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Segment Information
 3 Months Ended
Mar. 31, 2021
Segment Reporting [Abstract]  
Segment Reporting Disclosure [Text Block]
12. Segment Information
The following tables present reconciliations of Net Income Attributable to Boston Properties, Inc. Common Shareholders to the Company’s share of Net Operating Income and Net Income Attributable to Boston Properties Limited Partnership Common Unitholders to the Company’s share of Net Operating Income for the three months ended March 31, 2021 and 2020.
Boston Properties, Inc.
 Three months ended March 31,
20212020
(in thousands)
Net income attributable to Boston Properties, Inc. common shareholders
$91,624 $497,496 
Add:
Preferred stock redemption charge6,412 — 
Preferred dividends2,560 2,625 
Noncontrolling interest—common units of the Operating Partnership
11,084 57,539 
Noncontrolling interests in property partnerships16,467 19,486 
Interest expense107,902 101,591 
Losses from early extinguishment of debt898 — 
Net operating income from unconsolidated joint ventures24,795 28,758 
Depreciation and amortization expense176,565 171,094 
Transaction costs331 615 
Payroll and related costs from management services contracts
3,505 3,237 
General and administrative expense44,959 36,454 
Less:
Net operating income attributable to noncontrolling interests in property partnerships
44,376 47,661 
Gains (losses) from investments in securities1,659 (5,445)
Interest and other income (loss)1,168 3,017 
Gains on sales of real estate— 410,165 
Income (loss) from unconsolidated joint ventures5,225 (369)
Direct reimbursements of payroll and related costs from management services contracts
3,505 3,237 
Development and management services revenue6,803 7,879 
Company’s share of Net Operating Income$424,366 $452,750 
Boston Properties Limited Partnership
 Three months ended March 31,
 20212020
(in thousands)
Net income attributable to Boston Properties Limited Partnership common unitholders
$105,773 $566,333 
Add:
Preferred unit redemption charge6,412 — 
Preferred distributions2,560 2,625 
Noncontrolling interests in property partnerships16,467 19,486 
Interest expense107,902 101,591 
Losses from early extinguishment of debt898 — 
Net operating income from unconsolidated joint ventures24,795 28,758 
Depreciation and amortization expense173,500 169,285 
Transaction costs331 615 
Payroll and related costs from management services contracts
3,505 3,237 
General and administrative expense44,959 36,454 
Less:
Net operating income attributable to noncontrolling interests in property partnerships
44,376 47,661 
Gains (losses) from investments in securities1,659 (5,445)
Interest and other income (loss)1,168 3,017 
Gains on sales of real estate— 419,654 
Income (loss) from unconsolidated joint ventures5,225 (369)
Direct reimbursements of payroll and related costs from management services contracts
3,505 3,237 
Development and management services revenue6,803 7,879 
Company’s share of Net Operating Income$424,366 $452,750 
Net operating income (“NOI”) is a non-GAAP financial measure equal to net income attributable to Boston Properties, Inc. common shareholders and net income attributable to Boston Properties Limited Partnership common unitholders, as applicable, the most directly comparable GAAP financial measures, plus (1) preferred stock/unit redemption charge, preferred dividends/distributions, net income attributable to noncontrolling interests, interest expense, losses from early extinguishment of debt, depreciation and amortization expense, transaction costs, payroll and related costs from management services contracts and corporate general and administrative expense less (2) gains (losses) from investments in securities, interest and other income (loss), gains on sales of real estate, income (loss) from unconsolidated joint ventures, direct reimbursements of payroll and related costs from management services contracts and development and management services revenue. The Company believes NOI is useful to investors as a performance measure and believes it provides useful information to investors regarding its results of operations and financial condition because, when compared across periods, it reflects the impact on operations from trends in occupancy rates, rental rates, operating costs and acquisition and development activity on an unleveraged basis, providing perspective not immediately apparent from net income attributable to Boston Properties, Inc. common shareholders and net income attributable to Boston Properties Limited Partnership common unitholders. For example, interest expense is not necessarily linked to the operating performance of a real estate asset and is often incurred at the corporate level as opposed to the property level. Similarly, interest expense may be incurred at the property level even though the financing proceeds may be used at the corporate level (e.g., used for other investment activity). In addition, depreciation and amortization expense, because of historical cost accounting and useful life estimates, may distort operating performance measures at the property level. NOI presented by the Company may not be comparable to NOI reported by other REITs or real estate companies that define NOI differently.
The Company’s internal reporting utilizes its share of NOI, which includes its share of NOI from consolidated and unconsolidated joint ventures, which is a non-GAAP financial measure that is calculated as the consolidated amount, plus the Company’s share of the amount from the Company’s unconsolidated joint ventures (calculated based upon the Company’s economic percentage ownership interest and, in some cases, after priority allocations), minus the Company’s partners’ share of the amount from the Company’s consolidated joint ventures (calculated based upon the partners’ economic percentage ownership interests and, in some cases, after priority allocations, income allocation to private REIT shareholders and their share of fees due to the Company). The Company’s share of NOI from unconsolidated joint ventures does not include its share of gains on sales of real estate from unconsolidated joint ventures, both of which are included within Income From Unconsolidated Joint Ventures in the Company’s Consolidated Statements of Operations.  Management utilizes its share of NOI in assessing its performance as the Company has several significant joint ventures and, in some cases, the Company exercises significant influence over, but does not control, the joint venture, in which case GAAP requires that the Company account for the joint venture entity using the equity method of accounting and the Company does not consolidate it for financial reporting purposes. In other cases, GAAP requires that the Company consolidate the venture even though the Company’s partner(s) owns a significant percentage interest. As a result, the presentations of the Company’s share of NOI should not be considered a substitute for, and should only be considered together with and as a supplement to, the Company’s financial information presented in accordance with GAAP.
