ended September 30, 2017 and 2016 is comprised of Hotel Revenue of $13,064 and $12,354 less Hotel Expenses of $8,447 and $8,118, respectively, per the Consolidated Statements of Operations.


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Same Property Portfolio
Rental Revenue
Rental revenue from the Same Property Portfolioamortization expense increased by approximately $19.5$6.6 million for the three months ended September 30, 2017March 31, 2020 compared to 2016. The increase was primarily the result of increases in revenue from our leases and parking and other income of approximately $18.9 million and $1.5 million partially offset by a decrease in other tenant recoveries of approximately $0.9 million. Rental revenue from our leases increased approximately $18.9 million as a result of our average revenue per square foot increasing by approximately $1.96, which contributed approximately $17.5 million, and an approximately $1.4 million increase due to our average occupancy increasing from 91.58% to 91.78%.
Termination Income
Termination income increased by approximately $3.9 million for the three months ended September 30, 2017 compared to 2016.
Termination income for the three months ended September 30, 2017 related to seventeen tenants across the Same Property Portfolio and totaled approximately $4.7 million, of which approximately $3.0 million is from tenants that terminated leases early at 767 Fifth Avenue (the General Motors Building). This building is located in New York City.
Termination income for the three months ended September 30, 2016 related to nine tenants across the Same Property Portfolio and totaled approximately $0.8 million.
Real Estate Operating Expenses
Real estate operating expenses from the Same Property Portfolio increased by approximately $8.3 million, or 3.7%, for the three months ended September 30, 2017 compared to 2016 due primarily to increases in real estate taxes and other real estate operating expenses of approximately $5.9 million, or 5.5%, and $2.4 million, or 2.1%, respectively. The increase in real estate taxes was primarily experienced in the New York CBD properties.
Properties Placed In-Service Portfolio
The table below lists the properties placed in-service or partially placed in-service from July 1, 2016 through September 30, 2017. Rental revenue and real estate operating expenses increased by approximately $4.1 million and $1.6 million, respectively, for the three months ended September 30, 2017 compared to 2016 as detailed below.


  Quarter Initially Placed In-Service Quarter Fully Placed In-Service   Rental Revenue Real Estate Operating Expenses
Name   Square Feet 2017 2016 Change 2017 2016 Change
        (dollars in thousands)
Reservoir Place North Second Quarter, 2016 Second Quarter, 2017 73,258
 $—
 $—
 $—
 $103
 $34
 $69
888 Boylston Street Third Quarter, 2016 Third Quarter, 2017 417,000
 4,267
 174
 4,093
 1,571
 19
 1,552
      490,258
 $4,267
 $174
 $4,093
 $1,674
 $53
 $1,621
Properties Acquired Portfolio
The table below lists the properties acquired between July 1, 2016 and September 30, 2017. Rental revenue and real estate operating expenses increased by approximately $0.7 million and $0.3 million, respectively for the three months ended September 30, 2017 compared to 2016,2019, as detailed below.
      Rental Revenue Real Estate Operating Expenses
Name Date acquired Square Feet 2017 2016 Change 2017 2016 Change
      (dollars in thousands)
103 Carnegie Center May 25, 2017 96,332
 $689
 $—
 $689
 $269
 $—
 $269
Portfolio Depreciation and Amortization for the three months ended March 31,
2020 2019 Change
  (in thousands)
Same Property Portfolio $162,407
 $158,495
 $3,912
Properties Acquired Portfolio 2,564
 —
 2,564
Properties Placed in-Service Portfolio 2,959
 —
 2,959
Properties in Development or Redevelopment Portfolio 468
 673
 (205)
Properties Sold Portfolio 887
 3,514
 (2,627)
  $169,285
 $162,682
 $6,603


65Direct Reimbursements of Payroll and Related Costs From Management Services Contracts and Payroll and Related Costs From Management Service Contracts

TableWe have determined that amounts reimbursed for payroll and related costs received from third parties in connection with management services contracts should be reflected on a gross basis instead of Contents

Properties in Development or Redevelopment Portfolio
The table below listson a net basis as we have determined that we are the properties we placed in development or redevelopment between July 1, 2016 and September 30, 2017. Rental revenue and real estate operating expenses decreased by approximately $0.3 million and $0.5 million, for the three months ended September 30, 2017 compared to 2016, as detailed below.principal under these arrangements. We anticipate that these two financial statement line items will generally offset each other.
      Rental Revenue Real Estate Operating Expenses
Name Date commenced development / redevelopment Square Feet 2017 2016 Change 2017 2016 Change
      (dollars in thousands)
One Five Nine East 53rd Street (1) August 19, 2016 220,000
 $916
 $106
 $810
 $2,204
 $2,133
 $71
191 Spring Street (2) December 29, 2016 160,000
 —
 197
 (197) 233
 482
 (249)
145 Broadway (3) April 6, 2017 79,616
 —
 924
 (924) 15 305
 (290)
    459,616
 $916
 $1,227
 $(311) $2,452
 $2,920
 $(468)
___________
(1)This is the low-rise portion of 601 Lexington Avenue in New York City. Rental revenue includes approximately $43,000 and $(1.0) million of termination income for the three months ended September 30, 2017 and September 30, 2016, respectively. In addition, real estate operating expenses includes approximately $1.8 million and $0.7 million of demolition costs for the three months ended September 30, 2017 and September 30, 2016, respectively.
(2)Real estate operating expenses for the three months ended September 30, 2017 includes approximately $0.2 million of demolition costs.
(3)On April 6, 2017, we commenced the development of 145 Broadway, a build-to-suit Class A office project with approximately 485,000 net rentable square feet located in Cambridge, Massachusetts.
In addition, during the three months ended September 30, 2017 and September 30, 2016, we had approximately $(7,000) and $0.6 million of demolition costs related to our Proto Kendall Square residential development project.
Properties Sold Portfolio
The table below lists the properties we sold between July 1, 2016 and September 30, 2017. Rental revenue and real estate operating expenses from our Properties Sold Portfolio decreased by approximately $0.5 million and $0.3 million, respectively, for the three months ended September 30, 2017 compared to 2016 as detailed below.
        Rental Revenue Real Estate Operating Expenses
Name Date Sold Property Type Square Feet 2017 2016 Change 2017 2016 Change
        (dollars in thousands)
30 Shattuck Road April 19, 2017 Land N/A
 $—
 $—
 $—
 $—
 $11
 $(11)
40 Shattuck Road June 13, 2017 Office 122,000
 —
 450
 (450) —
 297
 (297)
Reston Eastgate August 30, 2017 Land N/A
 —
 —
 —
 18
 32
 (14)
      122,000
 $—
 $450
 $(450) $18
 $340
 $(322)

Residential Net Operating Income
Net operating income for our residential same properties decreased by approximately $61,000 for the three months ended September 30, 2017 compared to 2016.
The following reflects our occupancy and rate information for The Lofts at Atlantic Wharf and The Avant at Reston Town Center for the three months ended September 30, 2017 and 2016.

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  The Lofts at Atlantic Wharf The Avant at Reston Town Center
  2017 2016 Percentage
Change		 2017 2016 Percentage
Change
Average Monthly Rental Rate (1) $4,295
 $4,146
 3.6 % $2,418
 $2,429
 (0.5)%
Average Rental Rate Per Occupied Square Foot $4.74
 $4.63
 2.4 % $2.68
 $2.68
 — %
Average Physical Occupancy (2) 94.2% 97.3% (3.2)% 95.7% 95.6% 0.1 %
Average Economic Occupancy (3) 95.5% 97.7% (2.3)% 94.4% 95.6% (1.3)%
___________  
(1)Average Monthly Rental Rate is defined as rental revenue in accordance with GAAP, divided by the weighted monthly average number of occupied units. 
(2)Average Physical Occupancy is defined as (1) the average number of occupied units divided by (2) the total number of units, expressed as a percentage.
(3)Average Economic Occupancy is defined as (1) total possible revenue less vacancy loss divided by (2) total possible revenue, expressed as a percentage. Total possible revenue is determined by valuing average occupied units at contract rates and average vacant units at Market Rents. Vacancy loss is determined by valuing vacant units at current Market Rents. By measuring vacant units at their Market Rents, Average Economic Occupancy takes into account the fact that units of different sizes and locations within a residential property have different economic impacts on a residential property's total possible gross revenue. Market Rents used by us in calculating Economic Occupancy are based on the current market rates set by the managers of our residential properties based on their experience in renting their residential property’s units and publicly available market data. Trends in market rents for a region as reported by others could vary. Market Rents for a period are based on the average Market Rents during that period and do not reflect any impact for cash concessions.

Hotel Net Operating Income
Net operating income for the Boston Marriott Cambridge hotel property increaseddecreased by approximately $0.4$1.1 million for the three months ended September 30, 2017March 31, 2020 compared to 2016.2019.
The following reflects our occupancy and rate information for the Boston Marriott Cambridge hotel for the three months ended September 30, 2017March 31, 2020 and 2016.2019.
 2017 2016 
Percentage
Change
 2020 2019 

Change (%)
Occupancy 90.3% 87.2% 3.6% 59.6% 80.2% (25.7)%
Average daily rate $283.76
 $279.03
 1.7% $211.35
 $221.39
 (4.5)%
Revenue per available room, REVPAR $256.32
 $243.19
 5.4%
REVPAR $126.00
 $177.63
 (29.1)%

As a result of COVID-19, the Boston Marriott Cambridge was closed in March 2020 and is running at a monthly deficit. We do not know when the hotel will re-open and its closure will have a material adverse effect on the hotel’s contribution to our results of operations during the closure. See Item 1A: "Risk Factors" for additional details.
Other Operating Revenue and Expense Items
Development and Management Services Revenue
Development and management services revenue increaseddecreased by an aggregate of approximately $4.4$1.4 million for the three months ended September 30, 2017March 31, 2020 compared to 2016.2019. Development andservices revenue decreased by approximately $1.5 million while management services revenue increased by approximately $3.5$0.1 million. The decrease in development services revenue was primarily related to a decrease of approximately $2.7 million in development fees and $0.9fees associated with tenant improvement projects earned in the Boston region offset by an increase of $0.6 million respectively.in development fees earned in the San Francisco region and an increase of $0.6 million in development fees associated with a tenant improvement project earned in the Washington, DC region. The increase in developmentmanagement services revenue iswas primarily related to an approximately $2.5 million development fee we received as a result of a third-party terminating their development agreement with us. The remaining increase in the developmentproperty management fees earned was from a third-party development agreement in the Boston region and from our New York unconsolidated joint venture that is developing Dock 72 in Brooklyn, New York. Management services revenue increased primarily due to an increase in service income that we earned from our tenants in the New YorkLos Angeles region.
Operating Income and Expense Items
General and Administrative Expense
General and administrative expense increaseddecreased by approximately $0.6$5.3 million for the three months ended September 30, 2017March 31, 2020 compared to 20162019 primarily due to a decrease in compensation expense and other general and administrative expenses increasing by approximately $0.4 million and $0.2 million, respectively.expense. The increasedecrease in compensation expense was primarily related to (1) an approximately $0.7$8.4 million difference betweendecrease in the unrecognized expense remaining from the 2014 MYLTIP Units compared to the expense that was recognized during the three months ended September 30, 2017 for the newly issued 2017 MYLTIP Units (See Notes 8 and 11 to the Consolidated Financial Statements) and (2)value of our deferred compensation plan partially offset by an approximately $3.1 million increase in other compensation related expensesexpense, which includes the expense associated with our equity compensation programs, which includes the acceleration of approximately $0.2 million. These increases were partially offset by an increaseamortization that occurred for employees that reached a certain age and number of years of service and therefore became vested in capitalized wages of approximately $0.5 million. The increase in capitalized wages is shown as a decrease in general and administrative expense as these costs are

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capitalized and included in real estate assets or deferred charges on our Consolidated Balance Sheets (see below). The increase in other general and administrative expenses was primarily related to an increase in professional fees.awards sooner.
Wages directly related to the development and leasing of rental properties are capitalized and included in real estate assets or deferred charges on our Consolidated Balance Sheets, and amortized over the useful lives of the applicable asset or lease term. Capitalized wages for the three months ended September 30, 2017March 31, 2020 and 20162019 were approximately $4.7$2.8 million and $4.2$2.9 million, respectively. These costs are not included in the general and administrative expenses discussed above.
Impairment LossTransaction Costs
On September 27, 2016, we executed a letter of intentTransaction costs increased by approximately $0.2 million for the sale of the remaining parcel of land at our Washingtonian North property located in Gaithersburg, Maryland. The letter of intent caused us to reevaluate our strategy for the land and based on a shorter than expected hold period, we reduced the carrying value of the land to the estimated net sales price and recognized an impairment loss of approximately $1.8 million during the three months ended September 30, 2016.March 31, 2020 compared to 2019 due primarily to transaction costs related to the pursuit and formation of new joint ventures. In general, transaction costs relating to the formation of new and pending joint ventures and the pursuit of other transactions are expensed as incurred.
Depreciation and Amortization Expense
Depreciation expense may differ between BXP and BPLP as a result of previously applied acquisition accounting by BXP for the issuance of common stock in connection with non-sponsor OP Unit redemptions by BPLP.  This accounting resulted in a step-up of the real estate assets at BXP that was allocated to certain

properties.  The difference between the real estate assets of BXP as compared to BPLP for certain properties having an allocation of the real estate step-up will result in a corresponding difference in depreciation expense. For additional information see the Explanatory Note that follows the cover page of this Quarterly Report on Form 10-Q.
Boston Properties, Inc.
Depreciation and amortization expense decreasedincreased by approximately $51.6$6.5 million for the three months ended September 30, 2017March 31, 2020 compared to 2016, respectively,2019, as detailed below.
  Depreciation and Amortization Expense for the three months ended September 30,
2017 2016 Change
  (in thousands)
Same Property Portfolio $150,367
 $151,733
 $(1,366)
Properties Placed in-Service Portfolio 1,059
 8
 1,051
Properties Acquired Portfolio 738
 —
 738
Properties in Development or Redevelopment Portfolio (1) —
 51,817
 (51,817)
Properties Sold Portfolio —
 190
 (190)
  $152,164
 $203,748
 $(51,584)
___________
(1)
On August 19, 2016, the consolidated entity in which we have a 55% interest and that owns 601 Lexington Avenue located in New York City commenced the redevelopment of the six-story, low-rise office and retail building component of the complex. The redeveloped portion of the low-rise building will contain approximately 195,000 net rentable square feet of Class A office space and approximately 25,000 net rentable square feet of retail space. We recorded approximately $50.8 million, including $3.2 million related to the step-up of real estate assets, of accelerated depreciation expense for the portion of the complex demolished.


