What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2020-08-07 compared with 2020-05-11 · 769 added, 322 removed, 777 unchanged (58% of the section changed)

3 unchanged sentences

(Unaudited and in thousands, except for share and par value amounts)

Real estate, at cost (amounts related to variable interest entities (“VIEs”) of $6,564,762 and $6,497,031 at March 31, 2020 and December 31, 2019, respectively)

Right of use assets - finance leases (amounts related to VIEs of $21,000 and $21,000 at March 31, 2020 and December 31, 2019, respectively)

2020 December 31,

Real estate, at cost (amounts related to variable interest entities (“VIEs”) of $ 6,581,689 and $ 6,497,031 at June 30, 2020 and December 31, 2019, respectively)

$ 22,575,903 $ 22,502,976

Right of use assets - finance leases (amounts related to VIEs of $ 21,000 and $ 21,000 at June 30, 2020 and December 31, 2019, respectively)

237,394 237,394

Right of use assets - operating leases

accumulated depreciation (amounts related to VIEs of $(1,082,486) and$(1,058,495) at March 31, 2020 and December 31, 2019, respectively)

147,512 148,640

accumulated depreciation (amounts related to VIEs of $( 1,112,769 ) and $( 1,058,495 ) at June 30, 2020 and December 31, 2019, respectively)

( 5,292,389 ) ( 5,266,798 )

Total real estate 17,668,420 17,622,212

Cash and cash equivalents (amounts related to VIEs of $268,415 and $280,033 at March 31, 2020 and December 31, 2019, respectively)

Cash and cash equivalents (amounts related to VIEs of $ 300,552 and $ 280,033 at June 30, 2020 and December 31, 2019, respectively)

1,691,047 644,950

Cash held in escrows

300,608 46,936

Investments in securities 32,848 36,747

Tenant and other receivables, net (amounts related to VIEs of $19,954 and $28,918 at March 31, 2020 and December 31, 2019, respectively)

Tenant and other receivables, net (amounts related to VIEs of $ 11,989 and $ 28,918 at June 30, 2020 and December 31, 2019, respectively)

82,545 112,807

Related party note receivable, net 78,520 80,000

Note receivable, net

Accrued rental income, net (amounts related to VIEs of $308,482 and $298,318 at March 31, 2020 and December 31, 2019, respectively)

Deferred charges, net (amounts related to VIEs of $205,688 and $214,769 at March 31, 2020 and December 31, 2019, respectively)

Prepaid expenses and other assets (amounts related to VIEs of $52,641 and $20,931 at March 31, 2020 and December 31, 2019, respectively)

Notes receivable, net

25,480 15,920

Accrued rental income, net (amounts related to VIEs of $ 304,929 and $ 298,318 at June 30, 2020 and December 31, 2019, respectively)

1,069,004 1,038,788

Deferred charges, net (amounts related to VIEs of $ 190,708 and $ 214,769 at June 30, 2020 and December 31, 2019, respectively)

655,813 689,213

Prepaid expenses and other assets (amounts related to VIEs of $ 18,741 and $ 20,931 at June 30, 2020 and December 31, 2019, respectively)

56,768 41,685

Investments in unconsolidated joint ventures 1,339,724 955,647

Total assets $ 23,000,777 $ 21,284,905

LIABILITIES AND EQUITY

Mortgage notes payable, net (amounts related to VIEs of $2,916,068 and $2,918,806 at March 31, 2020 and December 31, 2019, respectively)

Mortgage notes payable, net (amounts related to VIEs of $ 2,913,287 and $ 2,918,806 at June 30, 2020 and December 31, 2019, respectively)

$ 2,915,852 $ 2,922,408

Unsecured senior notes, net 9,633,577 8,390,459

1 unchanged sentence

Unsecured term loan, net 499,150 498,939

Lease liabilities - finance leases (amounts related to VIEs of $20,198 and $20,189 at March 31, 2020 and December 31, 2019, respectively)

Lease liabilities - finance leases (amounts related to VIEs of $ 20,227 and $ 20,189 at June 30, 2020 and December 31, 2019, respectively)

230,146 224,042

Lease liabilities - operating leases 200,979 200,180

Accounts payable and accrued expenses (amounts related to VIEs of $28,437 and $45,777 at March 31, 2020 and December 31, 2019, respectively)

Accounts payable and accrued expenses (amounts related to VIEs of $ 25,685 and $ 45,777 at June 30, 2020 and December 31, 2019, respectively)

328,292 377,553

Dividends and distributions payable 171,077 170,713

Accrued interest payable

Other liabilities (amounts related to VIEs of $142,381 and $140,110 at March 31, 2020 and December 31, 2019, respectively)

95,274 90,016

Other liabilities (amounts related to VIEs of $ 132,460 and $ 140,110 at June 30, 2020 and December 31, 2019, respectively)

373,281 387,994

Total liabilities 14,447,628 13,262,304

Commitments and contingencies — —

Redeemable deferred stock units— 63,475 and 60,676 units outstanding at redemption value at March 31, 2020 and December 31, 2019, respectively

Redeemable deferred stock units— 66,424 and 60,676 units outstanding at redemption value at June 30, 2020 and December 31, 2019, respectively

Table of Content s

BOSTON PROPERTIES, INC.

1 unchanged sentence

(Unaudited and in thousands, except for share and par value amounts)

2020 December 31,

Stockholders’ equity attributable to Boston Properties, Inc.:

1 unchanged sentence

Preferred stock, $ 0.01 par value, 50,000,000 shares authorized;

5.25% Series B cumulative redeemable preferred stock, $0.01 par value, liquidation preference $2,500 per share, 92,000 shares authorized, 80,000 shares issued and outstanding at March 31, 2020 and December 31, 2019

Common stock, $0.01 par value, 250,000,000 shares authorized, 155,393,455 and 154,869,198 issued and 155,314,555 and 154,790,298 outstanding at March 31, 2020 and December 31, 2019, respectively

5.25 % Series B cumulative redeemable preferred stock, $ 0.01 par value, liquidation preference $ 2,500 per share, 92,000 shares authorized, 80,000 shares issued and outstanding at June 30, 2020 and December 31, 2019

200,000 200,000

Common stock, $ 0.01 par value, 250,000,000 shares authorized, 155,701,186 and 154,869,198 issued and 155,622,286 and 154,790,298 outstanding at June 30, 2020 and December 31, 2019, respectively

Additional paid-in capital

6,340,665 6,294,719

Dividends in excess of earnings ( 302,511 ) ( 760,523 )

Treasury common stock at cost, 78,900 shares at March 31, 2020 and December 31, 2019

Treasury common stock at cost, 78,900 shares at June 30, 2020 and December 31, 2019

( 2,722 ) ( 2,722 )

Accumulated other comprehensive loss ( 54,921 ) ( 48,335 )

Total stockholders’ equity attributable to Boston Properties, Inc.

6,182,067 5,684,687

Noncontrolling interests:

1 unchanged sentence

Property partnerships 1,724,588 1,728,689

Total equity 8,547,146 8,014,236

Total liabilities and equity $ 23,000,777 $ 21,284,905

The accompanying notes are an integral part of these consolidated financial statements.

Table of Content s

BOSTON PROPERTIES, INC.

1 unchanged sentence

(Unaudited and in thousands, except for per share amounts)

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

2020 2019 2020 2019

Lease $ 630,119 $ 680,189 $ 1,340,230 $ 1,359,440

Parking and other 13,946 26,319 38,450 51,225

Hotel 99 14,844 6,924 23,782

Development and management services 8,125 9,986 16,004 19,263

Direct reimbursements of payroll and related costs from management services contracts

2,484 2,403 5,721 5,798

Total revenue 654,773 733,741 1,407,329 1,459,508

Rental 239,787 257,971 502,753 515,488

Hotel 1,973 9,080 8,794 16,943

General and administrative 37,743 35,071 74,197 76,833

4 unchanged sentences

Other income (expense)

Income (loss) from unconsolidated joint ventures

Gains (losses) on sales of real estate

Interest and other income

Income from unconsolidated joint ventures 1,832 47,964 1,463 48,177

Gains on sales of real estate 203,767 1,686 613,932 781

Interest and other income (loss) 1,305 3,615 4,322 7,368

Gains (losses) from investments in securities 4,552 1,165 ( 893 ) 4,134

1 unchanged sentence

Interest expense ( 107,142 ) ( 102,357 ) ( 208,733 ) ( 203,366 )

Net income attributable to noncontrolling interests

Net income 298,580 203,461 875,726 334,620

Net (income) loss attributable to noncontrolling interests

Noncontrolling interests in property partnerships 767 ( 17,482 ) ( 18,719 ) ( 36,312 )

1 unchanged sentence

Net income attributable to Boston Properties, Inc.

269,150 166,943 769,482 267,681

Preferred dividends ( 2,625 ) ( 2,625 ) ( 5,250 ) ( 5,250 )

3 unchanged sentences

common shareholders:

Net income $ 1.71 $ 1.06 $ 4.92 $ 1.70

Weighted average number of common shares outstanding 155,386 154,555 155,199 154,540

1 unchanged sentence

common shareholders:

Net income $ 1.71 $ 1.06 $ 4.91 $ 1.69

Weighted average number of common and common equivalent shares outstanding

155,407 154,874 155,333 154,859

The accompanying notes are an integral part of these consolidated financial statements.

Table of Content s

BOSTON PROPERTIES, INC.

1 unchanged sentence

(Unaudited and in thousands)

Three months ended March 31,

Other comprehensive (loss):

Three months ended June 30, Six months ended June 30,

2020 2019 2020 2019

Net income $ 298,580 $ 203,461 $ 875,726 $ 334,620

Other comprehensive income (loss):

Effective portion of interest rate contracts ( 659 ) ( 4,426 ) ( 10,379 ) ( 7,054 )

Amortization of interest rate contracts (1) 1,677 1,666 3,343 3,332

Other comprehensive (loss)

Other comprehensive income (loss) 1,018 ( 2,760 ) ( 7,036 ) ( 3,722 )

Comprehensive income 299,598 200,701 868,690 330,898

1 unchanged sentence

Other comprehensive (income) loss attributable to noncontrolling interests

( 239 ) 154 450 123

Comprehensive income attributable to Boston Properties, Inc.

$ 269,929 $ 164,337 $ 762,896 $ 264,082

_______________

(1) Amounts reclassified from comprehensive income primarily to interest expense within Boston Properties, Inc.’s Consolidated Statements of Operations .

The accompanying notes are an integral part of these consolidated financial statements.

Table of Content s

BOSTON PROPERTIES, INC.

1 unchanged sentence

(Unaudited and in thousands)

Preferred Stock

Additional Paid-in Capital

Dividends in Excess of Earnings

Treasury Stock,

Accumulated Other Comprehensive Loss

Noncontrolling Interests - Common Units

Noncontrolling Interests - Property Partnerships

Common Stock Preferred Stock Additional Paid-in Capital Dividends in Excess of Earnings Treasury Stock,

at cost Accumulated Other Comprehensive Loss Noncontrolling Interests - Common Units Noncontrolling Interests - Property Partnerships Total

Shares Amount

Equity, March 31, 2020 155,315 $ 1,553 $ 200,000 $ 6,321,475 $ ( 416,740 ) $ ( 2,722 ) $ ( 55,700 ) $ 636,572 $ 1,736,445 $ 8,420,883

Redemption of operating partnership units to common stock 303 3 — 10,846 — — — ( 10,849 ) — —

Allocated net income (loss) for the period — — — — 269,361 — — 29,986 ( 767 ) 298,580

Dividends/distributions declared — — — — ( 155,132 ) — — ( 17,194 ) — ( 172,326 )

Net activity from stock option and incentive plan 4 — — 873 — — — 9,352 — 10,225

Contributions from noncontrolling interests in property partnerships — — — — — — — — 2,081 2,081

Distributions to noncontrolling interests in property partnerships — — — — — — — — ( 13,315 ) ( 13,315 )

Effective portion of interest rate contracts — — — — — — ( 601 ) ( 58 ) — ( 659 )

Amortization of interest rate contracts — — — — — — 1,380 153 144 1,677

Reallocation of noncontrolling interest — — — 7,471 — — — ( 7,471 ) — —

Equity, June 30, 2020

155,622 $ 1,556 $ 200,000 $ 6,340,665 $ ( 302,511 ) $ ( 2,722 ) $ ( 54,921 ) $ 640,491 $ 1,724,588 $ 8,547,146

Equity, March 31, 2019 154,515 $ 1,545 $ 200,000 $ 6,414,612 $ ( 728,083 ) $ ( 2,722 ) $ ( 48,734 ) $ 623,061 $ 1,710,608 $ 8,170,287

Redemption of operating partnership units to common stock 21 1 — 719 — — — ( 720 ) — —

Allocated net income for the period — — — — 166,951 — — 19,028 17,482 203,461

Dividends/distributions declared — — — — ( 149,460 ) — — ( 17,206 ) — ( 166,666 )

Net activity from stock option and incentive plan 27 — — 1,495 — — — 9,368 — 10,863

Acquisition of noncontrolling interest in property partnership — — — ( 162,505 ) — — — — ( 24,501 ) ( 187,006 )

Contributions from noncontrolling interests in property partnerships — — — — — — — — 7,761 7,761

Distributions to noncontrolling interests in property partnerships — — — — — — — — ( 15,273 ) ( 15,273 )

Effective portion of interest rate contracts — — — — — — ( 3,973 ) ( 453 ) — ( 4,426 )

Amortization of interest rate contracts — — — — — — 1,367 155 144 1,666

Reallocation of noncontrolling interest — — — 24,640 — — — ( 24,640 ) — —

Equity, June 30, 2019

154,563 $ 1,546 $ 200,000 $ 6,278,961 $ ( 710,592 ) $ ( 2,722 ) $ ( 51,340 ) $ 608,593 $ 1,696,221 $ 8,020,667

Table of Content s

BOSTON PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited and in thousands)

Common Stock Preferred Stock Additional Paid-in Capital Dividends in Excess of Earnings Treasury Stock,

at cost Accumulated Other Comprehensive Loss Noncontrolling Interests - Common Units Noncontrolling Interests - Property Partnerships Total

Shares Amount

Equity, December 31, 2019 154,790 $ 1,548 $ 200,000 $ 6,294,719 $ ( 760,523 ) $ ( 2,722 ) $ ( 48,335 ) $ 600,860 $ 1,728,689 $ 8,014,236

1 unchanged sentence

Redemption of operating partnership units to common stock 765 8 — 26,336 — — — ( 26,344 ) — —

Allocated net income for the year

Allocated net income for the period — — — — 769,482 — — 87,525 18,719 875,726

Dividends/distributions declared — — — — ( 309,965 ) — — ( 34,638 ) — ( 344,603 )

6 unchanged sentences

Reallocation of noncontrolling interest — — — 11,029 — — — ( 11,029 ) — —

Equity, March 31, 2020

Equity, June 30, 2020

155,622 $ 1,556 $ 200,000 $ 6,340,665 $ ( 302,511 ) $ ( 2,722 ) $ ( 54,921 ) $ 640,491 $ 1,724,588 $ 8,547,146

Equity, December 31, 2018 154,458 $ 1,545 $ 200,000 $ 6,407,623 $ ( 675,534 ) $ ( 2,722 ) $ ( 47,741 ) $ 619,352 $ 1,711,445 $ 8,213,968

1 unchanged sentence

Redemption of operating partnership units to common stock 35 1 — 1,211 — — — ( 1,212 ) — —

Allocated net income for the year

Allocated net income for the period — — — — 267,681 — — 30,627 36,312 334,620

Dividends/distributions declared — — — — ( 298,875 ) — — ( 34,391 ) — ( 333,266 )

1 unchanged sentence

Net activity from stock option and incentive plan 66 — — 4,554 — — — 22,778 — 27,332

Acquisition of noncontrolling interest in property partnerships — — — ( 162,505 ) — — — — ( 24,501 ) ( 187,006 )

Contributions from noncontrolling interests in property partnerships — — — — — — — — 12,148 12,148

3 unchanged sentences

Reallocation of noncontrolling interest — — — 27,705 — — — ( 27,705 ) — —

Equity, March 31, 2019

Equity, June 30, 2019

154,563 $ 1,546 $ 200,000 $ 6,278,961 $ ( 710,592 ) $ ( 2,722 ) $ ( 51,340 ) $ 608,593 $ 1,696,221 $ 8,020,667

The accompanying notes are an integral part of these consolidated financial statements.

