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SECURITIES
AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant
to Section 13 or 15(d) of the Date of Report (Date of earliest event
reported): July
22, 2003 Boston
Properties, Inc. (Exact name of Registrant as specified in its
charter) Delaware 1-13087 04-2473675 (State or other jurisdiction (Commission File (I.R.S. employer 111 Huntington Avenue (Address of principal executive offices and
zip code) Registrants telephone number, including
area code: (617) 236-3300 ITEM 7. Financial
Statements, Pro Forma Financial Information and Exhibits. (c) Exhibits. The following
exhibits are being furnished herewith: Exhibit No. 99.1 Boston Properties, Inc. Supplemental Operating and Financial Data for
the quarter ended June 30, 2003. 99.2 Press release dated July 22, 2003. ITEM 9. Regulation FD Disclosure (Information
provided under Item 12-Results of Operations and Financial Condition). The following information is furnished under Item 12 - Results of
Operations and Financial Condition in accordance with interim guidance
issued by the SEC in release No. 33-8216.
Such information, including the exhibits attached hereto, shall not be
deemed filed for any purpose, including for the purposes of Section 18 of
the Securities Exchange Act of 1934, as amended (the Exchange Act), or
otherwise subject to the liabilities of that Section. The information in this Current Report on
Form 8-K shall not be deemed incorporated by reference into any filing under
the Securities Act of 1933, as amended, or the Exchange Act regardless of any
general incorporation language in such filing. On July 22, 2003, Boston Properties, Inc. (the Company) issued a
press release announcing its financial results for the second quarter of
2003. That press release referred to
certain supplemental information that is available on the Companys website. The text of the supplemental information
and the press release are attached hereto as Exhibits 99.1 and 99.2 and are
incorporated by reference herein. 2 SIGNATURES Pursuant to
the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized. Date: July 22, 2003 BOSTON PROPERTIES, INC /s/ Douglas T. Linde By: Douglas T. Linde Chief Financial Officer 3 Exhibit
99.1 Supplemental
Operating and Financial Data Boston Properties, Inc. Second Quarter 2003 INDEX Grand Total - Office,
Office/Technical, Industrial and
Retail Properties This supplemental package 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 and tax law changes and other risks and uncertainties detailed from
time to time in the Companys filings with the Securities and Exchange
Commission. 2 Boston Properties, Inc. (the Company), a
self-administered and self-managed real estate investment trust (REIT), is one
of the largest owners, managers and developers of first-class office properties
in the United States, with a significant presence in four core markets: Boston, Washington, D.C., Midtown Manhattan
and San Francisco. Boston Properties
was founded in 1970 by Mortimer B. Zuckerman and Edward H. Linde in Boston,
where it maintains its headquarters.
The Company acquires, develops and manages its properties through
full-service regional offices in Boston, New York City, Washington, D.C., San
Francisco and Princeton, New Jersey.
Its property portfolio primarily comprises first-class office space and
also includes hotels and industrial buildings.
Boston Properties is well known for its in-house building management
expertise and responsiveness to tenants needs. The Boston Properties Management Team is
among the most distinguished in the REIT industry. This deep and talented team of thirty individuals average
twenty-four years of real estate experience and sixteen years with Boston
Properties. Chairman Mortimer Zuckerman
is nationally known, with economic interests and/or board positions in several
other public companies, which include serving as Chairman and Editor-in-Chief
of U.S. News and World Report and Chairman and Publisher of the New York Daily
News. He holds an undergraduate degree
from McGill University, a law degree from Harvard University and an MBA from
the Wharton School, University of Pennsylvania. President and CEO Edward Linde serves on a number of corporate
and philanthropic boards, including John Hancock Financial Services, Inc. the
Boston Symphony Orchestra, National Association of Real Estate Investment
Trusts (NAREIT) and The Real Estate Roundtable. He holds a B.S. Civil Engineering degree from MIT and an MBA
with high distinction as a Baker Scholar from Harvard Graduate School of
Business Administration. High barriers to entry and strong real
estate fundamentals characterize Boston Properties targeted markets. Since becoming a public company in June
1997, Boston Properties has acquired assets totaling approximately $5.8 billion
representing approximately 20.1 million square feet. Its acquisition strategy focuces on Class-A properties that will
add near-term and long-term value from their disciplined expertise in property
management, leasing, development and capital markets. The Company holds a superior track record in
developing premiere CBD office buildings, suburban office centers and
build-to-suit projects. The Companys current development pipeline consists of
three projects representing 2.0 million square feet in Midtown Manhattan,
Herndon, Virginia and Washington, D.C.
In addition, the Company owns or controls land where it can develop an
additional 8.8 million square feet. 3 Corporate
Headquarters Stock
Exchange Listing Information
Requests 111 Huntington Avenue New York Stock Exchange To request a standard
Investor package or to be added to Boston, MA 02199-7610 our quarterly distribtion
list: (617) 236-3300 Trading
Symbol (617) 236-3311 (fax) BXP 617-236-3322 www.bostonproperties.com Investor_relations@bostonproperties.com Key
Management: Mortimer B. Zuckerman Chairman of the Board Edward H. Linde President, CEO and
Director Robert E. Burke Executive Vice President,
Operations Douglas T. Linde Senior Vice President,
CFO and Treasurer TIMING Quarterly results for 2003 will be announced
according to the following anticipated schedule: Third Quarter Late October Fourth Quarter Late January 4 COMMON STOCK DATA (NYSE:BXP) Boston
Properties common stock is traded primarily on the New York Stock Exchange
under the symbol: BXP. BXPs common
stock has had the following characteristics (based on New York Stock Exchange
closing prices): 2nd Quarter 2003 1st Quarter 2003 4th Quarter 2002 3rd Quarter 2002 High Price $ 44.51 $ 39.29 $ 37.43 $ 39.87 Low Price $ 38.65 $ 34.99 $ 33.93 $ 34.56 Average Price $ 41.36 $ 36.58 $ 36.50 $ 37.64 Closing Price, at the end of the quarter $ 43.80 $ 37.90 $ 36.86 $ 37.20 Dividends per share - annualized (1) $ 2.52 $ 2.44 $ 2.44 $ 2.44 Closing dividend yield - annualized 5.75 % 6.44 % 6.62 % 6.56 % Closing shares, common units and preferred units (if
converted) outstanding (thousands) 126,605 125,597 125,038 125,031 Closing market value of shares and units outstanding
(thousands) $ 5,545,299 $ 4,760,126 $ 4,608,901 $ 4,651,153 (1) Reflects dividend increase from $0.61 per share to
$0.63 per share effective Q2 2003. BPLP UNSECURED SENIOR NOTES Settlement Date 5/22/03 3/18/03 1/17/03 12/13/02 Principal Amount $ 250,000,000 $ 300,000,000 $ 175,000,000 $ 750,000,000 Yield (on issue date) 5.075 % 5.636 % 6.280 % 6.296 % Coupon 5.000 % 5.625 % 6.250 % 6.250 % Discount 99.329 % 99.898 % 99.763 % 99.650 % Ratings: Moodys Baa2 (stable) Baa2 (stable) Baa2 (stable) Baa2 (stable) S&P BBB (stable) BBB (stable) BBB (stable) BBB (stable) Fitch BBB (stable) BBB (stable) BBB (stable) BBB (stable) Maturity Date 6/1/15 4/15/15 1/15/13 1/15/13 5 (unaudited and
in thousands, except per share amounts) This section
includes non-GAAP financial measures, which are accompanied by what we consider
the most directly comparable financial measures calculated and presented in
accordance with GAAP. Quantitative
reconciliations of the differences between the non-GAAP financial measures
presented and the most directly comparable GAAP financial measures are shown on
pages 9 and 10. A description of the
non-GAAP financial measures we present and a statement of the reasons why
management believes the non-GAAP measures provide useful information to
investors about the companys financial condition or results of operations can
be found on page 53. Three Months Ended June 30, 2003 March 31, 2003 December 31, 2002 September 30, 2002 Income Items: Revenue $ 323,370 (1) $ 319,680 (1) $ 333,597 (1) $ 301,193 (1) Straight line rent (FASB 13) $ 10,687 $ 10,866 $ 11,938 $ 12,244 Fair value lease revenue (SFAS 141) (2) $ (167 ) $ $ $ Lease termination fees (included in revenues) $ 1,419 $ 1,761 $ 3,724 $ 1,858 Capitalized interest $ 4,601 $ 4,453 $ 4,719 $ 4,684 Capitalized wages $ 1,325 $ 1,172 $ 1,057 $ 1,562 Operating Margins [(rental revenue - rental expenses)/rental revenue]
(3) 70.1 % 68.3 % 69.0 % 67.0 % Net income available to common shareholders $ 63,236 $ 185,045 $ 260,146 $ 71,541 Funds from operations (FFO) available to common shareholders before
net derivative losses and after cash basis early surrender lease income
(4) $ 103,360 $ 102,735 $ 113,464 $ 98,980 FFO per share before net derivative losses and after cash basis early
surrender lease income - diluted (4) $ 1.03 $ 1.03 $ 1.14 $ 1.00 Net income available to common shareholders per share - basic $ 0.66 $ 1.93 $ 2.73 $ 0.75 Net income available to common shareholders per share -diluted $ 0.64 $ 1.91 $ 2.70 $ 0.74 Dividends per share $ 0.63 $ 0.61 $ 0.61 $ 0.61 Funds available for distribution (FAD) (5) $ 103,611 $ 107,962 $ 112,377 $ 95,901 Ratios: Interest Coverage Ratio (excluding capitalized interest) - cash basis
(6) 2.64 2.65 2.87 2.70 Interest Coverage Ratio (including capitalized interest) - cash basis
(6) 2.48 2.50 2.69 2.52 FFO Payout Ratio (7) 61.17 % 59.22 % 53.51 % 61.00 % FAD Payout Ratio (8) 71.39 % 65.77 % 62.88 % 73.44 % June 30, 2003 March 31, 2003 December 31, 2002 September 30, 2002 Capitalization: Total Debt $ 4,819,282 $ 4,980,113 $ 5,147,220 $ 5,466,692 Price @ Quarter End $ 43.8000 $ 37.9000 $ 36.8600 $ 37.2000 Equity Value @ Quarter End $ 5,545,299 $ 4,760,126 $ 4,608,901 $ 4,651,153 Total Market Capitalization (9) $ 10,364,581 $ 9,740,239 $ 9,756,121 $ 10,117,845 Debt/Total Market Capitalization (9) 46.50 % 51.13 % 52.76 % 54.03 % (1) Includes gross revenues from hotels of $17,213, $13,246, $24,779 and
$20,007 for the three months ended June 30, 2003, March 31, 2003, December 31,
2002 and September 30, 2002, respectively. (2) Represents the net adjustment for above and below market leases which
are being amortized over the terms of the respective leases in place at the
property acquisition date. (3) Exclusive of the gross up of reimbursable electricity amounts totaling
$6,459, $5,391, $6,476 and $6,329 for the three months ended June 30, 2003,
March 31, 2003 December 31, 2002 and September 30, 2002, respectively. (4) For a quantitative reconciliation of the differences between FFO and net
income available to common shareholders as the most comparable GAAP financial
measure, see page 9. (5) For a quantitative reconciliation of the differences between FAD and FFO
before net derivative losses and after cash basis early surrender lease income,
see page 10. (6) For additional detail, see page 10. (7) Gross dividends to common shareholders plus distributions to common
Operating Partnership unit holders divided by FFO per share before net
derivative losses and after cash basis early surrender lease income - diluted. (8) Gross
dividends to common shareholders plus distributions to common Operating
Partnership unit holders divided by FAD. (9) For
additional detail, see page 53. 6 (in thousands) June 30, 2003 March 31, 2003 December 31, 2002 September 30, 2002 (unaudited) (unaudited) (unaudited) ASSETS Real estate $ 7,863,035 $ 7,745,475 $ 7,781,684 $ 8,139,450 Development in progress 445,003 418,798 448,576 412,981 Land held for future development 218,045 216,537 215,866 213,769 Real estate held for sale 224,585 Less accumulated depreciation (893,246 ) (846,002 ) (822,933 ) (836,418 ) Total real estate 7,632,837 7,534,808 7,847,778 7,929,782 Cash and cash equivalents 158,587 384,418 55,275 28,793 Escrows 18,187 20,804 41,906 28,200 Tenant and other receivables, net 21,185 23,193 20,458 48,716 Accrued rental income, net 160,586 148,034 165,321 156,818 Deferred charges, net 168,833 165,559 176,545 148,435 Prepaid expenses and other assets 22,090 30,144 18,015 38,752 Investments in unconsolidated joint ventures 93,904 101,794 101,905 101,819 Total assets $ 8,276,209 $ 8,408,754 $ 8,427,203 $ 8,481,315 LIABILITIES AND STOCKHOLDERS EQUITY Liabilities: Mortgage notes payable $ 3,349,134 $ 3,758,406 $ 4,267,119 $ 4,422,692 Unsecured senior notes, net of discount 1,470,148 1,221,707 747,375 Unsecured bridge loan 105,683 1,000,000 Unsecured line of credit 27,043 44,000 Accounts payable and accrued expenses 49,299 63,319 73,846 69,097 Dividends and distributions payable 84,030 81,128 81,226 81,329 Interest rate contracts 12,677 13,663 14,514 15,115 Accrued interest payable 56,088 37,534 25,141 18,265 Other liabilities 63,771 63,992 81,085 70,292 Total liabilities 5,085,147 5,239,749 5,423,032 5,720,790 Commitments and contingencies Minority interests 857,058 860,182 844,581 804,229 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,
97,028,911, 95,928,738, 95,362,990, and 95,273,202 outstanding, respectively 970 959 954 953 Additional paid-in capital 2,032,952 2,010,764 1,982,689 1,977,560 Earnings in excess of dividends/(dividends in excess of earnings) 327,222 325,114 198,586 (2,532 ) Treasury common stock, at cost (2,722 ) (2,722 ) (2,722 ) (2,722 ) Unearned compensation (7,734 ) (8,448 ) (2,899 ) (3,355 ) Accumulated other comprehensive loss (16,684 ) (16,844 ) (17,018 ) (13,608 ) Total stockholders equity 2,334,004 2,308,823 2,159,590 1,956,296 Total liabilities and stockholders equity $ 8,276,209 $ 8,408,754 $ 8,427,203 $ 8,481,315 7 CONSOLIDATED INCOME STATEMENTS (in
thousands, except for per share amounts) Three Months Ended 30-Jun-03 31-Mar-03 31-Dec-02 30-Sep-02 Revenue: Rental Base Rent $ 248,848 $ 247,353 $ 253,948 $ 229,453 Recoveries from tenants 37,262 39,881 38,184 34,884 Parking and other 13,955 14,195 13,217 13,056 Total rental revenue 300,065 301,429 305,349 277,393 Hotel revenues 17,213 13,246 24,779 20,007 Development and management services 5,429 4,590 2,769 2,571 Interest and other 663 415 700 1,222 Total revenue 323,370 319,680 333,597 301,193 Expenses: Operating 57,909 61,188 59,328 61,553 Taxes 37,780 37,914 38,969 33,565 Hotel operating 12,258 11,171 17,562 13,524 General and administrative 11,028 11,399 12,703 9,956 Interest (1) 75,447 73,645 71,337 65,476 Depreciation and amortization 50,742 49,824 52,188 43,933 Net derivative losses 991 932 1,461 5,284 Loss from early extinguishment of debt 1,474 2,386 Total expenses 246,155 247,547 255,934 233,291 Income before minority interests and income
from unconsolidated joint ventures 77,215 72,133 77,663 67,902 Minority interest in property partnerships 245 397 162 720 Income from unconsolidated joint ventures 1,353 2,658 2,083 2,530 Income before minority interest in
Operating Partnership 78,813 75,188 79,908 71,152 Minority interest in Operating Partnership
(2) (19,123 ) (18,523 ) (19,498 ) (18,071 ) Income before gain on sales, net of minority
interest 59,690 56,665 60,410 53,081 Gain on sales of real estate and other
assets, net of minority interest 3,546 52,912 187,562 Income before gain on sales of land held
for development 63,236 109,577 247,972 53,081 Gain on sales of land held for development,
net 3,644 Income before discontinued operations 63,236 109,577 247,972 56,725 Income from discontinued operations, net of
minority interest 1,940 4,529 3,032 Gain on sales of real estate from
discontinued operations, net of minority interest 73,528 7,645 11,910 Income before preferred dividend 63,236 185,045 260,146 71,667 Preferred dividend (126 ) Net income available to common shareholders $ 63,236 $ 185,045 $ 260,146 $ 71,541 INCOME PER SHARE OF COMMON STOCK (EPS) Net income available to common shareholders
per share - basic $ 0.66 $ 1.93 $ 2.73 $ 0.75 Net income available to common shareholders
per share - diluted $ 0.64 $ 1.91 $ 2.70 $ 0.74 (1) Interest expense is reported net of
capitalized interest of $4,601, $4,453, $4,719 and $4,684 for the three months
ended June 30, 2003, March 31, 2003, December 31, 2002 and September 30, 2002,
respectively. (2) Equals minority interest percent of 17.45%,
17.62%, 17.69%, and 17.76% of income before minority interest in Operating
Partnership after deduction for preferred dividends and distributions for the
three months ended June 30, 2003, March 31, 2003, December 31, 2002 and
September 30, 2002, respectively. Certain prior period amounts have been
reclassified to conform to current period presentation. 8 (in thousands,
except for per share amounts) Three months ended 30-Jun-03 31-Mar-03 31-Dec-02 30-Sep-02 Net income available to common shareholders $ 63,236 $ 185,045 $ 260,146 $ 71,541 Add: Preferred dividend 126 Minority interest in Operating Partnership 19,123 18,523 19,498 18,071 Less: Minority interest in property partnerships 245 397 162 720 Income from unconsolidated joint ventures 1,353 2,658 2,083 2,530 Gain on sales of real estate and other
assets, net of minority interest 3,546 52,912 187,562 Gain on sales of land held for development,
net of minority interest 3,644 Income from discontinued operations, net of
minority interest 1,940 4,529 3,032 Gain on sales of real estate from
discontinued operations, net of minority interest 73,528 7,645 11,910 Income before minority interests and income
from unconsolidated joint ventures 77,215 72,133 77,663 67,902 Add: Real estate depreciation and amortization
(1) 52,338 51,791 56,072 46,971 Income from discontinued operations 2,355 5,503 3,687 Income from unconsolidated joint ventures 1,353 2,658 2,083 2,530 Loss from early extinguishment of debt
associated with the sale of properties 1,474 2,386 Less: Minority property partnerships share of
funds from operations 842 866 1,390 521 Preferred dividends and distributions 5,852 5,771 5,926 6,162 Funds from operations (FFO) 124,212 123,774 136,391 114,407 Add (subtract): Net derivative losses 991 932 1,461 5,284 Early surrender lease payments received -
contractual basis 667 FFO before net derivative losses and after
early surrender lease payments received $ 125,203 $ 124,706 $ 137,852 $ 120,358 FFO available to common shareholders before
net derivative losses and after early surrender lease payments received (2) $ 103,360 $ 102,735 $ 113,464 $ 98,980 FFO per share before net derivative losses
and after cash basis early surrender lease income - basic $ 1.07 $ 1.07 $ 1.19 $ 1.04 Weighted average shares outstanding - basic 96,531 95,733 95,313 94,904 FFO per share before net derivative losses
and after early surrender lease payments received - diluted $ 1.03 $ 1.03 $ 1.14 $ 1.00 FFO per share after net derivative losses
and before early surrender lease payments received - diluted $ 1.02 $ 1.02 $ 1.13 $ 0.95 Weighted average shares outstanding -
diluted 107,408 105,955 105,631 105,725 RECONCILIATION
TO DILUTED FUNDS FROM OPERATIONS (in thousands,
except for per share amounts) June 30, 2003 March 31, 2003 December 31, 2002 September 30, 2002 Income Shares Income Shares Income Shares Income Shares Basic FFO before net derivative losses and
after early surrender lease income $ 125,203 116,931 $ 124,706 116,207 $ 137,852 115,800 $ 120,358 115,402 Effect of Dilutive Securities Convertible Preferred Units 5,852 9,195 5,771 9,199 5,926 9,236 6,036 9,344 Convertible Preferred Stock 126 200 Stock Options and other 1,682 1,022 1,082 1,276 Diluted FFO before net derivative losses
and after early surrender lease payments received $ 131,055 127,808 $ 130,477 126,428 $ 143,778 126,118 $ 126,520 126,222 Companys share of diluted FFO before net
derivative losses and after early surrender lease payments received (3) $ 110,137 107,408 $ 109,348 105,955 $ 120,422 105,631 $ 105,974 105,725 FFO per share before net derivative losses
and after early surrender lease payments received - basic $ 1.07 $ 1.07 $ 1.19 $ 1.04 FFO per share before net derivative losses
and after early surrender lease payments received - diluted $ 1.03 $ 1.03 $ 1.14 $ 1.00 (1) Real estate
depreciation includes the Companys share of joint venture real estate
depreciation of $2,266, $2,514, $2,848 and $2,170 less corporate related
depreciation of $670, $674, $733 and $733 for the three months ended June 30,
2003, March 31, 2003, December 31, 2002 and September 30, 2002, respectively. (2) Based on weighted
average shares for the quarter.
