EX-99.2 4 a2109057zex-99_2.txt EXHIBIT 99.2 Exhibit 99.2 NEWS [FRB 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 FOR IMMEDIATE RELEASE: April 22, 2003 BOSTON PROPERTIES, INC. ANNOUNCES FIRST QUARTER 2003 RESULTS REPORTS DILUTED FFO PER SHARE OF $1.03 REPORTS DILUTED EPS OF $1.91 BOSTON, MA, APRIL 22, 2003 - BOSTON PROPERTIES, INC. (NYSE: BXP), a real estate investment trust, today reported results for the first quarter ended March 31, 2003. Funds from Operations (FFO) for the quarter ended March 31, 2003 were $102.7 million, or $1.07 per share basic and $1.03 per share diluted before an accounting charge related to the application of SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities". This compares to FFO of $88.9 million, or $0.98 per share basic and $0.93 per share diluted for the quarter ended March 31, 2002. This represents a 10.8% quarter to quarter increase in diluted FFO per share. The weighted average number of basic and diluted shares outstanding totaled 95,733,238 and 105,954,957, respectively, for the quarter ended March 31, 2003 and 90,932,427 and 105,767,653, respectively, for the same quarter last year. Net income available to common shareholders per share (EPS) for the quarter ended March 31, 2003 was $1.93 basic and $1.91 on a diluted basis. This includes $1.31 per share, on a diluted basis, related to net gains on sales of properties. EPS for the first quarter 2002 was $0.60 on a diluted basis. This includes $0.06 per share, on a diluted basis, related to net gains on sales of properties. Excluding the net gains on sales of properties this represents an 11.1% quarter to quarter 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 ended March 31, 2003. In the opinion of management, all adjustments considered necessary for a fair presentation of these reported results have been made. As of March 31, 2003, the Company's portfolio consisted of 139 properties comprising more than 40.9 million square feet, including five properties under development totaling 2.5 million square feet. The overall leasing rate for the properties in service as of March 31, 2003 was 93.0%. As reported in our proxy statement the Company is proposing to expand the number of Independent Directors on its Board through the nomination of three new directors: o Lawrence S. Bacow is the President of and a Director for Tufts University. He previously served as Chancellor of the Massachusetts Institute of Technology. o William M. Daley is the President of SBC Communications, Inc. He served as United States Secretary of Commerce from January 1997 to July 2000 and as Chairman of the 2000 presidential election campaign of Vice President Al Gore. o David A. Twardock is the President and Chief Executive Officer of Prudential Mortgage Capital Company, LLC, the real estate affiliate of Prudential Financial, Inc. Ivan G. Seidenberg has decided not to stand for reelection as director due to his commitments as president and CEO of Verizon Communications. Significant events of the first quarter include: o The Company's Operating Partnership closed on the following private offerings in reliance on Rule 144A: On January 17, 2003, $175.0 million senior unsecured notes due 2013, yielding 6.28% and on March 18, 2003, $300.0 million senior unsecured notes due 2015, yielding 5.636%. o The Company sold the following assets: The Candler Building in Baltimore, Maryland for $63.1 million ($117 psf) on January 28, 2003; 875 Third Avenue in New York City for $370.1 million ($520 psf) on February 4, 2003; and 2300 N Street in Washington, D.C. for $122.0 million ($422 psf) on March 18, 2003. o In connection with the above transactions, the Company used the net proceeds to pay off the following secured and unsecured indebtedness:
Date Debt Amount -------------------- ----------------------------------- ---------------- (in thousands) January 17, 2003 Unsecured Bridge Loan* $ 105,683 January 17, 2003 Quorum Office Park 28,756 January 17, 2003 Orbital Sciences, Phase II 23,590 January 17, 2003 302 Carnegie Center 7,594 January 28, 2003 Waltham Weston Corporate Center 45,000 January 28, 2003 40 Shattuck Road 15,939 February 4, 2003 111 Huntington Avenue 203,000 February 4, 2003 875 Third Avenue 146,902 March 18, 2003 2300 N Street 66,000 ---------------- $ 642,464 ================
