Business Wire | Oct 26, 2021 05:15PM EDT

Boston Properties Announces Third Quarter 2021 Results; Reports EPS of $0.69 and FFO Per Share of $1.73

Oct. 26, 2021

BOSTON--(BUSINESS WIRE)--Oct. 26, 2021--Boston Properties, Inc. (NYSE: BXP), the largest publicly traded developer, owner, and manager of Class A office properties in the United States, reported results today for the third quarter ended September 30, 2021.

Financial highlights for the third quarter include:

* Revenue grew more than 5% to $730.1 million for the quarter ended September 30, 2021 as compared to $693.3 million for the quarter ended September 30, 2020. * Net income attributable to common shareholders of $108.3 million, or $0.69 per diluted share (EPS), compared to $89.9 million, or $0.58 per diluted share, for the quarter ended September 30, 2020. The increase in EPS of $0.11 per diluted share primarily related to increased lease revenue and revenue from parking and hotel operations. EPS of $0.69 per diluted share was $0.60 below the mid-point of the Company's third quarter guidance provided on July 27, 2021, primarily due to the deferral of the sale of the Spring Street Portfolio to the fourth quarter of 2021. Excluding the projected $0.65 gain on sales of real estate, EPS would have been $0.05 greater than the mid-point of the Company's provided guidance. * Funds from Operations (FFO) of $270.5 million, or $1.73 per diluted share, compared to FFO of $244.0 million, or $1.57 per diluted share, for the quarter ended September 30, 2020. FFO of $1.73 per diluted share was $0.04 greater than the mid-point of the Company's third quarter guidance provided on July 27, 2021, primarily due to better-than- projected results from the Company's in-service portfolio and improved parking revenue.

The Company provided guidance for full year 2021 with projected EPS of $3.11 - $3.13 and projected FFO of $6.50 - $6.52 per diluted share. Full year 2021 projected EPS and FFO includes an expected charge of $0.25 in the fourth quarter of 2021 related to the early redemption of $1.0 billion of 3.85% unsecured senior notes on October 15, 2021.

The Company provided guidance for full year 2022 with projected EPS of $2.97 - $3.17 and projected FFO of $7.25 - $7.45 per diluted share. See "EPS and FFO per Share Guidance" below.

Third quarter and recent business highlights include:

* Signed approximately 1.4 million square feet of leases in the third quarter with a weighted-average lease term of 9.3 years. Notable leases signed during the third quarter include: a 524,000 square-foot, ten-year lease extension with Wellington Management at Atlantic Wharf, in Boston, Massachusetts, a 79,000 square-foot new lease with a life sciences company at Bay Colony in Waltham, Massachusetts, and a 39,000 square-foot lease expansion with a financial services company at 399 Park Avenue in New York, New York, which increased its total leased square footage to approximately 373,000 square feet.

* Acquired Safeco Plaza, an approximately 800,000 square-foot Class A office building in Seattle, Washington. This acquisition marks BXP's initial entry into the Seattle market, one of the most vibrant markets in the U.S. for companies in the technology, life sciences, manufacturing and financial services sectors. Safeco Plaza is approximately 90% leased. The Company closed the acquisition on September 1, 2021, with two joint venture partners for a purchase price of approximately $465 million. Each partner has an approximately one-third ownership interest. The joint venture also obtained a $250 million mortgage loan secured by the property that bears interest at 30-day LIBOR (but not less than 0.15%) plus 2.20% per annum and matures September 1, 2026. * Acquired Shady Grove Bio+Tech Campus, consisting of seven buildings totaling approximately 435,000 square feet in the Shady Grove area of Rockville, Maryland, a region that is home to more than 400 companies in the biotechnology and life sciences sector. The Company plans to convert the office buildings on the campus to lab to meet current and growing demand in the region from biotechnology companies for new, Class A lab space. The Company closed the acquisition on August 2, 2021 for a purchase price of approximately $116.5 million. * Completed and delivered 440,000 square feet of space leased to an affiliate of Verizon Communications at 100 Causeway Street in Boston, Massachusetts on September 28, 2021. 100 Causeway is an approximately 632,000 square foot office building that the Company has a 50% ownership interest in. * Completed and delivered approximately 285,000 square feet at Reston Next, a Class A office project with approximately 1.1 million net rentable square feet located in Reston, Virginia on October 19, 2021. This project is 85% pre-leased. * Completed the sale of 181,191 and 201 Spring Street, in Lexington, Massachusetts on October 25, 2021 for an aggregate gross sale price of $191.5 million. 181,191 and 201 Spring Street is a three-building, 333,000 square-foot complex that is 100% leased. * Completed a green bond offering of $850.0 million of 2.450% unsecured senior notes maturing in 2033. This marks the Company's fourth green bond offering and represents the lowest coupon ever issued by the Company in the unsecured bond market. * Redeemed $1.0 billion of 3.85% unsecured senior notes that were scheduled to mature in February 2023. This redemption occurred on October 15, 2021, and the Company expects to recognize a loss from early extinguishment of debt of approximately $0.25 per diluted share in the fourth quarter of 2021 related primarily to the payment of the redemption premium. * Earned a top ESG rating in the 2021 Global Real Estate Sustainability Benchmark (GRESB(r)) assessment. The Company earned its tenth consecutive "Green Star" recognition and the highest GRESB 5-star Rating, as well as an "A" disclosure score. The Company also achieved the highest scores in several categories, including Data Monitoring & Review, Targets, Policies, Reporting, and Leadership.