Companys share for the quarter ended June 30, 2003, March 31, 2003,
December 31, 2002 and September 30, 2002 was 82.55%, 82.38%, 82.31%, and
82.24%, respectively. (3) Based on weighted
average diluted shares for the quarter.
Companys share for the quarter ended June 30, 2003, March 31, 2003,
December 31, 2002 and September 30, 2002 was 84.04%, 83.81%, 83.76% and 83.76%,
respectively. 9 Funds Available
for Distribution (FAD) (in thousands) Three Months Ended June 30, 2003 March 31, 2003 December 31, 2002 September 30, 2002 Funds from operations (FFO) before net
derivative losses and after cash basis early surrender lease income (see
page 9) $ 125,203 $ 124,706 $ 137,852 $ 120,358 Add: Non real estate depreciation 670 674 733 733 Fair value lease revenue (SFAS 141) 167 Less: Straight-line rent (10,687 ) (10,866 ) (11,938 ) (12,244 ) Recurring capital expenditures (4,726 ) (1,960 ) (5,909 ) (4,266 ) Hotel improvements, equipment upgrades and
replacements (911 ) (405 ) (188 ) (394 ) 2nd generation tenant improvements and
leasing commissions (6,105 ) (4,187 ) (8,173 ) (8,286 ) Funds available for distribution (FAD) $ 103,611 $ 107,962 $ 112,377 $ 95,901 Interest
Coverage Ratios (in thousands,
except for ratio amounts) Three Months Ended June 30, 2003 March 31, 2003 December 31, 2002 September 30, 2002 Excluding
Capitalized Interest Income before minority interests and income
from unconsolidated joint ventures $ 77,215 $ 72,133 $ 77,663 $ 67,902 Add: Discontinued operations 2,355 5,503 3,687 Interest expense 75,447 73,645 71,337 65,476 Depreciation 50,742 49,824 52,188 43,933 Net derivative losses 991 932 1,461 5,284 Prepayment penalty 1,474 2,386 Income from unconsolidated joint ventures 1,353 2,658 2,083 2,530 Discontinued Operations - depreciation 127 1,781 1,601 Discontinued Operations - interest expense 296 809 2,949 Fair value lease revenue (SFAS 141) 167 Less: Straight line rent (10,687 ) (10,866 ) (11,938 ) (12,244 ) Subtotal 195,228 192,578 203,273 181,118 Divided by: Interest expense (1) 74,077 72,352 69,901 64,202 Interest expense - discontinued operations 296 809 2,949 Total interest expense 74,077 72,648 70,710 67,151 Interest Coverage Ratio 2.64 2.65 2.87 2.70 Including
Capitalized Interest Income before minority interests and income
from unconsolidated joint ventures $ 77,215 $ 72,133 $ 77,663 $ 67,902 Add: Discontinued operations 2,355 5,503 3,687 Interest expense 75,447 73,645 71,337 65,476 Depreciation 50,742 49,824 52,188 43,933 Net derivative losses 991 932 1,461 5,284 Prepayment penantly 1,474 2,386 Income from unconsolidated joint ventures 1,353 2,658 2,083 2,530 Discontinued Operations - depreciation 127 1,781 1,601 Discontinued Operations - interest expense 296 809 2,949 Fair value lease revenue (SFAS 141) 167 Less: Straight line rent (10,687 ) (10,866 ) (11,938 ) (12,244 ) Subtotal 195,228 192,578 203,273 181,118 Divided by: Interest expense (1) (2) 78,678 76,805 74,763 68,867 Interest expense - discontinued operations 296 809 2,949 Total interest expense 78,678 77,101 75,572 71,816 Interest Coverage Ratio 2.48 2.50 2.69 2.52 (1) Excludes
amortization of financing costs of $1,370, $1,293, $1,436 and $1,274 for the
quarters ended June 30, 2003, March 31, 2003, December 31, 2002
and September 30, 2002, respectively. (2) Includes
capitalized interest of $4,601, $4,453, $4,719 and $4,684 for the quarters
ended June 30, 2003, March 31, 2003, December 31, 2002 and September 31, 2002,
respectively. 10 Debt Aggregate Principal Mortgage Notes Payable $ 3,349,134 Unsecured Senior Notes, net of discount 1,470,148 Unsecured Line of Credit Total Debt $ 4,819,282 Equity Shares & Units Common Equivalent (1) Common Stock 97,029 97,029 $ 4,249,870 Operating Partnership Units 20,383 20,383 892,775 Preferred Operating Partnership Units Series One (2) 2,368 2,106 92,243 Series Two 5,401 7,087 310,411 Total Equity 126,605 $ 5,545,299 Total Market Capitalization $ 10,364,581 (1) Value based on June 30, 2003 closing price of
$43.80 (2) These preferred units will be converted into
common operating partnership units in August 2003 pursuant to a redemption
notice given in July 2003. 11 Debt Maturities and Principal
Payments (in thousands) 2003 (1) 2004 2005 2006 2007 Thereafter Total Amount $ 22,423 $ 400,672 $ 296,409 $ 223,877 $ 184,204 $ 3,691,697 $ 4,819,282 Weighted Average Rate 7.07 % 4.19 % 6.71 % 7.28 % 6.59 % 6.67 % 6.50 % (1) Consists of
remaining portion of 2003. Unsecured Debt Unsecured Line of Credit - Matures January
17, 2006 (in thousands) Facility Outstanding Letters of Remaining $ 605,000 $ $ 5,909 $ 599,091 Unsecured Senior Notes (in thousands) Face Amount Amount net of discount $ 1,475,000 $ 1,470,148 Unsecured and Secured Debt Analysis % of Debt Weighted Weighted Average Unsecured Debt 30.51 % 5.95 % 10.4 years Secured Debt 69.49 % 6.74 % 5.5 years Total Debt 100.00 % 6.50 % 7.0 years Floating and Fixed Rate Debt Analysis % of Debt Weighted Weighted Average Floating Rate Debt 6.40 % 2.95 % 1.5 years Fixed Rate Debt 93.60 % 6.74 % 7.4 years Total Debt 100.00 % 6.50 % 7.0 years 12 Senior
Unsecured Debt Covenant Compliance Ratios (in thousands) In the fourth quarter of 2002 the Companys
operating partnership received investment grade ratings on its senior unsecured
debt securities and thereafter issued unsecured notes. The notes were issued under an indenture,
dated as of December 13, 2002, by and between Boston Properties Limited
Partnership and The Bank of New York, as trustee, as supplemented, which, among
other things, requires us to comply with the following limitations on
incurrence of debt: Limitation on Outstanding Debt; Limitation on Secured Debt;
Ratio of Annualized Consolidated EBITDA to Annualized Interest Expense; and
Maintenance of Unencumbered Assets.
Compliance with these restrictive covenants requires us to apply specialized
terms the meaning of which is described in detail in our filings with the SEC,
and to calculate ratios in the manner prescribed by the indenture. This section presents such ratios as of June 30,
2003 to show that the Companys operating partnership was in compliance with
the terms of the indenture agreement, as amended, which has been filed with the
SEC. Management is not presenting these
ratios and the related calculations for any other purpose or for any other
period, and is not intending for these measures to otherwise provide information
to investors about the Companys financial condition or results of
operations. Investors should not rely
on these measures other than for purposes of testing our compliance with the
indenture. June 30, 2003 Total Assets: Capitalized Property
Value $ 10,320,853 Cash and Cash
Equivalents 158,587 Undeveloped Land, at
Cost 218,045 Development in Process,
at Cost (including Joint Venture%) 462,506 Total Assets $ 11,159,991 Unencumbered Assets $ 4,342,725 Secured Debt (Fixed and
Variable) (1) $ 3,346,092 Joint Venture Debt 211,077 Contingent Liabilities
& Letters of Credit 20,336 Unsecured Debt (2) 1,475,000 Total Outstanding Debt $ 5,052,505 Consolidated EBITDA: Income before minority
interests and income from unconsolidated joint ventures (per Consolidated
Income Statement) $ 77,215 Add: Interest Expense (per Consolidated Income
Statement) 75,447 Add: Depreciation and Amortization (per
Consolidated Income Statement) 50,742 Add: Net derivative losses (SFAS No. 133) (per
Consolidated Income Statement) 991 Add: Loss from early extinguishment of debt
(per Consolidated Income Statement) EBITDA 204,395 Add: Company share of unconsolidated joint
venture EBITDA 6,851 Less: EBITDA related to
sold properties from continuing operations Consolidated EBITDA $ 211,246 Adjusted Interest
Expense: Interest Expense (per
Consolidated Income Statement) $ 75,447 Add: Company share of unconsolidated joint
venture interest expense 3,496 Less: amortization of financing costs (1,370 ) Less: interest expense
related to sold properties from continuing operations Adjusted Interest
Expense $ 77,573 Covenant
Ratios Test Actual Total Outstanding
Debt/Total Assets Less than
60% 45.3 % Secured Debt/Total
Assets Less than
50% 31.9 % Interest Coverage
(Annualized Consolidated EBITDA to Annualized Interest Expense) Greater than 1.50x 2.72 Unencumbered Assets/
Unsecured Debt Greater than 150% 294.4 % Unencumbered GAAP NOI $ 81,619 % of unencumbered NOI to
Total NOI 38.6 % # of unencumbered
properties 70 (1) Excludes Fair Value
Adjustment of $3.0 million. (2) Excludes Debt Discount
of $4.9 million. 13 DEBT
MATURITIES AND PRINCIPAL PAYMENTS (in thousands) Property 2003 2004 2005 2006 2007 Thereafter Total Citigroup Center $ 2,933 $ 6,191 $ 6,651 $ 7,145 $ 7,676 $ 483,253 $ 513,849 Embarcadero Center One,
Two and Federal Reserve 2,286 4,809 5,141 5,496 5,877 278,913 302,522 Times Square Tower 287,811 287,811 Prudential Center 2,160 4,591 4,919 5,256 5,619 259,705 282,250 280 Park Avenue 1,427 3,022 3,261 3,519 3,798 248,794 263,821 599 Lexington Avenue 225,000 225,000 Embarcadero Center Four 1,672 3,544 3,797 4,061 4,346 129,711 147,131 Embarcadero Center Three 1,120 2,351 2,506 2,671 132,726 141,374 Riverfront Plaza 1,382 2,905 3,104 3,314 3,540 95,327 109,572 Democracy Center 931 1,961 2,103 2,257 2,421 93,728 103,401 Embarcadero Center West
Tower 737 1,546 1,649 90,415 94,347 601 and 651 Gateway
Boulevard 422 899 977 1,062 1,155 83,566 88,081 100 East Pratt Street 927 1,964 2,100 2,246 2,401 78,105 87,743 One & Two Reston
Overlook 416 65,908 66,324 202, 206 & 214
Carnegie Center 310 663 719 780 845 58,217 61,534 New Dominion Technology
Park, Building One 43 91 654 1,282 1,378 54,042 57,490 Reservoir Place 632 1,321 1,400 1,484 1,572 50,258 56,667 Capital Gallery 660 1,404 1,524 50,651 54,239 504, 506 & 508
Carnegie Center 500 1,052 1,136 1,221 1,314 40,915 46,138 14 DEBT
MATURITIES AND PRINCIPAL PAYMENTS (in thousands) Property 2003 2004 2005 2006 2007 Thereafter Total 10 & 20 Burlington
Mall Rd & 91 Hartwell 273 688 741 795 855 35,589 38,941 10 Cambridge Center 239 607 659 715 777 31,436 34,433 1301 New York Avenue 620 1,315 1,417 1,531 1,651 23,409 29,943 Sumner Square 245 518 557 599 645 26,936 29,500 Eight Cambridge Center 241 557 601 649 702 24,486 27,236 510 Carnegie Center 276 588 635 683 735 23,519 26,436 Lockheed Martin Building 303 641 685 732 782 21,799 24,942 University Place 333 702 752 806 864 20,338 23,795 Reston Corporate Center 290 612 654 698 745 20,523 23,522 New Dominion Technology
Park, Bldg. 2 20,459 20,459 NIMA Building 251 530 566 604 644 17,785 20,380 Bedford Business Park 324 690 751 818 890 16,859 20,332 191 Spring Street 132 443 482 18,773 19,830 101 Carnegie Center 177 375 406 6,622 7,580 Montvale Center 82 173 189 6,762 7,206 Hilltop Business Center 79 200 214 230 246 4,336 5,305 22,423 400,672 296,409 223,877 184,204 2,221,549 3,349,134 Unsecured Senior Notes 1,470,148 1,470,148 Unsecured Line of Credit $ 22,423 $ 400,672 $ 296,409 $ 223,877 $ 184,204 $ 3,691,697 $ 4,819,282 15 Miscellaneous
Balance Sheet Information (unaudited and in thousands) as of June 30, 2003 One Market Metropolitan 140 265 Two 901 Combined Total Equity (1) $ 32 $ 11,036 $ 31,984 $ 5,442 $ 22,718 $ 8,792 $ 13,900 $ 93,904 Mortgage/Construction
loans payable (1) $ 18,840 $ 48,247 $ 69,482 $ 13,990 $ 18,897 $ 35,323 $ 6,298 $ 211,077 BXPs nominal ownership
percentage 25.00 % 50.00 % 51.00 % 25.00 % 35.00 % 50.00 % 25.00 % Results of
Operations for the three months ended June 30, 2003 One Market Metropolitan 140 265 Two 901 Combined REVENUE Total revenue $ 3,274 $ 4,844 $ 6,327 $ 2,338 $ 2,712 $ 4,096 $ $ 23,591 (3) EXPENSES Operating 910 1,712 2,074 417 1,320 981 7,414 SUBTOTAL 2,364 3,132 4,253 1,921 1,392 3,115 16,177 Interest 1,467 1,871 2,830 1,057 371 713 8,309 Depreciation and
amortization 635 1,348 1,162 343 693 548 4,729 NET
INCOME $ 262 $ (87 ) $ 261 $ 521 $ 328 $ 1,854 $ $ 3,139 BXPs share of net
income $ 92 (4) $ (44 ) $ 133 $ 130 (4) $ 115 $ 927 $ $ 1,353 BXPs share of
depreciation & amortization 357 674 592 126 243 274 2,266 BXPs share of Funds
from Operations (FFO) $ 449 (4) $ 630 $ 725 $ 256 (4) $ 358 $ 1,201 $ $ 3,619 (1) Represents the
Companys share. (2) Property is currently
under development. (3) The impact of the
straight-line rent adjustment increased revenue by $2,406 for the three months
ended June 30, 2003. (4) Reflects the
changes in the allocation percentages pursuant to the achievement of specified
investment return thresholds as provided for in the joint venture agreements. 16 UNCONSOLIDATED
JOINT VENTURE DEBT ANALYSIS (*) Debt Maturities and Principal