Table of Content s

BOSTON PROPERTIES, INC.

1 unchanged sentence

(Unaudited and in thousands)

For the three months ended March 31,

Six months ended June 30,

Cash flows from operating activities:

Net income $ 875,726 $ 334,620

Adjustments to reconcile net income to net cash provided by operating activities:

3 unchanged sentences

Non-cash compensation expense 27,899 25,444

Loss (income) from unconsolidated joint ventures

Income from unconsolidated joint ventures ( 1,463 ) ( 48,177 )

Distributions of net cash flow from operations of unconsolidated joint ventures

Losses (gains) from investments in securities 893 ( 4,134 )

Allowance for current expected credit losses 484 —

Non-cash portion of interest expense 11,483 10,900

(Gains) losses on sales of real estate

Gains on sales of real estate ( 613,932 ) ( 781 )

Change in assets and liabilities:

Tenant and other receivables, net 18,516 ( 11,514 )

Note receivable, net

Notes receivable, net ( 258 ) ( 250 )

Accrued rental income, net ( 43,399 ) ( 37,473 )

8 unchanged sentences

Cash flows from investing activities:

Acquisition of real estate

Acquisitions of real estate ( 133,406 ) ( 43,061 )

Construction in progress ( 247,615 ) ( 203,259 )

3 unchanged sentences

Capital contributions to unconsolidated joint ventures

( 106,168 ) ( 50,068 )

Capital distributions from unconsolidated joint ventures

54,413 105,000

Issuance of notes receivable, net ( 9,800 ) —

Investments in securities, net

3,006 ( 1,079 )

Net cash used in investing activities ( 120,522 ) ( 327,952 )

Table of Content s

BOSTON PROPERTIES, INC.

1 unchanged sentence

(Unaudited and in thousands)

For the three months ended March 31,

Six months ended June 30,

Cash flows from financing activities:

Repayments of mortgage notes payable ( 8,477 ) ( 9,702 )

Proceeds from unsecured senior notes 1,248,125 848,428

Borrowings on unsecured line of credit 265,000 380,000

6 unchanged sentences

Distributions to noncontrolling interests in property partnerships ( 29,065 ) ( 39,401 )

Net cash provided by (used in) financing activities

Net increase (decrease) in cash and cash equivalents and cash held in escrows

Cash and cash equivalents and cash held in escrows, beginning of year

Cash and cash equivalents and cash held in escrows, end of year

Acquisition of noncontrolling interests in property partnership — ( 186,952 )

Net cash provided by financing activities 866,019 286,081

Net increase in cash and cash equivalents and cash held in escrows 1,299,769 523,733

Cash and cash equivalents and cash held in escrows, beginning of period 691,886 639,191

Cash and cash equivalents and cash held in escrows, end of period $ 1,991,655 $ 1,162,924

Reconciliation of cash and cash equivalents and cash held in escrows:

19 unchanged sentences

Conversions of noncontrolling interests to stockholders’ equity $ 26,344 $ 1,212

Issuance of restricted securities to employees

Issuance of restricted securities to employees and non-employee directors $ 43,462 $ 38,923

The accompanying notes are an integral part of these consolidated financial statements.

Table of Content s

BOSTON PROPERTIES LIMITED PARTNERSHIP

1 unchanged sentence

(Unaudited and in thousands, except for unit amounts)

Real estate, at cost (amounts related to variable interest entities (“VIEs”) of $6,564,762 and $6,497,031 at March 31, 2020 and December 31, 2019, respectively)

Right of use assets - finance leases (amounts related to VIEs of $21,000 and $21,000 at March 31, 2020 and December 31, 2019, respectively)

2020 December 31,

Real estate, at cost (amounts related to variable interest entities (“VIEs”) of $ 6,581,689 and $ 6,497,031 at June 30, 2020 and December 31, 2019, respectively)

$ 22,199,094 $ 22,107,755

Right of use assets - finance leases (amounts related to VIEs of $ 21,000 and $ 21,000 at June 30, 2020 and December 31, 2019, respectively)

237,394 237,394

Right of use assets - operating leases 147,512 148,640

accumulated depreciation (amounts related to VIEs of $(1,082,486) and$(1,058,495) at March 31, 2020 and December 31, 2019, respectively)

accumulated depreciation (amounts related to VIEs of $( 1,112,769 ) and $( 1,058,495 ) at June 30, 2020 and December 31, 2019, respectively)

( 5,190,360 ) ( 5,162,908 )

Total real estate 17,393,640 17,330,881

Cash and cash equivalents (amounts related to VIEs of $268,415 and $280,033 at March 31, 2020 and December 31, 2019, respectively)

Cash and cash equivalents (amounts related to VIEs of $ 300,552 and $ 280,033 at June 30, 2020 and December 31, 2019, respectively)

1,691,047 644,950

Cash held in escrows

300,608 46,936

Investments in securities 32,848 36,747

Tenant and other receivables, net (amounts related to VIEs of $19,954 and $28,918 at March 31, 2020 and December 31, 2019, respectively)

Tenant and other receivables, net (amounts related to VIEs of $ 11,989 and $ 28,918 at June 30, 2020 and December 31, 2019, respectively)

82,545 112,807

Related party note receivable, net 78,520 80,000

Note receivable, net

Accrued rental income, net (amounts related to VIEs of $308,482 and $298,318 at March 31, 2020 and December 31, 2019, respectively)

Deferred charges, net (amounts related to VIEs of $205,688 and $214,769 at March 31, 2020 and December 31, 2019, respectively)

Prepaid expenses and other assets (amounts related to VIEs of $52,641 and $20,931 at March 31, 2020 and December 31, 2019, respectively)

Notes receivable, net 25,480 15,920

Accrued rental income, net (amounts related to VIEs of $ 304,929 and $ 298,318 at June 30, 2020 and December 31, 2019, respectively)

1,069,004 1,038,788

Deferred charges, net (amounts related to VIEs of $ 190,708 and $ 214,769 at June 30, 2020 and December 31, 2019, respectively)

655,813 689,213

Prepaid expenses and other assets (amounts related to VIEs of $ 18,741 and $ 20,931 at June 30, 2020 and December 31, 2019, respectively)

56,768 41,685

Investments in unconsolidated joint ventures 1,339,724 955,647

Total assets $ 22,725,997 $ 20,993,574

LIABILITIES AND CAPITAL

Mortgage notes payable, net (amounts related to VIEs of $2,916,068 and $2,918,806 at March 31, 2020 and December 31, 2019, respectively)

Mortgage notes payable, net (amounts related to VIEs of $ 2,913,287 and $ 2,918,806 at June 30, 2020 and December 31, 2019, respectively)

$ 2,915,852 $ 2,922,408

Unsecured senior notes, net 9,633,577 8,390,459

1 unchanged sentence

Unsecured term loan, net 499,150 498,939

Lease liabilities - finance leases (amounts related to VIEs of $20,198 and $20,189 at March 31, 2020 and December 31, 2019, respectively)

Lease liabilities - finance leases (amounts related to VIEs of $ 20,227 and $ 20,189 at June 30, 2020 and December 31, 2019, respectively)

230,146 224,042

Lease liabilities - operating leases

Accounts payable and accrued expenses (amounts related to VIEs of $28,437 and $45,777 at March 31, 2020 and December 31, 2019, respectively)

200,979 200,180

Accounts payable and accrued expenses (amounts related to VIEs of $ 25,685 and $ 45,777 at June 30, 2020 and December 31, 2019, respectively)

328,292 377,553

Dividends and distributions payable 171,077 170,713

Accrued interest payable

Other liabilities (amounts related to VIEs of $142,381 and $140,110 at March 31, 2020 and December 31, 2019, respectively)

95,274 90,016

Other liabilities (amounts related to VIEs of $ 132,460 and $ 140,110 at June 30, 2020 and December 31, 2019, respectively)

373,281 387,994

Total liabilities 14,447,628 13,262,304

Commitments and contingencies — —

Redeemable deferred stock units— 63,475 and 60,676 units outstanding at redemption value at March 31, 2020 and December 31, 2019, respectively

Table of Content s

BOSTON PROPERTIES LIMITED PARTNERSHIP

1 unchanged sentence

(Unaudited and in thousands, except for unit amounts)

2020 December 31,

Redeemable deferred stock units— 66,424 and 60,676 units outstanding at redemption value at June 30, 2020 and December 31, 2019, respectively

Noncontrolling interests:

Redeemable partnership units— 16,421,888 and 16,764,466 common units and 1,343,299 and 1,143,215 long term incentive units outstanding at redemption value at March 31, 2020 and December 31, 2019, respectively

5.25% Series B cumulative redeemable preferred units, liquidation preference $2,500 per unit, 80,000 units issued and outstanding at March 31, 2020 and December 31, 2019

Boston Properties Limited Partnership partners’ capital— 1,730,797 and 1,726,980 general partner units and 153,583,758 and 153,063,318 limited partner units outstanding at March 31, 2020 and December 31, 2019, respectively

Redeemable partnership units— 16,123,912 and 16,764,466 common units and 1,345,723 and 1,143,215 long term incentive units outstanding at redemption value at June 30, 2020 and December 31, 2019, respectively

1,581,010 2,468,753

5.25 % Series B cumulative redeemable preferred units, liquidation preference $ 2,500 per unit, 80,000 units issued and outstanding at June 30, 2020 and December 31, 2019

193,623 193,623

Boston Properties Limited Partnership partners’ capital— 1,730,919 and 1,726,980 general partner units and 153,891,367 and 153,063,318 limited partner units outstanding at June 30, 2020 and December 31, 2019, respectively

4,828,066 3,380,175

Accumulated other comprehensive loss ( 54,921 ) ( 48,335 )

4 unchanged sentences

The accompanying notes are an integral part of these consolidated financial statements.

Table of Content s

BOSTON PROPERTIES LIMITED PARTNERSHIP

1 unchanged sentence

(Unaudited and in thousands, except for per unit amounts)

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

2020 2019 2020 2019

Lease $ 630,119 $ 680,189 $ 1,340,230 $ 1,359,440

Parking and other 13,946 26,319 38,450 51,225

Hotel 99 14,844 6,924 23,782

Development and management services 8,125 9,986 16,004 19,263

Direct reimbursements of payroll and related costs from management services contracts

2,484 2,403 5,721 5,798

Total revenue 654,773 733,741 1,407,329 1,459,508

Rental 239,787 257,971 502,753 515,488

Hotel 1,973 9,080 8,794 16,943

General and administrative 37,743 35,071 74,197 76,833

4 unchanged sentences

Other income (expense)

Income (loss) from unconsolidated joint ventures

Gains (losses) on sales of real estate

Interest and other income

Income from unconsolidated joint ventures 1,832 47,964 1,463 48,177

Gains on sales of real estate 207,241 1,835 626,895 930

Interest and other income (loss) 1,305 3,615 4,322 7,368

Gains (losses) from investments in securities 4,552 1,165 ( 893 ) 4,134

1 unchanged sentence

Interest expense ( 107,142 ) ( 102,357 ) ( 208,733 ) ( 203,366 )

Net income attributable to noncontrolling interests

Net income 303,833 205,822 892,277 340,659

Net (income) loss attributable to noncontrolling interests

Noncontrolling interests in property partnerships 767 ( 17,482 ) ( 18,719 ) ( 36,312 )

2 unchanged sentences

Net income attributable to Boston Properties Limited Partnership common unitholders

$ 301,975 $ 185,715 $ 868,308 $ 299,097

Basic earnings per common unit attributable to Boston Properties Limited Partnership

Net income $ 1.75 $ 1.08 $ 5.02 $ 1.74

Weighted average number of common units outstanding 172,659 172,202 172,604 172,167

Diluted earnings per common unit attributable to Boston Properties Limited Partnership

Net income $ 1.75 $ 1.08 $ 5.02 $ 1.73

Weighted average number of common and common equivalent units outstanding

172,680 172,521 172,738 172,486

The accompanying notes are an integral part of these consolidated financial statements.

Table of Content s

BOSTON PROPERTIES LIMITED PARTNERSHIP

1 unchanged sentence

(Unaudited and in thousands)

Three months ended March 31,

Other comprehensive (loss):

Three months ended June 30, Six months ended June 30,

2020 2019 2020 2019

Net income $ 303,833 $ 205,822 $ 892,277 $ 340,659

Other comprehensive income (loss):

Effective portion of interest rate contracts ( 659 ) ( 4,426 ) ( 10,379 ) ( 7,054 )

Amortization of interest rate contracts (1) 1,677 1,666 3,343 3,332

Other comprehensive (loss)

Other comprehensive income (loss) 1,018 ( 2,760 ) ( 7,036 ) ( 3,722 )

Comprehensive income 304,851 203,062 885,241 336,937

Comprehensive income attributable to noncontrolling interests

Comprehensive (income) loss attributable to noncontrolling interests

623 ( 17,626 ) ( 19,007 ) ( 36,600 )

Comprehensive income attributable to Boston Properties Limited Partnership

$ 305,474 $ 185,436 $ 866,234 $ 300,337

_______________

(1) Amounts reclassified from comprehensive income primarily to interest expense within Boston Properties Limited Partnership’s Consolidated Statements of Operations.

