What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2020-11-06 compared with 2020-08-07 · 514 added, 551 removed, 1153 unchanged (48% of the section changed)

22 unchanged sentences

• the ability of our joint venture partners to satisfy their obligations;

Table of Content s

Table of Conte n ts

• risks and uncertainties affecting property development and construction (including, without limitation, construction delays, increased construction costs, cost overruns, inability to obtain necessary permits, tenant accounting considerations that may result in negotiated lease provisions that limit a tenant’s liability during construction, and public opposition to such activities);

20 unchanged sentences

We expressly disclaim any responsibility to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events, or otherwise, and you should not rely upon these forward-looking statements after the date of this report.

BXP is one of the largest publicly-traded office real estate investment trusts (REIT) in the United States (based on total market capitalization as of June 30, 2020) that develops, owns and manages primarily Class A office properties concentrated in five markets in the United States - Boston, Los Angeles, New York, San Francisco and Washington, DC.

BXP is one of the largest publicly-traded office real estate investment trusts (REITs) in the United States (based on total market capitalization as of September 30, 2020) that develops, owns and manages primarily Class A office properties concentrated in five markets in the United States - Boston, Los Angeles, New York, San Francisco and Washington, DC.

BPLP is the entity through which BXP conducts substantially all of its business and owns (either directly or through subsidiaries) substantially all of its assets.

1 unchanged sentence

When making leasing decisions, we consider, among other things, the creditworthiness of the tenant, the length of the lease, the rental rate to be paid at inception and throughout the

Table of Content s

Table of Conte n ts

lease term, the costs of tenant improvements and other landlord concessions, anticipated operating expenses and real estate taxes, current and anticipated vacancy, current and expected future demand for the space, the impact of any expansion rights and general economic factors.

Our core strategy has always been to develop, acquire and manage high-quality properties in supply-constrained markets with high barriers-to-entry and to focus on executing long-term leases with financially strong tenants.

Our tenant base is diverse across market sectors and the weighted-average lease term for our in-place leases was approximately 8.2 years, as of June 30, 2020, including leases at our unconsolidated joint ventures.

Our tenant base is diverse across market sectors and the weighted-average lease term for our in-place leases was approximately 7.5 years, as of September 30, 2020, including leases at our unconsolidated joint ventures.

The weighted-average lease term for our top 20 office tenant leases was approximately 10.8 years.

7 unchanged sentences

• our relationships with local brokers.

In the second quarter of 2020, macroeconomic conditions continued to be negatively impacted by the COVID-19 pandemic and the resulting economic slowdown.

Businesses across the U.S.

experienced significant job losses and other recessionary effects as U.S.

GDP fell 33% from April through June 2020.

As the number of unemployment claims rose and the economy slowed, the Federal Reserve continued its aggressive monetary and fiscal stimulus policies implemented in the first quarter and maintained the federal funds rate between 0% and 0.25%.

The effects of COVID-19 continued to negatively impact us and our tenants during the second quarter of 2020.

Although governments in some of our regions began easing their social distancing and stay-at-home policies later in the second quarter, the physical occupancy of our properties remained low as employees of our tenants adhered to their local government restrictions and their employers’ protocols for working from home during the pandemic.

Despite the pandemic-related slowdown in the quarter, we signed more than 940,000 square feet of leases and renewals during the second quarter, including a large 400,000 square foot lease in Reston, Virginia with Microsoft Corporation.

However, while leasing discussions remained active for leases that were in negotiation prior to COVID-19 and some long-range space planning continued, we have experienced a decrease in new leasing activity as existing and prospective tenants are focused on their employees’ safety and on the uncertainty of the impact of the economic shutdown on their businesses.

As a result, there continues to be minimal new leasing transactions except in the instances where tenants have a near-term expiration.

In the third quarter of 2020, the COVID-19 pandemic continued to negatively impact global macroeconomic conditions, and businesses across the United States experienced job losses and other recessionary effects.

Although U.S.

GDP improved 33% on an annualized basis in the third quarter of 2020 as compared to the 31% decline in the second quarter of 2020, the pace of improvement has slowed.

The federal stimulus programs that provided much of the economic lift last quarter have either expired or are expiring, and it is unclear if additional fiscal stimulus will be forthcoming.

economic recovery remains heavily impacted by the pandemic.

The health of the overall economy and employment trends among professional workers have been, and we expect will continue to be, one of the most important drivers of office market conditions.

Beginning in March 2020, public health officials and governmental authorities, including those in all of the markets in which we operate, reacted to the spread of the COVID-19 pandemic by imposing regulatory measures such as prohibiting people from congregating in heavily populated areas, instituting quarantines, restricting travel, issuing “stay-at-home” orders, restricting the types of businesses that could continue to operate (including the types of construction projects that could proceed) and closing schools, among many others.

Although the state and local authorities in all of our regions except Los Angeles and New Jersey have eased those regulations to allow for the return to work, the physical occupancy of our properties remains well below capacity as most employers continued their COVID-19 response protocols and encouraged employees to work from home when possible during the pandemic.

The short and long term impact the pandemic will have on the use of office space is unknown as companies consider the recessionary impact on their business and their demand for labor while, at the same time, consider the space requirements associated with social distancing.

We believe our strategically located, high quality product will continue to be a component of today’s forward thinking organization that desires to drive culture and productivity.

Because of the uncertainty regarding the length and severity of the pandemic, many existing and prospective tenants are deferring decisions on their office space needs as they focus on their employees’ safety, their companies’ liquidity and managing their businesses through the recession and economic recovery.

As a result, new leasing activity was lower in the third quarter of 2020 than it was prior to March 2020.

Despite the slowdown in tour activity during the quarter, we signed approximately 811,000 square feet of leases and renewals during the third quarter with an average lease term of seven years, indicating that many prospective and existing tenants are committed to long-term office space and view our properties as their preferred choice for premium, Class A office.

Included in our third quarter leasing activity was a lease extension and an expansion with a tenant totaling approximately 186,000 square feet in Reston, Virginia and a new lease for approximately 82,000 square feet with a tenant in Boston, Massachusetts.

Table of Conte n ts

Development of primarily pre-leased properties in supply-constrained markets with the strongest economic growth over time has been a cornerstone of our long-term growth strategy.

We have approximately 5.0 million square feet of active developments and redevelopments in our pipeline, which are 74% pre-leased, as of August 3, 2020, to credit-strong tenants with long lease terms.

We experienced work-stoppages at some of our development projects early in the second quarter.

Work has since resumed at all projects and we remain on schedule to meet all required delivery milestones in our leases and also remain within budget.

Our broad and deep experience as developers extends to our budgeting and planning, which have left us with ample time in our development schedules.

The health and safety of our employees, tenants, service providers and visitors continues to be one of our highest priorities.

In the second quarter, we published our Health Security Plan, which was developed by our Health Security Task Force composed of our employees, as well as outside experts in health care, industrial hygiene, cleaning and security.

We also conducted group and one-on-one conversations with our tenants regarding their plans to bring their work-force back to the office.

We implemented health safety protocols in all in-service properties across our portfolio to provide a safe environment for tenants and employees in accordance with the policies and applicable legal requirements in our regions.

Table of Content s

We have approximately 4.3 million square feet of active developments and redevelopments in our pipeline, which are 80% pre-leased, as of November 3, 2020, to primarily credit-strong tenants with long-lease terms.

All development projects remain on schedule to meet all required delivery milestones in our leases.

The health and safety of our employees, tenants, service providers and visitors continues to be our highest priority.

In the third quarter, we continued to implement our health safety protocols in all in-service properties across our portfolio to provide a safe environment for tenants and employees in accordance with the policies and applicable legal requirements in our regions.

Rent Collections

1 unchanged sentence

Cash rent amounts are based on all rent billed by us, including all amounts from consolidated operations and all unconsolidated joint ventures, other than Gateway Commons for which we do not handle billing.

Our second quarter rent collections among all tenants were approximately 96%.

Approximately 96% of our cash rent billings were derived from office tenants in the second quarter of 2020.

Our second quarter rent collections among office tenants was strong at 99%.

During the third quarter of 2020, our rent collections as a percentage of the total amounts billed to all tenants were 97%.

• Approximately 96% of these billings were made to office tenants.

Our third quarter rent collections from office tenants continued to be strong at 99%.

Approximately $612 million, or $2.4 billion annualized, of our lease revenue was from our office portfolio.

Our office portfolio has long-term lease contracts and modest rollover exposure over the next few years.

Approximately 4% of our cash rent billings were derived from retail leases in the second quarter of 2020.

Our second quarter rent collections among retail tenants was 45% .

Management analyzes accrued rent and accounts receivable balances 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, on a lease-by-lease basis.

In the second quarter, we recorded write-offs totaling approximately $41.0 million.

This amount equals the write-offs in our consolidated portfolio, plus our share of the write-offs from the unconsolidated joint ventures (calculated based on our ownership percentage), minus our partners’ share of write-offs from our consolidated joint ventures (calculated based upon the partners’ percentage ownership interests).

Approximately 95% of these write-offs related to tenants in the retail sector and approximately one-third related to Ann Taylor, whose parent company filed for bankruptcy in July 2020.

The remainder of the write-offs primarily related to tenants in the soft goods retail, restaurant and entertainment categories that have been notably impacted by COVID-19.

We have been and continue to actively work on lease modification amendments with retail tenants in the categories that we believe have justifiable financial needs.

Cash rent abatements and deferrals primarily related to COVID-19 were approximately $16.6 million in the second quarter.

This amount represented our consolidated cash rent abatements and deferrals plus our share of the cash rent abatements and deferrals from the unconsolidated joint ventures (calculated based on our ownership percentage) minus our partners’ share of cash rent abatements and deferrals from our consolidated joint ventures (calculated based upon the partners’ percentage ownership interests).

In the second quarter, our parking and other revenue was approximately $13.9 million, a decline of approximately $10.6 million from the first quarter of 2020.

The decline was largely due to the decline in transient parking revenue as employees adhered to government and employers’ stay-at-home orders during the pandemic.

Our hotel property, the Boston Marriott Cambridge, has been closed since March 2020 and operated at an approximately $1.9 million loss for the second quarter of 2020, which is approximately $7.6 million less than the second quarter of 2019.

It is unclear when the hotel will re-open .

As a result of the impact of the current environment, we expect our 2020 revenues to be adversely effected due to (1) our retail tenants, parking and hotel operator, (2) a slowdown in new leasing activity for vacant and expiring space and (3) write-offs of accounts receivable and accrued rent balances.

• Approximately 4% of these billings related to retail leases.

Our third quarter rent collections from retail tenants was 62%.

When evaluating the collectability of a tenant’s accrued rent and accounts receivable balances, management analyzes the tenant’s creditworthiness, current economic trends, including the impact of COVID-19 on a tenant’s business, and changes in the tenant’s payment patterns on a lease-by-lease basis.

In the third quarter, we recorded write-offs totaling approximately $10 million, of which approximately $6 million were associated with accrued rent and approximately $4 million were associated with accounts receivable.

These amounts represent the write-offs in our consolidated portfolio, plus our share of the write-offs from the unconsolidated joint ventures (calculated based on our ownership percentage), minus our partners’ share of write-offs from our consolidated joint ventures (calculated based upon the partners’ percentage ownership interests).

The majority of these write-offs related to tenants in the retail, fitness and entertainment sectors.

Cash rent abatements and deferrals primarily related to COVID-19 were approximately $18.2 million in the third quarter.

This amount represents our consolidated cash rent abatements and deferrals plus our share of the cash rent abatements and deferrals from the unconsolidated joint ventures (calculated based on our ownership percentage) minus our partners’ share of cash rent abatements and deferrals from our consolidated joint ventures (calculated based upon the partners’ percentage ownership interests).

In the third quarter, our parking and other revenue was approximately $16.3 million, an increase of $2.4 million, or 17%, from the second quarter of 2020, but a decrease of approximately $9.3 million, or 36%, as compared to the third quarter of 2019.

The year-over-year decline was largely due to the decline in transient parking revenue as employees continue to work from home during the pandemic.

Our hotel property, the Boston Marriott Cambridge, remained closed throughout the third quarter and therefore operated at an approximately $3.1 million loss.

As a result, net operating income declined approximately $7.3 million as compared to the third quarter of 2019.