The reported results are unaudited and there can be no assurance that these reported results will not vary from the final information for the quarter ended September 30, 2021. In the opinion of management, the Company has made all adjustments considered necessary for a fair statement of these reported results.

EPS and FFO per Share Guidance:The Company's guidance for the full year 2021 and full year 2022 for EPS (diluted) and FFO per share (diluted) is set forth and reconciled below. Except as described below, the estimates reflect management's view of current and future market conditions, including assumptions with respect to rental rates, occupancy levels, the timing of the lease-up of available space and the earnings impact of the events referenced in this release and those referenced during the related conference call. Except as otherwise publicly disclosed, the estimates do not include any material (1) possible future gains or losses or the impact on operating results from other possible future property acquisitions or dispositions, (2) possible gains or losses from capital markets activity (including, without limitation, due to the early extinguishment of and/or refinancing of debt or resulting from hedging activity and derivatives), (3) possible future write-offs or reinstatements of accounts receivable and accrued rent balances or (4) possible future impairment charges. EPS estimates may be subject to fluctuations as a result of several factors, including changes in the recognition of depreciation and amortization expense, impairment losses on depreciable real estate 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, impairment losses on depreciable real estate 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 below.

Full Year 2021 Full Year 2022

Low High Low High

Projected EPS (diluted) $ 3.11 $ 3.13 $ 2.97 $ 3.17

Add:

Projected Company share of real estate depreciation and 4.14 4.14 4.28 4.28 amortization

Projected Company share of (gains)/losses on sales of real (0.75) (0.75) - - estate

Projected FFO per share (diluted) $ 6.50 $ 6.52 $ 7.25 $ 7.45

Boston Properties will host a conference call on Wednesday, October 27, 2021 at 10:00 AM Eastern Time, open to the general public, to discuss the third quarter 2021 results, provide a business update and discuss other business matters that may be of interest to investors. The number to call for this interactive teleconference is (877) 796-3880 (Domestic) or (443) 961-9013 (International) and entering the passcode 1484189. A replay of the conference call will be available by dialing (855) 859-2056 (Domestic) or (404) 537-3406 (International) and entering the passcode 1484189. There will also be a live audio webcast of the call, which may be accessed in the Investor Relations section of the Company's website at investors.bxp.com. Shortly after the call, a replay of the webcast will be available in the Investor Relations section of the Company's website and archived for up to twelve months following the call.

Additionally, a copy of Boston Properties' third quarter 2021 "Supplemental Operating and Financial Data" and this press release are available in the Investor Relations section of the Company's website at investors.bxp.com.

Boston Properties (NYSE: BXP) is the largest publicly traded developer, owner, and manager of Class A office properties in the United States, concentrated in six markets - Boston, Los Angeles, New York, San Francisco, Seattle, and Washington, DC. The Company is a fully integrated real estate company, organized as a real estate investment trust (REIT), that develops, manages, operates, acquires, and owns a diverse portfolio of primarily Class A office space. Including properties owned by unconsolidated joint ventures, the Company's portfolio totals 52.5 million square feet and 202 properties, including nine properties under construction/redevelopment. For more information about Boston Properties, please visit our website at www.bxp.com or follow us on LinkedIn or Instagram.

