Segment Information

12 Months Ended

Dec. 31, 2022

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

11. 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 years ended December 31, 2022, 2021 and 2020.

BXP

	Year ended December 31,
	2022		2021		2020
	(in thousands)
Net income attributable to Boston Properties, Inc. common shareholders	$	848,947	$	496,223	$	862,227
Add:
Preferred stock redemption charge	—		6,412		—
Preferred dividends	—		2,560		10,500
Noncontrolling interest—common units of the Operating Partnership	96,780		55,931		97,704
Noncontrolling interests in property partnerships	74,857		70,806		48,260
Interest expense	437,139		423,346		431,717
Losses from early extinguishment of debt	—		45,182		—
Unrealized loss on non-real estate investment	150		—		—
Net operating income from unconsolidated joint ventures	146,081		107,756		94,943
Loss from unconsolidated joint ventures	59,840		2,570		85,110
Depreciation and amortization expense	749,775		717,336		683,751
Transaction costs	2,905		5,036		1,531
Payroll and related costs from management services contracts	15,450		12,487		11,626
General and administrative expense	146,378		151,573		133,112
Less:
Net operating income attributable to noncontrolling interests in property partnerships	191,812		186,304		162,887
Gains (losses) from investments in securities	(6,453)		5,626		5,261
Other income - assignment fee	6,624		—		—
Interest and other income (loss)	11,940		5,704		5,953
Gain on sales-type lease	10,058		—		—
Gains on sales of real estate	437,019		123,660		618,982
Direct reimbursements of payroll and related costs from management services contracts	15,450		12,487		11,626
Development and management services revenue	28,056		27,697		29,641
Company’s share of Net Operating Income	$	1,883,796	$	1,735,740	$	1,626,131

BPLP

	Year ended December 31,
	2022		2021		2020
	(in thousands)
Net income attributable to Boston Properties Limited Partnership common unitholders	$	957,265	$	561,993	$	979,979
Add:
Preferred unit redemption charge	—		6,412		—
Preferred distributions	—		2,560		10,500
Noncontrolling interests in property partnerships	74,857		70,806		48,260
Interest expense	437,139		423,346		431,717
Losses from early extinguishment of debt	—		45,182		—
Unrealized loss on non-real estate investment	150		—		—
Net operating income from unconsolidated joint ventures	146,081		107,756		94,943
Loss from unconsolidated joint ventures	59,840		2,570		85,110
Depreciation and amortization expense	742,293		709,035		676,666
Transaction costs	2,905		5,036		1,531
Payroll and related costs from management services contracts	15,450		12,487		11,626
General and administrative expense	146,378		151,573		133,112
Less:
Net operating income attributable to noncontrolling interests in property partnerships	191,812		186,304		162,887
Gains (losses) from investments in securities	(6,453)		5,626		5,261
Other income - assignment fee	6,624		—		—
Interest and other income (loss)	11,940		5,704		5,953
Gain on sales-type lease	10,058		—		—
Gains on sales of real estate	441,075		125,198		631,945
Direct reimbursements of payroll and related costs from management services contracts	15,450		12,487		11,626
Development and management services revenue	28,056		27,697		29,641
Company’s share of Net Operating Income	$	1,883,796	$	1,735,740	$	1,626,131

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, unrealized loss on non-real estate investment, net operating income from unconsolidated joint ventures, loss from unconsolidated joint ventures, 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, other income - assignment fee, interest and other income (loss), gains on sales-type lease, gains on sales of real estate, 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), less 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 losses from early extinguishment of debt from unconsolidated joint ventures, gains on sales of real estate from unconsolidated joint ventures and gain on sale of investment from unconsolidated joint ventures, both of which are included within Income (Loss) 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, unrealized loss on non-real estate investment, loss from unconsolidated joint ventures, 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, other income - assignment fee, interest and other income (loss), gain on sales-type lease, gains on sales of real estate, 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, Seattle and Washington, DC. On September 1, 2021, the Company invested in a joint venture that acquired Safeco Plaza located in Seattle, Washington. As such, the Seattle region was identified as a segment during the third quarter of 2021. The Company also presents information for each segment by property type, including Premier Workplace (which includes office, life sciences and retail), Residential and Hotel.

Parking and other revenue for the year ended December 31, 2022 increased by approximately $25.4 million compared to 2021. These increases were primarily in transient and monthly parking revenue.