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. Preferred stock/unit redemption charge, preferred dividends/distributions, interest expense, losses from early extinguishment of debt, depreciation and amortization expense, transaction costs, payroll and related costs from management services contracts, corporate general and administrative expense, gains (losses) from investments in securities, interest and other income (loss), gains on sales of real estate, income (loss) from unconsolidated joint ventures, direct reimbursements of payroll and related costs from management services contracts and development and management services revenue are not included in NOI and are provided as reconciling items to the Company’s reconciliations of its share of NOI to net income attributable to common shareholders/unitholders.
The Company’s segments are based on the Company’s method of internal reporting which classifies its operations by geographic area. The Company’s segments by geographic area are Boston, Los Angeles, New York, San Francisco and Washington, DC. The Company also presents information for each segment by property type, including Office, Residential and Hotel.
Included within the Office property type are commercial office and retail leases, as well as parking revenue.  Upon the adoption of ASC 842, any write-off for bad debt, including accrued rent, will be recorded as a reduction to lease revenue. As a result of COVID-19, during the three months ended March 31, 2021, the Company wrote off approximately $0.6 million related to accrued rent, net balances and approximately $(0.2) million related to accounts receivable, net balances. During the three months ended March 31, 2020, the Company wrote off approximately $1.2 million related to accrued rent, net balances and approximately $0.3 million related to accounts receivable, net balances. The write-offs were for tenants, primarily in the retail sector, that either terminated their leases or that the Company considered their accrued rent and/or accounts receivable balances no longer probable of collection.
In addition, parking and other revenue for the three months ended March 31, 2021 decreased by approximately $7.6 million compared to 2020. These decreases were primarily in transient and monthly parking revenue.
The Boston Marriott Cambridge closed in March 2020 due to COVID-19. The hotel re-opened on October 2, 2020 and it has operated at a diminished occupancy due to the continued impact of COVID-19 on business and leisure travel. The closing of the hotel for more than two fiscal quarters, weak demand and low occupancy since its re-opening, have had, and are expected to continue to have, a material adverse effect on the hotel’s operations and thus the results of the Company’s Hotel property type.
Information by geographic area and property type (dollars in thousands):
For the three months ended March 31, 2021:
BostonLos AngelesNew YorkSan FranciscoWashington, DCTotal
Rental Revenue: (1)
Office$230,403 $— $250,164 $130,598 $82,415 $693,580 
Residential3,045 — — 321 5,809 9,175 
Hotel632 — — — — 632 
Total234,080 — 250,164 130,919 88,224 703,387 
% of Grand Totals33.28 %— %35.57 %18.61 %12.54 %100.00 %
Rental Expenses:
Office79,881 — 99,385 40,249 31,747 251,262 
Residential1,455 — — 1,686 2,986 6,127 
Hotel2,051 — — — — 2,051 
Total83,387 — 99,385 41,935 34,733 259,440 
% of Grand Totals32.14 %— %38.31 %16.16 %13.39 %100.00 %
Net operating income
$150,693 $— $150,779 $88,984 $53,491 $443,947 
% of Grand Totals33.94 %— %33.97 %20.04 %12.05 %100.00 %
Less: Net operating income attributable to noncontrolling interests in property partnerships
(10,224)— (34,152)— — (44,376)
Add: Company’s share of net operating income from unconsolidated joint ventures
2,281 14,192 (793)3,480 5,635 24,795 
Company’s share of net operating income
$142,750 $14,192 $115,834 $92,464 $59,126 $424,366 
% of Grand Totals33.64 %3.34 %27.30 %21.79 %13.93 %100.00 %
  _______________
(1)Rental Revenue is equal to Total Revenue per the Company’s Consolidated Statements of Operations, less Development and Management Services Revenue and Direct Reimbursements of Payroll and Related Costs from Management Services Contracts Revenue per the Consolidated Statements of Operations.
For the three months ended March 31, 2020:
BostonLos AngelesNew YorkSan FranciscoWashington, DCTotal
Rental Revenue: (1)
Office$239,498 $— $255,286 $136,739 $93,136 $724,659 
Residential4,068 — — — 5,888 9,956 
Hotel6,825 — — — — 6,825 
Total250,391 — 255,286 136,739 99,024 741,440 
% of Grand Totals33.77 %— %34.43 %18.44 %13.36 %100.00 %
Rental Expenses:
Office82,545 — 99,140 42,569 34,648 258,902 
Residential1,340 — — — 2,724 4,064 
Hotel6,821 — — — — 6,821 
Total90,706 — 99,140 42,569 37,372 269,787 
% of Grand Totals33.62 %— %36.75 %15.78 %13.85 %100.00 %
Net operating income
$159,685 $— $156,146 $94,170 $61,652 $471,653 
% of Grand Totals33.85 %— %33.11 %19.97 %13.07 %100.00 %
Less: Net operating income attributable to noncontrolling interests in property partnerships
(10,663)— (36,998)— — (47,661)
Add: Company’s share of net operating income from unconsolidated joint ventures
3,099 15,930 756 3,159 5,814 28,758 
Company’s share of net operating income
$152,121 $15,930 $119,904 $97,329 $67,466 $452,750 
% of Grand Totals33.60 %3.52 %26.48 %21.50 %14.90 %100.00 %
  _______________
(1)Rental Revenue is equal to Total Revenue per the Company’s Consolidated Statements of Operations, less Development and Management Services Revenue and Direct Reimbursements of Payroll and Related Costs from Management Services Contracts Revenue per the Consolidated Statements of Operations.