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| [FRB LOGO] | Boston Properties, Inc. 111 Huntington Avenue Boston, MA 02199 (NYSE: BXP) |
AT THE COMPANY Investor Relations (617) 236-3322 | AT FRB/WEBER SHANDWICK Marilynn Meek—General Info. (212) 445-8431 Suzie Pileggi—Media (212) 445-8170 | |
FOR IMMEDIATE RELEASE: November 6, 2003 |
BOSTON PROPERTIES, INC. REFLECTS IMPACT OF DEFERRAL
OF SFAS NO. 150 ON THIRD QUARTER 2003 NET INCOME; FFO REMAINS UNCHANGED
| Reports diluted FFO per share of $0.98 | Reports diluted EPS of $0.57 |
BOSTON, MA, November 6, 2003—Boston Properties, Inc. (NYSE: BXP), a real estate investment trust, today announced that as a result of the Financial Accounting Standards Board's October 29, 2003 decision to defer paragraphs 9 and 10 of SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity," as they apply to mandatorily redeemable noncontrolling interests, the Company is not required to recognize a non-cash charge of ($0.10) per share for the cumulative effect of a change in accounting principle in the third quarter of 2003 related to the minority interest in equity of one of the Company's consolidated joint ventures. Accordingly, net income available to common shareholders per share (EPS) for the quarter ended September 30, 2003 was $0.59 basic and $0.57 on a diluted basis. The Company had previously announced on October 21, 2003 that EPS was $0.48 basic and $0.48 on a diluted basis, which included a SFAS No. 150-required non-cash charge of $9.8 million (or ($0.10) per share). The deferral of SFAS No. 150 has no effect on reported Funds from Operations.
The Company is reissuing its third quarter earnings press release in its entirety to reflect the deferral of SFAS No. 150 and to update all applicable disclosures and related financial tables.
Funds from Operations (FFO) for the quarter ended September 30, 2003 were $99.1 million, or $1.02 per share basic and $0.98 per share diluted before the application of SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," as amended. This compares to FFO of $99.0 million, or $1.04 per share basic and $1.00 per share diluted for the quarter ended September 30, 2002. The weighted average number of basic and diluted shares outstanding totaled 97,360,498 and 107,231,333, respectively, for the quarter ended September 30, 2003 and 94,903,894 and 105,724,729, respectively, for the same quarter last year.
Net income available to common shareholders per share (EPS) for the quarter ended September 30, 2003 was $0.59 basic and $0.57 on a diluted basis. This compares to EPS for the third quarter of 2002 of $0.75 basic and $0.74 on a diluted basis. EPS for the third quarter of 2003 includes $0.01 related to a gain on sale of real estate and other assets. EPS for the third quarter of 2002 included $0.19 related to gains on sales of real estate and discontinued operations. Excluding the impact of these items, diluted EPS was $0.56 for the quarter ended September 30, 2003 compared to $0.55 for the third quarter of 2002.
The reported results are unaudited and there can be no assurance that the results will not vary from the final information for the quarter ended September 30, 2003. In the opinion of management, all adjustments considered necessary for a fair presentation of these reported results have been made.
As of September 30, 2003, the Company's portfolio consisted of 139 properties comprising more than 43.5 million square feet, including three properties under construction totaling 2.0 million square feet.
The overall percentage of leased space for the properties in service as of September 30, 2003 was 92.2%.
Significant events of the third quarter include:
- •
- On August 5, 2003, the Company acquired the remaining outside interests in its One Freedom Square and Two Freedom Square joint venture properties located in Reston, Virginia for an aggregate of $36.0 million of cash and the assumption of the outside partner's share of the mortgage debt on the properties of approximately $56.4 million and $35.4 million, respectively. Subsequent to the acquisition, the Company repaid in full the mortgage debt on the Two Freedom Square property totaling $70.7 million. For 2004, the Company projects these properties' combined Unleveraged FFO Return to be 10.8% and Unleveraged Cash Return to be 9.8%. The calculation of these returns and related disclosures are presented on the accompanying table entitled "Projected 2004 Returns on Acquisitions." There can be no assurances that actual returns will not differ materially from these projections. Also on August 5, 2003, the Company acquired a 5.2-acre parcel of land in Reston, Virginia for $13.5 million of cash. The site will support approximately 507,000 square feet of commercial development.