The accompanying notes are an integral part of these consolidated financial statements.

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BOSTON PROPERTIES LIMITED PARTNERSHIP

1 unchanged sentence

(Unaudited and in thousands)

General Partner

Limited Partner

Partners’ Capital (General and Limited Partners)

Preferred Units

Comprehensive Loss

Noncontrolling

Interests - Property Partnerships

Total Capital

Noncontrolling Interests - Redeemable Partnership Units

Units Capital

General Partner Limited Partner Partners’ Capital (General and Limited Partners) Preferred Units Accumulated

Comprehensive Loss Noncontrolling

Interests - Property Partnerships Total Capital Noncontrolling Interests - Redeemable Partnership Units

Equity, March 31, 2020

1,731 153,584 $ 4,626,627 $ 193,623 $ ( 55,700 ) $ 1,736,445 $ 6,500,995 $ 1,639,855

Contributions

— 5 450 — — — 450 ( 98 )

Allocated net income (loss) for the period

— — 271,989 2,625 — ( 767 ) 273,847 29,986

Distributions

— — ( 152,507 ) ( 2,625 ) — — ( 155,132 ) ( 17,194 )

Unearned compensation

— — 423 — — — 423 9,450

Conversion of redeemable partnership units

— 302 10,849 — — — 10,849 ( 10,849 )

Adjustment to reflect redeemable partnership units at redemption value

— — 70,235 — — — 70,235 ( 70,235 )

Effective portion of interest rate contracts

— — — — ( 601 ) — ( 601 ) ( 58 )

Amortization of interest rate contracts

— — — — 1,380 144 1,524 153

Contributions from noncontrolling interests in property partnerships

— — — — — 2,081 2,081 —

Distributions to noncontrolling interests in property partnerships

— — — — — ( 13,315 ) ( 13,315 ) —

Equity, June 30, 2020 1,731 153,891 $ 4,828,066 $ 193,623 $ ( 54,921 ) $ 1,724,588 $ 6,691,356 $ 1,581,010

Equity, March 31, 2019

1,725 152,790 $ 3,603,174 $ 193,623 $ ( 48,734 ) $ 1,710,608 $ 5,458,671 $ 2,414,240

Contributions 1 26 882 — — — 882 1,082

Allocated net income for the year — — 166,687 2,625 — 17,482 186,794 19,028

Distributions — — ( 146,835 ) ( 2,625 ) — — ( 149,460 ) ( 17,206 )

Unearned compensation — — 613 — — — 613 8,286

Conversion of redeemable partnership units — 21 720 — — — 720 ( 720 )

Adjustment to reflect redeemable partnership units at redemption value — — 100,174 — — — 100,174 ( 100,174 )

Effective portion of interest rate contracts — — — — ( 3,973 ) — ( 3,973 ) ( 453 )

Amortization of interest rate contracts — — — — 1,367 144 1,511 155

Acquisition of noncontrolling interest in property partnership — — ( 162,505 ) — — ( 24,501 ) ( 187,006 ) —

Contributions from noncontrolling interests in property partnerships — — — — — 7,761 7,761 —

Distributions to noncontrolling interests in property partnerships — — — — — ( 15,273 ) ( 15,273 ) —

Equity, June 30, 2019 1,726 152,837 $ 3,562,910 $ 193,623 $ ( 51,340 ) $ 1,696,221 $ 5,401,414 $ 2,324,238

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BOSTON PROPERTIES LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF CAPITAL AND NONCONTROLLING INTERESTS

(Unaudited and in thousands)

Units Capital

General Partner Limited Partner Partners’ Capital (General and Limited Partners) Preferred Units Accumulated

Comprehensive Loss Noncontrolling

Interests - Property Partnerships Total Capital Noncontrolling Interests - Redeemable Partnership Units

Equity, December 31, 2019

1,727 153,063 $ 3,380,175 $ 193,623 $ ( 48,335 ) $ 1,728,689 $ 5,254,152 $ 2,468,753

Cumulative effect of a change in accounting principle

— — ( 1,505 ) — — — ( 1,505 ) ( 174 )

Contributions

1 68 7,162 — — — 7,162 39,643

Allocated net income for the period

— — 780,783 5,250 — 18,719 804,752 87,525

Distributions

— — ( 304,715 ) ( 5,250 ) — — ( 309,965 ) ( 34,638 )

Unearned compensation

— — 1,419 — — — 1,419 ( 14,614 )

Conversion of redeemable partnership units

3 760 26,344 — — — 26,344 ( 26,344 )

Adjustment to reflect redeemable partnership units at redemption value

— — 938,403 — — — 938,403 ( 938,403 )

Effective portion of interest rate contracts

— — — — ( 9,333 ) — ( 9,333 ) ( 1,046 )

Amortization of interest rate contracts

— — — — 2,747 288 3,035 308

Contributions from noncontrolling interests in property partnerships

— — — — — 5,957 5,957 —

Distributions to noncontrolling interests in property partnerships

Equity, March 31, 2020

— — — — — ( 29,065 ) ( 29,065 ) —

Equity, June 30, 2020 1,731 153,891 $ 4,828,066 $ 193,623 $ ( 54,921 ) $ 1,724,588 $ 6,691,356 $ 1,581,010

Equity, December 31, 2018

1,722 152,736 $ 4,054,996 $ 193,623 $ ( 47,741 ) $ 1,711,445 $ 5,912,323 $ 2,000,591

Cumulative effect of a change in accounting principle

— — ( 3,864 ) — — ( 70 ) ( 3,934 ) ( 445 )

Contributions

Allocated net income for the year

3 67 5,702 — — — 5,702 35,482

Allocated net income for the period

— — 268,470 5,250 — 36,312 310,032 30,627

Distributions

— — ( 293,625 ) ( 5,250 ) — — ( 298,875 ) ( 34,391 )

Unearned compensation

— — ( 775 ) — — — ( 775 ) ( 12,704 )

Conversion of redeemable partnership units

1 34 1,212 — — — 1,212 ( 1,212 )

Adjustment to reflect redeemable partnership units at redemption value

— — ( 306,701 ) — — — ( 306,701 ) 306,701

Effective portion of interest rate contracts

— — — — ( 6,332 ) — ( 6,332 ) ( 722 )

Amortization of interest rate contracts

— — — — 2,733 288 3,021 311

Acquisition of noncontrolling interest in property partnership — — ( 162,505 ) — — ( 24,501 ) ( 187,006 ) —

Contributions from noncontrolling interests in property partnerships

— — — — — 12,148 12,148 —

Distributions to noncontrolling interests in property partnerships

Equity, March 31, 2019

— — — — — ( 39,401 ) ( 39,401 ) —

Equity, June 30, 2019 1,726 152,837 $ 3,562,910 $ 193,623 $ ( 51,340 ) $ 1,696,221 $ 5,401,414 $ 2,324,238

The accompanying notes are an integral part of these consolidated financial statements.

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BOSTON PROPERTIES LIMITED PARTNERSHIP

1 unchanged sentence

(Unaudited and in thousands)

For the three months ended March 31,

Six months ended June 30,

Cash flows from operating activities:

Net income $ 892,277 $ 340,659

Adjustments to reconcile net income to net cash provided by operating activities:

3 unchanged sentences

Non-cash compensation expense 27,899 25,444

Loss (income) from unconsolidated joint ventures

Income from unconsolidated joint ventures ( 1,463 ) ( 48,177 )

Distributions of net cash flow from operations of unconsolidated joint ventures 13,382 3,890

Losses (gains) from investments in securities 893 ( 4,134 )

Allowance for current expected credit losses 484 —

Non-cash portion of interest expense 11,483 10,900

(Gains) losses on sales of real estate

Gains on sales of real estate ( 626,895 ) ( 930 )

Change in assets and liabilities:

Tenant and other receivables, net 18,516 ( 11,514 )

Note receivable, net

Notes receivable, net ( 258 ) ( 250 )

Accrued rental income, net ( 43,399 ) ( 37,473 )

8 unchanged sentences

Cash flows from investing activities:

Acquisition of real estate

Acquisitions of real estate ( 133,406 ) ( 43,061 )

Construction in progress ( 247,615 ) ( 203,259 )

3 unchanged sentences

Capital contributions to unconsolidated joint ventures ( 106,168 ) ( 50,068 )

Capital distributions from unconsolidated joint ventures 54,413 105,000

Issuance of notes receivable, net ( 9,800 ) —

Investments in securities, net 3,006 ( 1,079 )

Net cash used in investing activities ( 120,522 ) ( 327,952 )

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BOSTON PROPERTIES LIMITED PARTNERSHIP

1 unchanged sentence

(Unaudited and in thousands)

For the three months ended March 31,

Six months ended June 30,

Cash flows from financing activities:

Repayments of mortgage notes payable ( 8,477 ) ( 9,702 )

Proceeds from unsecured senior notes 1,248,125 848,428

Borrowings on unsecured line of credit 265,000 380,000

6 unchanged sentences

Distributions to noncontrolling interests in property partnerships ( 29,065 ) ( 39,401 )

Net cash provided by (used in) financing activities

Net increase (decrease) in cash and cash equivalents and cash held in escrows

Cash and cash equivalents and cash held in escrows, beginning of year

Cash and cash equivalents and cash held in escrows, end of year

Acquisition of noncontrolling interest in property partnership — ( 186,952 )

Net cash provided by financing activities 866,019 286,081

Net increase in cash and cash equivalents and cash held in escrows 1,299,769 523,733

Cash and cash equivalents and cash held in escrows, beginning of period 691,886 639,191

Cash and cash equivalents and cash held in escrows, end of period $ 1,991,655 $ 1,162,924

Reconciliation of cash and cash equivalents and cash held in escrows:

19 unchanged sentences

Conversions of redeemable partnership units to partners’ capital $ 26,344 $ 1,212

Issuance of restricted securities to employees

Issuance of restricted securities to employees and non-employee directors $ 43,462 $ 38,923

The accompanying notes are an integral part of these consolidated financial statements.

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BOSTON PROPERTIES, INC.

3 unchanged sentences

Boston Properties, Inc.

is the sole general partner of Boston Properties Limited Partnership, its operating partnership, and at March 31, 2020 owned an approximate 89.7 % ( 89.6 % at December 31, 2019 ) general and limited partnership interest in Boston Properties Limited Partnership.

is the sole general partner of Boston Properties Limited Partnership, its operating partnership, and at June 30, 2020 owned an approximate 89.9 % ( 89.6 % at December 31, 2019) general and limited partnership interest in Boston Properties Limited Partnership.

Unless stated otherwise or the context requires, the “Company” refers to Boston Properties, Inc.

18 unchanged sentences

LTIP Units (including the earned 2012 OPP Units and the earned 2013 - 2017 MYLTIP Units), whether vested or not, will receive the same quarterly per unit distributions as OP Units, which equal per share dividends on Common Stock (See Notes 8 and 11).

At March 31, 2020 , there was one series of Preferred Units outstanding (i.e., Series B Preferred Units).

At June 30, 2020, there was one series of Preferred Units outstanding (i.e., Series B Preferred Units).

The Series B Preferred Units were issued to Boston Properties, Inc.

2 unchanged sentences

contributed the net proceeds from the offering to Boston Properties Limited Partnership in exchange for 80,000 Series B Preferred Units having terms and preferences generally mirroring those of the Series B Preferred Stock (See Note 9).

At March 31, 2020 , the Company owned or had interests in a portfolio of 196 commercial real estate properties (the “Properties”) aggregating approximately 51.8 million net rentable square feet of primarily Class A office properties, including 10 properties under construction/redevelopment totaling approximately 5.2 million net rentable square feet.

At March 31, 2020 , the Properties consisted of:

177 office properties (including eight properties under construction/redevelopment);

twelve retail properties;

At June 30, 2020, the Company owned or had interests in a portfolio of 195 commercial real estate properties (the “Properties”) aggregating approximately 51.2 million net rentable square feet of primarily Class A office properties, including nine properties under construction/redevelopment totaling approximately 5.0 million net rentable square feet.

At June 30, 2020, the Properties consisted of:

• 176 office properties (including seven properties under construction/redevelopment);

• 12 retail properties;

• six residential properties (including two properties under construction);

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The Company considers Class A office properties to be well-located buildings that are professionally managed and maintained, attract high-quality tenants and command upper-tier rental rates, and that are modern structures or have been modernized to compete with newer buildings.

14 unchanged sentences

These financial statements should be read in conjunction with the Company’s financial statements and notes thereto contained in the Company’s Annual Report in the Company’s Form 10-K for its fiscal year ended December 31, 2019.

The Company bases its estimates on historical experience and on various other assumptions that it considers to be reasonable under the circumstances, including the impact of extraordinary events such as the novel coronavirus (“COVID-19”) pandemic, the results of which form the basis for making significant judgments about the carrying values of assets and liabilities, assessments of future collectability, and other areas of the financial statements that are impact by the use of estimates.

Actual results may differ from these estimates under different assumptions or conditions.

5 unchanged sentences

Consolidated Variable Interest Entities

As of March 31, 2020 , Boston Properties, Inc.

As of June 30, 2020, Boston Properties, Inc.

has identified six consolidated VIEs, including Boston Properties Limited Partnership.

2 unchanged sentences

The Company consolidates these VIEs because it is the primary beneficiary.

The third parties’ interests in these consolidated entities (i.e., excluding Boston Properties Limited Partnership’s interest) are reflected as noncontrolling interest in property partnerships in the accompanying consolidated financial statements (See Note 7 ).

The third parties’ interests in these consolidated entities (excluding Boston Properties Limited Partnership’s interest) are reflected as noncontrolling interests in property partnerships in the accompanying consolidated financial statements (See Note 8).

In addition, Boston Properties, Inc.’s only significant asset is its investment in Boston Properties Limited Partnership and, consequently, substantially all of Boston Properties, Inc.’s assets and liabilities are the assets and liabilities of Boston Properties Limited Partnership.

Table of Content s

Variable Interest Entities Not Consolidated

3 unchanged sentences

The Company follows the authoritative guidance for fair value measurements when valuing its financial instruments for disclosure purposes.

The table below presents the financial instruments that are being valued for disclosure purposes as well as the Level they are categorized at (as defined in Accounting Standards Codification (“ASC”) 820 “Fair Value Measurements and Disclosures” (“ASC 820”)).