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Portfolio Depreciation and Amortization for the three months ended March 31,
2020 2019 Change
  (in thousands)
Same Property Portfolio $164,216
 $160,407
 $3,809
Properties Acquired Portfolio 2,564
 —
 2,564
Properties Placed in-Service Portfolio 2,959
 —
 2,959
Properties in Development or Redevelopment Portfolio 468
 673
 (205)
Properties Sold Portfolio 887
 3,514
 (2,627)
  $171,094
 $164,594
 $6,500
Boston Properties Limited Partnership
Depreciation and amortization expense decreasedincreased by approximately $48.4$6.6 million for the three months ended September 30, 2017March 31, 2020 compared to 2016, respectively,2019, as detailed below.
 Depreciation and Amortization Expense for the three months ended September 30,
2017 2016 Change
Portfolio Depreciation and Amortization for the three months ended March 31,
2020 2019 Change
 (in thousands) (in thousands)
Same Property Portfolio $148,413
 $149,749
 $(1,336) $162,407
 $158,495
 $3,912
Properties Acquired Portfolio 2,564
 —
 2,564
Properties Placed in-Service Portfolio 1,059
 8
 1,051
 2,959
 —
 2,959
Properties Acquired Portfolio 738
 —
 738
Properties in Development or Redevelopment Portfolio (1) —
 48,635
 (48,635) 468
 673
 (205)
Properties Sold Portfolio —
 190
 (190) 887
 3,514
 (2,627)
 $150,210
 $198,582
 $(48,372) $169,285
 $162,682
 $6,603
___________
(1)On August 19, 2016, the consolidated entity in which we have a 55% interest and that owns 601 Lexington Avenue located in New York City commenced the redevelopment of the six-story, low-rise office and retail building component of the complex. The redeveloped portion of the low-rise building will contain approximately 195,000 net rentable square feet of Class A office space and approximately 25,000 net rentable square feet of retail space. We recorded approximately $47.6 million of accelerated depreciation expense for the portion of the complex demolished.
Direct Reimbursements of Payroll and Related Costs From Management Services Contracts and Payroll and Related Costs From Management Service Contracts
We have determined that amounts reimbursed for payroll and related costs received from third parties in connection with management services contracts should be reflected on a gross basis instead of on a net basis as we have determined that we are the principal under these arrangements. We anticipate that these two financial statement line items will generally offset each other.
Other Income and Expense Items
Income (Loss) from Unconsolidated Joint Ventures
IncomeFor the three months ended March 31, 2020 compared to 2019, income (loss) from unconsolidated joint ventures decreased by approximately $0.6 million primarily due to the addition of our Gateway Commons joint venture and the partial placing in-service of the Hub50House joint venture in South San Francisco, CA and Boston, MA, respectively. These joint ventures reduced our net income by approximately $1.4 million for the three months ended September 30, 2017 comparedMarch 31, 2020. At March 31, 2020, the Hub50House was only 28% leased and is not expected to 2016 duebe stabilized until the first quarter of 2022. The decrease in net income from the Gateway Commons joint venture was primarily related to a decrease indepreciation and amortization. These decreases were offset by an approximately $0.8 million increase related to our share of net income from our Annapolis Junction, 540 Madison Avenue and Colorado Centerother unconsolidated joint ventures. The decrease in our share of net income from our Annapolis Junction joint venture is primarily due to a decrease in occupancy and an increase in interest expense related to Annapolis Junction Building One’s mortgage loan having an event of default and, commencing October 17, 2016, being charged interest at the default interest rate. The decrease in net income from our 540 Madison Avenue joint venture was primarily related to an increase in interest expense as the mortgage loan that encumbers the property bears interest at a variable rate. On July 28, 2017, the joint venture that owns Colorado Center obtained mortgage loan financing, the result of which increased interest expense, which reduced the net income for the joint venture. For additional information pertaining to the Annapolis Junction Building One mortgage loan refer to “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Capitalization—Off-Balance Sheet Arrangements—Joint Venture Indebtedness.”
Interest and Other Income
Interest and other income decreased by approximately $2.3 million for the three months ended September 30, 2017 compared to 2016 due primarily to a decrease in other income of approximately $3.0 million partially offset by an increase in interest income of approximately $0.7 million. During the three months ended September 30, 2017, the decrease in other income was primarily due to an approximately $1.3 million tax credit that we received from our Washington, DC region and approximately $1.7 million related to the sale of historic tax credits at The Lofts at Atlantic Wharf in Boston, Massachusetts. Both of these items did not recur during 2017.
On October 20, 2010, we closed a transaction with a financial institution (the “HTC Investor”) related to the historic rehabilitation of The Lofts at Atlantic Wharf in Boston, Massachusetts. The HTC Investor has contributed an aggregate of approximately $15 million to the project. As part of its contribution, the HTC Investor received substantially all of the benefits derived from the tax credits. Beginning in July 2012 through July 2016, we recognized the cash received as revenue over the five-year tax credit recapture period as defined in the Internal Revenue Code.

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Losses from Early Extinguishments of Debt
On September 1, 2016, we used a portion of the net proceeds from BPLP’s offering of senior unsecured notes and available cash to repay the mortgage loan collateralized by our 599 Lexington Avenue property located in New York City totaling $750.0 million. The mortgage loan bore interest at a fixed rate of 5.57% per annum (5.41% per annum GAAP interest rate) and was scheduled to mature on March 1, 2017. There was no prepayment penalty. We recognized a gain from early extinguishment of debt totaling approximately $0.4 million consisting of the acceleration of the remaining balance related to the effective portion of a previous interest rate hedging program included within accumulated other comprehensive loss, offset by the write-off of unamortized deferred financing costs.
On September 1, 2016, we used a portion of the net proceeds from BPLP’s offering of senior unsecured notes and available cash to repay the mortgage loan collateralized by our Embarcadero Center Four property located in San Francisco, California totaling approximately $344.8 million. The mortgage loan bore interest at a fixed rate of 6.10% per annum (7.02% per annum GAAP interest rate) and was scheduled to mature on December 1, 2016. There was no prepayment penalty. We recognized a loss from early extinguishment of debt totaling approximately $0.7 million consisting of the write-off of unamortized deferred financing costs and the acceleration of the remaining balance related to the effective portion of a previous interest rate hedging program included within accumulated other comprehensive loss.
Gains from Investments in Securities
Gains from investments in securities for the three months ended September 30, 2017 and 2016 related to investments that we have made to reduce our market risk relating to a deferred compensation plan that we maintain for BXP’s officers. Under this deferred compensation plan, each officer who is eligible to participate is permitted to defer a portion of the officer’s current income on a pre-tax basis and receive a tax-deferred return on these deferrals based on the performance of specific investments selected by the officer. In order to reduce our market risk relating to this plan, we typically acquire, in a separate account that is not restricted as to its use, similar or identical investments as those selected by each officer. This enables us to generally match our liabilities to BXP’s officers under the deferred compensation plan with equivalent assets and thereby limit our market risk. The performance of these investments is recorded as gains from investments in securities. During the three months ended September 30, 2017 and 2016, we recognized gains of approximately $0.9 million and $1.0 million, respectively, on these investments. By comparison, our general and administrative expense increased by approximately $0.9 million and $1.0 million during the three months ended September 30, 2017 and 2016, respectively, as a result of an increase in our liability under our deferred compensation plan that were associated with the performance of the specific investments selected by officers of BXP participating in the plan.

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Interest Expense
Interest expense decreased by approximately $12.6 million for the three months ended September 30, 2017 compared to 2016 as detailed below:
Component Change in interest
expense for the three
months ended
September 30, 2017
compared to
September 30, 2016
  (in thousands)
Increases to interest expense due to:  
Refinancing of the debt collateralized by 767 Fifth Avenue (the General Motors Building) (1) $8,657
Issuance of $1.0 billion in aggregate principal of 2.750% senior notes due 2026 on August 17, 2016 4,269
Utilization of the Unsecured Line of Credit as well as an increase in capacity due to the execution of the 2017 Credit Facility (1) 417
Amortization of deferred financing fees for BPLP’s unsecured debt and credit facility 373
Other interest expense (excluding senior notes) 271
Total increases to interest expense 13,987
Decreases to interest expense due to:  
Repayment of mortgage financings (2) (11,032)
Decrease in the interest for the Outside Members’ Notes Payable for the 767 Fifth Avenue (the General Motors Building) (3) (8,694)
Increase in capitalized interest (4) (6,870)
Total decreases to interest expense (26,596)
Total change in interest expense $(12,609)
___________ 
(1)See Note 5 to the Consolidated Financial Statements.
(2)Includes the repayment of the mortgage loans collateralized by Embarcadero Center Four and 599 Lexington Avenue.
(3)
The related interest expense from the Outside Members’ Notes Payable totaled approximately $8.7 million for the three months ended September 30, 2016. This amount was allocated to the outside joint venture partners as an adjustment to Noncontrolling Interests in Property Partnerships in our Consolidated Statements of Operations. On June 7, 2017, a portion of the outside members’ notes payable was repaid and the remaining portion was contributed as equity in the consolidated entity (See Notes 5 and 8 to the Consolidated Financial Statements).
(4)
The increase was primarily due to the commencement and continuation of several development projects. For a list of development projects refer to “Liquidity and Capital Resources” within “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Interest expense directly related to the development of rental properties is capitalized and included in real estate assets on our Consolidated Balance Sheets and amortized over the useful lives of the real estate or lease term. As portions of properties are placed in-service, we cease capitalizing interest on these portions and interest is then expensed. Interest capitalized for the three months ended September 30, 2017 and 2016 was approximately $16.7 million and $9.8 million, respectively. These costs are not included in the interest expense referenced above.
At September 30, 2017, our variable rate debt consisted of BPLP’s $2.0 billion 2017 Credit Facility of which no amount was outstanding at September 30, 2017. For a summary of our consolidated debt as of September 30, 2017 and September 30, 2016 refer to the heading “Liquidity and Capital Resources—Capitalization—Debt Financing” within “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Losses from Interest Rate Contracts
On August 17, 2016, in conjunction with BPLP’s offering of its 2.750% senior unsecured notes due 2026, we terminated forward-starting interest rate swap contracts that fixed the 10-year swap rate at a weighted-average rate of approximately 2.423% per annum on notional amounts aggregating $550.0 million. We cash-settled the contracts and made cash payments to the counterparties aggregating approximately $49.3 million. We recognized approximately $0.1 million of losses on interest rate contracts during the three months ended September 30, 2016 related to the partial ineffectiveness of the interest rate

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contracts. We will reclassify into earnings over the 10-year term of the 2.750% senior unsecured notes due 2026 as an increase to interest expense approximately $49.2 million (or approximately $4.9 million per year) of the amounts recorded on our consolidated balance sheets within accumulated other comprehensive loss, which represents the effective portion of the applicable interest rate contracts.
Gains(Losses) on Sales of Real Estate
The gainsGains on sales of real estate may differ between BXP and BPLP as a result of previously applied acquisition accounting by BXP for the issuance of common stock in connection with non-sponsor OP Unit redemptions by BPLP. This accounting resulted in a step-up of the real estate assets at BXP that was allocated to certain properties. The difference between the real estate assets of BXP as compared to BPLP for certain properties having an allocation of the real estate step-up will result in a corresponding difference in the gains on sales of real estate when those properties are sold. For additional information, see the Explanatory Note that follows the cover page of this Quarterly Report on Form 10-Q.
Boston Properties, Inc.
Gains (losses) on sales of real estate decreasedincreased by approximately $10.1$411.1 million for the three months ended September 30, 2017March 31, 2020 compared to 2016, respectively,2019, as detailed below (dollars in millions):below.
Name Date Sold Property Type Square Feet Sale Price Net Cash Proceeds Gain (Loss) on Sale of Real Estate 
        (dollars in millions) 
2020             
601, 611 and 651 Gateway January 28, 2020 Office 768,000
 $350.0
 $—
 $217.7
(1)
New Dominion Technology Park February 20, 2020 Office 493,000
 256.0
 254.0
 192.3
 
        $606.0
 $254.0
 $410.0
(2)
2019             
2600 Tower Oaks Boulevard January 24, 2019 Office 179,000
 $22.7
 $21.4
 $(0.6)(3)
Name Date Sold Property Type Square Feet Sale Price Cash Proceeds Gain on Sale of Real Estate 
2017             
Reston Eastgate August 30, 2017 Land N/A $14.0
 $13.2
 $2.8
(1)
2016             
Broad Run Business Park August 16, 2016 Land N/A $18.0
 $17.9
 $13.0
 
___________
(1)
On January 28, 2020, we entered into a joint venture with a third party to own, operate and develop properties at our Gateway Commons complex located in South San Francisco. We contributed our 601, 611 and 651 Gateway properties and development rights with an agreed upon value aggregating approximately $350.0 million for our 50% interest in the joint venture (See Notes 3 and 5 to the Consolidated Financial Statements).
(2)Excludes approximately $58,000$0.1 million of a gaingains on salesales of real estate recognized during the three months ended September 30, 2017March 31, 2020 related to a previously deferred gain amountamounts from a 2016 sale.sales of real estate occurring in the prior year.
Boston Properties Limited Partnership
Gains on sales of real estate decreased by approximately $10.1 million for the three months ended September 30, 2017 compared to 2016, respectively, as detailed below (dollars in millions):
Name Date Sold Property Type Square Feet Sale Price Cash Proceeds Gain on Sale of Real Estate 
2017             
Reston Eastgate August 30, 2017 Land N/A $14.0
 $13.2
 $2.8
(1)
2016             
Broad Run Business Park August 16, 2016 Land N/A $18.0
 $17.9
 $13.0
 
___________
(1)(3)Excludes approximately $58,000$0.3 million of a gainlosses on salesales of real estate recognized during the three months ended September 30, 2017March 31, 2019 related to a previously deferred gain amountloss amounts from a 2016 sale.sales of real estate occurring in prior years.


Boston Properties Limited Partnership
Gains (losses) on sales of real estate increased by approximately $420.6 million for the three months ended March 31, 2020 compared to 2019, as detailed below.
Name Date Sold Property Type Square Feet Sale Price Net Cash Proceeds Gain (Loss) on Sale of Real Estate 
        (dollars in millions) 
2020             
601, 611 and 651 Gateway January 28, 2020 Office 768,000
 $350.0
 $—
 $222.4
(1)
New Dominion Technology Park February 20, 2020 Office 493,000
 256.0
 254.0
 197.1
 
        $606.0
 $254.0
 $419.5
(2)
2019             
2600 Tower Oaks Boulevard January 24, 2019 Office 179,000
 $22.7
 $21.4
 $(0.6)(3)
              
