Boston Properties (BXP) 8-K Results of Operations and Financial Condition

Exhibit 99.2

111 Huntington Avenue

Boston, MA 02199

AT THE COMPANY	AT FINANCIAL RELATIONS BOARD
Michael Walsh	Marilynn Meek – General Info.
Senior Vice President, Finance	(212) 827-3773
(617) 236-3410
Kathleen DiChiara
Investor Relations Manager
(617) 236-3343

BOSTON PROPERTIES, INC. ANNOUNCES SECOND QUARTER 2005 RESULTS

AND DECLARES A SPECIAL DIVIDEND

BOSTON, MA, July 26, 2005 – Boston Properties, Inc. (NYSE: BXP), a real estate investment trust, reported results today for the second quarter ended June 30, 2005.

Funds from Operations (FFO) for the quarter ended June 30, 2005 were $121.3 million, or $1.10 per share basic and $1.06 per share diluted, after a supplemental adjustment to exclude losses from early extinguishments of debt associated with the sales of real estate. This compares to FFO for the quarter ended June 30, 2004 of $116.9 million, or $1.09 per share basic and $1.05 per share diluted. Losses from early extinguishments of debt associated with the sales of real estate totaled $0.09 per share basic and $0.08 per share diluted for the quarter ended June 30, 2005. The weighted average number of basic and diluted shares outstanding totaled 110,764,403 and 118,460,257, respectively, for the quarter ended June 30, 2005 and 107,215,662 and 115,207,736, respectively, for the same quarter last year.

Net income available to common shareholders was $166.6 million for the three months ended June 30, 2005, compared to $87.1 million for the quarter ended June 30, 2004. Net income available to common shareholders per share (EPS) for the quarter ended June 30, 2005 was $1.47 basic and $1.44 on a diluted basis. This compares to EPS for the second quarter of 2004 of $0.81 basic and $0.79 on a diluted basis. EPS includes $0.98 and $0.20 on a diluted basis, related to gains on sales of real estate and discontinued operations for the quarters ended June 30, 2005 and 2004, respectively.

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 June 30, 2005. In the opinion of management, all adjustments considered necessary for a fair presentation of these reported results have been made.

In addition, the Company announced that its Board of Directors declared a special cash dividend of $2.50 per common share payable on October 31, 2005 to shareholders of record as of the close of business on September 30, 2005. The Board of Directors did not make any change in the Company’s policy with respect to regular quarterly dividends. The holders of Series Two Preferred Units of limited partnership interest in the Company’s Operating Partnership will participate in the special dividend on an as-converted basis along with the holders of common units. The decision to declare a special dividend will be discussed in more detail during the Company’s conference call on July 27.

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Edward H. Linde, President and Chief Executive Officer of Boston Properties, commented on the Board’s decision, by saying, “while the difficulty in purchasing significant high quality assets in accordance with our disciplined return and underwriting standards was one factor, also important was the exceptional strength of our current balance sheet which, even after this distribution, will allow us to aggressively pursue any attractive purchase or development opportunity that surfaces. Therefore, it is appropriate to return undeployed funds to our shareholders. As always, we remain committed to our goal of maximizing total return to our shareholders.”

As of June 30, 2005, the Company’s portfolio consisted of 122 properties comprising approximately 41.2 million square feet, including two properties under construction and one expansion project totaling 0.7 million square feet. The overall percentage of leased space for the 117 properties in service as of June 30, 2005 was 93.2%.

Significant events of the second quarter include:

• The Company increased its quarterly dividend payable to holders of the Company’s Common Stock from $0.65 per share to $0.68 per share. This represents a 4.6% increase.

• On April 12, 2005, the Company obtained construction financing totaling $125.0 million collateralized by its Seven Cambridge Center development project located in Cambridge, Massachusetts. Seven Cambridge Center is a fully-leased, build-to-suit project with approximately 231,000 net rentable square feet of office, research laboratory and retail space plus parking for approximately 800 cars. The construction financing bears interest at a variable rate equal to LIBOR plus 1.25% per annum and matures in April 2007 with a one-year extension option.

• On April 20, 2005, the Company sold the Old Federal Reserve, a Class A office property totaling approximately 150,000 net rentable square feet located in San Francisco, California, at a sale price of approximately $46.8 million.