Financial Instrument

Unsecured senior notes (1)

Related party note receivable

Note receivable

Mortgage notes payable

Unsecured term loan / line of credit

The table below presents the financial instruments that are being valued for disclosure purposes as well as the Level at which they are categorized (as defined in Accounting Standards Codification (“ASC”) 820 “Fair Value Measurements and Disclosures” (“ASC 820”)).

Financial Instrument Level

Unsecured senior notes (1) Level 1

Related party note receivable Level 3

Notes receivable Level 3

Mortgage notes payable Level 3

Unsecured term loan / line of credit Level 3

_______________

2 unchanged sentences

The following table identifies the range and weighted average of significant unobservable inputs for the Company’s Level 3 fair value measured instruments.

Financial Instrument

Weighted Average

Related party note receivable

Note receivable

Mortgage notes payable

2.82% - 3.25%

Unsecured term loan / line of credit

Financial Instrument Level Range Weighted Average

Related party note receivable Level 3 3.66 % 3.66 %

Notes receivable Level 3 3.66 % - 8.00 %

Mortgage notes payable Level 3 2.09 % - 3.25 %

Unsecured term loan / line of credit Level 3 1.01 % 1.01 %

In addition, the Company’s estimated fair values for these instruments as of the end of the applicable reporting period are not projections of, nor necessarily indicative of, estimated or actual fair values in future reporting periods.

The following table presents the aggregate carrying value of the Company’s related party note receivable, net, note receivable, net, mortgage notes payable, net, unsecured senior notes, net, unsecured line of credit and unsecured term loan, net and the Company’s corresponding estimate of fair value as of March 31, 2020 and December 31, 2019 (in thousands):

March 31, 2020

December 31, 2019

The following table presents the aggregate carrying value of the Company’s related party note receivable, net, notes receivable, net, mortgage notes payable, net, unsecured senior notes, net, unsecured line of credit and unsecured term loan, net and the Company’s corresponding estimate of fair value as of June 30, 2020 and December 31, 2019 (in thousands):

June 30, 2020 December 31, 2019

Amount Estimated

Fair Value Carrying

Amount Estimated

Related party note receivable, net $ 78,520 $ 85,394 $ 80,000 $ 81,931

Note receivable, net

Notes receivable, net 25,480 25,648 15,920 14,978

Total $ 104,000 $ 111,042 $ 95,920 $ 96,909

Mortgage notes payable, net $ 2,915,852 $ 3,155,771 $ 2,922,408 $ 2,984,956

2 unchanged sentences

Unsecured term loan, net 499,150 500,450 498,939 500,561

Total $ 13,048,579 $ 14,174,090 $ 11,811,806 $ 12,311,892

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New Accounting Pronouncements Adopted

7 unchanged sentences

ASU 2016-13 and ASU 2018-19 were effective for the Company for reporting periods beginning after December 15, 2019, with early adoption permitted.

ASU 2016-13 and ASU 2018-19 are applicable to the Company with respect to (1) certain of its accounts receivable, except for amounts arising from operating leases accounted for under ASC 842, (2) its related party note receivable, (3) its note receivable and (4) certain of its off-balance sheet credit exposures.

ASU 2016-13 and ASU 2018-19 are applicable to the Company with respect to (1) certain of its accounts receivable, except for amounts arising from operating leases accounted for under ASC 842, (2) its related party note receivable, (3) its notes receivable and (4) certain of its off-balance sheet credit exposures.

The Company adopted ASU 2016-13 and ASU 2018-19 effective January 1, 2020 using the modified retrospective approach.

The adoption of ASU 2016-13 and ASU 2018-19 resulted in the Company recognizing an allowance for current expected credit losses associated with (1) its related party note receivable, (2) its note receivable and (3) an off-balance sheet loan commitment arrangement.

The adoption of ASU 2016-13 and ASU 2018-19 resulted in the Company recognizing an allowance for current expected credit losses associated with (1) its related party note receivable, (2) its notes receivable and (3) an off-balance sheet loan commitment arrangement.

As a result, the modified retrospective approach resulted in the Company recognizing on January 1, 2020, the cumulative effect of adopting ASU 2016-13 and ASU 2018-19 aggregating approximately $ 1.5 million to Dividends in Excess of Earnings of Boston Properties, Inc.

11 unchanged sentences

ASU 2018-16 permits the use of the overnight index swap rate based on the Secured Overnight Financing Rate (“SOFR”) to be used as a U.S.

benchmark interest rate for purposes of applying hedge accounting under ASC 815, “Derivatives and Hedging (Topic 815)” .

ASU 2018-16 was effective for the Company, which has already adopted ASU 2017-12, “Derivatives and Hedging (Topic 815):

benchmark interest rate for purposes of applying hedge accounting under ASC 815, “Derivatives and Hedging (Topic 815).” ASU 2018-16 was effective for the Company, which has already adopted ASU 2017-12, “Derivatives and Hedging (Topic 815):

Targeted Improvements to Accounting for Hedging Activities” for reporting periods beginning after December 15, 2018 and was required to be adopted on a prospective basis for qualifying new or re-designated hedging relationships entered into on or after the date of adoption.

4 unchanged sentences

The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur.

During the three months ended March 31, 2020, the Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives.

During the six months ended June 30, 2020, the Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives.

Application of these expedients preserves the presentation of derivatives consistent with past presentation.

The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.

The Company continues to

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evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.

Consolidation

5 unchanged sentences

Boston Properties, Inc.

Real estate consisted of the following at March 31, 2020 and December 31, 2019 (in thousands):

March 31, 2020

December 31, 2019

Real estate consisted of the following at June 30, 2020 and December 31, 2019 (in thousands):

June 30, 2020 December 31, 2019

Land $ 5,070,126 $ 5,111,606

Right of use assets - finance leases 237,394 237,394

5 unchanged sentences

Construction in progress 893,935 789,736

Total 22,960,809 22,889,010

Accumulated depreciation ( 5,292,389 ) ( 5,266,798 )

$ 17,668,420 $ 17,622,212

_______________

(1) Includes pre-development costs.

Boston Properties Limited Partnership

Real estate consisted of the following at March 31, 2020 and December 31, 2019 (in thousands):

March 31, 2020

December 31, 2019

Real estate consisted of the following at June 30, 2020 and December 31, 2019 (in thousands):

June 30, 2020 December 31, 2019

Land $ 4,972,910 $ 5,011,153

Right of use assets - finance leases 237,394 237,394

5 unchanged sentences

Construction in progress 893,935 789,736

Total 22,584,000 22,493,789

Accumulated depreciation ( 5,190,360 ) ( 5,162,908 )

$ 17,393,640 $ 17,330,881

_______________

(1) Includes pre-development costs.

On January 28, 2020, the Company exercised its option to acquire real property at 425 Fourth Street located in San Francisco, California for a purchase price totaling approximately $ 134.1 million .

425 Fourth Street is expected to support the development of approximately 804,000 square feet of primarily commercial office space.

There can be no assurance that the acquisition will be consummated on the terms currently contemplated or at all.

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On March 26, 2020, the Company completed and fully placed in-service 17Fifty Presidents Street located in Reston, Virginia.

17Fifty Presidents Street is a build-to-suit project with approximately 276,000 net rentable square feet of Class A office space that is 100 % leased.

On June 1, 2020, the Company completed and fully placed in-service 20 CityPoint, a Class A office project with approximately 211,000 net rentable square feet located in Waltham, Massachusetts that is 62 % leased.

On June 26, 2020, the Company completed the acquisition of real property at 777 Harrison Street (known as Fourth + Harrison and formerly known as 425 Fourth Street) located in San Francisco, California for a gross purchase price, including entitlements, totaling approximately $ 140.1 million.

Fourth + Harrison is expected to support the development of approximately 804,000 square feet of primarily commercial office space.

On January 28, 2020, the Company entered into a joint venture with a third party to own, operate and develop properties at its Gateway Commons complex located in South San Francisco, California.

4 unchanged sentences

Future development projects will be owned 49 % by the Company and 51 % by its partner.

Upon the third party’s contribution, the Company ceased accounting for the joint venture entity on a consolidated basis and is accounting for the joint venture entity on an unconsolidated basis using the equity method of accounting, as it has reduced its ownership interest in the joint venture entity and no longer has a controlling financial or operating interest in the joint venture entity (See Note 5 ).

Upon the partner’s contribution, the Company ceased accounting for the joint venture entity on a consolidated basis and is accounting for the joint venture entity on an unconsolidated basis using the equity method of accounting, as it has reduced its ownership interest in the joint venture entity and no longer has a controlling financial or operating interest in the joint venture entity (See Note 5).

The Company recognized a gain on the retained and sold interest in the real estate contributed to the joint venture totaling approximately $ 217.7 million for Boston Properties, Inc.

and $ 222.4 million for Boston Properties Limited Partnership during the three months ended March 31, 2020 within Gains (Losses) on Sales of Real Estate on the respective Consolidated Statements of Operations, as the fair value of the real estate exceeded its carrying value.

601, 611 and 651 Gateway contributed approximately $ 0.2 million of net income to the Company for the period from January 1, 2020 through January 27, 2020 and contributed approximately $ 2.9 million of net income to the Company for the three months ended March 31, 2019.

and $ 222.4 million for Boston Properties Limited Partnership during the six months ended June 30, 2020 within Gains on Sales of Real Estate on the respective Consolidated Statements of Operations, as the fair value of the real estate exceeded its carrying value.

601, 611 and 651 Gateway contributed approximately $ 0.2 million of net income to the Company for the period from January 1, 2020 through January 27, 2020 and contributed approximately $ 3.1 million and $ 6.0 million of net income to the Company for the three and six months ended June 30, 2019, respectively.

On February 20, 2020, the Company completed the sale of New Dominion Technology Park located in Herndon, Virginia for a gross sale price of $ 256.0 million.

2 unchanged sentences

New Dominion Technology Park is comprised of two Class A office properties aggregating approximately 493,000 net rentable square feet.

New Dominion Technology Park contributed approximately $ 1.6 million of net income to the Company for the period from January 1, 2020 through February 19, 2020 and contributed approximately $ 2.1 million of net income to the Company for the three months ended March 31, 2019.

New Dominion Technology Park contributed approximately $ 1.6 million of net income to the Company for the period from January 1, 2020 through February 19, 2020 and contributed approximately $ 2.1 million and $ 4.2 million of net income to the Company for the three and six months ended June 30, 2019, respectively.

On June 25, 2020, the Company completed the sale of a portion of its Capital Gallery property located in Washington, DC for a gross sale price of approximately $ 253.7 million.

Net cash proceeds totaled approximately $ 246.9 million, resulting in a gain on sale of real estate totaling approximately $ 203.8 million for Boston Properties, Inc.

and approximately $ 207.2 million for Boston Properties Limited Partnership.

Capital Gallery is an approximately 631,000 net rentable square foot Class A office property.

The portion sold was comprised of approximately 455,000 net rentable square feet of commercial office space.

The Company continues to own the land, underground parking garage and remaining commercial office and retail space containing approximately 176,000 net rentable square feet at the property.

The sold portion of Capital Gallery contributed approximately $ 2.9 million and $ 6.3 million of net income to the Company for the period from April 1, 2020 through June 24, 2020 and the period from January 1, 2020 through June 24, 2020, respectively, and contributed approximately $ 3.5 million and $ 7.0 million of net income to the Company for the three and six months ended June 30, 2019, respectively.

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The Company must make estimates as to the collectability of its accrued rent and accounts receivable related to lease revenue.

Management analyzes accrued rent and accounts receivable by considering tenant creditworthiness, current economic trends, including the impact of COVID-19 on tenants’ businesses, and changes in tenants’ payment patterns when evaluating the collectability of the tenant’s receivable balance, including the accrued rent receivable.

The following table summarizes the components of lease revenue recognized during the three months ended March 31, 2020 and 2019 included within the Company's Consolidated Statements of Operations (in thousands):

Three months ended March 31,

As a result of this analysis, during the three and six months ended June 30, 2020, the Company wrote off approximately $ 35.9 million and $ 37.4 million, respectively, related to accrued rent balances and approximately $ 18.0 million and $ 18.9 million, respectively, related to accounts receivable 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 April 2020, the FASB staff issued a question and answer document (“Lease Modification Q & A”) related to the application of lease accounting guidance for lease concessions, in accordance with ASC 842, as a result of COVID-19.

Under existing lease guidance, the Company would have to determine, on a lease-by-lease basis, if a lease concession was the result of a new arrangement reached with the tenant (treated within the lease modification accounting framework) or if a lease concession was under the enforceable rights and obligations within the existing lease agreement (precluded from applying the lease modification accounting framework).

The Lease Modification Q & A allows the Company, if certain criteria have been met, to assume that a lease concession was included within the enforceable rights and obligations of the existing lease agreement and instead elect to either apply the lease modification accounting framework or not, with such election applied consistently to leases with similar characteristics and similar circumstances.

The Company did not utilize the guidance provided in the Lease Modification Q & A and instead elected to continue to account for the COVID-19 lease concessions on a lease-by-lease basis in accordance with the existing lease modification accounting framework.