___________  
(1)
On January 28, 2020, we entered into a joint venture with a third party to own, operate and develop properties at our Gateway Commons complex located in South San Francisco. We contributed our 601, 611 and 651 Gateway properties and development rights with an agreed upon value aggregating approximately $350.0 million for our 50% interest in the joint venture (See Notes 3 and 5 to the Consolidated Financial Statements).
(2)Excludes approximately $0.1 million of gains on sales of real estate recognized during the three months ended March 31, 2020 related to gain amounts from sales of real estate occurring in the prior year.
(3)Excludes approximately $0.3 million of losses on sales of real estate recognized during the three months ended March 31, 2019 related to loss amounts from sales of real estate occurring in prior years.
Interest and Other Income
Interest and other income decreased by approximately $0.7 million for the three months ended March 31, 2020 compared to 2019 due primarily to a decrease in interest rates.
Gains (Losses) from Investments in Securities
Gains (losses) from investments in securities for the three months ended March 31, 2020 and 2019 related to investments that we have made to reduce our market risk relating to deferred compensation plans that we maintain for BXP’s officers and non-employee directors. Under the deferred compensation plans, each officer or non-employee director who is eligible to participate is permitted to defer a portion of the officer’s current income or the non-employee director’s compensation on a pre-tax basis and receive a tax-deferred return on these deferrals based on the performance of specific investments selected by the officer or non-employee director. In order to reduce our market risk relating to these plans, we typically acquire, in a separate account that is not restricted as to its use, similar or identical investments as those selected by each officer or non-employee director. This enables us to generally match our liabilities to BXP’s officers or non-employee directors under our deferred compensation plans with equivalent assets and thereby limit our market risk. The performance of these investments is recorded as gains (losses) from investments in securities. During the three months ended March 31, 2020 and 2019, we recognized gains (losses) of approximately $(5.4) million and $3.0 million, respectively, on these investments. By comparison, our general and administrative expense increased (decreased) by approximately $(5.4) million and $3.0 million during the three months ended March 31, 2020 and 2019, respectively, as a result of increases (decreases) in our liability under our deferred compensation plans that was associated with the performance of the specific investments selected by officers and non-employee directors of BXP participating in the plans.
Impairment Loss
Impairment loss may differ between BXP and BPLP as a result of previously applied acquisition accounting by BXP for the issuance of common stock in connection with non-sponsor OP Unit redemptions by BPLP.  This accounting resulted in a step-up of the real estate assets at BXP that was allocated to certain properties.  The difference between the real estate assets of BXP as compared to BPLP for certain properties having an allocation

of the real estate step-up will result in a corresponding difference in depreciation expense. For additional information see the Explanatory Note that follows the cover page of this Quarterly Report on Form 10-Q.
At March 31, 2019, we evaluated the expected hold period of our One Tower Center property located in East Brunswick, New Jersey and, based on a shorter-than-expected hold period, we reduced the carrying value of the property to its estimated fair value at March 31, 2019 and recognized an impairment loss totaling approximately $24.0 million for BXP and approximately $22.3 million for BPLP. Our estimated fair value was based on a pending offer from a third party to acquire the property and the subsequent execution of a purchase and sale agreement on April 18, 2019 for a gross sale price of approximately $38.0 million. On June 3, 2019, we completed the sale of the property. One Tower Center is an approximately 410,000 net rentable square foot Class A office property.
Interest Expense
Interest expense increased by approximately $0.6 million for the three months ended March 31, 2020 compared to 2019, as detailed below.
Component Change in interest expense for the three months ended March 31, 2020
compared to
March 31, 2019
  (in thousands)
Increases to interest expense due to:  
Issuance of $850 million in aggregate principal of 3.400% senior notes due 2029 on June 21, 2019 $7,259
Issuance of $700 million in aggregate principal of 2.900% senior notes due 2030 on September 3, 2019 5,082
Increase in interest due to finance leases 1,781
Other interest expense (excluding senior notes) 198
Total increases to interest expense 14,320
Decreases to interest expense due to:  
Redemption of $700 million in aggregate principal of 5.625% senior notes due 2020 on September 18, 2019 (9,865)
Increase in capitalized interest related to development projects that had finance leases (1,781)
Decrease in interest rates for the 2017 Credit Facility (972)
Repayment of a bond financing collateralized by New Dominion Technology Building One (565)
Increase in capitalized interest related to development projects (555)
Total decreases to interest expense (13,738)
Total change in interest expense $582
Interest expense directly related to the development of rental properties is capitalized and included in real estate assets on our Consolidated Balance Sheets and amortized over the useful lives of the real estate or lease term. As portions of properties are placed in-service, we cease capitalizing interest on that portion and interest is then expensed. Interest capitalized for the three months ended March 31, 2020 and 2019 was approximately $14.1 million and $11.8 million, respectively. These costs are not included in the interest expense referenced above.
At March 31, 2020, our outstanding variable rate debt consisted of BPLP’s $2.0 billion unsecured revolving credit facility (the “2017 Credit Facility”), which includes the $500.0 million delayed draw term loan facility (the “Delayed Draw Facility”) and the $1.5 billion revolving line of credit (the “Revolving Facility”). The Delayed Draw Facility and Revolving Facility had $500.0 million and $250.0 million outstanding as of March 31, 2020, respectively. For a summary of our consolidated debt as of March 31, 2020 and March 31, 2019 refer to the heading “Liquidity and Capital Resources—Capitalization—Debt Financing” within “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

On May 5, 2020, BPLP completed a public offering of $1.25 billion in aggregate principal amount of its 3.250% unsecured senior notes due 2031 (See Note 12 to the Consolidated Financial Statements). We used a portion of the net proceeds from this offering for the repayment of borrowings outstanding under the Revolving Facility.
Noncontrolling interestsInterests in property partnershipsProperty Partnerships
Noncontrolling interests in property partnerships increased by approximately $31.6$0.7 million for the three months ended September 30, 2017March 31, 2020 compared to 20162019, as detailed below.

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Property Noncontrolling Interests in Property Partnerships for the three months ended September 30, Noncontrolling Interests in Property Partnerships for the three months ended March 31,
2017 2016 Change2020 2019 Change
 (in thousands) (in thousands)
Salesforce Tower(1) $(160) $(3) $(157) $—
 $116
 $(116)
767 Fifth Avenue (the General Motors Building) (1)(2) 1,179
 (5,938) 7,117
 1,660
 2,298
 (638)
Times Square Tower 6,741
 6,636
 105
 6,869
 6,892
 (23)
601 Lexington Avenue (2) 3,066
 (21,141) 24,207
 4,850
 4,664
 186
100 Federal Street(3) 1,174
 887
 287
 3,661
 2,555
 1,106
Atlantic Wharf Office 2,340
 2,334
 6
Atlantic Wharf Office Building 2,446
 2,305
 141
 $14,340
 $(17,225) $31,565
 $19,486
 $18,830
 $656
__________________________
(1)
On June 7, 2017,April 1, 2019, we acquired our consolidated entity in which we have a 60%partner’s 5% interest completed the refinancing of indebtedness that had been secured by direct and indirect interests in 767 Fifth Avenue. Prior to this quarter, the net loss allocation was primarily due to the partners’ share of the interest expense for the outside members’ notes payable, which was $8.7 million for the three months ended 2016. On June 7, 2017, a portion of the outside members’ notes payable was repaid and the remaining portion was contributed as equity in the consolidated entity (See Notes 5 and 8 to the Consolidated Financial Statements)subsequently own 100%.
(2)On August 19, 2016, the consolidated entityThe decrease was primarily due to a decrease in which we have a 55% interest and that owns this property commenced the redevelopment of the six-story low-rise office and retail building component of the complex. lease revenue from our tenants.
(3)The redeveloped portion of the low-rise building will contain approximately 195,000 net rentable square feet of Class A office space and approximately 25,000 net rentable square feet of retail space. We will capitalize incremental costs during the redevelopment. BXP and BPLP recognized approximately $50.8 million and $47.6 million, respectively, of depreciation expense associated with the acceleration of depreciation on the assets being removedincrease was primarily due to an increase in lease revenue from service and demolished as part of the redevelopment of the property. Approximately $21.4 million of those amounts was allocated to the outside partners.our tenants.
Noncontrolling Interest—Common Units of Boston Properties Limitedthe Operating Partnership
For BXP, noncontrolling interest–interest—common units of Boston Properties Limitedthe Operating Partnership increased by approximately $4.0$45.9 million for the three months ended September 30, 2017March 31, 2020 compared to 20162019 due primarily to an increase in allocable income, which was the result of recognizing a greater gain on sales of real estate amount during 2020 partially offset by a decrease in the noncontrolling interest’s ownership percentage. Due to our UPREIT ownership structure, there is no corresponding line item on BPLP’s financial statements.
Liquidity and Capital Resources
General
Our principal liquidity needs for the next twelve months and beyond are to:
fund normal recurring expenses;
meet debt service and principal repayment obligations, including balloon payments on maturing debt;obligations;
fund development/redevelopment costs;
fund capital expenditures, including major renovations, tenant improvements and leasing costs;
fund development costs;planned and possible acquisitions of properties, either directly or indirectly through the acquisition of equity interests therein;
fund dividend requirements on BXP’s Series B Preferred Stock;
fund possible property acquisitions; and
make the minimum distribution required to enable BXP to maintain its REIT qualification under the Internal Revenue Code of 1986, as amended.
We expect to satisfy these needs using one or more of the following:
cash flow from operations;
distribution of cash flows from joint ventures;
cash and cash equivalent balances;
issuances of BXP equity securities and/or additional preferred or common units of partnership interest in BPLP;
BPLP’s 2017 Credit Facility and other short-term bridge facilities;
construction loans;
long-term secured and unsecured indebtedness (including unsecured exchangeable indebtedness); and
sales of real estate.estate; and

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BXP equity securities and/or additional preferred or common units of partnership interest in BPLP.

We draw on multiple financing sources to fund our long-term capital needs. Our current consolidated development properties are expected to be primarily funded with our available cash balances, construction loans and BPLP’s 2017 CreditRevolving Facility. We use BPLP’s 2017 CreditRevolving Facility is utilized primarily as a bridge facility to fund acquisition opportunities, refinance outstanding indebtedness and meet short-term development and working capital needs. Although we may seek to fund our development projects with construction loans, which may require guarantees by BPLP, the financing for each particular project ultimately depends on several factors, including, among others, the project’s size and duration, the extent of pre-leasing and our available cash and access to cost effective capital at the given time.


The following table presents information on properties under construction and redevelopment as of September 30, 2017March 31, 2020 (dollars in thousands):
Construction
Properties
 
Estimated
Stabilization Date
 Location 
# of
Buildings
 
Estimated
Square
Feet
 
Investment
to Date (1)
 
Estimated
Total
Investment (1)
 
Estimated
Future
Equity
Requirement (1)
 
Percentage
Leased (2)
 
Office and Retail                 
Salesforce Tower (95% ownership) Third Quarter, 2019 San Francisco, CA 1
 1,400,000
 913,515
 1,073,500
 170,160
 87%(3)
The Hub on Causeway (50% ownership) Fourth Quarter, 2019 Boston, MA 1
 385,000
 46,272
 141,870
 —
 42%(4)
145 Broadway Fourth Quarter, 2019 Cambridge, MA 1
 485,000
 70,097
 375,000
 304,903
 98% 
Dock 72 (50% ownership) First Quarter, 2020 Brooklyn, NY 1
 670,000
 70,335
 204,900
 9,565
 33%(5)
6595 Springfield Center Drive (TSA Headquarters) Fourth Quarter, 2020 Springfield, VA 1
 634,000
 34,401
 313,700
 279,299
 98% 
7750 Wisconsin Avenue (Marriott International Headquarters) (50% ownership) Third Quarter, 2022 Bethesda, MD 1
 740,000
 11,206
 211,100
 199,894
 100%(6)
Total Office and Retail Properties under Construction   6
 4,314,000
 1,145,826
 2,320,070
 963,821
 80% 
Residential                 
Proto Kendall Square (280 units) Second Quarter, 2019 Cambridge, MA 1
 149,600
 59,422
 140,170
 80,748
 N/A
 
Proto Kendall Square - Retail     —
 14,400
 —
 —
 —
 15% 
Signature at Reston (508 units) Second Quarter, 2020 Reston, VA 1
 490,000
 171,649
 234,854
 63,205
 N/A
 
Signature at Reston - Retail     —
 24,600
 —
 —
 —
 81% 
MacArthur Station Residences (402 units) Fourth Quarter, 2021 Oakland, CA 1
 324,000
 3,133
 263,600
 260,467
 N/A
(7)
Total Residential Properties under Construction   3
 1,002,600
 234,204
 638,624
 404,420
 57% 
Redevelopment Properties               
191 Spring Street Fourth Quarter, 2018 Lexington, MA 1
 160,000
 30,221
 53,920
 23,699
 49% 
One Five Nine East 53rd Street (55% ownership) Fourth Quarter, 2019 New York, NY —
 220,000
 52,171
 106,000
 53,829
 —%(8)
Total Redevelopment Properties under Construction 1
 380,000
 82,392
 159,920
 77,528
 21% 
Total Properties under Construction and Redevelopment 10
 5,696,600
 $1,462,422
 $3,118,614
 $1,445,769
 75%
              Financings     
Construction Properties Estimated Stabilization Date Location # of Buildings Estimated Square Feet Investment to Date (1)(2)(3) Estimated Total Investment (1)(2) Total Available (1) Outstanding at 3/31/2020 (1) Estimated Future Equity Requirement (1)(2)(4) Percentage Leased (5) 
Office                     
20 CityPoint First Quarter, 2021 Waltham, MA 1
 211,000
 $77,622
 $97,000
 $—
 $—
 $19,378
 63%(6)
Dock 72 (50% ownership) Third Quarter, 2021 Brooklyn, NY 1
 670,000
 201,569
 243,150
 125,000
 90,578
 7,159
 33%(7)
325 Main Street Third Quarter, 2022 Cambridge, MA 1
 420,000
 110,493
 418,400
 —
 —
 307,907
 90% 
100 Causeway Street (50% ownership) Third Quarter, 2022 Boston, MA 1
 632,000
 136,514
 267,300
 200,000
 61,218
 —
 95% 
7750 Wisconsin Avenue (Marriott International Headquarters) (50% ownership) Third Quarter, 2022 Bethesda, MD 1
 734,000
 103,848
 198,900
 127,500
 40,768
 8,320
 100% 
Reston Gateway Fourth Quarter, 2023 Reston, VA 2
 1,062,000
 207,516
 715,300
 —
 —
 507,784
 72% 
2100 Pennsylvania Avenue Third Quarter, 2024 Washington, DC 1
 469,000
 76,983
 356,100
 —
 —
 279,117
 61% 
Total Office Properties under Construction     8
 4,198,000
 914,545
 2,296,150
 452,500
 192,564
 1,129,665
 74% 
Residential                     
Hub50House (440 units) (50% ownership) First Quarter, 2022 Boston, MA 1
 320,000
 139,938
 153,500
 90,000
 77,685
 1,247
 41%(8)
The Skylyne (402 units) First Quarter, 2022 Oakland, CA 1
 324,000
 221,806
 263,600
 —
 —
 41,794
 —
(9)
Total Residential Properties under Construction   2
 644,000
 361,744
 417,100
 90,000
 77,685
 43,041
 41% 
Redevelopment Properties                   
One Five Nine East 53rd Street (55% ownership) Fourth Quarter, 2020 New York, NY —
 220,000
 131,712
 150,000
 —
 —
 18,288
 96%(10)
200 West Street Fourth Quarter, 2021 Waltham, MA —
 126,000
 5,120
 47,800
 —
 —
 42,680
 —%(11)
Total Redevelopment Properties under Construction —
 346,000
 136,832
 197,800
 —
 —
 60,968
 61% 
Total Properties under Construction and Redevelopment 10
 5,188,000
 $1,413,121
 $2,911,050
 $542,500
 $270,249
 $1,233,674
 73%(12)

___________  
(1)Represents our share. Includes net revenue during lease up period, acquisition expenses and approximately $64.2 million of construction cost and leasing commission accruals.
(2)Represents percentage leasedInvestment to Date, Estimated Total Investment and Estimated Future Equity Requirement all include our share of acquisition expenses, as applicable, and reflect our share of November 2, 2017,the estimated net revenue/expenses that we expect to incur prior to stabilization of the project, including leases with future commencement dates and excluding residential units.any amounts actually received or paid through March 31, 2020.
(3)Under the joint venture agreement, if the project is funded with 100% equity, we have agreed to fund 50% of our partner’s equity requirement, structured as preferred equity. We expect to fundIncludes approximately $25.4 million at a rate of LIBOR plus 3.0% per annum and receive priority distributions from all distributions to our partner until the principal and interest are repaid. As of September 30, 2017, we had contributed an aggregate of approximately $15.2$91.6 million of preferred equity to the venture.unpaid but accrued construction costs and leasing commissions.