Payments (in thousands) 2003 2004 2005 2006 2007 Thereafter Total Amount $ 19,840 $ 37,325 $ 8,462 $ 2,343 $ 2,534 $ 140,573 $ 211,077 Weighted Average Rate 2.87 % 3.05 % 4.13 % 7.89 % 7.90 % 7.94 % 6.44 % Floating and Fixed Rate Debt Analysis % of Debt Weighted Weighted Average Floating Rate Debt 28.67 % 2.74 % 0.9 years Fixed Rate Debt 71.33 % 7.93 % 7.6 years Total Debt 100.00 % 6.44 % 5.7 years Debt Maturities and Principal Payments by
Property (in thousands) Property 2003 2004 2005 2006 2007 Thereafter Total Metropolitan Square (1) $ 359 $ 764 $ 830 $ 901 $ 978 $ 65,650 $ 69,482 Market Square North (2) 405 860 926 1,001 1,080 43,975 48,247 Two Freedom Square (2) 35,323 35,323 265 Franklin Street (3) 18,897 18,897 One Freedom Square (4) 105 221 239 258 279 17,738 18,840 140 Kendrick Street (4) 74 157 169 183 197 13,210 13,990 901 New York Avenue (4) 6,298 6,298 $ 19,840 $ 37,325 $ 8,462 $ 2,343 $ 2,534 $ 140,573 $ 211,077 (*) All amounts
represent the Companys share. (1) Boston Properties
has a 51% interest in this property. (2) Boston Properties
has a 50% interest in this property. (3) Boston Properties
has a 35% interest in this property. We
have notified the lender regarding our intention to extend the maturity date of
this loan to October 2004, as provided for by the loan agreement. (4) Boston Properties
has a 25% interest in this property 17 PORTFOLIO
OVERVIEW - SQUARE FOOTAGE Rentable Square Footage of In-Service
Properties by Location and Type of Property Geographic
Area Office (1) Office/Technical Industrial Total % of Total Greater Boston 7,818,962 (2) 545,206 164,313 8,528,481 27.31 % Greater Washington 6,252,402 (3) 970,865 7,223,267 23.13 % Greater San Francisco 4,706,790 144,366 60,000 4,911,156 15.73 % Midtown Manhattan 6,547,249 6,547,249 20.96 % Princeton/East
Brunswick, NJ 2,315,887 2,315,887 7.42 % Baltimore, MD 641,469 641,469 2.05 % Richmond, VA 901,308 901,308 2.89 % Bucks County, PA 161,000 161,000 0.52 % 29,184,067 1,660,437 385,313 31,229,817 100.00 % % of Total 93.45 % 5.32 % 1.23 % 100.00 % Hotel Properties Hotel
Properties Number of Square Long Wharf Marriott,
Boston, MA 402 420,000 Cambridge Center
Marriott, Cambridge, MA 431 330,400 Residence Inn by
Marriott, Cambridge, MA 221 187,474 Total Hotel Properties 1,054 937,874 Structured Parking Number of Square Total
Structured Parking 28,962 8,725,064 (1) Includes
approximately 1,200,000 square feet of retail space. (2) Includes 343,913
square feet at 265 Franklin Street which is 35% owned by Boston Properties and
380,987 square feet at 140 Kendrick Street which is 25% owned by Boston
Properties. (3) Includes 410,308
square feet at One Freedom Square which is 25% owned by Boston Properties,
587,217 square feet at Metropolitan Square which is 51% owned by Boston
Properties, 403,721 square feet at
Market Square North which is 50% owned by Boston Properties and 422,930 square
feet at Two Freedom Square which is 50% owned by Boston Properties. 18 In-Service Property
Listing as of
June 30, 2003 Sub Market Number of Square Feet Leased% Annualized Encumbered Central Greater
Boston Office 800 Boylston Street -
The Prudential Center CBD Boston MA 1 1,175,218 90.8 % $ 38.39 Y CBD 111 Huntington Avenue -
The Prudential Center (1) CBD Boston MA 1 853,672 99.0 % 49.12 N CBD 101 Huntington Avenue -
The Prudential Center CBD Boston MA 1 516,974 84.3 % 38.93 Y CBD The Shops at the
Prudential Center (2),(3) CBD Boston MA 1 537,026 95.7 % 49.63 Y CBD Shaws Supermarket at
the Prudential Center (1) CBD Boston MA 1 57,235 100.0 % 44.79 N CBD 265 Franklin Street (35%
ownership) CBD Boston MA 1 344,235 69.4 % 55.90 Y CBD One Cambridge Center East Cambridge MA 1 215,385 97.5 % 43.98 N CBD Three Cambridge Center East Cambridge MA 1 107,484 100.0 % 31.44 N CBD Eight Cambridge Center East Cambridge MA 1 177,226 100.0 % 31.63 Y CBD Ten Cambridge Center East Cambridge MA 1 152,664 100.0 % 32.08 Y CBD Eleven Cambridge Center East Cambridge MA 1 79,616 100.0 % 43.49 N CBD University Place Mid-Cambridge MA 1 195,282 100.0 % 36.68 Y CBD Reservoir Place Route 128 Mass Turnpike
MA 1 520,551 81.4 % 34.53 Y S 204 Second Avenue Route 128 Mass Turnpike
MA 1 40,974 52.7 % 30.50 N S 140 Kendrick Street
(25% ownership) Route 128 Mass Turnpike
MA 3 380,987 100.0 % 28.03 Y S 170 Tracer Lane Route 128 Mass Turnpike
MA 1 75,073 91.3 % 30.00 N S Waltham Office Center Route 128 Mass Turnpike
MA 3 130,209 85.2 % 30.52 N S 195 West Street Route 128 Mass Turnpike
MA 1 63,500 100.0 % 48.20 N S 200 West Street Route 128 Mass Turnpike
MA 1 248,048 100.0 % 35.59 N S Waltham Weston
Corporate Center (1) Route 128 Mass Turnpike
MA 1 308,599 43.1 % 32.66 N S 10 & 20 Burlington
Mall Road Route 128 Northwest MA 2 156,416 88.7 % 29.13 Y S Bedford Business Park Route 128 Northwest MA 1 90,000 100.0 % 20.72 Y S 32 Hartwell Avenue Route 128 Northwest MA 1 69,154 100.0 % 29.77 N S 91 Hartwell Avenue Route 128 Northwest MA 1 121,486 91.1 % 35.71 Y S 92 Hayden Avenue Route 128 Northwest MA 1 31,100 100.0 % 52.49 N S 100 Hayden Avenue Route 128 Northwest MA 1 55,924 100.0 % 19.95 N S 33 Hayden Avenue Route 128 Northwest MA 1 80,872 43.3 % 27.91 N S Lexington Office Park Route 128 Northwest MA 2 166,510 85.7 % 29.98 N S 191 Spring Street Route 128 Northwest MA 1 162,700 100.0 % 31.12 Y S 181 Spring Street Route 128 Northwest MA 1 53,595 41.2 % 36.88 N S 201 Spring Street Route 128 Northwest MA 1 102,500 100.0 % 32.87 N S 40 Shattuck Road Route 128 Northwest MA 1 120,000 95.6 % 27.20 N S Quorum Office Park Route 128 Northwest MA 2 259,918 100.0 % 19.43 N S Newport Office Park Route 128 South MA 1 168,829 44.6 % 25.32 N S 41 7,818,962 88.8 % $ 37.68 Office/Technical Fourteen Cambridge Center East Cambridge MA 1 67,362 100.0 % 22.00 N CBD Bedford Business Park Route 128 Northwest MA 2 383,704 100.0 % 15.71 Y S 17 Hartwell Avenue Route 128 Northwest MA 1 30,000 100.0 % 11.00 N S 164 Lexington Road Route 128 Northwest MA 1 64,140 100.0 % 10.57 N S 5 545,206 100.0 % $ 15.62 Industrial 40-46 Harvard Street Route 128 Southwest MA 1 164,313 74.9 % $ 7.47 N S Total Greater Boston: 47 8,528,481 89.2 % (1) Not included in same property analysis (2) 93,935 square feet of space added in Q2 2002
is not included in the same property analysis. (3) 93,899 square feet of space is unencumbered. 19 Sub Market Number of Square Feet Leased % Annualized Encumbered Central Greater
Washington, DC Office Capital Gallery Southwest Washington DC 1 396,894 97.9 % $ 37.50 Y CBD 500 E Street, N. W. Southwest Washington DC 1 242,769 100.0 % 33.66 N CBD Metropolitan Square
(51% ownership) East End Washington DC 1 585,220 97.6 % 39.94 Y CBD 1301 New York Avenue East End Washington DC 1 188,358 100.0 % 30.49 Y CBD Market Square North
(50% ownership) East End Washington DC 1 403,721 100.0 % 44.67 Y CBD Sumner Square CBD Washington DC 1 207,620 100.0 % 35.07 Y CBD Decoverly Two Montgomery County MD 1 77,747 100.0 % 24.18 N S Decoverly Three Montgomery County MD 1 77,040 100.0 % 26.28 N S Democracy Center Montgomery County MD 3 680,644 87.0 % 30.07 Y S Montvale Center Montgomery County MD 1 120,823 85.8 % 24.18 Y S 2600 Tower Oaks
Boulevard Montgomery County MD 1 178,887 100.0 % 33.09 N S Orbital Sciences
1&3 Loudoun County 2 176,726 100.0 % 23.32 N S Orbital Sciences 2 Loudoun County 1 160,502 100.0 % 23.66 N S The Arboretum Fairfax County VA 1 95,584 100.0 % 26.34 N S One Freedom Square (25%
ownership) Fairfax County VA 1 410,308 100.0 % 32.75 Y S Two Freedom Square (50%
ownership) (1) Fairfax County VA 1 422,930 99.2 % 33.78 Y S One Reston Overlook Fairfax County VA 1 312,685 100.0 % 24.46 Y S Two Reston Overlook Fairfax County VA 1 131,594 82.2 % 32.80 Y S One Discovery Square Fairfax County VA 1 181,019 100.0 % 36.83 N S Two Discovery Square
(1) Fairfax County VA 1 185,970 92.8 % 30.50 N S New Dominion Technology
Park Fairfax County VA 1 235,201 100.0 % 27.05 Y S Reston Corporate Center Fairfax County VA 2 261,046 100.0 % 32.56 Y S Lockheed Martin
Building Fairfax County VA 1 255,244 100.0 % 30.59 Y S NIMA Building Fairfax County VA 1 263,870 100.0 % 29.44 Y S 28 6,252,402 97.3 % $ 32.60 Office/Technical Broad Run Business Park
(1) Loudoun County 1 127,226 54.7 % 22.18 N S Sugarland Business
Park, Building One Fairfax County VA 1 52,797 22.8 % 22.67 N S Sugarland Business
Park, Building Two Fairfax County VA 1 59,215 65.9 % 20.46 N S 7435 Boston Boulevard Fairfax County VA 1 103,557 82.3 % 15.37 N S 7451 Boston Boulevard Fairfax County VA 1 47,001 66.1 % 17.35 N S 7450 Boston Boulevard Fairfax County VA 1 62,402 100.0 % 20.58 N S 7374 Boston Boulevard Fairfax County VA 1 57,321 100.0 % 13.87 N S 8000 Grainger Court Fairfax County VA 1 90,465 71.9 % 13.71 N S 7500 Boston Boulevard Fairfax County VA 1 79,971 100.0 % 14.63 N S 7501 Boston Boulevard Fairfax County VA 1 75,756 100.0 % 23.45 N S 7601 Boston Boulevard Fairfax County VA 1 103,750 100.0 % 14.28 N S 7375 Boston Boulevard Fairfax County VA 1 26,865 100.0 % 17.75 N S 8000 Corporate Court Fairfax County VA 1 52,539 100.0 % 10.27 N S 7300 Boston Boulevard Fairfax County VA 1 32,000 100.0 % 20.86 N S 14 970,865 81.6 % $ 17.09 Total Greater Washington: 42 7,223,267 95.2 % (1) Not included in same property analysis 20 Sub Market Number of Square Feet Leased % Annualized Encumbered Central Midtown
Manhattan Office 599 Lexington Avenue Park Avenue NY 1 1,019,341 95.3 % $ 62.40 Y CBD 280 Park Avenue Park Avenue NY 1 1,170,080 97.9 % 57.21 Y CBD Citigroup Center Park Avenue NY 1 1,577,959 99.9 % 59.52 Y CBD 399 Park Avenue (1) Park Avenue NY 1 1,678,090 99.5 % 69.47 N CBD 5 Times Square Times Square NY 1 1,101,779 100.0 % 49.98 N CBD Total Midtown Manhattan: 5 6,547,249 98.7 % $ 60.48 Princeton/East
Brunswick, NJ Office 101 Carnegie Center Princeton NJ 1 123,659 100.0 % $ 28.19 Y S 104 Carnegie Center Princeton NJ 1 102,830 85.2 % 32.74 N S 105 Carnegie Center Princeton NJ 1 69,648 100.0 % 29.39 N S 201 Carnegie Center Princeton NJ 6,500 100.0 % 25.42 N S 202 Carnegie Center Princeton NJ 1 128,715 97.7 % 30.03 Y S 210 Carnegie Center Princeton NJ 1 161,112 100.0 % 30.82 N S 211 Carnegie Center Princeton NJ 1 47,025 100.0 % 25.51 N S 212 Carnegie Center Princeton NJ 1 148,233 98.5 % 32.47 N S 214 Carnegie Center Princeton NJ 1 150,416 92.2 % 30.74 Y S 206 Carnegie Center Princeton NJ 1 161,763 100.0 % 28.98 Y S 302 Carnegie Center Princeton NJ 1 65,135 95.5 % 31.65 N S 502 Carnegie Center Princeton NJ 1 116,374 95.3 % 31.90 N S 510 Carnegie Center Princeton NJ 1 234,160 100.0 % 26.79 Y S 504 Carnegie Center Princeton NJ 1 121,990 100.0 % 27.67 Y S 506 Carnegie Center Princeton NJ 1 136,213 88.3 % 29.37 Y S 508 Carnegie Center Princeton NJ 1 131,085 100.0 % 27.23 Y S One Tower Center East Brunswick NJ 1 411,029 84.4 % 34.09 N S Total Princeton/East Brunswick, NJ: 16 2,315,887 94.8 % $ 30.19 Greater
San Francisco Office Embarcadero Center One CBD San Francisco CA 1 836,339 95.7 % 43.18 Y CBD Embarcadero Center Two CBD San Francisco CA 1 778,958 87.4 % 47.52 Y CBD Embarcadero Center
Three CBD San Francisco CA 1 773,693 86.6 % 42.57 Y CBD Embarcadero Center Four CBD San Francisco CA 1 936,302 91.4 % 62.61 Y CBD Federal Reserve CBD San Francisco CA 1 149,592 99.8 % 49.19 Y CBD West Tower CBD San Francisco CA 1 471,822 100.0 % 44.03 Y CBD 611 Gateway (1) South San Francisco CA 1 250,825 0.0 % N S 601 and 651 Gateway South San Francisco CA 2 509,259 82.4 % 37.29 Y S 9 4,706,790 86.0 % $ 47.63 Office/Technical Hilltop Office Center South San Francisco CA 9 144,366 77.8 % $ 14.99 Y S Industrial 560 Forbes Blvd South San Francisco CA 1 40,000 100.0 % 10.62 N S 430 Rozzi Place South San Francisco CA 1 20,000 100.0 % 12.09 N S 2 60,000 100.0 % $ 11.11 Total Greater San Francisco: 20 4,911,156 85.9 % (1) Not included in same property analysis 21 Sub Market Number of Square
Feet Leased% Annualized Encumbered Central Baltimore,
MD Office 100 East Pratt Street Baltimore MD 1 641,469 98.5 % $ 30.32 Y CBD Richmond,
VA Office Riverfront Plaza Richmond VA 1 901,308 91.4 % $ 24.71 Y CBD Bucks
County, PA Industrial 38 Cabot Boulevard Bucks County PA 1 161,000 100.0 % $ 4.79 N S Total
In-Service Properties: 133 31,229,817 92.8 % 22 TOP 20 TENANTS LISTING
AND PORTFOLIO TENANT DIVERSIFICATION TOP 20
TENANTS BY SQUARE FEET LEASED Tenant Sq. Ft. % of 1 U.S. Government 1,397,980 4.48 % 2 Citibank, N.A. 1,231,068 3.94 % 3 Ernst and Young 1,064,939 3.41 % 4 Lockheed Martin Corporation 601,995 1.93 % 5 Shearman & Sterling 585,808 1.88 % 6 Gillette Company 485,932 1.56 % 7 Lehman Brothers 436,723 1.40 % 8 Wachovia 393,794 1.26 % 9 Parametric Technology Corp. (1) 380,987 1.22 % 10 Washington Group International 365,245 1.17 % 11 Deutsche Bank 346,617 1.11 % 12 Orbital Sciences Corporation 337,228 1.08 % 13 TRW, Inc. 309,689 0.99 % 14 T. Rowe Price Associates, Inc. 304,129 0.97 % 15 Hunton & Williams 301,081 0.96 % 16 Kirkland & Ellis 294,821 0.94 % 17 Digitas 279,182 0.89 % 18 Accenture (1) 265,622 0.85 % 19 Bingham McCutchen 265,224 0.85 % 20 Tellabs Operations, Inc. 259,918 0.83 % Total % of Portfolio