The following table summarizes the components of lease revenue recognized during the three and six months ended June 30, 2020 and 2019 included within the Company's Consolidated Statements of Operations (in thousands):

Three months ended June 30, Six months ended June 30,

Lease Revenue 2020 2019 2020 2019

1 unchanged sentence

Variable lease payments 100,605 122,369 223,759 247,634

$ 630,119 $ 680,189 $ 1,340,230 $ 1,359,440

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Investments in Unconsolidated Joint Ventures

The investments in unconsolidated joint ventures consist of the following at March 31, 2020 and December 31, 2019 :

The investments in unconsolidated joint ventures consist of the following at June 30, 2020 and December 31, 2019:

Carrying Value of Investment (1)

Entity Properties Nominal %

Ownership June 30,

2020 December 31,

(in thousands)

Square 407 Limited Partnership

Market Square North

Square 407 Limited Partnership Market Square North 50.0 % $ ( 4,123 ) $ ( 4,872 )

BP/CRF Metropolitan Square, LLC

Metropolitan Square 20.0 % ( 7,319 ) 9,134

901 New York, LLC

901 New York Avenue

WP Project Developer LLC

Wisconsin Place Land and Infrastructure

Annapolis Junction NFM LLC

Annapolis Junction

540 Madison Venture LLC

540 Madison Avenue

500 North Capitol Venture LLC

500 North Capitol Street, NW

501 K Street LLC

1001 6th Street

Podium Developer LLC

The Hub on Causeway - Podium

Residential Tower Developer LLC

Hotel Tower Developer LLC

The Hub on Causeway - Hotel Air Rights

Office Tower Developer LLC

100 Causeway Street

1265 Main Office JV LLC

1265 Main Street

BNY Tower Holdings LLC

BNYTA Amenity Operator LLC

901 New York, LLC 901 New York Avenue 25.0 % (2) ( 12,174 ) ( 12,113 )

WP Project Developer LLC Wisconsin Place Land and Infrastructure

33.3 % (3) 36,102 36,789

Annapolis Junction NFM LLC Annapolis Junction 50.0 % (4) 12,967 25,391

540 Madison Venture LLC 540 Madison Avenue 60.0 % (5) 201 2,953

500 North Capitol Venture LLC 500 North Capitol Street, NW 30.0 % ( 5,530 ) ( 5,439 )

501 K Street LLC 1001 6th Street

50.0 % (6) 42,673 42,496

Podium Developer LLC The Hub on Causeway - Podium 50.0 % 49,160 49,466

Residential Tower Developer LLC Hub50House 50.0 % 53,340 55,092

Hotel Tower Developer LLC The Hub on Causeway - Hotel Air Rights

50.0 % 10,228 9,883

Office Tower Developer LLC 100 Causeway Street 50.0 % 56,544 56,606

1265 Main Office JV LLC 1265 Main Street 50.0 % 4,116 3,780

BNY Tower Holdings LLC Dock 72 50.0 % 96,013 94,804

BNYTA Amenity Operator LLC Dock 72 50.0 % — —

CA-Colorado Center Limited Partnership

Colorado Center 50.0 % 236,287 252,069

7750 Wisconsin Avenue LLC

7750 Wisconsin Avenue

BP-M 3HB Venture LLC

3 Hudson Boulevard

SMBP Venture LP

Santa Monica Business Park

Platform 16 Holdings LP

Gateway Portfolio Holdings LLC

Gateway Commons

7750 Wisconsin Avenue LLC 7750 Wisconsin Avenue 50.0 % 57,130 56,247

BP-M 3HB Venture LLC 3 Hudson Boulevard 25.0 % 91,422 67,499

SMBP Venture LP Santa Monica Business Park 55.0 % 148,665 163,937

Platform 16 Holdings LP Platform 16 55.0 % (7) 99,734 29,501

Gateway Portfolio Holdings LLC Gateway Commons 50.0 % (8) 345,142 N/A

$ 1,310,578 $ 933,223

Investments with deficit balances aggregating approximately $ 22.2 million and $ 22.4 million at March 31, 2020 and December 31, 2019 , respectively, are included within Other Liabilities in the Company’s Consolidated Balance Sheets.

_______________

(1) Investments with deficit balances aggregating approximately $ 29.1 million and $ 22.4 million at June 30, 2020 and December 31, 2019, respectively, are included within Other Liabilities in the Company’s Consolidated Balance Sheets.

(2) The Company’s economic ownership has increased based on the achievement of certain return thresholds.

At March 31, 2020 and December 31, 2019, the Company’s economic ownership was approximately 50 % .

At June 30, 2020 and December 31, 2019, the Company’s economic ownership was approximately 50 %.

(3) The Company’s wholly-owned subsidiary that owns Wisconsin Place Office also owns a 33.3 % interest in the joint venture entity that owns the land, parking garage and infrastructure of the project.

The joint venture owns three in-service buildings and two undeveloped land parcels.

(4) The joint venture owns two in-service buildings.

(5) T he property was sold on June 27, 2019.

As of March 31, 2020 and December 31, 2019 , the investment is comprised of undistributed cash.

As of June 30, 2020 and December 31, 2019, the investment is comprised of undistributed cash.

(6) Under the joint venture agreement for this land parcel, the partner will be entitled to up to two additional payments from the venture based on increases in total entitled square footage of the project above 520,000 square feet and achieving certain project returns at stabilization.

(7) This entity is a VIE (See Note 2).

As a result of the partner’s deferred contribution, the Company has an initial approximately 55 % interest in the joint venture.

(8) As a result of the partner’s deferred contribution, the Company owns an approximately 55 % interest in the joint venture at June 30, 2020.

Future development projects will be owned 49 % by the Company and 51 % by its partner.

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Under certain of the Company’s joint venture agreements, if certain return thresholds are achieved, the partners or the Company will be entitled to an additional promoted interest or payments.

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The combined summarized balance sheets of the Company’s unconsolidated joint ventures are as follows:

2020 December 31,

(in thousands)

Real estate and development in process, net (1) $ 4,527,828 $ 3,904,400

Other assets 535,870 502,706

Total assets $ 5,063,698 $ 4,407,106

LIABILITIES AND MEMBERS’/PARTNERS’ EQUITY

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_______________

At March 31, 2020 and December 31, 2019 , this amount includes right of use assets - finance leases totaling approximately $ 248.9 million and $ 383.9 million , respectively, and right of use assets - operating leases totaling approximately $ 11.9 million and $ 12.1 million , respectively.

At March 31, 2020 and December 31, 2019 , this amount includes lease liabilities - finance leases totaling approximately $ 391.0 million and $ 510.8 million , respectively, and lease liabilities - operating leases totaling approximately $ 17.4 million and $ 17.3 million , respectively.

(1) At June 30, 2020 and December 31, 2019, this amount includes right of use assets - finance leases totaling approximately $ 248.9 million and $ 383.9 million, respectively, and right of use assets - operating leases totaling approximately $ 11.7 million and $ 12.1 million, respectively.

(2) At June 30, 2020 and December 31, 2019, this amount includes lease liabilities - finance leases totaling approximately $ 390.2 million and $ 510.8 million, respectively, and lease liabilities - operating leases totaling approximately $ 17.4 million and $ 17.3 million, respectively.

(3) This amount represents the aggregate difference between the Company’s historical cost basis and the basis reflected at the joint venture level, which is typically amortized over the life of the related assets and liabilities.

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In addition, certain acquisition, transaction and other costs may not be reflected in the net assets at the joint venture level.

At March 31, 2020 and December 31, 2019 , there was an aggregate basis differential of approximately $ 310.1 million and $ 311.3 million , respectively, between the carrying value of the Company’s investment in the joint venture that owns Colorado Center and the joint venture’s basis in the assets and liabilities.

At March 31, 2020 , there was an aggregate basis differential of approximately $ 55.7 million between the carrying value of the Company’s investment in the joint venture that owns Gateway Commons and the joint venture’s basis in the assets and liabilities.

These basis differentials (excluding land) shall be amortized over the remaining lives of the related assets and liabilities.

Investments with deficit balances aggregating approximately $ 22.2 million and $ 22.4 million at March 31, 2020 and December 31, 2019 , respectively, have been reflected within Other Liabilities in the Company’s Consolidated Balance Sheets.

At June 30, 2020 and December 31, 2019, there was an aggregate basis differential of approximately $ 309.0 million and $ 311.3 million, respectively, between the carrying value of the Company’s investment in the joint venture that owns Colorado Center and the joint venture’s basis in the assets and liabilities.

At June 30, 2020, there was an aggregate basis differential of approximately $ 54.4 million between the carrying value of the Company’s investment in the joint venture that owns Gateway Commons and the joint venture’s basis in the assets and liabilities.

These basis differentials (excluding land) will be amortized over the remaining lives of the related assets and liabilities.

(4) Investments with deficit balances aggregating approximately $ 29.1 million and $ 22.4 million at June 30, 2020 and December 31, 2019, respectively, are reflected within Other Liabilities in the Company’s Consolidated Balance Sheets.

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The combined summarized statements of operations of the Company’s unconsolidated joint ventures are as follows:

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

2020 2019 2020 2019

(in thousands)

Total revenue (1) $ 89,563 $ 80,204 $ 182,766 $ 163,159

Operating 33,704 30,134 69,105 60,633

Depreciation and amortization 37,390 24,818 69,425 53,464

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Interest expense ( 23,306 ) ( 20,803 ) ( 45,889 ) ( 41,560 )

Gains on sales of real estate 11,720 34,572 11,720 34,572

Net income $ 6,883 $ 39,021 $ 10,067 $ 42,074

Company’s share of net income $ 4,024 $ 22,376 $ 5,276 $ 23,960

Basis differential (2) ( 2,192 ) 25,588 ( 3,813 ) 24,217

Income (loss) from unconsolidated joint ventures

Income from unconsolidated joint ventures $ 1,832 $ 47,964 $ 1,463 $ 48,177

_______________

Includes straight-line rent adjustments of approximately $ 9.7 million and $ 5.8 million for the three months ended March 31, 2020 and 2019 , respectively.

Includes straight-line rent adjustments of approximately $ 0.5 million and $ 0.5 million for the three months ended March 31, 2020 and 2019 , respectively.

Also includes net above-/below-market rent adjustments of approximately $ 0.3 million and $ 0.4 million for the three months ended March 31, 2020 and 2019 , respectively.

(1) Includes straight-line rent adjustments of approximately $ 8.5 million and $ 7.6 million for the three months ended June 30, 2020 and 2019, respectively, and $ 18.2 million and $ 13.4 million for the six months ended June 30, 2020 and 2019, respectively.

(2) Includes straight-line rent adjustments of approximately $ 0.4 million and $ 0.5 million for the three months ended June 30, 2020 and 2019, respectively, and $ 0.9 million and $ 1.1 million for the six months ended June 30, 2020 and 2019, respectively.

Also includes net above-/below-market rent adjustments of approximately $ 0.2 million and $ 0.4 million for the three months ended June 30, 2020 and 2019, respectively, and $ 0.5 million and $ 0.8 million for the six months ended June 30, 2020 and 2019, respectively.

On January 28, 2020, the Company entered into a joint venture with a third party to own, operate and develop properties at its Gateway Commons complex located in South San Francisco, California.

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On January 28, 2020, a joint venture in which the Company has a 55 % interest commenced development of the first phase of its Platform 16 project located in San Jose, California.

Platform 16 consists of a parcel of land totaling approximately 5.6 acres that is expected to support the development of approximately 1.1 million square feet of commercial office space.

The first phase of the Platform 16 development project consists of an approximately 390,000 net rentable square foot Class A office building and a below-grade parking garage.

Though the joint venture has completed site preparation work, in consultation with the Company’s partner, the joint venture has paused construction activities and it will revisit its plans once the economic impact of COVID-19 becomes clearer.

The joint venture will pause construction activities after completing site preparation work and intends to revisit its plans once the economic impact of COVID-19 becomes clearer or economic conditions improve.

On February 20, 2020, the joint venture acquired the land underlying the ground lease for a purchase price totaling approximately $ 134.8 million.

The joint venture had previously made a deposit totaling $ 15.0 million, which deposit was credited against the purchase price.

Platform 16 consists of a parcel of land totaling approximately 5.6 acres that is expected to support the development of approximately 1.1 million square feet of commercial office space.

On March 18, 2020, a joint venture in which the Company has a 50 % interest extended the mortgage loan collateralized by Annapolis Junction Building Seven and Building Eight.

At the time of the extension, the outstanding balance of the loan totaled approximately $ 34.6 million , bore interest at a variable rate equal to LIBOR plus 2.35 % per annum and matured on March 6, 2020.

The extended loan matures on June 30, 2020.

Annapolis Junction Building Seven and Building Eight are Class A office properties with approximately 127,000 and 126,000 net rentable square feet, respectively, located in Annapolis, Maryland.

On June 9, 2020, a joint venture in which the Company has a 20 % interest refinanced with a new lender the mortgage loan collateralized by its Metropolitan Square property located in Washington, DC.

The outstanding balance of the loan totaled approximately $ 155.9 million, bore interest at a fixed rate of 5.75 % per annum and was scheduled to mature on August 5, 2020.

The new mortgage loan totaling $ 325.0 million, of which $ 288.0 million was advanced at closing, bears interest at a variable rate equal to LIBOR plus 4.75 % per annum and matures on

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July 7, 2022, with two , one -year extension options, subject to certain conditions.

The joint venture entered into an interest rate cap agreement with a financial institution to limit its exposure to increases in the LIBOR portion of interest costs to 3.00 % per annum on a notional amount of $ 325.0 million through July 7, 2022.

The joint venture distributed excess loan proceeds from the new mortgage loan totaling approximately $ 112.7 million, of which the Company’s share totaled approximately $ 22.5 million.

Metropolitan Square is a Class A office property with approximately 654,000 net rentable square feet.

On Jun e 25, 2020, a joint venture in which the Company has a 50 % interest completed the sale of Annapolis Junction Building Eight and two land parcels located in Annapolis, Maryland for a gross sale price of $ 47.0 million.

Net cash proceeds totaled approximately $ 45.8 million after the payment of transaction costs.

The Company recognized a gain on sale of real estate totaling approximately $ 5.8 million, which is included in Income from Unconsolidated Joint Ventures in the accompanying Consolidated Statements of Operations.

The joint venture distributed approximately $ 36.8 million of available cash and the net proceeds from the sale after the pay down of the mortgage loan, of which the Company’s share totaled approximately $ 18.4 million.

Annapolis Junction Building Eight is an approximately 126,000 net rentable square foot Class A office property, which is vacant.

The two land parcels will support the development of approximately 300,000 square feet of commercial office space with one parcel currently containing surface parking for approximately 511 vehicles.

On June 25, 2020, in conjunction with the joint venture’s sale of Annapolis Junction Building Eight, the joint venture in which the Company has a 50 % interest modified the mortgage loan collateralized by Annapolis Junction Building Seven and Building Eight with the release of Annapolis Junction Building Eight as collateral under the loan in exchange for a principal pay down of approximately $ 16.1 million using a portion of the net proceeds from the sale of the property.

At the time of the modification, the outstanding balance of the loan totaled approximately $ 34.5 million, bore interest at a variable rate equal to LIBOR plus 2.35 % per annum and was scheduled to mature on June 30, 2020.

The modified mortgage loan totaling approximately $ 18.4 million is collateralized by Annapolis Junction Building Seven, continues to bear interest at a variable rate equal to LIBOR plus 2.35 % per annum and matures on March 25, 2021.

Annapolis Junction Building Seven is a Class A office property with approximately 127,000 net rentable square feet located in Annapolis, Maryland.

