EX-99.2 5 a2101304zex-99_2.txt EXHIBIT 99.2 Exhibit 99.2 [LOGO] BOSTON PROPERTIES, INC. 111 HUNTINGTON AVENUE BOSTON, MA 02199 (NYSE: BXP) AT THE COMPANY AT FRB/WEBER SHANDWICK Douglas T. Linde Marilynn Meek - General Info. (212) 445-8431 Chief Financial Officer Suzie Pileggi - Media (212) 445-8170 (617) 236-3300 BOSTON PROPERTIES, INC. ANNOUNCES FOURTH QUARTER 2002 RESULTS REPORTS DILUTED FFO PER SHARE OF $1.14 REPORTS DILUTED EPS OF $2.70 BOSTON, MA, JANUARY 21, 2003 - BOSTON PROPERTIES, INC. (NYSE: BXP), a real estate investment trust, today reported results for the fourth quarter ended December 31, 2002. Funds from Operations (FFO) for the quarter ended December 31, 2002 were $113.5 million, or $1.19 per share basic and $1.14 per share diluted before an accounting charge related to the application of SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities". FFO for the fourth quarter of 2002 compares to FFO of $90.7 million, or $1.00 per share basic and $0.95 per share diluted for the quarter ended December 31, 2001. This represents a 20.0% quarter to quarter increase in diluted FFO per share. The weighted average number of basic and diluted shares outstanding totaled 95,313,371 and 105,630,130, respectively, for the quarter ended December 31, 2002 and 90,736,578 and 105,577,393, respectively, for the same quarter last year. FFO for the year ended December 31, 2002 were $399.5 million, or $4.29 per share basic and $4.09 per share diluted. FFO for the year ended 2002 compares to FFO of $337.8 million, or $3.75 per share basic and $3.57 per share diluted for the year ended December 31, 2001. This represents a 14.6% year to year increase in diluted FFO per share. The weighted average number of basic and diluted shares outstanding totaled 93,144,747 and 105,799,277, respectively, for the year ended December 31, 2002 and 90,001,534 and 105,185,427, respectively, for last year. Net income available to common shareholders per share (EPS) for the quarter ended December 31, 2002 was $2.70 on a diluted basis. This includes $2.03 per share, on a diluted basis, related to gains on sales of properties. EPS for the fourth quarter 2001 was $0.60 on a diluted basis. This includes $0.03 per share, on a diluted basis, related to gains on sales of properties. Excluding the gains on sales of properties this represents a 17.5% quarter to quarter increase in diluted EPS. Net income available to common shareholders per share (EPS) for the year ended December 31, 2002 was $4.66 on a diluted basis. This includes $2.28 per share, on a diluted basis, relates to gains on sales of properties. EPS for 2001 was $2.19 on a diluted basis. This includes $0.10 per share, on a diluted basis, related to gains on sales of properties. Excluding the gains on sales of properties this represents a 13.9% year to year increase in diluted EPS. The reported results are unaudited and there can be no assurance that the results will not vary from the final information for the quarter and year ended December 31, 2002. In the opinion of management, all adjustments considered necessary for a fair presentation of these reported results have been made. As of December 31, 2002, the Company's portfolio consisted of 142 properties comprising more than 42.4 million square feet, including six properties under development totaling 2.8 million square feet. The overall occupancy rate for the properties in service as of December 31, 2002 was 93.9%. Significant events of the fourth quarter include: o The Company's Operating Partnership closed a private offering under Rule 144A of $750.0 million in aggregate principal amount of its 6.25% senior unsecured notes due 2013. The notes were priced at 99.65% of their face amount to yield 6.296%. The Company used the net proceeds to pay down its unsecured bridge loan incurred in connection with the acquisition of 399 Park Avenue in September 2002. o The Company's Operating Partnership received ratings on its inaugural offering of senior unsecured notes of: Moody's Baa2 (stable) Standard & Poor's BBB (stable) FitchRatings BBB (stable) o The Company sold One and Two Independence Square, comprised of two Class A office properties consisting of approximately 900,000 square feet located in Washington, D.C. for $345.0 million. The Company used the net proceeds to repay mortgage financing related to these properties totaling approximately $189.1 million and to pay down its unsecured bridge loan. The Company will continue to manage these properties under an agreement with the buyer. o The Company executed a binding contract for the sale of 875 Third Avenue, a Class A office property totaling approximately 719,000 square feet in midtown Manhattan for $370.1 million. The buyer paid a non-refundable deposit of $20.0 million and waived further due diligence review. The sale is subject to the satisfaction of customary closing conditions and, although there can be no assurances that the sale will be consummated, we have no reason to believe that the closing will not occur as expected by February 2003. o The Company sold 2391 West Winton Avenue, an industrial property