Segment Information

6 Months Ended

Jun. 30, 2023

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

11. Segment Information

The following tables present reconciliations of Net Income Attributable to Boston Properties, Inc. to the Company’s share of Net Operating Income and Net Income Attributable to Boston Properties Limited Partnership to the Company’s share of Net Operating Income for the three and six months ended June 30, 2023 and 2022.

BXP

	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
	(in thousands)
Net income attributable to Boston Properties, Inc.	$	104,299	$	222,989	$	182,215	$	366,044
Add:
Noncontrolling interest—common units of the Operating Partnership	12,117		25,708		21,169		42,061
Noncontrolling interests in property partnerships	19,768		18,546		38,428		36,095
Interest expense	142,473		104,142		276,680		205,370
Net operating income from unconsolidated joint ventures	42,254		35,710		83,010		73,031
Depreciation and amortization expense	202,577		183,146		411,311		360,770
Transaction costs	308		496		1,219		496
Payroll and related costs from management services contracts	4,609		3,239		9,844		7,304
General and administrative expense	44,175		34,665		99,977		77,859
Less:
Net operating income attributable to noncontrolling interests in property partnerships	47,958		47,862		95,055		94,917
Unrealized gain on non-real estate investment	124		—		383		—
Gains (losses) from investments in securities	1,571		(4,716)		3,236		(6,978)
Other income - assignment fee	—		6,624		—		6,624
Interest and other income (loss)	17,343		1,195		28,284		2,423
Gains on sales of real estate	—		96,247		—		118,948
Income (loss) from unconsolidated joint ventures	(6,668)		(54)		(14,237)		2,135
Direct reimbursements of payroll and related costs from management services contracts	4,609		3,239		9,844		7,304
Development and management services revenue	9,858		6,354		18,838		12,185
Company’s share of Net Operating Income	$	497,785	$	471,890	$	982,450	$	931,472

BPLP

	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
	(in thousands)
Net income attributable to Boston Properties Limited Partnership	$	118,098	$	253,788	$	206,928	$	415,617
Add:
Noncontrolling interests in property partnerships	19,768		18,546		38,428		36,095
Interest expense	142,473		104,142		276,680		205,370
Net operating income from unconsolidated joint ventures	42,254		35,710		83,010		73,031
Depreciation and amortization expense	200,895		181,416		407,767		357,302
Transaction costs	308		496		1,219		496
Payroll and related costs from management services contracts	4,609		3,239		9,844		7,304
General and administrative expense	44,175		34,665		99,977		77,859
Less:
Net operating income attributable to noncontrolling interests in property partnerships	47,958		47,862		95,055		94,917
Unrealized gain on non-real estate investment	124		—		383		—
Gains (losses) from investments in securities	1,571		(4,716)		3,236		(6,978)
Other income - assignment fee	—		6,624		—		6,624
Interest and other income (loss)	17,343		1,195		28,284		2,423
Gains on sales of real estate	—		99,608		—		122,992
Income (loss) from unconsolidated joint ventures	(6,668)		(54)		(14,237)		2,135
Direct reimbursements of payroll and related costs from management services contracts	4,609		3,239		9,844		7,304
Development and management services revenue	9,858		6,354		18,838		12,185
Company’s share of Net Operating Income	$	497,785	$	471,890	$	982,450	$	931,472

Net operating income (“NOI”) is a non-GAAP financial measure equal to net income attributable to Boston Properties, Inc. and net income attributable to Boston Properties Limited Partnership, as applicable, the most directly comparable GAAP financial measures, plus (1) net income attributable to noncontrolling interests, interest expense, depreciation and amortization expense, transaction costs, payroll and related costs from management services contracts and corporate general and administrative expense less (2) unrealized gain on non-real estate investment, gains (losses) from investments in securities, other income - assignment fee, 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. and net income attributable to Boston Properties Limited Partnership. 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, as defined above, also does not include its share of losses from early extinguishment of debt from unconsolidated joint ventures and unrealized gain on derivative instruments, 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. Interest expense, depreciation and amortization expense, transaction costs, payroll and related costs from management services contracts, corporate general and administrative expense, unrealized gain on non-real estate investment, gains (losses) from investments in securities, other income - assignment fee, 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.

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. The Company also presents information for each segment by property type, including Premier Workplace (which includes office, life sciences and retail), Residential and Hotel.

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

For the three months ended June 30, 2023:

	Boston			Los Angeles			New York			San Francisco			Seattle			Washington, DC			Total
Rental Revenue: (1)
Premier Workplace	$	269,464		$	—		$	262,979		$	136,241		$	17,060		$	90,720		$	776,464
Residential	4,124			—			—			3,864			—			4,265			12,253
Hotel	13,969			—			—			—			—			—			13,969
Total	287,557			—			262,979			140,105			17,060			94,985			802,686
% of Grand Totals	35.83		%	—		%	32.76		%	17.45		%	2.13		%	11.83		%	100.00		%
Rental Expenses:
Premier Workplace	95,597			—			102,948			48,197			3,082			35,429			285,253
Residential	1,601			—			—			2,215			—			1,967			5,783
Hotel	8,161			—			—			—			—			—			8,161
Total	105,359			—			102,948			50,412			3,082			37,396			299,197
% of Grand Totals	35.21		%	—		%	34.41		%	16.85		%	1.03		%	12.50		%	100.00		%
Net operating income	$	182,198		$	—		$	160,031		$	89,693		$	13,978		$	57,589		$	503,489
% of Grand Totals	36.19		%	—		%	31.78		%	17.81		%	2.78		%	11.44		%	100.00		%
Less: Net operating income attributable to noncontrolling interests in property partnerships	(11,343)			—			(36,615)			—			—			—			(47,958)
Add: Company’s share of net operating income from unconsolidated joint ventures	8,771			12,768			3,363			3,332			1,878			12,142			42,254
Company’s share of net operating income	$	179,626		$	12,768		$	126,779		$	93,025		$	15,856		$	69,731		$	497,785
% of Grand Totals	36.08		%	2.56		%	25.47		%	18.69		%	3.19		%	14.01		%	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 June 30, 2022:

	Boston			Los Angeles			New York			San Francisco			Seattle			Washington, DC			Total
Rental Revenue: (1)
Premier Workplace	$	244,936		$	—		$	254,264		$	133,707		$	6,472		$	95,954		$	735,333
Residential	3,748			—			—			5,850			—			7,314			16,912
Hotel	12,089			—			—			—			—			—			12,089
Total	260,773			—			254,264			139,557			6,472			103,268			764,334
% of Grand Totals	34.11		%	—		%	33.27		%	18.26		%	0.85		%	13.51		%	100.00		%
Rental Expenses:
Premier Workplace	87,027			—			95,363			45,201			1,680			34,759			264,030
Residential	1,492			—			—			5,145			—			3,181			9,818
Hotel	6,444			—			—			—			—			—			6,444
Total	94,963			—			95,363			50,346			1,680			37,940			280,292
% of Grand Totals	33.88		%	—		%	34.02		%	17.96		%	0.60		%	13.54		%	100.00		%
Net operating income	$	165,810		$	—		$	158,901		$	89,211		$	4,792		$	65,328		$	484,042
% of Grand Totals	34.25		%	—		%	32.83		%	18.43		%	0.99		%	13.50		%	100.00		%
Less: Net operating income attributable to noncontrolling interests in property partnerships	(11,377)			—			(36,485)			—			—			—			(47,862)
Add: Company’s share of net operating income (loss) from unconsolidated joint ventures	8,134			13,247			18			3,183			1,944			9,184			35,710
Company’s share of net operating income	$	162,567		$	13,247		$	122,434		$	92,394		$	6,736		$	74,512		$	471,890
% of Grand Totals	34.44		%	2.81		%	25.95		%	19.58		%	1.43		%	15.79		%	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.

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

For the six months ended June 30, 2023:

	Boston			Los Angeles			New York			San Francisco			Seattle			Washington, DC			Total
Rental Revenue: (1)
Premier Workplace	$	539,415		$	—		$	521,171		$	272,334		$	31,318		$	181,384		$	1,545,622
Residential	8,173			—			—			7,506			—			8,300			23,979
Hotel	22,070			—			—			—			—			—			22,070
Total	569,658			—			521,171			279,840			31,318			189,684			1,591,671
% of Grand Totals	35.79		%	—		%	32.74		%	17.58		%	1.97		%	11.92		%	100.00		%
Rental Expenses:
Premier Workplace	195,646			—			205,433			94,282			6,042			69,695			571,098
Residential	3,153			—			—			4,388			—			3,705			11,246
Hotel	14,832			—			—			—			—			—			14,832
Total	213,631			—			205,433			98,670			6,042			73,400			597,176
% of Grand Totals	35.78		%	—		%	34.40		%	16.52		%	1.01		%	12.29		%	100.00		%
Net operating income	$	356,027		$	—		$	315,738		$	181,170		$	25,276		$	116,284		$	994,495
% of Grand Totals	35.80		%	—		%	31.75		%	18.22		%	2.54		%	11.69		%	100.00		%
Less: Net operating income attributable to noncontrolling interests in property partnerships	(22,160)			—			(72,895)			—			—			—			(95,055)
Add: Company’s share of net operating income (loss) from unconsolidated joint ventures	17,348			25,993			7,013			6,796			3,724			22,136			83,010
Company’s share of net operating income	$	351,215		$	25,993		$	249,856		$	187,966		$	29,000		$	138,420		$	982,450
% of Grand Totals	35.75		%	2.65		%	25.43		%	19.13		%	2.95		%	14.09		%	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 six months ended June 30, 2022:

	Boston			Los Angeles			New York			San Francisco			Seattle				Washington, DC			Total
Rental Revenue: (1)
Premier Workplace	$	487,014		$	—		$	511,134		$	266,082		$	6,472			$	191,519		$	1,462,221
Residential	7,344			—			—			8,241			—				14,293			29,878
Hotel	16,646			—			—			—			—				—			16,646
Total	511,004			—			511,134			274,323			6,472				205,812			1,508,745
% of Grand Totals	33.87		%	—		%	33.88		%	18.18		%	0.43		%		13.64		%	100.00		%
Rental Expenses:
Premier Workplace	177,555			—			191,703			88,609			1,680				68,306			527,853
Residential	2,929			—			—			7,013			—				6,308			16,250
Hotel	11,284			—			—			—			—				—			11,284
Total	191,768			—			191,703			95,622			1,680			—	74,614			555,387
% of Grand Totals	34.53		%	—		%	34.52		%	17.22		%	0.30		%		13.43		%	100.00		%
Net operating income	$	319,236		$	—		$	319,431		$	178,701		$	4,792			$	131,198		$	953,358
% of Grand Totals	33.49		%	—		%	33.51		%	18.74		%	0.50		%		13.76		%	100.00		%
Less: Net operating income attributable to noncontrolling interests in property partnerships	(23,112)			—			(71,805)			—			—				—			(94,917)
Add: Company’s share of net operating income (loss) from unconsolidated joint ventures	17,827			27,004			(138)			6,364			3,899				18,075			73,031
Company’s share of net operating income	$	313,951		$	27,004		$	247,488		$	185,065		$	8,691			$	149,273		$	931,472
% of Grand Totals	33.70		%	2.90		%	26.57		%	19.87		%	0.93		%		16.03		%	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.