Unsecured Senior Notes

The following summarizes the unsecured senior notes outstanding as of June 30, 2020 (dollars in thousands):

Stated Rate Effective

Rate(1) Principal

Amount Maturity Date(2)

10 Year Unsecured Senior Notes 4.125 % 4.289 % $ 850,000 May 15, 2021

11 Year Unsecured Senior Notes 3.850 % 3.954 % 1,000,000 February 1, 2023

10.5 Year Unsecured Senior Notes 3.125 % 3.279 % 500,000 September 1, 2023

10.5 Year Unsecured Senior Notes 3.800 % 3.916 % 700,000 February 1, 2024

7 Year Unsecured Senior Notes 3.200 % 3.350 % 850,000 January 15, 2025

10 Year Unsecured Senior Notes 3.650 % 3.766 % 1,000,000 February 1, 2026

10 Year Unsecured Senior Notes 2.750 % 3.495 % 1,000,000 October 1, 2026

10 Year Unsecured Senior Notes 4.500 % 4.628 % 1,000,000 December 1, 2028

10 Year Unsecured Senior Notes 3.400 % 3.505 % 850,000 June 21, 2029

10.5 Year Unsecured Senior Notes 2.900 % 2.984 % 700,000 March 15, 2030

10.75 Year Unsecured Senior Notes 3.250 % 3.343 % 1,250,000 January 30, 2031

Total principal 9,700,000

Net unamortized discount ( 17,719 )

Deferred financing costs, net ( 48,704 )

Total $ 9,633,577

_______________

(1) Yield on issuance date including the effects of discounts on the notes, settlements of interest rate contracts and the amortization of financing costs.

(2) No principal amounts are due prior to maturity.

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On May 5, 2020, Boston Properties Limited Partnership completed a public offering of $ 1.25 billion in aggregate principal amount of its 3.250 % unsecured senior notes due 2031.

The notes were priced at 99.850 % of the principal amount to yield an effective rate (including financing fees) of approximately 3.343 % per annum to maturity.

The notes will mature on January 30, 2031, unless earlier redeemed.

The aggregate net proceeds from the offering were approximately $ 1.24 billion after deducting underwriting discounts and transaction expenses.

The indenture relating to the unsecured senior notes contains certain financial restrictions and requirements, including (1) a leverage ratio not to exceed 60%, (2) a secured debt leverage ratio not to exceed 50%, (3) an interest coverage ratio of greater than 1.50, and (4) an unencumbered asset value of not less than 150% of unsecured debt.

At June 30, 2020, Boston Properties Limited Partnership was in compliance with each of these financial restrictions and requirements.

Commitments and Contingencies

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In connection with the refinancing of 767 Fifth Avenue’s (the General Motors Building) secured loan by the Company’s consolidated joint venture entity, 767 Venture, LLC, the Company guaranteed the consolidated entity’s obligation to fund various reserves for tenant improvement costs and allowances, leasing commissions and free rent obligations in lieu of cash deposits.

As of March 31, 2020 , the maximum funding obligation under the guarantee was approximately $ 57.1 million .

As of June 30, 2020, the maximum funding obligation under the guarantee was approximately $ 48.9 million.

The Company earns a fee from the joint venture for providing the guarantee and has an agreement with the outside partners to reimburse the joint venture for their share of any payments made under the guarantee.

As of March 31, 2020 , no amounts related to the guarantee are recorded as liabilities in the Company’s consolidated financial statements.

As of June 30, 2020, no amounts related to the guarantee are recorded as liabilities in the Company’s consolidated financial statements.

Pursuant to the lease agreement with Marriott, the Company has guaranteed the completion of the office building and parking garage on behalf of its 7750 Wisconsin Avenue joint venture and has also provided a financing guaranty as required with respect to the third-party construction financing.

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In addition, the Company entered into agreements with affiliates of The Bernstein Companies whereby the Company could be required to act as a mezzanine and/or mortgage lender and finance the construction of the hotel property.

An affiliate of The Bernstein Companies has exercised an option to borrow up to $ 15.0 million from the Company under such agreements.

As of March 31, 2020, no funding request has been received by the Company.

An affiliate of The Bernstein Companies exercised its option to borrow $ 10.0 million from the Company under such agreements, which financing was provided by the Company on June 1, 2020.

The financing

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bears interest at a fixed rate of 8.00 % per annum, compounded monthly, and matures on the fifth anniversary of the date on which the base building of the affiliate of The Bernstein Companies’ hotel property is substantially completed.

The financing is collateralized by a pledge of the partner’s equity interest in the joint venture that owns and is developing 7750 Wisconsin Avenue .

To secure such financing arrangements, affiliates of The Bernstein Companies are required to provide certain security, which varies depending on the specific loan, by pledges of their equity interest in the office property, a fee mortgage on the hotel property, or both.

As of March 31, 2020 , no amounts related to the contingent aspect of any of the guarantees are recorded as liabilities in the Company’s consolidated financial statements.

As of June 30, 2020, no amounts related to the contingent aspect of any of the guarantees are recorded as liabilities in the Company’s consolidated financial statements.

In connection with the sale and development of the Company’s 6595 Springfield Center Drive development project, the Company has guaranteed the completion of the project and the payment of certain cost overruns in accordance with the development management agreement with the buyer.

Although the project has been sold and the lease with the Federal Government tenant has been assigned to the buyer, pursuant to the terms of the Federal Government lease, the Federal Government tenant is not obligated to release the prior owner/landlord from such landlord’s obligations under the lease until completion of the construction.

As a result, the entity which previously

owned the land remains liable to the Federal Government tenant for the completion of the construction obligations under the lease.

As a result, the entity which previously owned the land remains liable to the Federal Government tenant for the completion of the construction obligations under the lease.

The buyer is obligated to fund the balance of the costs to meet such construction obligations, subject to the Company’s obligation to fund cost overruns (if any), as noted above.

An affiliate of the buyer has provided a guaranty of the obligations of the buyer to fund such construction costs and the buyer has agreed to use commercially reasonable efforts to require the construction lender to provide certain remedies to the Company in the event the buyer does not fund such construction obligations.

As of March 31, 2020 , no amounts related to the contingent aspect of the guarantee are recorded as a liability in the Company’s consolidated financial statements.

In connection with the redevelopment of the Company’s 325 Main Street property located in Cambridge, Massachusetts, the Company is required, pursuant to the local zoning ordinance, to commence construction of a residential building of at least 200,000 square feet with 25 % of the project designated as income-restricted (with a minimum of 20 % of the square footage devoted to home ownership units) prior to the occupancy of the 325 Main Street property.

As of June 30, 2020, no amounts related to the contingent aspect of the guarantee are recorded as a liability in the Company’s consolidated financial statements.

325 Main Street consisted of an approximately 115,000 net rentable square foot Class A office property that was demolished and is being developed into an approximately 420,000 net rentable square foot Class A office property, including approximately 41,000 net rentable square feet of retail space.

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Given the inherent uncertainties in bankruptcy proceedings, there can be no assurance as to the timing or amount of additional proceeds, if any, that the Company may ultimately realize on the remaining claim, whether by sale to a third party or by one or more distributions from the trustee.

Accordingly, the Company has not recorded any estimated recoveries associated with this gain contingency within its Consolidated Financial Statements at March 31, 2020 .

Accordingly, the Company has not recorded any estimated recoveries associated with this gain contingency within its Consolidated Financial Statements at June 30, 2020.

The Company’s property insurance program per occurrence limits are $ 1.0 billion for its portfolio insurance program, including coverage for acts of terrorism other than nuclear, biological, chemical or radiological terrorism (“Terrorism Coverage”).

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The per occurrence limit for NBCR Coverage is $ 1.0 billion.

Under TRIA, after the payment of the required deductible and coinsurance, the NBCR Coverage provided by IXP is backstopped by the Federal Government if the aggregate industry insured losses resulting from a certified act of terrorism exceed a “program trigger.” The program trigger is $ 200 million , the coinsurance is 20 % and the deductible is 20 % of the premiums earned by the insurer for the year prior to a claim.

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$ 200 million, the coinsurance is 20 % and the deductible is 20 % of the premiums earned by the insurer for the year prior to a claim.

If the Federal Government pays out for a loss under TRIA, it is mandatory that the Federal Government recoup the full amount of the loss from insurers offering TRIA coverage after the payment of the loss pursuant to a formula in TRIA.

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In addition, the amount of earthquake coverage could impact the Company’s ability to finance properties subject to earthquake risk.

The Company may discontinue

earthquake insurance or change the structure of its earthquake insurance program on some or all of its properties in the future if the premiums exceed the Company’s estimation of the value of the coverage.

The Company may discontinue earthquake insurance or change the structure of its earthquake insurance program on some or all of its properties in the future if the premiums exceed the Company’s estimation of the value of the coverage.

IXP, a captive insurance company which is a wholly-owned subsidiary of the Company, acts as a direct insurer with respect to a portion of the Company’s earthquake insurance coverage for its Greater San Francisco and Los Angeles properties and the Company’s NBCR Coverage.

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and interests in consolidated property partnerships not wholly-owned by the Company.

As of March 31, 2020 , the noncontrolling interests in Boston Properties Limited Partnership consisted of 16,421,888 OP Units, 1,343,299 LTIP Units (including 105,080 2012 OPP Units, 64,468 2013 MYLTIP Units, 23,100 2014 MYLTIP Units, 28,724 2015 MYLTIP Units, 89,791 2016 MYLTIP Units and 116,167 2017 MYLTIP Units), 336,195 2018 MYLTIP Units, 220,734 2019 MYLTIP Units and 203,278 2020 MYLTIP Units held by parties other than Boston Properties, Inc.

As of June 30, 2020, the noncontrolling interests in Boston Properties Limited Partnership consisted of 16,123,912 OP Units, 1,345,723 LTIP Units (including 105,080 2012 OPP Units, 64,468 2013 MYLTIP Units, 23,100 2014 MYLTIP Units, 24,966 2015 MYLTIP Units, 89,791 2016 MYLTIP Units and 116,078 2017 MYLTIP Units), 336,195 2018 MYLTIP Units, 220,325 2019 MYLTIP Units and 203,278 2020 MYLTIP Units held by parties other than Boston Properties, Inc.

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Noncontrolling Interest—Common Units

During the three months ended March 31, 2020 , 461,856 OP Units were presented by the holders for redemption (including 71,303 OP Units issued upon conversion of LTIP Units, 2012 OPP Units, 2013 MYLTIP Units, 2014 MYLTIP Units, 2016 MYLTIP Units and 2017 MYLTIP Units) and were redeemed by Boston Properties, Inc.

During the six months ended June 30, 2020, 764,640 OP Units were presented by the holders for redemption (including 82,551 O P Units issued upon conversion of LTIP Units, 2012 OPP Units and 2013 - 2017 MYLTIP Units) and were redeemed by Boston Properties, Inc.

in exchange for an equal number of shares of Common Stock.

At March 31, 2020 , Boston Properties Limited Partnership had outstanding 336,195 2018 MYLTIP Units, 220,734 2019 MYLTIP Units and 203,278 2020 MYLTIP Units.

At June 30, 2020, Boston Properties Limited Partnership had outstanding 336,195 2018 MYLTIP Units, 220,325 2019 MYLTIP Units and 203,278 2020 MYLTIP Units.

Prior to the applicable measurement date (February 5, 2021 for 2018 MYLTIP Units, February 4, 2022 for 2019 MYLTIP Units and February 3, 2023 for 2020 MYLTIP Units), holders of MYLTIP Units will be entitled to receive per unit distributions equal to one-tenth ( 10 %) of the regular quarterly distributions payable on an OP Unit, but will not be entitled to receive any special distributions.

After the measurement date, the number of MYLTIP Units, both vested and unvested, that MYLTIP award recipients

have earned, if any, based on the establishment of a performance pool, will be entitled to receive distributions in an amount per unit equal to distributions, both regular and special, payable on an OP Unit.

After the measurement date, the number of MYLTIP Units, both vested and unvested, that MYLTIP award recipients have earned, if any, based on the establishment of a performance pool, will be entitled to receive distributions in an amount per unit equal to distributions, both regular and special, payable on an OP Unit.

On February 6, 2020, the measurement period for the Company’s 2017 MYLTIP awards ended and, based on Boston Properties, Inc.’s relative TSR performance, the final awards were determined to be 83.8 % of target or an aggregate of approximately $ 17.6 million (after giving effect to employee separations).

As a result, an aggregate of 270,942 2017 MYLTIP Units that had been previously granted were automatically forfeited.

The following table presents Boston Properties Limited Partnership’s distributions on the OP Units and LTIP Units (including the 2012 OPP Units, 2013 - 2016 MYLTIP Units and, after the February 6, 2020 measurement date, the 2017 MYLTIP Units) and its distributions on the 2017 MYLTIP Units (prior to the February 6, 2020 measurement date), 2018 MYLTIP Units, 2019 MYLTIP Units and 2020 MYLTIP Units (after the February 4, 2020 issuance date) that occurred during the three months ended March 31, 2020 :

Distributions per OP Unit and LTIP Unit

Distributions per MYLTIP Unit

March 31, 2020

April 30, 2020

December 31, 2019

January 30, 2020

The following table presents Boston Properties Limited Partnership’s distributions on the OP Units and LTIP Units (including the 2012 OPP Units, 2013 - 2015 MYLTIP Units and, after the February 9, 2019 measurement date, the 2016 MYLTIP Units) and its distributions on the 2016 MYLTIP Units (prior to the February 9, 2019 measurement date), 2017 MYLTIP Units, 2018 MYLTIP Units and 2019 MYLTIP Units (after the February 5, 2019 issuance date) that occurred during the three months ended March 31, 2019 :

Distributions per OP Unit and LTIP Unit

Distributions per MYLTIP Unit

March 29, 2019

April 30, 2019

December 31, 2018

January 30, 2019

Record Date Payment Date Distributions per OP Unit and LTIP Unit Distributions per MYLTIP Unit

June 30, 2020 July 31, 2020 $ 0.98 $ 0.098

March 31, 2020 April 30, 2020 $ 0.98 $ 0.098

December 31, 2019 January 30, 2020 $ 0.98 $ 0.098

Record Date Payment Date Distributions per OP Unit and LTIP Unit Distributions per MYLTIP Unit

June 28, 2019 July 31, 2019 $ 0.95 $ 0.095

March 29, 2019 April 30, 2019 $ 0.95 $ 0.095

December 31, 2018 January 30, 2019 $ 0.95 $ 0.095

A holder of an OP Unit may present the OP Unit to Boston Properties Limited Partnership for redemption at any time (subject to restrictions agreed upon at the time of issuance of OP Units to particular holders that may restrict such redemption right for a period of time, generally one year from issuance).

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The value of the OP Units (not owned by Boston Properties, Inc.

and LTIP Units (including the 2012 OPP Units, 2013 - 2017 MYLTIP Units) assuming that all conditions had been met for the conversion thereof) had all of such units been redeemed at March 31, 2020 was approximately $ 1.6 billion based on the last reported price of a share of Common Stock on the New York Stock Exchange of $ 92.23 per share on March 31, 2020 .

and LTIP Units (including the 2012 OPP Units, 2013 - 2017 MYLTIP Units) assuming that all conditions had been met for the conversion thereof) had all of such units been redeemed at June 30, 2020 was approximately $ 1.6 billion based on the last reported price of a share of Common Stock on the New York Stock Exchange of $ 90.38 per share on June 30, 2020.