- •
- On August 12, 2003, Boston Properties Limited Partnership, the Company's Operating Partnership, exercised its redemption right and caused all of the outstanding Series One Preferred Units to be converted into common Operating Partnership units.
- •
- On August 19, 2003, the Company recognized a gain on sale of $1.3 million (net of minority interest in Operating Partnership's share of $0.3 million) related to the transfer of the remaining mortgage on the Five Times Square property in New York City.
- •
- On September 4, 2003, the Company modified an $87.9 million mortgage loan that is secured by the 601 and 651 Gateway Boulevard properties in South San Francisco, California. The loan bore interest at 8.40% per annum and was scheduled to mature on October 1, 2010. In connection with the modification, the Company repaid $5.7 million of principal. The modified mortgage loan of $82.2 million requires monthly payments equal to the net cash flow from the property which will be allocated first to interest based on a rate of 3.50% per annum with the remainder applied to principal. The modified mortgage loan matures on September 1, 2006.
- •
- On September 9, 2003, the Company completed registered exchange offers for its 5.625% senior notes due 2015 and 5.00% senior notes due 2015, as required by agreements with the initial purchasers of the notes. The exchanges did not involve any changes in principal amount, interest rate or other terms of the notes.
- •
- On September 11, 2003, the Company entered into a joint venture with an unaffiliated third party to pursue the development of a Class A office property at 801 New Jersey Avenue in Washington, D.C. that would support approximately 1.1 million square feet of commercial development. The Company made an initial cash contribution of $3.0 million for a 50% interest in the joint venture.
Transactions completed subsequent to September 30, 2003:
- •
- On October 8, 2003, the Company acquired 1333 New Hampshire Avenue, a 320,000 square foot Class A office property in Washington, D.C. at a purchase price of approximately $111.6 million. The acquisition was financed with borrowings under the Company's unsecured revolving credit facility and available cash. The property is 100% leased. For 2004, the Company projects this property's Unleveraged FFO Return to be 10.6% and Unleveraged Cash Return to be 8.2%. The calculation of these returns and related disclosures are presented on the accompanying table entitled "Projected 2004 Returns on Acquisitions." There can be no assurances that actual returns will not differ materially from these projections.
EPS and FFO Per Share Guidance:
The Company's guidance for the fourth quarter of 2003 and the full year of 2004 for EPS (diluted) and FFO per share (diluted) is set forth and reconciled below. The reconciliation of Projected EPS to Projected FFO per share, as provided below, is consistent with the Company's historical computations.
| | Fourth Quarter 2003 | Full Year 2004 | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | Low | – | High | Low | – | High | ||||||||||
| | ||||||||||||||||
| Projected EPS (diluted) | $ | 0.59 | – | $ | 0.61 | $ | 2.23 | – | $ | 2.41 | ||||||
| Add: | ||||||||||||||||
| Projected Company Share of Real Estate Depreciation and Amortization | $ | 0.45 | – | $ | 0.44 | $ | 1.85 | – | $ | 1.85 | ||||||
| Projected Company Share of Net Derivatives | $ | 0.00 | – | $ | 0.00 | $ | 0.00 | – | $ | 0.00 | ||||||
| Less: | ||||||||||||||||
| Dilutive Impact of Preferred Securities | $ | 0.04 | – | $ | 0.04 | $ | 0.15 | – | $ | 0.15 | ||||||
| Projected FFO per Share (diluted) before net derivatives | $ | 1.00 | – | $ | 1.01 | $ | 3.93 | – | $ | 4.11 | ||||||
The foregoing estimates reflect management's view of current and future market conditions, including certain assumptions with respect to rental rates, occupancy levels and earnings impact of the events referenced in this release. There can be no assurance that the Company's actual results will not differ materially from the estimates set forth above.
Boston Properties hosted a conference call on October 22, 2003 to discuss the results of this year's third quarter. An audio-webcast has been archived and may be accessed atwww.bostonproperties.com in the Investors section under the headingAudio Archive.