The hotel re-opened on October 2, 2020, but occupancy remains low due to reduced demand as a result of COVID-19 and we expect demand to remain low for the foreseeable future.

As a result of the impact of the current environment, we expect our 2020 revenues to be adversely affected due to (1) declines in revenue from our retail tenants, parking and hotel operator, (2) a slowdown in new leasing activity for vacant and expiring space and (3) write-offs of accounts receivable and accrued rent balances.

Despite the near-term challenges of COVID-19, we remain confident in our ability to weather the current market downturn and manage our business throughout uncertain future market conditions.

Table of Conte n ts

As a leading developer, owner and manager of marquee Class A office properties in the United States, our priorities during and following COVID-19 remain focused on the following:

5 unchanged sentences

• completing the redevelopment and repositioning of several key properties to increase future revenue and asset values over the long-term;

Table of Content s

• maintaining our conservative balance sheet and managing our near-term debt maturities;

1 unchanged sentence

• maintaining discipline in our underwriting of investment opportunities.

Following is an overview of portfolio activity and leasing activity in the second quarter of 2020, recognizing that both leasing activities and construction activities had slowed in the majority of our regions throughout the second quarter due to COVID-19.

The overall occupancy of our in-service office and retail properties was 92.0% at June 30, 2020, a decrease of 90 basis points as compared to March 31, 2020.

During the second quarter of 2020, we signed leases across our portfolio totaling approximately 942,000 square feet and we commenced revenue recognition on approximately 1.3 million square feet of leases in second generation space, including lease modifications.

Of these second generation leases, approximately 1.2 million square feet had been vacant for less than one year and, in the aggregate, they represent a decrease in net rental obligations (gross rent less operating expenses) of approximately 1% over the prior leases.

Following is an overview of portfolio activity and leasing activity in the third quarter of 2020.

The overall occupancy of our in-service office and retail properties was 91.1% at September 30, 2020, a decrease of 90 basis points as compared to June 30, 2020.

During the third quarter of 2020, we signed leases across our portfolio totaling approximately 811,000 square feet and we commenced revenue recognition on approximately 1.2 million square feet of leases in second generation space, including lease modifications.

Of these second generation leases, approximately 895,000 square feet had been vacant for less than one year and, in the aggregate, they represent an increase in net rental obligations (gross rent less operating expenses) of approximately 20% over the prior leases.

A brief overview of each of our markets follows.

Our Boston central business district (“CBD”) in-service portfolio was approximately 99% leased as of June 30, 2020, including approximately 343,000 square feet of leases that we terminated, due to the nonpayment of rent, where the tenants have yet to vacate.

During the second quarter of 2020, we executed approximately 143,000 square feet of leases and had approximately 68,000 square feet of leases commence in the Boston region.

Our Boston central business district (“CBD”) in-service portfolio was approximately 98% leased as of September 30, 2020, including approximately 343,000 square feet of leases that we terminated, due to the nonpayment of rent, where the tenants have yet to vacate.

During the third quarter of 2020, we executed approximately 96,000 square feet of leases and had approximately 262,000 square feet of leases commence in the Boston region.

Approximately 222,000 square feet of the leases that commenced had been vacant for less than one year and represent an increase in net rental obligations of approximately 15% over the prior leases.

In May 2020, we resumed development of 100 Causeway Street, which had been paused earlier in the quarter due to stay-at-home orders.

100 Causeway Street is an approximately 632,000 net rentable square foot office tower located in Boston, Massachusetts, of which we own 50%, that is 94% pre-leased, as of August 3, 2020.

Our approximately 2.0 million square foot in-service office portfolio in Cambridge was nearly 100% leased, as of June 30, 2020.

In June of 2020, we resumed development of 325 Main Street at Kendall Center in Cambridge, Massachusetts, which is 90% pre-leased to a tenant for a term of 15 years.

Development was paused earlier in the quarter due to stay-at-home orders, but we anticipate delivering the project on time.

In our suburban Waltham/Lexington portfolio, we completed and fully placed in-service 20 CityPoint, an approximately 211,000 square foot Class A office development in Waltham, Massachusetts that is 62% leased as of August 3, 2020.

We continue the redevelopment of a portion of 200 West Street, an approximately 261,000 net rentable square foot Class A office property in Waltham, Massachusetts.

During the quarter, a joint venture in which we own 50% fully placed in-service Hub50House, a 440 unit residential property that is part of the 1.3 million square foot mixed-use Hub on Causeway development in Boston, Massachusetts.

Our approximately 2.0 million square foot in-service office portfolio in Cambridge was approximately 99% leased, as of September 30, 2020.

In addition, during the third quarter of 2020, one of our large tenants in Cambridge had the contractual right to terminate a lease for 190,000 square feet but the tenant did not exercise that right and its lease now expires in 2037.

During the quarter, we continued our development of 325 Main Street at Kendall Center in Cambridge, Massachusetts, which is 90% pre-leased to a tenant for a term of 15 years.

In our suburban Waltham/Lexington portfolio, we continued the redevelopment of a portion of 200 West Street, an approximately 261,000 net rentable square foot Class A office property in Waltham, Massachusetts.

The redevelopment is a conversion of a portion of the property to laboratory space to meet growing demand in the life sciences sector.

Waltham continues to be a desirable submarket of Boston where a cluster of many technology and life sciences organizations are located.

Our Los Angeles (“LA”) portfolio is currently focused on West LA and includes an approximately 1.1 million square foot property, Colorado Center, of which we own 50%, and Santa Monica Business Park, a 21-building, approximately 1.2 million square foot property of which we own 55%.

We believe both properties provide us with ample opportunity for future growth, as a majority of the current leases are at below-market rents.

As of June 30, 2020, our LA in-service properties was approximately 96% leased.

In November 2020, we signed an approximately 138,000 square-foot, 10-year lease with a new tenant at this building.

With this lease, the property is 100% leased.

During the third quarter of 2020, we also entered into an agreement with an existing joint venture partner for the future development of a 1.2 million square foot site in Waltham.

The agreement allows for the phased development of office and lab properties across 41-acres.

We expect to serve as the development manager.

As part of this development, we expect to complete new exit/interchange improvements onto I-95/Route 128, enhancing access to our entire Waltham portfolio.

Waltham and the surrounding Route 128 Mass Turnpike area continues to be a popular submarket of Boston for leading and emerging companies in the life sciences, biotechnology and technology sectors.

This agreement builds on our current footprint of approximately 4.3 million square feet of office and lab properties in this submarket.

Table of Conte n ts

Our Los Angeles (“LA”) in-service portfolio is currently focused on West LA and includes approximately 2.3 million square feet, including a 1.1 million square foot property, Colorado Center, of which we own 50%, and Santa Monica Business Park, a 21-building, approximately 1.2 million square foot property of which we own 55%.

We increased our occupancy in LA in the third quarter by 80 basis points due to an approximately 46,000 square foot expansion by one of our existing technology tenants.

As of September 30, 2020, our LA in-service properties were approximately 97% leased.

Since our initial entry in the West LA market in 2016, we have continued to explore opportunities to increase our presence in the LA market by seeking investments where our financial, operational, redevelopment and development expertise provide the opportunity to achieve accretive returns.

In July 2020, we announced the acquisition of a 50% interest in Beach Cities Media Center, a 6.4-acre land site on the Rosecrans Corridor of the El Segundo submarket of Los Angeles, California for a purchase price of $21.2 million.

In the third quarter of 2020, we announced the acquisition of a 50% interest in Beach Cities Media Center, a 6.4-acre land site on the Rosecrans Corridor of the El Segundo submarket of Los Angeles, California for a purchase price of $21.2 million.

The site is fully entitled to support the future development of approximately 275,000 square feet of Class A creative office space and is located in one of the most in-demand creative office areas in the South Bay of Los Angeles where several Fortune 500 and emerging office tenants in the technology, entertainment and financial sectors are located.

In conjunction with the

Table of Content s

acquisition, BXP entered into a joint venture with Continental Development Corporation, a premier developer and owner of Class A properties primarily in the El Segundo and Manhattan Beach submarkets with more than 500 tenants across its portfolio.

As of June 30, 2020, our New York CBD in-service portfolio was approximately 94% leased, including approximately 374,000 square feet of leases that we terminated due to the nonpayment of rent, where the tenants have yet to vacate.

In the second quarter of 2020, we commenced approximately 682,000 square feet of leases in the New York region.

Of these leases, approximately 638,000 square feet had been vacant for less than one year and represent a decrease in net rental obligations of approximately 2% over the prior leases.

In conjunction with the acquisition, we entered into a joint venture with Continental Development Corporation, a premier developer and owner of Class A properties primarily in the El Segundo and Manhattan Beach submarkets with more than 500 tenants across its portfolio.

As of September 30, 2020, our New York CBD in-service portfolio was approximately 94% leased, including approximately 374,000 square feet of leases that we terminated due to the nonpayment of rent, where the tenants have yet to vacate.

We are negotiating a reinstatement and renewal agreement with one of these tenants for approximately 150,000 square feet.

In addition, we have executed approximately 249,000 square feet of leases that we expect will commence by the end of the first quarter of 2021.

In the third quarter of 2020, we commenced approximately 210,000 square feet of leases in the New York region.

Of these leases, approximately 129,000 square feet had been vacant for less than one year and represent an increase in net rental obligations of approximately 14% over the prior leases.

San Francisco

Our San Francisco CBD in-service properties were approximately 97% leased as of June 30, 2020.

During the second quarter of 2020, we commenced approximately 135,000 square feet of leases in the San Francisco region.

Our San Francisco CBD in-service properties were approximately 96% leased as of September 30, 2020.

During the third quarter of 2020, we commenced approximately 387,000 square feet of leases in the San Francisco region.

Of these leases, approximately 354,000 square feet had been vacant for less than one year and represent an increase in net rental obligations of approximately 29% over the prior leases.

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

Fourth + Harrison, is a fully-entitled site that can support the development of approximately 804,000 square feet of primarily office space.

During the third quarter, we placed in service The Skylyne, a 402 unit residential property in Oakland, California, which was 9% leased as of November 3, 2020.

Washington , DC

In the Washington, DC region, our focus remains on (1) expanding our development potential in Reston, Virginia, where demand from technology and cybersecurity tenants remains strong, (2) divesting of certain assets in Washington, DC and select suburban markets and (3) matching development sites with tenants to begin development with significant pre-leasing commitments.

During the second quarter of 2020, we commenced approximately 372,000 square feet of leases in the Washington, DC region.

Of these leases, approximately 316,000 square feet had been vacant for less than one year and represent a decrease in net rental obligations of approximately 19% over the prior leases.

During the quarter, we also signed a new, 12-year lease with Microsoft Corporation for approximately 400,000 square feet at Reston Town Center in Reston, Virginia.

Our Washington, DC CBD in-service properties were approximately 83% leased, as of June 30, 2020, with modest near-term exposure and we have reduced our exposure in the Washington, DC CBD market significantly over the past few years through dispositions of assets.

During the second quarter of 2020, we continued this strategy through the sale of a portion of our Capital Gallery office building comprised of approximately 455,000 square feet for approximately $254 million.

Also, a joint venture in which we have a 50% ownership interest sold Annapolis Junction Building Eight, an approximately 126,000 square foot office building, and two land parcels for approximately $47.0 million.

Our Washington, DC suburban properties, which includes our significant presence in Reston, Virginia, was approximately 86% leased as of June 30, 2020.

Table of Content s

During the third quarter of 2020, we commenced approximately 273,000 square feet of leases in the Washington, DC region.

Of these leases, approximately 163,000 square feet had been vacant for less than one year and represent an increase in net rental obligations of approximately 1% over the prior leases.

Our Washington, DC CBD in-service properties were approximately 85% leased, as of September 30, 2020, with modest near-term exposure, and we have reduced our exposure in the Washington, DC CBD market significantly over the past few years through dispositions of assets.

Our Washington, DC suburban properties, which includes our significant presence in Reston, Virginia, were approximately 84% leased as of September 30, 2020.

During the third quarter of 2020, we signed a lease extension and an expansion with a tenant totaling approximately 186,000 square feet in Reston, Virginia.

In October 2020, we signed an approximately 196,000 square foot, 20-year lease with a tenant at Reston Next, our

Table of Conte n ts

approximately 1.1 million square foot development, the new phase of Reston Town Center in Reston, Virginia.