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(4)This development has a $102.3Excludes approximately $91.6 million (our share)of unpaid but accrued construction facility. As of September 30, 2017, no amounts have been drawn under this facility.costs and leasing commissions.
(5)This development has a $125 million (our share) construction facility. AsRepresents percentage leased as of September 30, 2017, no amounts have been drawn under this facility.May 5, 2020, including leases with future commencement dates.
(6)Rentable square feetThis property is an estimate based on current building design.65% placed in-service as of March 31, 2020.
(7)This property is 34% placed in-service as of March 31, 2020.
(8)This property is 81% placed in-service as of March 31, 2020.
(9)This development is subject to a 99-year ground lease (including extension options) with an option to purchase in the future.
(8)(10)TheRepresents the low-rise portion of 601 Lexington Avenue.
(11)Represents a portion of the property under redevelopment for conversion to laboratory space.
(12)Percentage leased excludes residential units.

Contractual rentalLease revenue (which includes recoveries from tenants,tenants), other income from operations, available cash balances, mortgage financings and draws on BPLP’s 2017 CreditRevolving Facility are the principal sources of capital that we use to payfund operating expenses, debt service, maintenance and repositioning capital expenditures, tenant improvements and the minimum distribution required to enable BXP to maintain its REIT qualification. We seek to maximize income from our existing properties by maintaining quality standards for our properties that promote high occupancy rates and permit increases in rental rates while reducing tenant turnover and controlling operating expenses. Our sources of revenue also include third-party fees generated by our property management, leasing and development and construction businesses, as well as the sale of assets from time to time. We believe our revenue, together with our cash balances and proceeds from financing activities,these sources of capital will continue to provide the funds necessary for our short-term liquidity needs, including our properties under development and redevelopment.
Material adverse changes in one or more sources of capital, including from the impacts of COVID-19, may adversely affect our net cash flows. SuchFor example, we may experience a decrease in cash rent collections resulting from restrictions implemented to limit the spread of COVID-19, including delays in tenant improvements and decreases in parking and hotel revenue. In turn, these changes in turn, could adversely affect our ability to fund operating expenses, dividends and distributions, debt service payments, maintenance and repositioning capital expenditures and tenant improvements. In addition, a material adverse change in the cash provided by our operations may affect our ability to comply with the financial covenants under BPLP’s 2017 Credit Facility and unsecured senior notes.
Our primary uses of capital will be the completion of our current and committed development and redevelopment projects. As of September 30, 2017,March 31, 2020, our share of the remaining development and redevelopment costs that we expect to fund through 20222024 is approximately $1.4$1.2 billion. During the third quarter,
As of May 5, 2020, we further enhanced our liquidity through two secured debt financings aggregating $754.6 million in gross commitments with the $550 million mortgage financing placed on Colorado Center located in Santa Monica, California and a $204.6 million construction commitment collateralized by our Hub on Causeway development project located in Boston, Massachusetts. As a result of the Colorado Center financing the joint venture distributed $502.0 million to the partners, of which our share was $251.0 million. We own a 50% interest in Colorado Center and the Hub on Causeway joint ventures.
Withhave approximately $486 million$1.6 billion of cash and cash equivalents, of which approximately $124 million is attributable to our consolidated joint venture partners, as well as approximately $151 million held in escrow for 1031 exchanges. Our cash and cash equivalents balance includes the proceeds from BPLP’s issuance of $1.25 billion of 3.250% unsecured senior notes due 2031, which generated net proceeds of approximately $2.0 billion available$1.24 billion. We used $250.0 million of the net proceeds from this offering for the repayment of borrowings outstanding under the 2017 Credit Facility, asRevolving Facility. In addition, during the first quarter of November 2, 2017,2020, we have sufficientenhanced our liquidity with the sale of our New Dominion Technology Park property located in Herndon, Virginia, which generated net cash proceeds of approximately $254 million.
Although the full extent to which COVID-19 impacts our liquidity and capital to complete these projects. Weresources will depend on future developments, which are highly uncertain and cannot be predicted with confidence at this time, we believe that our strong liquidity, including, our availabilityas of May 5, 2020, the approximately $1.5 billion available under BPLP’s 2017 Creditthe Revolving Facility, and proceeds from debt financings and asset sales will provide sufficient liquidity to fund our remaining capital requirements on existing development and redevelopment projects, fund pending new developments and pursue additionalstill be able to act opportunistically on attractive investment opportunities. In addition, on June 2, 2017 we renewed BXP’s $600.0 million ATM stock offering program for a period of three years.
We have not sold any shares under this ATM stock offering program.BXP’s $600.0 million at the market (ATM) program and intend to renew the program prior to its expiration in June 2020.
Given the relatively low interest rates currently available to us in the debt markets, weWe may seek to enhance our liquidity to provide sufficient capacity to meet our debt obligations and to fund our remaining capital requirements on existing developmentdevelopment/redevelopment projects, fund our foreseeable potential development activity, pursue additional attractive investment opportunities and pursue attractive additional investment opportunities.refinance or repay indebtedness. Our unconsolidated joint ventures have approximately $498.8 million of debt maturing in 2020, of which our share is approximately $202.5 million. We have no debt maturing until BPLP’s $850 million of 4.125% senior unsecured notes mature in May 2021, and we intend to continue to evaluate the costs associated with an early refinancing or redemption of all or a portion of this maturity. Depending on interest rates and overall conditions in the debt and equity markets, we may decide to access the debteither or both of these markets in advance of the need for the funds. Doing so may result in us carrying additional cash and cash equivalents pending BPLP’s use of the proceeds, which would increase our net interest expense and it would be dilutive to our earnings by increasing our net interest expense.earnings.
REIT Tax Distribution Considerations
Dividend
BXP as a REIT is subject to a number of organizational and operational requirements, including a requirement that BXP currently distribute at least 90% of its annual taxable income (excluding capital gains and with certain other adjustments). Our policy is for BXP to distribute at least 100% of its taxable income, including capital gains, to avoid paying federal tax. On December 19, 2016,17, 2019, the Board of Directors of BXP increased our regular quarterly

dividend to $0.75from $0.95 per common share to $0.98 per common share, or 3%, beginning with the fourth quarter of 2016. The dividend was paid on January 30, 2017 to shareholders of record as of the close of business on December 30, 2016.2019. Common and LTIP unitholders of limited partnership interest in BPLP, as of the close of business on December 30, 2016, received the same total distribution per unit on January 30, 2017.unit.
BXP’s Board of Directors will continue to evaluate BXP’s policy taking into considerationdividend rate in light of our actual and projected taxable income, our liquidity requirements and other circumstances, thatincluding the BXP’s Boardimpact of Directors may deem relevant from time to time,COVID-19, and there can be no assurance that the future dividends declared by itsBXP’s Board of Directors will not differ materially.

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materially from the current quarterly dividend amount.
Sales
To the extent that we sell assets at a gain and cannot efficiently use the proceeds in a tax deferred manner for either our development activities or attractive acquisitions, BXP would, at the appropriate time, decide whether it is better to declare a special dividend, adopt a stock repurchase program, reduce indebtedness or retain the cash for future investment opportunities. Such a decision will depend on many factors including, among others, the timing, availability and terms of development and acquisition opportunities, our then-current and anticipated leverage, the cost and availability of capital from other sources, the price of BXP’s common stock and REIT distribution requirements. At a minimum, we expect that BXP would distribute at least that amount of proceeds necessary for BXP to avoid paying corporate level tax on the applicable gains realized from any asset sales.
From time to time in selected cases, whether due to a change in use, structuring issues to comply with applicable REIT regulations or other reasons, we may sell an asset that is held by a taxable REIT subsidiary (“TRS”). Such a sale by a TRS would be subject to federal and local taxes.
Cash Flow Summary
The following summary discussion of our cash flows is based on the Consolidated Statements of Cash Flows and is not meant to be an all-inclusive discussion of the changes in our cash flows for the periods presented below.
Cash and cash equivalents wereand cash held in escrows aggregated approximately $0.5 billion$858.6 million and $0.4 billion$432.3 million at September 30, 2017March 31, 2020 and 2016,2019, respectively, representing an increase of approximately $0.1 billion.$426.3 million. The following table sets forth changes in cash flows:
Nine months ended September 30,Three months ended March 31,
2017 2016 Increase
(Decrease)		2020 2019 Increase
(Decrease)
(in thousands)
Net cash provided by operating activities$592,712
 $743,785
 $(151,073)$175,197
 $207,234
 $(32,037)
Net cash used in investing activities(622,427) (1,104,384) 481,957
(73,793) (223,515) 149,722
Net cash provided by financing activities165,856
 56,204
 109,652
Net cash provided by (used in) financing activities65,288
 (190,612) 255,900
Our principal source of cash flow is related to the operation of our properties. The averageweighted-average term of our in-place tenant leases, including our unconsolidated joint ventures, is approximately 7.28.3 years with occupancy rates historically in the range of 90% to 94%. OurGenerally, our properties generate a relatively consistent stream of cash flow that provides us with resources to pay operating expenses, debt service and fund regular quarterly dividend and distribution payment requirements. In addition, over the past several years, we have raised capital through the sale of some of our properties and through secured and unsecured borrowingsborrowings.
The full extent of the impact of COVID-19 on our business, operations and equity offerings of BXP.financial results will depend on numerous evolving factors that we may not be able to accurately predict. In addition, we cannot predict the impact that COVID-19 will have on our tenants, employees, contractors, lenders, suppliers, vendors and joint venture partners; any material effect on these parties could also have a material adverse effect on us. See Item 1A: “Risk Factors” for additional details.
Cash is used in investing activities to fund acquisitions, development, net investments in unconsolidated joint ventures and maintenance and repositioning capital expenditures. We selectively invest in new projects that enable us to take advantage of our development, leasing, financing and property management skills and invest in existing buildings to enhance or maintain their market position. Cash used in investing activities for the ninethree months ended September 30, 2017March 31, 2020 consisted primarily of development projects, building and tenant improvements and capital contributions to unconsolidated joint ventures.ventures, partially offset by the proceeds from the sales of real estate. Cash

used in investing activities for the ninethree months ended September 30, 2016March 31, 2019 consisted primarily of the acquisition of real estate, development projects, building and tenant improvements and capital contributions to and distributions from unconsolidated joint ventures, partially offset by the proceeds from the sale ofor real estate, as detailed below:

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 Nine months ended September 30,
 2017 2016
 (in thousands)
Acquisitions of real estate (1)$(15,953) $(78,000)
Construction in progress (2)(452,283) (359,716)
Building and other capital improvements(162,395) (81,842)
Tenant improvements(152,749) (167,762)
Proceeds from sales of real estate (3)29,810
 122,750
Proceeds from sales of real estate placed in escrow (3)(29,810) (122,647)
Proceeds from sales of real estate released from escrow (3)16,640
 122,647
Cash released from escrow for investing activities9,638
 6,694
Cash released from escrow for land sale contracts—
 1,403
Cash placed in escrow for investment in unconsolidated joint venture (4)(25,000) —
Capital contributions to unconsolidated joint ventures (5)(89,874) (546,982)
Capital distributions from unconsolidated joint ventures (6)251,000
 —
Investments in securities, net(1,451) (929)
Net cash used in investing activities$(622,427) $(1,104,384)
 Three months ended March 31,
 2020 2019
 (in thousands)
Acquisition of real estate (1)$—
 $(43,061)
Construction in progress (2)(143,160) (85,632)
Building and other capital improvements(39,154) (32,719)
Tenant improvements(64,172) (54,242)
Proceeds from sales of real estate (3)259,489
 20,019
Capital contributions to unconsolidated joint ventures (4)(89,997) (26,995)
Investments in securities, net3,201
 (885)
Net cash used in investing activities$(73,793) $(223,515)
___________  Cash used in investing activities changed primarily due to the following:

(1)On May 15, 2017,January 10, 2019, we acquired 103land parcels at our Carnegie Center property located in Princeton, New Jersey for a gross purchase price of approximately $16.0$51.5 million, which includes an aggregate of approximately $8.6 million of additional amounts that are payable in cash, including transaction costs.the future to the seller upon the development or sale of each of the parcels. The land parcels will support approximately 1.7 million square feet of development.
On April 22, 2016, we acquired 3625-3635 Peterson Way located in Santa Clara, California for a purchase price of approximately $78.0 million in cash.
(2)Construction in progress for the ninethree months ended September 30, 2017March 31, 2020 includes ongoing expenditures associated with Reservoir Place North, 888 Boylston17Fifty Presidents Street, and the Prudential Center retail expansion, which were fullywas completed and placed in-service during the ninethree months ended September 30, 2017.March 31, 2020 and 20 CityPoint, which was partially placed in-service during the year ended December 31, 2019. In addition, we incurred costs associated with our continued development/redevelopment of Salesforce Tower, One Five Nine East 53rd Street, (the low-rise portion of 601 Lexington Avenue), 191 SpringReston Gateway, 2100 Pennsylvania Avenue, 200 West Street, 145 Broadway, 6595 Springfield Center Drive,The Skylyne and MacArthur Station Residences, Proto Kendall Square and Signature at Reston residential projects.325 Main Street.
Construction in progress for the ninethree months ended September 30, 2016March 31, 2019 includes ongoing expenditures associated with 601 Massachusetts Avenue, 804 Carnegie Center, 10 CityPoint, Reservoir Place North, 888 Boylston Street and the Prudential Center retail expansion,Salesforce Tower, which were partially or fullywas placed in-service during the nine monthsyear ended September 30, 2016.December 31, 2018. In addition, we incurred costs associated with our continued developmentdevelopment/redevelopment of Salesforce Tower, One Five Nine East 53rd Street, (the low-rise portion of 601 Lexington Avenue),145 Broadway, 20 CityPoint, 17Fifty Presidents Street, Reston Gateway and Proto Kendall Square and Signature at Reston residential projects.The Skylyne.
(3)On April 19, 2017,February 20, 2020, we completed the sale of an approximately 9.5-acre parcel of land at 30 Shattuck RoadNew Dominion Technology Park located in Andover, MassachusettsHerndon, Virginia for a gross sale price of $5.0$256.0 million. Net cash proceeds totaled approximately $5.0 million.$254.0 million, resulting in a gain on sale of real estate totaling approximately $192.3 million for BXP and approximately $197.1 million for BPLP. New Dominion Technology Park is comprised of two Class A office properties aggregating approximately 493,000 net rentable square feet.
On June 13, 2017, we completed the sale of 40 Shattuck Road located in Andover, Massachusetts for a gross sale price of $12.0 million. Net cash proceeds totaled approximately $11.9 million.
On August 30, 2017,January 24, 2019, we completed the sale of our Reston Eastgate2600 Tower Oaks Boulevard property located in Reston, Virginia for a gross sale price of $14.0 million.  Net cash proceeds totaled approximately $13.2 million.
On February 1, 2016, we completed the sale of our 415 Main Street property located in Cambridge, Massachusetts to the tenantRockville, Maryland for a gross sale price of approximately $105.4$22.7 million. Net cash proceeds totaled approximately $104.9 million.
On August 16, 2016, we completed the$21.4 million, resulting in a loss on sale of a parcel of land within our Broad Run Business Park property located in Loudoun County, Virginia. Net cash proceeds totaledreal estate totaling approximately $17.9$0.6 million. The sale of the land parcel was completed as part of a like-kind exchange under Section 1031 of the Internal Revenue Code.2600 Tower Oaks Boulevard is an approximately 179,000 net rentable square foot Class A office property.
(4)On August 7, 2017, we deposited $25.0 million into an escrow account to be contributed by us to the unconsolidated joint venture that is developing 7750 Wisconsin Avenue to fund future development costs.