Square Feet 31.73 % Total % of Portfolio
Revenue 34.55 % Major
Signed Deals for Future Development Tenant Sq. Ft. U.S. Government 257,400 Finnegan Henderson Farabow Garrett & Dunner,
LLP 251,337 OMelveny & Myers 220,887 (1) These tenants
occupy space in a property in which Boston Properties has a 25% interest. TENANT
DIVERSIFICATION (GROSS RENT) * * The
Companys tenants are classified according to the U.S. Governments North
American Industry Classification System (NAICS) which has replaced the Standard
Industrial Classification (SIC) system. 23 Percentage of Rental Revenues Less
Operating Expenses and Real Estate Taxes for In-Service Properties Geographic Area Office (1) Office/ Industrial Hotel Total Greater Boston 21.9 % 0.8 % 0.1 % 2.3 % 25.1 % Greater Washington 14.9 % 1.1 % 16.0 % Greater San Francisco 14.9 % 0.1 % 0.1 % 15.1 % Midtown Manhattan 34.8 % 0.2 % 35.0 % Princeton/East
Brunswick, NJ 5.2 % 0.1 % 5.3 % Baltimore, MD 1.8 % 1.8 % Richmond, VA 1.7 % 1.7 % Bucks County, PA Total 95.2 % 2.2 % 0.3 % 2.3 % 100.0 % Geographic Area CBD Suburban Total Greater Boston 18.0 % 7.1 % 25.1 % Greater Washington 4.7 % 11.4 % 16.1 % Greater San Francisco 13.7 % 1.4 % 15.1 % Midtown Manhattan 34.9 % 34.9 % Princeton/East
Brunswick, NJ 5.2 % 5.2 % Baltimore, MD 1.8 % 1.8 % Richmond, VA 1.7 % 1.7 % Bucks County, PA 0.1 % 0.1 % Total 74.8 % 25.2 % 100.0 % (1) Includes Retail Center (Prudential Center and
Embarcadero Center). 24 Same Property Occupancy - By Location CBD Suburban Total Location 30-Jun-03 30-Jun-02 30-Jun-03 30-Jun-02 30-Jun-03 30-Jun-02 Greater Boston 90.8 % 92.8 % 89.0 % 93.9 % 89.8 % 93.4 % Greater Washington 98.9 % 99.1 % 94.4 % 96.2 % 95.8 % 97.1 % Midtown Manhattan 98.5 % 98.9 % 98.5 % 98.9 % Baltimore, MD 98.5 % 98.2 % 98.5 % 98.2 % Princeton/East
Brunswick, NJ 94.8 % 90.8 % 94.8 % 90.8 % Richmond, VA 91.4 % 93.1 % 91.4 % 93.1 % Greater San Francisco 91.9 % 94.5 % 82.9 % 86.2 % 90.6 % 93.3 % Bucks County, PA 100.0 % 100.0 % 100.0 % 100.0 % Total Portfolio 94.8 % 96.1 % 92.1 % 93.8 % 93.7 % 95.1 % Same Property - By Type of Property CBD Suburban Total 30-Jun-03 30-Jun-02 30-Jun-03 30-Jun-02 30-Jun-03 30-Jun-02 Total Office Portfolio 94.8 % 96.1 % 92.6 % 93.5 % 93.9 % 95.1 % Total Office/Technical
Portfolio 100.0 % 100.0 % 89.6 % 93.9 % 90.0 % 94.1 % Total Industrial
Portfolio 89.3 % 100.0 % 89.3 % 100.0 % Total Portfolio 94.8 % 96.1 % 92.1 % 93.8 % 93.7 % 95.1 % 25 Lease Expirations Year of Lease Rentable Square Current Annualized Current Annualized Annualized Annualized Percentage of 2003 689,403 $ 23,846,576 $ 34.59 $ 23,991,336 $ 34.80 2.49 % 2004 1,867,439 72,251,766 38.69 73,010,346 39.10 6.74 % 2005 2,386,437 92,048,847 38.57 94,285,870 39.51 8.62 % 2006 2,949,113 126,836,566 43.01 130,531,693 44.26 10.65 % 2007 2,279,077 87,508,668 38.40 91,121,341 39.98 8.23 % 2008 1,470,442 61,564,123 41.87 64,620,470 43.95 5.31 % 2009 2,423,879 95,683,023 39.48 104,402,579 43.07 8.75 % 2010 1,359,353 63,834,257 46.96 71,464,301 52.57 4.91 % 2011 2,640,870 108,521,309 41.09 124,300,795 47.07 9.54 % 2012 2,097,043 95,330,909 45.46 103,659,111 49.43 7.57 % Thereafter 5,346,474 257,905,634 48.24 313,803,231 58.69 19.31 % Occupancy By Location* CBD Suburban Total Location 30-Jun-03 30-Jun-02 30-Jun-03 30-Jun-02 30-Jun-03 30-Jun-02 Greater Boston 92.5 % 92.5 % 84.0 % 92.6 % 88.8 % 92.5 % Greater Washington 98.9 % 99.4 % 96.5 % 97.0 % 97.3 % 98.2 % Midtown Manhattan 98.7 % 98.4 % 98.7 % 98.4 % Baltimore, MD 98.5 % 97.8 % 98.5 % 97.8 % Princeton/East
Brunswick, NJ 94.8 % 90.8 % 94.8 % 90.8 % Richmond, VA 91.4 % 93.1 % 91.4 % 93.1 % Greater San Francisco 91.9 % 94.5 % 55.2 % 85.5 % 86.0 % 93.5 % Bucks County, PA n/a n/a n/a n/a n/a n/a Total Portfolio 95.5 % 96.2 % 89.2 % 93.4 % 93.2 % 95.3 % *
Includes approximately 1,500,000 square feet of retail space. 26 IN-SERVICE OFFICE/TECHNICAL PROPERTIES Lease Expirations Year of Lease Rentable Square Current Annualized Current Annualized Annualized Annualized Percentage of 2003 111,435 $ 2,019,529 $ 18.12 $ 2,019,529 $ 18.12 6.71 % 2004 82,291 1,516,632 18.43 1,527,380 18.56 4.96 % 2005 148,414 2,119,974 14.28 2,207,509 14.87 8.94 % 2006 297,604 4,329,235 14.55 4,382,165 14.72 17.92 % 2007 317,912 5,435,164 17.10 5,915,518 18.61 19.15 % 2008 24,939 380,034 419,717 1.50 % 2009 2010 79,971 1,170,372 14.63 1,170,372 14.63 4.82 % 2011 137,321 2,379,601 17.33 2,582,414 18.81 8.27 % 2012 67,362 1,481,908 22.00 1,633,473 24.25 4.06 % Thereafter 205,304 3,692,408 17.99 4,303,743 20.96 12.36 % Occupancy By Location CBD Suburban Total Location 30-Jun-03 30-Jun-02 30-Jun-03 30-Jun-02 30-Jun-03 30-Jun-02 Greater Boston 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % Greater Washington 81.6 % 92.3 % 81.6 % 92.3 % Midtown Manhattan n/a n/a n/a n/a n/a n/a Baltimore, MD n/a n/a n/a n/a n/a n/a Princeton/East
Brunswick, NJ n/a n/a n/a n/a n/a n/a Richmond, VA n/a n/a n/a n/a n/a n/a Greater San Francisco 77.8 % 82.8 % 77.8 % 82.8 % Bucks County, PA n/a n/a n/a n/a n/a n/a Total Portfolio 100.0 % 100.0 % 86.8 % 93.9 % 87.3 % 94.1 % 27 IN-SERVICE INDUSTRIAL PROPERTIES Lease
Expirations Year of Lease Rentable Square Current Annualized Current Annualized Annualized Annualized Percentage of 2003 128,105 $ 956,761 $ 7.47 $ 956,761 $ 7.47 33.25 % 2004 201,000 1,195,884 5.95 1,205,484 6.00 52.17 % 2005 2006 2007 20,000 241,890 12.09 260,859 13.04 5.19 % 2008 2009 2010 2011 2012 Thereafter Occupancy By
Location CBD Suburban Total Location 30-Jun-03 30-Jun-02 30-Jun-03 30-Jun-02 30-Jun-03 30-Jun-02 Greater Boston 74.9 % 100.0 % 74.9 % 100.0% Greater Washington n/a n/a n/a n/a n/a n/a Midtown Manhattan n/a n/a n/a n/a n/a n/a Baltimore, MD n/a n/a n/a n/a n/a n/a Princeton/East Brunswick, NJ n/a n/a n/a n/a n/a n/a Richmond, VA n/a n/a n/a n/a n/a n/a Greater San Francisco 100.0 % 100.0 % 100.0 % 100.0% Bucks County, PA 100.0 % 100.0 % 100.0 % 100.0% Total Portfolio 89.3 % 100.0 % 89.3 % 100.0% 28 Lease
Expirations Year of Lease Expiration Rentable Square Current Annualized Current Annualized Annualized Annualized Percentage of 2003 55,423 $ 4,321,734 $ 77.98 $ 4,281,582 $ 77.25 3.70 % 2004 79,240 5,670,470 71.56 5,681,772 71.70 5.29 % 2005 94,767 4,251,340 44.86 4,387,122 46.29 6.32 % 2006 49,726 2,852,453 57.36 2,874,568 57.81 3.32 % 2007 42,847 2,101,402 49.04 2,233,466 52.13 2.86 % 2008 65,066 3,470,419 53.34 3,571,916 54.90 4.34 % 2009 45,169 2,131,532 47.19 2,218,270 49.11 3.01 % 2010 83,166 3,437,095 41.33 3,819,606 45.93 5.55 % 2011 41,289 2,595,010 62.85 2,993,839 72.51 2.76 % 2012 101,610 4,822,177 47.46 5,413,669 53.28 6.77 % Thereafter 618,219 30,660,470 49.59 38,022,256 61.50 41.26 % 29 IN-SERVICE PROPERTIES Lease Expiration Year of Lease Rentable Square Current Annualized Current Annualized Annualized Annualized Percentage of 2003 984,366 $ 31,144,600 $ 31.64 $ 31,249,209 $ 31.75 3.2 % 2004 2,229,970 80,634,752 36.16 81,424,982 36.51 7.1 % 2005 2,629,618 98,420,161 37.43 100,880,502 38.36 8.4 % 2006 3,296,443 134,018,254 40.66 137,788,427 41.80 10.6 % 2007 2,659,836 95,287,125 35.82 99,531,184 37.42 8.5 % 2008 1,560,447 65,414,576 41.92 68,612,103 43.97 5.0 % 2009 2,469,048 97,814,555 39.62 106,620,848 43.18 7.9 % 2010 1,522,490 68,441,723 44.95 76,454,279 50.22 4.9 % 2011 2,819,480 113,495,920 40.25 129,877,048 46.06 9.0 % 2012 2,266,015 101,634,995 44.85 110,706,253 48.86 7.3 % Thereafter 6,169,997 292,258,512 47.37 356,129,230 57.72 19.8 % Occupancy
By Location CBD Suburban Total Location 30-Jun-03 30-Jun-02 30-Jun-03 30-Jun-02 30-Jun-03 30-Jun-02 Greater Boston 92.6 % 92.6 % 85.5 % 93.9 % 89.2 % 93.2 % Greater Washington 98.9 % 99.4 % 93.8 % 96.0 % 95.2 % 97.5 % Midtown Manhattan 98.7 % 98.4 % 98.7 % 98.4 % Baltimore, MD 98.5 % 97.8 % 98.5 % 97.8 % Princeton/East Brunswick, NJ 94.8 % 90.8 % 94.8 % 90.8 % Richmond, VA 91.4 % 93.1 % 91.4 % 93.1 % Greater San Francisco 91.9 % 94.5 % 61.3 % 89.4 % 85.9 % 93.6 % Bucks County, PA 100.0 % 100.0 % 100.0 % 100.0 % Total Portfolio 95.5 % 96.2 % 88.9 % 93.8 % 92.8 % 95.3 % 30 IN-SERVICE GREATER BOSTON PROPERTIES Lease
Expirations - Greater Boston OFFICE OFFICE/TECHNICAL Year of Lease Rentable Square Current Annualized Per Annualized Per Rentable Square Current Annualized Per Annualized Per 2003 96,476 $ 3,283,982 $ 34.04 $ 3,275,582 $ 33.95 $ $ $ $ 2004 440,314 15,040,180 34.16 15,635,057 35.51 2005 847,475 34,588,260 40.81 35,095,750 41.41 2006 550,049 20,104,625 36.55 20,454,872 37.19 253,704 3,637,962 14.34 3,637,962 14.34 2007 460,838 17,723,934 38.46 19,067,767 41.38 144,140 1,813,124 12.58 2,236,404 15.52 2008 326,641 10,505,258 32.16 11,059,733 33.86 2009 995,470 36,971,788 37.14 40,764,088 40.95 2010 197,524 7,638,453 38.67 8,400,105 42.53 2011 762,735 28,440,890 37.29 33,578,037 44.02 80,000 1,584,819 19.81 1,784,820 22.31 2012 613,127 22,454,543 36.62 24,943,670 40.68 67,362 1,481,908 22.00 1,633,473 24.25 Thereafter 858,075 33,113,181 38.59 41,754,114 48.66 INDUSTRIAL RETAIL Year of Lease Rentable Square Current Annualized Per Annualized Per Rentable Square Current Annualized Per Annualized Per 2003 128,105 $ 956,761 $ 7.47 $ 956,761 $ 7.47 27,569 $ 2,984,756 $ 108.26 $ 2,944,604 $ 106.81 2004 40,867 3,829,896 93.72 3,838,404 93.92 2005 60,671 2,428,039 40.02 2,515,735 41.47 2006 14,431 1,024,451 70.99 1,024,451 70.99 2007 432 85,923 198.90 93,300 215.97 2008 13,965 1,108,977 79.41 1,072,977 76.83 2009 6,250 492,545 78.81 492,545 78.81 2010 37,110 1,422,237 38.32 1,496,457 40.32 2011 11,599 609,538 52.55 658,038 56.73 2012 52,284 1,752,004 33.51 1,812,228 34.66 Thereafter 405,596 14,957,817 36.88 17,556,164 43.28 31 IN-SERVICE GREATER BOSTON PROPERTIES Quarterly Lease Expirations - Greater Boston OFFICE OFFICE/TECHNICAL Year of Lease Rentable Square Current Annualized Per Annualized Per Rentable Square Current Annualized Per Annualized Per Q1 2003 $ $ $ $ $ $ $ $ Q2
2003 Q3
2003 70,165 2,534,471 39.12 2,534,471 36.12 Q4
2003 26,311 749,511 28.49 741,111 28.17 Total
2003 96,476 $ 3,283,982 $ 34.04 $ 3,275,582 $ 33.95 $ $ $ $ Q1 2004 57,562 $ 1,998,437 34.72 $ 1,998,437 34.72 $ $ $ $ Q2
2004 89,659 2,806,115 31.30 3,014,739 33.62 Q3
2004 190,498 6,668,030 35.00 7,027,038 36.89 Q4
2004 102,595 3,567,598 34.77 3,594,843 35.04 Total
2004 440,314 $ 15,040,180 $ 34.16 $ 15,635,057 $ 35.51 $ $ $ $ INDUSTRIAL RETAIL Year of Lease Rentable Square Current Annualized Per Annualized Per Rentable Square Current Annualized Per Annualized Per Q1 2003 $ $ $ $ $ $ $ $ Q2
2003 Q3
2003 128,105 956,761 7.47 956,761 7.47 1,275 193,000 151.37 193,000 151.37 Q4
2003 26,294 2,791,756 106.17 2,751,604 104.65 Total
2003 128,105 $ 956,761 $ 7.47 $ 956,761 $ 7.47 27,569 $ 2,984,756 $ 108.26 $ 2,944,604 $ 106.81 Q1 2004 $ $ $ 22,053 $ 1,809,059 82.03 $ 1,795,559 $ 81.42 Q2
2004 10,794 1,445,749 133.94 1,439,749 133.38 Q3
2004 3,187 292,281 91.71 292,281 91.71 Q4
2004 4,833 282,808 58.52 310,816 64.31 Total
2004 $ $ $ $ 40,867 $ 3,289,897 $ 93.72 $ 3,838,405 $ 93.92 32 IN-SERVICE GREATER WASHINGTON PROPERTIES Lease Expirations - Greater Washington OFFICE OFFICE/TECHNICAL Year of Lease Rentable Square Current Annualized Per Annualized Per Rentable Square Current Annualized Per Annualized Per 2003 51,864 $ 1,570,503 $ 30.28 $ 1,572,470 $ 30.32 86,380 $ 1,631,218 $ 18.88 $ 1,631,218 $ 18.88 2004 220,253 8,297,233 37.67 8,369,980 38.00 67,791 1,276,908 18.84 1,283,396 18.93 2005 461,175 16,737,007 36.29 17,603,700 38.17 101,345 1,454,787 14.35 1,518,693 14.99 2006 421,027 12,044,319 28.61 12,801,556 30.41 33,400 527,690 15.80 569,160 17.04 2007 629,566 20,770,865 32.99 21,221,683 33.71 163,422 3,493,161 21.38 3,520,715 21.54 2008 461,613 13,921,818 30.16 14,673,677 31.79 23,439 361,314 15.42 399,557 17.05 2009 713,857 24,549,275 34.39 25,998,982 36.42 2010 518,249 20,342,687 39.25 23,773,568 45.87 79,971 1,170,372 14.63 1,170,372 14.63 2011 1,062,026 32,987,680 31.06 38,955,413 36.68 57,321 794,782 13.87 797,594 13.91 2012 434,504 15,435,208 35.52 19,438,658 44.74 Thereafter 994,592 29,171,416 29.33 37,702,400 37.91 205,304 3,692,408 17.99 4,303,743 20.96 INDUSTRIAL RETAIL Year of Lease Rentable Square Current Annualized Per Annualized Per Rentable Square Current Annualized Per Annualized Per 2003 $ $ $ $ $ $ $ $ 2004 2,151 103,154 47.96 103,154 47.96 2005 4,274 141,964 33.22 143,882 33.66 2006 3,309 114,577 34.63 114,942 34.74 2007 16,548 423,430 25.59 446,136 26.96 2008 16,338 598,212 36.61 685,147 41.94 2009 3,871 41,744 10.78 41,744 10.78 2010 10,277 373,278 36.32 433,983 42.23 2011 11,221 475,535 42.38 535,392 47.71 2012 10,046 265,496 26.43 324,961 32.35 Thereafter 36,415 1,453,553 39.92 1,910,903 52.48 33 IN-SERVICE
GREATER WASHINGTON PROPERTIES Quarterly Lease Expirations - Greater
