Segment Information

6 Months Ended

Jun. 30, 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 (losses) 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 June 30, 2015:

	Boston			New York			San Francisco			Washington, DC			Total
Rental Revenue:
Class A Office	$	174,894		$	246,432		$	68,781		$	91,489		$	581,596
Office/Technical	6,042			—			5,554			2,953			14,549
Residential	1,131			—			—			2,680			3,811
Hotel	13,403			—			—			—			13,403
Total	195,470			246,432			74,335			97,122			613,359
% of Grand Totals	31.87		%	40.18		%	12.12		%	15.83		%	100.00		%
Rental Expenses:
Class A Office	67,874			85,661			23,416			32,180			209,131
Office/Technical	1,779			—			999			1,024			3,802
Residential	511			—			—			1,020			1,531
Hotel	8,495			—			—			—			8,495
Total	78,659			85,661			24,415			34,224			222,959
% of Grand Totals	35.28		%	38.42		%	10.95		%	15.35		%	100.00		%
Net operating income	$	116,811		$	160,771		$	49,920		$	62,898		$	390,400
% of Grand Totals	29.92		%	41.18		%	12.79		%	16.11		%	100.00		%

For the three months ended June 30, 2014:

	Boston			New York			San Francisco			Washington, DC			Total
Rental Revenue:
Class A Office	$	173,128		$	223,899		$	57,450		$	94,222		$	548,699
Office/Technical	5,912			—			6,341			3,671			15,924
Residential	1,089			—			—			5,209			6,298
Hotel	12,367			—			—			—			12,367
Total	192,496			223,899			63,791			103,102			583,288
% of Grand Totals	33.00		%	38.39		%	10.94		%	17.67		%	100.00		%
Rental Expenses:
Class A Office	65,818			74,962			21,282			32,481			194,543
Office/Technical	1,736			—			1,308			1,123			4,167
Residential	544			—			—			3,392			3,936
Hotel	7,315			—			—			—			7,315
Total	75,413			74,962			22,590			36,996			209,961
% of Grand Totals	35.92		%	35.70		%	10.76		%	17.62		%	100.00		%
Net operating income	$	117,083		$	148,937		$	41,201		$	66,106		$	373,327
% of Grand Totals	31.36		%	39.89		%	11.04		%	17.71		%	100.00		%

For the six months ended June 30, 2015:

	Boston			New York			San Francisco			Washington, DC			Total
Rental Revenue:
Class A Office	$	344,801		$	499,530		$	135,033		$	184,620		$	1,163,984
Office/Technical	12,162			—			11,213			5,995			29,370
Residential	2,309			—			—			8,356			10,665
Hotel	22,488			—			—			—			22,488
Total	381,760			499,530			146,246			198,971			1,226,507
% of Grand Totals	31.13		%	40.73		%	11.92		%	16.22		%	100.00		%
Rental Expenses:
Class A Office	142,339			170,722			45,325			64,460			422,846
Office/Technical	3,765			—			1,911			2,215			7,891
Residential	1,020			—			—			4,057			5,077
Hotel	16,071			—			—			—			16,071
Total	163,195			170,722			47,236			70,732			451,885
% of Grand Totals	36.12		%	37.78		%	10.45		%	15.65		%	100.00		%
Net operating income	$	218,565		$	328,808		$	99,010		$	128,239		$	774,622
% of Grand Totals	28.22		%	42.45		%	12.78		%	16.55		%	100.00		%

For the six months ended June 30, 2014:

	Boston			New York			San Francisco			Washington, DC			Total
Rental Revenue:
Class A Office	$	344,070		$	441,207		$	112,058		$	191,270		$	1,088,605
Office/Technical	11,732			—			12,558			7,331			31,621
Residential	2,252			—			—			9,728			11,980
Hotel	20,560			—			—			—			20,560
Total	378,614			441,207			124,616			208,329			1,152,766
% of Grand Totals	32.84		%	38.28		%	10.81		%	18.07		%	100.00		%
Rental Expenses:
Class A Office	137,216			149,333			40,595			65,920			393,064
Office/Technical	3,425			—			2,522			2,325			8,272
Residential	992			—			—			6,706			7,698
Hotel	14,112			—			—			—			14,112
Total	155,745			149,333			43,117			74,951			423,146
% of Grand Totals	36.81		%	35.29		%	10.19		%	17.71		%	100.00		%
Net operating income	$	222,869		$	291,874		$	81,499		$	133,378		$	729,620
% of Grand Totals	30.55		%	40.00		%	11.17		%	18.28		%	100.00		%

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

	Three months ended June 30,					Six months ended June 30,
	2015			2014		2015		2014
	(in thousands)
Net Operating Income	$	390,400		$	373,327	$	774,622	$	729,620
Add:
Development and management services income	4,862			6,506		10,190		11,722
Income from unconsolidated joint ventures	3,078			2,834		17,912		5,650
Interest and other income	1,293			2,109		2,700		3,420
Gains (losses) from investments in securities	(24		)	662		369		948
Gains on sales of real estate	—			—		95,084		—
Less:
General and administrative expense	22,284			23,271		51,075		53,176
Transaction costs	208			661		535		1,098
Depreciation and amortization expense	167,844			154,628		322,067		308,898
Interest expense	108,534			110,977		217,291		224,531
Noncontrolling interests in property partnerships	9,264			7,553		24,472		11,907
Noncontrolling interest—redeemable preferred units of the Operating Partnership	3			320		6		939
Noncontrolling interest—common units of the Operating Partnership	9,394			8,883		29,530		15,010
Preferred dividends	2,618			2,618		5,207		5,207
Net income attributable to Boston Properties, Inc. common shareholders	$	79,460		$	76,527	$	250,694	$	130,594