Additionally, a copy of Boston Properties' third quarter 2003 "Supplemental Operating and Financial Data" (which now also reflects the impact of the deferral of SFAS No. 150) and this press release are available in the Investors section of the Company's website atwww.bostonproperties.com. These materials are also available by contacting Investor Relations at (617) 236-3322 or by written request to:
Investor Relations
Boston Properties, Inc.
111 Huntington Avenue, Suite 300
Boston, MA 02199-7610
Boston Properties is a fully integrated, self-administered and self-managed real estate investment trust that develops, redevelops, acquires, manages, operates and owns a diverse portfolio of Class A office, industrial and hotel properties. The Company is one of the largest owners and developers of Class A office properties in the United States, concentrated in four core markets—Boston, Midtown Manhattan, Washington, D.C. and San Francisco.
This press release contains forward-looking statements within the meaning of the Federal securities laws. You can identify these statements by our use of the words "expects," "plans," "estimates," "projects," "intends," "believes" and similar expressions that do not relate to historical matters. You should exercise caution in interpreting and relying on forward-looking statements because they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond Boston Properties' control and could materially affect actual results, performance or achievements. These factors include, without limitation, the ability to enter into new leases or renew leases on favorable terms, dependence on tenants' financial condition, the uncertainties of real estate development and acquisition activity, the ability to effectively integrate acquisitions, the costs and availability of financing, the effects of local economic and market conditions, the impact of newly adopted accounting principles on period-to-period comparisons of financial results, regulatory changes and other risks and uncertainties detailed from time to time in the Company's filings with the Securities and Exchange Commission. The Company does not undertake a duty to update forward-looking statements, including its expected operating results for the fourth quarter of 2003 and the full year of 2004.
Financial tables follow.
BOSTON PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
| | Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | 2003 | 2002 | 2003 | 2002 | ||||||||||||
| | (in thousands, except for per share amounts) (unaudited) | |||||||||||||||
| Revenue | ||||||||||||||||
| Rental: | ||||||||||||||||
| Base rent | $ | 253,594 | $ | 229,453 | $ | 749,795 | $ | 678,766 | ||||||||
| Recoveries from tenants | 42,079 | 34,884 | 119,222 | 103,409 | ||||||||||||
| Parking and other | 13,249 | 13,056 | 41,399 | 37,610 | ||||||||||||
| Total rental revenue | 308,922 | 277,393 | 910,416 | 819,785 | ||||||||||||
| Hotel revenue | 17,542 | 20,007 | 48,001 | 20,007 | ||||||||||||
| Development and management services | 3,616 | 2,571 | 13,635 | 7,979 | ||||||||||||
| Interest and other | 1,089 | 1,222 | 2,167 | 4,804 | ||||||||||||
| Total revenue | 331,169 | 301,193 | 974,219 | 852,575 | ||||||||||||
| Expenses | ||||||||||||||||
| Operating: | ||||||||||||||||
| Rental | 107,404 | 95,118 | 302,195 | 269,940 | ||||||||||||
| Hotel | 12,829 | 13,524 | 36,258 | 13,524 | ||||||||||||
| General and administrative | 11,183 | 9,956 | 33,610 | 34,589 | ||||||||||||
| Interest | 75,343 | 65,476 | 224,435 | 190,657 | ||||||||||||
| Depreciation and amortization | 53,455 | 43,933 | 154,021 | 127,819 | ||||||||||||
| Net derivative (gains)/losses | (885 | ) | 5,284 | 1,038 | 10,413 | |||||||||||
| Loss from early extinguishment of debt | — | — | 1,474 | — | ||||||||||||
| Loss on investments in securities | — | — | — | 4,297 | ||||||||||||
| Total expenses | 259,329 | 233,291 | 753,031 | 651,239 | ||||||||||||
