EX-99.1 2 dex991.htm PRO FORMA FINANCIAL INFORMATION Pro Forma Financial Information

Exhibit 99.1

BOSTON PROPERTIES, INC.

PRO FORMA CONSOLIDATED BALANCE SHEET

INTRODUCTION TO THE PRO FORMA CONSOLIDATED BALANCE SHEET

March 31, 2006

(Unaudited)

The accompanying unaudited Pro Forma Consolidated Balance Sheet of Boston Properties, Inc. (the “Company”) is presented as if the disposition of 280 Park Avenue and related mortgage financing defeasance, which occurred subsequent to March 31, 2006, had been consummated on March 31, 2006. On June 6, 2006, the Company completed the sale of 280 Park Avenue, a Class A office property of approximately 1,179,000 net rentable square feet located in midtown Manhattan, for a gross sales price of approximately $1.2 billion. In conjunction with the sale, the Company has entered into a master lease agreement with the buyer. Under the master lease agreement, the Company has guaranteed that the buyer will receive at least a minimum amount of base rent from approximately 74,340 square feet of space during the ten-year period following the expiration of the current leases for this space. The current leases for this space are scheduled to expire at various times between June 2006 and October 2007. The aggregate amount of base rent guaranteed by the Company over the entire period from 2006 to 2017 is approximately $67.3 million. The Company’s guarantee obligations, which will be in the form of base rent payments to the buyer, will be reduced by the amount of base rent payable, whether or not actually paid, under qualifying leases for this space that are obtained by the Company from prospective tenants. The Company will remain responsible for any free rent periods. The buyer will bear all customary leasing costs for this space, including tenant improvements and leasing commissions. The Company has also agreed to provide to the buyer monthly revenue support from the closing date until December 31, 2008. The aggregate amount of the revenue support payments will be approximately $22.5 million.

Such pro forma information is based on the historical consolidated balance sheet of the Company as of that date, giving effect to the disposition of 280 Park Avenue and related mortgage financing defeasance. This Pro Forma Consolidated financial information should be read in conjunction with Form 10-Q for the three months ended March 31, 2006 (unaudited). In management’s opinion, all adjustments necessary to reflect the above transaction have been made.

The following Pro Forma Consolidated Balance Sheet is not necessarily indicative of what the actual financial position would have been assuming the disposition of 280 Park Avenue and related mortgage financing defeasance had been consummated on March 31, 2006 nor does it purport to represent the future financial position of the Company.

 

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BOSTON PROPERTIES, INC.

PRO FORMA CONSOLIDATED BALANCE SHEET

(Unaudited)

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

 

     March 31,
2006		      Disposition
of 280 Park
Avenue		           Pro Forma  
ASSETS          

Real estate, at cost

    $ 8,864,907      $ (381,244 )   (A )   $ 8,483,663  

Construction in process

      107,051        —           107,051  

Land held for future development

      189,024        —           189,024  

Less: accumulated depreciation

      (1,320,712 )      60,999     (A )     (1,259,713 )
                           

Total real estate

      7,840,270        (320,245 )       7,520,025  

Cash and cash equivalents

      32,214        869,754     (B )     901,968  

Cash held in escrows

      23,715        (3,061 )   (C )     20,654  

Tenant and other receivables, net

      41,458        (3,922 )   (C )     37,536  

Accrued rental income, net

      316,048        (24,419 )   (C )     291,629  

Deferred charges, net

      246,214        (14,228 )   (D )     231,986  

Prepaid expenses and other assets

      91,646        (4,419 )   (C )     87,227  

Investments in unconsolidated joint ventures

      98,836        —           98,836  
                           

Total assets

    $ 8,690,401      $ 499,460       $ 9,189,861  
                           
LIABILITIES AND STOCKHOLDERS’ EQUITY          

Liabilities:

          

Mortgage notes payable

    $ 3,185,550      $ (255,256 )   (E )   $ 2,930,294  

Unsecured senior notes, net of discount

      1,471,163        —           1,471,163  

Unsecured line of credit

      40,000        —           40,000  

Accounts payable and accrued expenses

      86,938        (1,254 )   (C )     85,684  

Dividends and distributions payable

      95,344        —           95,344  

Accrued interest payable

      39,269        (1,626 )   (C )     37,643  

Other liabilities

      98,296        101,706     (C )     200,002  
                           

Total liabilities

      5,016,560        (156,430 )       4,860,130  
                           

Commitments and contingencies

      —          —           —    
                           

Minority interests

      735,185        106,311     (F )     841,496  
                           

Stockholders’ equity:

          

Excess stock, $.01 par value, 150,000,000 shares authorized, none issued or outstanding

      —          —           —    

Preferred stock, $.01 par value, 50,000,000 shares authorized, none issued or outstanding

      —          —           —    

Common stock, $.01 par value, 250,000,000 shares authorized, 112,892,557 issued and 112,813,657 outstanding

      1,128        —           1,128  

Additional paid-in capital

      2,759,580        (7,807 )   (F )     2,751,773  

Earnings in excess of dividends

      173,129        557,386     (F )     730,515  

Treasury common stock at cost, 78,900 shares

      (2,722 )      —           (2,722 )

Accumulated other comprehensive income

      7,541        —           7,541  
                           

Total stockholders’ equity

      2,938,656        549,579         3,488,235  
                           

Total liabilities and stockholders’ equity

    $ 8,690,401      $ 499,460       $ 9,189,861  
                           

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

 

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BOSTON PROPERTIES, INC.

NOTES TO THE PRO FORMA

CONSOLIDATED BALANCE SHEET

March 31, 2006

(Unaudited)

 

(A) Represents the elimination of the net book value of 280 Park Avenue at March 31, 2006.

 

(B) Represents the estimated net cash proceeds from the sale of 280 Park Avenue.

 

(C) Represents the elimination of certain assets and liabilities of 280 Park Avenue as of March 31, 2006. Other liabilities consists of an approximately $67.3 million master lease obligation, an approximately $22.5 million revenue support obligation and approximately $16.6 million of deferred management fees, offset by the elimination of other liabilities as of March 31, 2006 of 280 Park Avenue.

 

(D) Represents the elimination of the net book value of deferred leasing and financing costs of 280 Park Avenue as of March 31, 2006.

 

(E) Represents the legal defeasance of the mortgage financing related to the disposition of 280 Park Avenue.

 

(F) Represents the net increase in Stockholders’ Equity and the rebalancing of Minority Interests as a result of the sale of 280 Park Avenue.

 

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BOSTON PROPERTIES, INC.

PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS

For the three months ended March 31, 2006 and the year ended December 31, 2005

(Unaudited)

The accompanying unaudited Pro Forma Consolidated Statements of Operations for the three months ended March 31, 2006 and for the year ended December 31, 2005 are presented as if the disposition on June 6, 2006 of 280 Park Avenue and related mortgage financing defeasance had occurred on January 1, 2005. Due to the Company’s continuing involvement through an agreement with the buyer to manage 280 Park Avenue for a fee after the sale, 280 Park Avenue will not be categorized as discontinued operations in the Company’s Consolidated Statements of Operations. An estimated nonrecurring gain on sale of real estate and loss on early extinguishment of debt of approximately $584.0 million (net of minority interest share of $110.8 million) and approximately $26.6 million (net of minority interest share of $5.0 million), respectively, have not been included in the Pro Forma Consolidated Statements of Operations but will be reflected in the Company’s consolidated statements of operations to be included in the Company’s Form 10-Q for the quarter ending June 30, 2006.

These Pro Forma Consolidated Statements of Operations should be read in conjunction with the historical consolidated financial statements and notes thereto of the Company reported on Form 10-K for the year ended December 31, 2005 and on Form 10-Q for the three months ended March 31, 2006.

The unaudited Pro Forma Consolidated financial information prepared by Boston Properties’ management is not necessarily indicative of what the actual results of operations would have been for the three months ended March 31, 2006 or for the year ended December 31, 2005 had the disposition of 280 Park Avenue and related mortgage financing defeasance actually occurred on January 1, 2005 and the effect thereof carried forward through the three month period ended March 31, 2006, nor do they purport to present the future results of operations of the Company.

 

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BOSTON PROPERTIES, INC.

PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

(Unaudited)

(in thousands, except for per share amounts)

 

     Three Months
Ended
March 31,
2006		     Disposition
of 280 Park
Avenue		     Pro Forma  

Revenue

       

Rental:

       

Base rent

    $ 276,398     $ (15,527 )(A)   $ 260,871  

Recoveries from tenants

      47,193       (3,289 )(A)     43,904  

Parking and other

      13,829       (22 )(A)     13,807  
                        

Total rental revenue

      337,420       (18,838 )     318,582  

Hotel revenue

      12,343       —         12,343  

Development and management services

      4,376       —         4,376  

Interest and other

      1,965       (22 )(A)     1,943  
                        

Total revenue

      356,104       (18,860 )     337,244  
                        

Expenses

       

Operating:

       

Rental

      112,614       (8,384 )(A)     104,230  

Hotel

      11,477       —         11,477  

General and administrative

      14,642       —         14,642  

Interest

      74,817       (4,904 )(B)     69,913  

Depreciation and amortization

      66,847       (2,788 )(C)     64,059  

Loss from early extinguishment of debt

      467       —         467  
                        

Total expenses

      280,864       (16,076 )     264,788  
                        

Income before minority interest in property partnership, income from unconsolidated joint ventures, minority interest in Operating Partnership and gain on sale of real estate

