EX-99.2 3 dex992.htm PRESS RELEASE Press release

Exhibit 99.2

LOGO

LOGO

800 Boylston Street

Boston, MA 02199

AT THE COMPANY

Michael Walsh

Senior Vice President, Finance

(617) 236-3410

Arista Joyner

Investor Relations Manager

(617) 236-3343

BOSTON PROPERTIES ANNOUNCES

FOURTH QUARTER 2009 RESULTS

Reports diluted FFO per share of $1.04                        Reports diluted EPS of $0.38

BOSTON, MA, January 26, 2010 – Boston Properties, Inc. (NYSE: BXP), a real estate investment trust, reported results today for the fourth quarter ended December 31, 2009.

Results for the quarter ended December 31, 2009

Funds from Operations (FFO) for the quarter ended December 31, 2009 were $146.1 million, or $1.05 per share basic and $1.04 per share diluted. This compares to FFO for the quarter ended December 31, 2008 of $(0.6) million, or $(0.01) per share basic and $(0.01) per share diluted. FFO for the quarter ended December 31, 2009 includes $0.04 per share on a diluted basis related to non-cash impairment charges on the Company’s investment in its Value-Added Fund. FFO for the quarter ended December 31, 2008 includes $1.33 per share on a diluted basis related to non-cash impairment charges on certain of the Company’s investments in unconsolidated joint ventures, $0.05 per share on a diluted basis related to termination income associated with the Company’s termination of its lease with the law firm of Heller Ehrman LLP and $0.05 per share charge on a diluted basis related to the ineffectiveness of certain of the Company’s interest rate hedging contracts. FFO for the quarters ended December 31, 2009 and 2008 also includes additional non-cash interest expense of $0.07 and $0.06 per share on a diluted basis, respectively, related to the Company’s adoption of Accounting Standards Codification 470-20 “Debt with Conversion and Other Options” (formerly known as FSP No. APB 14-1). The weighted average number of basic and diluted shares outstanding totaled 138,761,430 and 140,919,736, respectively, for the quarter ended December 31, 2009 and 120,788,097 and 120,788,097, respectively, for the quarter ended December 31, 2008.

Net income (loss) available to common shareholders was $53.3 million for the quarter ended December 31, 2009, compared to $(98.1) million for the quarter ended December 31, 2008. Net income (loss) available to common shareholders per share (EPS) for the quarter ended December 31, 2009 was $0.38 basic and $0.38 on a diluted basis. This compares to EPS for the fourth quarter of 2008 of $(0.81) basic and $(0.81) on a diluted basis.

 

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Results for the year ended December 31, 2009

FFO for the year ended December 31, 2009 were $606.3 million, or $4.63 per share basic and $4.59 per share diluted. This compares to FFO for the year ended December 31, 2008 of $403.8 million, or $3.37 per share basic and $3.33 per share diluted. The weighted average number of basic and diluted shares outstanding totaled 131,050,184 and 132,972,524, respectively, for the year ended December 31, 2009 and 119,979,810 and 122,759,352, respectively, for the year ended December 31, 2008.

Net income available to common shareholders was $231.0 million for the year ended December 31, 2009, compared to $105.3 million for the year ended December 31, 2008. Net income available to common shareholders per share (EPS) for the year ended December 31, 2009 was $1.76 basic and $1.76 on a diluted basis. This compares to EPS for the year ended December 31, 2008 of $0.88 basic and $0.87 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 and year ended December 31, 2009. In the opinion of management, all adjustments considered necessary for a fair presentation of these reported results have been made.

As of December 31, 2009, the Company’s portfolio consisted of 146 properties comprising approximately 50.5 million square feet, including five properties under construction totaling 2.0 million square feet and one hotel. The overall percentage of leased space for the 140 properties in service as of December 31, 2009 was 92.4%.