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Noncontrolling Interests—Property Partnerships

The noncontrolling interests in property partnerships consist of the outside equity interests in ventures that are consolidated with the financial results of the Company because the Company exercises control over the entities that own the properties.

The equity interests in these ventures that are not owned by the Company, totaling approximately $ 1.7 billion at March 31, 2020 and December 31, 2019 , are included in Noncontrolling Interests—Property Partnerships on the accompanying Consolidated Balance Sheets.

The equity interests in these ventures that are not owned by the Company, totaling approximately $ 1.7 billion at June 30, 2020 and December 31, 2019, are included in Noncontrolling Interests—Property Partnerships on the accompanying Consolidated Balance Sheets.

Stockholders’ Equity / Partners’ Capital

Boston Properties, Inc.

As of March 31, 2020 , Boston Properties, Inc.

As of June 30, 2020, Boston Properties, Inc.

had 155,622,286 shares of Common Stock outstanding.

As of March 31, 2020 , Boston Properties, Inc.

As of June 30, 2020, Boston Properties, Inc.

owned 1,730,919 general partnership units and 153,891,367 limited partnership units in Boston Properties Limited Partnership.

On June 2, 2017, Boston Properties, Inc.

On May 22, 2020, Boston Properties, Inc.

renewed its “at the market” (“ATM”) stock offering program through which it may sell from time to time up to an aggregate of $ 600.0 million of its Common Stock through sales agents over a three -year period.

This program replaced the Company’s prior $ 600.0 million ATM stock offering program that was scheduled to expire on June 3, 2017.

The Company intends to use the net proceeds from any offering for general business purposes, which may include investment opportunities and debt reduction.

Under the ATM stock offering program, Boston Properties, Inc.

may also engage in forward sale transactions with affiliates of certain sales agents for the sale of its Common Stock on a forward basis.

This program replaced Boston Properties, Inc.’s prior $ 600.0 million ATM stock offering program that was scheduled to expire on June 2, 2020.

Boston Properties, Inc.

intends to use the net proceeds from any offering for general business purposes, which may include investment opportunities and debt reduction.

No shares of Common Stock have been issued under this ATM stock offering program.

During the three months ended March 31, 2020 , Boston Properties, Inc.

During the six months ended June 30, 2020, Boston Properties, Inc.

issued 43,792 shares of Common Stock upon the exercise of options to purchase Common Stock.

During the three months ended March 31, 2020 , Boston Properties, Inc.

During the six months ended June 30, 2020, Boston Properties, Inc.

issued 764,640 shares of Common Stock, in connection with the redemption of an equal number of redeemable OP Units from limited partners.

The following table presents Boston Properties, Inc.’s dividends per share and Boston Properties Limited Partnership’s distributions per OP Unit and LTIP Unit paid or declared in 2020 and during the three months ended March 31, 2019 :

Dividend (Per Share)

Distribution (Per Unit)

March 31, 2020

April 30, 2020

December 31, 2019

January 30, 2020

March 29, 2019

April 30, 2019

December 31, 2018

January 30, 2019

Record Date Payment Date Dividend (Per Share) Distribution (Per Unit)

June 30, 2020 July 31, 2020 $ 0.98 $ 0.98

March 31, 2020 April 30, 2020 $ 0.98 $ 0.98

December 31, 2019 January 30, 2020 $ 0.98 $ 0.98

June 28, 2019 July 31, 2019 $ 0.95 $ 0.95

March 29, 2019 April 30, 2019 $ 0.95 $ 0.95

December 31, 2018 January 30, 2019 $ 0.95 $ 0.95

Preferred Stock

As of March 31, 2020 , Boston Properties, Inc.

As of June 30, 2020, Boston Properties, Inc.

had 80,000 shares ( 8,000,000 depositary shares each representing 1/100th of a share) outstanding of its 5.25 % Series B Cumulative Redeemable Preferred Stock with a liquidation preference of $ 2,500.00 per share ($ 25.00 per depositary share).

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or its affiliates.

The following table presents Boston Properties Inc.’s dividends per share on its outstanding Series B Preferred Stock paid or declared during 2020 and during the three months ended March 31, 2019 :

Dividend (Per Share)

February 4, 2020

February 18, 2020

February 4, 2019

February 15, 2019

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The following table presents Boston Properties Inc.’s dividends per share on its outstanding Series B Preferred Stock paid or declared during 2020 and during the six months ended June 30, 2019:

Record Date Payment Date Dividend (Per Share)

August 3, 2020 August 17, 2020 $ 32.8125

May 1, 2020 May 15, 2020 $ 32.8125

February 4, 2020 February 18, 2020 $ 32.8125

August 2, 2019 August 15, 2019 $ 32.8125

May 3, 2019 May 15, 2019 $ 32.8125

February 4, 2019 February 15, 2019 $ 32.8125

Earnings Per Share / Common Unit

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common shareholders by the weighted-average number of common shares outstanding during the period.

Unvested share-based payment

awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are also participating securities.

Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are also participating securities.

As such, unvested restricted common stock of Boston Properties, Inc.

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Other potentially dilutive common shares, including stock options, restricted stock and other securities of Boston Properties Limited Partnership that are exchangeable for Boston Properties, Inc.’s Common Stock, and the related impact on earnings, are considered when calculating diluted EPS.

Three months ended March 31, 2020

(Denominator)

Three months ended June 30, 2020

(Numerator) Shares

(Denominator) Per Share

(in thousands, except for per share amounts)

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common shareholders

$ 266,525 155,386 $ 1.72

Allocation of undistributed earnings to participating securities

( 336 ) — ( 0.01 )

Net income attributable to Boston Properties, Inc.

common shareholders

$ 266,189 155,386 $ 1.71

Effect of Dilutive Securities:

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common shareholders

Three months ended March 31, 2019

(Denominator)

$ 266,189 155,407 $ 1.71

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Three months ended June 30, 2019

(Numerator) Shares

(Denominator) Per Share

(in thousands, except for per share amounts)

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common shareholders

$ 164,318 154,555 $ 1.06

Allocation of undistributed earnings to participating securities

Net income attributable to Boston Properties, Inc.

common shareholders

$ 164,270 154,555 $ 1.06

Effect of Dilutive Securities:

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common shareholders

$ 164,270 154,874 $ 1.06

Six months ended June 30, 2020

(Numerator) Shares

(Denominator) Per Share

(in thousands, except for per share amounts)

Basic Earnings:

Net income attributable to Boston Properties, Inc.

common shareholders

$ 764,232 155,199 $ 4.92

Allocation of undistributed earnings to participating securities

( 1,344 ) — —

Net income attributable to Boston Properties, Inc.

common shareholders

$ 762,888 155,199 $ 4.92

Effect of Dilutive Securities:

Stock Based Compensation

— 134 ( 0.01 )

Diluted Earnings:

Net income attributable to Boston Properties, Inc.

common shareholders

$ 762,888 155,333 $ 4.91

Six months ended June 30, 2019

(Numerator) Shares

(Denominator) Per Share

(in thousands, except for per share amounts)

Basic Earnings:

Net income attributable to Boston Properties, Inc.

common shareholders

$ 262,431 154,540 $ 1.70

Effect of Dilutive Securities:

Stock Based Compensation

— 319 ( 0.01 )

Diluted Earnings:

Net income attributable to Boston Properties, Inc.

common shareholders

$ 262,431 154,859 $ 1.69

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Boston Properties Limited Partnership

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Other potentially dilutive common units and the related impact on earnings are considered when calculating diluted earnings per common unit.

Included in the number of units (the denominator) below are approximately 17,538,000 and 17,606,000 redeemable common units for the three months ended March 31, 2020 and 2019 , respectively.

Three months ended March 31, 2020

(Denominator)

Included in the number of units (the denominator) below are approximately 17,273,000 and 17,647,000 redeemable common units for the three months ended June 30, 2020 and 2019, respectively, and 17,405,000 and 17,627,000 redeemable common units for the six months ended June 30, 2020 and 2019, respectively.

Three months ended June 30, 2020

(Numerator) Units

(Denominator) Per Unit

(in thousands, except for per unit amounts)

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Net income attributable to Boston Properties Limited Partnership common unitholders

$ 301,975 172,659 $ 1.75

Allocation of undistributed earnings to participating securities

Net income attributable to Boston Properties Limited Partnership common unitholders

$ 301,601 172,659 $ 1.75

Effect of Dilutive Securities:

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Net income attributable to Boston Properties Limited Partnership common unitholders

Three months ended March 31, 2019

(Denominator)

$ 301,601 172,680 $ 1.75

Three months ended June 30, 2019

(Numerator) Units

(Denominator) Per Unit

(in thousands, except for per unit amounts)

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Net income attributable to Boston Properties Limited Partnership common unitholders

$ 185,715 172,202 $ 1.08

Allocation of undistributed earnings to participating securities

Net income attributable to Boston Properties Limited Partnership common unitholders

$ 185,661 172,202 $ 1.08

Effect of Dilutive Securities:

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Net income attributable to Boston Properties Limited Partnership common unitholders

$ 185,661 172,521 $ 1.08

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Six months ended June 30, 2020

(Numerator) Units

(Denominator) Per Unit

(in thousands, except for per unit amounts)

Basic Earnings:

Net income attributable to Boston Properties Limited Partnership common unitholders

$ 868,308 172,604 $ 5.03

Allocation of undistributed earnings to participating securities

( 1,495 ) — ( 0.01 )

Net income attributable to Boston Properties Limited Partnership common unitholders

$ 866,813 172,604 $ 5.02

Effect of Dilutive Securities:

Stock Based Compensation

Diluted Earnings:

Net income attributable to Boston Properties Limited Partnership common unitholders

$ 866,813 172,738 $ 5.02

Six months ended June 30, 2019

(Numerator) Units

(Denominator) Per Unit

(in thousands, except for per unit amounts)

Basic Earnings:

Net income attributable to Boston Properties Limited Partnership common unitholders

$ 299,097 172,167 $ 1.74

Effect of Dilutive Securities:

Stock Based Compensation

— 319 ( 0.01 )

Diluted Earnings:

Net income attributable to Boston Properties Limited Partnership common unitholders

$ 299,097 172,486 $ 1.73

Stock Option and Incentive Plan

On February 4, 2020, Boston Properties, Inc.’s Compensation Committee approved the 2020 MYLTIP awards under the Boston Properties, Inc.’s 2012 Stock Option and Incentive Plan (the “2012 Plan”) to certain officers and employees of Boston Properties, Inc.

The 2020 MYLTIP awards utilize Boston Properties, Inc.’s TSR over a three-

year measurement period, on an annualized, compounded basis, as the performance metric.

Earned awards will be based on Boston Properties, Inc.’s TSR relative to the FTSE Russell Nareit Office Index, adjusted to include Vornado Realty Trust.

On February 4, 2020, Boston Properties, Inc.’s Compensation Committee granted the 2020 MYLTIP awards under the Boston Properties, Inc.’s 2012 Stock Option and Incentive Plan (the “2012 Plan”) to certain officers and employees of Boston Properties, Inc.

The 2020 MYLTIP awards utilize Boston Properties, Inc.’s TSR over a three-year measurement period, on an annualized, compounded basis, as the performance metric.

Earned awards will range from zero to a maximum of 203,278 LTIP Units depending on Boston Properties, Inc.’s TSR relative to the FTSE Russell Nareit Office Index, adjusted to include Vornado Realty Trust, with a target of approximately 101,638 LTIP Units and linear interpolation between zero and maximum.

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As a result, an aggregate of 270,942 2017 MYLTIP Units that had been previously granted were automatically forfeited.

During the three months ended March 31, 2020 , Boston Properties, Inc.

issued 24,503 shares of restricted common stock and Boston Properties Limited Partnership issued 196,927 LTIP Units and 203,278 2020 MYLTIP Units to employees under the 2012 Plan.

Employees paid $ 0.01 per share of restricted common stock and $ 0.25 per LTIP Unit and 2020 MYLTIP Unit.

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During the six months ended June 30, 2020, Boston Properties, Inc.

issued 29,630 shares of restricted common stock and Boston Properties Limited Partnership issued 207,181 LTIP Units and 203,278 2020 MYLTIP Units to employees and non-employee directors under the 2012 Plan.

Employees and non-employee directors paid $ 0.01 per share of restricted common stock and $ 0.25 per LTIP Unit and 2020 MYLTIP Unit.

When issued, LTIP Units are not economically equivalent in value to a share of Common Stock, but over time can increase in value to one-for-one parity with Common Stock if there is sufficient appreciation in the value of the Company’s assets.

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and Boston Properties Limited Partnership.

A substantial majority of the grants of restricted common stock and LTIP Units to employees vest in four equal annual installments.

A majority of the grants of restricted common stock and LTIP Units to employees vest in four equal annual installments.

Restricted common stock is measured at fair value on the date of grant based on the number of shares granted and the closing price of Boston Properties, Inc.’s Common Stock on the date of grant as quoted on the New York Stock Exchange.

Such value is recognized as an expense ratably over the corresponding employee service period.

The shares of restricted common stock granted during the three months ended March 31, 2020 were valued at approximately $ 3.5 million ( $ 143.45 per share weighted-average).

The shares of restricted common stock granted during the six months ended June 30, 2020 were valued at approximately $ 4.0 million ($ 133.81 per share weighted-average).

The LTIP Units granted were valued at approximately $ 26.3 million (approximately $ 127.14 per unit weighted-average fair value) using a Monte Carlo simulation method model.

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an expected life of 5.7 years, a risk-free interest rate of 1.47 % and an expected price volatility of 18.0 %.

Because the 2012 OPP Units, 2013 MYLTIP Units, 2014 MYLTIP Units, 2015 MYLTIP Units, 2016 MYLTIP Units, 2017 MYLTIP Units, 2018 MYLTIP Units, 2019 MYLTIP Units and 2020 MYLTIP Units are subject to both a service condition and a market condition, the Company recognizes the related compensation expense under the graded vesting attribution method.

Because the 2012 OPP Units and 2013 - 2020 MYLTIP Units are subject to both a service condition and a market condition, the Company recognizes the related compensation expense under the graded vesting attribution method.

Under the graded vesting attribution method, each portion of the award that vests at a different date is accounted for as a separate award and recognized over the period appropriate to that portion so that the compensation cost for each portion should be recognized in full by the time that portion vests.

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Dividends paid on both vested and unvested shares of restricted stock are charged directly to Dividends in Excess of Earnings in Boston Properties, Inc.’s Consolidated Balance Sheets and Partners’ Capital in Boston Properties Limited Partnership’s Consolidated Balance Sheets.