• On May 12, 2005, the Company modified its mortgage loan collateralized by 601 and 651 Gateway Boulevard located in South San Francisco, California. The modified mortgage loan of $83.8 million matures on December 31, 2005 and continues to require 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 through the end of the term, with a balloon payment due at maturity.

• On May 12, 2005, the Company completed the sale of 100 East Pratt Street, a 639,000 net rentable square foot Class A office property located in Baltimore, Maryland, for approximately $207.5 million. Net cash proceeds were approximately $93.0 million after the repayment of mortgage indebtedness of approximately $84.0 million, a prepayment penalty of approximately $6.5 million and unfunded tenant obligations and other closing costs totaling approximately $24.0 million.

• On May 16, 2005, the Company completed the sale of Riverfront Plaza, a 910,000 net

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rentable square foot Class A office property located in Richmond, Virginia, for approximately $247.1 million. Net proceeds were approximately $130.2 million after the repayment of mortgage indebtedness of approximately $104.0 million, a prepayment penalty of approximately $4.3 million and unfunded tenant obligations and other closing costs totaling approximately $8.6 million.

• On May 19, 2005, the Company extended its $605.0 million unsecured revolving credit agreement for a term expiring on October 30, 2007 with a one-year extension option. The interest rate on borrowings has been reduced from a per annum variable rate of Eurodollar plus 0.70% to Eurodollar plus 0.65%, subject to adjustment in the event of a change in the unsecured debt ratings of the Company’s Operating Partnership.

• On June 21, 2005, the Company refinanced its construction loan facility collateralized by Times Square Tower located in New York City. The new mortgage loan totaling $475.0 million bears interest at a variable rate equal to LIBOR plus 0.50% per annum and matures on July 9, 2008. The new mortgage loan includes provisions for two one-year extensions at the option of the Company. The Company also entered into an agreement to cap the interest rate at 10.5% per annum.

Transactions completed subsequent to June 30, 2005:

• On July 19, 2005, the Company refinanced at maturity its mortgage loan collateralized by 599 Lexington Avenue located in New York City. The mortgage loan totaling $225.0 million bore interest at a fixed rate of 7.0% per annum. The mortgage loan was refinanced through a secured draw from the Company’s revolving credit facility.

EPS and FFO per Share Guidance:

The Company’s guidance for the third quarter of 2005 and the full year 2005 for EPS (diluted), FFO per share (diluted) and FFO per share (diluted) after a supplemental adjustment is set forth and reconciled below.

	Third Quarter 2005					Full Year 2005
	Low		-	High		Low		-	High
Projected EPS (diluted)	$	0.57	-	$	0.59	$	3.04	-	$	3.11
Add:
Projected Company Share of Real Estate Depreciation and Amortization		0.45	-		0.45		1.89	-		1.89
Less:
Projected Company Share of Gains on Sales of Real Estate		—	-		—		0.86	-		0.86
Projected FFO per Share (diluted)	$	1.02	-	$	1.04	$	4.07	-	$	4.14
Add:
Projected Company Share of Losses from Early Extinguishments of Debt Associated with the Sales of Real Estate		—	-		—		0.08	-		0.08
Projected FFO per Share (diluted) after a supplemental adjustment to exclude Losses from Early Extinguishments of Debt Associated with the Sales of Real Estate	$	1.02	-	$	1.04	$	4.15	-	$	4.22

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The foregoing estimates reflect management’s view of current and future market conditions, including assumptions with respect to rental rates, occupancy levels and earnings impact of the events referenced in this release. EPS estimates may be subject to fluctuations as a result of several factors, including changes in the recognition of depreciation and amortization expense and any gains or losses associated with disposition activity. The Company is not able to assess at this time the potential impact of these factors on projected EPS. By definition, FFO does not include real estate-related depreciation and amortization or gains or losses associated with disposition activities. There can be no assurance that the Company’s actual results will not differ materially from the estimates set forth above.

