Company Quick10K Filing
Boston Properties
Price130.12 EPS4
Shares155 P/E32
MCap20,149 P/FCF25
Net Debt-805 EBIT940
TEV19,344 TEV/EBIT21
TTM 2019-09-30, in MM, except price, ratios
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 2020-05-22
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

BXP 10Q Quarterly Report

Part I. Financial Information
Item 1-Financial Statements.
Item 2-Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3-Quantitative and Qualitative Disclosures About Market Risk.
Item 4-Controls and Procedures.
Part II. Other Information
Item 1-Legal Proceedings.
Item 1A-Risk Factors.
Item 2-Unregistered Sales of Equity Securities and Use of Proceeds
Item 3-Defaults Upon Senior Securities.
Item 4-Mine Safety Disclosures.
Item 5-Other Information.
Item 6-Exhibits.
EX-31.1 bxpbplp93018-ex311.htm
EX-31.2 bxpbplp93018-ex312.htm
EX-31.3 bxpbplp93018-ex313.htm
EX-31.4 bxpbplp93018-ex314.htm
EX-32.1 bxpbplp93018-ex321.htm
EX-32.2 bxpbplp93018-ex322.htm
EX-32.3 bxpbplp93018-ex323.htm
EX-32.4 bxpbplp93018-ex324.htm

Boston Properties Earnings 2018-09-30

Balance SheetIncome StatementCash Flow
25201510502012201420172020
Assets, Equity
0.80.60.50.30.20.02012201420172020
Rev, G Profit, Net Income
0.90.50.1-0.4-0.8-1.22012201420172020
Ops, Inv, Fin

10-Q 1 bxpandbplp10-q20180930.htm 10-Q Document

 
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, 2018
¨
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)
 
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, smaller reporting company or an emerging growth company. See definition 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
154,440,500
(Registrant)
(Class)
(Outstanding on November 2, 2018)
 



EXPLANATORY NOTE
This report combines the quarterly reports on Form 10-Q for the period ended September 30, 2018 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 September 30, 2018, BXP owned an approximate 89.7% ownership interest in BPLP. The remaining approximate 10.3% interest is 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



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 $308.7 million, or 1.9% at September 30, 2018 and a corresponding difference in depreciation expense 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 7. Noncontrolling Interests;
Note 8. Stockholders’ Equity / Partners’ Capital;
Note 9. Earnings Per Share / Common Unit; and
Note 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 31 and 32 certifications for each of BXP and BPLP.





BOSTON PROPERTIES, INC. AND BOSTON PROPERTIES LIMITED PARTNERSHIP
FORM 10-Q
for the quarter ended September 30, 2018
TABLE OF CONTENTS 
 
 
 
 
 
Page
 
 
 
ITEM 1.
 
 
 
Boston Properties, Inc.
 
 
 
 
 
 
 
 
 
Boston Properties Limited Partnership
 
 
 
 
 
 
 
 
 
Boston Properties, Inc. and Boston Properties Limited Partnership
 
 
 


 
ITEM 2.
ITEM 3.
ITEM 4.
 
 
 
ITEM 1.
ITEM 1A.
ITEM 2.
ITEM 3.
ITEM 4.
ITEM 5.
ITEM 6.
 
 



PART I. FINANCIAL INFORMATION
ITEM 1—Financial Statements.


BOSTON PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
 
September 30, 2018
 
December 31, 2017
 
 
(in thousands, except for share and par value amounts)
ASSETS
 
 
 
 
Real estate, at cost (amounts related to variable interest entities (“VIEs”) of $7,426,998 and $7,172,718 at September 30, 2018 and December 31, 2017, respectively)
 
$
21,687,639

 
$
21,096,642

Less: accumulated depreciation (amounts related to VIEs of $(942,678) and $(854,172) at September 30, 2018 and December 31, 2017, respectively)
 
(4,838,496
)
 
(4,589,634
)
Total real estate
 
16,849,143

 
16,507,008

Cash and cash equivalents (amounts related to VIEs of $284,053 and $304,955 at September 30, 2018 and December 31, 2017, respectively)
 
322,502

 
434,767

Cash held in escrows (amounts related to VIEs of $6,118 and $6,135 at September 30, 2018 and December 31, 2017, respectively)
 