totaling approximately 220,000 square feet located in Hayward, CA for $10.8 million. The Company used the net proceeds to pay down its unsecured bridge loan. o The Company placed-in-service the following development projects: Two Discovery Square, a 184,487 square foot office property in Reston, Virginia and Broad Run Business Park Building E, a 127,226 square foot office/technical property in Dulles, Virginia. These projects are 82% and 55% leased, respectively. o The Company refinanced its first mortgage totaling approximately $146.9 million secured by 875 Third Avenue in New York City. o The Company obtained construction financing totaling $65.0 million for its New Dominion Technology Park, Building Two development project in Herndon, Virginia. o The Company obtained construction financing totaling $120.0 million for its development of 901 New York Avenue in Washington, D.C., a joint venture in which the Company has a 25% interest. o The Company repaid a $0.4 million mortgage secured by 201 Carnegie Center in Princeton, New Jersey. o The Company amended its construction loan on the Waltham Weston Corporate Center which reduced the loan commitment from $70.0 million to $45.0 million. In connection with the amendment, $9.9 million was repaid to reduce the amount outstanding to $45.0 million. o The Company exercised a one-year extension option on its 2600 Tower Oaks $30 million construction loan facility. The Company has an additional one-year option. Transactions completed subsequent to December 31, 2002: o The Company's Operating Partnership closed a private offering under Rule 144A of an additional $175.0 million in aggregate principal amount of its 6.25% senior unsecured notes due 2013. The notes were priced at 99.763% of their face amount to yield 6.28%. o In connection with the above transaction, the Company used the net proceeds to pay off its unsecured bridge loan incurred in connection with the acquisition of 399 Park Avenue in September 2002 and to repay in full its construction loans secured by Quorum Office Park, Orbital Sciences, Phase II and 302 Carnegie Center. The total amounts repaid were approximately $165.6 million. o The Company extended its $605.0 million unsecured revolving credit agreement for a three-year term expiring on January 17, 2006 with a one-year extension provision. The interest rate on borrowings has been reduced from Libor + 1.45% to Libor + 0.70%. o The Company executed a binding contract for the sale of the Candler Building, a Class A office property totaling approximately 541,000 square feet in Baltimore, Maryland for $63.1 million. The sale is subject to the satisfaction of customary closing conditions and, although there can be no assurances that the sale will be consummated, we have no reason to believe that the closing will not occur as expected by February 2003. Boston Properties will host a conference call tomorrow, January 22, 2003 at 10:00 AM (Eastern Time), open to the general public, to discuss the results of this year's fourth quarter. The number to call for this interactive teleconference is (800) 374-1372. A replay of the conference call will be available through January 29, 2003 by dialing (800) 642-1687 and entering the passcode 7277400. Additionally, a copy of Boston Properties' fourth quarter 2002 "Supplemental Operating and Financial Data" is available on the Investor section of the Company's website at http://www.bostonproperties.com. These materials are also available by contacting Investor Relations at 617-236-3322 or by written request to: Investor Relations Boston Properties, Inc. 111 Huntington Avenue, Suite 300 Boston, MA 02199-7610 Boston Properties is a fully integrated, self-administered and self-managed real estate investment trust that develops, redevelops, acquires, manages, operates and owns a diverse portfolio of Class A office, industrial and hotel properties. The Company is one of the largest owners and developers of Class A office properties in the United States, concentrated in four core markets - Boston, Midtown Manhattan, Washington, DC and San Francisco. THIS PRESS RELEASE CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE FEDERAL SECURITIES LAWS. 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, REGULATORY CHANGES AND OTHER RISKS AND UNCERTAINTIES DETAILED FROM TIME TO TIME IN THE COMPANY'S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. Financial tables follow. BOSTON PROPERTIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, ------------------- ----------------------- 2002 2001 2002 2001 -------- -------- ---------- ---------- (UNAUDITED AND IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS) Revenue Rental: Base rent............................................... $265,559 $220,534 $ 978,382 $ 843,147 Recoveries from tenants................................. 38,929 32,368 144,576 127,024 Parking and other....................................... 13,217 11,757 50,827 51,999 -------- -------- ---------- ---------- Total rental revenue.................................. 317,705 264,659 1,173,785 1,022,170 Hotel revenue............................................. 