With this new lease, the Reston Next development is 85% pre-leased.

Leasing Statistics

The table below details the leasing activity, including 100% of the unconsolidated joint ventures, that commenced during the three and six months ended June 30, 2020:

Three months ended June 30, 2020 Six months ended June 30, 2020

The table below details the leasing activity, including 100% of the unconsolidated joint ventures, that commenced during the three and nine months ended September 30, 2020:

Three months ended September 30, 2020 Nine months ended September 30, 2020

Total Square Feet

1 unchanged sentence

Property dispositions/properties taken out of service (1) — (150,193)

Vacant space in properties acquired — —

Properties placed (and partially placed) in-service (2) 12,825 377,647

2 unchanged sentences

1 st generation leases

20,551 342,007

2 nd generation leases with new tenants

13 unchanged sentences

__________________

(1) Total square feet of property dispositions/properties taken out of service during the three and six months ended June 30, 2020 consists of 24,508 due to the sale of a portion of Capital Gallery and 125,685 due to the sale of Annapolis Junction Building Eight.

(2) Total square feet of properties placed (and partially placed) in-service during the three months ended June 30, 2020 consists of 79,527 at 20 CityPoint and 4,330 at 685 Gateway.

Total square feet of properties placed (and partially placed) in-service during the six months ended June 30, 2020 consists of 79,527 at 20 CityPoint, 4,330 at 685 Gateway, 5,156 at 145 Broadway and 275,809 at 17Fifty Presidents Street.

(3) Represents leases for which lease revenue recognition has commenced in accordance with GAAP during the three and six months ended June 30, 2020.

(4) Represents leases executed during the three and six months ended June 30, 2020 for which we either (1) commenced lease revenue recognition in such period or (2) will commence lease revenue recognition in subsequent periods, in accordance with GAAP, and includes leases at properties currently under development.

The total square feet of leases executed and recognized in the three and six months ended June 30, 2020 is 262,368 and 506,388, respectively.

Amounts for the three and six months ended June 30, 2020 exclude lease modifications related to COVID-19 covering an aggregate of 3,099,343 square feet that were executed in the three and six months ended June 30, 2020 to provide cash rent deferrals and/or abatements.

Of these lease modifications, the lease terms associated with 296,989 square feet were extended for a period of 12 or more months.

(1) Total square feet of property dispositions/properties taken out of service during the nine months ended September 30, 2020 consists of 24,508 square feet due to the sale of a portion of Capital Gallery and 125,685 square feet due to the sale of Annapolis Junction Building Eight.

(2) Total square feet of properties placed (and partially placed) in-service during the three months ended September 30, 2020 consists of 12,825 at The Skylyne.

Total square feet of properties placed (and partially placed) in-service during the nine months ended September 30, 2020 consists of 12,825 at The Skylyne, 79,527 at 20 CityPoint, 4,330 at 685 Gateway, 5,156 at 145 Broadway and 275,809 at 17Fifty Presidents Street.

(3) Represents leases for which lease revenue recognition has commenced in accordance with GAAP during the three and nine months ended September 30, 2020.

(4) Represents leases executed during the three and nine months ended September 30, 2020 for which we either (1) commenced lease revenue recognition in such period or (2) will commence lease revenue recognition in subsequent periods, in accordance with GAAP, and includes leases at properties currently under development.

The total square feet of leases executed and recognized in the three and nine months ended September 30, 2020 is 174,187 and 680,575, respectively.

Amounts for the three and nine months ended September 30, 2020 exclude lease modifications related to COVID-19 covering an aggregate of 667,000 and 3,766,343 square feet that were executed in the three and nine months ended September 30, 2020, respectively, to provide cash rent deferrals and/or abatements.

Of these lease modifications, the lease terms associated with 176,787 and 473,776 square feet were extended for a period of 12 or more months during the three and nine months ended September 30, 2020, respectively.

(5) Second generation leases are defined as leases for space that had previously been leased by us.

Of the 1,278,458 and 2,273,481 square feet of second generation leases that commenced during the three and six months ended June 30, 2020, respectively, leases for 1,016,090 and 1,772,249 square feet, respectively, were signed in prior periods.

Of the 1,188,471 and 3,461,952 square feet of second generation leases that commenced during the three and nine months ended September 30, 2020, respectively, leases for 1,014,284 and 2,786,533 square feet, respectively, were signed in prior periods.

Table of Conte n ts

(6) Total transaction costs include tenant improvements and leasing commissions but exclude free rent concessions and other inducements in accordance with GAAP.

(7) Represents the increase in gross rent (base rent plus expense reimbursements) on the new versus expired leases on the 1,178,430 and 1,905,772 square feet of second generation leases that had been occupied within

Table of Content s

the prior 12 months for the three and six months ended June 30, 2020, respectively;

(7) Represents the increase in gross rent (base rent plus expense reimbursements) on the new versus expired leases on the 894,966 and 2,800,738 square feet of second generation leases that had been occupied within the prior 12 months for the three and nine months ended September 30, 2020, respectively;

excludes leases that management considers temporary because the tenant is not expected to occupy the space on a long-term basis.

(8) Represents the increase in net rent (gross rent less operating expenses) on the new versus expired leases on the 1,178,430 and 1,905,772 square feet of second generation leases that had been occupied within the prior 12 months for the three and six months ended June 30, 2020, respectively;

(8) Represents the increase in net rent (gross rent less operating expenses) on the new versus expired leases on the 894,966 and 2,800,738 square feet of second generation leases that had been occupied within the prior 12 months for the three and nine months ended September 30, 2020, respectively;

excludes leases that management considers temporary because the tenant is not expected to occupy the space on a long-term basis.

Transactions during the three months ended June 30, 2020 included the following:

Capital markets

• On May 5, 2020, BPLP 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.

• On May 22, 2020, BXP 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 peri od.

Under the ATM stock offering program, BXP 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 BXP’s prior $600.0 million ATM stock offering program that was scheduled to expir e on June 2, 2020.

BXP 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.

• On June 1, 2020, we 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, we 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.

Transactions during the three months ended September 30, 2020 included the following:

• On July 31, 2020, we acquired an undivided ownership interest in real property at 759 Harrison Street located in San Francisco, California, which is expected to be included in the Fourth + Harrison development project, for a purchase price totaling approximately $2.3 million.

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

• On June 25, 2020, we completed the sale of a portion of our 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 BXP and approximately $207.2 million for BPLP.

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.

We continue 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.

• On August 15, 2020, we completed and fully placed in-service The Skylyne, an approximately 331,000 square foot project comprised of 402 residential units and retail space located in Oakland, California that was 9% leased, as of November 3, 2020.

Unconsolidated joint venture activities

• On June 9, 2020, a joint venture in which we have 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 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

Table of Content s

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 our 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 we have 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.

We 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 our 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.

In conjunction with the joint venture’s sale of Annapolis Junction Building Eight, the joint venture 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.

Transaction completed subsequent to June 30, 2020 included the following:

• On July 23, 2020, we 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.

• On July 24, 2020, a joint venture in which we have a 50% interest completed and fully placed in-service Hub50House, an approximately 320,000 square foot project comprised of 440 residential units located in Boston, Massachusetts, that was 53% leased, as of November 3, 2020.

• On September 1, 2020, we entered into an agreement with our partner in the joint venture that owns 1265 Main Street located in Waltham, Massachusetts to (1) form additional joint ventures to own and develop a mixed-use property containing approximately 1,200,000 square feet to be developed in phases on an approximately 41-acre site adjacent to 1265 Main Street and (2) share the costs of certain offsite infrastructure improvements with our joint venture partner and other third party abutting land owners.

We will serve as the development manager and expect to own a 50% interest in each of the joint ventures.

• On September 30, 2020, a joint venture in which we have a 50% interest extended the mortgage loan collateralized by its Market Square North property.

At the time of the extension, the outstanding balance of the loan totaled approximately $114.2 million, bore interest at a fixed rate of 4.85% per annum and was scheduled to mature on October 1, 2020.

The extended loan matures on November 1, 2020.

Market Square North is a Class A office property with approximately 418,000 net rentable square feet located in Washington, DC.

Transactions completed subsequent to September 30, 2020 included the following:

• On October 1, 2020, a joint venture in which we have a 50% interest completed and fully placed in-service Dock 72, a Class A office project with approximately 670,000 net rentable square feet located in Brooklyn, New York.

• On October 30, 2020, a joint venture in which we have a 50% interest refinanced the mortgage loan collateralized by its Market Square North property located in Washington, DC.

The outstanding balance of the loan totaled approximately $114.2 million, bore interest at a fixed rate of 4.85% per annum and was scheduled to mature on November 1, 2020.

The new mortgage loan totals

Table of Conte n ts

$125.0 million, bears interest at a variable rate equal to (1) the greater of (x) LIBOR or (y) 0.50%, plus (2) 2.30% per annum, and matures on November 10, 2025, with one, one-year extension option, subject to certain conditions.

• On November 3, 2020, we signed an approximately 138,000 square-foot, 10-year lease with a new tenant at 200 West Street in Waltham, Massachusetts.

We are currently redeveloping a portion of 200 West Street into lab space with expected completion in 2021.

With this lease, the property is 100% leased.

Critical Accounting Policies

8 unchanged sentences

Management discusses and reviews our critical accounting policies and management’s judgments and estimates with BXP’s Audit Committee.

Table of Content s

Results of Operations for the Six Months Ended June 30, 2020 and 2019

The impact that COVID-19 has had on our business, financial position and results of operations during the second quarter of 2020 is discussed throughout this report.

Results of Operations for the Nine Months Ended September 30, 2020 and 2019

The impact that COVID-19 has had on our business, financial position and results of operations during the second and third quarters of 2020 is discussed throughout this report.

The full extent of the impact of COVID-19 on our business, operations and financial results will depend on numerous evolving factors that we may not be able to accurately predict.

4 unchanged sentences

Net income attributable to Boston Properties, Inc.

common shareho lders and net income attributable to Boston Properties Limited Partnership common unitholders increased approximately $501.8 million and $569.2 million for the six months ended June 30, 2020 compared to 2019, respectively, as detailed in the following tables and for the reasons discussed below under the heading “ Comparison of the six months ended June 30, 2020 to the six months ended June 30, 2019” within “ Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations .”

common shareho lders and net income attributable to Boston Properties Limited Partnership common unitholders increased approximately $484.3 million and $548.7 million for the nine months ended September 30, 2020 compared to 2019, respectively, as detailed in the following tables and for the reasons discussed below under the heading “ Comparison of the nine months ended September 30, 2020 to the nine months ended September 30, 2019” within “ Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations .”

The following are reconciliations of Net Income Attributable to Boston Properties, Inc.

Common Shareholders to Net Operating Income and Net Income Attributable to Boston Properties Limited Partnership Common Unitholders to Net Operating Income for the six months ended June 30, 2020 and 2019 (in thousands):

Table of Content s

Common Shareholders to Net Operating Income and Net Income Attributable to Boston Properties Limited Partnership Common Unitholders to Net Operating Income for the nine months ended September 30, 2020 and 2019 (in thousands):

Table of Conte n ts

Boston Properties, Inc.

Six months ended June 30,

Nine months ended September 30,

2020 2019 Increase/

15 unchanged sentences

319,726 309,837 9,889 3.19 %

Loss from early extinguishment of debt — 28,010 (28,010) (100.00) %

Impairment loss

1 unchanged sentence

Other Income:

Gains (losses) from investments in securities

(893) 4,134 (5,027) (121.60) %

Gains from investments in securities 965 4,240 (3,275) (77.24) %

Interest and other income (loss) 4,277 14,546 (10,269) (70.60) %

4,322 7,368 (3,046) (41.34) %

Gains on sales of real estate

613,723 766 612,957 80,020.50 %

Income from unconsolidated joint ventures

1,463 48,177 (46,714) (96.96) %

Income (loss) from unconsolidated joint ventures (5,410) 47,528 (52,938) (111.38) %

Other Expenses:

12 unchanged sentences

Net Operating Income $ 1,295,723 $ 1,358,491 $ (62,768) (4.62) %

Table of Content s

Table of Conte n ts

Boston Properties Limited Partnership

Six months ended June 30,

Nine months ended September 30,

2020 2019 Increase/

11 unchanged sentences

319,726 309,837 9,889 3.19 %

Loss from early extinguishment of debt — 28,010 (28,010) (100.00) %

Impairment loss

1 unchanged sentence

Other Income:

Gains (losses) from investments in securities

(893) 4,134 (5,027) (121.60) %

Gains from investments in securities 965 4,240 (3,275) (77.24) %

Interest and other income (loss) 4,277 14,546 (10,269) (70.60) %

4,322 7,368 (3,046) (41.34) %

Gains on sales of real estate

626,686 915 625,771 68,390.27 %

Income from unconsolidated joint ventures

1,463 48,177 (46,714) (96.96) %

Income (loss) from unconsolidated joint ventures (5,410) 47,528 (52,938) (111.38) %

Other Expenses:

12 unchanged sentences

Net Operating Income $ 1,295,723 $ 1,358,491 $ (62,768) (4.62) %

At June 30, 2020 and 2019, we owned or had interests in a portfolio of 195 and 193 commercial real estate properties, respectively (in each case, the “Total Property Portfolio”).