The foregoing estimates also include FFO after a supplemental adjustment to exclude losses from early extinguishments of debt associated with the sales of real estate. These losses from early extinguishments of debt are incurred when the sale of real estate encumbered by debt requires the Company to pay the extinguishment costs prior to the debt’s stated maturity and to write-off unamortized loan costs at the date of the extinguishment. Such costs are excluded from the gains on sales of real estate reported in accordance with GAAP. However, the Company views the losses from early extinguishments of debt associated with the sales of real estate as an incremental cost of the sale transactions because the Company extinguished the debt in connection with the consummation of the sale transactions and the Company had no intent to extinguish the debt absent such transactions. The Company believes that this supplemental adjustment more appropriately reflects the results of its operations exclusive of the impact of its sale transactions.

Boston Properties will host a conference call tomorrow, July 27, 2005 at 10:00 AM (Eastern Time), open to the general public, to discuss the second quarter 2005 results, the 2005 projections and other related matters. The number to call for this interactive teleconference is (800) 218-9073. A replay of the conference call will be available through August 3, 2005 by dialing (800) 405-2236 and entering the passcode 11033290. An audio-webcast will also be archived and may be accessed atwww.bostonproperties.com in the Investor Relations section under the headingEvents & Webcasts.

Additionally, a copy of Boston Properties’ second quarter 2005 “Supplemental Operating and Financial Data” and this press release are available in the Investor Relations 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 properties and also includes three hotels and one industrial property. The Company is one of the largest owners and developers of Class A office properties in the United States, concentrated in five markets – Boston, Midtown Manhattan, Washington, D.C., San Francisco and Princeton, N.J.

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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 “guidance,” “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 the Company’s accounting policies and on period-to-period comparisons of financial results, regulatory changes and other risks and uncertainties detailed from time to time in the Company’s filings with the Securities and Exchange Commission. Boston Properties does not undertake a duty to update or revise any forward-looking statement whether as a result of new information, future events or otherwise, including its guidance for the third quarter and full fiscal year 2005.

Financial tables follow.

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BOSTON PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

	Three months ended June 30,						Six months ended June 30,
	2005			2004			2005			2004
	(in thousands, except for per share amounts)
	(unaudited)
Revenue
Rental:
Base rent	$	277,360		$	263,559		$	556,109		$	517,291
Recoveries from tenants		41,856			39,261			85,196			79,842
Parking and other		14,248			14,083			28,173			27,271
Total rental revenue		333,464			316,903			669,478			624,404
Hotel revenue		20,066			19,166			34,068			32,344
Development and management services		4,137			5,961			8,673			9,283
Interest and other		2,937			1,090			4,574			8,618
Total revenue		360,604			343,120			716,793			674,649
Expenses
Operating:
Rental		106,576			101,049			215,177			201,171
Hotel		13,979			13,376			26,265			25,054
General and administrative		14,252			12,493			29,065			25,093
Interest		78,233			74,789			157,587			149,094
Depreciation and amortization		65,850			60,366			133,833			116,373
Losses from early extinguishments of debt		12,896			—			12,896			6,258
Total expenses		291,786			262,073			574,823			523,043
Income before minority interests in property partnerships, income from unconsolidated joint ventures, minority interest in Operating Partnership, gains on sales of real estate and land held for development and discontinued operations		68,818			81,047			141,970			151,606
Minority interests in property partnerships		1,472			1,292			3,124			1,677
Income from unconsolidated joint ventures		847			879			2,182			2,256
Income before minority interest in Operating Partnership, gains on sales of real estate and land held for development and discontinued operations		71,137			83,218			147,276			155,539
Minority interest in Operating Partnership		(14,965	)		(17,776	)		(30,671	)		(34,945	)
Income before gains on sales of real estate and land held for development and discontinued operations		56,172			65,442			116,605			120,594
Gains on sales of real estate, net of minority interest		102,073			1,377			102,073			8,108
Gains on sales of land held for development, net of minority interest		—			—			1,208			—
Income before discontinued operations		158,245			66,819			219,886			128,702
Discontinued operations:
Income (loss) from discontinued operations, net of minority interest		—			710			(406	)		2,349
Gains on sales of real estate from discontinued operations, net of minority interest		8,389			19,589			8,389			22,010
Net income available to common shareholders	$	166,634		$	87,118		$	227,869		$	153,061
Basic earnings per common share:
Income available to common shareholders before discontinued operations	$	1.39		$	0.62		$	1.96		$	1.23
Discontinued operations, net of minority interest		0.08			0.19			0.07			0.23
Net income available to common shareholders	$	1.47		$	0.81		$	2.03		$	1.46
Weighted average number of common shares outstanding		110,764			107,216			110,477			104,053
Diluted earnings per common share:
Income available to common shareholders before discontinued operations	$	1.37		$	0.60		$	1.92		$	1.20
Discontinued operations, net of minority interest		0.07			0.19			0.07			0.23
Net income available to common shareholders	$	1.44		$	0.79		$	1.99		$	1.43
Weighted average number of common and common equivalent shares outstanding		113,103			109,016			112,740			106,255

BOSTON PROPERTIES, INC.