Significant events during the fourth quarter included:

 

•  

On October 9, 2009, the Company’s Operating Partnership completed a public offering of $700.0 million in aggregate principal amount of its 5.875% senior notes due 2019. The notes were priced at 99.931% of the principal amount to yield 5.884% to maturity. The aggregate net proceeds to the Operating Partnership, after deducting underwriter discounts and offering expenses, were approximately $693.7 million. The notes mature on October 15, 2019, unless earlier redeemed.

 

•  

On October 9, 2009, the Company placed in-service 701 Carnegie Center, an approximately 120,000 net rentable square foot Class A office property located in Princeton, New Jersey. The property is 100% leased.

 

•  

On November 6, 2009, the Company acquired the land parcel at 17 Cambridge Center in Cambridge, Massachusetts for a gross purchase price of approximately $6.0 million.

 

•  

During the quarter ended December 31, 2009, the Company’s Value-Added Fund, an unconsolidated joint venture, recognized a non-cash impairment charge related to its One and Two Circle Star Way properties in San Carlos, California totaling approximately $24.6 million, of which the Company’s share was approximately $4.2 million. In addition, the

 

2

 

Company recognized a non-cash impairment charge of approximately $2.0 million representing the other-than-temporary decline in the fair value below the remaining carrying value of its investment in the Value-Added Fund.

Transactions completed subsequent to December 31, 2009:

 

•  

On January 19, 2010, the Company paid $12.8 million related to the termination of a lease for its 250 West 55th Street project in New York City. The Company announced in February 2009 that it was suspending construction of the 1,000,000 square foot office project. During the first quarter of 2009, the Company recognized costs aggregating approximately $27.8 million related to the suspension of development, which amount included a $20.0 million accrual for leasing related costs. As a result, the Company will recognize approximately $7.2 million of other income during the first quarter of 2010, which amount has been reflected in the guidance below.

EPS and FFO per Share Guidance:

The Company’s guidance for the first quarter and full year 2010 for EPS (diluted) and FFO per share (diluted) is set forth and reconciled below.

 

     First Quarter 2010    Full Year 2010
     Low    -    High    Low    -    High

Projected EPS (diluted)

    $ 0.36    -    $ 0.38    $ 1.36    -    $ 1.51

Add:

                  

Projected Company Share of Real Estate Depreciation and Amortization

      0.67    -      0.67      2.75    -      2.75

Less:

                  

Projected Company Share of Gains on Sales of Real Estate

      0.01    -      0.01     
 0.01
    -      0.01
                                     

Projected FFO per Share (diluted)

    $ 1.02    -    $ 1.04    $ 4.10    -    $ 4.25
                                     

Except as described below, the foregoing estimates reflect management’s view of current and future market conditions, including assumptions with respect to rental rates, occupancy levels and the earnings impact of the events referenced in this release and previously disclosed. In addition, the estimates do not include possible future gains or losses or the impact on operating results from other possible future property acquisitions or dispositions, or possible future impairment charges. EPS estimates may be subject to fluctuations as a result of several factors, including changes in the recognition of depreciation and amortization expense and any gains or losses associated with disposition activity. The Company is not able to assess at this time the potential impact of these factors on projected EPS. By definition, FFO does not include real estate-related depreciation and amortization or gains or losses associated with disposition activities. There can be no assurance that the Company’s actual results will not differ materially from the estimates set forth above.

Boston Properties will host a conference call on Wednesday, January 27, 2010 at 10:00 AM Eastern Time, open to the general public, to discuss the fourth quarter and full year 2009 results, the 2010 projections and related assumptions, and other related matters that may be of interest to investors. The number to call for this interactive teleconference is (877) 706-4503 (Domestic) or

 

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(281) 913-8731 (International) and entering the passcode 49923056. A replay of the conference call will be available through February 11, 2010, by dialing (800) 642-1687 (Domestic) or (706) 645-9291 (International) and entering the passcode 49923056. There will also be a live audio webcast of the call which may be accessed on the Company’s website at www.bostonproperties.com in the Investor Relations section. Shortly after the call a replay of the webcast will be available in the Investor Relations section of the Company’s website and archived for up to twelve months following the call.

Additionally, a copy of Boston Properties’ fourth quarter 2009 “Supplemental Operating and Financial Data” and this press release are available in the Investor Relations section of the Company’s website at www.bostonproperties.com.

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 properties and one hotel. The Company is one of the largest owners and developers of Class A office properties in the United States, concentrated in five markets – Boston, Midtown Manhattan, Washington, D.C., San Francisco and Princeton, N.J.

This press release contains forward-looking statements within the meaning of the Federal securities laws. You can identify these statements by our use of the words “assumes,” “believes,” “estimates,” “expects,” “guidance,” “intends,” “plans,” “projects” and similar expressions that do not relate to historical matters. 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, acquisition and disposition activity, the ability to effectively integrate acquisitions, the costs and availability of financing, the effectiveness of our interest rate hedging contracts, the ability of our joint venture partners to satisfy their obligations, the effects of local economic and market conditions, the effects of acquisitions, dispositions and possible impairment charges on our operating results, the impact of newly adopted accounting principles on the Company’s accounting policies and on period-to-period comparisons of financial results, regulatory changes and other risks and uncertainties detailed from time to time in the Company’s filings with the Securities and Exchange Commission. Boston Properties does not undertake a duty to update or revise any forward-looking statement, including its guidance for the first quarter and full fiscal year 2010, whether as a result of new information, future events or otherwise.

Financial tables follow.

 

4

BOSTON PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

 

     Three months ended
December 31,		     Year ended
December 31,		  
     2009     2008     2009     2008  
    

(in thousands, except for per share amounts)

(unaudited)

  

Revenue

         

Rental:

         

Base rent

    $ 295,448      $ 300,544      $ 1,185,431      $ 1,129,215   

Recoveries from tenants

      46,769        50,032        200,899        204,732   

Parking and other

      15,357        17,663        66,597        68,105   
                                

Total rental revenue

      357,574        368,239        1,452,927        1,402,052   

Hotel revenue

      10,277        12,158        30,385        36,872   

Development and management services

      8,277        9,024        34,878        30,518   

Interest and other

      1,784        879        4,059        18,958   
                                

Total revenue

      377,912        390,300        1,522,249        1,488,400   
                                

Expenses

         

Operating:

         

Rental

      124,188        123,479        501,799        488,030   

Hotel

      7,717        8,846        23,966        27,510   

General and administrative

      19,506        16,552        75,447        72,365   

Interest

      88,180        78,862        322,833        295,322   

Depreciation and amortization

      79,125        79,766        321,681        304,147   

Loss from suspension of development

      —          —          27,766        —     

Net derivative losses

      —          7,172        —          17,021   

Losses from early extinguishments of debt

      —          —          510        —     

Losses (gains) from investments in securities

      (510 )      2,631        (2,434 )      4,604   
                                

Total expenses

      318,206        317,308        1,271,568        1,208,999   
                                

Income before income (loss) from unconsolidated joint ventures, gains on sales of real estate and net income attributable to noncontrolling interests

      59,706        72,992        250,681        279,401   

Income (loss) from unconsolidated joint ventures

      962        (187,559 )      12,058        (182,018 ) 

Gains on sales of real estate

      2,078        1,946        11,760        33,340   
                                

Net income

      62,746        (112,621 )      274,499        130,723   

Net income attributable to noncontrolling interests:

         

Noncontrolling interests in property partnerships

      (463 )      (427 )      (2,778 )      (1,997 ) 

Noncontrolling interest - common units of the Operating Partnership

      (7,841 )      16,339        (35,534 )      (14,392 ) 

Noncontrolling interest in gains on sales of real estate - common units of the Operating Partnership

      (265 )      (279 )      (1,579 )      (4,838 ) 

Noncontrolling interest - redeemable preferred units of the Operating Partnership

      (860 )      (1,075 )      (3,594 )      (4,226 ) 
                                

Net income attributable to Boston Properties, Inc.