Washington OFFICE OFFICE/TECHNICAL Year of Lease Rentable Square Current Annualized Per Annualized Per Rentable Square Current Annualized Per Annualized Per Q1 2003 $ $ $ $ $ $ $ $ Q2 2003 Q3 2003 17,139 470,291 27.44 470,291 27.44 79,380 1,511,667 19.04 1,511,667 19.04 Q4 2003 34,725 1,100,212 31.68 1,102,180 31.74 7,000 119,551 17.08 119,551 17.08 Total 2003 51,864 $ 1,570,503 $ 30.28 $ 1,572,470 $ 30.32 86,380 $ 1,631,218 $ 18.88 $ 1,631,218 $ 18.88 Q1 2004 50,565 $ 1,690,445 $ 33 1,690,445 33.43 14,338 $ 239,826 16.73 239,826 16.73 Q2 2004 40,483 1,309,095 32.34 1,311,547 32.40 43,101 811,781 18.83 811,781 18.83 Q3 2004 97,372 4,051,136 41.60 4,093,967 42.04 Q4 2004 31,833 1,246,557 39.16 1,274,021 40.02 10,352 225,301 21.76 231,788 22.39 Total 2004 220,253 $ 8,297,233 $ 37.67 $ 8,369,980 $ 38.00 67,791 $ 1,276,908 $ 18.84 $ 1,283,395 $ 18.93 INDUSTRIAL RETAIL Year of Lease Rentable Square Current Annualized Per Annualized Per Rentable Square Current Annualized Per Annualized Per Q1 2003 $ $ $ $ $ $ $ $ Q2 2003 Q3 2003 Q4 2003 Total 2003 $ $ $ $ $ $ $ Q1 2004 $ $ $ $ $ $ $ $ Q2 2004 2,151 103,154 47.96 103,154 47.96 Q3 2004 Q4 2004 Total 2004 $ $ $ $ 2,151 $ 103,154 $ 47.96 $ 103,154 $ 47.96 34 IN-SERVICE GREATER SAN FRANCISCO PROPERTIES Lease
Expirations - Greater San Francisco OFFICE OFFICE/TECHNICAL Year of Lease Rentable Square Current Annualized Per Annualized Per Rentable Square Current Annualized Per Annualized Per 2003 315,509 $ 12,112,073 $ 38.39 $ 12,257,966 $ 38.85 25,055 $ 388,311 $ 15.50 $ 388,311 $ 15.50 2004 558,525 24,956,471 44.68 25,000,116 44.76 14,500 239,724 16.53 243,984 16.83 2005 347,813 16,298,546 46.86 16,762,459 48.19 47,069 665,187 14.13 688,817 14.63 2006 833,580 43,286,781 51.93 44,935,397 53.91 10,500 163,584 15.58 175,044 16.67 2007 407,813 20,496,382 50.26 21,011,415 51.52 10,350 128,880 12.45 158,400 15.30 2008 222,382 9,373,871 42.15 9,723,658 43.73 1,500 18,720 12.48 20,160 13.44 2009 241,254 11,150,239 46.22 11,815,396 48.97 2010 185,628 11,197,216 60.32 12,990,794 69.98 2011 192,684 17,982,929 93.33 18,475,523 95.89 2012 127,771 5,459,564 42.73 5,974,226 46.76 Thereafter 180,312 7,328,303 40.64 7,909,169 43.86 INDUSTRIAL RETAIL Year of Lease Rentable Square Current Annualized Per Annualized Per Rentable Square Current Annualized Per Annualized Per 2003 $ $ $ $ 27,054 $ 1,067,047 $ 39.44 $ 1,067,047 $ 39.44 2004 40,000 424,836 10.62 434,436 10.86 29,485 1,432,066 48.57 1,432,066 48.57 2005 23,012 1,142,616 49.65 1,163,632 50.57 2006 18,043 903,565 50.08 910,694 50.47 2007 20,000 241,890 12.09 260,859 13.04 18,341 1,145,990 62.48 1,231,740 67.16 2008 27,970 1,536,359 54.93 1,557,353 55.68 2009 35,048 1,597,243 45.57 1,683,981 48.05 2010 30,749 1,305,084 42.44 1,475,171 47.97 2011 3,474 203,930 58.70 234,550 67.52 2012 33,641 2,182,836 64.89 2,457,670 73.06 Thereafter 9,574 756,394 79.00 854,251 89.23 35 IN-SERVICE GREATER SAN FRANCISCO PROPERTIES Quarterly Lease
Expirations - Greater San Francisco OFFICE OFFICE/TECHNICAL Year of Lease Rentable Square Current Annualized Per Annualized Per Rentable Square Current Annualized Per Annualized Per Q1
2003 $ $ $ $ $ $ $ $ Q2
2003 Q3
2003 31,939 1,402,791 43.92 1,402,791 43.92 17,047 258,408 15.16 258,408 15.16 Q4
2003 283,570 10,709,282 37.77 10,855,175 38.28 8,008 129,903 16.22 129,903 16.22 Total
2003 315,509 $ 12,112,073 $ 38.39 $ 12,257,966 38.85 25,055 $ 388,311 $ 15.50 $ 388,311 $ 15.50 Q1 2004 34,574 1,870,502 54.10 1,884,627 54.51 $ $ $ Q2
2004 152,623 5,650,821 37.02 5,650,821 37.02 5,000 80,040 16.01 80,040 16.01 Q3
2004 235,737 11,158,631 47.34 11,164,947 47.36 5,500 102,936 18.72 105,576 19.20 Q4
2004 135,591 6,276,517 46.29 6,299,720 46.46 4,000 56,748 14.19 58,368 14.59 Total
2004 558,525 $ 24,956,471 $ 44.68 $ 25,000,115 $ 44.76 14,500 $ 239,724 $ 16.53 $ 243,984 $ 16.83 INDUSTRIAL RETAIL Year of Lease Rentable Square Current Annualized Per Annualized Per Rentable Square Current Annualized Per Annualized Per Q1
2003 $ $ $ $ $ $ $ $ Q2
2003 Q3
2003 5,410 235,302 43.49 235,302 43.49 Q4
2003 21,644 831,746 38.43 831,746 38.43 Total
2003 $ $ $ 27,054 $ 1,067,048 $ 39.44 $ 1,067,048 $ 39.44 Q1 2004 16,598 $ 717,244 $ 43.21 717,244 $ 43.21 Q2
2004 200 3,600 18.00 3,600 18.00 Q3
2004 4,982 285,923 57.39 285,923 57.39 Q4
2004 40,000 424,836 10.62 434,436 10.86 7,705 425,299 55.20 425,299 55.20 Total
2004 40,000 $ 424,836 $ 10.62 $ 434,436 $ 10.86 29,485 $ 1,432,066 $ 48.57 $ 1,432,066 $ 48.57 36 IN-SERVICE MIDTOWN MANHATTAN PROPERTIES Lease Expirations - Midtown Manhattan OFFICE OFFICE/TECHNICAL Year of Lease Rentable Square Current Annualized Per Annualized Per Rentable Square Current Annualized Per Annualized Per 2003 37,970 $ 2,093,157 $ 55.13 $ 2,093,157 $ 55.13 $ $ $ $ 2004 153,624 9,469,506 61.64 9,484,530 61.74 2005 102,427 7,045,706 68.79 7,084,630 69.17 2006 428,385 29,328,051 68.46 29,621,253 69.15 2007 180,808 10,975,186 60.70 11,078,081 61.27 2008 454,408 27,597,689 60.73 28,979,435 63.77 2009 280,620 17,046,517 60.75 19,138,307 68.20 2010 274,195 18,927,466 69.03 19,994,243 72.92 2011 363,724 21,211,117 58.32 24,535,846 67.46 2012 891,075 51,026,407 57.26 52,083,280 58.45 Thereafter 3,032,320 179,823,376 59.30 217,061,175 71.58 INDUSTRIAL RETAIL Year of Lease Rentable Square Current Annualized Per Annualized Per Rentable Square Current Annualized Per Annualized Per 2003 $ $ $ $ 800 $ 261,210 $ 326.51 $ 261,210 $ 326.51 2004 1,650 184,730 111.96 187,524 113.65 2005 1,514 283,800 187.45 295,107 194.92 2006 10,607 647,479 61.04 662,100 62.42 2007 826 183,204 221.80 199,436 241.45 2008 3,232 149,192 46.16 165,734 51.28 2009 2010 5,030 336,496 66.90 413,996 82.31 2011 14,995 1,306,007 87.10 1,565,859 104.43 2012 5,639 621,841 110.28 818,811 145.20 Thereafter 152,056 13,205,652 86.85 17,309,516 113.84 37 Quarterly Lease Expirations - Midtown
Manhattan OFFICE OFFICE/TECHNICAL Year of Lease Rentable Square Current Annualized Per Annualized Per Rentable Square Current Annualized Per Annualized Per Q1 2003 $ $ $ $ $ $ $ $ Q2
2003 Q3
2003 12,471 712,698 57.15 712,698 57.15 Q4
2003 25,499 1,380,459 54.14 1,380,459 54.14 Total
2003 37,970 $ 2,093,157 $ 55.13 $ 2,093,157 $ 55.13 $ $ $ $ Q1 2004 $ $ $ $ $ $ Q2
2004 49,328 4,012,217 81.34 4,012,217 81.34 Q3
2004 Q4
2004 104,296 5,457,288 52.33 5,472,312 52.47 Total
2004 153,624 $ 9,469,505 $ 61.64 $ 9,484,529 $ 61.74 $ $ $ $ INDUSTRIAL RETAIL Year of Lease Rentable Square Current Annualized Per Annualized Per Rentable Square Current Annualized Per Annualized Per Q1 2003 $ $ $ $ $ $ $ $ Q2
2003 Q3
2003 Q4
2003 800 261,210 326.51 261,210 326.51 Total
2003 $ $ $ $ 800 $ 261,210 $ 326.51 $ 261,210 $ 326.51 Q1
2004 $ $ $ $ $ $ $ $ Q2
2004 350 47,861 136.75 50,655 144.73 Q3
2004 Q4
2004 1,300 136,869 105.28 136,869 105.28 Total
2004 $ $ $ $ 1,650 $ 184,730 $ 111.96 $ 187,524 $ 113.65 38 Lease Expirations - Princeton/East
Brunswick OFFICE OFFICE/TECHNICAL Year of Lease Rentable Square Current Annualized Per Annualized Per Rentable Square Current Annualized Per Annualized Per 2003 80,586 $ 2,243,192 $ 27.84 $ 2,243,192 $ 27.84 $ $ $ $ 2004 416,315 12,670,396 30.43 12,670,396 30.43 2005 228,388 7,194,245 31.50 7,245,104 31.72 2006 89,577 3,026,823 33.79 3,162,833 35.31 2007 510,959 14,651,330 28.67 15,804,639 30.93 2008 2009 161,514 5,204,053 32.22 5,818,297 36.02 2010 154,917 5,106,368 32.96 5,603,900 36.17 2011 255,083 7,774,595 30.48 8,616,363 33.78 2012 Thereafter 281,175 8,469,358 30.12 9,376,373 33.35 INDUSTRIAL RETAIL Year of Lease Rentable Square Current Annualized Per Annualized Per Rentable Square Current Annualized Per Annualized Per 2003 $ $ $ $ $ $ $ $ 2004 2,904 48,000 16.53 48,000 16.53 2005 2006 2007 2008 2009 2010 2011 2012 Thereafter 39 IN-SERVICE PRINCETON/EAST BRUNSWICK PROPERTIES Quarterly Lease Expirations - Princeton/East Brunswick OFFICE OFFICE/TECHNICAL Year of Lease Rentable Square Current Annualized Per Annualized Per Rentable Square Current Annualized Per Annualized Per Q1 2003 $ $ $ $ $ $ $ $ Q2
2003 Q3
2003 11,302 315,432 27.91 315,432 27.91 Q4
2003 69,284 1,927,760 27.82 1,927,760 27.82 Total
2003 80,586 $ 2,243,192 $ 27.84 $ 2,243,192 $ 27.84 $ $ $ $ Q1 2004 18,592 $ 574,633 $ 30.91 $ 574,633 $ 30.91 $ $ $ $ Q2
2004 54,636 1,536,832 28.13 1,536,832 28.13 Q3
2004 121,054 3,715,691 30.69 3,715,691 30.69 Q4
2004 222,033 6,843,240 30.82 6,843,240 30.82 Total
2004 416,315 $ 12,670,396 $ 30.43 $ 12,670,396 $ 30.43 $ $ $ $ INDUSTRIAL RETAIL Year of Lease Rentable Square Current Annualized Per Annualized Per Rentable Square Current Annualized Per Annualized Per Q1 2003 $ $ $ $ $ $ $ $ Q2
2003 Q3
2003 Q4
2003 Total
2003 $ $ $ $ $ $ $ $ Q1
2004 $ $ $ $ $ $ $ $ Q2
2004 Q3
2004 Q4
2004 2,904 48,000 16.53 48,000 16.53 Total
2004 $ $ $ $ 2,904 $ 48,000 $ 16.53 $ 48,000 $ 16.53 40 Lease Expirations OFFICE OFFICE/TECHNICAL Year of Lease Rentable Square Current Annualized Per Annualized Per Rentable Square Current Annualized Per Annualized Per 2003 106,998 $ 2,543,669 $ 23.77 $ 2,548,969 $ 23.82 $ $ $ $ 2004 78,408 1,817,980 23.19 1,850,267 23.60 2005 399,159 10,185,084 25.52 10,494,227 26.29 2006 626,495 19,045,966 30.40 19,555,781 31.21 2007 89,093 2,890,971 32.45 2,937,756 32.97 2008 5,398 165,486 30.66 183,967 34.08 2009 31,164 761,151 24.42 867,509 27.84 2010 28,840 622,068 21.57 701,692 24.33 2011 4,618 124,098 26.87 139,614 30.23 2012 30,566 955,188 31.25 1,219,278 39.89 Thereafter INDUSTRIAL RETAIL Year of Lease Rentable Square Current Annualized Per Annualized Per Rentable Square Current Annualized Per Annualized Per 2003 $ $ $ $ $ 8,721 $ $ 8,721 $ 2004 161,000 771,048 4.79 771,048 4.79 2,183 72,623 33.27 72,623 33.27 2005 5,296 254,921 48.13 268,765 50.75 2006 3,336 162,382 48.68 162,382 48.68 2007 6,700 262,854 39.23 262,854 39.23 2008 3,561 77,679 21.81 90,705 25.47 2009 2010 2011 2012 Thereafter 14,578 287,054 19.69 391,422 26.85 41 IN-SERVICE OTHER PROPERTIES Quarterly Lease Expirations OFFICE OFFICE/TECHNICAL Year of Lease Rentable Square Current Annualized Per Annualized Per Rentable Square Current Annualized Per Annualized Per Q1 2003 $ $ $ $ $ $ $ $ Q2
2003 Q3
2003 26,400 586,854 22.23 586,854 22.23 Q4
2003 80,598 1,956,815 24.28 1,962,114 24.34 Total
2003 106,998 $ 2,543,669 $ 23.77 $ 2,548,968 $ 23.82 $ $ $ $ Q1 2004 $ $ $ $ $ $ $ $ Q2
2004 9,483 303,637 32.02 305,627 32.23 Q3
2004 66,935 1,451,075 21.68 1,479,528 22.10 Q4
2004 1,990 63,268 31.79 65,113 32.72 Total
2004 78,408 $ 1,817,980 $ 23.19 $ 1,850,268 $ 23.60 $ $ $ $ INDUSTRIAL RETAIL Year of Lease Rentable Square Current Annualized Per Annualized Per Rentable Square Current Annualized Per Annualized Per Q1 2003 $ $ $ $ $ $ $ $ Q2
2003 Q3
2003 Q4
2003 8,721 8,721 Total
2003 $ $ $ $ $ 8,721 $ $ 8,721 $ Q1 2004 $ $ $ $ 2,183 $ 72,623 $ 33.27 $ 72,623 $ 33.27 Q2
2004 161,000 771,048 4.79 771,048 4.79 Q3
2004 Q4
2004 Total
2004 161,000 $ 771,048 $ 4.79 $ 771,048 $ 4.79 2,183 $ 72,623 $ 33.27 $ 72,623 $ 33.27 42 Lease
Expirations Greater Boston Greater Washington Year of Lease Rentable Square Current Annualized Per Annualized Per Rentable Square Current Annualized Per Annualized Per 2003
(1) 34,835 $ 3,459,596 $ 99.31 $ 3,419,444 $ 98.16 22,792 $ 849,633 $ 37.28 $ 851,601 $ 37.36 2004
(2) 142,477 8,292,785 58.20 8,648,438 60.70 145,918 6,134,331 42.04 6,198,348 42.48 2005 582,044 26,842,391 46.12 27,332,483 46.96 203,504 8,100,289 39.80 8,528,207 41.91 2006 176,117 8,686,145 49.32 8,826,520 50.12 26,961 1,030,252 38.21 1,080,177 40.06 2007 152,862 8,156,943 53.36 8,411,756 55.03 275,177 9,322,118 33.88 9,480,965 34.45 2008 81,259 3,533,274 43.48 3,616,474 44.51 31,917 1,179,830 36.97 1,356,217 42.49 2009 718,525 26,712,908 37.18 29,825,085 41.51 441,576 15,706,938 35.57 17,106,613 38.74 2010 150,555 6,335,529 42.08 7,081,514 47.04 213,938 7,703,422 36.01 9,129,945 42.68 2011 434,991 21,856,742 50.25 26,067,545 59.93 106,022 3,482,017 32.84 4,294,606 40.51 2012 308,360 13,841,377 44.89 14,744,121 47.81 77,318 2,876,971 37.21 2,894,478 37.44 Thereafter 1,263,671 48,070,998 38.04 59,310,279 46.93 55,969 2,501,937 44.70 3,398,560 60.72 New York San Francisco Year of Lease Rentable Square Current Annualized Per Annualized Per Rentable Square Current Annualized Per Annualized Per 2003 38,770 $ 2,354,367 $ 60.73 $ 2,354,367 $ 60.73 127,830 $ 5,690,663 $ 44.52 $ 5,690,663 $ 44.52 2004 155,274 9,654,236 62.18 9,672,054 62.29 546,663 24,694,156 45.17 24,714,598 45.21 2005 103,941 7,329,506 70.52 7,379,738 71.00 311,833 14,775,150 47.38 14,823,142 47.54 2006 438,992 29,975,530 68.28 30,283,354 68.98 813,193 41,852,488 51.47 43,271,831 53.21 2007 181,634 11,158,390 61.43 11,277,517 62.09 412,879 21,137,160 51.19 21,720,088 52.61 2008 457,640 27,746,881 60.63 29,145,169 63.69 225,969 10,258,576 45.40 10,562,863 46.74 2009 280,620 17,046,517 60.75 19,138,307 68.20 271,046 12,562,439 46.35 13,284,690 49.01 2010 279,225 19,263,962 68.99 20,408,239 73.09 208,653 12,334,299 59.11 14,234,244 68.22 2011 378,719 22,517,124 59.46 26,101,705 68.92 196,158 18,186,859 92.72 18,710,073 95.38 2012 896,714 51,648,248 57.60 52,902,091 59.00 161,412 7,642,400 47.35 8,431,895 52.24 Thereafter 3,184,376 193,029,029 60.62 234,370,691 73.60 189,886 8,084,697 42.58 8,763,420 46.15 New Jersey Other Year of Lease Rentable Square Current Annualized Per Annualized Per Rentable Square Current Annualized Per Annualized Per 2003 $ $ $ $ 106,998 $ 2,552,390 $ 23.85 $ 2,557,690 $ 23.90 2004 80,591 1,890,603 23.46 1,922,890 23.86 2005 404,455 10,440,004 25.81 10,762,993 26.61 2006 629,831 19,208,348 30.50 19,718,163 31.31 2007 95,793 3,153,825 32.92 3,200,611 33.41 2008 8,959 243,165 27.14 274,672 30.66 2009 31,164 761,151 24.42 867,509 27.84 2010 28,840 622,068 21.57 701,692 24.33 2011 4,618 124,098 26.87 139,614 30.23 2012 30,566 955,188 31.25 1,219,278 39.89 Thereafter 14,578 287,054 19.69 391,422 26.85 (1) Includes 23,069 square feet of retail space