At each of September 30, 2020 and 2019, we owned or had joint venture interests in a portfolio of 196 commercial real estate properties (in each case, the “Total Property Portfolio”).

As a result of changes within our Total Property Portfolio, the financial data presented below shows significant changes in revenue and expenses from period-to-period.

Accordingly, we do not believe that our period-to-period financial data with respect to the Total Property Portfolio is meaningful.

Therefore, the comparison of operating results for the three and six months ended June 30, 2020 and 2019 show separately the changes attributable to the properties that were owned by us and in-service throughout each period compared (the “Same Property Portfolio”) and the changes attributable to the properties included in the Acquired, Placed In-Service, Development or Redevelopment or Sold Portfolios.

Therefore, the comparison of operating results for the three and nine months ended September 30, 2020 and 2019 show separately the changes attributable to the properties that were owned by us and in-service throughout each period compared (the “Same Property Portfolio”) and the changes attributable to the properties included in the Acquired, Placed In-Service, Development or Redevelopment or Sold Portfolios.

In our analysis of operating results, particularly to make comparisons of net operating income between periods meaningful, it is important to provide information for properties that were in-service and owned by us throughout each period presented.

1 unchanged sentence

The Same Property Portfolio therefore excludes properties acquired, placed in-service or in development or redevelopment after the beginning of the earliest period presented or disposed of prior to the end of the latest period presented.

Table of Content s

Table of Conte n ts

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 (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.

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, loss from early extinguishment of debt, 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 from investments in securities, interest and other income (loss), 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.

We use NOI internally as a performance measure and believe it provides useful information to investors regarding our 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.

12 unchanged sentences

For additional information see the Explanatory Note that follows the cover page of this Quarterly Report on Form 10-Q.

Comparison of the six months ended June 30, 2020 to the six months ended June 30, 2019

Comparison of the nine months ended September 30, 2020 to the nine months ended September 30, 2019

The table below shows selected operating information for the Same Property Portfolio and the Total Property Portfolio.

The Same Property Portfolio consists of 139 properties totaling approximately 38.6 million net rentable square feet, excluding unconsolidated joint ventures.

The Same Property Portfolio includes properties acquired or placed in-service on or prior to January 1, 2019 and owned and in service through June 30, 2020.

The Total Property Portfolio includes the effects of the other properties either acquired, placed in-service, in development or redevelopment after January 1, 2019 or disposed of on or prior to June 30, 2020.

This table includes a reconciliation from the Same Property Portfolio to the Total Property Portfolio by also providing information for the six months ended June 30, 2020 and 2019 with respect to the properties that were acquired, placed in-service, in development or redevelopment or sold.

Table of Content s

The Same Property Portfolio includes properties acquired or placed in-service on or prior to January 1, 2019 and owned and in service through September 30, 2020.

This table includes a reconciliation from the Same Property Portfolio to the Total Property Portfolio by also providing information for the nine months ended September 30, 2020 and 2019 with respect to the properties that were acquired, placed in-service, in development or redevelopment or sold.

Table of Conte n ts

Same Property Portfolio Properties Acquired Portfolio Properties

17 unchanged sentences

1,224,982 1,285,741 (60,759) (4.73) % 5,964 649 39,007 1,099 (1,365) 1,600 15,987 43,489 1,284,575 1,332,578 (48,003) (3.60) %

Residential Net Operating Income (2)

11,329 8,818 2,511 28.48 % — — — — — — — — 11,329 8,818 2,511 28.48 %

Residential Net Operating Income (Loss) (2) 16,809 14,803 2,006 13.55 % — — (717) — — — — — 16,092 14,803 1,289 8.71 %

Hotel Net Operating Income (Loss) (2) (4,944) 11,110 (16,054) (144.50) % — — — — — — — — (4,944) 11,110 (16,054) (144.50) %

5 unchanged sentences

(2) For a detailed discussion of NOI, including the reasons management believes NOI is useful to investors, see page 58.

Residential Net Operating Income for the six months ended June 30, 2020 and 2019 is comprised of Residential Revenue of $19,358 and $16,714 less Residential Expenses of $8,029 and $7,896, respectively.

Hotel Net Operating Income for the six months ended June 30, 2020 and 2019 is comprised of Hotel Revenue of $6,924 and $23,782 less Hotel Expenses of $8,794 and $16,943, respectively, per the Consolidated Statements of Operations.

Table of Content s

Residential Net Operating Income for the nine months ended September 30, 2020 and 2019 is comprised of Residential Revenue of $29,076 and $26,710 less Residential Expenses of $12,984 and $11,907, respectively.

Hotel Net Operating Income for the nine months ended September 30, 2020 and 2019 is comprised of Hotel Revenue of $7,014 and $36,796 less Hotel Expenses of $11,958 and $25,686, respectively, per the Consolidated Statements of Operations.

Table of Conte n ts

Same Property Portfolio

Lease Revenue (Excluding Termination Income)

Lease revenue from the Same Property Portfolio decreased by approximately $23.4 million for the six months ended June 30, 2020 compared to 2019.

Lease revenue from the Same Property Portfolio decreased by approximately $48.3 million for the nine months ended September 30, 2020 compared to 2019.

Approximately $60.8 million of the decrease was related to write-offs, which are discussed below.

The decrease was offset by an increase in our average revenue per square foot by approximately $1.35, contributing approximately $27.3 million and an approximately $2.6 million increase due to our average occupancy increasing from 93.80% to 93.99%.

Excluding the impact of the write-offs, the average revenue per square foot increased by approximately $0.49, contributing approximately $17.9 million, offset by an approximately $5.4 million decrease due to our average occupancy decreasing from 93.8% to 93.5%.

Under Accounting Standards Codification (“ASC”) 842 - “Leases” (“ASC 842”), any write-off for bad debt, including accrued rent, is recorded as a reduction to lease revenue.

As a result, during the six months ended June 30, 2020, for our Same Property Portfolio, we wrote off approximately $35.1 million and $18.2 million of accrued rent and accounts receivable balances, respectively.

These write-offs were for tenants, primarily in the retail sector, that either terminated their leases or we determined that their accrued rent and/or accounts receivable balances were no longer probable of collection.

In addition, as a result of COVID-19, for the Same Property Portfolio, during the second quarter of 2020, we executed lease modification agreements for approximately 2.4 million square feet and granted approximately $25.0 million of cash rent abatements and deferrals, of which approximately $14.0 million related to rental charges for the second quarter of 2020.

As a result, during the nine months ended September 30, 2020 , for our Same Property Portfolio, we wrote off approximately $39.2 million and $21.6 million of accrued rent and accounts receivable balances, respectively.

These write-offs related to tenants, primarily in the retail sector, that either terminated their leases or for which we determined that their accrued rent and/or accounts receivable balances were no longer probable of collection.

In addition, as a result of COVID-19, for the Same Property Portfolio, during the second and third quarters of 2020, we executed lease modification agreements for approximately 2.9 million square feet and granted approximately $46.9 million of cash rent abatements and deferrals, of which approximately $31.2 million related to rental charges for the second and third quarters of 2020.

Although some of the lease modifications were deferrals under which we expect the tenant will pay us in full primarily in 2021, the majority of the lease modifications involved extending the lease term (in some cases for a year or more).

2 unchanged sentences

We 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 (See Note 4 to the Consolidated Financial Statements).

As such, our accrued rent balances, which are a component of lease revenue, include the accounting impact (adjusted for write-offs) from the rent abatements, deferrals and extensions that were executed during the second quarter of 2020.

We expect to continue to execute lease modification agreements as a result of COVID-19.

3 unchanged sentences

Termination Income

Termination income decreased by approximately $5.9 million for the six months ended June 30, 2020 compared to 2019.

Termination income for the six months ended June 30, 2020 related to 28 tenants across the Same Property Portfolio and totaled approximately $5.6 million, which was primarily related to tenants that terminated leases early in New York City and the Boston region.

Termination income for the six months ended June 30, 2019 related to 19 tenants across the Same Property Portfolio and totaled approximately $11.5 million, of which approximately $6.8 million is from two tenants that terminated leases early at 399 Park Avenue in New York City.

Termination income decreased by approximately $4.9 million for the nine months ended September 30, 2020 compared to 2019.

Termination income for the nine months ended September 30, 2020 related to 34 tenants across the Same Property Portfolio and totaled approximately $8.4 million, which was primarily related to tenants that terminated leases early in the New York region.

Termination income for the nine months ended September 30, 2019 related to 29 tenants across the Same Property Portfolio and totaled approximately $13.2 million, of which approximately $7.8 million is from two tenants that terminated leases early at 399 Park Avenue in New York City.

Parking and Other Revenue

Parking and other revenue decreased by approximately $13.2 million for the six months ended June 30, 2020 compared to 2019.

Parking and other revenue decreased by approximately $22.3 million for the nine months ended September 30, 2020 compared to 2019.

Parking revenue decreased by approximately $24.4 million while other revenue increased by approximately $2.1 million.

The decrease in parking revenue was primarily due to a decrease in transient and monthly parking.

During the second quarter of 2020, with stay-at-home orders in effect, business closures and people working remotely in a majority of regions in which our properties are located, we generated minimal hourly/daily parking

Table of Content s

revenue and this trend may continue for as long as these conditions exist.

However, as these conditions shift, and “stay-at-home” orders are partially or fully lifted, businesses begin to open and people begin to return to working in an office setting, we expect to and have begun to see an increase in parking revenue.

As a result, for the six months ended June 30, 2020, transient and monthly parking decreased by approximately $9.8 million and $2.3 million, respectively.

Table of Conte n ts

During the second and third quarters of 2020, with stay-at-home orders in effect business closures and people working remotely in a majority of regions in which our properties are located, we generated minimal hourly/daily parking revenue and this trend may continue for as long as these conditions exist.

However, as these conditions shifted, and stay-at-home orders were partially or fully lifted, businesses began to open and people began to return to working in an office setting, we expected, and have begun to see, an increase in parking revenue.

As a result, for the nine months ended September 30, 2020 , transient and monthly parking decreased by approximately $15.2 million and $5.1 million, respectively.

Some of our monthly parking revenues are contractual agreements embedded in our leases, and some are at will individual agreements.

Real Estate Operating Expenses

Real estate operating expenses from the Same Property Portfolio decreased by approximately $9.5 million, or 2.0%, for the six months ended June 30, 2020 compared to 2019, due primarily to a decrease in utility expense of approximately $9.9 million, or 18.6%, partially offset by an increase in other real estate operating expenses of $0.4 million, or 0.1%.

The decrease in utility expense was experienced across the portfolio and was primarily driven by a decrease in physical tenant occupancy, which led to lower demand for electricity and HVAC.

Real estate operating expenses from the Same Property Portfolio decreased by approximately $14.7 million, or 2.0%, for the nine months ended September 30, 2020 compared to 2019, due primarily to decreases in utility and cleaning expense of approximately $15.6 million, or 18.7%, and $7.5 million, or 11.7%, respectively, partially offset by an increase in other real estate operating expenses of $8.4 million, or 1.4%.

The decreases in utility and cleaning expense were experienced across the portfolio and were primarily driven by a decrease in physical tenant occupancy, which led to lower demand for electricity, HVAC, and cleaning.