      75,240       (2,784 )     72,456  

Minority interest in property partnership

      1,236       —         1,236  

Income from unconsolidated joint ventures

      1,290       —         1,290  
                        

Income before minority interest in Operating Partnership and gain on sale of real estate

      77,766       (2,784 )     74,982  

Minority interest in Operating Partnership

      (15,470 )     444 (D)     (15,026 )
                        

Income available to common shareholders before gain on sale of real estate

    $ 62,296     $ (2,340 )   $ 59,956  
                        

Basic earnings per common share:

       

Income available to common shareholders before gain on sale of real estate

    $ 0.55       $ 0.53  
                  

Weighted average number of common shares outstanding

      112,509         112,509  
                  

Diluted earnings per common share:

       

Income available to common shareholders before gain on sale of real estate

    $ 0.54       $ 0.52  
                  

Weighted average number of common and common equivalent shares outstanding

      115,157         115,157  
                  

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

 

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BOSTON PROPERTIES, INC.

PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

(Unaudited)

(in thousands, except for per share amounts)

 

     Year Ended
December 31,
2005		     Disposition
of 280 Park
Avenue		     Pro Forma  

Revenue

       

Rental:

       

Base rent

    $ 1,110,212     $ (65,713 )(A)   $ 1,044,499  

Recoveries from tenants

      173,254       (12,463 )(A)     160,791  

Parking and other

      55,567       (71 )(A)     55,496  
                        

Total rental revenue

      1,339,033       (78,247 )     1,260,786  

Hotel revenue

      69,277       —         69,277  

Development and management services

      17,310       —         17,310  

Interest and other

      12,015       (28 )(A)     11,987  
                        

Total revenue

      1,437,635       (78,275 )     1,359,360  
                        

Expenses

       

Operating

       

Rental

      438,335       (32,419 )(A)     405,916  

Hotel

      51,689       —         51,689  

General and administrative

      55,471       —         55,471  

Interest

      308,091       (19,777 )(B)     288,314  

Depreciation and amortization

      266,829       (11,631 )(C)     255,198  

Losses from early extinguishments of debt

      12,896       —         12,896  
                        

Total expenses

      1,133,311       (63,827 )     1,069,484  
                        

Income before minority interest in property partnership, income from unconsolidated joint ventures, minority interest in Operating Partnership, gains on sales of real estate, discontinued operations and cumulative effect of a change in accounting principle

      304,324       (14,448 )     289,876  

Minority interest in property partnership

      6,017       —         6,017  

Income from unconsolidated joint ventures

      4,829       —         4,829  
                        

Income before minority interest in Operating Partnership, gains on sales of real estate, discontinued operations and cumulative effect of a change in accounting principle

      315,170       (14,448 )     300,722  

Minority interest in Operating Partnership

      (74,103 )     2,349 (D)     (71,754 )
                        

Income available to common shareholders before gains on sales of real estate, discontinued operations and cumulative effect of a change in accounting principle

    $ 241,067     $ (12,099 )   $ 228,968  
                        

Basic earnings per common share:

       

Income available to common shareholders before gains on sales of real estate, discontinued operations and cumulative effect of a change in accounting principle

    $ 2.17       $ 2.06  
                  

Weighted average number of common shares outstanding

      111,274         111,274  
                  

Diluted earnings per common share:

       

Income available to common shareholders before gains on sales of real estate, discontinued operations and cumulative effect of a change in accounting principle

    $ 2.12       $ 2.02  
                  

Weighted average number of common and common equivalent shares outstanding

      113,559         113,559  
                  

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

 

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BOSTON PROPERTIES, INC.

NOTES TO THE PRO FORMA

CONSOLIDATED STATEMENTS OF OPERATIONS

(dollars in thousands)

The Pro Forma Consolidated Statements of Operations reflect the elimination of the historical results of operations of 280 Park Avenue for year ended December 31, 2005 and the three months ended March 31, 2006 (unaudited). Due to the Company’s continuing involvement through an agreement with the buyer to manage 280 Park Avenue for a fee after the sale, 280 Park Avenue will not be categorized as discontinued operations in the Company’s Consolidated Statements of Operations.

 

(A) Reflects the elimination of rental income and operating expenses of 280 Park Avenue.

 

(B) Reflects the decrease in interest expense as a result of the legal defeasance of the mortgage financing in conjunction with the disposition of 280 Park Avenue. The mortgage financing defeased in connection with the disposition of 280 Park Avenue consists of an approximately $255.3 million loan (balance at March 31, 2006) collateralized by 280 Park Avenue which bore interest at a fixed rate of 7.644% per annum.

 

(C) Reflects the decrease in depreciation and amortization expense related to the disposition of 280 Park Avenue.

 

(D) Reflects an adjustment for the minority interest in the Operating Partnership’s share of pro forma income before gains on sales of real estate, discontinued operations and the cumulative effect of a change in accounting principle.

 

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