and kiosks at an average current rent on expiring leases of $128.60 per square
foot and an average rent on expiring leases with future step-ups of $126.36 per
square foot. (2) Includes 40,867 square feet of retail space
and kiosks at an average current rent on expiring leases of $93.72 per square
foot and an average rent on expiring leases with future step-ups of $93.92 per
square foot. 43 SUBURBAN PROPERTIES Lease Expirations Greater Boston Greater Washington Year of Lease Rentable Square Current Annualized Per Annualized Per Rentable Square Current Annualized Per Annualized Per 2003 217,315 $ 3,765,903 $ 17.33 $ 3,757,503 $ 17.29 115,452 $ 2,352,088 $ 20.37 $ 2,352,088 $ 20.37 2004 338,704 10,577,291 31.23 10,825,023 31.96 144,277 3,542,965 24.56 3,558,182 24.66 2005 326,102 10,173,908 31.20 10,279,002 31.52 363,290 10,233,469 28.17 10,738,068 29.56 2006 642,067 16,080,892 25.05 16,290,766 25.37 430,775 11,656,334 27.06 12,405,481 28.80 2007 452,548 11,466,038 25.34 12,985,714 28.69 534,359 15,365,337 28.75 15,707,569 29.40 2008 259,347 8,080,962 31.16 8,516,236 32.84 469,473 13,701,514 29.18 14,402,164 30.68 2009 283,195 10,751,425 37.96 11,431,548 40.37 276,152 8,884,081 32.17 8,934,112 32.35 2010 84,079 2,725,161 32.41 2,815,048 33.48 394,559 14,182,915 35.95 16,247,977 41.18 2011 419,343 8,778,506 20.93 9,953,349 23.74 1,024,546 30,775,979 30.04 35,993,792 35.13 2012 424,413 11,847,079 27.91 13,645,250 32.15 367,232 12,823,733 34.92 16,869,141 45.94 Thereafter 1,180,342 31,815,440 26.95 40,518,486 34.33 New York San Francisco Year of Lease Rentable Square Current Annualized Per Annualized Per Rentable Square Current Annualized Expiring Leases Per Annualized Per 2003 $ $ $ $ 239,788 $ 7,876,768 $ 32.85 $ 8,022,661 $ 33.46 2004 95,847 2,358,941 24.61 2,396,004 25.00 2005 106,061 3,331,199 31.41 3,791,766 35.75 2006 48,930 2,501,442 51.12 2,749,304 56.19 2007 43,625 875,982 20.08 942,326 21.60 2008 25,883 670,374 25.90 738,308 28.52 2009 5,256 185,043 35.21 214,687 40.85 2010 7,724 168,000 21.75 231,720 30.00 2011 2012 Thereafter New Jersey Other Year of Lease Rentable
Square Current
Annualized Per Revenues
Under Per Rentable
Square Current
Annualized Per Revenues
Under Per 2003 80,586 $ 2,243,192 $ 27.84 $ 2,243,192 $ 27.84 $ $ $ $ 2004 419,219 12,718,396 30.34 12,718,396 30.34 161,000 771,048 4.79 771,048 4.79 2005 228,388 7,194,245 31.50 7,245,104 31.72 2006 89,577 3,026,823 33.79 3,162,833 35.31 2007 510,959 14,651,330 28.67 15,804,639 30.93 2008 2009 161,514 5,204,053 32.22 5,818,297 36.02 2010 154,917 5,106,368 32.96 5,603,900 36.17 2011 255,083 7,774,595 30.48 8,616,363 33.78 2012 Thereafter 281,175 8,469,358 30.12 9,376,373 33.35 44 Long
Wharf Marriott - Boston Second Quarter Second Quarter Percent YTD YTD Percent Occupancy 81.8 % 88.2 % -7.3 % 76.8 % 82.2 % -6.6 % Average Daily Rate $ 205.76 $ 219.02 -6.1 % $ 186.31 $ 200.41 -7.0 % Revenue per available room $ 168.31 $ 193.25 -12.9 % $ 143.12 $ 164.64 -13.1 % Hotel Revenues Less Hotel Operating Expenses (in
thousands) $ 2,470 $ 2,728 -9.5 % $ 3,397 $ 3,958 -14.2 % Cambridge
Center Marriott Second Quarter Second Quarter Percent YTD YTD Percent Occupancy 77.7 % 81.0 % -4.1 % 70.9 % 73.3 % -3.3 % Average Daily Rate $ 166.87 $ 187.36 -10.9 % $ 157.03 $ 173.90 -9.7 % Revenue per available room $ 129.60 $ 151.70 -14.6 % $ 111.33 $ 127.49 -12.7 % Hotel Revenues Less Hotel Operating Expenses (in
thousands) $ 1,744 $ 2,462 -29.2 % $ 2,457 $ 3,595 -31.7 % Residence
Inn by Marriott Second Quarter Second Quarter Percent YTD YTD Percent Occupancy 80.3 % 87.6 % -8.3 % 74.9 % 84.0 % -10.8 % Average Daily Rate $ 129.28 $ 140.45 -8.0 % $ 123.27 $ 133.15 -7.4 % Revenue per available room $ 103.77 $ 123.08 -15.7 % $ 92.29 $ 111.78 -17.4 % Hotel Revenues Less Hotel Operating Expenses (in
thousands) $ 741 $ 1,014 -26.9 % $ 1,176 $ 1,606 -26.8 % Total
Hotel Performance Second Quarter Second Quarter Percent YTD YTD Percent Occupancy 79.8 % 85.1 % -6.2 % 74.0 % 78.9 % -6.2 % Average Daily Rate $ 173.82 $ 189.60 -8.3 % $ 161.12 $ 175.47 -8.2 % Revenue per available room $ 138.95 $ 161.55 -14.0 % $ 119.46 $ 138.37 -13.7 % Hotel Revenues Less Hotel Operating Expenses (in
thousands) $ 4,955 $ 6,204 -20.1 % $ 7,030 $ 9,159 -23.2 % 45 Office, Office/Technical, Industrial
and Hotel Properties Office Office/Technical Industrial Hotel
(3) Total Number of Properties 94 27 4 3 128 Square feet 25,332,890 1,533,211 385,313 937,874 28,189,288 Percent of in-service properties 86.8 % 92.3 % 100.0 % 100.0 % 87.6 % Occupancy @ 6/30/02 95.1 % 94.1 % 100.0 % 95.1 % Occupancy @ 6/30/03 93.9 % 90.0 % 89.3 % 93.7 % Percent change from 2nd quarter 2003 over 2nd
quarter 2002 (1): Rental revenue 1.0 % -5.1 % -2.0 % -20.2 % 0.1 % Operating expenses and real estate taxes 3.0 % 13.1 % 1.6 % -21.7 % 2.6 % Rental revenue less operating expenses and real
estate taxes 0.0 % -9.5 % -3.1 % -19.7 % -0.9 % Rental revenue less operating expenses and real
estate taxes - without hotels -0.2 % Rental revenue - cash basis 2.6 % -2.3 % -0.3 % -20.2 % 1.7 % Rental revenue less operating expenses and real
estate taxes - cash basis 2.3 % -6.2 % -0.8 % -19.7 % 1.3 % Rental revenue less operating expenses and real
estate taxes - cash basis - without hotels 2.1 % Same Property Lease Analysis - quarter
ended June 30, 2003 Office Office/Technical Industrial Total Vacant
space available @4/01/03 (sf) 1,453,082 144,773 41,168 1,639,023 Square footage of leases expiring or terminated
04/01/03-06/30/03 554,492 55,112 609,604 Total space for lease (sf) 2,007,574 199,885 41,168 2,248,627 New tenants (sf) 345,742 5,300 351,042 Renewals (sf) 115,709 41,847 157,556 Total space leased (sf) 461,451 47,147 508,598 Space available @6/30/03 (sf) 1,546,123 152,738 41,168 1,740,029 Net (increase)/decrease in available space (sf) (93,041 ) (7,965 ) (101,006 ) Average lease term (months) 46 37 46 2nd generation TI/Comm PSF $ 36.18 $ 0.12 $ $ 11.90 Increase (decrease) in 2nd generation net rents (2) -25.8 % -3.4 % 0 % -24.7 % (1) See page 47 for a quantitative
reconciliation. (2) Represents increase in net rents on a cash
to cash basis. (Actual net rent at
time of expiration vs. initial net rent of new lease.) (3) Includes revenue and expenses from retail
tenants at the hotel properties. 46 Reconciliation to Same Property Performance (in
thousands) Office Office/Technical Industrial For the three months ended $ % For the three months ended $ % For the three months ended $ % 30-Jun-03 30-Jun-02 Change Change 30-Jun-03 30-Jun-02 Change Change 30-Jun-03 30-Jun-02 Change Change Rental Revenue $ 246,430 $ 243,750 $ 5,624 $ 5,939 $ 629 $ 642 Less Termination Income 1,419 1,212 15 Rental revenue - subtotal 245,011 242,538 2,473 1.0 % 5,624 5,924 (300 ) -5.1 % 629 642 (13 ) -2.0 % Operating expenses and real estate taxes 78,865 76,591 2,321 3.0 % 1,324 1,171 153 13.1 % 145 142 2 1.6 % Rental revenue less operating expenses and real
estate taxes $ 166,146 $ 165,947 $ 199 0.0 % $ 4,300 $ 4,753 $ (453 ) -9.5 % $ 485 $ 500 $ (15 ) -3.1 % Rental revenue - subtotal $ 245,011 $ 242,538 $ 5,624 $ 5,924 $ 629 $ 642 Less Straight Line Rent 7,089 10,690 (3,601 ) 20 187 (167 ) (29 ) (18 ) (11 ) Rental revenue - cash basis 237,922 231,848 6,074 2.6 % 5,604 5,737 (133 ) -2.3 % 658 660 (2 ) -0.3 % Less: Operating expenses and real estate taxes 78,865 76,591 2,274 3.0 % 1,324 1,171 153 13.1 % 145 142 2 1.6 % Rental revenue less operating expenses and real
estate taxes - cash basis $ 159,057 $ 155,257 $ 3,800 2.4 % $ 4,280 $ 4,566 $ (286 ) -6.2 % $ 514 $ 518 $ (4 ) -0.8 % Hotel Total For the three months ended $ % For the three months ended $ % 30-Jun-03 30-Jun-02 Change Change 30-Jun-03 30-Jun-02 Change Change Rental Revenue $ 6,498 $ 8,141 $ 259,182 $ 258,473 Less Termination Income 1,419 1,227 Rental revenue - subtotal 6,498 8,141 $ (1,643 ) -20.2 % 257,763 257,246 517 0.2 % Operating expenses and real estate taxes 1,424 1,819 (395 ) -21.7 % 81,758 79,723 2,034 2.6 % Rental revenue less operating expenses and real
estate taxes $ 5,074 $ 6,322 $ (1,248 ) -19.7 % $ 176,005 $ 177,522 $ (1,517 ) -0.9 % Rental revenue - subtotal $ 6,498 $ 8,141 $ 257,763 $ 257,246 Less Straight Line Rent 3 8 (4 ) 7,083 10,867 (3,784 ) Rental revenue - cash basis 6,495 8,134 (1,639 ) -20.2 % 250,680 246,379 4,301 1.7 % Less: Operating expenses and real estate taxes 1,424 1,819 (395 ) -21.7 % 81,758 79,723 2,034 2.6 % Rental revenue less operating expenses and real
estate taxes - cash basis $ 5,071 $ 6,315 $ (1,244 ) -19.7 % $ 168,922 $ 166,656 $ 2,267 1.4 % 47 All In-Service Properties - quarter
ended June 30, 2003 Office Office/Technical Industrial Total Vacant space available @ 04/01/03 (sf) 1,953,333 144,773 41,168 2,139,274 Property dispositions New development completed (sf) 422,930 422,930 Leases expiring or terminated 04/01/03 - 06/30/03
(sf) 574,165 55,112 629,277 Total space for lease (sf) 2,950,428 199,885 41,168 3,191,481 New tenants (sf) 782,487 5,300 787,787 Renewals (sf) 115,709 41,847 157,556 Total space leased (sf) 898,196 47,147 945,343 (2) Space available @ 06/30/03 (sf) 2,052,232 152,738 41,168 2,246,138 Net (increase)/decrease in available space (sf) (98,899 ) (7,965 ) (106,864 ) Average lease term (months) 50 37 49 2nd generation TI/Comm PSF $ 13.61 $ 0.12 $ $ 12.33 Increase (decrease) in 2nd generation net rents (1) -22.97 % -3.43 % 0.00 % -22.07 % (1) Represents increase in net rents on a cash to
cash basis (actual net rent at time of expiration vs. initial net rent of new
lease). (2) Details of 1st and 2nd generation space: 1st Generation 2nd Generation Total Boston 10,289 113,589 123,878 Washington 439,886 86,463 526,349 New York 49,285 49,285 San Francisco 242,778 242,778 Princeton 3,053 3,053 450,175 495,168 945,343 48 HISTORICALLY
GENERATED CAPITAL EXPENDITURES, Historical Capital Expenditures (in thousands) Q2
2003 Q1
2003 2002 2001 2000 Recurring capital expenditures $ 4,726 $ 1,960 $ 16,674 $ 11,770 $ 11,201 Planned non-recurring capital expenditures
associated with acquisition properties (1) 596 2,324 31,908 45,052 25,782 Hotel improvements, equipment upgrades and
replacements 911 405 3,218 9,230 5,697 $ 6,233 $ 4,689 $ 51,800 $ 66,052 $ 42,680 2nd Generation Tenant Improvements
and Leasing Commissions (2) (in thousands, except per share
amounts) Q2
2003 Q1
2003 2002 2001 2000 Office Square feet 448,021 501,547 2,122,409 2,394,291 2,913,599 Tenant improvement and lease commissions PSF $ 13.61 $ 8.34 $ 20.17 $ 17.47 $ 13.82 Office/Technical Square feet 47,147 4,700 347,321 348,178 694,536 Tenant improvement and lease commissions PSF $ 0.12 $ 0.86 $ 1.42 $ 3.13 $ 2.95 Industrial Square feet 244,904 209,125 Tenant improvement and lease commissions PSF $ $ $ 0.62 $ $ 1.38 Average tenant improvement and lease commission PSF $ 12.33 $ 8.27 $ 16.01 $ 15.65 $ 11.16 (1) Includes budgeted costs associated with the
18.4 million square feet of previously disclosed acquisitions (2) Based on leases executed during the period 49 VALUE CREATION PIPELINE -
ACQUISITIONS/DISPOSITIONS as of June 30, 2003 ACQUISITIONS Property Date
Acquired Square
Feet Initial Anticipated Total Current Discovery Square (remaining 50% interest) Apr-03 366,989 $ 18,273,000 $ $ 18,273,000 96 % Total Value Creation Pipeline
Acquisitions 366,989 $ 18,273,000 $ $ 18,273,000 96 % DISPOSITIONS For the period from January 1, 2003
through June 30, 2003 Property
and other assets Date
Disposed Square
Feet Gross Book
Gain(Loss) The Candler Building Jan-03 540,706 $ 63,067,000 $ (292,564 ) 875 Third Avenue Feb-03 711,901 370,100,000 (1) 90,020,729 2300 N Street Mar-03 289,243 122,000,000 (2) 64,310,972 Prudential Center garage spaces May-03 N/A 1,935,000 153,000 Transfer of mortgage Jun-03 N/A 4,143,000 4,143,000 Total Dispositions 1,541,850 $ 561,245,000 $ 158,335,137 (1) Includes $8.8 million of future tenant