Properties Acquired Portfolio

The table below lists the properties acquired between January 1, 2019 and June 30, 2020.

Rental revenue and real estate operating expenses increased by approximately $6.9 million and $2.9 million, respectively, for the six months ended June 30, 2020 compared to 2019, as detailed below.

The table below lists the properties acquired between January 1, 2019 and September 30, 2020.

Rental revenue and real estate operating expenses increased by approximately $9.2 million and $3.9 million, respectively, for the nine months ended September 30, 2020 compared to 2019, as detailed below.

Square Feet Rental Revenue Real Estate Operating Expenses

7 unchanged sentences

(1) Located at 777 Harrison Street in San Francisco, California (known as Fourth + Harrison and formerly known as 425 Fourth Stree t) .

Table of Conte n ts

Properties Placed In-Service Portfolio

The table below lists the properties that were placed in-service or partially placed in-service between January 1, 2019 and June 30, 2020.

Rental revenue and real estate operating expenses from our Properties Placed In-Service Portfolio increased by approximately $29.4 million and $4.9 million, respectively, for the six months ended June 30, 2020 compared to 2019, as detailed below.

The table below lists the properties that were placed in-service or partially placed in-service between January 1, 2019 and September 30, 2020.

Rental revenue and real estate operating expenses from our Properties Placed In-Service Portfolio increased by approximately $46.2 million and $9.0 million, respectively, for the nine months ended September 30, 2020 compared to 2019, as detailed below.

Quarter Initially Placed In-Service Quarter Fully Placed In-Service Rental Revenue Real Estate Operating Expenses

5 unchanged sentences

First Quarter, 2020 First Quarter, 2020 275,809 8,878 — 8,878 2,576 — 2,576

Total Office 977,371 47,740 1,576 46,164 8,733 477 8,256

The Skylyne Third Quarter, 2020 Third Quarter, 2020 330,996 23 — 23 740 — 740

Total Residential 330,996 23 — 23 740 — 740

1,308,367 $ 47,763 $ 1,576 $ 46,187 $ 9,473 $ 477 $ 8,996

Properties in Development or Redevelopment Portfolio

The table below lists the properties that were in development or redevelopment between January 1, 2019 and June 30, 2020.

Rental revenue and real estate operating expenses from our Properties in Development or Redevelopment Portfolio decreased by approximately $4.2 million and $1.8 million, respectively, for the six months ended June 30, 2020 compared to 2019.

Table of Content s

The table below lists the properties that were in development or redevelopment between January 1, 2019 and September 30, 2020.

Rental revenue and real estate operating expenses from our Properties in Development or Redevelopment Portfolio decreased by approximately $5.4 million and $2.5 million, respectively, for the nine months ended September 30, 2020 compared to 2019.

Rental Revenue Real Estate Operating Expenses

9 unchanged sentences

_______________

(1) Rental revenue for the six months ended June 30, 2020 includes an approximately $2.9 million write-off of accrued rent and accounts receivable balances for a terminated tenant.

(2) Rental revenue for the six months ended June 30, 2019 includes the acceleration and write-off of accrued rent associated with the early termination of a lease at the property.

Real estate operating expenses for the six months ended June 30, 2020 and 2019 includes approximately $0.1 million and $0.4 million of demolition costs, respectively.

(3) Rental revenue and real estate operating expenses for the six months ended June 30, 2019 are related to the entire building.

(1) Rental revenue for the nine months ended September 30, 2020 includes an approximately $2.9 million write-off of accrued rent and accounts receivable balances for a terminated tenant.

(2) Rental revenue for the nine months ended September 30, 2019 includes the acceleration and write-off of accrued rent associated with the early termination of a lease at the property.

Real estate operating expenses for the nine months ended September 30, 2020 and 2019 includes approximately $0.3 million and $0.7 million of demolition costs, respectively.

(3) Rental revenue and real estate operating expenses for the nine months ended September 30, 2019 are related to the entire building.

The redevelopment is a conversion of a 126,000 square foot portion of the property to laboratory space.

Table of Conte n ts

Properties Sold Portfolio

The table below lists the properties we sold between January 1, 2019 and June 30, 2020.

Rental revenue and real estate operating expenses from our Properties Sold Portfolio decreased by approximately $24.2 million and $9.3 million, respectively, for the six months ended June 30, 2020 compared to 2019, as detailed below.

The table below lists the properties we sold between January 1, 2019 and September 30, 2020.

Rental revenue and real estate operating expenses from our Properties Sold Portfolio decreased by approximately $43.6 million and $16.1 million, respectively, for the nine months ended September 30, 2020 compared to 2019, as detailed below.

Rental Revenue Real Estate Operating Expenses

13 unchanged sentences

_______________

(1) Rental revenue for the six months ended June 30, 2019 includes approximately $0.5 million of termination income (See Notes 3 and 5 to the Consolidated Financial Statements).

(1) Rental revenue for the nine months ended September 30, 2019 includes approximately $0.8 million of termination income (See Notes 3 and 5 to the Consolidated Financial Statements).

(2) We completed the sale of a portion of our Capital Gallery property located in Washington, DC.

5 unchanged sentences

Residential Net Operating Income

Net operating income for our residential same properties increased by approximately $2.5 million for the six months ended June 30, 2020 compared to 2019.

The following reflects our occupancy and rate information for The Lofts at Atlantic Wharf, The Avant at Reston Town Center, Signature at Reston and Proto Kendall Square for the six months ended June 30, 2020 and 2019.

Table of Content s

Net operating income for our residential same properties increased by approximately $2.0 million for the nine months ended September 30, 2020 compared to 2019.

Net operating income for the nine months ended September 30, 2020 includes approximately $0.7 million of termination income from a retail tenant.

The following reflects our occupancy and rate information for The Lofts at Atlantic Wharf, The Avant at Reston Town Center, Signature at Reston and Proto Kendall Square for the nine months ended September 30, 2020 and 2019.

The Lofts at Atlantic Wharf The Avant at Reston Town Center Signature at Reston Proto Kendall Square

10 unchanged sentences

(1) Average Monthly Rental Rate is calculated as the average of the quotients obtained by dividing (A) rental revenue as determined in accordance with GAAP, by (B) the number of occupied units for each month within the applicable fiscal period.

Table of Conte n ts

(2) Average Physical Occupancy is defined as (1) the average number of occupied units divided by (2) the total number of units, expressed as a percentage.

6 unchanged sentences

Market Rents for a period are based on the average Market Rents during that period and do not reflect any impact for cash concessions.

Hotel Net Operating Income

Net operating income for the Boston Marriott Cambridge hotel property decreased by approximately $8.7 million for the six months ended June 30, 2020 compared to 2019.

As a result of COVID-19, we closed the Boston Marriott Cambridge in March 2020 and it did not re-open during the second quarter of 2020.

We do not know 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 effect on the hotel’s contribution to our results of operations during the closure.

Hotel Net Operating Income (Loss)

Net operating income (loss) for the Boston Marriott Cambridge hotel property decreased by approximately $16.1 million for the nine months ended September 30, 2020 compared to 2019.

The Boston Marriott Cambridge closed in March 2020 due to COVID-19 and did not re-open until October 2, 2020.

The hotel is operating at a monthly deficit.

The closing of the hotel for more than two fiscal quarters, weak demand and low occupancy since its re-opening, have had, and are expected to continue to have, a material adverse effect on the hotel’s operations.

“Risk Factors” for additional details.

The following reflects our occupancy and rate information for the Boston Marriott Cambridge hotel for the six months ended June 30, 2020 and 2019.

The following reflects our occupancy and rate information for the Boston Marriott Cambridge hotel for the nine months ended September 30, 2020 and 2019.

Occupancy 19.8 % 86.7 % (77.2) %

3 unchanged sentences

Development and Management Services Revenue

Development and management services revenue decreased by approximately $3.3 million for the six months ended June 30, 2020 compared to 2019.

Development and management services revenue decreased by approximately $6.3 million for the nine months ended September 30, 2020 compared to 2019.

Development services revenue decreased by approximately $6.5 million, while management services revenue increased by approximately $0.2 million.

The decrease in development services revenue was primarily related to a decrease of approximately $4.5 million in development fees and fees associated with tenant improvement projects earned in the Boston and New York regions offset by an increase of approximately $0.6 million in development fees earned in the San Francisco region.

The increase in management services revenue was primarily related to an increase in property management fees earned from our Gateway Commons unconsolidated joint venture, which was deconsolidated on January 28, 2020.

Table of Content s

The decrease in development services revenue was primarily related to a decrease of approximately $7.3 million in development fees and fees associated with tenant improvement projects earned from our unconsolidated joint ventures in the Boston and New York regions partially offset by an increase of approximately $0.8 million in development fees earned in the San Francisco region.

The increase in management services revenue was primarily related to property management fees earned from third-party owned buildings in the Washington, DC region and our Gateway Commons unconsolidated joint venture, which was deconsolidated on January 28, 2020, partially offset by a decrease in leasing commissions earned from our unconsolidated joint ventures in the Boston region.

General and Administrative Expense

General and administrative expense decreased by approximately $2.6 million for the six months ended June 30, 2020 compared to 2019 primarily due to a decrease in compensation expense of approximately $3.2 million, partially offset by an approximately $0.6 million increase in other general and administrative expenses.

The decrease in compensation expense was related to (1) an approximately $5.0 million decrease in the value of our deferred compensation plan, (2) an approximately $0.8 million decrease in health care costs and (3) an approximately $0.7 million increase in capitalized wages, which decreases general and administrative expenses.

These increases were partially offset by an approximately $3.3 million increase in other compensation expense, which includes the expense associated with our equity compensation programs, which includes the acceleration of amortization that occurred for employees that reached a certain age and number of years of service and therefore became vested in these awards sooner.

The increase in other general and administrative expenses was primarily related to the write-off of the remaining fees associated with BXP’s prior ATM stock offering program that was scheduled to expire on June 2, 2020 and an increase in other professional fees.

General and administrative expense decreased by approximately $5.9 million for the nine months ended September 30, 2020 compared to 2019 primarily due to a decrease in compensation expense of approximately $6.1 million, partially offset by an approximately $0.2 million increase in other general and administrative expenses.

The decrease in compensation expense was related to (1) an approximately $3.2 million decrease in the value of our deferred compensation plan, (2) an approximately $1.3 million decrease in health care costs and (3) an approximately $1.6 million decrease in other compensation-related expenses.

The increase in other general and administrative expenses was primarily related to the write-off of the remaining fees associated with BXP’s prior “at the market” stock offering program that was scheduled to expire on June 2, 2020 and an increase in other professional fees.

Table of Conte n ts

Wages directly related to the development of rental properties are capitalized and included in real estate assets on our Consolidated Balance Sheets and amortized over the useful lives of the applicable asset or lease term.

Capitalized wages for the six months ended June 30, 2020 and 2019 were approximately $6.2 million and $5.5 million, respectively.

Capitalized wages for the nine months ended September 30, 2020 and 2019 were approximately $9.6 million and $8.1 million, respectively.

These costs are not included in the general and administrative expenses discussed above.

Transaction Costs

Transaction costs increased by approximately $70,000 for the six months ended June 30, 2020 compared to 2019 due primarily to costs incurred in connection with the pursuit and formation of new joint ventures.

Transaction costs decreased by approximately $0.2 million for the nine months ended September 30, 2020 compared to 2019 due primarily to costs incurred in connection with the pursuit and formation of new joint ventures.

In general, transaction costs relating to the formation of new and pending joint ventures and the pursuit of other transactions are expensed as incurred.

5 unchanged sentences

Boston Properties, Inc.

Depreciation and amortization expense increased by approximately $7.3 million for the six months ended June 30, 2020 compared to 2019, as detailed below.

Portfolio Depreciation and Amortization for the six months ended June 30,

Depreciation and amortization expense increased by approximately $7.9 million for the nine months ended September 30, 2020 compared to 2019, as detailed below.

Portfolio Depreciation and Amortization for the nine months ended September 30,

2020 2019 Change

8 unchanged sentences

(1) On May 9, 2019, we commenced development of 325 Main Street in Cambridge, Massachusetts.

As a result, during the six months ended June 30, 2019, we recorded approximately $9.9 million of accelerated depreciation expense for the demolition of the building, of which approximately $0.4 million related to the step-up of real estate assets.