101,282

 
70,602

Investments in securities
 
31,376

 
29,161

Tenant and other receivables (amounts related to VIEs of $42,193 and $27,057 at September 30, 2018 and December 31, 2017, respectively)
 
98,502

 
92,186

Related party note receivable
 
80,000

 

Accrued rental income (amounts related to VIEs of $269,794 and $242,589 at September 30, 2018 and December 31, 2017, respectively)
 
926,274

 
861,575

Deferred charges, net (amounts related to VIEs of $261,951 and $281,678 at September 30, 2018 and December 31, 2017, respectively)
 
669,545

 
679,038

Prepaid expenses and other assets (amounts related to VIEs of $62,325 and $33,666 at September 30, 2018 and December 31, 2017, respectively)
 
133,443

 
77,971

Investments in unconsolidated joint ventures
 
925,431

 
619,925

Total assets
 
$
20,137,498

 
$
19,372,233

LIABILITIES AND EQUITY
 
 
 
 
Liabilities:
 
 
 
 
Mortgage notes payable, net (amounts related to VIEs of $2,931,852 and $2,939,183 at September 30, 2018 and December 31, 2017, respectively)
 
$
2,967,548

 
$
2,979,281

Unsecured senior notes, net
 
7,253,786

 
7,247,330

Unsecured line of credit
 
170,000

 
45,000

Unsecured term loan, net
 
498,368

 

Accounts payable and accrued expenses (amounts related to VIEs of $78,893 and $106,683 at September 30, 2018 and December 31, 2017, respectively)
 
315,462

 
331,500

Dividends and distributions payable
 
165,118

 
139,040

Accrued interest payable (amounts related to VIEs of $6,659 and $6,907 at September 30, 2018 and December 31, 2017, respectively)
 
92,809

 
83,646

Other liabilities (amounts related to VIEs of $200,306 and $164,806 at September 30, 2018 and December 31, 2017, respectively)
 
468,433

 
443,980

Total liabilities
 
11,931,524

 
11,269,777

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, 2018 and December 31, 2017
 
200,000

 
200,000

Common stock, $0.01 par value, 250,000,000 shares authorized, 154,519,139 and 154,404,186 issued and 154,440,239 and 154,325,286 outstanding at September 30, 2018 and December 31, 2017, respectively
 
1,544

 
1,543

Additional paid-in capital
 
6,400,193

 
6,377,908

Dividends in excess of earnings
 
(677,312
)
 
(712,343
)
Treasury common stock at cost, 78,900 shares at September 30, 2018 and December 31, 2017
 
(2,722
)
 
(2,722
)
Accumulated other comprehensive loss
 
(45,137
)
 
(50,429
)
Total stockholders’ equity attributable to Boston Properties, Inc.
 
5,876,566

 
5,813,957

Noncontrolling interests:
 
 
 
 
Common units of Boston Properties Limited Partnership
 
618,380

 
604,739

Property partnerships
 
1,711,028

 
1,683,760

Total equity
 
8,205,974

 
8,102,456

Total liabilities and equity
 
$
20,137,498

 
$
19,372,233

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

1


BOSTON PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
Three months ended September 30,
 
Nine months ended September 30,
 
2018
 
2017
 
2018
 
2017
 
(in thousands, except for per share amounts)
Revenue
 
 
 
 
 
 
 
Rental
 
 
 
 
 
 
 
Base rent
$
525,875

 
$
513,269

 
$
1,561,821

 
$
1,537,373

Recoveries from tenants
102,424

 
94,476

 
292,801

 
272,803

Parking and other
26,552

 
26,092

 
79,590

 
78,164

Total rental revenue
654,851

 
633,837

 
1,934,212

 
1,888,340

Hotel revenue
13,664

 
13,064

 
37,373

 
33,859

Development and management services
15,253

 
10,811

 
32,963

 
24,648

Direct reimbursements of payroll and related costs from management services contracts
2,516

 

 
7,371

 

Total revenue
686,284

 
657,712

 
2,011,919

 
1,946,847

Expenses
 
 
 
 
 
 
 
Operating
 
 
 
 
 
 
 
Rental
247,989

 
237,341

 
726,108

 
696,082

Hotel
8,828

 
8,447

 
25,642

 
23,942

General and administrative
29,677

 
25,792

 
94,039

 
84,319

Payroll and related costs from management services contracts
2,516

 

 
7,371

 