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(5)Capital contributions to unconsolidated joint ventures for the ninethree months ended September 30, 2017March 31, 2020 consisted primarily of cash contributions of approximately $34.2$64.5 million, $31.7$16.8 million and $21.4$4.0 million to our Dock 72, Hub on CausewayPlatform 16, 3 Hudson Boulevard and 7750 Wisconsin AvenueMetropolitan Square joint ventures, respectively.
Capital contributions to unconsolidated joint ventures for the ninethree months ended September 30, 2016 wereMarch 31, 2019 consisted primarily due toof cash contributions of approximately $505.1 million, $15.3 million, $14.5 million and $11.8$23.3 million to our Colorado Center, Hub on100 Causeway Dock72 and 1265 Main Street joint ventures, respectively. On July 1, 2016, we acquired a 49.8% interest in Colorado Center.venture.
(6)Capital distributions from unconsolidated joint ventures for the nine months ended September 30, 2017 consisted of a cash distribution of $251.0 million from our Colorado Center joint venture resulting from the proceeds of the new mortgage financing.
Cash provided by financing activities for the ninethree months ended September 30, 2017March 31, 2020 totaled approximately $165.9$65.3 million. This consisted primarily of the net proceeds from borrowing under the refinancing of the 767 Fifth Avenue (the General Motors Building) debtRevolving Facility, partially offset by the payment of our regular dividends and distributions to our shareholders and unitholders. Future debt payments are discussed below under the heading “Capitalization—Debt Financing.”

Capitalization
The following table presents Consolidated Market Capitalization and BXP’s Share of Market Capitalization, as well as the corresponding ratios of Consolidated Debt to Consolidated Market Capitalization and BXP’s Share of Debt to BXP’s Share of Market Capitalization (dollars in thousands)(in thousands except for percentages):
 September 30, 2017  March 31, 2020 
 Shares / Units Outstanding Common Stock Equivalent Equivalent Value (1)  Shares / Units Outstanding Common Stock Equivalent Equivalent Value (1) 
Common Stock 154,322,266
 154,322,266
 $18,963,120
  155,315
 155,315
 $14,324,702
 
Common Operating Partnership Units 17,629,311
 17,629,311
 2,166,290
(2) 17,765
 17,765
 1,638,466
(2)
5.25% Series B Cumulative Redeemable Preferred Stock (non-callable until March 27, 2018) 80,000
 —
 200,000
 
5.25% Series B Cumulative Redeemable Preferred Stock 80
 —
 200,000
 
Total Equity   171,951,577
 $21,329,410
    173,080
 $16,163,168
 
              
Consolidated Debt   

 $10,234,634
      $12,061,224
 
Add: 
            
BXP’s share of unconsolidated joint venture debt (3)     591,622
      1,027,547
 
Subtract:              
Partners’ share of Consolidated Debt (4)     (1,210,389)      (1,198,575) 
BXP’s Share of Debt     $9,615,867
      $11,890,196
 
              
Consolidated Market Capitalization     $31,564,044
      $28,224,392
 
BXP’s Share of Market Capitalization     $30,945,277
      $28,053,364
 
Consolidated Debt/Consolidated Market Capitalization     32.42%      42.73% 
BXP’s Share of Debt/BXP’s Share of Market Capitalization     31.07% BXP’s Share of Debt/BXP’s Share of Market Capitalization   42.38% 
_______________  
(1)Except for the Series B Cumulative Redeemable Preferred Stock, which is valued at the liquidation preference of $2,500.00$2,500 per share, values are based on the closing price per share of BXP’s Common Stock on September 30, 2017the New York Stock Exchange on March 31, 2020 of $122.88.$92.23.
(2)Includes 816,982 long-term incentive plan units (including 118,067 2012 OPP Units 85,405and 2013 MYLTIP Units and 25,107 2014- 2017 MYLTIP Units), but excludes an aggregate of 1,239,978 MYLTIP Units granted between 20152018 and 2017.2020.
(3)See page 8370 for additional information.
(4)See page 8269 for additional information.


Consolidated Debt to Consolidated Market Capitalization Ratio is a measure of leverage commonly used by analysts in the REIT industry.sector. We present this measure as a percentage and it is calculated by dividing (A) our consolidated debt by (B) our consolidated market capitalization, which is the market value of our outstanding equity securities plus our consolidated debt. Consolidated market capitalization is the sum of:

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(1)     our consolidated debt; plus
(2)     the product of (x) the closing price per share of BXP common stock on September 30, 2017,March 31, 2020, as reported by the New York Stock Exchange, multiplied by (y) the sum of:
(i)the number of outstanding shares of common stock of BXP,
(ii)the number of outstanding OP Units in BPLP (excluding OP Units held by BXP),
(iii)the number of OP Units issuable upon conversion of all outstanding LTIP Units, assuming all conditions have been met for the conversion of the LTIP Units, and
(iv)the number of OP Units issuable upon conversion of 2012 OPP Units, 2013 MYLTIP Units and 2014- 2017 MYLTIP Units that were issued in the form of LTIP Units; plus
(3)     the aggregate liquidation preference ($2,500 per share) of the outstanding shares of BXP’s 5.25% Series B Cumulative Redeemable Preferred Stock.

The calculation of consolidated market capitalization does not include LTIP Units issued in the form of MYLTIP Awards unless and until certain performance thresholds are achieved and they are earned. Because their three-year performance periods have not yet ended, 2015, 2016 and 20172018 - 2020 MYLTIP Units are not included in this calculation as of September 30, 2017.March 31, 2020.
We also present BXP’s Share of Market Capitalization and BXP’s Share of Debt/BXP’s Share of Market Capitalization, which isare calculated in the same manner, except that BXP’s Share of Debt is utilized instead of our consolidated debt in both the numerator and the denominator. BXP’s Share of Debt is defined as our consolidated debt plus our share of debt from our unconsolidated joint ventures (calculated based upon our ownership percentage), minus our partners’ share of debt from our consolidated joint ventures (calculated based upon the partners’ percentage ownership interests)interests adjusted for basis differentials). Management believes that BXP’s Share of Debt provides useful information to investors regarding our financial condition because it includes our share of debt from unconsolidated joint ventures and excludes our partners’ share of debt from consolidated joint ventures, in each case presented on the same basis. We have several significant joint ventures and presenting various measures of financial condition in this manner can help investors better understand our financial condition and/or results of operations after taking into account our economic interest in these joint ventures.  We caution investors that the ownership percentages used in calculating BXP’s Share of Debt 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 for routine and major decisions), distributions, transferability of interests, financing and guarantees, liquidations and other matters.  Moreover, in some cases we exercise significant influence over, but do not control, the joint venture in which case GAAP requires that we account for the joint venture entity using the equity method of accounting and we do not consolidate it for financial reporting purposes. In other cases, GAAP requires that we consolidate the venture even though our partner(s) own(s) a significant percentage interest.  As a result, presentationsmanagement believes that the presentation of BXP’s Share of a financial measure should not be considered a substitute for, and should only be considered with and as a supplement to our financial information presented in accordance with GAAP.
We present these supplemental ratios because our degree of leverage could affect our ability to obtain additional financing for working capital, capital expenditures, acquisitions, development or other general corporate purposes and because different investors and lenders consider one or both of these ratios. Investors should understand that these ratios are, in part, a function of the market price of the common stock of BXP and as such will fluctuate with changes in such price, and they do not necessarily reflect our capacity to incur additional debt to finance our activities or our ability to manage our existing debt obligations. However, for a company like BXP, whose assets are primarily income-producing real estate, these ratios may provide investors with an alternate indication of leverage, so long as they are evaluated along with the ratio of indebtedness to other measures of asset value used by financial analysts and other financial ratios, as well as the various components of our outstanding indebtedness.
For a discussion of our unconsolidated joint venture indebtedness, see “Liquidity and Capital Resources—Capitalization—Off-Balance Sheet Arrangements—Joint Venture Indebtedness” within “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations” and for a discussion of our consolidated joint venture indebtedness see “Liquidity and Capital Resources—Capitalization—Mortgage Notes Payable, Net” within “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Debt Financing
As of September 30, 2017,March 31, 2020, we had approximately $10.2$12.1 billion of outstanding consolidated indebtedness, representing approximately 32.42%42.73% of our Consolidated Market Capitalization as calculated above consisting of approximately (1) $7.3$8.4 billion (net of discount and deferred financing fees) in publicly traded unsecured senior notes having a GAAP weighted-average interest rate of 4.21%3.76% per annum and

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maturities in 20182021 through 2026;2030 (See Note 12 to the Consolidated Financial Statements), (2) $3.0$2.9 billion (net of deferred financing fees) of property-specific mortgage debt having a GAAP weighted-average interest rate of 3.96%3.90% per annum and weighted-average term of 8.4 years.6.1 years and (3) $749.1 million (net of deferred financing fees) outstanding under BPLP’s 2017 Credit Facility that matures on April 24, 2022.

The table below summarizes the aggregate carrying value of our mortgage notes payable, mezzanine notes payable and outside members’ notes payable and BPLP’s unsecured senior notes, line of credit and term loan, as well as Consolidated Debt Financing Statistics at September 30, 2017March 31, 2020 and September 30, 2016. Because the outside members’ notes payable are allocated to the partners, they are not included in the Consolidated Debt Financing Statistics.March 31, 2019.
 
September 30,March 31,
2017 20162020 2019
(dollars in thousands)(dollars in thousands)
Debt Summary:      
Balance      
Fixed rate mortgage notes payable, net$2,982,067
 $2,077,707
$2,919,157
 $2,959,908
Unsecured senior notes, net7,252,567
 7,243,767
8,393,009
 7,547,043
Unsecured line of credit—
 —
250,000
 —
Unsecured term loan—
 —
Mezzanine notes payable—
 307,448
Outside members’ notes payable—
 180,000
Unsecured term loan, net499,058
 498,607
Consolidated Debt10,234,634
 9,808,922
12,061,224
 11,005,558
Add:      
BXP’s share of unconsolidated joint venture debt (1)591,622
 350,225
BXP’s share of unconsolidated joint venture debt, net (1)1,027,547
 919,217
Subtract:      
Partners’ share of consolidated mortgage notes payable, net (2)(1,210,389) (847,483)(1,198,575) (1,203,572)
Partners’ share of consolidated mezzanine notes payable—
 (122,979)
Outside members’ notes payable—
 (180,000)
BXP’s Share of Debt$9,615,867
 $9,008,685
$11,890,196
 $10,721,203
      
September 30,March 31,
2017 20162020 2019
Consolidated Debt Financing Statistics:      
Percent of total debt:      
Fixed rate100.00% 100.00%93.79% 95.47%
Variable rate—% —%6.21% 4.53%
Total100.00% 100.00%100.00% 100.00%
GAAP Weighted-average interest rate at end of period:      
Fixed rate4.13% 4.06%3.80% 4.01%
Variable rate—% —%2.16% 3.49%
Total4.13% 4.06%3.70% 3.99%
Coupon/Stated Weighted-average interest rate at end of period:      
Fixed rate4.02% 4.50%3.69% 3.91%
Variable rate—% —%2.07% 3.40%
Total4.02% 4.50%3.59% 3.88%
Weighted-average maturity at end of period (in years):      
Fixed rate6.1
 5.2
5.8
 5.9
Variable rate—
 —
2.1
 3.1
Total6.1
 5.2
5.6
 5.7
_______________
(1)See page 8370 for additional information.
(2)See page 8269 for additional information.

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Unsecured Credit Facility
On April 24, 2017, BPLP entered into the 2017 Credit Facility. Among other things, the 2017 Credit Facility (1) increased the total commitment of the Revolving Facility from $1.0 billion to $1.5 billion, (2) extended the maturity date from July 26, 2018 to April 24, 2022, (3) reduced the per annum variable interest rates, and (4) added a $500.0 million Delayed Draw Facility that permitspermitted BPLP to draw until the first anniversary of the closing date. Based on BPLP’s current credit rating, (1) the applicable Eurocurrency margins for the Revolving Facility and Delayed Draw Facility are 87.582.5 basis points and 9590 basis points, respectively, and (2) the facility fee on the Revolving Facility commitment is 0.15%0.125% per annum.

On April 24, 2018, BPLP exercised its option to draw $500.0 million on its Delayed Draw Facility. The Delayed Draw Facility hasbears interest at a fee on unused commitmentsvariable rate equal to 0.15%LIBOR plus 0.90% per annum (See Note 5 to the Consolidated Financial Statements).based on BPLP’s March 31, 2020 credit rating and matures on April 24, 2022.
As of September 30, 2017March 31, 2020, BPLP had $500.0 million of borrowings outstanding under its Delayed Draw Facility, $250.0 million borrowings under its Revolving Facility and November 2, 2017, we had no borrowings and outstanding letters of credit totaling approximately $1.6$2.5 million outstanding under the 2017 Credit Facility, with the ability to borrow approximately $2.0 billion.$1.2 billion under the Revolving Facility. As of May 5, 2020, BPLP had $500.0 million of borrowings outstanding under its Delayed Draw Facility, no borrowings under its Revolving Facility and letters of credit totaling approximately $2.5 million outstanding with the ability to borrow approximately $1.5 billion under the Revolving Facility.
Unsecured Senior Notes, Net
The following summarizes theBPLP’s outstanding unsecured senior notes outstanding as of September 30, 2017March 31, 2020 (dollars in thousands) (See Note 12 to the Consolidated Financial Statements):
Coupon/
Stated Rate
 
Effective
Rate(1)
 
Principal
Amount
 Maturity Date(2)
Coupon/
Stated Rate
 
Effective
Rate(1)
 
Principal
Amount
 Maturity Date(2)
10 Year Unsecured Senior Notes4.125% 4.289% $850,000
 May 15, 2021
11 Year Unsecured Senior Notes3.850% 3.954% 1,000,000
 February 1, 2023
10.5 Year Unsecured Senior Notes3.125% 3.279% 500,000
 September 1, 2023
10.5 Year Unsecured Senior Notes3.800% 3.916% 700,000
 February 1, 2024
7 Year Unsecured Senior Notes3.700% 3.853% $850,000
 November 15, 20183.200% 3.350% 850,000
 January 15, 2025
10 Year Unsecured Senior Notes5.875% 5.967% 700,000
 October 15, 20193.650% 3.766% 1,000,000
 February 1, 2026
10 Year Unsecured Senior Notes5.625% 5.708% 700,000
 November 15, 20202.750% 3.495% 1,000,000
 October 1, 2026
10 Year Unsecured Senior Notes4.125% 4.289% 850,000
 May 15, 20214.500% 4.628% 1,000,000
 December 1, 2028
11 Year Unsecured Senior Notes3.850% 3.954% 1,000,000
 February 1, 2023
10 Year Unsecured Senior Notes3.400% 3.505% 850,000
 June 21, 2029
10.5 Year Unsecured Senior Notes3.125% 3.279% 500,000
 September 1, 20232.900% 2.984% 700,000
 March 15, 2030
10.5 Year Unsecured Senior Notes3.800% 3.916% 700,000
 February 1, 2024
10 Year Unsecured Senior Notes3.650% 3.766% 1,000,000
 February 1, 2026
10 Year Unsecured Senior Notes2.750% 3.495% 1,000,000
 October 1, 2026
Total principal    7,300,000
     8,450,000
 
Net unamortized discount    (16,810)     (16,663) 
Deferred financing costs, net    (30,623)     (40,328) 
Total    $7,252,567
     $8,393,009
 
_______________
(1)Yield on issuance date including the effects of discounts on the notes, settlements of interest rate contracts and the amortization of financing costs.
(2)
No principal amounts are due prior to maturity.
maturity.
The indenture relating to the unsecured senior notes contains certain financial restrictions and requirements, including (1) a leverage ratio not to exceed 60%, (2) a secured debt leverage ratio not to exceed 50%, (3) an interest coverage ratio of greater than 1.50, and (4) an unencumbered asset value of not less than 150% of unsecured debt. At September 30, 2017,March 31, 2020, BPLP was in compliance with each of these financial restrictions and requirements.