* Incurred in connection with the acquisition of 399 Park Avenue 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%, subject to adjustment in the event of a change in the Company's Operating Partnership's unsecured debt ratings. o The Company leased 206,958 square feet of space at Times Square Tower in New York City to the law firm O'Melveny & Myers. The firm will be relocating from Citigroup Center and its other space in New York City. Times Square Tower is a 47-story, approximately 1.2 million square foot office tower in Times Square, New York City that the Company expects to complete by the first quarter of 2004. This project is now approximately 17% pre-leased. o The Company placed-in-service its Waltham Weston Corporate Center development project, a 304,050 square foot office property in Waltham, Massachusetts. This project is 43.1% leased. o The Company issued restricted stock awards as the primary form of long-term incentive compensation primarily for officer level employees and has included the related expense as a charge against earnings over the vesting period. Transactions completed subsequent to March 31, 2003: o The Company used the net proceeds from its Operating Partnership's $300.0 million offering of senior unsecured notes, a draw of approximately $139.7 million from its unsecured line of credit and other excess available funds to: o Refinance its mortgage loan secured by the Five Times Square property in New York City totaling $376.7 million on April 14, 2003. o Repay the Shaw's Supermarket mortgage loan secured by the property at the Prudential Center in Boston totaling $21.5 million on April 1, 2003. o Acquire the remaining 50% outside interest in its Discovery Square joint venture on April 1, 2003 for cash of $18.3 million and the assumption of the mortgage debt on the property of approximately $32.4 million. Subsequent to the acquisition, the Company repaid in full the mortgage debt on the property totaling $64.7 million. Boston Properties will host a conference call tomorrow, April 23, 2003 at 10:00 AM (Eastern Time), open to the general public, to discuss the results of this year's first quarter. The number to call for this interactive teleconference is (800) 374-1372. A replay of the conference call will be available through April 30, 2003 by dialing (800) 642-1687 and entering the passcode 9637741. An audio-webcast will be archived and can be accessed at WWW.BOSTONPROPERTIES.COM in the Investor section under the header AUDIO ARCHIVE. Additionally, a copy of Boston Properties' first quarter 2003 "Supplemental Operating and Financial Data" and this press release are available on the Investor section of the Company's website at 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, D.C. 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 MARCH 31, ------------------------------------- 2003 2002 ---------------- ---------------- (UNAUDITED AND IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS) Revenue Rental: Base rent $247,353 $218,017 Recoveries from tenants 39,881 32,976 Parking and other 14,195 12,096 ---------------- ---------------- Total rental revenue 301,429 263,089 Hotel revenue 13,246 - Development and management services 4,590 3,698 Interest and other 415 1,272 ---------------- ---------------- Total revenue 319,680 268,059 ---------------- ---------------- Expenses Operating Rental 99,102 86,298 Hotel 11,171 - General and administrative 11,399 11,069 Interest 73,645 60,815 Depreciation and amortization 49,824 41,550 Net derivative losses 932 303 Loss from early extinguishment of debt 1,474 - Loss on investments in securities - 4,297 ---------------- ---------------- Total expenses 247,547 204,332 ---------------- ---------------- Income before minority interests in property partnerships, income from unconsolidated joint ventures, minority interest in Operating Partnership, gain on sale of real estate, discontinued operations and preferred dividend 72,133 63,727 Minority interests in property partnerships 397 471 Income from unconsolidated joint ventures 2,658 1,682 ---------------- ---------------- Income before minority interest in Operating Partnership, gain on sale of real estate, discontinued operations and preferred dividend 75,188 65,880 Minority interest in Operating Partnership (18,523) (17,818) ---------------- ---------------- Income before gain on sale of real estate, discontinued operations and preferred dividend 56,665 48,062 Gain on sale of real estate, net of minority interest 52,912 - ---------------- ---------------- Income before discontinued operations and preferred dividend 109,577 48,062 Discontinued Operations: Income from discontinued operations, net of minority interest 1,940 3,106 Gains on sales of real estate from discontinued operations, net of minority interest 73,528 5,840 ---------------- ---------------- Income before preferred dividend 185,045 57,008 Preferred dividend - (1,643) ---------------- ---------------- Net income available to common shareholders $185,045 $ 55,365 ================ ================ Basic earnings per share: Income available to common shareholders before discontinued operations $ 1.14 $ 0.51 Discontinued operations, net of minority interest 0.79 0.10 ---------------- ---------------- Net income available to common shareholders $ 1.93 $ 0.61 ================ ================ Weighted average number of common shares outstanding 95,733 90,932 ================ ================ Diluted earnings per share: Income available to common shareholders before discontinued operations $ 1.13 $ 0.50 Discontinued operations, net of minority interest 0.78 0.10 ---------------- ---------------- Net income available to common shareholders $ 1.91 $ 0.60 ================ ================ Weighted average number of common and common equivalent shares outstanding 96,755 92,783 ================ ================
BOSTON PROPERTIES, INC. CONSOLIDATED BALANCE SHEETS
MARCH 31, DECEMBER 31, 2003 2002 -------------------- -------------------- (IN THOUSANDS, EXCEPT FOR SHARE AMOUNTS) (UNAUDITED) ASSETS Real estate $ 7,745,475 $ 7,781,684 Development in progress 418,798 448,576 Land held for future development 216,537 215,866 Real estate held for sale, net - 224,585 Less: accumulated depreciation (846,002) (822,933) -------------------- -------------------- Total real estate 7,534,808 7,847,778 Cash and cash equivalents 384,418 55,275 Cash held in escrows 20,804 41,906 Tenant and other receivables, net 23,193 20,458 Accrued rental income, net 148,034 165,321 Deferred charges, net 165,559 176,545 Prepaid expenses and other assets 30,144 18,015 Investments in unconsolidated joint ventures 101,794 101,905 -------------------- -------------------- Total assets $ 8,408,754 $ 8,427,203 ==================== ==================== LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Mortgage notes payable $ 3,758,406 $ 4,267,119 Unsecured senior notes, net of discount 1,221,707 747,375 Unsecured bridge loan - 105,683 Unsecured line of credit - 27,043 Accounts payable and accrued expenses 63,319 73,846 Dividends and distributions payable 81,128 81,226 Interest rate contracts 13,663 14,514 Accrued interest payable 37,534 25,141 Other liabilities 63,992 81,085 -------------------- -------------------- Total liabilities 5,239,749 5,423,032 -------------------- -------------------- Commitments and contingencies - - -------------------- -------------------- Minority interests 860,182 844,581 -------------------- -------------------- Series A Convertible Redeemable Preferred Stock, liquidation preference $50.00 per share, 0 shares outstanding in 2003 and 2002 - - -------------------- -------------------- 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, 96,007,638 and 95,441,890 shares issued and 95,928,738 and 95,362,990 shares outstanding in 2003 and 2002, respectively 959 954 Additional paid-in capital 2,010,764 1,982,689 Earnings in excess of dividends 325,114 198,586 Treasury common stock, at cost (2,722) (2,722) Unearned compensation (8,448) (2,899) Accumulated other comprehensive loss (16,844) (17,018) -------------------- -------------------- Total stockholders' equity 2,308,823 2,159,590 -------------------- -------------------- Total liabilities and stockholders' equity $ 8,408,754 $ 8,427,203 ==================== ====================
BOSTON PROPERTIES, INC. FUNDS FROM OPERATIONS (1)
