Boston Properties Earnings 2020-06-30

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

bxp-20200630

Table of Content s

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2020


☐			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.	Delaware	04-2473675
	(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

Boston Properties Limited Partnership	Delaware	04-3372948
	(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

Prudential Center, 800 Boylston Street, Suite 1900, Boston, Massachusetts 02199-8103

(Address of principal executive offices) (Zip Code)

(617) 236-3300

(Registrants’ telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Registrant

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Boston Properties, Inc.

Common Stock, par value $0.01 per share

BXP

New York Stock Exchange

Boston Properties, Inc.

Depositary Shares Each Representing 1/100th of a share

BXP PRB

New York Stock Exchange

of 5.25% Series B Cumulative Redeemable Preferred Stock, par value $0.01 per share

Table of Content s

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.: Yes x No ☐ Boston Properties Limited Partnership: Yes x No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).

Boston Properties, Inc.: Yes x No ☐ Boston Properties Limited Partnership: Yes x No ☐

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 the 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 filer x Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

Boston Properties Limited Partnership:

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer x 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 share	155,633,800
(Registrant)	(Class)	(Outstanding on August 3, 2020)

Table of Content s

EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the period ended June 30, 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. 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 June 30, 2020, BXP owned an approximate 89.9% ownership interest in BPLP. The remaining approximate 10.1% interest was 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-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

Table of Content s

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.

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 $274.8 million, or 1.6% at June 30, 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 9. Stockholders’ Equity / Partners’ Capital;

• Note 10. Earnings Per Share / Common Unit; and

• Note 12. 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 31 and 32 certifications for each of BXP and BPLP.

Table of Content s

BOSTON PROPERTIES, INC. AND BOSTON PROPERTIES LIMITED PARTNERSHIP

FORM 10-Q

for the quarter ended June 30, 2020

TABLE OF CONTENTS



		Page
PART I. FINANCIAL INFORMATION
ITEM 1.	Financial Statements (unaudited)	1

Boston Properties, Inc.


	a) Consolidated Balance Sheets as of June 30 , 2020 and December 31, 2019	1
	b) Consolidated Statements of Operations for the three and six months ended June 30 , 2020 and 2019	3
	c) Consolidated Statements of Comprehensive Income for the three and six months ended June 30 , 2020 and 2019	4
	d) Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30 , 2020 and 2019	5
	e) Consolidated Statements of Cash Flows for the six months ended June 30 , 2020 and 2019	7

Boston Properties Limited Partnership


	a) Consolidated Balance Sheets as of June 30 , 2020 and December 31, 2019	9
	b) Consolidated Statements of Operations for the three and six months ended June 30 , 2020 and 2019	11
	c) Consolidated Statements of Comprehensive Income for the three and six months ended June 30 , 2020 and 2019	12
	d) Consolidated Statements of Capital and Noncontrolling Interests for the three and six months ended June 30 , 2020 and 2019	13
	e) Consolidated Statements of Cash Flows for the six months ended June 30 , 2020 and 2019	15

Boston Properties, Inc. and Boston Properties Limited Partnership
	Notes to the Consolidated Financial Statements	17

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	45
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	98
ITEM 4.	Controls and Procedures	99

PART II. OTHER INFORMATION
ITEM 1.	Legal Proceedings	101
ITEM 1A.	Risk Factors	101
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	104
ITEM 3.	Defaults Upon Senior Securities	105
ITEM 4.	Mine Safety Disclosures	105
ITEM 5.	Other Information	105
ITEM 6.	Exhibits	106