Transaction costs
914

 
239

 
1,409

 
572

Depreciation and amortization
157,996

 
152,164

 
480,210

 
463,288

Total expenses
447,920

 
423,983

 
1,334,779

 
1,268,203

Operating income
238,364

 
233,729

 
677,140

 
678,644

Other income (expense)
 
 
 
 
 
 
 
Income (loss) from unconsolidated joint ventures
(4,313
)
 
843

 
(3,083
)
 
7,035

Gains on sales of real estate
7,863

 
2,891

 
122,552

 
6,791

Interest and other income
2,822

 
1,329

 
7,049

 
3,447

Gains from investments in securities
1,075

 
944

 
1,454

 
2,716

Gains from early extinguishments of debt

 

 

 
14,354

Interest expense
(95,366
)
 
(92,032
)
 
(277,790
)
 
(282,709
)
Net income
150,445

 
147,704

 
527,322

 
430,278

Net income attributable to noncontrolling interests
 
 
 
 
 
 
 
Noncontrolling interests in property partnerships
(14,850
)
 
(14,340
)
 
(46,484
)
 
(33,967
)
Noncontrolling interest—common units of Boston Properties Limited Partnership
(13,852
)
 
(13,402
)
 
(49,128
)
 
(40,350
)
Net income attributable to Boston Properties, Inc.
121,743

 
119,962

 
431,710

 
355,961

Preferred dividends
(2,625
)
 
(2,625
)
 
(7,875
)
 
(7,875
)
Net income attributable to Boston Properties, Inc. common shareholders
$
119,118

 
$
117,337

 
$
423,835

 
$
348,086

Basic earnings per common share attributable to Boston Properties, Inc. common shareholders:
 
 
 
 
 
 
 
Net income
$
0.77

 
$
0.76

 
$
2.74

 
$
2.26

Weighted average number of common shares outstanding
154,440

 
154,355

 
154,414

 
154,132

Diluted earnings per common share attributable to Boston Properties, Inc. common shareholders:
 
 
 
 
 
 
 
Net income
$
0.77

 
$
0.76

 
$
2.74

 
$
2.26

Weighted average number of common and common equivalent shares outstanding
154,678

 
154,483

 
154,652

 
154,344


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

2


BOSTON PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 
 
Three months ended September 30,
 
Nine months ended September 30,
 
2018
 
2017
 
2018
 
2017
 
(in thousands)
Net income
$
150,445

 
$
147,704

 
$
527,322

 
$
430,278

Other comprehensive income (loss):
 
 
 
 
 
 
 
Effective portion of interest rate contracts
1,325

 

 
1,325

 
(6,133
)
Amortization of interest rate contracts (1)
1,666

 
1,665

 
4,998

 
4,368

Other comprehensive income (loss)
2,991

 
1,665

 
6,323

 
(1,765
)
Comprehensive income
153,436

 
149,369

 
533,645

 
428,513

Net income attributable to noncontrolling interests
(28,702
)
 
(27,742
)
 
(95,612
)
 
(74,317
)
Other comprehensive (income) loss attributable to noncontrolling interests
(433
)
 
(300
)
 
(1,031
)
 
2,220

Comprehensive income attributable to Boston Properties, Inc.
$
124,301

 
$
121,327

 
$
437,002

 
$
356,416

_______________
(1) Amounts reclassified from comprehensive income primarily to interest expense within the Boston Properties, Inc.’s Consolidated Statements of Operations.































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

3


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, 2017
154,325

 
$
1,543

 
$
200,000

 
$
6,377,908

 
$
(712,343
)
 
$
(2,722
)
 
$
(50,429
)
 
$
2,288,499

 
$
8,102,456

Cumulative effect of a change in accounting principle

 

 

 

 
4,933

 

 

 
563

 
5,496

Redemption of operating partnership units to common stock
60

 
1

 

 
2,111

 

 

 

 
(2,112
)
 

Allocated net income for the year

 

 

 

 
431,710

 

 

 
95,612

 
527,322

Dividends/distributions declared

 

 

 

 
(401,612
)
 

 

 
(45,730
)
 
(447,342
)
Shares issued pursuant to stock purchase plan
6

 

 

 
797

 

 

 

 

 
797

Net activity from stock option and incentive plan
49

 

 

 
1,354

 

 

 