Aggregate stock-based compensation expense associated with restricted stock, LTIP Units, 2016 MYLTIP Units, 2017 MYLTIP Units, 2018 MYLTIP Units, 2019 MYLTIP Units and 2020 MYLTIP Units was approximately $ 17.2 million and $ 14.8 million for the three months ended March 31, 2020 and 2019 , respectively.

At March 31, 2020 , there was (1) an aggregate of approximately $ 42.2 million of unrecognized compensation expense related to unvested restricted stock, LTIP Units and 2017 MYLTIP Units and (2) an aggregate of approximately $ 19.8 million of unrecognized compensation expense related to unvested 2018 MYLTIP Units, 2019 MYLTIP Units and 2020 MYLTIP Units that is expected to be recognized over a weighted-average period of approximately 2.6 years.

Aggregate stock-based compensation expense associated with restricted stock, LTIP Units and 2016 - 2020 MYLTIP Units was approximately $ 10.1 million and $ 10.1 million for the three months ended June 30, 2020 and 2019, respectively, and $ 27.3 million and $ 24.9 million for the six months ended June 30, 2020 and 2019, respectively.

At June 30, 2020, there was (1) an aggregate of approximately $ 37.1 million of unrecognized compensation expense related to unvested restricted stock, LTIP Units and 2017 MYLTIP Units and (2) an aggregate of approximately $ 15.3 million of unrecognized compensation expense related to unvested 2018 - 2020 MYLTIP Units that is expected to be recognized over a weighted-average period of approximately 2.4 years.

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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, 2020 and 2019 .

Boston Properties, Inc.

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

2020 2019 2020 2019

(in thousands)

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common shareholders

$ 266,525 $ 164,318 $ 764,232 $ 262,431

Preferred dividends 2,625 2,625 5,250 5,250

Noncontrolling interest—common units of the Operating Partnership

30,197 19,036 87,525 30,627

Noncontrolling interests in property partnerships ( 767 ) 17,482 18,719 36,312

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Payroll and related costs from management services contracts

2,484 2,403 5,721 5,798

General and administrative expense 37,743 35,071 74,197 76,833

Net operating income attributable to noncontrolling interests in property partnerships

32,427 45,562 80,088 92,647

Gains (losses) from investments in securities 4,552 1,165 ( 893 ) 4,134

Interest and other income

Gains (losses) on sales of real estate

Income (loss) from unconsolidated joint ventures

Interest and other income (loss) 1,305 3,615 4,322 7,368

Gains on sales of real estate 203,767 1,686 613,932 781

Income from unconsolidated joint ventures 1,832 47,964 1,463 48,177

Direct reimbursements of payroll and related costs from management services contracts

2,484 2,403 5,721 5,798

Development and management services revenue 8,125 9,986 16,004 19,263

Company’s share of Net Operating Income $ 397,888 $ 433,454 $ 850,638 $ 859,433

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Boston Properties Limited Partnership

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

2020 2019 2020 2019

(in thousands)

Net income attributable to Boston Properties Limited Partnership common unitholders

$ 301,975 $ 185,715 $ 868,308 $ 299,097

Preferred distributions 2,625 2,625 5,250 5,250

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Payroll and related costs from management services contracts

2,484 2,403 5,721 5,798

General and administrative expense 37,743 35,071 74,197 76,833

Net operating income attributable to noncontrolling interests in property partnerships

32,427 45,562 80,088 92,647

Gains (losses) from investments in securities 4,552 1,165 ( 893 ) 4,134

Interest and other income

Gains (losses) on sales of real estate

Income (loss) from unconsolidated joint ventures

Interest and other income (loss) 1,305 3,615 4,322 7,368

Gains on sales of real estate 207,241 1,835 626,895 930

Income from unconsolidated joint ventures 1,832 47,964 1,463 48,177

Direct reimbursements of payroll and related costs from management services contracts

2,484 2,403 5,721 5,798

Development and management services revenue 8,125 9,986 16,004 19,263

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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 dividends/distributions, 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) gains (losses) from investments in securities, interest and other income, gains (losses) 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.

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 dividends/distributions, 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) gains (losses) from investments in securities, interest and other income (loss), gains on sales of real estate, income 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.

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NOI presented by the Company may not be comparable to NOI reported by other REITs or real estate companies that define NOI differently.

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 sale of real estate from unconsolidated joint ventures, which is included within Income (Loss) From Unconsolidated Joint Ventures in the Company’s Consolidated Statements of Operations.

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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 sale of real estate from unconsolidated joint ventures, which is 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.

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Therefore, depreciation and amortization expense is not allocated among segments.

Preferred dividends/distributions, interest expense, impairment loss, 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, gains (losses) 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.

Preferred dividends/distributions, interest expense, impairment loss, 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, 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.

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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 shown as a reduction to lease revenue.

The degree to which our commercial and retail tenants’ and parking operators’ businesses are or will continue to be negatively impacted by the ongoing COVID-19 pandemic by measures intended to reduce its spread, such as mandatory business closures and “stay-at-home” orders, could result in a reduction in the Company’s cash flows or require that the Company write-off a tenant’s accrued rent balance, and this could have a material adverse effect on lease revenue and thus the results of the Company’s Office property type.

In addition, as a result of COVID-19, the Boston Marriott Cambridge was closed in March 2020.

The Company is uncertain as to when the hotel will re-open, and the continued closure is expected to have a material impact on the hotel’s operations and thus the results of the Company’s Hotel property type.

“Risk Factors” for additional details.

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 and six months ended June 30, 2020, the Company wrote off approximately $ 35.9 million and $ 37.4 million, respectively, related to accrued rent balances and approximately $ 18.0 million and $ 18.9 million, respectively, related to accounts receivable balances.

In addition, parking and other revenue for the three and six months ended June 30, 2020 decreased by approximately $ 12.4 million and $ 12.8 million, respectively, compared to 2019.

These decreases were primarily in transient and monthly parking revenue.

The degree to which the Company’s commercial and retail tenants’ and parking operators’ businesses are, or will continue to be, negatively impacted by COVID-19, including by measures intended to reduce its spread, such as mandatory business closures and “stay-at-home” orders, could result in a reduction in the Company’s cash flows or require that the Company write off additional accrued rent and/or accounts receivable balances, and this could have a material adverse effect on lease revenue and thus the results of the Company’s Office property type.

The Boston Marriott Cambridge closed in March 2020 and did not re-open during the second quarter.

The Company is uncertain as to when the hotel will re-open.

The hotel is operating at a monthly deficit and its continued closure has had, and will continue to have, a material adverse impact on the hotel’s operations and thus the results of the Company’s Hotel property type.

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

For the three months ended March 31, 2020 :

San Francisco

Washington, DC

For the three months ended June 30, 2020:

Boston Los Angeles New York San Francisco Washington, DC Total

Rental Revenue:

Office $ 218,351 $ — $ 204,242 $ 128,233 $ 83,837 $ 634,663

Residential 3,401 — — — 6,001 9,402

Hotel 99 — — — — 99

Total 221,851 — 204,242 128,233 89,838 644,164

% of Grand Totals 34.43 % — % 31.71 % 19.91 % 13.95 % 100.00 %

Rental Expenses:

Office 75,694 — 88,367 39,081 32,680 235,822

Residential 1,235 — — — 2,730 3,965

Hotel 1,973 — — — — 1,973

Total 78,902 — 88,367 39,081 35,410 241,760

% of Grand Totals 32.64 % — % 36.54 % 16.17 % 14.65 % 100.00 %

Net operating income

$ 142,949 $ — $ 115,875 $ 89,152 $ 54,428 $ 402,404

% of Grand Totals 35.52 % — % 28.80 % 22.15 % 13.53 % 100.00 %

Net operating income attributable to noncontrolling interests in property partnerships

( 10,576 ) — ( 21,851 ) — — ( 32,427 )

Company’s share of net operating income from unconsolidated joint ventures

2,627 15,026 815 4,127 5,316 27,911

Company’s share of net operating income

$ 135,000 $ 15,026 $ 94,839 $ 93,279 $ 59,744 $ 397,888

% of Grand Totals 33.92 % 3.78 % 23.84 % 23.44 % 15.02 % 100.00 %

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(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, 2019 :

San Francisco

Washington, DC

Table of Content s

For the three months ended June 30, 2019:

Boston Los Angeles New York San Francisco Washington, DC Total

Rental Revenue:

Office $ 217,961 $ — $ 251,556 $ 131,506 $ 96,486 $ 697,509

Residential 3,222 — — — 5,777 8,999

Hotel 14,844 — — — — 14,844

Total 236,027 — 251,556 131,506 102,263 721,352

% of Grand Totals 32.72 % — % 34.87 % 18.23 % 14.18 % 100.00 %

Rental Expenses:

Office 77,660 — 96,809 43,708 35,672 253,849

Residential 1,279 — — — 2,843 4,122

Hotel 9,080 — — — — 9,080

Total 88,019 — 96,809 43,708 38,515 267,051

% of Grand Totals 32.96 % — % 36.25 % 16.37 % 14.42 % 100.00 %

Net operating income

$ 148,008 $ — $ 154,747 $ 87,798 $ 63,748 $ 454,301

% of Grand Totals 32.58 % — % 34.06 % 19.33 % 14.03 % 100.00 %

Net operating income attributable to noncontrolling interests in property partnerships

( 10,031 ) — ( 35,531 ) — — ( 45,562 )

Company’s share of net operating income from unconsolidated joint ventures

818 15,454 1,696 — 6,747 24,715

Company’s share of net operating income

$ 138,795 $ 15,454 $ 120,912 $ 87,798 $ 70,495 $ 433,454

% of Grand Totals 32.01 % 3.57 % 27.90 % 20.26 % 16.26 % 100.00 %

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For the six months ended June 30, 2020:

Boston Los Angeles New York San Francisco Washington, DC Total

Rental Revenue:

Office $ 457,849 $ — $ 459,528 $ 264,972 $ 176,973 $ 1,359,322

Residential 7,469 — — — 11,889 19,358

Hotel 6,924 — — — — 6,924

Total 472,242 — 459,528 264,972 188,862 1,385,604

% of Grand Totals 34.09 % — % 33.16 % 19.12 % 13.63 % 100.00 %

Rental Expenses:

Office 158,239 — 187,507 81,650 67,328 494,724

Residential 2,575 — — — 5,454 8,029

Hotel 8,794 — — — — 8,794

Total 169,608 — 187,507 81,650 72,782 511,547

% of Grand Totals 33.16 % — % 36.65 % 15.96 % 14.23 % 100.00 %

Net operating income

$ 302,634 $ — $ 272,021 $ 183,322 $ 116,080 $ 874,057

% of Grand Totals 34.63 % — % 31.12 % 20.97 % 13.28 % 100.00 %

Net operating income attributable to noncontrolling interests in property partnerships

( 21,239 ) — ( 58,849 ) — — ( 80,088 )

Company’s share of net operating income from unconsolidated joint ventures

5,726 30,956 1,571 7,286 11,130 56,669

Company’s share of net operating income

$ 287,121 $ 30,956 $ 214,743 $ 190,608 $ 127,210 $ 850,638

% of Grand Totals 33.76 % 3.64 % 25.24 % 22.41 % 14.95 % 100.00 %

_______________

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For the six months ended June 30, 2019:

Boston Los Angeles New York San Francisco Washington, DC Total

Rental Revenue:

Office $ 435,372 $ — $ 510,187 $ 255,561 $ 192,831 $ 1,393,951

Residential 5,923 — — — 10,791 16,714

Hotel 23,782 — — — — 23,782

Total 465,077 — 510,187 255,561 203,622 1,434,447

% of Grand Totals 32.42 % — % 35.56 % 17.82 % 14.20 % 100.00 %

Rental Expenses:

Office 157,160 — 193,780 84,833 71,819 507,592

Residential 2,485 — — — 5,411 7,896

Hotel 16,943 — — — — 16,943

Total 176,588 — 193,780 84,833 77,230 532,431

% of Grand Totals 33.17 % — % 36.39 % 15.93 % 14.51 % 100.00 %

Net operating income

$ 288,489 $ — $ 316,407 $ 170,728 $ 126,392 $ 902,016

% of Grand Totals 31.98 % — % 35.08 % 18.93 % 14.01 % 100.00 %

Net operating income attributable to noncontrolling interests in property partnerships

( 19,404 ) — ( 72,795 ) ( 448 ) — ( 92,647 )

Company’s share of net operating income from unconsolidated joint ventures

1,590 31,162 3,482 — 13,830 50,064

Company’s share of net operating income

$ 270,675 $ 31,162 $ 247,094 $ 170,280 $ 140,222 $ 859,433

% of Grand Totals 31.49 % 3.63 % 28.75 % 19.81 % 16.32 % 100.00 %

_______________

Subsequent Events

There are many uncertainties regarding COVID-19, and the Company is closely monitoring the impact of the pandemic on all aspects of its business, including how it will impact its tenants, employees, contractors, lenders, suppliers, vendors and joint venture partners.

The Company is unable to predict the impact that COVID-19 will have on its future financial position and operating results due to numerous uncertainties.

The Company has received requests from many of its retail and some of its office tenants seeking either rent concessions, deferrals, rent abatements related to lease provision interpretations, or other relief, in each case, as a result of COVID-19.

The Company is evaluating these requests on a case-by-case basis and is considering a number of factors to determine the appropriate response.

The Company expects to continue to assess the evolving impact of COVID-19 and intends to make adjustments to its responses accordingly.

On April 22, 2020, a joint venture in which the Company has a 20 % interest extended the mortgage loan collateralized by Metropolitan Square located in Washington, DC.

At the time of the extension, the outstanding balance of the loan totaled approximately $ 156.4 million and was scheduled to mature on May 5, 2020.

The extended loan continues to bear interest at a fixed rate of 5.75 % per annum and matures on August 5, 2020.

Metropolitan Square is a Class A office property with approximately 654,000 net rentable square feet.

On May 5, 2020, Boston Properties Limited Partnership completed a public offering of $ 1.25 billion in aggregate principal amount of its 3.250 % unsecured senior notes due 2031.

The notes were priced at 99.850 % of the principal amount to yield an effective rate (including financing fees) of approximately 3.343 % per annum to maturity.

The notes will mature on January 30, 2031, unless earlier redeemed.

The aggregate net proceeds from the offering were approximately $ 1.24 billion after deducting underwriting discounts and estimated transaction expenses.

On July 23, 2020, the Company acquired a 50 % interest in a joint venture entity that owns Beach Cities Media Center, a 6.4 -acre parcel of land located in El Segundo, California, for a purchase price of approximately $ 21.2 million.

Beach Cities Media Center is expected to support the development of approximately 275,000 square feet of Class A office space.

Table of Content s

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements