Segment Information

3 Months Ended

Mar. 31, 2024

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 months ended March 31, 2024 and 2023.

BXP

	Three months ended March 31,
	2024		2023
	(in thousands)
Net income attributable to Boston Properties, Inc.	$	79,883	$	77,890
Add:
Noncontrolling interest—common units of the Operating Partnership	9,500		9,078
Noncontrolling interests in property partnerships	17,221		18,660
Interest expense	161,891		134,207
Impairment loss	13,615		—
Net operating income from unconsolidated joint ventures	35,430		40,756
Depreciation and amortization expense	218,716		208,734
Transaction costs	513		911
Payroll and related costs from management services contracts	4,293		5,235
General and administrative expense	50,018		55,802
Less:
Net operating income attributable to noncontrolling interests in property partnerships	46,570		47,097
Unrealized gain on non-real estate investment	396		259
Gains from investments in securities	2,272		1,665
Interest and other income (loss)	14,529		10,941
Income (loss) from unconsolidated joint ventures	19,186		(7,569)
Direct reimbursements of payroll and related costs from management services contracts	4,293		5,235
Development and management services revenue	6,154		8,980
Company’s share of Net Operating Income	$	497,680	$	484,665

BPLP

	Three months ended March 31,
	2024		2023
	(in thousands)
Net income attributable to Boston Properties Limited Partnership	$	91,080	$	88,830
Add:
Noncontrolling interests in property partnerships	17,221		18,660
Interest expense	161,891		134,207
Impairment loss	13,615		—
Net operating income from unconsolidated joint ventures	35,430		40,756
Depreciation and amortization expense	217,019		206,872
Transaction costs	513		911
Payroll and related costs from management services contracts	4,293		5,235
General and administrative expense	50,018		55,802
Less:
Net operating income attributable to noncontrolling interests in property partnerships	46,570		47,097
Unrealized gain on non-real estate investment	396		259
Gains from investments in securities	2,272		1,665
Interest and other income (loss)	14,529		10,941
Income (loss) from unconsolidated joint ventures	19,186		(7,569)
Direct reimbursements of payroll and related costs from management services contracts	4,293		5,235
Development and management services revenue	6,154		8,980
Company’s share of Net Operating Income	$	497,680	$	484,665

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, impairment loss, 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 from investments in securities, interest and other income (loss), 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 unrealized gain (loss) on derivative instruments and gain on sale / consolidation, all 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, impairment loss, 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 from investments in securities, interest and other income (loss), 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 March 31, 2024:

	Boston			Los Angeles			New York			San Francisco			Seattle			Washington, DC			Total
Rental Revenue: (1)
Premier Workplace	$	280,466		$	20,401		$	260,809		$	132,614		$	10,910		$	102,922		$	808,122
Residential	4,196			—			—			3,958			—			4,530			12,684
Hotel	8,186			—			—			—			—			—			8,186
Total	292,848			20,401			260,809			136,572			10,910			107,452			828,992
% of Grand Totals	35.33		%	2.46		%	31.46		%	16.47		%	1.32		%	12.96		%	100.00		%
Rental Expenses:
Premier Workplace	105,171			6,567			107,481			46,942			3,081			39,229			308,471
Residential	1,593			—			—			2,218			—			1,875			5,686
Hotel	6,015			—			—			—			—			—			6,015
Total	112,779			6,567			107,481			49,160			3,081			41,104			320,172
% of Grand Totals	35.23		%	2.05		%	33.57		%	15.35		%	0.96		%	12.84		%	100.00		%
Net operating income	$	180,069		$	13,834		$	153,328		$	87,412		$	7,829		$	66,348		$	508,820
% of Grand Totals	35.39		%	2.72		%	30.13		%	17.18		%	1.54		%	13.04		%	100.00		%
Less: Net operating income attributable to noncontrolling interests in property partnerships	(11,056)			—			(35,514)			—			—			—			(46,570)
Add: Company’s share of net operating income from unconsolidated joint ventures	8,757			7,248			5,984			5,154			1,876			6,411			35,430
Company’s share of net operating income	$	177,770		$	21,082		$	123,798		$	92,566		$	9,705		$	72,759		$	497,680
% of Grand Totals	35.71		%	4.24		%	24.88		%	18.60		%	1.95		%	14.62		%	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, 2023:

	Boston			Los Angeles			New York			San Francisco			Seattle			Washington, DC			Total
Rental Revenue: (1)
Premier Workplace	$	269,951		$	—		$	258,192		$	136,093		$	14,258		$	90,664		$	769,158
Residential	4,049			—			—			3,642			—			4,035			11,726
Hotel	8,101			—			—			—			—			—			8,101
Total	282,101			—			258,192			139,735			14,258			94,699			788,985
% of Grand Totals	35.76		%	—		%	32.72		%	17.71		%	1.81		%	12.00		%	100.00		%
Rental Expenses:
Premier Workplace	100,049			—			102,485			46,085			2,960			34,266			285,845
Residential	1,552			—			—			2,173			—			1,738			5,463
Hotel	6,671			—			—			—			—			—			6,671
Total	108,272			—			102,485			48,258			2,960			36,004			297,979
% of Grand Totals	36.34		%	—		%	34.39		%	16.20		%	0.99		%	12.08		%	100.00		%
Net operating income	$	173,829		$	—		$	155,707		$	91,477		$	11,298		$	58,695		$	491,006
% of Grand Totals	35.41		%	—		%	31.71		%	18.63		%	2.30		%	11.95		%	100.00		%
Less: Net operating income attributable to noncontrolling interests in property partnerships	(10,817)			—			(36,280)			—			—			—			(47,097)
Add: Company’s share of net operating income from unconsolidated joint ventures	8,577			13,225			3,650			3,464			1,846			9,994			40,756
Company’s share of net operating income	$	171,589		$	13,225		$	123,077		$	94,941		$	13,144		$	68,689		$	484,665
% of Grand Totals	35.41		%	2.73		%	25.39		%	19.59		%	2.71		%	14.17		%	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.