| Income before minority interests in property partnerships, income from unconsolidated joint ventures, minority interest in Operating Partnership, gains on sales of real estate and other assets, discontinued operations and preferred dividend | 71,840 | 67,902 | 221,188 | 201,336 | ||||||||||||
| Minority interests in property partnerships | 563 | 720 | 1,205 | 1,903 | ||||||||||||
| Income from unconsolidated joint ventures | 1,343 | 2,530 | 5,354 | 5,871 | ||||||||||||
| Income before minority interest in Operating Partnership, gains on sales of real estate and other assets, discontinued operations and preferred dividend | 73,746 | 71,152 | 227,747 | 209,110 | ||||||||||||
| Minority interest in Operating Partnership | (18,117 | ) | (18,071 | ) | (55,783 | ) | (54,761 | ) | ||||||||
| Income before gains on sales of real estate and other assets, discontinued operations and preferred dividend | 55,629 | 53,081 | 171,964 | 154,349 | ||||||||||||
| Gains on sales of real estate and other assets, net of minority interest | 1,341 | 3,644 | 57,729 | 3,644 | ||||||||||||
| Income before discontinued operations and preferred dividend | 56,970 | 56,725 | 229,693 | 157,993 | ||||||||||||
| Discontinued Operations: | ||||||||||||||||
| Income from discontinued operations, net of minority interest | — | 3,032 | 1,938 | 9,350 | ||||||||||||
| Gains on sales of real estate from discontinued operations, net of minority interest | — | 11,910 | 73,436 | 17,750 | ||||||||||||
| Income before preferred dividend | 56,970 | 71,667 | 305,067 | 185,093 | ||||||||||||
| Preferred dividend | — | (126 | ) | — | (3,412 | ) | ||||||||||
| Net income available to common shareholders | $ | 56,970 | $ | 71,541 | $ | 305,067 | $ | 181,681 | ||||||||
| Basic earnings per share: | ||||||||||||||||
| Income available to common shareholders before discontinued operations | $ | 0.59 | $ | 0.59 | $ | 2.38 | $ | 1.68 | ||||||||
| Discontinued operations, net of minority interest | — | 0.16 | 0.78 | 0.29 | ||||||||||||
| Net income available to common shareholders | $ | 0.59 | $ | 0.75 | $ | 3.16 | $ | 1.97 | ||||||||
| Weighted average number of common shares outstanding | 97,360 | 94,904 | 96,547 | 92,413 | ||||||||||||
| Diluted earnings per share: | ||||||||||||||||
| Income available to common shareholders before discontinued operations | $ | 0.57 | $ | 0.59 | $ | 2.34 | $ | 1.64 | ||||||||
| Discontinued operations, net of minority interest | — | 0.15 | 0.77 | 0.29 | ||||||||||||
| Net income available to common shareholders | $ | 0.57 | $ | 0.74 | $ | 3.11 | $ | 1.93 | ||||||||
| Weighted average number of common and common equivalent shares outstanding | 99,183 | 96,181 | 98,029 | 94,026 | ||||||||||||
BOSTON PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
| | September 30, 2003 | December 31, 2002 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| | (in thousands, except for share amounts) (unaudited) | ||||||||||
| ASSETS | |||||||||||
| Real estate | $ | 8,060,525 | $ | 7,781,684 | |||||||
| Development in progress | 481,571 | 448,576 | |||||||||
| Land held for future development | 232,361 | 215,866 | |||||||||
| Real estate held for sale, net | — | 224,585 | |||||||||
| Less: accumulated depreciation | (952,754 | ) | (822,933 | ) | |||||||
| Total real estate | 7,821,703 | 7,847,778 | |||||||||
| Cash and cash equivalents | 37,621 | 55,275 | |||||||||
| Cash held in escrows | 27,992 | 41,906 | |||||||||
| Tenant and other receivables, net | 21,813 | 20,458 | |||||||||
| Accrued rental income, net | 175,063 | 165,321 | |||||||||
| Deferred charges, net | 178,819 | 176,545 | |||||||||
| Prepaid expenses and other assets | 57,012 | 18,015 | |||||||||
| Investments in unconsolidated joint ventures | 88,632 | 101,905 | |||||||||
| Total assets | $ | 8,408,655 | $ | 8,427,203 | |||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
| Liabilities: | |||||||||||