Table of Content s

As a result, during the nine months ended September 30, 2019, we recorded approximately $9.9 million of accelerated depreciation expense for the demolition of the building, of which approximately $0.4 million related to the step-up of real estate assets.

Boston Properties Limited Partnership

Depreciation and amortization expense increased by approximately $7.8 million for the six months ended June 30, 2020 compared to 2019, as detailed below.

Portfolio Depreciation and Amortization for the six months ended June 30,

Depreciation and amortization expense increased by approximately $8.5 million for the nine months ended September 30, 2020 compared to 2019, as detailed below.

Portfolio Depreciation and Amortization for the nine months ended September 30,

2020 2019 Change

6 unchanged sentences

$ 510,400 $ 501,901 $ 8,499

Table of Conte n ts

_______________

(1) On May 9, 2019, we commenced development of 325 Main Street in Cambridge, Massachusetts.

As a result, during the six months ended June 30, 2019, we recorded approximately $9.5 million of accelerated depreciation expense for the demolition of the building.

As a result, during the nine months ended September 30, 2019, we recorded approximately $9.5 million of accelerated depreciation expense for the demolition of the building.

Direct Reimbursements of Payroll and Related Costs From Management Services Contracts and Payroll and Related Costs From Management Service Contracts

2 unchanged sentences

Other Income and Expense Items

Income from Unconsolidated Joint Ventures

For the six months ended June 30, 2020 compared to 2019, income from unconsolidated joint ventures decreased by approximately $46.7 million primarily due to an approximately $47.8 million gain on sale of real estate from the sale of 540 Madison Avenue during the six months ended June 30, 2019 and the resulting loss of income thereafter, along with the addition of our Gateway Commons joint venture and the partial placing in-service of the Hub50House joint venture in South San Francisco, CA and Boston, MA, respectively.

These joint ventures reduced our net income by approximately $4.0 million for the six months ended June 30, 2020.

At June 30, 2020, the Hub50House was only 35% leased and we do not expect it to be stabilized until the first quarter of 2022.

Income (loss) from Unconsolidated Joint Ventures

For the nine months ended September 30, 2020 compared to 2019, income (loss) from unconsolidated joint ventures decreased by approximately $52.9 million primarily due to an approximately $47.5 million gain on sale of real estate from the sale of 540 Madison Avenue during the nine months ended September 30, 2019 and the resulting loss of income thereafter, along with the addition of our Gateway Commons joint venture and the placing in-service of the Hub50House joint venture in South San Francisco, California and Boston, Massachusetts, respectively.

These joint ventures reduced our net income by approximately $5.9 million for the nine months ended September 30, 2020.

During the nine months ended September 30, 2020, Hub50House was fully placed in-service and we do not expect it to be stabilized until the first quarter of 2022.

The decrease in net income from the Gateway Commons joint venture was primarily related to depreciation and amortization.

These decreases were partially offset by an approximately $5.8 million gain on sale of real estate from the sale of Annapolis Junction Building Eight and two land parcels during the six months ended June 30, 2020 (See Note 5 to the Consolidated Financial Statements).

The decrease in our net income was also driven by a $2.1 million reduction at our Colorado Center joint venture, primarily due to a write-off of lease revenue during the nine months ended September 30, 2020.

These decreases were partially offset by an approximately $5.8 million gain on sale of real estate from the sale of Annapolis Junction Building Eight and two undeveloped land parcels during the nine months ended September 30, 2020.

Under ASC 842, any write-off for bad debt, including accrued rent, is recorded as a reduction to lease revenue.

As a result, during the six months ended June 30, 2020, for our unconsolidated joint ventures, we wrote off our share of the accrued rent and accounts receivable balances of approximately $0.7 million and $1.0 million, respectively.

In addition, as a result of COVID-19, for properties owned by our unconsolidated joint ventures, during the second quarter of 2020, the joint ventures executed lease modification agreements for approximately 674,000 square feet.

As a result of these lease modification agreements, our share of the total cash rent abatements and deferrals granted was approximately $5.3 million, of which approximately $2.5 million was related to rental charges for the second quarter of 2020.

As a result, during the nine months ended September 30, 2020, for our unconsolidated joint ventures, we wrote off our share of the accrued rent and accounts receivable balances of approximately $2.6 million and $1.5 million, respectively.

These write-offs related to tenants that either terminated their leases or for which we determined that their accrued rent and/or accounts receivable balances were no longer probable of collection.

In addition, as a result of COVID-19, for properties owned by our unconsolidated joint ventures, during the second and third quarters of 2020, the joint ventures executed lease modification agreements for approximately 855,000 square feet.

As a result of these lease modification agreements, our share of the total cash rent abatements and deferrals granted was approximately $5.8 million, of which approximately $4.4 million was related to rental charges for the second and third quarters of 2020.

Although some of the lease modifications were deferrals where we expect the tenant will pay the joint venture in full primarily in 2021, the majority of the lease modifications involved extending the lease term (in some cases for longer than a year).

As a result of the lease modification agreements that extended the lease term, we expect to see an increase in cash rent received in the future.

Table of Content s

In April 2020, the FASB staff issued the 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.

As such, the accrued rent balances, which are a component of lease revenue, include the accounting impact (adjusted for write-offs) from the rent abatements, deferrals and extensions that were executed during the second quarter of 2020.

The joint ventures expect to continue to execute lease modification agreements as a result of COVID-19.

2 unchanged sentences

“Risk Factors” for additional details .

Table of Conte n ts

Gains on Sales of Real Estate

4 unchanged sentences

Boston Properties, Inc.

Gains on sales of real estate increased by approximately $613.2 million for the six months ended June 30, 2020 compared to 2019, as detailed below.

Gains on sales of real estate increased by approximately $613.0 million for the nine months ended September 30, 2020 compared to 2019, as detailed below.

Name Date Sold Property Type Square Feet Sale Price Net Cash Proceeds Gain (Loss) on Sale of Real Estate

17 unchanged sentences

We continue to own the land, underground parking garage and remaining commercial office and retail space (See Note 3 to the Consolidated Financial Statements).

(3) Excludes approximately $0.1 million of gains on sales of real estate recognized during the six months ended June 30, 2020 related to gain amounts from sales of real estate occurring in the prior year.

(4) Excludes approximately $0.3 million of losses on sales of real estate recognized during the six months ended June 30, 2019 related to loss amounts from sales of real estate occurring in prior years.

Table of Content s

(3) Excludes approximately $0.1 million of gains on sales of real estate recognized during the nine months ended September 30, 2020 related to gain amounts from sales of real estate occurring in the prior year.

(4) Excludes approximately $0.3 million of losses on sales of real estate recognized during the nine months ended September 30, 2019 related to loss amounts from sales of real estate occurring in prior years.

Table of Conte n ts

Boston Properties Limited Partnership

Gains on sales of real estate increased by approximately $626.0 million for the six months ended June 30, 2020 compared to 2019, as detailed below.

Gains on sales of real estate increased by approximately $625.8 million for the nine months ended September 30, 2020 compared to 2019, as detailed below.

Name Date Sold Property Type Square Feet Sale Price Net Cash Proceeds Gain (Loss) on Sale of Real Estate

19 unchanged sentences

We continue to own the land, underground parking garage and remaining commercial office and retail space (See Note 3 to the Consolidated Financial Statements).

Interest and Other Income (Loss)

Interest and other income (loss) decreased by approximately $3.0 million for the six months ended June 30, 2020 compared to 2019.

Interest income and the credit loss allowance decreased by approximately $2.5 million and $0.5 million, respectively.

The decrease in interest income is primarily due to a decrease in interest rates.

Interest and other income (loss) decreased by approximately $10.3 million for the nine months ended September 30, 2020 compared to 2019.

Interest and other income decreased by approximately $8.3 million due primarily to a decrease in interest rates.

On January 1, 2020, we adopted ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”) and, as a result, we were required to record a credit loss allowance related to our outstanding (1) related party note receivable, (2) notes receivable and (3) off-balance sheet credit exposures (See Note 2 to the Consolidated Financial Statements).

Gains (Losses) from Investments in Securities

Gains (losses) from investments in securities for the six months ended June 30, 2020 and 2019 related to investments that we have made to reduce our market risk relating to deferred compensation plans that we maintain for BXP’s officers and former non-employee directors.

Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”) and, as a result, we were required to record an allowance for current expected credit losses related to our outstanding (1) related party note receivable, (2) notes receivable and (3) off-balance sheet credit exposures (See Note 2 to the Consolidated Financial Statements).

For the nine months ended September 30, 2020 the allowance for current expected credit losses was $2.0 million.

Gains from Investments in Securities

Gains from investments in securities for the nine months ended September 30, 2020 and 2019 related to investments that we have made to reduce our market risk relating to deferred compensation plans that we maintain for BXP’s officers and former non-employee directors.

Under the deferred compensation plans, each officer or non-employee director who is eligible to participate is permitted to defer a portion of the officer’s current income or the non-employee director’s compensation on a pre-tax basis and receive a tax-deferred return on these deferrals based on the performance of specific investments selected by the officer or non-employee director.

In order to reduce our market risk relating to these plans, we typically acquire, in a separate account that is not restricted as to its use, similar or identical investments as those selected by each officer or non-employee director.

This enables us to generally match our liabilities to BXP’s officers or former non-employee directors under our deferred compensation plans with equivalent assets and thereby limit our market risk.

The performance of these

Table of Content s

investments is recorded as gains (losses) from investments in securities.

During the six months ended June 30, 2020 and 2019, we recognized gains (losses) of approximately $(0.9) million and $4.1 million, respectively, on these investments.

By comparison, our general and administrative expense increased (decreased) by approximately $(0.9) million and $4.1 million during the six months ended June 30, 2020 and 2019, respectively, as a result of increases (decreases) in our liability under our deferred compensation plans that was associated with the performance of the specific investments selected by officers and former non-employee directors of BXP participating in the plans.

This enables us

Table of Conte n ts

to generally match our liabilities to BXP’s officers or former non-employee directors under our deferred compensation plans with equivalent assets and thereby limit our market risk.

The performance of these investments is recorded as gains from investments in securities.

During the nine months ended September 30, 2020 and 2019, we recognized gains of approximately $1.0 million and $4.2 million, respectively, on these investments.

By comparison, our general and administrative expense increased by approximately $1.0 million and $4.2 million during the nine months ended September 30, 2020 and 2019, respectively, as a result of increases in our liability under our deferred compensation plans that was associated with the performance of the specific investments selected by officers and former non-employee directors of BXP participating in the plans.

Impairment Loss

7 unchanged sentences

One Tower Center is an approximately 410,000 net rentable square foot Class A office property.

We did not have any impairments during the six months ended June 30, 2020.

We did not have any impairments during the nine months ended September 30, 2020.

Loss From Early Extinguishment of Debt

On September 18, 2019, BPLP completed the redemption of $700.0 million in aggregate principal amount of its 5.625% senior notes due November 15, 2020.

The redemption price was approximately $740.7 million.

The redemption price included approximately $13.5 million of accrued and unpaid interest to, but not including, the redemption date.

Excluding the accrued and unpaid interest, the redemption price was approximately 103.90% of the principal amount being redeemed.

We recognized a loss from early extinguishment of debt totaling approximately $28.0 million, which amount included the payment of the redemption premium totaling approximately $27.3 million.

Table of Conte n ts

Interest Expense

Interest expense increased by approximately $5.4 million for the six months ended June 30, 2020 compared to 2019, as detailed below.

Component Change in interest expense for the six months ended June 30, 2020 compared to June 30, 2019

Interest expense increased by approximately $9.9 million for the nine months ended September 30, 2020 compared to 2019, as detailed below.

Component Change in interest expense for the nine months ended September 30, 2020 compared to September 30, 2019

(in thousands)

Increases to interest expense due to:

Issuance of $1.25 billion in aggregate principal of 3.250% senior notes due 2031 on May 5, 2020

Issuance of $850 million in aggregate principal of 3.400% senior notes due 2029 on June 21, 2019 13,714

Issuance of $700 million in aggregate principal of 2.900% senior notes due 2030 on September 3, 2019

Issuance of $1.25 billion in aggregate principal of 3.250% senior notes due 2031 on May 5, 2020

Increase in interest due to finance leases

Decrease in capitalized interest related to development projects

Increase in interest due to finance leases 2,758

Other interest expense (excluding senior notes)

7 unchanged sentences

Total change in interest expense $ 9,889

Table of Content s

Interest expense directly related to the development of rental properties is capitalized and included in real estate assets on our Consolidated Balance Sheets and amortized over the useful lives of the real estate or lease term.

