Segment Information

6 Months Ended

Jun. 30, 2016

Segment Reporting [Abstract]

Segment Information

13. Segment Information

Below is a reconciliation of Net Income Attributable to Boston Properties, Inc. Common Shareholders to Net Operating Income and Net Income Attributable to Boston Properties Limited Partnership Common Unitholders to Net Operating Income for the three and six months ended June 30, 2016 and 2015.

Boston Properties, Inc.

	Three months ended June 30,					Six months ended June 30,
	2016		2015			2016		2015
	(in thousands)
Net income attributable to Boston Properties, Inc. common shareholders	$	96,597	$	79,460		$	278,323	$	250,694
Add:
Preferred dividends	2,589		2,618			5,207		5,207
Noncontrolling interest—common units of the Operating Partnership	11,357		9,394			32,771		29,530
Noncontrolling interest—redeemable preferred units of the Operating Partnership	—		3			—		6
Noncontrolling interests in property partnerships	6,814		9,264			17,278		24,472
Interest expense	105,003		108,534			210,312		217,291
Depreciation and amortization expense	153,175		167,844			312,623		322,067
Transaction costs	913		208			938		535
General and administrative expense	25,418		22,284			54,771		51,075
Less:
Gains on sales of real estate	—		—			67,623		95,084
Gains (losses) from investments in securities	478		(24		)	737		369
Interest and other income	1,524		1,293			3,029		2,700
Income from unconsolidated joint ventures	2,234		3,078			4,025		17,912
Development and management services income	5,533		4,862			12,222		10,190
Net Operating Income	$	392,097	$	390,400		$	824,587	$	774,622

Boston Properties Limited Partnership

	Three months ended June 30,					Six months ended June 30,
	2016		2015			2016		2015
	(in thousands)
Net income attributable to Boston Properties Limited Partnership common unitholders	109,938		90,852			317,234		284,221
Add:
Preferred distributions	2,589		2,618			5,207		5,207
Noncontrolling interest—redeemable preferred units	—		3			—		6
Noncontrolling interests in property partnerships	6,814		9,264			17,278		24,472
Interest expense	105,003		108,534			210,312		217,291
Depreciation and amortization expense	151,191		165,846			308,652		318,070
Transaction costs	913		208			938		535
General and administrative expense	25,418		22,284			54,771		51,075
Less:
Gains on sales of real estate	—		—			69,792		95,084
Gains (losses) from investments in securities	478		(24		)	737		369
Interest and other income	1,524		1,293			3,029		2,700
Income from unconsolidated joint ventures	2,234		3,078			4,025		17,912
Development and management services income	5,533		4,862			12,222		10,190
Net Operating Income	$	392,097	$	390,400		$	824,587	$	774,622

Net Operating Income is not a measure of operating results or cash flows from operating activities as measured by GAAP, 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 performance 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 and net income attributable to Boston Properties Limited Partnership common unitholders.

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/distributions are not included in Net Operating Income as internal reporting addresses these items on a corporate level.

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: Office, Residential and Hotel.

Beginning on January 1, 2016, the properties that were historically included in the Company’s Office/Technical segment are now included in the Office segment to align with its method of internal reporting, which shifted after the disposition of 415 Main Street in Cambridge, Massachusetts. As such, the amounts previously included in Office/Technical are now included in Office for all periods presented.

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

For the three months ended June 30, 2016:

	Boston			New York			San Francisco			Washington, DC			Total
Rental Revenue:
Office	$	179,048		$	243,957		$	78,524		$	99,588		$	601,117
Residential	1,180			—			—			2,908			4,088
Hotel	12,808			—			—			—			12,808
Total	193,036			243,957			78,524			102,496			618,013
% of Grand Totals	31.24		%	39.47		%	12.71		%	16.58		%	100.00		%
Rental Expenses:
Office	68,754			88,749			25,470			33,359			216,332
Residential	513			—			—			1,093			1,606
Hotel	7,978			—			—			—			7,978
Total	77,245			88,749			25,470			34,452			225,916
% of Grand Totals	34.19		%	39.29		%	11.27		%	15.25		%	100.00		%
Net operating income	$	115,791		$	155,208		$	53,054		$	68,044		$	392,097
% of Grand Totals	29.53		%	39.59		%	13.53		%	17.35		%	100.00		%

For the three months ended June 30, 2015:

	Boston			New York			San Francisco			Washington, DC			Total
Rental Revenue:
Office	$	180,936		$	246,432		$	74,335		$	94,442		$	596,145
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:
Office	69,653			85,661			24,415			33,204			212,933
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 six months ended June 30, 2016:

	Boston			New York			San Francisco			Washington, DC			Total
Rental Revenue:
Office	$	356,875		$	535,815		$	154,841		$	200,076		$	1,247,607
Residential	2,351			—			—			5,786			8,137
Hotel	21,565			—			—			—			21,565
Total	380,791			535,815			154,841			205,862			1,277,309
% of Grand Totals	29.81		%	41.95		%	12.12		%	16.12		%	100.00		%
Rental Expenses:
Office	139,441			177,547			49,375			67,541			433,904
Residential	1,033			—			—			2,173			3,206
Hotel	15,612			—			—			—			15,612
Total	156,086			177,547			49,375			69,714			452,722
% of Grand Totals	34.47		%	39.22		%	10.91		%	15.40		%	100.00		%
Net operating income	$	224,705		$	358,268		$	105,466		$	136,148		$	824,587
% of Grand Totals	27.25		%	43.45		%	12.79		%	16.51		%	100.00		%

For the six months ended June 30, 2015:

	Boston			New York			San Francisco			Washington, DC			Total
Rental Revenue:
Office	$	356,963		$	499,530		$	146,246		$	190,615		$	1,193,354
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:
Office	146,104			170,722			47,236			66,675			430,737
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		%