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Mortgage Notes Payable, Net
The following represents the outstanding principal balances due under the mortgage notes payable at September 30, 2017:March 31, 2020:
Properties 
Stated
Interest Rate
 
GAAP
Interest Rate(1)
 
Stated
Principal
Amount
 Deferred Financing Costs, Net 
Carrying
Amount
 
Carrying Amount (partners’ share)
   Maturity Date 
Stated
Interest Rate
 
GAAP
Interest Rate (1)
 
Stated
Principal Amount
 Deferred Financing Costs, Net Carrying Amount 
Carrying Amount (Partners’ Share)
 Maturity Date
 (dollars in thousands) (dollars in thousands)
Wholly-ownedWholly-owned                      
New Dominion Tech Park, Bldg. One 7.69% 7.84% $32,944
 $(274) $32,670
 N/A
    January 15, 2021
University Place 6.94% 6.99% 7,896
 (49) 7,847
 N/A
    August 1, 2021 6.94% 6.99% $3,106
 $(17) $3,089
 N/A
 August 1, 2021
     40,840
 (323) 40,517
 N/A
      

 

 

   
Consolidated Joint VenturesConsolidated Joint Ventures         Consolidated Joint Ventures           
767 Fifth Avenue (the General Motors Building) 3.43% 3.64% 2,300,000
 (33,829) 2,266,171
 906,468
 (2)(3)(4) June 9, 2027 3.43% 3.64% 2,300,000
 (25,099) 2,274,901
 $910,050
 (2)(3)(4) June 9, 2027
601 Lexington Avenue 4.75% 4.79% 676,885
 (1,506) 675,379
 303,921
 (5) April 10, 2022 4.75% 4.79% 641,836
 (669) 641,167
 288,525
 (5) April 10, 2022
     2,976,885
 (35,335) 2,941,550
 1,210,389
      2,941,836
 (25,768) 2,916,068
 1,198,575
 
Total     $3,017,725
 $(35,658) $2,982,067
 $1,210,389
         $2,944,942
 $(25,785) $2,919,157
 $1,198,575
 
_______________ 
(1)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.transactions (if any).
(2)The mortgage loan requires interest only payments with a balloon payment due at maturity.
(3)This property is owned by a consolidated entity in which we have a 60% interest. The partners’ share of the carrying amount has been adjusted for basis differentials.
(4)In connection with the refinancing of the loan, we guaranteed the consolidated entity’s obligation to fund various reserves for tenant improvement costs and allowances, leasing commissions and free rent obligations in lieu of cash deposits. As of September 30, 2017,March 31, 2020, the maximum funding obligation under the guarantee was approximately $222.7$57.1 million. We earn a fee from the joint venture for providing the guarantee and have an agreement with our partners to reimburse the joint venture for their share of any payments made under the guarantee (See Notes 5 and 7Note 6 to the Consolidated Financial Statements).
(5)This property is owned by a consolidated entity in which we have a 55% interest.
Off-Balance Sheet Arrangements—Joint Venture Indebtedness
We have investments in unconsolidated joint ventures with our effective ownership interests ranging from 20% to 60%. TenFourteen of these ventures have mortgage indebtedness. We exercise significant influence over, but do not control, these entities and therefore they are presently accountedentities. As a result, we account for them using the equity method of accounting. See also Note 45 to the Consolidated Financial Statements. At September 30, 2017,March 31, 2020, the aggregate carrying amount of debt, including both our and our partners’ share, incurred by these ventures was approximately $1.4$2.3 billion (of which our proportionate share is approximately $591.6 million)$1.0 billion). The table below summarizes the outstanding debt of these joint venture properties at September 30, 2017.March 31, 2020. In addition to other guarantees specifically noted in the table, we have agreed to customary environmental indemnifications and nonrecourse carve-outs (e.g., guarantees against fraud, misrepresentation and bankruptcy) as well as the completion of development projects on certain of the loans.

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Properties 
Venture
Ownership
%
 
Stated
Interest
Rate
 
GAAP
Interest
Rate (1)
 Stated Principal Amount Deferred Financing Costs, Net Carrying Amount Carrying Amount (Our Share)   Maturity Date Nominal % Ownership Stated Interest Rate GAAP Interest Rate (1) Stated Principal Amount Deferred Financing Costs, Net Carrying Amount Carrying Amount (Our share)   Maturity Date
 (dollars in thousands) (dollars in thousands)
540 Madison Avenue 60% 2.73% 2.90% $120,000
 $(187) $119,813
 $71,888
 (2)(3) June 5, 2018
Santa Monica Business Park 55% 4.06% 4.24% $300,000
 $(2,786) $297,214
 $163,468
 (2)(3) July 19, 2025
Market Square North 50% 5.75% 5.81% 121,707
 (252) 121,455
 60,727
    October 1, 2020 50% 4.85% 4.91% 115,529
 (42) 115,487
 57,743
    October 1, 2020
Annapolis Junction Building One 50% 6.99% 7.16% 39,549
 (41) 39,508
 19,751
 (4) March 31, 2018
Annapolis Junction Building Six 50% 3.49% 3.66% 13,751
 (39) 13,712
 6,856
 (5) November 17, 2018 50% 3.41% 3.56% 12,401
 (14) 12,387
 6,193
 (4) November 17, 2020
Annapolis Junction Building Seven and Eight 50% 3.58% 3.86% 36,260
 (223) 36,037
 18,019
 (6) December 7, 2019 50% 4.02% 4.17% 34,630
 (26) 34,604
 17,302
 (5) June 30, 2020
1265 Main Street 50% 3.77% 3.84% 39,910
 (396) 39,514
 19,757
 January 1, 2032 50% 3.77% 3.84% 37,957
 (327) 37,630
 18,815
 January 1, 2032
Colorado Center 50% 3.56% 3.58% 550,000
 (992) 549,008
 274,504
 (2) August 9, 2027 50% 3.56% 3.58% 550,000
 (757) 549,243
 274,622
 (2) August 9, 2027
Dock 72 50% N/A
 N/A
 —
 —
 —
 —
 (2)(7) December 18, 2020 50% 3.65% 4.79% 181,156
 (2,576) 178,580
 89,290
 (2)(6) December 18, 2020
The Hub on Causeway - Podium 50% N/A
 N/A
 —
 —
 —
 —
 (2)(8) September 6, 2021 50% 3.59% 4.08% 173,408
 (1,460) 171,948
 85,974
 (2)(7) September 6, 2021
500 North Capitol Street 30% 4.15% 4.20% 105,000
 (335) 104,665
 31,399
 (2) June 6, 2023
Hub50House 50% 3.35% 3.63% 155,370
 (1,062) 154,308
 77,154
 (2)(8) April 19, 2022
100 Causeway Street 50% 3.15% 3.36% 122,435
 (2,894) 119,541
 59,770
 (2)(9) September 5, 2023
7750 Wisconsin Avenue (Marriott International Headquarters) 50% 2.69% 3.24% 81,535
 (4,293) 77,242
 38,621
 (2)(10) April 26, 2023
500 North Capitol Street, NW 30% 4.15% 4.20% 105,000
 (187) 104,813
 31,444
 (2) June 6, 2023
901 New York Avenue 25% 3.61% 3.69% 225,000
 (1,295) 223,705
 55,926
    January 5, 2025 25% 3.61% 3.69% 224,304
 (849) 223,455
 55,864
    January 5, 2025
3 Hudson Boulevard 25% 4.97% 5.05% 80,000
 (209) 79,791
 19,948
 (2)(11) July 13, 2023
Metropolitan Square 20% 5.75% 5.81% 164,240
 (256) 163,984
 32,795
    May 5, 2020 20% 5.75% 5.81% 156,701
 (6) 156,695
 31,339
 (12) May 5, 2020
Total       $1,415,417
 $(4,016) $1,411,401
 $591,622
           $2,330,426
 $(17,488) $2,312,938
 $1,027,547
    
_______________
(1)GAAP interest rate differs from the stated interest rate due to the inclusion of the amortization of financing charges.charges, which includes mortgage recording fees.
(2)The loan requires interest only payments with a balloon payment due at maturity.
(3)MortgageThe loan bears interest at a variable rate equal to LIBOR plus 1.50%1.28% per annum.annum and matures on July 19, 2025. A subsidiary of the joint venture entered into interest rate swap contracts with notional amounts aggregating $300.0 million through April 1, 2025, resulting in a fixed rate of approximately 4.063% per annum through the expiration of the interest rate swap contracts.
(4)On April 11, 2016,The loan bears interest at a notice of event of default was received from the lender because the loanvariable rate equal to value ratio is not in compliance with the applicable covenant in the loan agreement. On October 17, 2016, the lender notified the joint venture that it has elected to charge the default rate on the loan. The default rate is defined as LIBOR plus 5.75%2.00% per annum. Subsequently, the cash flows generated from the property have become insufficient to fund debt service paymentsannum and capital improvements necessary to lease and operate the property and the joint venture is not prepared to fund additional cash shortfalls at this time. Consequently, the joint venture is not currentmatures on making debt service payments and remains in default. The loan has one, three-year extension option, subject to certain conditions including that no event of default exists or is ongoing.November 17, 2020.
(5)The loan bears interest at a variable rate equal to LIBOR plus 2.25%2.35% per annum.annum and matures on June 30, 2020.
(6)The loan bears interest atconstruction financing has a variable rate equal to LIBOR plus 2.35% per annum and matures on December 7, 2019, with three, one-year extension options, subject to certain conditions.
(7)No amounts have been drawn under theborrowing capacity of $250.0 million construction facility.million. The construction financing bears interest at a variable rate equal to LIBOR plus 2.25% per annum and matures on December 18, 2020, with two, one-year extension option,options, subject to certain conditions.
(8)(7)No amounts have been drawn underThe construction financing had a borrowing capacity of $204.6 million. On September 16, 2019, the $204.6joint venture paid down the construction loan principal balance in the amount of approximately $28.8 million, construction facility.reducing the borrowing capacity to $175.8 million. The construction financing bears interest at a variable rate equal to LIBOR plus 2.25% per annum and matures on September 6, 2021, with two, one-year extension options, subject to certain conditions. In connection with the
(8)The construction financing we obtainedhas a borrowing capacity of $180.0 million. The construction financing bears interest at a variable rate equal to LIBOR plus 2.00% per annum and matures on April 19, 2022, with two, one-year extension options, subject to certain conditions.
(9)The construction financing has a borrowing capacity of $400.0 million. The construction financing bears interest at a variable rate equal to LIBOR plus 1.50% per annum (LIBOR plus 1.375% per annum upon stabilization, as defined in the rightloan agreement) and matures on September 5, 2023, with two, one-year extension options, subject to complete the construction of the garage underneath the project being developed by an affiliate of our joint venture partner and obtain funding from the garage construction lender.  We agreed to guaranty completion of the garage to the construction lender and an affiliate of our partner agreed to reimburse us for our partner’s share of any payments under the guaranty.certain conditions.

(10)The construction financing has a borrowing capacity of $255.0 million. The construction financing bears interest at a variable rate equal to LIBOR plus 1.25% per annum and matures on April 26, 2023, with two, one-year extension options, subject to certain conditions.
(11)We provided $80.0 million of mortgage financing to the joint venture. The loan bears interest at a variable rate equal to LIBOR plus 3.50% per annum and matures on July 13, 2023, with extension options, subject to certain conditions. The loan has been reflected as Related Party Note Receivable, Net on our Consolidated Balance Sheets.
(12)On April 22, 2020, the maturity date was extended to August 5, 2020.
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State and Local Tax Matters
Because BXP is organized and qualifies as a REIT, it is generally not subject to federal income taxes, but it is subject to certain state and local taxes. In the normal course of business, BXP, BPLP and certain entities through which we own real estate either have undergone, or are currently undergoing, tax audits or other inquiries. Although we believe that we have substantial arguments in favor of our positionsposition in the ongoing audits, in some instances there is no controlling precedent or interpretive guidance on the specific point at issue. Collectively, tax deficiency notices received to date from the jurisdictions conducting the ongoing audits have not been material. However, there can be no assurance that future audits will not occur with increased frequency or that the ultimate result of such audits will not have a material adverse effect on our results of operations.
Insurance
We carry insurance coverage on our properties of types and in amounts and with deductibles that we believe are in line with coverage customarily obtained by owners of similar properties. For additional information concerning our insurance program, see Note 76 to the Consolidated Financial Statements.
Funds from Operations
Pursuant to the revised definition of Funds from Operations adopted by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”Nareit”), we calculate Funds from Operations, or “FFO,” for each of BXP and BPLP by adjusting net income (loss) attributable to Boston Properties, Inc. common shareholders and net income (loss) attributable to Boston Properties Limited Partnership common unitholders respectively, (computed in accordance with GAAP), respectively, 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 our share of real estate-related depreciation and amortization. FFO is a non-GAAP financial measure, but wemeasure. 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 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 can help investors compare the operating performance of a company'scompany’s real estate across reporting periods and to the operating performance of other companies.
Our computation of FFO may not be comparable to FFO reported by other REITs or real estate companies that do not define the term in accordance with the current NAREITNareit definition or that interpret the current NAREITNareit definition differently. We believe that in order to facilitate a clear understanding of our operating results, FFO should be examined in conjunction with net income attributable to Boston Properties, Inc. common shareholders and net income attributable to Boston Properties Limited Partnership as presented in our Consolidated Financial Statements. FFO should not be considered as a substitute for net income attributable to Boston Properties, Inc. common shareholders or net income attributable to Boston Properties Limited Partnership common unitholders (determined in accordance with GAAP) or any other GAAP financial measures and should only be considered together with and as a supplement to our financial information prepared in accordance with GAAP.