improvement work credited to buyer at closing (2) Includes $8.0 million of future tenant
improvement work credited to buyer at closing 50 VALUE CREATION PIPELINE - CONSTRUCTION IN PROGRESS as
of June 30, 2003 Development Properties Initial
Occupancy Estimated Location # of Square
feet Investment Estimated Total Amount Estimated Percentage New Dominion Tech, Building Two Q2 2004 Q2 2004 Herndon,
VA 1 257,400 $ 21,271,637 $ 67,589,000 $ 65,000,000 $ 20,458,662 $ 1,776,025 100 % Times Square Tower Q1 2004 Q1 2005 New
York, NY 1 1,234,464 437,435,960 653,500,000 493,500,000 287,811,314 10,375,354 22 % 901 New York Avenue (25% ownership) Q3 2004 Q3 2005 Washington,
D.C. 1 538,463 19,081,639 44,777,000 30,000,000 6,284,528 1,979,889 77 % Total Development Properties 3 2,030,327 $ 477,789,236 $ 765,866,000 $ 588,500,000 $ 314,554,504 $ 14,131,268 46 % DEVELOPMENTS PLACED-IN-SERVICE
DURING 2003 Initial Estimated Location # of Square
feet Investment Estimated Construction Drawn at Estimated Percentage Class
A Office Building Waltham Weston Corporate Center Q1 2002 Q4 2003 Waltham,
MA 1 308,599 $ 69,093,883 $ 85,000,000 $ $ $ 15,906,117 43 % Two Freedom Square (50% ownership) Q3 2002 Q2 2003 Reston,
VA 1 422,930 41,903,121 49,336,000 (2) 45,000,000 (2) 35,323,051 100 % Shaws Supermarket Q2 2003 Q2 2003 Boston,
MA 1 57,235 22,833,840 24,034,000 1,200,160 100 % Total Developments Placed in Service 3 788,764 $ 133,830,844 $ 158,370,000 $ 45,000,000 $ 35,323,051 $ 17,106,277 78 % (1) Includes net revenues during lease-up period
and cash component of hedge contracts. (2) Represents 50% of the total anticipated
project-level investment and construction loan 51 VALUE CREATION
PIPELINE - OWNED LAND PARCELS as
of June 30, 2003 Location No. of Acreage Developable Rockville, MD 4 92.3 986,000 Dulles, VA 2 76.6 937,000 Gaithersburg, MD 4 27.0 850,000 San Jose, CA 5 3.7 841,000 Reston, VA 3 26.7 861,000 Boston, MA 2 0.5 776,000 Marlborough, MA 1 50.0 400,000 Weston, MA 1 74.0 350,000 Waltham, MA 1 4.3 202,000 Andover, MA 1 10.0 110,000 Washington, D.C. 1 0.5 170,000 25 365.6 6,483,000 VALUE CREATION PIPELINE - LAND PURCHASE OPTIONS as
of June 30, 2003 Location No. of Acreage Developable Princeton, NJ (1) 14 149.9 1,900,000 Framingham, MA (2) 1 21.5 300,000 Cambridge, MA (3) 1 2.6 165,000 16 174.0 2,365,000 (1) $20.00 per developable square foot plus an
earnout calculation (2) Subject to ground lease. (3) Prior to January 23, 2004, the cost will be
$28.32/SF of land area. Land area is
approximately 108,000 SF. 52 This
section contains a brief explanation of certain non-GAAP financial measures we
provide in other sections of this document, and a statement of the reasons why
management believes these measures provide useful information to investors
about the companys financial condition or results of operations. Additional detail can be found in the
companys most recent annual report on Form 10-K and other documents filed with
the SEC from time to time. Funds
from Operations: 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)
(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. The use of FFO, combined with the required primary GAAP
presentations, has been fundamentally beneficial, improving the understanding
of operating results of REITs among the investing public and making comparisons
of REIT operating results more meaningful. Management generally considers FFO to
be a useful measure for reviewing the comparative operating and financial
performance of the Company because, by excluding gains and losses related to
sales of previously depreciated operating real estate assets and excluding real
estate asset depreciation and amortization (which can vary among owners of
identical assets in similar condition based on historical cost accounting and
useful life estimates), FFO can help one compare the operating performance of a
companys real estate between periods or as compared to different 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 addition to
presenting FFO in accordance with the NAREIT definition, we also disclose FFO
after specific supplemental adjustments, including net derivative losses and
early surrender lease adjustments. Although our FFO as adjusted clearly differs
from NAREIT's definition of FFO, as well as that of other REITs and real estate
companies, we believe it provides a meaningful supplemental measure of our
operating performance. FFO should not be considered as an alternative to net
income (determined in accordance with GAAP) as an indication of our
performance. FFO does not represent cash generated from operating activities
determined in accordance with GAAP and is not a measure of liquidity or an
indicator of our ability to make cash distributions. We believe that to further
understand our performance, FFO and FFO as adjusted should be compared with our
reported net income and considered in addition to cash flows in accordance with
GAAP, as presented in our consolidated financial statements. Funds
Available for Distribution (FAD) In
addition to FFO, we present Funds Available for Distribution (FAD) by (1)
adding to FFO non-real estate depreciation, (2) eliminating the effect of
straight-line rent, and (3) subtracting: recurring capital expenditures; hotel
improvements, equipment upgrades and replacements; and second generation tenant
improvement and leasing commissions. In
addition, this calculation includes all non-cash compensation expense related
to restricted securities. Although our
FAD as adjusted differs from that of other real estate companies, we believe it
provides a meaningful indicator of our ability to fund cash needs and to make
cash distributions to equity owners. In
addition, we believe that to further understand our liquidity, FAD should be
compared with our cash flows in accordance with GAAP, as presented in our
consolidated financial statements. Our
computation of FAD may not be comparable to FAD reported by other REITs or real
estate companies and FAD 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. Debt
to Total Market Capitalization Ratio Debt
to total market capitalization ratio, defined as total consolidated debt as a
percentage of the market value of our outstanding equity securities plus our
total consolidated debt, is a measure of leverage commonly used by analysts in
the REIT sector. Total market
capitalization is the sum of our total indebtedness outstanding on a consolidated
basis (excluding unconsolidated joint venture debt) and the market value of our
outstanding equity securities calculated using the closing stock price per
share of common stock of the company multiplied by the sum of (i) the actual
aggregate number of outstanding common partnership units of our operating
partnership (including common partnership units held by the company) and (ii)
the number of common partnership units issuable upon conversion of preferred
partnership units of our operating partnership. We are presenting this ratio because our degree of leverage could
affect our ability to obtain additional financing for working capital, capital
expenditures, acquisitions, development or other general corporate
purposes. Investors should understand that
our debt to market capitalization ratio is in part a function of the market
price of the common stock of Boston Properties, Inc., and as such will
fluctuate with changes in such price and does not necessarily reflect our
capacity to incur additional debt to finance our activities or our ability to
manage our existing debt obligations.
However, for a company like ours, whose assets are primarily
income-producing real estate, the debt to total market capitalization ratio may
provide investors with an alternate indication of leverage, so long as it is
evaluated along with the ratio of indebtedness to other measures of asset value
used by financial analysts and other financial ratios, as well as the various
components of our outstanding indebtedness. If
you would like to receive this document in a different electronic format,
please call investor relations at 617-236-3322. 53 Exhibit
99.2 Boston Properties,
Inc. 111 Huntington Avenue Boston, MA 02199 (NYSE: BXP) AT THE COMPANY AT FRB/WEBER
SHANDWICK Kathleen DiChiara Marilynn Meek - General Info. (212) 445-8431 Investor Relations Suzie Pileggi Media (212) 445-8170 (617) 236-3300 FOR IMMEDIATE
RELEASE: July 22, 2003 BOSTON PROPERTIES, INC. ANNOUNCES SECOND QUARTER 2003 RESULTS BOSTON, MA, July 22,
2003 Boston Properties, Inc. (NYSE: BXP), a real
estate investment trust, today reported results for the second quarter ended
June 30, 2003. Funds from Operations (FFO) for the quarter ended June 30, 2003 were
$103.4 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 $98.2 million, or $1.07 per share basic
and $1.02 per share diluted for the quarter ended June 30, 2002. The weighted average number of basic and
diluted shares outstanding totaled 96,530,769 and 107,408,373, respectively,
for the quarter ended June 30, 2003 and 91,357,121 and 105,982,092,
respectively, for the same quarter last year. Net income available to common shareholders per share (EPS) for the
quarter ended June 30, 2003 was $0.66 basic and $0.64 on a diluted basis. This
compares to EPS for the second quarter of 2002 of $0.60 basic and $0.59 on a
diluted basis. 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 June 30, 2003. In
the opinion of management, all adjustments considered necessary for a fair
presentation of these reported results have been made. As of June 30, 2003, the Companys portfolio consisted of 139
properties comprising more than 42.9 million square feet, including three
properties under construction totaling 2.0 million square feet. The overall percentage of leased space for
the properties in service as of June 30, 2003 was 92.8%. As previously reported, the Companys stockholders elected at its May
2003 Annual Meeting of Stockholders three new independent members to the
Companys Board of Directors. The new
directors are: -more- Lawrence
S. Bacow - President of and a Director for Tufts University. He previously served as Chancellor of the
Massachusetts Institute of Technology. William
M. Daley - 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. David
A. Twardock - President and Chief Executive Officer of Prudential Mortgage
Capital Company, LLC, the real estate affiliate of Prudential Financial, Inc. Significant events of the second quarter include: The
increase in the quarterly dividend paid to holders of the Company's Common
Stock from $0.61 per share to $0.63 per share. This represents a 3.3% increase. The
Company used the net proceeds from its Operating Partnerships March 18, 2003
$300.0 million offering of senior unsecured notes and a draw of approximately
$105.8 million from its unsecured line of credit to: Refinance
and pay down its mortgage loan secured by the Five Times Square property in New
York City from $376.7 million to $75.4 million. Repay
the Shaws Supermarket mortgage loan secured by the property at the Prudential
Center in Boston, Massachusetts, totaling $21.5 million on April 1, 2003. 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. The
Companys Operating Partnership closed on a private offering in reliance on
Rule 144A on May 22, 2003 of $250.0 million senior unsecured notes due 2015,
yielding 5.075%. The Company used the
net proceeds from the offering to: Repay
the mortgage loan secured by the property at 2600 Tower Oaks Boulevard in
Rockville, Maryland totaling $31.0 million on May 22, 2003. Repay
in full the unsecured line of credit. The
Company modified a $62.7 million mortgage loan bearing interest at 9.646% which
is secured by the Reservoir Place property in Waltham Massachusetts. In connection with the modification, the
Company made a principal pay-down of $9.1 million and incurred an up-front $2.1
million prepayment fee on that amount which is being amortized over the term of
the modified loan. The modified
mortgage loan -more- 2 totaling $53.6
million bears interest at a fixed rate of 7.0% per annum and matures on July 1,
2009. The
Company recognized a gain on sale of $3.4 million (net of minority interest
share of $0.7 million) related to the transfer of a mortgage. The
Company placed-in-service the following properties: Two
Freedom Square - a 422,930 square foot joint venture Class-A office property in
Reston, Virginia in which the Company has a 50% ownership interest. This
project is 99% leased. Shaws
Supermarket development project - a 57,235 square foot retail property at the
Prudential Center in Boston, Massachusetts.