24,779 -- 44,786 -- Development and management services....................... 2,769 3,528 10,748 12,167 Interest and other........................................ 700 1,829 5,504 12,183 -------- -------- ---------- ---------- Total revenue......................................... 345,953 270,016 1,234,823 1,046,520 -------- -------- ---------- ---------- Expenses Operating Rental.................................................. 102,726 88,605 385,491 330,301 Hotel................................................... 17,562 -- 31,086 -- General and administrative................................ 12,703 8,663 47,292 38,312 Interest.................................................. 72,146 59,730 271,685 223,389 Depreciation and amortization............................. 53,957 39,993 186,177 149,181 Net derivative losses..................................... 1,461 2,080 11,874 26,488 Loss on investments in securities......................... -- -- 4,297 6,500 -------- -------- ---------- ---------- Total expenses........................................ 260,555 199,071 937,902 774,171 -------- -------- ---------- ---------- Income before minority interests, income from unconsolidated joint ventures, minority interest in Operating Partnership, gains on sales of real estate and land held for development, discontinued operations, extraordinary items, cumulative effect of a change in accounting principle and preferred dividend.......................... 85,398 70,945 296,921 272,349 Minority interests in property partnerships................. 162 456 2,065 1,085 Income from unconsolidated joint ventures................... 2,083 1,345 7,954 4,186 -------- -------- ---------- ---------- Income before minority interest in Operating Partnership, gains on sales of real estate and land held for development, discontinued operations, extraordinary items, cumulative effect of a change in accounting principle and preferred dividend........................................ 87,643 72,746 306,940 277,620 Minority interest in Operating Partnership.................. (20,867) (19,084) (77,524) (74,739) -------- -------- ---------- ---------- Income before gains on sales of real estate and land held for development, discontinued operations, extraordinary items, cumulative effect of a change in accounting principle and preferred dividend.......................... 66,776 53,662 229,416 202,881 Gains on sales of real estate, net of minority interest..... 187,562 -- 186,810 6,505 Gains on sales of land held for development, net of minority interest.................................................. -- 2,584 3,633 2,584 -------- -------- ---------- ---------- Income before discontinued operations, extraordinary items, cumulative effect of a change in accounting principle and preferred dividend........................................ 254,338 56,246 419,859 211,970 Discontinued Operations: Income from discontinued operations, net of minority interest................................................ 127 682 1,135 2,829 Gains on sales of real estate from discontinued operations, net of minority interest.................... 7,645 -- 25,345 -- -------- -------- ---------- ---------- Income before extraordinary items, cumulative effect of a change in accounting principle and preferred dividend..... 262,110 56,928 446,339 214,799 Extraordinary items, net of minority interest............... (1,964) -- (1,956) -- -------- -------- ---------- ---------- Income before cumulative effect of a change in accounting principle and preferred dividend.......................... 260,146 56,928 444,383 214,799 Cumulative effect of a change in accounting principle, net of minority interest...................................... -- -- -- (6,767) -------- -------- ---------- ---------- Net income before preferred dividend........................ 260,146 56,928 444,383 208,032 Preferred dividend.......................................... -- (1,648) (3,412) (6,592) -------- -------- ---------- ---------- Net income available to common shareholders................. $260,146 $ 55,280 $ 440,971 $ 201,440 ======== ======== ========== ========== Basic earnings per share: Income available to common shareholders before discontinued operations, extraordinary items and cumulative effect of a change in accounting principle... $ 2.67 $ 0.60 $ 4.47 $ 2.28 Discontinued operations................................... -- 0.01 0.01 0.03 Gains on sales from discontinued operations............... 0.08 -- 0.27 -- Extraordinary items....................................... (0.02) -- (0.02) -- Cumulative effect of a change in accounting principle..... -- -- -- (0.07) -------- -------- ---------- ---------- Net income available to common shareholders............... $ 2.73 $ 0.61 $ 4.73 $ 2.24 ======== ======== ========== ========== Weighted average number of common shares outstanding...... 95,313 90,737 93,145 90,002 ======== ======== ========== ========== Diluted earnings per share: Income available to common shareholders before discontinued operations, extraordinary items and cumulative effect of a change in accounting principle... $ 2.64 $ 0.59 $ 4.40 $ 2.23 Discontinued operations................................... -- 0.01 0.01 0.03 Gains on sale from discontinued operations................ 0.08 -- 0.27 -- Extraordinary items....................................... (0.02) -- (0.02) -- Cumulative effect of a change in accounting principle..... -- -- -- (0.07) -------- -------- ---------- ---------- Net income available to common shareholders............... $ 2.70 $ 0.60 $ 4.66 $ 2.19 ======== ======== ========== ========== Weighted average number of common and common equivalent shares outstanding...................................... 96,395 92,593 94,612 92,200 ======== ======== ========== ==========