This press release contains "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. You can identify these statements by our use of the words "anticipates," "believes," "budgeted," "could," "estimates," "expects," "guidance," "intends," "plans," "projects" and similar expressions that do not relate to historical matters. These statements are based on our current plans and expectations, projections and assumptions about future events. 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. If our underlying assumptions prove inaccurate, or known or unknown risks or uncertainties materialize, actual results could differ materially from those expressed or implied by the forward-looking statements. These factors include, without limitation, uncertainties and risks related to the impact of the COVID-19 global pandemic, including the duration, scope and severity of the pandemic domestically and internationally; federal, state and local government actions or restrictive measures implemented in response to COVID-19, the effectiveness of such measures and the direct and indirect impact of such measures on our and our tenants' businesses, financial condition, results of operation, cash flows, liquidity and performance, and the U.S. and international economy and economic activity generally; the speed, effectiveness and distribution of vaccines; whether new or existing actions/or measures continue to impact the ability of our residential tenants to generate sufficient income to pay, or makes them unwilling to pay, rent in full or at all in a timely manner; the health, continued service and availability of our personnel, including our key personnel and property management teams; and the effectiveness or lack of effectiveness of governmental relief in providing assistance to individuals and large and small businesses, including our tenants, that have suffered significant adverse effects from COVID-19. In addition to the risks specific to COVID-19, other factors include, without limitation, the Company's ability to enter into new leases or renew leases on favorable terms, dependence on tenants' financial condition, the uncertainties of real estate development, acquisition and disposition activity, the ability to effectively integrate acquisitions, the uncertainties of investing in new markets, the costs and availability of financing, the effectiveness of our interest rate hedging contracts, the ability of our joint venture partners to satisfy their obligations, the effects of local, national and international economic and market conditions, the effects of acquisitions, dispositions and possible impairment charges on our operating results, 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, except as may be required by law.

Financial tables follow.

BOSTON PROPERTIES, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

September 30, December 31, 2021 2020

(in thousands, except for share and par value amounts)

ASSETS

Real estate, at cost $ 22,088,835 $ 21,649,383

Construction in progress 1,054,531 868,773

Land held for future development 568,034 450,954

Right of use assets - finance leases 237,845 237,393

Right of use assets - operating leases 170,085 146,406

Less: accumulated depreciation (5,850,397) (5,534,102)

Total real estate 18,268,933 17,818,807

Cash and cash equivalents 1,002,728 1,668,742

Cash held in escrows 79,193 50,587

Investments in securities 41,517 39,457

Tenant and other receivables, net 61,269 77,411

Related party note receivable, net 78,144 77,552

Note receivables, net 19,297 18,729

Accrued rental income, net 1,203,840 1,122,502

Deferred charges, net 622,807 640,085

Prepaid expenses and other assets 97,560 33,840

Investments in unconsolidated joint ventures 1,373,522 1,310,478

Total assets $ 22,848,810 $ 22,858,190

LIABILITIES AND EQUITY

Liabilities:

Mortgage notes payable, net $ 2,898,699 $ 2,909,081

Unsecured senior notes, net 10,479,651 9,639,287

Unsecured line of credit - -

Unsecured term loan, net - 499,390

Lease liabilities - finance leases 243,562 236,492

Lease liabilities - operating leases 204,137 201,713

Accounts payable and accrued expenses 331,687 336,264

Dividends and distributions payable 169,739 171,082

Accrued interest payable 87,408 106,288

Other liabilities 370,403 412,084

Total liabilities 14,785,286 14,511,681



Commitments and contingencies - -

Redeemable deferred stock units 8,775 6,897

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, 50,000,000shares authorized; 5.25% Series B cumulativeredeemable preferred stock, $0.01 par value, - 200,000 liquidation preference $2,500 per share, 92,000shares authorized, 80,000 shares issued andoutstanding at December 31, 2020

Common stock, $0.01 par value, 250,000,000shares authorized, 156,285,391 and 155,797,725issued and 156,206,491 and 155,718,825 1,562 1,557 outstanding at September 30, 2021 and December31, 2020, respectively

Additional paid-in capital 6,415,802 6,356,791

Dividends in excess of earnings (657,021) (509,653)

Treasury common stock at cost, 78,900 shares at (2,722) (2,722) September 30, 2021 and December 31, 2020

Accumulated other comprehensive loss (40,803) (49,890)

Total stockholders' equity attributable to 5,716,818 5,996,083 Boston Properties, Inc.