As portions of properties are placed in-service, we cease capitalizing interest on that portion and interest is then expensed.

Interest capitalized for the six months ended June 30, 2020 and 2019 was approximately $27.9 million and $25.1 million, respectively.

Interest capitalized for each of the nine months ended September 30, 2020 and 2019 was approximately $41.3 million.

These costs are not included in the interest expense referenced above.

At June 30, 2020, our outstanding variable rate debt consisted of BPLP’s $2.0 billion unsecured revolving credit facility (the “2017 Credit Facility”), which includes the $500.0 million delayed draw term loan facility (the “Delayed Draw Facility”) and the $1.5 billion revolving line of credit (the “Revolving Facility”).

The Delayed Draw Facility had $500.0 million outstanding as of June 30, 2020.

The Revolving Facility did not have an outstanding balance as of June 30, 2020.

For a summary of our consolidated debt as of June 30, 2020 and June 30, 2019 refer to the heading “ Liquidity and Capital Resources—Capitalization—Debt Financing” within “ Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations.

At September 30, 2020, our outstanding variable rate debt consisted of BPLP’s $2.0 billion unsecured revolving credit facility (the “2017 Credit Facility”), which includes the $500.0 million delayed draw term loan facility (the “Delayed Draw Facility”) and the $1.5 billion revolving line of credit (the “Revolving Facility”).

The Delayed Draw Facility had $500.0 million outstanding as of September 30, 2020.

The Revolving Facility did not have an outstanding balance as of September 30, 2020.

For a summary of our consolidated debt as of September 30, 2020 and September 30, 2019 refer to the heading “ Liquidity and Capital Resources—Capitalization—Debt Financing” within “ Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations.

On May 5, 2020, BPLP completed a public offering of $1.25 billion in aggregate principal amount of its 3.250% unsecured senior notes due 2031 (See Note 6 to the Consolidated Financial Statements).

We used a portion of the net proceeds from this offering for the repayment of borrowings outstanding under the Revolving Facility.

Table of Conte n ts

Noncontrolling Interests in Property Partnerships

Noncontrolling interests in property partnerships decreased by approximately $17.6 million for the six months ended June 30, 2020 compared to 2019, as detailed below.

Property Noncontrolling Interests in Property Partnerships for the six months ended June 30,

Noncontrolling interests in property partnerships decreased by approximately $20.5 million for the nine months ended September 30, 2020 compared to 2019, as detailed below.

Property Noncontrolling Interests in Property Partnerships for the nine months ended September 30,

2020 2019 Change

9 unchanged sentences

(1) On April 1, 2019, we acquired our partner’s 5% interest and subsequently own 100%.

(2) During the six months ended June 30, 2020, we wrote off approximately $26.8 million of accrued rent and accounts receivable balances for tenants that either terminated their leases or for which we determined their accrued rent and/or accounts receivable balances, primarily retail tenants, were no longer probable of collection.

(2) The increase during the nine months ended September 30, 2020 was related to above-/below-market lease assets that were fully amortized in 2020.

(3) During the nine months ended September 30, 2020, we wrote off approximately $26.8 million of accrued rent and accounts receivable balances for tenants that either terminated their leases or for which we determined their accrued rent and/or accounts receivable balances, primarily retail tenants, were no longer probable of collection.

Approximately $14.7 million represents our share of the write-offs.

(3) During the six months ended June 30, 2020, we wrote off approximately $2.9 million of accrued rent and accounts receivable balances for tenants that either terminated their leases or for which we determined their accrued rent and/or accounts receivable balances, primarily retail tenants, were no longer probable of collection.

As a result of these terminations, lease revenue decreased for the nine months ended September 30, 2020.

(4) During the nine months ended September 30, 2019, we wrote off approximately $2.9 million of accrued rent and accounts receivable balances for tenants that either terminated their leases or for which we determined their accrued rent and/or accounts receivable balances, primarily retail tenants, were no longer probable of collection.

Approximately $1.6 million represents our share of the write-offs.

As a result of these terminations, lease revenue decreased for the nine months ended September 30, 2020.

(5) The increase was primarily due to an increase in lease revenue from our tenants.

(6) During the nine months ended September 30, 2020, we wrote off approximately $0.5 million of accrued rent and accounts receivable balances for tenants whose balances we determined were no longer probable of collection.

Approximately $0.3 million represents our share of the write-offs.

Noncontrolling Interest—Common Units of the Operating Partnership

For BXP, noncontrolling interest—common units of the Operating Partnership increased by approximately $56.9 million for the six months ended June 30, 2020 compared to 2019 due primarily to an increase in allocable income, which was the result of recognizing a greater gain on sales of real estate amount during 2020 partially offset by a decrease in the noncontrolling interest’s ownership percentage.

For BXP, noncontrolling interest—common units of the Operating Partnership increased by approximately $54.0 million for the nine months ended September 30, 2020 compared to 2019 due primarily to an increase in allocable income, which was the result of recognizing a greater gain on sales of real estate amount during 2020 partially offset by a decrease in the noncontrolling interest’s ownership percentage.

Due to our ownership structure, there is no corresponding line item on BPLP’s financial statements.

Table of Content s

Results of Operations for the Three Months Ended June 30, 2020 and 2019

The impact that COVID-19 has had on our business, financial position and results of operations during the second quarter of 2020 is discussed throughout this report.

Results of Operations for the Three Months Ended September 30, 2020 and 2019

The impact that COVID-19 has had on our business, financial position and results of operations during the third quarter of 2020 is discussed throughout this report.

The full extent of the impact of COVID-19 on our business, operations and financial results will depend on numerous evolving factors that we may not be able to accurately predict.

4 unchanged sentences

Net income attributable to Boston Properties, Inc.

common shareholders and net income attributable to Boston Properties Limited Partnership common unitholders increased approximately $102.2 million and $116.3 million for the three months ended June 30, 2020 compared to 2019, respectively, as detailed in the following tables and for the reasons discussed below under the heading “ Comparison of the three months ended June 30, 2020 to the three months ended June 30, 2019” within “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations.

common shareholders and net income attributable to Boston Properties Limited Partnership common unitholders decreased approximately $17.9 million and $20.5 million for the three months ended September 30, 2020 compared to 2019, respectively, as detailed in the following tables and for the reasons discussed below under the heading “ Comparison of the three months ended September 30, 2020 to the

Table of Conte n ts

three months ended September 30, 2019” within “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Below are reconciliations of net income attributable to Boston Properties, Inc.

common shareholders to NOI and net income attributable to Boston Properties Limited Partnership common unitholders to NOI for the three months ended June 30, 2020 and 2019.

common shareholders to NOI and net income attributable to Boston Properties Limited Partnership common unitholders to NOI for the three months ended September 30, 2020 and 2019.

For a detailed discussion of NOI, including the reasons management believes NOI is useful to investors, see page 58.

Table of Content s

Boston Properties, Inc.

Three months ended June 30,

Three months ended September 30,

2020 2019 Increase/

15 unchanged sentences

Interest expense 110,993 106,471 4,522 4.25 %

107,142 102,357 4,785 4.67 %

Loss from early extinguishment of debt — 28,010 (28,010) (100.00) %

Losses on sales of real estate 209 15 194 1,293.33 %

Loss from unconsolidated joint ventures 6,873 649 6,224 959.01 %

Other Income:

3 unchanged sentences

( 45 ) 7,178 (7,223) (100.63) %

Gains on sales of real estate

203,767 1,686 202,081 11,985.82 %

Income from unconsolidated joint ventures

1,832 47,964 (46,132) (96.18) %

Other Expenses:

12 unchanged sentences

Net Operating Income $ 421,666 $ 456,475 $ (34,809) (7.63) %

Table of Content s

Table of Conte n ts

Boston Properties Limited Partnership

Three months ended June 30,

Three months ended September 30,

2020 2019 Increase/

12 unchanged sentences

110,993 106,471 4,522 4.25 %

Loss from early extinguishment of debt — 28,010 (28,010) (100.00) %

Losses on sales of real estate 209 15 194 1,293.33 %

Loss from unconsolidated joint ventures 6,873 649 6,224 959.01 %

Other Income:

3 unchanged sentences

( 45 ) 7,178 (7,223) (100.63) %

Gains on sales of real estate

207,241 1,835 205,406 11,193.79 %

Income from unconsolidated joint ventures

1,832 47,964 (46,132) (96.18) %

Other Expenses:

12 unchanged sentences

Net Operating Income $ 421,666 $ 456,475 $ (34,809) (7.63) %

Comparison of the three months ended June 30, 2020 to the three months ended June 30, 2019

Comparison of the three months ended September 30, 2020 to the three months ended September 30, 2019

The table below shows selected operating information for the Same Property Portfolio and the Total Property Portfolio.

The Same Property Portfolio consists of 139 properties totaling approximately 38.6 million net rentable square feet, excluding unconsolidated joint ventures.

The Same Property Portfolio includes properties acquired or placed in-service on or prior to April 1, 2019 and owned and in-service through June 30, 2020.

The Total Property Portfolio includes the effects of the other properties either acquired, placed in-service, in development or redevelopment after April 1, 2019 or disposed of on or prior to June 30, 2020.

This table includes a reconciliation from the Same Property Portfolio to the Total Property Portfolio by also providing information for the three months ended June 30, 2020 and 2019 with respect to the properties that were acquired, placed in-service, in development or redevelopment or sold.

Table of Content s

The Same Property Portfolio includes properties acquired or placed in-service on or prior to July 1, 2019 and owned and in-service through September 30, 2020.

The Total Property Portfolio includes the effects of the other properties either acquired, placed in-service, in development or redevelopment after July 1, 2019 or disposed of on or prior to September 30, 2020.

This table includes a reconciliation from the Same Property Portfolio to the Total Property Portfolio by also providing information for the three months ended September 30, 2020 and 2019 with respect to the properties that were acquired, placed in-service, in development or redevelopment or sold.

Table of Conte n ts

Same Property Portfolio Properties

19 unchanged sentences

Real Estate Operating Expenses 245,346 250,554 (5,208) (2.08) % 1,706 649 3,802 477 1,298 1,926 1,154 7,986 253,306 261,592 (8,286) (3.17) %

Net Operating Income (Loss), Excluding Residential and Hotel

380,556 429,718 (49,162) (11.44) % 1,955 — 13,105 — (2,060) (1,034) 5,285 14,976 398,841 443,660 (44,819) (10.10) %

Residential Net Operating Income (2)

5,437 4,877 560 11.48 % — — — — — — — — 5,437 4,877 560 11.48 %

Net Operating Income, Excluding Residential and Hotel 401,972 429,802 (27,830) (6.48) % 1,922 649 14,554 1,099 96 658 1,433 14,011 419,977 446,219 (26,242) (5.88) %

Residential Net Operating Income (Loss) (2) 5,480 5,985 (505) (8.44) % — — (717) — — — — — 4,763 5,985 (1,222) (20.42) %

Hotel Net Operating Income (Loss) (2) (3,074) 4,271 (7,345) (171.97) % — — — — — — — — (3,074) 4,271 (7,345) (171.97) %

Net Operating Income (Loss)

$ 384,119 $ 440,359 $ (56,240) (12.77) % $ 1,955 $ — $ 13,105 $ — $ (2,060) $ (1,034) $ 5,285 $ 14,976 $ 402,404 $ 454,301 $ (51,897) (11.42) %

Net Operating Income $ 404,378 $ 440,058 $ (35,680) (8.11) % $ 1,922 $ 649 $ 13,837 $ 1,099 $ 96 $ 658 $ 1,433 $ 14,011 $ 421,666 $ 456,475 $ (34,809) (7.63) %

_______________

2 unchanged sentences

(2) For a detailed discussion of NOI, including the reasons management believes NOI is useful to investors, see page 58.

Residential Net Operating Income for the three months ended June 30, 2020 and 2019 is comprised of Residential Revenue of $ 9,402 and $ 8,999 less Residential Expenses of $ 3,965 and $ 4,122 , respectively.

