Segment Information

3 Months Ended

Mar. 31, 2015

Segment Reporting [Abstract]

Segment Information

11. Segment Information

The Company’s segments are based on the Company’s method of internal reporting which classifies its operations by both geographic area and property type. The Company’s segments by geographic area are Boston, New York, San Francisco and Washington, DC. Segments by property type include: Class A Office, Office/Technical, Residential and Hotel.

Asset information by segment is not reported because the Company does not use this measure to assess performance. Therefore, depreciation and amortization expense is not allocated among segments. Interest and other income, development and management services income, general and administrative expenses, transaction costs, interest expense, depreciation and amortization expense, gains from investments in securities, income from unconsolidated joint ventures, gains on sales of real estate, noncontrolling interests and preferred dividends are not included in Net Operating Income as internal reporting addresses these items on a corporate level.

Net Operating Income is not a measure of operating results or cash flows from operating activities as measured by accounting principles generally accepted in the United States of America, and it is not indicative of cash available to fund cash needs and should not be considered an alternative to cash flows as a measure of liquidity. All companies may not calculate Net Operating Income in the same manner. The Company considers Net Operating Income to be an appropriate supplemental measure to net income because it helps both investors and management to understand the core operations of the Company’s properties. The Company's management also uses Net Operating Income to evaluate regional property level performance and to make decisions about resource allocations. Further, the Company believes Net Operating Income is useful to investors as a performance measure because, when compared across periods, Net Operating Income reflects the impact on operations from trends in occupancy rates, rental rates, operating costs and acquisition and development activity on an unleveraged basis, providing perspectives not immediately apparent from net income attributable to Boston Properties, Inc. common shareholders.

Information by geographic area and property type (dollars in thousands):

For the three months ended March 31, 2015:

	Boston			New York			San Francisco			Washington, DC			Total
Rental Revenue:
Class A Office	$	169,907		$	253,098		$	66,252		$	93,131		$	582,388
Office/Technical	6,120			—			5,659			3,042			14,821
Residential	1,178			—			—			5,676			6,854
Hotel	9,085			—			—			—			9,085
Total	186,290			253,098			71,911			101,849			613,148
% of Grand Totals	30.38		%	41.28		%	11.73		%	16.61		%	100.00		%
Rental Expenses:
Class A Office	74,465			85,061			21,909			32,280			213,715
Office/Technical	1,986			—			912			1,191			4,089
Residential	509			—			—			3,037			3,546
Hotel	7,576			—			—			—			7,576
Total	84,536			85,061			22,821			36,508			228,926
% of Grand Totals	36.92		%	37.16		%	9.97		%	15.95		%	100.00		%
Net operating income	$	101,754		$	168,037		$	49,090		$	65,341		$	384,222
% of Grand Totals	26.48		%	43.73		%	12.78		%	17.01		%	100.00		%

For the three months ended March 31, 2014:

	Boston			New York			San Francisco			Washington, DC			Total
Rental Revenue:
Class A Office	$	170,942		$	217,308		$	54,608		$	97,048		$	539,906
Office/Technical	5,820			—			6,217			3,660			15,697
Residential	1,163			—			—			4,519			5,682
Hotel	8,193			—			—			—			8,193
Total	186,118			217,308			60,825			105,227			569,478
% of Grand Totals	32.68		%	38.16		%	10.68		%	18.48		%	100.00		%
Rental Expenses:
Class A Office	71,398			74,371			19,313			33,439			198,521
Office/Technical	1,689			—			1,214			1,202			4,105
Residential	448			—			—			3,314			3,762
Hotel	6,797			—			—			—			6,797
Total	80,332			74,371			20,527			37,955			213,185
% of Grand Totals	37.68		%	34.89		%	9.63		%	17.80		%	100.00		%
Net operating income	$	105,786		$	142,937		$	40,298		$	67,272		$	356,293
% of Grand Totals	29.69		%	40.12		%	11.31		%	18.88		%	100.00		%

The following is a reconciliation of Net Operating Income to net income attributable to Boston Properties, Inc. common shareholders:

	Three months ended March 31,
	2015		2014
	(in thousands)
Net Operating Income	$	384,222	$	356,293
Add:
Development and management services income	5,328		5,216
Income from unconsolidated joint ventures	14,834		2,816
Interest and other income	1,407		1,311
Gains from investments in securities	393		286
Gains on sales of real estate	95,084		—
Less:
General and administrative expense	28,791		29,905
Transaction costs	327		437
Depreciation and amortization expense	154,223		154,270
Interest expense	108,757		113,554
Noncontrolling interests in property partnerships	15,208		4,354
Noncontrolling interest—redeemable preferred units of the Operating Partnership	3		619
Noncontrolling interest—common units of the Operating Partnership	20,188		6,160
Preferred dividends	2,589		2,589
Net income attributable to Boston Properties, Inc. common shareholders	$	171,182	$	54,034