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Boston Properties, Inc.
The following table presents a reconciliation of net income attributable to Boston Properties, Inc. common shareholders to FFO attributable to Boston Properties, Inc. common shareholders for the three months ended September 30, 2017March 31, 2020 and 2016:2019:
Three months ended September 30, Three months ended March 31,
2017 2016 2020 2019
(in thousands) (in thousands)
Net income attributable to Boston Properties, Inc. common shareholders$117,337
 $76,753
 $497,496
 $98,105
Add:       
Preferred dividends2,625
 2,589
 2,625
 2,625
Noncontrolling interest—common units of Boston Properties Limited Partnership13,402
 9,387
Noncontrolling interest—common units of the Operating Partnership 57,539
 11,599
Noncontrolling interests in property partnerships14,340
 (17,225) 19,486
 18,830
Less:   
Gains on sales of real estate2,891
 12,983
Income before gains on sales of real estate144,813
 58,521
Net income 577,146
 131,159
Add:       
Depreciation and amortization152,164
 203,748
 171,094
 164,594
Noncontrolling interests in property partnerships’ share of depreciation and amortization(18,552) (40,907) (17,627) (18,002)
BXP’s share of depreciation and amortization from unconsolidated joint ventures9,282
 9,128
 18,332
 15,470
Corporate-related depreciation and amortization(434) (393) (469) (395)
Impairment loss —
 24,038
Less:       
Gains (losses) on sales of real estate 410,165
 (905)
Noncontrolling interests in property partnerships14,340
 (17,225) 19,486
 18,830
Preferred dividends2,625
 2,589
 2,625
 2,625
Funds from Operations (FFO) attributable to Boston Properties Limited Partnership common unitholders (including Boston Properties, Inc.) (“Basic FFO”)
270,308
 244,733
Funds from Operations (FFO) attributable to the Operating Partnership common unitholders (including Boston Properties, Inc.) 316,200
 296,314
Less:       
Noncontrolling interest—common units of Boston Properties Limited Partnership’s share of funds from operations27,293
 25,169
FFO attributable to Boston Properties, Inc. common shareholders$243,015
 $219,564
Boston Properties, Inc.’s percentage share of Funds from Operations—basic89.90% 89.72%
Weighted-average shares outstanding—basic154,355
 153,754
Noncontrolling interest—common units of the Operating Partnership’s share of funds from operations 32,138
 30,307
Funds from Operations attributable to Boston Properties, Inc. common shareholdersFunds from Operations attributable to Boston Properties, Inc. common shareholders$284,062
 $266,007
Our percentage share of Funds from Operations—basic 89.84% 89.77%
Weighted average shares outstanding—basic 155,011
 154,525


Reconciliation to Diluted Funds from Operations:
 Three months ended September 30, 2017 Three months ended September 30, 2016
Income
(Numerator)
 
Shares
(Denominator)
 
Income
(Numerator)
 
Shares
(Denominator)
 (in thousands)
Basic FFO$270,308
 171,691
 $244,733
 171,379
Effect of Dilutive Securities       
Stock Based Compensation—
 128
 —
 382
Diluted FFO270,308
 171,819
 244,733
 171,761
Less:       
Noncontrolling interest—common units of Boston Properties Limited Partnership’s share of diluted FFO27,272
 17,336
 25,113
 17,625
Boston Properties, Inc.’s share of Diluted FFO (1)$243,036
 154,483
 $219,620
 154,136
  Three months ended March 31,
  2020 2019
  Income
(Numerator)		 Shares/Units
(Denominator)		 Income
(Numerator)		 Shares/Units
(Denominator)
  (in thousands)
Basic Funds from Operations $316,200
 172,549
 $296,314
 172,131
Effect of Dilutive Securities:        
Stock based compensation —
 247
 —
 319
Diluted Funds from Operations $316,200
 172,796
 $296,314
 172,450
Less: Noncontrolling interest—common units of the Operating Partnership’s share of diluted Funds from Operations 32,092
 17,538
 30,251
 17,606
Diluted Funds from Operations attributable to Boston Properties, Inc. (1) $284,108
 155,258
 $266,063
 154,844
 _______________
(1)BXP’s share of diluted FFOFunds from Operations was 89.91%89.85% and 89.74%89.79% for the three months ended September 30, 2017March 31, 2020 and 2016,2019, respectively.

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Boston Properties Limited Partnership
The following table presents a reconciliation of net income attributable to Boston Properties Limited Partnership common unitholders to FFO attributable to Boston Properties Limited Partnership common unitholders for the three months ended September 30, 2017March 31, 2020 and 2016:2019:
Three months ended September 30, Three months ended March 31,
2017 2016 2020 2019
(in thousands) (in thousands)
Net income attributable to Boston Properties Limited Partnership common unitholders$132,693
 $91,306
 $566,333
 $113,382
Add:       
Preferred distributions2,625
 2,589
 2,625
 2,625
Noncontrolling interests in property partnerships14,340
 (17,225) 19,486
 18,830
Less:   
Gains on sales of real estate2,891
 12,983
Income before gains on sales of real estate146,767
 63,687
Net income 588,444
 134,837
Add:       
Depreciation and amortization150,210
 198,582
 169,285
 162,682
Noncontrolling interests in property partnerships’ share of depreciation and amortization(18,552) (40,907) (17,627) (18,002)
BPLP’s share of depreciation and amortization from unconsolidated joint ventures
9,282
 9,128
BPLP’s share of depreciation and amortization from unconsolidated joint ventures 18,332
 15,470
Corporate-related depreciation and amortization(434) (393) (469) (395)
Impairment loss —
 22,272
Less:       
Gains (losses) on sales of real estate 419,654
 (905)
Noncontrolling interests in property partnerships14,340
 (17,225) 19,486
 18,830
Preferred distributions2,625
 2,589
 2,625
 2,625
Funds from Operations (FFO) attributable to Boston Properties Limited Partnership common unitholders (“Basic FFO”) (1)
$270,308
 $244,733
Weighted-average units outstanding—basic171,691
 171,379
Funds from operations attributable to Boston Properties Limited Partnership common unitholders (1) $316,200
 $296,314
Weighted average units outstanding—basic 172,549
 172,131
_______________  
(1)Our calculation includes OP Units and vested LTIP Units (including vested 2012 OPP Units and vested 2013 MYLTIP Units and vested 2014- 2017 MYLTIP Units).

Reconciliation to Diluted Funds from Operations:
 Three months ended September 30, 2017 Three months ended September 30, 2016
Income
(Numerator)
 
Units
(Denominator)
 
Income
(Numerator)
 
Units
(Denominator)
 (in thousands)
Basic FFO$270,308
 171,691
 $244,733
 171,379
Effect of Dilutive Securities       
Stock Based Compensation—
 128
 —
 382
Diluted FFO$270,308
 171,819
 $244,733
 171,761
  Three months ended March 31,
  2020 2019
  
Income
(Numerator)
 
Shares/Units
(Denominator)
 
Income
(Numerator)
 
Shares/Units
(Denominator)
  (in thousands)
Basic Funds from Operations $316,200
 172,549
 $296,314
 172,131
Effect of Dilutive Securities:        
Stock based compensation —
 247
 —
 319
Diluted Funds from Operations $316,200
 172,796
 $296,314
 172,450


Contractual Obligations
We have various service contracts with vendors related to our property management. In addition, we have certain other contracts we enter into in the ordinary course of business that may extend beyond one year. These contracts include terms that provide for cancellation with insignificant or no cancellation penalties. Contract terms are generally between three and five years.

During the third quarter of 2017,three months ended March 31, 2020, we paid approximately $75.7$81.9 million to fund tenant-related obligations, including tenant improvements and leasing commissions,commissions.
In addition, during the three months ended March 31, 2020, we and our unconsolidated joint venture partners incurred approximately $120$36 million of new tenant-related obligations associated with approximately 1.3 million702,000 square feet of second generation leases, or approximately $98$52 per square foot. In addition, we signed leases for approximately 1.3 million square feet ofWe did not sign any first generation space.leases. The tenant-related obligations for the

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development properties are included within the projects’ “Estimated Total Investment” referred to in “Item 2—Management’s Discussion and Analysis of Financial Condition” Condition and “Results Results of Operations—Liquidity and Capital Resources.” In the aggregate, during the third quarter of 2017, we signed leases for approximately 2.6 million square feet of space and incurred aggregate tenant-related obligations of approximately $180 million, or approximately $70 per square foot.
ITEM 3—Quantitative and Qualitative Disclosures about Market Risk.
The following table presents the aggregate carrying value of our mortgage notes payable, net, unsecured senior notes, net, unsecured line of credit, unsecured term loan, net and our corresponding estimate of fair value as of September 30, 2017. Approximately $10.2March 31, 2020. As of March 31, 2020, approximately $11.3 billion of these borrowings bore interest at fixed
rates and therefore the fair value of these instruments is affected by changes in the market interest rates. As of March 31, 2020, the weighted-average interest rate on our variable rate debt was LIBOR plus 0.85% (2.07%) per annum. The following table presents our aggregate fixed rate debt obligations with corresponding weighted-average interest rates sorted by maturity date. At September 30, 2017, none ofdate and our borrowings bore interest at aaggregate variable rate.rate debt obligations sorted by maturity date.
The table below does not include our unconsolidated joint venture debt. For a discussion concerning our unconsolidated joint venture debt, see Note 45 to the Consolidated Financial Statements and “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Capitalization—Off-Balance Sheet Arrangements—Joint Venture Indebtedness.”

2017 2018 2019 2020 2021 2022+ Total 
Estimated
Fair Value
2020 2021 2022 2023 2024 2025+ Total 
Estimated
Fair Value
(dollars in thousands)
Mortgage debt, net
(dollars in thousands)
Mortgage debt, net
Fixed Rate$2,782
 $14,708
 $15,745
 $16,841
 $36,346
 $2,895,645
 $2,982,067
 $3,049,617
$10,076
 $13,440
 $611,132
 $(3,494) $(3,494) $2,291,497
 $2,919,157
 $3,054,533
Average Interest Rate5.04% 5.52% 5.53% 5.55% 6.61% 3.89% 3.96%  
GAAP Average Interest Rate5.07% 4.98% 4.79% —% —% 3.64% 3.90%  
Variable Rate—
 —
 —
 —
 —
 —
 —
 —
—
 —
 —
 —
 —
 —
 —
 —
Unsecured debt, netUnsecured debt, net
Fixed Rate$(2,216) $841,285
 $692,461
 $692,962
 $844,289
 $4,183,786
 $7,252,567
 $7,533,164
$(7,720) $840,465
 $(9,074) $1,492,008
 $693,286
 $5,384,044
 $8,393,009
 $8,449,511
Average Interest Rate—
 3.85% 5.97% 5.71% 4.29% 3.71% 4.21%  
GAAP Average Interest Rate—% 4.29% —% 3.73% 3.92% 3.67% 3.76%  
Variable Rate—
 —
 —
 —
 —
 —
 —
 —
(341) (451) 749,850
 —
 —
 —
 749,058
 750,379
$566
 $855,993

$708,206

$709,803

$880,635

$7,079,431

$10,234,634
 $10,582,781
Total Debt$2,015
 $853,454
—
$1,351,908
 $1,488,514
 $689,792
 $7,675,541
 $12,061,224
 $12,254,423


At September 30, 2017,March 31, 2020, the weighted-average coupon/stated rates on the fixed rate debt stated above was 4.02%3.69% per annum. At March 31, 2020, our outstanding variable rate debt based on LIBOR totaled approximately $750.0 million. At March 31, 2020, the coupon/stated rate on our variable rate debt was approximately 2.07% per annum. If market interest rates on our variable rate debt had been 100 basis points greater, total interest expense would have increased approximately $1.9 million for the three months ended March 31, 2020.
The fair value amounts were determined solely by considering the impact of hypothetical interest rates on our financial instruments.
Due to the uncertainty of specific actions we may undertake to minimize possible effects of market interest rate increases, this analysis assumes no changes in our financial structure. In the event that LIBOR is discontinued, the interest rate for our variable rate debt and our unconsolidated joint ventures’ variable rate debt and the swap rate for our unconsolidated joint ventures’ interest rate swaps following such event will be based on an alternative variable rate as specified in the applicable documentation governing such debt or swaps or as otherwise agreed upon. Such an event would not affect our ability to borrow or maintain already outstanding borrowings or our unconsolidated joint ventures’ ability to maintain its outstanding swaps, but the alternative variable rate could be higher and more volatile than LIBOR prior to its discontinuance. We understand that LIBOR is expected to remain available through the end of 2021, but may be discontinued or otherwise become unavailable thereafter.
ITEM 4—Controls and Procedures.
Boston Properties, Inc.
(a) Evaluation of Disclosure Controls and Procedures. As of the end of the period covered by this report, our management, with the participation of Boston Properties, Inc.’s Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934)1934, as amended). Based upon that evaluation, Boston Properties, Inc.’s Chief Executive Officer and Chief Financial Officer concluded that these disclosure controls and procedures were effective as of the end of the period covered by this report.
(b) Changes in Internal Control Over Financial Reporting. No change in Boston Properties, Inc.’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934)1934, as amended) occurred during the thirdfirst quarter of our fiscal year ending December 31, 20172020 that has materially affected, or is reasonably likely to materially affect, Boston Properties, Inc.’s internal control over financial reporting.

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Boston Properties Limited Partnership
(a) Evaluation of Disclosure Controls and Procedures. As of the end of the period covered by this report, the management of Boston Properties, Inc., the sole general partner of Boston Properties Limited Partnership, with the participation of its Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934)1934, as amended). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer of Boston Properties, Inc. concluded that these disclosure controls and procedures were effective as of the end of the period covered by this report.
(b) Changes in Internal Control Over Financial Reporting. No change in its internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934)1934, as amended) occurred during the thirdfirst quarter of our fiscal year ending December 31, 20172020 that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.


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PART II. OTHER INFORMATION
ITEM 1—Legal Proceedings.
We are subject to legal proceedings and claims that arise in the ordinary course of business. These matters are generally covered by insurance. Management believes that the final outcome of such matters will not have a material adverse effect on our financial position, results of operations or liquidity.
ITEM 1A—Risk Factors.
Except to the extent updated below or previously updated or to the extent additional factual information disclosed elsewhere in these Quarterly Reports on Form 10-Q relates to such risk factors (including, without limitation, the matters discussed in Part I, “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations”), there were no material changes toWe are supplementing the risk factors disclosed in Part I,described under “Item 1A. Risk Factors” ofin our Annual Report on Form 10-K for the year ended December 31, 2016.2019 (“Form 10-K”) with the additional risk factor set forth below. This supplemental risk factor should be read in conjunction with the other risk factors described in the Form 10-K.