 
29,216

 
30,570

Contributions from noncontrolling interests in property partnerships

 

 

 

 

 

 

 
37,148

 
37,148

Distributions to noncontrolling interests in property partnerships

 

 

 

 

 

 

 
(56,796
)
 
(56,796
)
Effective portion of interest rate contracts

 

 

 

 

 

 
1,190

 
135

 
1,325

Amortization of interest rate contracts

 

 

 

 

 

 
4,102

 
896

 
4,998

Reallocation of noncontrolling interest

 

 

 
18,023

 

 

 

 
(18,023
)
 

Equity, September 30, 2018
154,440

 
$
1,544

 
$
200,000

 
$
6,400,193

 
$
(677,312
)
 
$
(2,722
)
 
$
(45,137
)
 
$
2,329,408

 
$
8,205,974

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity, December 31, 2016
153,790

 
$
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 stock
492

 
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 plan
6

 

 

 
795

 

 

 

 

 
795

Net activity from stock option and incentive plan
34

 

 

 
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, 2017
154,322

 
$
1,543

 
$
200,000

 
$
6,370,932

 
$
(692,739
)
 
$
(2,722
)
 
$
(51,796
)
 
$
2,274,477

 
$
8,099,695







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

4


BOSTON PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
                         
 
For the nine months ended September 30,
 
2018
 
2017
 
(in thousands)
Cash flows from operating activities:
 
 
 
Net income
$
527,322

 
$
430,278

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
480,210

 
463,288

Non-cash compensation expense
31,700

 
27,260

Loss (income) from unconsolidated joint ventures
3,083

 
(7,035
)
Distributions of net cash flow from operations of unconsolidated joint ventures
3,988

 
8,563

Gains from investments in securities
(1,454
)
 
(2,716
)
Gains from early extinguishments of debt

 
(14,354
)
Non-cash portion of interest expense
15,922

 
(6,667
)
Gains on sales of real estate
(122,552
)
 
(6,791
)
Change in assets and liabilities:
 
 
 
Tenant and other receivables, net
1,578

 
12,528

Accrued rental income, net
(41,519
)
 
(36,012
)
Prepaid expenses and other assets
(51,938
)
 
(13,633
)
Accounts payable and accrued expenses
6,354

 
7,861

Accrued interest payable
8,860

 
(144,833
)
Other liabilities
(1,561
)
 
(65,073
)
Tenant leasing costs
(89,366
)
 
(67,699
)
Total adjustments
243,305

 
154,687

Net cash provided by operating activities
770,627

 
584,965

Cash flows from investing activities:
 
 
 
Acquisition of real estate

 
(15,953
)
Construction in progress
(530,389
)
 
(452,283
)
Building and other capital improvements
(140,969
)
 
(162,395
)
Tenant improvements
(129,450
)
 
(152,749
)
Proceeds from sales of real estate
175,577

 
29,810

Capital contributions to unconsolidated joint ventures
(314,075
)
 
(89,874
)
Capital distributions from unconsolidated joint ventures

 
251,000

Issuance of related party note receivable
(80,000
)
 

Investments in securities, net
(761
)
 
(1,451
)
Net cash used in investing activities
(1,020,067
)
 
(593,895
)
 
 
 
 
 
 
 
 
 
 
 
 

5


BOSTON PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
For the nine months ended September 30,
 
2018
 
2017
 
(in thousands)
Cash flows from financing activities:
 
 
 
Proceeds from mortgage notes payable

 
2,300,000

Repayments of mortgage notes payable
(14,677
)
 
(1,313,890
)
Borrowings on unsecured line of credit
580,000

 
470,000

Repayments of unsecured line of credit
(455,000
)
 
(470,000
)
Proceeds from unsecured term loan
500,000

 

Repayments of mezzanine notes payable

 
(306,000
)
Repayments of outside members’ notes payable

 
(70,424
)
Payments on capital lease obligations

 
(463
)
Payments on real estate financing transactions
(960
)
 
(1,306
)
Deposit on mortgage note payable interest rate lock

 
(23,200
)
Return of deposit on mortgage note payable interest rate lock

 
23,200

Deferred financing costs
(263
)
 
(44,083
)
Debt prepayment and extinguishment costs

 
(90
)
Net proceeds from equity transactions
(333
)
 
241

Dividends and distributions
(421,264
)
 