| Mortgage notes payable | $ | 3,450,112 | $ | 4,267,119 | |||||||
| Unsecured senior notes, net of discount | 1,470,231 | 747,375 | |||||||||
| Unsecured bridge loan | — | 105,683 | |||||||||
| Unsecured line of credit | — | 27,043 | |||||||||
| Accounts payable and accrued expenses | 69,940 | 73,846 | |||||||||
| Dividends and distributions payable | 83,972 | 81,226 | |||||||||
| Interest rate contracts | 9,875 | 14,514 | |||||||||
| Accrued interest payable | 44,010 | 25,141 | |||||||||
| Other liabilities | 69,242 | 81,085 | |||||||||
| Total liabilities | 5,197,382 | 5,423,032 | |||||||||
| Commitments and contingencies | — | ||||||||||
| Minority interests | 829,779 | 844,581 | |||||||||
| Stockholders' equity: | |||||||||||
| Excess stock, $.01 par value, 150,000,000 shares authorized, none issued or outstanding | — | — | |||||||||
| Preferred stock, $.01 par value, 50,000,000 shares authorized, none issued or outstanding | — | — | |||||||||
| Common stock, $.01 par value, 250,000,000 shares authorized, 97,656,565 and 95,441,890 shares issued and 97,577,665 and 95,362,990 shares outstanding in 2003 and 2002, respectively | 976 | 954 | |||||||||
| Additional paid-in capital | 2,084,490 | 1,982,689 | |||||||||
| Earnings in excess of dividends | 322,530 | 198,586 | |||||||||
| Treasury common stock, at cost | (2,722 | ) | (2,722 | ) | |||||||
| Unearned compensation | (7,271 | ) | (2,899 | ) | |||||||
| Accumulated other comprehensive loss | (16,509 | ) | (17,018 | ) | |||||||
| Total stockholders' equity | 2,381,494 | 2,159,590 | |||||||||
| Total liabilities and stockholders' equity | $ | 8,408,655 | $ | 8,427,203 | |||||||
BOSTON PROPERTIES, INC.
FUNDS FROM OPERATIONS(1)
| | Three months ended September 30, | Nine months ended September 30, | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | 2003 | 2002 | 2003 | 2002 | ||||||||||
| | (in thousands, except for per share amounts) (unaudited) | |||||||||||||
| Net income available to common shareholders | $ | 56,970 | $ | 71,541 | $ | 305,067 | $ | 181,681 | ||||||
| Add: | ||||||||||||||
| Preferred dividend | — | 126 | — | 3,412 | ||||||||||
| Minority interest in Operating Partnership | 18,117 | 18,071 | 55,783 | 54,761 | ||||||||||
| Less: | ||||||||||||||
| Minority interests in property partnerships | 563 | 720 | 1,205 | 1,903 | ||||||||||
| Income from unconsolidated joint ventures | 1,343 | 2,530 | 5,354 | 5,871 | ||||||||||
| Gains on sales of real estate and other assets, net of minority interest | 1,341 | 3,644 | 57,729 | 3,644 | ||||||||||
| Income from discontinued operations, net of minority interest | — | 3,032 | 1,938 | 9,350 | ||||||||||
| Gains on sales of real estate from discontinued operations, net of minority interest | — | 11,910 | 73,436 | 17,750 | ||||||||||
| Income before minority interests in property partnerships, income from unconsolidated joint ventures, minority interest in Operating Partnership, gains on sales of real estate and other assets, discontinued operations and preferred dividend | $ | 71,840 | $ | 67,902 | $ | 221,188 | $ | 201,336 | ||||||
Add: | ||||||||||||||
| Real estate depreciation and amortization | 54,606 | 46,971 | 158,735 | 136,502 | ||||||||||
| Income from discontinued operations | — | 3,687 | 2,355 | 11,417 | ||||||||||
| Income from unconsolidated joint ventures | 1,343 | 2,530 | 5,354 | 5,871 | ||||||||||
| Loss from early extinguishment of debt associated with the sale of real estate | — | — | 1,474 | — | ||||||||||
| Less: | ||||||||||||||
| Minority interests in property partnerships' share of funds from operations | (805 | ) | (521 | ) | (2,513 | ) | (1,833 | ) | ||||||
| Preferred dividends and distributions | (5,183 | ) | (6,162 | ) | (16,806 | ) | (22,785 | ) | ||||||
| Funds from operations | 121,801 | 114,407 | 369,787 | 330,508 | ||||||||||
| Add (subtract): | ||||||||||||||
| Net derivative (gains)/losses (SFAS No. 133) | (885 | ) | 5,284 | 1,038 | 10,413 | |||||||||