SIGNATURES			107

Table of Content s

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)
	June 30, 2020		December 31, 2019
ASSETS
Real estate, at cost (amounts related to variable interest entities (“VIEs”) of $6,581,689 and $6,497,031 at June 30, 2020 and December 31, 2019, respectively)	$	22,575,903	$	22,502,976
Right of use assets - finance leases (amounts related to VIEs of $21,000 and $21,000 at June 30, 2020 and December 31, 2019, respectively)	237,394		237,394
Right of use assets - operating leases	147,512		148,640
Less: accumulated depreciation (amounts related to VIEs of $(1,112,769) and $(1,058,495) at June 30, 2020 and December 31, 2019, respectively)	(5,292,389)		(5,266,798)
Total real estate	17,668,420		17,622,212
Cash and cash equivalents (amounts related to VIEs of $300,552 and $280,033 at June 30, 2020 and December 31, 2019, respectively)	1,691,047		644,950
Cash held in escrows	300,608		46,936
Investments in securities	32,848		36,747
Tenant and other receivables, net (amounts related to VIEs of $11,989 and $28,918 at June 30, 2020 and December 31, 2019, respectively)	82,545		112,807
Related party note receivable, net	78,520		80,000
Notes receivable, net	25,480		15,920
Accrued rental income, net (amounts related to VIEs of $304,929 and $298,318 at June 30, 2020 and December 31, 2019, respectively)	1,069,004		1,038,788
Deferred charges, net (amounts related to VIEs of $190,708 and $214,769 at June 30, 2020 and December 31, 2019, respectively)	655,813		689,213
Prepaid expenses and other assets (amounts related to VIEs of $18,741 and $20,931 at June 30, 2020 and December 31, 2019, respectively)	56,768		41,685
Investments in unconsolidated joint ventures	1,339,724		955,647
Total assets	$	23,000,777	$	21,284,905
LIABILITIES AND EQUITY
Liabilities:
Mortgage notes payable, net (amounts related to VIEs of $2,913,287 and $2,918,806 at June 30, 2020 and December 31, 2019, respectively)	$	2,915,852	$	2,922,408
Unsecured senior notes, net	9,633,577		8,390,459
Unsecured line of credit	—		—
Unsecured term loan, net	499,150		498,939
Lease liabilities - finance leases (amounts related to VIEs of $20,227 and $20,189 at June 30, 2020 and December 31, 2019, respectively)	230,146		224,042
Lease liabilities - operating leases	200,979		200,180
Accounts payable and accrued expenses (amounts related to VIEs of $25,685 and $45,777 at June 30, 2020 and December 31, 2019, respectively)	328,292		377,553
Dividends and distributions payable	171,077		170,713
Accrued interest payable	95,274		90,016
Other liabilities (amounts related to VIEs of $132,460 and $140,110 at June 30, 2020 and December 31, 2019, respectively)	373,281		387,994
Total liabilities	14,447,628		13,262,304
Commitments and contingencies	—		—
Redeemable deferred stock units— 66,424 and 60,676 units outstanding at redemption value at June 30, 2020 and December 31, 2019, respectively	6,003		8,365

Table of Content s


BOSTON PROPERTIES, INC. CONSOLIDATED BALANCE SHEETS (Unaudited and in thousands, except for share and par value amounts)
	June 30, 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 June 30, 2020 and December 31, 2019	200,000		200,000
Common stock, $0.01 par value, 250,000,000 shares authorized, 155,701,186 and 154,869,198 issued and 155,622,286 and 154,790,298 outstanding at June 30, 2020 and December 31, 2019, respectively	1,556		1,548
Additional paid-in capital	6,340,665		6,294,719
Dividends in excess of earnings	(302,511)		(760,523)
Treasury common stock at cost, 78,900 shares at June 30, 2020 and December 31, 2019	(2,722)		(2,722)
Accumulated other comprehensive loss	(54,921)		(48,335)
Total stockholders’ equity attributable to Boston Properties, Inc.	6,182,067		5,684,687
Noncontrolling interests:
Common units of Boston Properties Limited Partnership	640,491		600,860
Property partnerships	1,724,588		1,728,689
Total equity	8,547,146		8,014,236
Total liabilities and equity	$	23,000,777	$	21,284,905

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

Table of Content s

BOSTON PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited and in thousands, except for per share amounts)


	Three months ended June 30,						Six months ended June 30,
	2020		2019		2020		2019
Revenue
Lease	$	630,119	$	680,189	$	1,340,230	$	1,359,440
Parking and other	13,946		26,319		38,450		51,225
Hotel	99		14,844		6,924		23,782
Development and management services	8,125		9,986		16,004		19,263
Direct reimbursements of payroll and related costs from management services contracts	2,484		2,403		5,721		5,798
Total revenue	654,773		733,741		1,407,329		1,459,508
Expenses
Operating
Rental	239,787		257,971		502,753		515,488
Hotel	1,973		9,080		8,794		16,943
General and administrative	37,743		35,071		74,197		76,833
Payroll and related costs from management services contracts	2,484		2,403		5,721		5,798
Transaction costs	332		417		947		877
Depreciation and amortization	178,188		177,411		349,282		342,005
Total expenses	460,507		482,353		941,694		957,944
Other income (expense)
Income from unconsolidated joint ventures	1,832		47,964		1,463		48,177
Gains on sales of real estate	203,767		1,686		613,932		781
Interest and other income (loss)	1,305		3,615		4,322		7,368
Gains (losses) from investments in securities	4,552		1,165		(893)		4,134
Impairment loss	—		—		—		(24,038)
Interest expense	(107,142)		(102,357)		(208,733)		(203,366)
Net income	298,580		203,461		875,726		334,620
Net (income) loss attributable to noncontrolling interests
Noncontrolling interests in property partnerships	767		(17,482)		(18,719)		(36,312)
Noncontrolling interest—common units of the Operating Partnership	(30,197)		(19,036)		(87,525)		(30,627)
Net income attributable to Boston Properties, Inc.	269,150		166,943		769,482		267,681
Preferred dividends	(2,625)		(2,625)		(5,250)		(5,250)
Net income attributable to Boston Properties, Inc. common shareholders	$	266,525	$	164,318	$