(394,900
)
Contributions from noncontrolling interests in property partnerships
37,148

 
38,196

Distributions to noncontrolling interests in property partnerships
(56,796
)
 
(41,605
)
Net cash provided by financing activities
167,855

 
165,676

Net increase (decrease) in cash and cash equivalents and cash held in escrows
(81,585
)
 
156,746

Cash and cash equivalents and cash held in escrows, beginning of period
505,369

 
420,088

Cash and cash equivalents and cash held in escrows, end of period
$
423,784

 
$
576,834

 
 
 
 
Reconciliation of cash and cash equivalents and cash held in escrows:
 
 
 
Cash and cash equivalents, beginning of period
$
434,767

 
$
356,914

Cash held in escrows, beginning of period
70,602

 
63,174

Cash and cash equivalents and cash held in escrows, beginning of period
$
505,369

 
$
420,088

 
 
 
 
Cash and cash equivalents, end of period
$
322,502

 
$
493,055

Cash held in escrows, end of period
101,282

 
83,779

Cash and cash equivalents and cash held in escrows, end of period
$
423,784

 
$
576,834

 
 
 
 
Supplemental disclosures:
 
 
 
Cash paid for interest
$
303,203

 
$
477,189

Interest capitalized
$
51,594

 
$
43,286

Non-cash investing and financing activities:
 
 
 
Write-off of fully depreciated real estate
$
(100,118
)
 
$
(103,972
)
Additions to real estate included in accounts payable and accrued expenses
$
(11,746
)
 
$
36,609

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
$
165,118

 
$
130,434

Conversions of noncontrolling interests to stockholders’ equity
$
2,112

 
$
16,812

Issuance of restricted securities to employees
$
37,342

 
$
35,711

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

6



BOSTON PROPERTIES LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
 
September 30, 2018
 
December 31, 2017
 
 
(in thousands, except for unit amounts)
ASSETS
 
 
 
 
Real estate, at cost (amounts related to variable interest entities (“VIEs”) of $7,426,998 and $7,172,718 at September 30, 2018 and December 31, 2017, respectively)
 
$
21,281,726

 
$
20,685,164

Less: accumulated depreciation (amounts related to VIEs of $(942,678) and $(854,172) at September 30, 2018 and December 31, 2017, respectively)
 
(4,741,280
)
 
(4,496,959
)
Total real estate
 
16,540,446

 
16,188,205

Cash and cash equivalents (amounts related to VIEs of $284,053 and $304,955 at September 30, 2018 and December 31, 2017, respectively)
 
322,502

 
434,767

Cash held in escrows (amounts related to VIEs of $6,118 and $6,135 at September 30, 2018 and December 31, 2017, respectively)
 
101,282

 
70,602

Investments in securities
 
31,376

 
29,161

Tenant and other receivables (amounts related to VIEs of $42,193 and $27,057 at September 30, 2018 and December 31, 2017, respectively)
 
98,502

 
92,186

Related party note receivable
 
80,000

 

Accrued rental income (amounts related to VIEs of $269,794 and $242,589 at September 30, 2018 and December 31, 2017, respectively)
 
926,274

 
861,575

Deferred charges, net (amounts related to VIEs of $261,951 and $281,678 at September 30, 2018 and December 31, 2017, respectively)
 
669,545

 
679,038

Prepaid expenses and other assets (amounts related to VIEs of $62,325 and $33,666 at September 30, 2018 and December 31, 2017, respectively)
 
133,443

 
77,971

Investments in unconsolidated joint ventures
 
925,431

 
619,925

Total assets
 
$
19,828,801

 
$
19,053,430

LIABILITIES AND CAPITAL
 
 
 
 
Liabilities:
 
 
 
 
Mortgage notes payable, net (amounts related to VIEs of $2,931,852 and $2,939,183 at September 30, 2018 and December 31, 2017, respectively)
 
$
2,967,548

 
$
2,979,281

Unsecured senior notes, net
 
7,253,786

 
7,247,330

Unsecured line of credit
 
170,000

 
45,000

Unsecured term loan, net
 
498,368

 

Accounts payable and accrued expenses (amounts related to VIEs of $78,893 and $106,683 at September 30, 2018 and December 31, 2017, respectively)
 