CONSOLIDATED BALANCE SHEETS

	June 30, 2005			December 31, 2004
	(in thousands, except for share amounts)
	(unaudited)
ASSETS
Real estate	$	8,736,776		$	9,033,858
Development in progress		99,727			35,063
Land held for future development		239,314			222,306
Less: accumulated depreciation		(1,189,101	)		(1,143,369	)
Total real estate		7,886,716			8,147,858
Cash and cash equivalents		507,182			239,344
Cash held in escrows		29,077			24,755
Investments in marketable securities		25,000			—
Tenant and other receivables, net of allowance for doubtful accounts of $2,698 and $2,879, respectively		28,230			25,500
Accrued rental income, net of allowance of $4,838 and $4,252, respectively		280,257			251,236
Deferred charges, net		243,679			254,950
Prepaid expenses and other assets		43,042			38,630
Investments in unconsolidated joint ventures		82,810			80,955
Total assets	$	9,125,993		$	9,063,228
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Mortgage notes payable	$	3,427,892		$	3,541,131
Unsecured senior notes, net of discount		1,470,865			1,470,683
Unsecured line of credit		—			—
Accounts payable and accrued expenses		92,649			94,451
Dividends and distributions payable		95,597			91,428
Interest rate contract		—			1,164
Accrued interest payable		47,744			50,670
Other liabilities		132,427			91,300
Total liabilities		5,267,174			5,340,827
Commitments and contingencies		—			—
Minority interests		795,990			786,328
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, 111,482,273 and 110,399,385 shares issued and 111,403,373 and 110,320,485 shares outstanding in 2005 and 2004, respectively		1,114			1,103
Additional paid-in capital		2,679,448			2,633,980
Earnings in excess of dividends		405,780			325,452
Treasury common stock, at cost		(2,722	)		(2,722	)
Unearned compensation		(5,503	)		(6,103	)
Accumulated other comprehensive loss		(15,288	)		(15,637	)
Total stockholders’ equity		3,062,829			2,936,073
Total liabilities and stockholders’ equity	$	9,125,993		$	9,063,228

BOSTON PROPERTIES, INC.

FUNDS FROM OPERATIONS (1)

	Three months ended June 30,						Six months ended June 30,
	2005			2004			2005			2004
	(in thousands, except for per share amounts)
	(unaudited)
Net income available to common shareholders	$	166,634		$	87,118		$	227,869		$	153,061
Add:
Minority interest in Operating Partnership		14,965			17,776			30,671			34,945
Less:
Minority interests in property partnerships		1,472			1,292			3,124			1,677
Income from unconsolidated joint ventures		847			879			2,182			2,256
Gains on sales of real estate, net of minority interest		102,073			1,377			102,073			8,108
Gains on sales of land held for development, net of minority interest		—			—			1,208			—
Income (loss) from discontinued operations, net of minority interest		—			710			(406	)		2,349
Gains on sales of real estate from discontinued operations, net of minority interest		8,389			19,589			8,389			22,010
Income before minority interests in property partnerships, income from unconsolidated joint ventures, minority interest in Operating Partnership, gains on sales of real estate and land held for development and discontinued operations		68,818			81,047			141,970			151,606
Add:
Real estate depreciation and amortization (2)		67,878			61,919			137,418			119,792
Income (loss) from discontinued operations		—			910			(486	)		2,957
Income from unconsolidated joint ventures		847			879			2,182			2,256
Less:
Minority interests in property partnerships’ share of funds from operations		(106	)		(158	)		(31	)		(1,062	)
Preferred distributions		(3,340	)		(3,813	)		(6,620	)		(8,198	)
Funds from operations (FFO)		134,097			140,784			274,433			267,351
Add:
Losses from early extinguishments of debt associated with the sales of real estate		11,041			—			11,041			—
Funds from operations after a supplemental adjustment to exclude losses from early extinguishments of debt associated with the sales of real estate	$	145,138		$	140,784		$	285,474		$	267,351
Less:
Minority interest in the Operating Partnership’s share of funds from operations after a supplemental adjustment to exclude losses from early extinguishments of debt associated with the sales of real estate		23,829			23,880			46,864			46,655
Funds from operations available to common shareholders after a supplemental adjustment to exclude losses from early extinguishments of debt associated with the sales of real estate	$	121,309		$	116,904		$	238,610		$	220,696
Our percentage share of funds from operations - basic		83.58	%		83.04	%		83.58	%		82.55	%
Weighted average shares outstanding - basic		110,764			107,216			110,477			104,053
FFO per share basic after a supplemental adjustment to exclude losses from early extinguishments of debt associated with the sales of real estate	$	1.10		$	1.09		$	2.16		$	2.12
FFO per share basic	$	1.01		$	1.09		$	2.08		$	2.12
Weighted average shares outstanding - diluted		118,460			115,208			118,098			112,895
FFO per share diluted after a supplemental adjustment to exclude losses from early extinguishments of debt associated with the sales of real estate	$	1.06		$	1.05		$	2.09		$	2.04
FFO per share diluted	$	0.98		$	1.05		$	2.01		$	2.04