| Early surrender lease adjustment(2) | — | 667 | — | 8,520 | ||||||||||
| Funds from operations before net derivative losses (SFAS No. 133) and after early surrender lease adjustment | $ | 120,916 | $ | 120,358 | $ | 370,825 | $ | 349,441 | ||||||
| Funds from operations available to common shareholders before net derivative losses (SFAS No. 133) and after early surrender lease adjustment | $ | 99,057 | $ | 98,980 | $ | 305,122 | $ | 286,080 | ||||||
| Weighted average shares outstanding—basic | 97,360 | 94,904 | 96,547 | 92,413 | ||||||||||
| FFO per share basic before net derivative losses (SFAS No. 133) and after early surrender adjustment | $ | 1.02 | $ | 1.04 | $ | 3.16 | $ | 3.10 | ||||||
| FFO per share basic after net derivative losses (SFAS No. 133) and before early surrender lease adjustment | $ | 1.02 | $ | 0.99 | $ | 3.15 | $ | 2.93 | ||||||
| Weighted average shares outstanding—diluted | 107,231 | 105,725 | 106,839 | 105,870 | ||||||||||
| FFO per share diluted before net derivative losses (SFAS No. 133) and after early surrender lease adjustment | $ | 0.98 | $ | 1.00 | $ | 3.04 | $ | 2.95 | ||||||
| FFO per share diluted after net derivative losses (SFAS No. 133) and before early surrender lease adjustment | $ | 0.99 | $ | 0.95 | $ | 3.03 | $ | 2.80 | ||||||
- (1)
- Pursuant to the revised definition of Funds from Operations adopted by the Board of Governors of the National Association of Real Estate Investment Trusts ("NAREIT"), we calculate Funds from Operations, or "FFO," by adjusting net income (loss) (computed in accordance with accounting principles generally accepted in the United States of America ("GAAP"), including non-recurring items), for gains (or losses) from sales of properties, real estate related depreciation and amortization, and after adjustment for unconsolidated partnerships and joint ventures.
The use of FFO, combined with the required primary GAAP presentations, has been fundamentally beneficial, improving the understanding of operating results of REITs among the investing public and making comparisons of REIT operating results more meaningful. Management generally considers FFO to be a useful measure for reviewing the comparative operating and financial performance of the Company because, by excluding gains and losses related to sales of previously depreciated operating real estate assets and excluding real estate asset depreciation and amortization (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates), FFO can help one compare the operating performance of a company's real estate between periods or as compared to different companies.
Our computation of FFO may not be comparable to FFO reported by other REITs or real estate companies that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently. In addition to presenting FFO in accordance with the NAREIT definition, we also disclose FFO after specific
supplemental adjustments, including net derivative losses and early surrender lease adjustments. Although our FFO as adjusted clearly differs from NAREIT's definition of FFO, as well as that of other REITs and real estate companies, we believe it provides a meaningful supplemental measure of our operating performance. FFO should not be considered as an alternative to net income (determined in accordance with GAAP) as an indication of our performance. FFO does not represent cash generated from operating activities determined in accordance with GAAP and is not a measure of liquidity or an indicator of our ability to make cash distributions. We believe that to further understand our performance, FFO and FFO as adjusted should be compared with our reported net income and considered in addition to cash flows in accordance with GAAP, as presented in our consolidated financial statements.
- (2)
- Represents cash received under contractual obligations.
BOSTON PROPERTIES, INC.