315,462

 
331,500

Distributions payable
 
165,118

 
139,040

Accrued interest payable (amounts related to VIEs of $6,659 and $6,907 at September 30, 2018 and December 31, 2017, respectively)
 
92,809

 
83,646

Other liabilities (amounts related to VIEs of $200,306 and $164,806 at September 30, 2018 and December 31, 2017, respectively)
 
468,433

 
443,980

Total liabilities
 
11,931,524

 
11,269,777

Commitments and contingencies
 

 

Noncontrolling interests:
 
 
 
 
Redeemable partnership units—16,804,929 and 16,810,378 common units and 992,321 and 818,343 long term incentive units outstanding at redemption value at September 30, 2018 and December 31, 2017, respectively
 
2,190,664

 
2,292,263

Capital:
 
 
 
 
5.25% Series B cumulative redeemable preferred units, liquidation preference $2,500 per unit, 80,000 units issued and outstanding at September 30, 2018 and December 31, 2017
 
193,623

 
193,623

Boston Properties Limited Partnership partners’ capital—1,722,375 and 1,719,540 general partner units and 152,717,864 and 152,605,746 limited partner units outstanding at September 30, 2018 and December 31, 2017, respectively
 
3,801,962

 
3,614,007

Noncontrolling interests in property partnerships
 
1,711,028

 
1,683,760

Total capital
 
5,706,613

 
5,491,390

Total liabilities and capital
 
$
19,828,801

 
$
19,053,430


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

7


BOSTON PROPERTIES LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) 
 
Three months ended September 30,
 
Nine months ended September 30,
 
2018
 
2017
 
2018
 
2017
 
(in thousands, except for per unit amounts)
Revenue
 
 
 
 
 
 
 
Rental
 
 
 
 
 
 
 
Base rent
$
525,875

 
$
513,269

 
$
1,561,821

 
$
1,537,373

Recoveries from tenants
102,424

 
94,476

 
292,801

 
272,803

Parking and other
26,552

 
26,092

 
79,590

 
78,164

Total rental revenue
654,851

 
633,837

 
1,934,212

 
1,888,340

Hotel revenue
13,664

 
13,064

 
37,373

 
33,859

Development and management services
15,253

 
10,811

 
32,963

 
24,648

Direct reimbursements of payroll and related costs from management services contracts
2,516

 

 
7,371

 

Total revenue
686,284

 
657,712

 
2,011,919

 
1,946,847

Expenses
 
 
 
 
 
 
 
Operating
 
 
 
 
 
 
 
Rental
247,989

 
237,341

 
726,108

 
696,082

Hotel
8,828

 
8,447

 
25,642

 
23,942

General and administrative
29,677

 
25,792

 
94,039

 
84,319

Payroll and related costs from management services contracts
2,516

 

 
7,371

 

Transaction costs
914

 
239

 
1,409

 
572

Depreciation and amortization
156,056

 
150,210

 
474,383

 
457,102

Total expenses
445,980

 
422,029

 
1,328,952

 
1,262,017

Operating income
240,304

 
235,683

 
682,967

 
684,830

Other income (expense)
 
 
 
 
 
 
 
Income (loss) from unconsolidated joint ventures
(4,313
)
 
843

 
(3,083
)
 
7,035

Gains on sales of real estate
9,154

 
2,891

 
126,831

 
7,368

Interest and other income
2,822

 
1,329

 
7,049

 
3,447

Gains from investments in securities
1,075

 
944

 
1,454

 
2,716

Gains from early extinguishments of debt

 

 

 
14,354

Interest expense
(95,366
)
 
(92,032
)
 
(277,790
)
 
(282,709
)
Net income
153,676

 
149,658

 
537,428

 
437,041

Net income attributable to noncontrolling interests
 
 
 
 
 
 
 
Noncontrolling interests in property partnerships
(14,850
)
 
(14,340
)
 
(46,484
)
 
(33,967
)
Net income attributable to Boston Properties Limited Partnership
138,826

 
135,318

 
490,944

 
403,074

Preferred distributions
(2,625
)
 
(2,625
)
 
(7,875
)
 
(7,875
)
Net income attributable to Boston Properties Limited Partnership common unitholders
$
136,201

 
$
132,693

 
$
483,069

 
$
395,199

Basic earnings per common unit attributable to Boston Properties Limited Partnership common unitholders:
 
 
 
 
 
 
 