This project is 100% leased. The
Company completed the public registration of its Operating Partnership with the
Securities and Exchange Commission related to its issuance of unsecured senior
notes. The
Companys Operating Partnership delivered a redemption notice for all of its
Series One Preferred Units. The Series
One Preferred Units will be converted into common Operating Partnership units
on August 12, 2003. EPS and FFO Per Share
Guidance: The Companys guidance for the third and fourth quarters of 2003 for
EPS (diluted) and FFO per share (diluted) is set forth and reconciled
below. The reconciliation of Projected
EPS to Projected FFO per share, as provided below, is consistent with the Companys
historical computations. Third Quarter 2003 Fourth Quarter 2003 Low - High Low - High Projected EPS
(diluted) $ 0.51 - $ 0.54 $ 0.54 - $ 0.58 Add: Projected Company
Share of Real Estate $ 0.45 - $ 0.43 $ 0.45 - $ 0.43 Depreciation
and Amortization Projected
Company Share of Net Derivatives $ 0.01 - $ 0.01 $ 0.01 - $ 0.01 Less: Dilutive
Impact of Preferred Securities $ 0.01 - $ 0.01 $ 0.03 - $ 0.03 Projected FFO
per Share (diluted) before net derivatives $ 0.96 - $ 0.97 $ 0.97 - $ 0.99 -more- 3 The foregoing estimates reflect managements view of current and future
market conditions, including certain assumptions with respect to rental rates
and occupancy levels. There can be no
assurance that the Companys actual results will not differ materially from the
estimates set forth above. Boston Properties will host a conference call tomorrow, July 23, 2003
at 10:00 AM (Eastern Time), open to the general public, to discuss the results
of this years second quarter. The
number to call for this interactive teleconference is (800) 374-1372. A replay of the conference call will be
available through July 30, 2003 by dialing (800) 642-1687 and entering the
passcode 1582716. 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 second quarter 2003
Supplemental Operating and Financial Data and this press release are
available in the Investor section of the Companys 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 Companys
filings with the Securities and Exchange Commission. The Company does not
undertake a duty to update forward-looking statements, including its expected
operating results for the third and fourth quarters of 2003. Financial tables follow. ### 4 BOSTON PROPERTIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS Three months ended Six months ended 2003 2002 2003 2002 (unaudited and in thousands, except for per share
amounts) Revenue Rental: Base rent $ 248,848 $ 231,296 $ 496,201 $ 449,313 Recoveries from tenants 37,262 35,549 77,143 68,525 Parking and other 13,955 12,458 28,150 24,554 Total rental revenue 300,065 279,303 601,494 542,392 Hotel revenue 17,213 30,459 Development and management services 5,429 1,710 10,019 5,408 Interest and other 663 2,310 1,078 3,582 Total revenue 323,370 283,323 643,050 551,382 Expenses Operating Rental 95,689 88,524 194,791 174,822 Hotel 12,258 23,429 General and administrative 11,028 13,564 22,427 24,633 Interest 75,447 64,366 149,092 125,181 Depreciation and amortization 50,742 42,336 100,566 83,886 Net derivative losses 991 4,826 1,923 5,129 Loss from early extinguishment of debt 1,474 Loss on investments in securities 4,297 Total expenses 246,155 213,616 493,702 417,948 Income before minority interests in
property partnerships, income from unconsolidated joint ventures, minority
interest in Operating Partnership, gain on sale of real estate and other
assets, discontinued operations and preferred dividend 77,215 69,707 149,348 133,434 Minority interests in property partnerships 245 712 642 1,183 Income from unconsolidated joint ventures 1,353 1,659 4,011 3,341 Income before minority interest in
Operating Partnership, gain on sale of real estate and other assets,
discontinued operations and preferred dividend 78,813 72,078 154,001 137,958 Minority interest in Operating Partnership (19,123 ) (18,867 ) (37,642 ) (36,685 ) Income before gain on sale of real estate
and other assets, discontinued operations and preferred dividend 59,690 53,211 116,359 101,273 Gain on sale of real estate and other
assets, net of minority interest 3,546 56,513 Income before discontinued operations and
preferred dividend 63,236 53,211 172,872 101,273 Discontinued Operations: Income from discontinued operations, net of
minority interest 3,207 1,942 6,313 Gains on sales of real estate from
discontinued operations, net of minority interest 73,611 5,840 Income before preferred dividend 63,236 56,418 248,425 113,426 Preferred dividend (1,643 ) (3,286 ) Net income available to common shareholders $ 63,236 $ 54,775 $ 248,425 $ 110,140 Basic earnings per share: Income available to common shareholders
before discontinued operations $ 0.66 $ 0.56 $ 1.80 $ 1.08 Discontinued operations, net of minority
interest 0.04 0.78 0.13 Net income available to common shareholders $ 0.66 $ 0.60 $ 2.58 $ 1.21 Weighted average number of common shares
outstanding 96,531 91,357 96,134 91,146 Diluted earnings per share: Income available to common shareholders
before discontinued operations $ 0.64 $ 0.55 $ 1.77 $ 1.06 Discontinued operations, net of minority
interest 0.04 0.78 0.13 Net income available to common shareholders $ 0.64 $ 0.59 $ 2.55 $ 1.19 Weighted average number of common and
common equivalent shares outstanding 98,213 93,016 97,454 92,897 5 BOSTON PROPERTIES, INC. CONSOLIDATED BALANCE SHEETS June 30, December 31, (in thousands, except for share amounts) (unaudited) ASSETS Real estate $ 7,863,035 $ 7,781,684 Development in progress 445,003 448,576 Land held for future development 218,045 215,866 Real estate held for sale, net 224,585 Less: accumulated depreciation (893,246 ) (822,933 ) Total real estate 7,632,837 7,847,778 Cash and cash equivalents 158,587 55,275 Cash held in escrows 18,187 41,906 Tenant and other receivables, net 21,185 20,458 Accrued rental income, net 160,586 165,321 Deferred charges, net 168,833 176,545 Prepaid expenses and other assets 22,090 18,015 Investments in unconsolidated joint
ventures 93,904 101,905 Total assets $ 8,276,209 $ 8,427,203 LIABILITIES AND STOCKHOLDERS EQUITY Liabilities: Mortgage notes payable $ 3,349,134 $ 4,267,119 Unsecured senior notes, net of discount 1,470,148 747,375 Unsecured bridge loan 105,683 Unsecured line of credit 27,043 Accounts payable and accrued expenses 49,299 73,846 Dividends and distributions payable 84,030 81,226 Interest rate contracts 12,677 14,514 Accrued interest payable 56,088 25,141 Other liabilities 63,771 81,085 Total liabilities 5,085,147 5,423,032 Commitments and contingencies Minority interests 857,058 844,581 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, 97,107,811 and 95,441,890 shares issued and 97,028,911 and
95,362,990 shares outstanding in 2003 and 2002, respectively 970 954 Additional paid-in capital 2,032,952 1,982,689 Earnings in excess of dividends 327,222 198,586 Treasury common stock, at cost (2,722 ) (2,722 ) Unearned compensation (7,734 ) (2,899 ) Accumulated other comprehensive loss (16,684 ) (17,018 ) Total stockholders equity 2,334,004 2,159,590 Total liabilities and stockholders equity $ 8,276,209 $ 8,427,203 6 BOSTON
PROPERTIES, INC. FUNDS
FROM OPERATIONS (1) Three months ended Six months ended 2003 2002 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 and other
assets, discontinued operations and preferred dividend $ 77,215 $ 69,707 $ 149,348 $ 133,434 Add: Real estate depreciation and amortization 52,338 45,032 104,129 89,531 Income from discontinued operations 3,929 2,355 7,730 Income from unconsolidated joint ventures 1,353 1,659 4,011 3,341 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 (842 ) (593 ) (1,708 ) (1,312 ) Preferred dividends and distributions (5,852 ) (8,223 ) (11,623 ) (16,623 ) Funds from operations 124,212 111,511 247,986 216,101 Add (subtract): Net derivative losses (SFAS No. 133) 991 4,826 1,923 5,129 Early surrender lease adjustment (2) 3,926 7,853 Funds from operations before net derivative
losses (SFAS No. 133) and after early surrender lease adjustment $ 125,203 $ 120,263 $ 249,909 $ 229,083 Funds from operations available to common
shareholders before net derivative losses (SFAS No. 133) and after early
surrender lease adjustment $ 103,360 $ 98,165 $ 206,096 $ 187,094 Weighted average shares outstanding - basic 96,531 91,357 96,134 91,146 FFO per share basic before net derivative
losses (SFAS No. 133) and after early surrender adjustment $ 1.07 $ 1.07 $ 2.14 $ 2.05 FFO per share basic after net derivative
losses (SFAS No. 133) and before early surrender lease adjustment $ 1.06 $ 1.00 $ 2.13 $ 1.94 Weighted average shares outstanding -
diluted 107,408 105,982 106,652 105,870 FFO per share diluted before net derivative
losses (SFAS No. 133) and after early surrender lease adjustment $ 1.03 $ 1.02 $ 2.06 $ 1.95 FFO per share diluted after net derivative
losses (SFAS No. 133) and before early surrender lease adjustment $ 1.02 $ 0.95 $ 2.04 $ 1.84 (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) (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. The use of FFO, combined with the required primary GAAP
presentations, has been fundamentally beneficial, improving the understanding
of operating results of REITs among the investing public and making comparisons
of REIT operating results more meaningful. Management generally considers FFO
to be a useful measure for reviewing the comparative operating and financial
performance of the Company because, by excluding gains and losses related to
sales of previously depreciated operating real estate assets and excluding real
estate asset depreciation and amortization (which can vary among owners of
identical assets in similar condition based on historical cost accounting and
useful life estimates), FFO can help one compare the operating performance of a
companys real estate between periods or as compared to different 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 addition to presenting FFO in accordance with the NAREIT definition, we also
disclose FFO after specific supplemental adjustments, including net derivative
losses and early surrender lease adjustments. Although our FFO as adjusted
clearly differs from NAREIT's definition of FFO, as well as that of other REITs
and real estate companies, we believe it provides a meaningful supplemental
measure of our operating performance. FFO should not be considered as an
alternative to net income (determined in accordance with GAAP) as an indication
of our performance. FFO does not represent cash generated from operating activities
determined in accordance with GAAP and is not a measure of liquidity or an
indicator of our ability to make cash distributions. We believe that to further
understand our performance, FFO and FFO as adjusted should be compared with our
reported net income and considered in addition to cash flows in accordance with
GAAP, as presented in our consolidated financial statements. (2) Represents cash
received under contractual obligations. 7 BOSTON
PROPERTIES, INC. PORTFOLIO
LEASING PERCENTAGES % Leased by
Location June 30, 2003 December 31, 2002 Greater Boston 89.2 % 91.8 % Greater Washington, D.C. 95.2 % 95.9 % Midtown Manhattan 98.7 % 98.4 % Baltimore, MD 98.5 % 97.6 % Richmond, VA 91.4 % 91.8 % Princeton/East Brunswick, NJ 94.8 % 93.3 % Greater San Francisco 85.9 % 87.4 % Bucks County, PA 100.0 % 100.0 % Total Portfolio 92.8 % 93.9 % % Leased by Type June 30, 2003 December 31, 2002 Class A Office Portfolio 93.2 % 94.1 % Office/Technical Portfolio 87.3 % 89.7 % Industrial Portfolio 89.3 % 100.0 % Total Portfolio 92.8 % 93.9 % 8
Securities Exchange Act of 1934
of incorporation)
Number)
Identification No.)
Boston, Massachusetts 02199
for the Quarter Ended June 30, 2003
(unaudited)
(unaudited)
(unaudited)
(Numerator)
(Denominator)
(Numerator)
(Denominator)
(Numerator)
(Denominator)
(Numerator)
(Denominator)
(in thousands)
June 30, 2003
(in thousands)
Outstanding
Stock
Equivalents
@6/30/03
Credit
Capacity
@6/30/03
@6/30/03
Average Rate
Maturity
Average Rate
Maturity
Freedom
Square
Square
North
Square
Kendrick
Street
Franklin
Street
Freedom
Square
New York
Avenue (2)
Freedom
Square
Square
North
Square
Kendrick
Street
Franklin
Street
Freedom
Square
New York
Avenue (2)
Average Rate
Maturity
Rooms
Feet
Spaces
Feet
Buildings
Revenue
Per
Leased SF
with secured
debt
(Y/N)
Business
District (CBD) or
Suburban (S)
Buildings
Revenue
Per
Leased SF
with secured
debt
(Y/N)
Business
District (CBD) or
Suburban (S)
Buildings
Revenues
Per
Leased SF
with Secured
debt
(Y/N)
Business
District (CBD) or
Suburban (S)
Buildings
Revenue
Per
Leased SF
with secured
debt
(Y/N)
Business
District(CBD) or
Suburban (S)
Portfolio
by Location and Type of Property for the Quarter Ended June 30, 2003
Technical
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Other Properties (Richmond, VA, Baltimore, MD, Bucks County, PA)
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Square
Foot
Footage Subject to
Expiring Leases
Revenues Under
Expiring Leases
Square
Foot
Revenues Under
Expiring Leases
with future step-ups
Square
Foot
Expiration
Footage Subject to
Expiring Leases
Revenues Under
Expiring Leases
Square
Foot
Revenues Under
Expiring Leases
with future step-ups
Square
Foot
Footage Subject to
Expiring Leases
Revenues Under
Expiring Leases
Square
Foot
Revenues Under
Expiring Leases
with future step-ups
Square
Foot
Other Properties (Richmond, VA, Baltimore, MD, Bucks County, PA)
Expiration
Footage Subject to
Expiring Leases
Revenues Under
Expiring Leases
Square
Foot
Revenues Under
Expiring Leases
with future step-ups
Square
Foot
Footage Subject to
Expiring Leases
Revenues Under
Expiring Leases
Square
Foot
Revenues Under
Expiring Leases
with future step-ups
Square
Foot
Expiration
Footage Subject to
Expiring Leases
Revenues Under
Expiring Leases
Square
Foot
Revenues Under
Expiring Leases
with future step-ups
Square
Foot
Footage Subject to
Expiring Leases
Revenues Under
Expiring Leases
Square
Foot
Revenues Under
Expiring Leases
with future step-ups
Square
Foot
Expiration
Footage Subject to
Expiring Leases
Revenues Under
Expiring Leases
Square
Foot
Revenues Under
Expiring Leases
with future step-ups
Square
Foot
Footage Subject to
Expiring Leases
Revenues Under
Expiring Leases
Square
Foot
Revenues Under
Expiring Leases
with future step-ups
Square
Foot
Expiration
Footage Subject to
Expiring Leases
Revenues Under
Expiring Leases
Square
Foot
Revenues Under
Expiring Leases
with future step-ups
Square
Foot
Footage Subject to
Expiring Leases
Revenues Under
Expiring Leases
Square
Foot
Revenues Under
Expiring Leases
with future step-ups
Square
Foot
Expiration
Footage Subject to
Expiring Leases
Revenues Under
Expiring Leases
Square
Foot
Revenues Under
Expiring Leases
with future step-ups
Square
Foot
Footage Subject to
Expiring Leases
Revenues Under
Expiring Leases
Square
Foot
Revenues Under
Expiring Leases
with future step-ups
Square
Foot
Expiration
Footage Subject to
Expiring Leases
Revenues Under
Expiring Leases
Square
Foot
Revenues Under
Expiring Leases
with future step-ups
Square
Foot
Footage Subject to
Expiring Leases
Revenues Under
Expiring Leases
Square
Foot
Revenues Under
Expiring Leases
with future step-ups
Square
Foot
Expiration
Footage Subject to
Expiring Leases
Revenues Under
Expiring Leases
Square
Foot
Revenues Under
Expiring Leases
with future step-ups
Square
Foot
Footage Subject to
Expiring Leases
Revenues Under
Square
Foot
Revenues Under
Expiring Leases
with future step-ups
Square
Foot
Expiration
Footage Subject to
Expiring Leases
Revenues Under
Expiring Leases
Square
Foot
Expiring Leases
with future step-ups
Square
Foot
Footage Subject to
Expiring Leases
Revenues Under
Expiring Leases
Square
Foot
Expiring Leases
with future step-ups
Square
Foot
2003
2002
Change
2003
2002
Change
2003
2002
Change
2003
2002
Change
2003
2002
Change
2003
2002
Change
2003
2002
Change
2003
2002
Change
Leased
TENANT IMPROVEMENT COSTS AND LEASING COMMISSIONS
Investment
Future
Investment
Investment
Leased
Sales Price
Stabilization Date
Buildings
to Date
Total
Investment(1)
Construction
Loan
Drawn at
June 30, 2003
Future Equity
Requirement
Leased
In Service Date
Stabilization
Date
Buildings
to Date
Total
Investment
Loan
June 30, 2003
Future Equity
Requirement
Leased
Parcels
Square Feet
Parcels
Square Feet
Reports diluted FFO per share of $1.03 Reports
diluted EPS of $0.64
June 30,
June 30,
2003
2002
June 30,
June 30,
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