Noncontrolling interests:

Common units of the Operating Partnership 609,830 616,596

Property partnerships 1,728,101 1,726,933

Total equity 8,054,749 8,339,612

Total liabilities and equity $ 22,848,810 $ 22,858,190

BOSTON PROPERTIES, INC.CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)

Three months ended Nine months ended September 30, September 30,

2021 2020 2021 2020

(in thousands, except for per share amounts)

Revenue

Lease $ 692,260 $ 666,674 $ 2,062,102 $ 2,006,904

Parking and other 23,507 16,327 58,727 54,777

Hotel revenue 5,189 90 7,382 7,014

Development and 6,094 7,281 20,181 23,285 management services

Directreimbursements ofpayroll and related 3,006 2,896 9,166 8,617 costs frommanagement servicescontracts

Total revenue 730,056 693,268 2,157,558 2,100,597

Expenses

Operating

Rental 258,281 258,261 764,373 761,014

Hotel 3,946 3,164 7,993 11,958

General and 34,560 27,862 117,924 102,059 administrative

Payroll and relatedcosts from 3,006 2,896 9,166 8,617 management servicescontracts

Transaction costs 1,888 307 2,970 1,254

Depreciation and 179,412 166,456 539,815 515,738 amortization

Total expenses 481,093 458,946 1,442,241 1,400,640

Other income (expense)

Income (loss) fromunconsolidated (5,597) (6,873) (1,745) (5,410) joint ventures

Gains (losses) onsales of real 348 (209) 8,104 613,723 estate

Interest and other 1,520 (45) 4,140 4,277 income (loss)

Gains (losses) frominvestments in (190) 1,858 3,744 965 securities

Losses from earlyextinguishment of - - (898) - debt

Interest expense (105,794) (110,993) (320,015) (319,726)

Net income 139,250 118,060 408,647 993,786

Net incomeattributable to noncontrollinginterests

Noncontrollinginterests in (18,971) (15,561) (52,602) (34,280) propertypartnerships

Noncontrollinginterest-commonunits of the (11,982) (10,020) (35,393) (97,090) OperatingPartnership

Net incomeattributable to 108,297 92,479 320,652 862,416 Boston Properties,Inc.

Preferred dividends - (2,625) (2,560) (7,875)

Preferred stock - - (6,412) - redemption charge

Net incomeattributable toBoston Properties, $ 108,297 $ 89,854 $ 311,680 $ 854,541 Inc. commonshareholders

Basic earnings percommon shareattributable to Boston Properties,Inc. commonshareholders:

Net income $ 0.69 $ 0.58 $ 2.00 $ 5.49

Weighted averagenumber of common 156,183 155,645 156,062 155,349 shares outstanding

Diluted earningsper common shareattributable to Boston Properties,Inc. commonshareholders:

Net income $ 0.69 $ 0.58 $ 1.99 $ 5.49

Weighted averagenumber of commonand common 156,598 155,670 156,394 155,447 equivalent sharesoutstanding

BOSTON PROPERTIES, INC.FUNDS FROM OPERATIONS (1)(Unaudited)

Three months ended Nine months ended September 30, September 30,

2021 2020 2021 2020

(in thousands, except for per share amounts)

Net income attributableto Boston Properties, $ 108,297 $ 89,854 $ 311,680 $ 854,541 Inc. common shareholders

Add:

Preferred stock - - 6,412 - redemption charge

Preferred dividends - 2,625 2,560 7,875

Noncontrolling interest -common units of the 11,982 10,020 35,393 97,090 Operating Partnership

Noncontrolling interests 18,971 15,561 52,602 34,280 in property partnerships

Net income 139,250 118,060 408,647 993,786

Add:

Depreciation and 179,412 166,456 539,815 515,738 amortization expense

Noncontrolling interestsin property partnerships' (16,773) (15,833) (50,343) (55,940) share of depreciation andamortization

Company's share ofdepreciation andamortization from 17,803 20,413 51,565 59,757 unconsolidated jointventures

Corporate-relateddepreciation and (443) (444) (1,327) (1,399) amortization

Less:

Gains on sale ofinvestment includedwithin loss from - - 10,257 5,946 unconsolidated jointventures

Gains (losses) on sales 348 (209) 8,104 613,723 of real estate

Noncontrolling interests 18,971 15,561 52,602 34,280 in property partnerships

Preferred dividends - 2,625 2,560 7,875

Preferred stock - - 6,412 - redemption charge

Funds from operations(FFO) attributable to theOperating Partnership 299,930 270,675 868,422 850,118 common unitholders(including BostonProperties, Inc.)