Net income
$
0.79

 
$
0.77

 
$
2.81

 
$
2.30

Weighted average number of common units outstanding
171,928

 
171,691

 
171,904

 
171,649

Diluted earnings per common unit attributable to Boston Properties Limited Partnership common unitholders:
 
 
 
 
 
 
 
Net income
$
0.79

 
$
0.77

 
$
2.81

 
$
2.30

Weighted average number of common and common equivalent units outstanding
172,166

 
171,819

 
172,142

 
171,861


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

8


BOSTON PROPERTIES LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 
 
Three months ended September 30,
 
Nine months ended September 30,
 
2018
 
2017
 
2018
 
2017
 
(in thousands)
Net income
$
153,676

 
$
149,658

 
$
537,428

 
$
437,041

Other comprehensive income (loss):
 
 
 
 
 
 
 
Effective portion of interest rate contracts
1,325

 

 
1,325

 
(6,133
)
Amortization of interest rate contracts (1)
1,666

 
1,665

 
4,998

 
4,368

Other comprehensive income (loss)
2,991

 
1,665

 
6,323

 
(1,765
)
Comprehensive income
156,667

 
151,323

 
543,751

 
435,276

Comprehensive income attributable to noncontrolling interests
(14,994
)
 
(14,484
)
 
(46,916
)
 
(31,695
)
Comprehensive income attributable to Boston Properties Limited Partnership
$
141,673

 
$
136,839

 
$
496,835

 
$
403,581

_______________
(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.

9


BOSTON PROPERTIES LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017
(Unaudited and in thousands)
 
 
Total Partners’ Capital
Balance at December 31, 2017
$
3,807,630

Cumulative effect of a change in accounting principle
4,933

Contributions
2,039

Net income allocable to general and limited partner units
441,816

Distributions
(401,612
)
Other comprehensive income
5,292

Unearned compensation
112

Conversion of redeemable partnership units
2,112

Adjustment to reflect redeemable partnership units at redemption value
133,263

Balance at September 30, 2018
$
3,995,585

 
 
Balance at December 31, 2016
$
3,811,717

Contributions
4,937

Net income allocable to general and limited partner units
362,724

Distributions
(354,734
)
Other comprehensive income
455

Cumulative effect of a change in accounting principle
(272
)
Unearned compensation
(1,222
)
Conversion of redeemable partnership units
16,812

Adjustment to reflect redeemable partnership units at redemption value
103,556

Balance at September 30, 2017
$
3,943,973
























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


10


BOSTON PROPERTIES LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) 
 
For the nine months ended September 30,
 
2018
 
2017
 
(in thousands)
Cash flows from operating activities:
 
 
 
Net income
$
537,428

 
$
437,041

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
474,383

 
457,102

Non-cash compensation expense
31,700

 
27,260

Loss (income) from unconsolidated joint ventures
3,083

 
(7,035
)
Distributions of net cash flow from operations of unconsolidated joint ventures
3,988

 
8,563

Gains from investments in securities
(1,454
)
 
(2,716
)
Gains from early extinguishments of debt

 
(14,354
)
Non-cash portion of interest expense
15,922

 
(6,667
)
Gains on sales of real estate
(126,831
)
 
(7,368
)
Change in assets and liabilities:
 
 
 
Tenant and other receivables, net
1,578

 
12,528

Accrued rental income, net
(41,519
)
 
(36,012
)
Prepaid expenses and other assets
(51,938
)
 
(13,633
)
Accounts payable and accrued expenses
6,354

 
7,861

Accrued interest payable
8,860

 
(144,833
)
Other liabilities
(1,561
)
 
(65,073
)
Tenant leasing costs
(89,366
)
 
(67,699
)
Total adjustments
233,199

 
147,924

Net cash provided by operating activities
770,627

 
584,965

Cash flows from investing activities:
 
 
 
Acquisition of real estate

 
(15,953
)
Construction in progress
(530,389
)
 
(452,283
)
Building and other capital improvements
(140,969
)
 
(162,395
)
Tenant improvements
(129,450
)
 
(152,749
)
Proceeds from sales of real estate
175,577

 
29,810

Capital contributions to unconsolidated joint ventures
(314,075
)
 
(89,874
)
Capital distributions from unconsolidated joint ventures

 
251,000

Issuance of related party note receivable
(80,000
)
 

Investments in securities, net
(761