    $ 53,317      $ (98,063 )    $ 231,014      $ 105,270   
                                

Basic earnings per common share attributable to Boston Properties, Inc.:

         

Net income

    $ 0.38      $ (0.81 )    $ 1.76      $ 0.88   
                                

Weighted average number of common shares outstanding

      138,761        120,788        131,050        119,980   
                                

Diluted earnings per common share attributable to Boston Properties, Inc.:

         

Net income

    $ 0.38      $ (0.81 )    $ 1.76      $ 0.87   
                                

Weighted average number of common and common equivalent shares outstanding

      139,459        120,788        131,512        121,299   
                                

BOSTON PROPERTIES, INC.

CONSOLIDATED BALANCE SHEETS

 

     December 31,
2009		     December 31,
2008		  
    

(in thousands, except for share amounts)

(unaudited)

  
ASSETS     

Real estate

    $ 9,817,388      $ 9,560,924   

Construction in progress

      563,645        835,983   

Land held for future development

      718,525        228,300   

Less: accumulated depreciation

      (2,033,677 )      (1,768,785 ) 
                

Total real estate

      9,065,881        8,856,422   

Cash and cash equivalents

      1,448,933        241,510   

Cash held in escrows

      21,867        21,970   

Investments in securities

      9,946        11,590   

Tenant and other receivables, net of allowance for doubtful accounts of $4,125 and $4,006, respectively

      93,240        68,743   

Related party note receivable

      270,000        270,000   

Accrued rental income, net of allowance of $2,645 and $15,440, respectively

      363,121        316,711   

Deferred charges, net

      294,395        325,369   

Prepaid expenses and other assets

      17,684        22,401   

Investments in unconsolidated joint ventures

      763,636        782,760   
                

Total assets

    $ 12,348,703      $ 10,917,476   
                
LIABILITIES AND EQUITY     

Liabilities:

     

Mortgage notes payable

    $ 2,643,301      $ 2,660,642   

Unsecured senior notes, net of discount

      2,172,389        1,472,375   

Unsecured exchangeable senior notes, net of discount

      1,904,081        1,859,867   

Unsecured line of credit

      —          100,000   

Accounts payable and accrued expenses

      220,089        171,791   

Dividends and distributions payable

      80,536        97,162   

Accrued interest payable

      76,058        67,132   

Other liabilities

      127,538        173,750   
                

Total liabilities

      7,223,992        6,602,719   
                

Commitments and contingencies

      —          —     
                

Noncontrolling interest:

     

Redeemable preferred units of the Operating Partnership

      55,652        55,652   
                

Equity:

     

Stockholders’ equity attributable to Boston Properties, Inc.

     

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, 138,958,910 and 121,259,555 shares issued and 138,880,010 and 121,180,655 shares outstanding in 2009 and 2008, respectively

      1,389        1,212   

Additional paid-in capital

      4,373,679        3,559,841   

Earnings in excess of dividends

      95,433        154,953   

Treasury common stock, at cost

      (2,722 )      (2,722 ) 

Accumulated other comprehensive loss

      (21,777 )      (24,291 ) 
                

Total stockholders’ equity attributable to Boston Properties, Inc.

      4,446,002        3,688,993   

Noncontrolling interests:

     

Common units of the Operating Partnership

      617,386        563,212   

Property partnerships

      5,671        6,900   
                

Total equity

      5,069,059        4,259,105   
                

Total liabilities and equity

    $ 12,348,703      $ 10,917,476   
                

BOSTON PROPERTIES, INC.

FUNDS FROM OPERATIONS (1)

 

     Three months ended
December 31,		     Year ended
December 31,		  
     2009     2008     2009     2008  
     (in thousands, except for per share amounts)
(unaudited)		  

Net income attributable to Boston Properties, Inc.