THREE MONTHS ENDED MARCH 31, --------------------------------- 2003 2002 ---------------- --------------- (IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS) (UNAUDITED) Income before minority interests in property partnerships, income from unconsolidated joint ventures, minority interest in Operating Partnership, gain on sale of real estate, discontinued operations and preferred dividend $ 72,133 $ 63,727 Add: Real estate depreciation and amortization 51,791 44,499 Income from discontinued operations 2,355 3,801 Income from unconsolidated joint ventures 2,658 1,682 Loss from early extinguishment of debt associated with the sale of 2300 N Street 1,474 - Less: Minority interests in property partnerships' share of funds from operations (866) (719) Preferred dividends and distributions (5,771) (8,400) ---------------- --------------- Funds from operations 123,774 104,590 Add (subtract): Net derivative losses (SFAS No. 133) 932 303 Early surrender lease adjustment (2) - 3,927 ---------------- --------------- Funds from operations before net derivative losses (SFAS No. 133) and after early surrender lease adjustment $ 124,706 $ 108,820 ================ =============== Funds from operations available to common shareholders before net derivative losses (SFAS No. 133) and after early surrender lease adjustment $ 102,735 $ 88,929 ================ =============== Weighted average shares outstanding - basic 95,733 90,932 ================ =============== FFO per share basic before net derivative losses (SFAS No. 133) and after early surrender adjustment $ 1.07 $ 0.98 ================ =============== FFO per share basic after net derivative losses (SFAS No. 133) and before early surrender lease adjustment $ 1.07 $ 0.94 ================ =============== Weighted average shares outstanding - diluted 105,955 105,768 ================ =============== FFO per share diluted before net derivative losses (SFAS No. 133) and after early surrender lease adjustment $ 1.03 $ 0.93 ================ =============== FFO per share diluted after net derivative losses (SFAS No. 133) and before early surrender lease adjustment $ 1.02 $ 0.90 ================ ===============
(1) Pursuant to the revised definition of Funds from Operations adopted by the Board of Governors of the National Association of Real Estate Investment TshsflowsNinEIT"), we calculate 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 of properties, real estate related depreciation and amortization, and after adjustment for unconsolidated partnerships and joint ventures. In addition to FFO (as defined by NAREIT), we also disclose FFO after specific supplemental adjustments. Although our FFO as adjusted clearly differs from NAREIT's definition of FFO as well that of other real estate companies, we believe it provides a meaningful presentation of our operating performance. In addition, we believe that to further understand our performance, FFO and FFO as adjusted should be compared with our reported net income and ca Our computation of FFO may not be comparable to FFO reported by other REITs or real estate companies that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently. In addition to presenting FFO in accordance with the NAREIT definition, we make 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 our 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 indicator of our ability to make cash distributions. (2) Represents cash received under contractual obligations. BOSTON PROPERTIES, INC. PORTFOLIO LEASING PERCENTAGES
% LEASED BY LOCATION -------------------------------------------------------------- MARCH 31, 2003 DECEMBER 31, 2002 ----------------------------- ----------------------------- Greater Boston 89.3% 91.8% Greater Washington, D.C. 95.7% 95.9% Midtown Manhattan 99.2% 98.4% Baltimore, MD 98.5% 97.6% Richmond, VA 92.1% 91.8% Princeton/East Brunswick, NJ 95.0% 93.3% Greater San Francisco 85.7% 87.4% Bucks County, PA 100.0% 100.0% ----------------------------- ----------------------------- Total Portfolio 93.0% 93.9% ============================= =============================
% LEASED BY TYPE -------------------------------------------------------------- MARCH 31, 2003 DECEMBER 31, 2002 ----------------------------- ----------------------------- Class A Office Portfolio 93.3% 94.1% Office/Technical Portfolio 87.8% 89.7% Industrial Portfolio 89.0% 100.0% ----------------------------- ----------------------------- Total Portfolio 93.0% 93.9% ============================= =============================