PROJECTED 2004 RETURNS ON ACQUISITIONS
| | 1333 New Hampshire Avenue | One and Two Freedom Square | |||||
|---|---|---|---|---|---|---|---|
| | (dollars in thousands) | ||||||
| Base rent and recoveries from tenants | $ | 12,600 | $ | 27,663 | |||
| Straight-line rent | 800 | 3,467 | |||||
| Fair value lease revenue | 2,000 | (1,393 | ) | ||||
| Total rental revenue | 15,400 | 29,737 | |||||
| Operating Expenses | 3,300 | 6,922 | |||||
| Revenue less Operating Expenses | 12,100 | 22,815 | |||||
| Interest expense | — | (5,178 | ) | ||||
| Depreciation and amortization | (3,100 | ) | (5,330 | ) | |||
| Net income | $ | 9,000 | $ | 12,307 | |||
| Add: | |||||||
| Interest expense | — | 5,178 | |||||
| Depreciation and amortization | 3,100 | 5,330 | |||||
| Unleveraged FFO | $ | 12,100 | $ | 22,815 | |||
| Less: | |||||||
| Straight-line rent | (800 | ) | (3,467 | ) | |||
| Fair value lease revenue | (2,000 | ) | 1,393 | ||||
| Unleveraged Cash | $ | 9,300 | $ | 20,741 | (3) | ||
| Cash | $ | 113,800 | $ | 36,000 | |||
| Total debt | — | 151,500 | |||||
| Existing equity | — | 6,100 | |||||
| Costs to complete | — | 18,300 | |||||
| Total Investment | $ | 113,800 | $ | 211,900 | |||
| Unleveraged FFO Return (1) | 10.6 | % | 10.8 | % | |||
| Unleveraged Cash Return (2) | 8.2 | % | 9.8 | % | |||
- (1)
- Unleveraged FFO Return is determined by dividing Unleveraged FFO by Total Investment. Other real estate companies may calculate this return differently. Management believes projected Unleveraged FFO Return is a useful measure in the real estate industry when determining the appropriate purchase price for a property or estimating a property's value. When evaluating acquisition opportunities, management considers, among other factors, projected Unleveraged FFO Return because it excludes, among other items, interest expense (which may vary depending on the level of corporate debt or proprety-specific debt), as well as depreciation and amortization expense (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates). In addition, management considers its cost of capital and available financing alternatives in making decisions concerning acquisitions.
- (2)
- Unleveraged Cash Return is determined by dividing Unleveraged Cash by Total Investment. Other real estate companies may calculate this return differently. Management believes that projected Unleveraged Cash Return is also a useful measure of a property's value when used in addition to Unleveraged FFO Return because it eliminates the effect of straight-lining of rent and the FAS 141 treatment of in-place above and below market leases which over the forecasted period enables an investor to assess the cash on cash return from the property.
- (3)
- Does not include approximately $1.3 million of free rent granted to a tenant for the first four months of 2004.
Management is presenting these projected returns and related calculations to assist investors in analyzing the Company's recent acquisitions. Management does not intend to present this data for any other purpose, for any other period or for its other properties, and is not intending for these measures to otherwise provide information to investors about the Company's financial condition or results of operations. The Company does not undertake a duty to update any of these projections.
BOSTON PROPERTIES, INC.
PORTFOLIO LEASING PERCENTAGES
| | % Leased by Location | ||||
|---|---|---|---|---|---|
| | September 30, 2003 | December 31, 2002 | |||
| Greater Boston | 87.5% | 91.8% | |||
| Greater Washington, D.C. | 95.1% | 95.9% | |||
| Midtown Manhattan | 98.9% | 98.4% | |||
| Baltimore, MD | 98.5% | 97.6% | |||
| Richmond, VA | 88.9% | 91.8% | |||
| Princeton/East Brunswick, NJ | 95.0% | 93.3% | |||
| Greater San Francisco | 85.5% | 87.4% | |||
| Bucks County, PA | 100.0% | 100.0% | |||
| Total Portfolio | 92.2% | 93.9% | |||
| | % Leased by Type | ||||
|---|---|---|---|---|---|
| | September 30, 2003 | December 31, 2002 | |||
| Class A Office Portfolio | 93.0% | 94.1% | |||
| Office/Technical Portfolio | 86.1% | 89.7% | |||
| Industrial Portfolio | 56.6% | 100.0% | |||
| Total Portfolio | 92.2% | 93.9% | |||
BOSTON PROPERTIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS
BOSTON PROPERTIES, INC. CONSOLIDATED BALANCE SHEETS
BOSTON PROPERTIES, INC. FUNDS FROM OPERATIONS(1)
BOSTON PROPERTIES, INC. PROJECTED 2004 RETURNS ON ACQUISITIONS
BOSTON PROPERTIES, INC. PORTFOLIO LEASING PERCENTAGES