    $ 53,317      $ (98,063 )    $ 231,014      $ 105,270   

Add:

         

Noncontrolling interest - redeemable preferred units of the Operating Partnership

      860        1,075        3,594        4,226   

Noncontrolling interest in gains on sales of real estate - common units of the Operating Partnership

      265        279        1,579        4,838   

Noncontrolling interest - common units of the Operating Partnership

      7,841        (16,339 )      35,534        14,392   

Noncontrolling interests in property partnerships

      463        427        2,778        1,997   

Less:

         

Gains on sales of real estate

      2,078        1,946        11,760        33,340   

Income (loss) from unconsolidated joint ventures

      962        (187,559 )      12,058        (182,018 ) 
                                

Income before income (loss) from unconsolidated joint ventures, gains on sales of real estate and net income attributable to noncontrolling interests

      59,706        72,992        250,681        279,401   

Add:

         

Real estate depreciation and amortization (2)

      109,153        115,668        446,718        382,600   

Income (loss) from unconsolidated joint ventures (3)

      962        (187,559 )      12,058        (182,018 ) 

Less:

         

Noncontrolling interests in property partnerships’ share of funds from operations

      1,523        897        5,513        3,949   

Noncontrolling interest - redeemable preferred units of the Operating Partnership

      860        953        3,594        3,738   
                                

Funds from operations (FFO) attributable to the Operating Partnership

      167,438        (749 )      700,350        472,296   

Less:

         

Noncontrolling interest - common units of the Operating Partnership’s share of funds from operations

      21,382        (107 )      94,078        68,508   
                                

Funds from operations attributable to Boston Properties, Inc.

    $ 146,056      $ (642 )    $ 606,272      $ 403,788   
                                

Our percentage share of funds from operations - basic

      87.23 %      85.67 %      86.57 %      85.49 % 
                                

Weighted average shares outstanding - basic

      138,761        120,788        131,050        119,980   
                                

FFO per share basic

    $ 1.05      $ (0.01 )    $ 4.63      $ 3.37   
                                

Weighted average shares outstanding - diluted

      140,920        120,788        132,973        122,759   
                                

FFO per share diluted

    $ 1.04      $ (0.01 )    $ 4.59      $ 3.33   
                                

(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 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. FFO is a non-GAAP financial measure. The use of FFO, combined with the required primary GAAP presentations, has been fundamentally beneficial in 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 our comparative operating and financial performance 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 company’s 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.

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 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) Real estate depreciation and amortization consists of depreciation and amortization from the Consolidated Statements of Operations of $79,125, $79,766, $321,681 and $304,147, our share of unconsolidated joint venture real estate depreciation and amortization of $30,507, $36,399, $126,943 and $80,303, less corporate-related depreciation and amortization of $479, $497, $1,906 and $1,850 for the three months and year ended December 31, 2009 and 2008, respectively.
(3) Includes non-cash impairment losses aggregating approximately $6.2 million and $13.6 million for the three months and year ended December 31, 2009, respectively, and $188.3 million for the three months and year ended December 31, 2008 in accordance with the guidance in Accounting Standards Codification (“ASC”) 323 “Investments-Equity Method and Joint Ventures” (formerly known as APB No. 18 “The Equity Method of Accounting for Investments in Common Stock”) and ASC 360 “Property, Plant and Equipment” (formerly known as SFAS No. 144 “Accounting for the Impairment or Disposal of Long Lived Assets”).

BOSTON PROPERTIES, INC.

PORTFOLIO LEASING PERCENTAGES

 

     % Leased by Location  
     December 31,
2009		     December 31,
2008		  

Greater Boston

    89.6 %    92.9 % 

Greater Washington, D.C.

    95.5 %    96.1 % 

Midtown Manhattan

    95.4 %    98.4 % 

Princeton/East Brunswick, NJ

    81.7 %    83.8 % 

Greater San Francisco

    91.1 %    92.8 % 
            

Total Portfolio

    92.4 %    94.5 % 
            
     % Leased by Type  
     December 31,
2009		     December 31,
2008		  

Class A Office Portfolio

    92.8 %    95.2 % 

Office/Technical Portfolio

    83.4 %    81.9 % 
            

Total Portfolio

    92.4 %    94.5 %