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

For the year ended December 31, 2022:

	Boston			Los Angeles			New York			San Francisco			Seattle			Washington, DC			Total
Rental Revenue: (1)
Premier Workplace	$	1,005,156		$	—		$	1,031,479		$	534,397		$	31,978		$	365,402		$	2,968,412
Residential	15,086			—			—			14,769			—			27,326			57,181
Hotel	39,482			—			—			—			—			—			39,482
Total	1,059,724			—			1,031,479			549,166			31,978			392,728			3,065,075
% of Grand Totals	34.58		%	—		%	33.65		%	17.92		%	1.04		%	12.81		%	100.00		%
Rental Expenses:
Premier Workplace	360,218			—			391,293			183,353			8,386			135,237			1,078,487
Residential	5,961			—			—			11,371			—			12,251			29,583
Hotel	27,478			—			—			—			—			—			27,478
Total	393,657			—			391,293			194,724			8,386			147,488			1,135,548
% of Grand Totals	34.66		%	—		%	34.46		%	17.15		%	0.74		%	12.99		%	100.00		%
Net operating income	$	666,067		$	—		$	640,186		$	354,442		$	23,592		$	245,240		$	1,929,527
% of Grand Totals	34.52		%	—		%	33.18		%	18.37		%	1.22		%	12.71		%	100.00		%
Less: Net operating income attributable to noncontrolling interests in property partnerships	(45,822)			—			(145,990)			—			—			—			(191,812)
Add: Company’s share of net operating income (loss) from unconsolidated joint ventures	34,233			53,023			1,594			12,785			7,690			36,756			146,081
Company’s share of net operating income	$	654,478		$	53,023		$	495,790		$	367,227		$	31,282		$	281,996		$	1,883,796
% of Grand Totals	34.75		%	2.81		%	26.32		%	19.49		%	1.66		%	14.97		%	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 year ended December 31, 2021:

	Boston			Los Angeles			New York			San Francisco			Seattle				Washington, DC			Total
Rental Revenue: (1)
Premier Workplace	$	930,560		$	—		$	1,012,172		$	508,620		$	—			$	340,808		$	2,792,160
Residential	13,397			—			—			3,892			—				25,379			42,668
Hotel	13,609			—			—			—			—				—			13,609
Total	957,566			—			1,012,172			512,512			—				366,187			2,848,437
% of Grand Totals	33.62		%	—		%	35.53		%	17.99		%	—		%		12.86		%	100.00		%
Rental Expenses:
Premier Workplace	322,298			—			379,267			168,040			—				127,102			996,707
Residential	5,811			—			—			6,717			—				11,916			24,444
Hotel	12,998			—			—			—			—				—			12,998
Total	341,107			—			379,267			174,757			—			—	139,018			1,034,149
% of Grand Totals	32.98		%	—		%	36.67		%	16.90		%	—		%		13.45		%	100.00		%
Net operating income	$	616,459		$	—		$	632,905		$	337,755		$	—			$	227,169		$	1,814,288
% of Grand Totals	33.98		%	—		%	34.88		%	18.62		%	—		%		12.52		%	100.00		%
Less: Net operating income attributable to noncontrolling interests in property partnerships	(43,232)			—			(143,072)			—			—				—			(186,304)
Add: Company’s share of net operating income (loss) from unconsolidated joint ventures	16,551			51,641			(664)			14,152			2,498				23,578			107,756
Company’s share of net operating income	$	589,778		$	51,641		$	489,169		$	351,907		$	2,498			$	250,747		$	1,735,740
% of Grand Totals	33.98		%	2.98		%	28.18		%	20.27		%	0.14		%		14.45		%	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 year ended December 31, 2020:

	Boston			Los Angeles			New York			San Francisco			Washington, DC			Total
Rental Revenue: (1)
Premier Workplace	$	897,915		$	—		$	935,966		$	508,327		$	336,587		$	2,678,795
Residential	13,616			—			—			155			24,375			38,146
Hotel	7,478			—			—			—			—			7,478
Total	919,009			—			935,966			508,482			360,962			2,724,419
% of Grand Totals	33.73		%	—		%	34.36		%	18.66		%	13.25		%	100.00		%
Rental Expenses:
Premier Workplace	318,509			—			384,753			163,156			132,051			998,469
Residential	5,378			—			—			2,261			11,100			18,739
Hotel	13,136			—			—			—			—			13,136
Total	337,023			—			384,753			165,417			143,151			1,030,344
% of Grand Totals	32.71		%	—		%	37.35		%	16.05		%	13.89		%	100.00		%
Net operating income	$	581,986		$	—		$	551,213		$	343,065		$	217,811		$	1,694,075
% of Grand Totals	34.35		%	—		%	32.54		%	20.25		%	12.86		%	100.00		%
Less: Net operating income attributable to noncontrolling interests in property partnerships	(41,849)			—			(121,038)			—			—			(162,887)
Add: Company’s share of net operating income from unconsolidated joint ventures	10,765			57,907			(5,326)			14,928			16,669			94,943
Company’s share of net operating income	$	550,902		$	57,907		$	424,849		$	357,993		$	234,480		$	1,626,131
% of Grand Totals	33.88		%	3.56		%	26.12		%	22.02		%	14.42		%	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.