The COVID-19 pandemic has caused severe disruptions in the United States and global economies and we expect it will continue to materially and adversely affect our financial condition, results of operations, cash flows, liquidity and performance and that of our tenants.
Since being reported in December 2019, COVID-19 has spread globally, including to every state in the United States. On March 11, 2020, the World Health Organization declared COVID-19 a global pandemic, and on March 13, 2020, the United States declared a national emergency with respect to COVID-19.
The global impact of the COVID-19 pandemic is continually evolving and public health officials and governmental authorities, including those in all of the markets in which we operate, have reacted by taking measures such as prohibiting people from congregating in heavily populated areas, instituting quarantines, restricting travel, issuing “stay-at-home” orders, restricting the types of businesses that may continue to operate (including the types of construction projects that may proceed) and closing schools, among many others. Most of these restrictions began in earnest in March 2020 and they quickly had a material adverse impact on economic and market conditions around the world, including the United States and the markets in which our properties are located, and on us. It is possible that public health officials and governmental authorities in the markets in which we operate may impose additional restrictions in an effort to slow the spread of COVID-19 or may relax or revoke existing restrictions too quickly, which could, in either case, exacerbate the severity of these adverse impacts on the economy. There is great uncertainty regarding the duration and breadth of the COVID-19 pandemic, as well as possible future responses, which makes it impossible for us to predict with certainty the impact that COVID-19 will have on us and our tenants at this time. Factors related to COVID-19 that have had, or could have, a material adverse effect on our results of operations and financial condition, include:
•
a complete or partial closure of, or other operational issues at, one or more of our properties resulting from government or tenant action, which could adversely affect our operations and those of our tenants;
•
reduced economic activity impacting the businesses, financial condition and liquidity of our tenants has caused, and is expected to continue to cause, one or more of our tenants to be unable to meet their obligations to us, including their ability to make rental payments, in full or at all, or to otherwise seek modifications of such obligations, including rent concessions, deferrals or abatements, or to declare bankruptcy;
the failure of our tenants to properly implement or deploy their business continuity plans, or if those plans are ineffective, it could have a material adverse effect on our tenants’ businesses and their ability to pay rent;
•
the impact of new or continued complete or partial shutdowns of the operations of one or more of our tenants’ businesses, including office, hotel and retail tenants, and parking operators, temporary or long-term disruptions in our tenants’ supply chains from local, national and international suppliers or delays in the delivery of products, services or other materials necessary for our tenants’ operations, could force our tenants to reduce, delay or eliminate offerings of their products and services, which could result in less revenue, income and cash flow, and possibly their bankruptcy or insolvency, which in turn could:
•
reduce our cash flows,
adversely impact our ability to finance, refinance or sell a property,

adversely impact our ability to continue paying dividends to our stockholders at current levels, or at all, and
•
result in additional legal and other costs to enforce our rights, collect rent and/or re-lease the space occupied by the distressed tenant;
•
the duration and scope of the mandatory business closures and “stay-at-home” orders have had, and are expected to continue to have, a severe negative impact on our retail tenants that depend on in-person interactions with their customers to generate revenues and have resulted, and are expected to continue to result, in most retail tenants being unable to make timely rental payments in full or at all;
the extent to which COVID-19 decreases customers’ willingness to frequent or prevents customers from frequenting, our tenants’ businesses in the future, may result in our retail tenants’ continued inability to make timely rental payments to us under their leases;
many of our retail and some of our office tenants have approached us seeking either rent concessions, deferrals or abatements, and the extent to which we grant these requests or instead seek to enforce our legal remedies could have a material adverse effect on our results of operations, liquidity and cash flows;
the degree to which our tenants’ businesses have been and continue to be negatively impacted may require us to write-off a tenant’s accrued rent balance and this could have a material adverse effect on our results of operations and liquidity;
if new or existing actions or measures implemented to prevent the spread of COVID-19 continue to result in increasing unemployment, it may negatively affect the ability of our residential tenants to generate sufficient income to pay, or make them unwilling to pay rent, in full or at all, in a timely manner;
•
the impact of prolonged restrictions on freedom of movement and business operations, such as travel bans, business closures and “stay-at-home” orders have had, and are expected to continue to have, a material adverse effect on the operators of our parking garages and our hotel property, which negatively impacts our revenues and may also result in a decrease in demand for hotel stays even after the travel bans and other restrictions are lifted;
•
our failure, or that of any of our joint venture partners’, to meet our or their, as applicable, responsibilities or obligations to the other or to third parties, such as lenders, including a failure to contribute additional capital needed by the ventures or a default by a party under a joint venture agreement or other agreement relating to a joint venture, each of which, in our case, could result in dilution of our interest or a loss of our management and other rights relating to our joint ventures, and in the case of a joint venture partner, could result in our payment of the partner’s share of the additional capital;
•
the impact of COVID-19 could result in an event or change in circumstances that results in an impairment in the value of our properties or our investments in unconsolidated joint ventures, and any such impairment could have a material adverse effect on our results of operations in the periods in which the charge is taken;
we may be unable to restructure or amend leases with certain of our tenants on terms favorable to us or at all;
the impact and validity of interpretations of lease provisions and related claims by tenants regarding their obligations to pay rent as a result of COVID-19, and any court rulings or decisions interpreting these provisions, could have a material adverse effect on our results of operations and liquidity;
•
restrictions intended to prevent the spread of COVID-19 have limited, and are expected to continue to limit, our leasing activities, such as property tours, and may have a material adverse effect on our ability to renew leases, lease vacant space or re-lease available space as leases expire in our properties on favorable terms, or at all;

•
COVID-19 has caused a material decline in general business activity and demand for real estate transactions, and if this persists, it would adversely affect our ability or desire to make strategic acquisitions or dispositions;
•
the impact of recent and future efforts by state, local, federal and industry groups to enact laws and regulations have restricted, and may further restrict, the ability of landlords, such as us, to collect rent, enforce remedies for the failure to pay rent, or otherwise enforce the terms of the lease agreements, such as a rent freeze for tenants or a suspension of a landlord’s ability to enforce evictions;
the extent of construction delays on our development/redevelopment projects due to work-stoppage orders, disruptions in the supply of materials, delays in permitting or inspections, or other factors could result in our failure to meet the development milestones set forth in any applicable lease agreement, which could provide the tenant the right to terminate its lease or entitle the tenant to monetary damages, delay the commencement or completion of construction and our anticipated lease-up plans for a development/redevelopment project or our overall development pipeline, including recognizing revenue for new leases, that may cause returns on investment to be less than projected, and/or increase the costs of construction of new or existing projects, any of which could adversely affect our investment returns, profitability and/or our future growth;
we may be unable to access debt and equity capital on attractive terms, or at all, and a further disruption and instability in the global financial markets or deteriorations in credit and financing conditions may affect our tenants’ and our access to capital and other sources of funding necessary to fund our respective operations or address maturing liabilities on a timely basis;
the financial effects of the COVID-19 pandemic on our future financial results, cash flows and financial condition could adversely impact our compliance with the financial covenants of our credit facility and other debt agreements and could result in an event of default and the acceleration of indebtedness, which could negatively impact our financial condition, results of operations and our ability to make additional borrowings and pay dividends;
adaptions made by companies in response to “stay-at-home” orders and future limitations on in-person work environments could lead to a sustained shift away from collective in-person work environments and adversely affect the overall demand for office space across our portfolio over the long term;
the effectiveness or lack of effectiveness of governmental relief in providing assistance to large and small businesses, including some of our tenants, that have suffered significant declines in revenues as a result of mandatory business shut-downs, “stay-at-home” orders and social distancing practices, and the potential for a prolonged, severe recession, could have a material adverse impact on our financial condition and results of operations;
increased vulnerability to cyber-security threats and potential breaches, including phishing attacks, malware and impersonation tactics, resulting from the increase in numbers of individuals working from home;
the potential that business interruption, loss of rental income and/or other associated expenses related to our operations will not be covered in whole or in part by our insurance policies, which may increase unreimbursed liabilities;
if the health of our employees, particularly our key personnel and property management teams, are negatively impacted, we may be unable to ensure business continuity and be exposed to lawsuits from tenants;
if we choose to pay dividends in our stock instead of cash, our stockholders may have to pay income taxes on the dividends without receiving a corresponding amount of cash;
•
uncertainty as to what conditions must be satisfied before government authorities lift “stay-at-home” orders and public health officials begin the process of gradually returning Americans to work and whether government authorities will impose (or suggest) requirements on landlords, such as us, to protect the health and safety of tenants and visitors to our buildings could result in increased

operating costs and demands on our property management teams to ensure compliance with any such requirements, as well as increased costs associated with protecting against potential liability arising from these measures, such as claims by tenants that the measures violate their leases and claims by visitors that the measures caused them damages; and
limited access to our facilities, management, tenants, support staff and professional advisors could decrease the effectiveness of our disclosure controls and procedures, internal controls over financial reporting and other risk mitigation strategies, increase our susceptibility to security breaches, hamper our ability to comply with regulatory obligations and prevent us from conducting our business as efficiently and effectively as we otherwise would have.
The full extent to which the COVID-19 pandemic impacts our operations and those of our tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence at this time. The fluidity of the situation presents material uncertainty and risk with respect to our financial condition, results of operations, cash flows, liquidity and overall performance. Moreover, many risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2019 are heightened risks as a result of the impact of the COVID-19 pandemic.
ITEM 2—Unregistered Sales of Equity Securities and Use of Proceeds
Boston Properties, Inc.

(a)None.During the three months ended March 31, 2020, BXP issued an aggregate of 461,856 shares of common stock in exchange for 461,856 common units of limited partnership held by certain limited partners of BPLP. Of these shares, 376,104 shares were issued in reliance on an exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended. We relied on the exemption under Section 4(a)(2) based upon factual representations received from the limited partner who received the common shares.
(b)Not applicable.
(c)Issuer Purchases of Equity Securities. None.

Period
(a)
Total Number of Shares of Common Stock Purchased
 
(b)
Average Price Paid per Common Share
(c)
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
(d)
Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased
January 1, 2020 - January 31, 20207,149
(1)$138.12
N/AN/A
February 1, 2020 - February 29, 2020228
(1)$144.56
N/AN/A
March 1, 2020 - March 31, 2020915
(2)$0.01
N/AN/A
Total8,292
 $123.06
N/AN/A
___________
(1)Represents shares of common stock of BXP surrendered by employees to BXP to satisfy such employees’ tax withholding obligations in connection with the vesting of restricted common stock.
(2)Represents shares of restricted common stock of BXP repurchased in connection with the termination of a certain employee’s employment with BXP. Under the terms of the applicable restricted stock award agreements, the shares were repurchased by BXP at a price of $0.01 per share, which was the amount originally paid by such employee for such shares.

Boston Properties Limited Partnership

(a)Each time Boston Properties, Inc.BXP issues shares of stock (other than in exchange for common units of BPLP when such common units are presented for redemption), it contributes the proceeds of such issuance to usBPLP in return for an equivalent number of partnership units with rights and preferences analogous to the shares issued. During the three months ended September 30, 2017,March 31, 2020, in connection with issuances of common stock by Boston Properties, Inc.BXP pursuant to issuances to employees of restricted common stock and exercises of non-qualified stock options under the Boston Properties, Inc. 2012 Stock Option and Incentive Plan and pursuant to issuances under the Boston Properties, Inc. 1999 Non-Qualified Employee Stock Purchase Plan, Boston Properties Limited PartnershipBPLP issued an aggregate of approximately 3,38170,694 common units to Boston Properties, Inc.BXP in exchange for approximately $360,000,$4.29 million, the aggregate proceeds of such common stock issuances to Boston Properties, Inc.BXP. Such units were issued in reliance on an exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended.
(b)Not Applicable.
(c)Issuer Purchases of Equity Securities. None.

Period
(a)
Total Number of Units
Purchased
 
(b)
Average Price Paid per Unit
(c)
Total Number of Units Purchased as Part of Publicly Announced Plans or Programs
(d)
Maximum Number (or Approximate Dollar Value) of Units that May Yet be Purchased
January 1, 2020 - January 31, 20208,693
(1)$113.63
N/AN/A
February 1, 2020 - February 29, 2020271,170
(2)$0.37
N/AN/A
March 1, 2020 - March 31, 2020915
(3)$0.01
N/AN/A
Total280,778
 $3.88
N/AN/A
___________
(1)Includes 1,482 LTIP units and 62 2016 MYLTIP units that were repurchased in connection with the termination of an employee’s employment with BXP. Under the terms of the applicable LTIP unit vesting agreements and 2016 MYLTIP award agreement, such LTIP units and 2016 MYLTIP units were repurchased at a price $0.25 per unit, which was the amount originally paid by such employee for such units. Also includes 7,149 common units previously held by BXP that were redeemed in connection with the surrender of shares of restricted common stock of BXP by employees to BXP to satisfy such employees’ tax withholding obligations in connection with the vesting of restricted common stock.
(2)Includes 270,942 2017 MYLTIP units. The measurement period for such 2017 MYLTIP units ended on February 6, 2020 and BXP’s total return to stockholders was sufficient for employees to earn and therefore become eligible to vest in a portion of the 2017 MYLTIP units. Under the terms of the applicable 2017 MYLTIP award agreements, the 270,942 unearned 2017 MYLTIP units were repurchased at a price of $0.25 per 2017 MYLTIP unit, which was the amount originally paid by each employee for the units. Also includes 228 common units previously held by BXP that were redeemed in connection with the surrender of shares of restricted common stock of BXP by employees to BXP to satisfy such employees’ tax withholding obligations in connection with the vesting of restricted common stock.
(3)Includes 915 common units of BPLP previously held by BXP that were redeemed in connection with the repurchase of restricted shares of common stock of BXP in connection with the termination of an employee’s employment with BXP. Under the terms of the applicable restricted stock award agreements, the shares were repurchased by BXP at a price of $0.01 per share, which was the amount originally paid by such employee for such shares.
ITEM 3—Defaults Upon Senior Securities.
None.
ITEM 4—Mine Safety Disclosures.
None.
ITEM 5—Other Information.
(a)None.
(b)None.

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ITEM 6—Exhibits.
(a)Exhibits
 
3.1
12.1

—
CalculationThird Amended and Restated By-laws of Ratios of Earnings to Fixed Charges and Calculation of Ratios of Earnings to Combined Fixed Charges and Preferred Dividends for Boston Properties, Inc. (Filed herewith.(Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K of Boston Properties, Inc. filed on May 19, 2016.)
   
12.23.2

—
CalculationAmendment No. 1 to Third Amended and Restated By-laws of RatiosBoston Properties, Inc., effective as of EarningsMarch 20, 2020. (Incorporated by reference to Fixed ChargesExhibit 3.1 to the Current Report on Form 8-K of Boston Properties, Inc. and Calculation of Ratios of Earnings to Combined Fixed Charges and Preferred Distributions for Boston Properties Limited Partnership. (Filed herewith.Partnership filed on March 24, 2020.)
4.1
—
Supplemental Indenture No. 21, dated as of May 5, 2020, between Boston Properties Limited Partnership and The Bank of New York Mellon Trust Company, N.A., as Trustee; including a form of the 3.250% Senior Note due 2031. (Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K of Boston Properties, Inc. and Boston Properties Limited Partnership filed on May 5, 2020.)
   
31.1

—
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Boston Properties, Inc. (Filed herewith.)
   
31.2

—
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Boston Properties, Inc. (Filed herewith.)
   
31.3

—
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Boston Properties Limited Partnership. (Filed herewith.)
   
31.4

—
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Boston Properties Limited Partnership. (Filed herewith.)
   
32.1

—
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes Oxley Act of 2002 for Boston Properties, Inc. (Furnished herewith.)
   
32.2

—
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes Oxley Act of 2002 for Boston Properties, Inc. (Furnished herewith.)
   
32.3

—
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes Oxley Act of 2002 for Boston Properties Limited Partnership. (Furnished herewith.)
   
32.4

—
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes Oxley Act of 2002 for Boston Properties Limited Partnership. (Furnished herewith.)
   
101101.SCH

—The following materials from Boston Properties, Inc.’s and Boston Properties Limited Partnership’s Quarterly Reports on Form 10-Q for the quarter ended September 30, 2017 formattedInline XBRL Taxonomy Extension Schema Document. (Filed herewith.)
101.CAL
—Inline XBRL Taxonomy Extension Calculation Linkbase Document. (Filed herewith.)
101.LAB
—Inline XBRL Taxonomy Extension Label Linkbase Document. (Filed herewith.)
101.PRE
—Inline XBRL Taxonomy Extension Presentation Linkbase Document. (Filed herewith.)
101.DEF
—Inline XBRL Taxonomy Extension Definition Linkbase Document. (Filed herewith.)
104
—Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Stockholders’ Equity, (v) the Consolidated Statements of Partners’ Capital (vi) the Consolidated Statements of Cash Flows, and (vii) related notes to these financial statements.Exhibits 101.*). (Filed herewith.)


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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.






 BOSTON PROPERTIES, INC.
   
November 6, 2017May 8, 2020 
/s/    MICHAEL R. WALSH        
  Michael R. Walsh
  
Chief Accounting Officer
(duly authorized officer and principal accounting officer)



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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.






 BOSTON PROPERTIES LIMITED PARTNERSHIP
 By: Boston Properties, Inc., its General Partner
   
November 6, 2017May 8, 2020  
/s/    MICHAEL R. WALSH        
   Michael R. Walsh
   
Chief Accounting Officer
(duly authorized officer and principal accounting officer)




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