BOSTON PROPERTIES, INC. CONSOLIDATED BALANCE SHEETS
DECEMBER 31, DECEMBER 31, 2002 2001 ------------ ------------ (IN THOUSANDS, EXCEPT FOR SHARE AMOUNTS) (UNAUDITED) ASSETS Real estate................................................. $7,781,684 $6,167,399 Development in progress..................................... 448,576 1,107,835 Land held for future development............................ 215,866 182,672 Real estate held for sale, net.............................. 224,585 -- Less: accumulated depreciation............................ (822,933) (719,854) ---------- ---------- Total real estate....................................... 7,847,778 6,738,052 Cash and cash equivalents................................... 55,275 98,067 Escrows..................................................... 41,906 23,000 Investments in securities................................... -- 4,297 Tenant and other receivables, net........................... 20,458 43,546 Accrued rental income, net.................................. 165,321 119,494 Deferred charges, net....................................... 176,545 107,573 Prepaid expenses and other assets........................... 18,015 20,996 Investments in unconsolidated joint ventures................ 101,905 98,485 ---------- ---------- Total assets............................................ $8,427,203 $7,253,510 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Mortgage notes and bonds payable.......................... $4,267,119 $4,314,942 Unsecured senior notes.................................... 747,375 -- Unsecured bridge loan..................................... 105,683 -- Unsecured line of credit.................................. 27,043 -- Accounts payable and accrued expenses..................... 93,846 81,108 Dividends and distributions payable....................... 81,226 79,561 Interest rate contracts................................... 14,514 11,147 Accrued interest payable.................................. 25,141 9,080 Other liabilities......................................... 61,085 58,859 ---------- ---------- Total liabilities....................................... 5,423,032 4,554,697 ---------- ---------- Commitments and contingencies............................... -- -- ---------- ---------- Minority interests.......................................... 844,581 844,740 ---------- ---------- Series A Convertible Redeemable Preferred Stock, liquidation preference $50.00 per share, 0 and 2,000,000 shares issued and outstanding in 2002 and 2001, respectively............ -- 100,000 ---------- ---------- Stockholders' equity: Excess stock, $.01 par value, 150,000,000 shares authorized, none issued or outstanding.................. -- -- Common stock, $.01 par value, 250,000,000 shares authorized, 95,362,990 and 90,780,591 issued and outstanding in 2002 and 2001, respectively.............. 954 908 Additional paid-in capital................................ 1,981,833 1,789,521 Earnings in excess of dividends........................... 199,442 (17,669) Treasury common stock, at cost............................ (2,722) (2,722) Unearned compensation..................................... (2,899) (2,097) Accumulated other comprehensive loss...................... (17,018) (13,868) ---------- ---------- Total stockholders' equity.............................. 2,159,590 1,754,073 ---------- ---------- Total liabilities and stockholders' equity............ $8,427,203 $7,253,510 ========== ==========
BOSTON PROPERTIES, INC. FUNDS FROM OPERATIONS (1)
THREE MONTHS ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, ------------------- ------------------- 2002 2001 2002 2001 -------- -------- -------- -------- (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED) Income before minority interests, income from unconsolidated joint ventures, minority interest in Operating Partnership, gains on sales of real estate and land held for development, discontinued operations, extraordinary items, cumulative effect of a change in accounting principle and preferred dividend.......................... $ 85,398 $ 70,945 $296,921 $272,349 Add: Real estate depreciation and amortization................. 56,072 41,034 192,574 153,550 Income from discontinued operations....................... 154 835 1,384 2,989 Income from unconsolidated joint ventures................. 