(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 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. FFO is a non-GAAP financial measure. The use of FFO, combined with the required primary GAAP presentations, has been fundamentally beneficial in 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 our comparative operating and financial performance 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 a specific and defined supplemental adjustment to exclude losses from early extinguishments of debt associated with the sales of real estate. The adjustment to exclude losses from early extinguishments of debt results when the sale of real estate encumbered by debt requires us to pay the extinguishment costs prior to the debt’s stated maturity and to write-off unamortized loan costs at the date of the extinguishment. Such costs are excluded from the gains on sales of real estate reported in accordance with GAAP. However, we view the losses from early extinguishments of debt associated with the sales of real estate as an incremental cost of the sale transactions because we extinguished the debt in connection with the consummation of the sale transactions and we had no intent to extinguish the debt absent such transactions. We believe that this supplemental adjustment more appropriately reflects the results of our operations exclusive of the impact of our sale transactions.

Although our FFO as adjusted clearly differs from NAREIT’s definition of FFO, and may not be comparable to that of other REITs and real estate companies, we believe it provides a meaningful supplemental measure of our operating performance because we believe that, by excluding the effects of the losses from early extinguishments of debt associated with the sales of real estate, management and investors are presented with an indicator of our operating performance that more closely achieves the objectives of the real estate industry in presenting FFO.

Neither FFO nor FFO as adjusted should be considered as an alternative to net income (determined in accordance with GAAP) as an indication of our performance. Neither FFO nor FFO as adjusted 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) Real estate depreciation and amortization consists of depreciation and amortization from the Consolidated Statements of Operations of $65,850, $60,366, $133,833 and $116,373, our share of unconsolidated joint venture real estate depreciation and amortization of $2,394, $1,683, $4,192 and $3,380 and depreciation and amortization from discontinued operations of $0, $487, $179 and $1,273, less corporate related depreciation and amortization of $366, $617, $786 and $1,234 for the three months and six months ended June 30, 2005 and 2004, respectively.

BOSTON PROPERTIES, INC.

PORTFOLIO LEASING PERCENTAGES

	% Leased by Location
	June 30, 2005		December 31, 2004
Greater Boston	90.5	%	90.2	%
Greater Washington, D.C.	97.1	%	97.9	%
Midtown Manhattan	97.4	%	96.4	%
Baltimore, MD	N/A		90.9	%
Richmond, VA	N/A		91.3	%
Princeton/East Brunswick, NJ	88.4	%	90.2	%
Greater San Francisco	86.0	%	80.3	%
Total Portfolio	93.2	%	92.1	%
	% Leased by Type
	June 30, 2005		December 31, 2004
Class A Office Portfolio	93.4	%	92.3	%
Office/Technical Portfolio	97.6	%	97.6	%
Industrial Portfolio	0.0	%	0.0	%
Total Portfolio	93.2	%	92.1	%