Price	130.12	EPS	4
Shares	155	P/E	32
MCap	20,149	P/FCF	25
Net Debt	-805	EBIT	940
TEV	19,344	TEV/EBIT	21
TTM 2019-09-30, in MM, except price, ratios

10-Q	2020-06-30	Filed 2020-08-10
10-Q	2020-03-31	Filed 2020-05-11
10-K	2019-12-31	Filed 2020-03-02
10-Q	2019-09-30	Filed 2019-11-08
10-Q	2019-06-30	Filed 2019-08-07
10-Q	2019-03-31	Filed 2019-05-08
10-K	2018-12-31	Filed 2019-02-28
10-Q	2018-09-30	Filed 2018-11-07
10-Q	2018-06-30	Filed 2018-08-07
10-Q	2018-03-31	Filed 2018-05-08
10-K	2017-12-31	Filed 2018-02-28
10-Q	2017-09-30	Filed 2017-11-07
10-Q	2017-06-30	Filed 2017-08-08
10-Q	2017-03-31	Filed 2017-05-08
10-K	2016-12-31	Filed 2017-02-28
10-Q	2016-09-30	Filed 2016-11-07
10-Q	2016-06-30	Filed 2016-08-04
10-Q	2016-03-31	Filed 2016-05-06
10-K	2015-12-31	Filed 2016-02-29
10-Q	2015-09-30	Filed 2015-11-06
10-Q	2015-06-30	Filed 2015-08-07
10-Q	2015-03-31	Filed 2015-05-11
10-K	2014-12-31	Filed 2015-03-02
10-Q	2014-09-30	Filed 2014-11-07
10-Q	2014-06-30	Filed 2014-08-08
10-Q	2014-03-31	Filed 2014-05-09
10-K	2013-12-31	Filed 2014-02-28
10-Q	2013-09-30	Filed 2013-11-08
10-Q	2013-06-30	Filed 2013-08-09
10-Q	2013-03-31	Filed 2013-05-10
10-K	2012-12-31	Filed 2013-02-28
10-Q	2012-09-30	Filed 2012-11-08
10-Q	2012-06-30	Filed 2012-08-08
10-Q	2012-03-31	Filed 2012-05-08
10-K	2011-12-31	Filed 2012-02-28
10-Q	2011-09-30	Filed 2011-11-08
10-Q	2011-06-30	Filed 2011-08-08
10-Q	2011-03-31	Filed 2011-05-09
10-K	2010-12-31	Filed 2011-02-25
10-Q	2010-09-30	Filed 2010-11-05
10-Q	2010-06-30	Filed 2010-08-06
10-Q	2010-03-31	Filed 2010-05-06
10-K	2009-12-31	Filed 2010-02-25

8-K	2020-07-28	Earnings, Exhibits
8-K	2020-05-22
8-K	2020-05-20
8-K	2020-05-05
8-K	2020-05-01
8-K	2020-04-28
8-K	2020-03-20
8-K	2020-01-28
8-K	2019-10-29
8-K	2019-09-03
8-K	2019-07-30
8-K	2019-06-21
8-K	2019-05-21
8-K	2019-04-30
8-K	2019-01-29
8-K	2018-11-28
8-K	2018-10-30
8-K	2018-07-31
8-K	2018-05-23
8-K	2018-04-24
8-K	2018-01-30

EX-31.1	bxpbplp-2020630ex311.htm
EX-31.2	bxpbplp2020630ex312.htm
EX-31.3	bxpbplp-2020630ex313.htm
EX-31.4	bxpbplp-2020630ex314.htm
EX-32.1	bxpbplp-2020630ex321.htm
EX-32.2	bxpbplp-2020630ex322.htm
EX-32.3	bxpbplp-2020630ex323.htm
EX-32.4	bxpbplp-2020630ex324.htm

BXP 10Q Quarterly Report

Boston Properties Earnings 2020-06-30