2,083 1,345 7,954 4,186 Less: Minority interests in property partnerships' share of funds from operations................................... (1,390) (776) (3,223) (2,322) Preferred dividends and distributions..................... (5,926) (8,448) (28,711) (33,312) -------- -------- -------- -------- Funds from operations....................................... 136,391 104,935 466,899 397,440 Add (subtract): Net derivative losses (SFAS No. 133)...................... 1,461 2,080 11,874 26,488 Early surrender lease adjustment (2)...................... -- 3,927 8,520 (8,518) -------- -------- -------- -------- Funds from operations before net derivative losses (SFAS No. 133) and after early surrender lease adjustment........... $137,852 $110,942 $487,293 $415,410 ======== ======== ======== ======== Funds from operations available to common shareholders before net derivative losses (SFAS No. 133) and after early surrender lease adjustment.......................... $113,464 $ 90,704 $399,489 $337,823 ======== ======== ======== ======== Weighted average shares outstanding -- basic................ 95,313 90,737 93,145 90,002 ======== ======== ======== ======== FFO per share basic before net derivative losses (SFAS No. 133) and after early surrender adjustment............... $ 1.19 $ 1.00 $ 4.29 $ 3.75 ======== ======== ======== ======== FFO per share basic after net derivative losses (SFAS No. 133) and before early surrender lease adjustment........ $ 1.18 $ 0.95 $ 4.11 $ 3.59 ======== ======== ======== ======== Weighted average shares outstanding -- diluted.............. 105,631 105,577 105,799 105,185 ======== ======== ======== ======== FFO per share diluted before net derivative losses (SFAS No. 133) and after early surrender lease adjustment..... $ 1.14 $ 0.95 $ 4.09 $ 3.57 ======== ======== ======== ======== FFO per share diluted after net derivative losses (SFAS No. 133) and before early surrender lease adjustment.... $ 1.13 $ 0.90 $ 3.92 $ 3.42 ======== ======== ======== ========
(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"), the Company calculates Funds From Operations, or "FFO," by adjusting net income (loss) (computed in accordance with accounting principles generally accepted in the United States of America ("GAAP"), including non-recurring items), for gains (or losses) from sales or properties (except gains and losses from sales of real estate), real estate related depreciation and amortization, and after adjustment for unconsolidated partnerships and joint ventures. In addition to FFO (as defined by NAREIT), the Company also discloses FFO after specific supplemental adjustments. Although the Company's FFO as adjusted clearly differs from NAREIT's definition of FFO as well as that of other real estate companies, the Company believes it provides a more meaningful presentation of the Company's operating performance. In addition, the Company believes that to further understand its performance, FFO and FFO as adjusted should be compared with its reported net income and cash flows in accordance with GAAP, as presented in the Company's consolidated financial statements. The Company's computation of FFO may not be comparable to FFO reported by other REIT's 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, the Company makes adjustments to FFO, as defined by NAREIT, including net derivative losses and early surrender lease adjustments. FFO does not represent cash generated from operating activities determined in accordance with GAAP, and should not be considered as an alternative to net income (determined in accordance with GAAP) as an indication of the Company's performance, as an alternative to net cash flows from operating activities (determined in accordance with GAAP) as a measure of our liquidity, or as an indication of the Company's ability to make cash distributions. (2) Represents cash received under contractual obligations. BOSTON PROPERTIES, INC. PORTFOLIO OCCUPANCY
OCCUPANCY BY LOCATION ------------------------------------- DECEMBER 31, 2002 DECEMBER 31, 2001 ----------------- ----------------- Greater Boston.............................................. 91.8% 92.3% Greater Washington, D.C..................................... 95.9% 97.8% Midtown Manhattan........................................... 98.4% 99.8% Baltimore, MD............................................... 97.6% 99.2% Richmond, VA................................................ 91.8% 98.4% Princeton/East Brunswick, NJ................................ 93.3% 88.6% Greater San Francisco....................................... 87.4% 93.5% Bucks County, PA............................................ 100.0% 100.0% ----- ----- Total Portfolio........................................... 93.9% 95.3% ===== =====
OCCUPANCY BY TYPE ------------------------------------- DECEMBER 31, 2002 DECEMBER 31, 2001 ----------------- ----------------- Class A Office Portfolio.................................... 94.1% 95.4% Office/Technical Portfolio.................................. 89.7% 97.9% Industrial Portfolio........................................ 100.0% 87.3% ----- ---- Total Portfolio........................................... 93.9% 95.3% ===== ====