Less:

Noncontrolling interest -common units of theOperating Partnership's 29,453 26,697 85,366 85,095 share of funds fromoperations

Funds from operationsattributable to Boston $ 270,477 $ 243,978 $ 783,056 $ 765,023 Properties, Inc. commonshareholders

Boston Properties, Inc.'spercentage share of funds 90.18 % 90.14 % 90.17 % 89.99 %from operations - basic

Weighted average shares 156,183 155,645 156,062 155,349 outstanding - basic

FFO per share basic $ 1.73 $ 1.57 $ 5.02 $ 4.92

Weighted average shares 156,598 155,670 156,394 155,447 outstanding - diluted

FFO per share diluted $ 1.73 $ 1.57 $ 5.01 $ 4.92

(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) attributable to Boston Properties, Inc. common shareholders (computed in accordance with GAAP) for gains (or losses) from sales of properties, impairment losses on depreciable real estate consolidated on our balance sheet, impairment losses on our investments in unconsolidated joint ventures driven by a measurable decrease in the fair value of depreciable real estate held by the unconsolidated joint ventures and real estate-related depreciation and amortization. FFO is a non-GAAP financial measure, but we believe the presentation of FFO, combined with the presentation of required GAAP financial measures, has improved the understanding of operating results of REITs among the investing public and has helped make comparisons of REIT operating results more meaningful. Management generally considers FFO and FFO per share to be useful measures for understanding and comparing our operating results because, by excluding gains and losses related to sales of previously depreciated operating real estate assets, impairment losses and real estate asset depreciation and amortization (which can differ across owners of similar assets in similar condition based on historical cost accounting and useful life estimates), FFO and FFO per share can help investors compare the operating performance of a company's real estate across reporting periods and to the operating performance of other companies.

Our computation of FFO may not be comparable to FFO reported by other REITs or real estate companies that do not define the term in accordance with the current Nareit definition or that interpret the current Nareit definition differently.

In order to facilitate a clear understanding of the Company's operating results, FFO should be examined in conjunction with net income attributable to Boston Properties, Inc. common shareholders as presented in the Company's consolidated financial statements. FFO should not be considered as a substitute for net income attributable to Boston Properties, Inc. common shareholders (determined in accordance with GAAP) or any other GAAP financial measures and should only be considered together with and as a supplement to the Company's financial information prepared in accordance with GAAP.

BOSTON PROPERTIES, INC.PORTFOLIO LEASING PERCENTAGES

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) attributable to Boston Properties, Inc. common shareholders (computed in accordance with GAAP) for gains (or losses) from sales of properties, impairment losses on depreciable real estate consolidated on our balance sheet, impairment losses on our investments in unconsolidated joint ventures driven by a measurable decrease in the fair value of depreciable real estate held by the unconsolidated joint ventures and real estate-related depreciation and amortization. FFO is a non-GAAP financial measure, but we believe the(1) presentation of FFO, combined with the presentation of required GAAP financial measures, has improved the understanding of operating results of REITs among the investing public and has helped make comparisons of REIT operating results more meaningful. Management generally considers FFO and FFO per share to be useful measures for understanding and comparing our operating results because, by excluding gains and losses related to sales of previously depreciated operating real estate assets, impairment losses and real estate asset depreciation and amortization (which can differ across owners of similar assets in similar condition based on historical cost accounting and useful life estimates), FFO and FFO per share can help investors compare the operating performance of a company's real estate across reporting periods and to the operating performance of other companies.

Our computation of FFO may not be comparable to FFO reported by other REITs or real estate companies that do not define the term in accordance with the current Nareit definition or that interpret the current Nareit definition differently.

In order to facilitate a clear understanding of the Company's operating results, FFO should be examined in conjunction with net income attributable to Boston Properties, Inc. common shareholders as presented in the Company's consolidated financial statements. FFO should not be considered as a substitute for net income attributable to Boston Properties, Inc. common shareholders (determined in accordance with GAAP) or any other GAAP financial measures and should only be considered together with and as a supplement to the Company's financial information prepared in accordance with GAAP.

BOSTON PROPERTIES, INC.PORTFOLIO LEASING PERCENTAGES



% Leased by Location

September 30, 2021 December 31, 2020

Boston 92.3 % 94.8 %

Los Angeles 83.4 % 93.5 %

New York 87.5 % 87.4 %

San Francisco 87.3 % 91.0 %

Seattle ^1 90.9 % N/A

Washington, DC 85.1 % 84.4 %

Total Portfolio 88.4 % 90.1 %

_____________

1. The Company entered the Seattle market on September 1, 2021. Therefore, there is no occupancy information provided for December 31, 2020.

View source version on businesswire.com: https://www.businesswire.com/news/home/20211026006293/en/

CONTACT: AT THE COMPANY Michael LaBelle Executive Vice President, Chief Financial Officer and Treasurer (617) 236-3352

CONTACT: Laura Sesody Vice President, Corporate Marketing & Communication lsesody@bxp.com