Real Estate Activity During the Six Months Ended June 30, 2012

6 Months Ended

Jun. 30, 2012

Real Estate Activity During the Six Months Ended June 30, 2012

3. Real Estate Activity During the Six Months Ended June 30, 2012

Acquisitions

On March 1, 2012, the Company acquired 453 Ravendale Drive located in Mountain View, California for a purchase price of approximately $6.7 million in cash. 453 Ravendale Drive is an approximately 30,000 net rentable square foot Office/Technical property. The following table summarizes the allocation of the aggregate purchase price of 453 Ravendale Drive at the date of acquisition (in thousands).

Land	$	5,477
Building and improvements		974
Tenant improvements		116
In-place lease intangibles		223
Below-market rents		(140	)
Net assets acquired	$	6,650

On March 13, 2012, the Company acquired 100 Federal Street in Boston, Massachusetts for an aggregate investment of approximately $615.0 million in cash. In connection with the transaction, the Company entered into a long-term lease with an affiliate of Bank of America for approximately 735,000 square feet. 100 Federal Street is an approximately 1,264,000 net rentable square foot, 37-story Class A office tower located in Boston, Massachusetts. The following table summarizes the allocation of the aggregate purchase price of 100 Federal Street at the date of acquisition (in thousands).

Land	$	131,067
Building and improvements		387,321
Tenant improvements		48,633
In-place lease intangibles		69,530
Above-market rents		81
Other assets		4,800
Below-market rents		(22,515	)
Accounts payable and accrued expenses		(3,917	)
Net assets acquired	$	615,000

The following table summarizes the estimated amortization of the acquired in-place lease intangibles and the acquired net below-market lease intangibles for 453 Ravendale Drive and 100 Federal Street, collectively, for each of the five succeeding years (in thousands).

	Acquired In-Place Lease Intangibles		Acquired Net  Below- Market Lease Intangibles
Period from July 1, 2012 through December 31, 2012	$	5,080	$	1,864
2013		10,084		3,709
2014		7,869		3,374
2015		5,927		2,885
2016		5,199		2,512

100 Federal Street contributed approximately $19.5 million of revenue and approximately $3.3 million of earnings to the Company for the period from March 13, 2012 through June 30, 2012. 453 Ravendale Drive contributed approximately $0.2 million of revenue and approximately $40,000 of earnings to the Company for the period from March 1, 2012 through June 30, 2012.

The accompanying pro forma information for the six months ended June 30, 2012 and 2011 is presented as if the acquisitions of (1) 453 Ravendale Drive on March 1, 2012 and (2) 100 Federal Street on March 13, 2012, had occurred on January 1, 2011. This pro forma information is based upon the historical consolidated financial statements and should be read in conjunction with the consolidated financial statements and notes thereto. This pro forma information does not purport to represent what the actual results of operations of the Company would have been had the above occurred, nor do they purport to predict the results of operations of future periods.

Pro Forma	Six months ended June 30,
(in thousands, except per share data)	2012		2011
Total revenue	$	932,251	$	882,090
Income from continuing operations	$	155,514	$	122,989
Net income attributable to Boston Properties, Inc.	$	185,751	$	105,242
Basic earnings per share:
Net income per share attributable to Boston Properties, Inc.	$	1.24	$	0.73
Diluted earnings per share:
Net income per share attributable to Boston Properties, Inc.	$	1.24	$	0.73

Developments

On January 3, 2012, the Company commenced the redevelopment of Two Patriots Park, a Class A office project with approximately 256,000 net rentable square feet located in Reston, Virginia. The Company will capitalize incremental costs during the redevelopment.

On April 30, 2012, the Company fully placed in-service 510 Madison Avenue, a Class A office project with approximately 356,000 net rentable square feet located in New York City.

On May 4, 2012, the Company completed and fully placed in-service One Patriots Park, a Class A office redevelopment project with approximately 268,000 net rentable square feet located in Reston, Virginia.

Dispositions

On January 31, 2012, the servicer of the non-recourse mortgage loan collateralized by the Company’s Montvale Center property located in Gaithersburg, Maryland foreclosed on the property. During 2011, the Company had notified the master servicer of the non-recourse mortgage loan that the cash flows generated from the property were insufficient to fund debt service payments and capital improvements necessary to lease and operate the property and that the Company was not prepared to fund any cash shortfalls. The Company was not current on making debt service payments and was accruing interest at the default interest rate of 9.93% per annum. The loan was originally scheduled to mature on June 6, 2012. As a result of the foreclosure, the mortgage loan totaling $25.0 million was extinguished and the related obligations were satisfied with the transfer of the real estate and working capital to the servicer. The Company no longer has any equitable or economic ownership interest in the property. The transaction resulted in a gain on forgiveness of debt of approximately $17.8 million. The operating results of the property through the date of foreclosure have been classified as discontinued operations on a historical basis for all periods presented.

On May 17, 2012, the Company completed the sale of its Bedford Business Park properties located in Bedford, Massachusetts for approximately $62.8 million in cash. Net cash proceeds totaled approximately $62.0 million, resulting in a gain on sale of approximately $36.9 million. Bedford Business Park is comprised of two Office/Technical buildings and one Class A office building aggregating approximately 470,000 net rentable square feet.

The following table summarizes the income (loss) from discontinued operations related to Montvale Center and Bedford Business Park and the related gain on sale of real estate and gain on forgiveness of debt for the three and six months ended June 30, 2012 and 2011:

	For the three months ended June 30,						For the six months ended June 30,
	2012			2011			2012			2011
	(in thousands)
Total revenue	$	1,091		$	2,584		$	3,748		$	5,177
Expenses
Operating		450			1,242			1,602			2,322
Depreciation and amortization		243			821			1,040			1,656
Total expenses		693			2,063			2,642			3,978
Operating income		398			521			1,106			1,199
Other expense
Interest expense		—			(653	)		(222	)		(1,279	)
Income (loss) from discontinued operations	$	398		$	(132	)	$	884		$	(80	)
Noncontrolling interest in income (loss) from discontinued operations – common units of the Operating Partnership		(42	)		15			(94	)		10
Income (loss) from discontinued operations attributable to Boston Properties, Inc.	$	356		$	(117	)	$	790		$	(70	)
Gain on sale of real estate from discontinued operations	$	36,877		$	—		$	36,877		$	—
Gain on forgiveness of debt from discontinued operations		—			—			17,807			—
Noncontrolling interest in gain on sale of real estate and gain on forgiveness of debt from discontinued operations – common units of the Operating Partnership		(4,052	)		—			(6,021	)		—
Gain on sale of real estate and gain on forgiveness of debt from discontinued operations attributable to Boston Properties, Inc.	$	32,825		$	—		$	48,663		$	—