Hotel Net Operating Income for the three months ended June 30, 2020 and 2019 is comprised of Hotel Revenue of $ 99 and $ 14,844 less Hotel Expenses of $ 1,973 and $ 9,080 , respectively, per the Consolidated Statements of Operations.

Table of Content s

Residential Net Operating Income for the three months ended September 30, 2020 and 2019 is comprised of Residential Revenue of $ 9,718 and $ 9,996 less Residential Expenses of $ 4,955 and $ 4,011 , respectively.

Hotel Net Operating Income for the three months ended September 30, 2020 and 2019 is comprised of Hotel Revenue of $ 90 and $ 13,014 less Hotel Expenses of $ 3,164 and $ 8,743 , respectively, per the Consolidated Statements of Operations.

Table of Conte n ts

Same Property Portfolio

Lease Revenue (Excluding Termination Income)

Lease revenue from the Same Property Portfolio decreased by approximately $51.4 million for the three months ended June 30, 2020 compared to 2019.

Lease revenue from the Same Property Portfolio decreased by approximately $25.0 million for the three months ended September 30, 2020 compared to 2019.

Approximately $7.5 million of the decrease was related to write-offs, which are discussed below.

The remaining decrease was a result of an approximately $4.1 million decrease due to our average occupancy decreasing from 94.4% to 93.8%, partially offset by our average revenue per square foot increasing by approximately $0.21, contributing approximately $3.8 million.

Excluding the write-offs, the remaining decrease was a result of an approximately $9.8 million decrease due to our average occupancy decreasing from 94.0% to 92.6%, and our average revenue per square foot decreasing by approximately $1.11, contributing approximately $7.7 million.

Under ASC 842, any write-off for bad debt, including accrued rent, is recorded as a reduction to lease revenue.

As a result, during the three months ended June 30, 2020, for our Same Property Portfolio, we wrote off approximately $33.7 million and $17.4 million of accrued rent and accounts receivable balances, respectively.

In addition, as a result of COVID-19, for the Same Property Portfolio, during the second quarter of 2020, we executed lease modification agreements for approximately 2.4 million square feet and granted approximately $25.0 million of cash rent abatements and deferrals, of which approximately $14.0 million was related to rental charges for the second quarter of 2020.

As a result, during the three months ended September 30, 2020, for our Same Property Portfolio, we wrote off approximately $4.1 million and $3.4 million of accrued rent and accounts receivable balances, respectively.

In addition, as a result of COVID-19, for the Same Property Portfolio, during the third quarter of 2020, we executed lease modification agreements for approximately 479,000 square feet and granted approximately $21.9 million of cash rent abatements and deferrals, of which approximately $11.7 million was related to rental charges for the third quarter of 2020.

2 unchanged sentences

We expect to continue to execute lease modification agreements as a result of COVID-19.

3 unchanged sentences

Termination Income

Termination income decreased by approximately $1.3 million for the three months ended June 30, 2020 compared to 2019.

Termination income for the three months ended June 30, 2020 related to 17 tenants across the Same Property Portfolio and totaled approximately $3.3 million, which was primarily related to tenants that terminated leases early in the New York City region.

Termination income for the three months ended June 30, 2019 related to 10 tenants across the Same Property Portfolio and totaled approximately $4.6 million, of which approximately $2.0 million is from a tenant that terminated a lease early at 399 Park Avenue in New York City.

Termination income increased by approximately $1.0 million for the three months ended September 30, 2020 compared to 2019.

Termination income for the three months ended September 30, 2020 related to 10 tenants across the Same Property Portfolio and totaled approximately $2.7 million, which was primarily related to tenants that terminated leases early in the New York and Washington DC regions.

Termination income for the three months ended September 30, 2019 related to 17 tenants across the Same Property Portfolio and totaled approximately $1.7 million, of which approximately $1.0 million is from a tenant that terminated a lease early at 399 Park Avenue in New York City.

Parking and Other Revenue

Parking and other revenue decreased by approximately $12.2 million for the three months ended June 30, 2020 compared to 2019.

Parking and other revenue decreased by approximately $9.1 million for the three months ended September 30, 2020 compared to 2019.

Parking revenue decreased by approximately $10.4 million while other revenue increased by approximately $1.3 million.

The decrease in parking revenue was primarily due to a decrease in transient and monthly parking.

Table of Content s

As a result, for the three months ended June 30, 2020, transient and monthly parking decreased by approximately $8.5 million and $2.3 million, respectively.

Table of Conte n ts

During the third quarter of 2020, with stay-at-home orders in effect in certain regions, business closures and people working remotely in a majority of regions in which our properties are located, we generated minimal hourly/daily parking revenue and this trend may continue for as long as these conditions exist.

As a result, for the three months ended September 30, 2020, transient and monthly parking decreased by approximately $5.4 million and $2.9 million, respectively.

Some of our monthly parking revenues are contractual agreements embedded in our leases, and some are at will individual agreements.

Real Estate Operating Expenses

Real estate operating expenses from the Same Property Portfolio decreased by approximately $15.8 million, or 6.49%, for the three months ended June 30, 2020 compared to 2019, due primarily to decreases in utility expense and other real estate operating expenses of approximately $7.0 million, or 29.2%, and $8.8 million, or 4.0%, respectively.

The decrease in utility expense was experienced across the portfolio and was primarily driven by a decrease in physical tenant occupancy, which led to lower demand for electricity and HVAC.

Real estate operating expenses from the Same Property Portfolio decreased by approximately $5.2 million, or 2.1%, for the three months ended September 30, 2020 compared to 2019, due primarily to decreases in utility and cleaning expense of approximately $5.6 million, or 18.7%, and $4.5 million, or 20.7%, respectively, partially offset by an increase in other real estate operating expenses of approximately $4.9 million, or 2.5%.

Properties Acquired Portfolio

The table below lists the properties acquired between April 1, 2019 and June 30, 2020.

Rental revenue and real estate operating expenses increased by approximately $3.3 million and $1.4 million, respectively, for the three months ended June 30, 2020 compared to 2019, as detailed below.

The table below lists the properties acquired between July 1, 2019 and September 30, 2020.

Rental revenue and real estate operating expenses increased by approximately $2.3 million and $1.1 million, respectively, for the three months ended September 30, 2020 compared to 2019, as detailed below.

Square Feet Rental Revenue Real Estate Operating Expenses

7 unchanged sentences

(1) Located at 777 Harrison Street in San Francisco, California (known as Fourth + Harrison and formerly known as 425 Fourth Stree t) .

Table of Conte n ts

Properties Placed In-Service Portfolio

The table below lists the properties that were placed in-service or partially placed in-service between April 1, 2019 and June 30, 2020.

Rental revenue and real estate operating expenses from our Properties Placed In-Service Portfolio increased by approximately $16.0 million and $2.9 million, respectively, for the three months ended June 30, 2020 compared to 2019, as detailed below.

The table below lists the properties that were placed in-service or partially placed in-service between July 1, 2019 and September 30, 2020.

Rental revenue and real estate operating expenses from our Properties Placed In-Service Portfolio increased by approximately $16.8 million and $4.1 million, respectively, for the three months ended September 30, 2020 compared to 2019, as detailed below.

Quarter Initially Placed In-Service Quarter Fully Placed In-Service Rental Revenue Real Estate Operating Expenses

5 unchanged sentences

First Quarter, 2020 First Quarter, 2020 275,809 4,935 — 4,935 1,300 — 1,300

Total Office 977,371 18,356 1,576 16,780 3,802 477 3,325

The Skylyne Third Quarter, 2020 Third Quarter, 2020 330,996 23 — 23 740 — 740

Total Residential 330,996 23 — 23 740 — 740

1,308,367 $ 18,379 $ 1,576 $ 16,803 $ 4,542 $ 477 $ 4,065

Properties in Development or Redevelopment Portfolio

The table below lists the properties that were in development or redevelopment between April 1, 2019 and June 30, 2020.

Rental revenue and real estate operating expenses from our Properties in Development or Redevelopment Portfolio decreased by approximately $2.1 million and $1.0 million, respectively, for the three months ended June 30, 2020 compared to 2019.

Table of Content s

The table below lists the properties that were in development or redevelopment between July 1, 2019 and September 30, 2020.

Rental revenue and real estate operating expenses from our Properties in Development or Redevelopment Portfolio decreased by approximately $1.2 million and $0.6 million, respectively, for the three months ended September 30, 2020 compared to 2019.

Rental Revenue Real Estate Operating Expenses

1 unchanged sentence

(dollars in thousands)

One Five Nine East 53rd Street (1)

August 19, 2016 220,000 $ (2,279) $ 989 $ (3,268) $ 279 $ 395 $ (116)

325 Main Street (2)

May 9, 2019 115,000 36 (1,953) 1,989 (75) 547 (622)

200 West Street (3)

September 30, 2019 261,000 1,325 2,098 (773) 938 1,226 (288)

One Five Nine East 53rd Street August 19, 2016 220,000 $ 161 $ 919 $ (758) $ 307 $ 476 $ (169)

325 Main Street (1) May 9, 2019 115,000 — 49 (49) 207 298 (91)

200 West Street (2) September 30, 2019 261,000 1,233 1,616 (383) 784 1,152 (368)

596,000 $ 1,394 $ 2,584 $ (1,190) $ 1,298 $ 1,926 $ (628)

_______________

(1) Rental revenue for the three months ended June 30, 2020, includes an approximately $2.9 million write-off of accrued rent and accounts receivable balances for a terminated tenant.

(2) Rental revenue for the three months ended June 30, 2019 includes the acceleration and write-off of accrued rent associated with the early termination of a lease at the property.

Real estate operating expenses for the three months ended June 30, 2019 includes approximately $0.4 million of demolition costs.

(3) Rental revenue and real estate operating expenses for the three months ended June 30, 2019 are related to the entire building.

(1) Real estate operating expenses for the three months ended September 30, 2020 and September 30, 2019 includes approximately $0.2 million and $0.3 million of demolition costs, respectively.

(2) Rental revenue and real estate operating expenses for the three months ended September 30, 2019 are related to the entire building.

The redevelopment is a conversion of a 126,000 square foot portion of the property to laboratory space.

Table of Conte n ts

Properties Sold Portfolio

The table below lists the properties we sold between April 1, 2019 and June 30, 2020.

Rental revenue and real estate operating expenses from our Properties Sold Portfolio decreased by approximately $15.2 million and $5.5 million, respectively, for the three months ended June 30, 2020 compared to 2019, as detailed below.

The table below lists the properties we sold between July 1, 2019 and September 30, 2020.

Rental revenue and real estate operating expenses from our Properties Sold Portfolio decreased by approximately $19.4 million and $6.8 million, respectively, for the three months ended September 30, 2020 compared to 2019, as detailed below.

Rental Revenue Real Estate Operating Expenses

1 unchanged sentence

(dollars in thousands)

One Tower Center June 3, 2019 Office 410,000 $ — $ 895 $ (895) $ — $ 904 $ (904)

164 Lexington Road June 28, 2019 Office 64,000 — — — — 39 (39)

Washingtonian North December 20, 2019 Land N/A $ — $ — $ — $ — $ 41 $ (41)

6 unchanged sentences

_______________

(1) Rental revenue for the three months ended June 30, 2019 includes approximately $0.3 million of termination income (See Notes 3 and 5 to the Consolidated Financial Statements).

(1) Rental revenue for the three months ended September 30, 2019 includes approximately $0.3 million of termination income (See Notes 3 and 5 to the Consolidated Financial Statements).

(2) We completed the sale of a portion of our Capital Gallery property located in Washington, DC.

3 unchanged sentences

The amounts shown represent the entire property and not just the portion sold (See Note 3 to the Consolidated Financial Statements).

For additional information on the sales of the above properties and land parcel refer to “Results of Operations—Other Income and Expense Items - Gains on Sales of Real Estate” within “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

For additional information on the sales of the above properties and land parcel refer to “Results of Operations—Other Income and Expense Items - Losses on Sales of Real Estate” within “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Residential Net Operating Income

Net operating income for our residential same properties increased by approximately $0.6 million for the three months ended June 30, 2020 compared to 2019.

The following reflects our occupancy and rate information for The Lofts at Atlantic Wharf, The Avant at Reston Town Center, Signature at Reston and Proto Kendall Square for the three months ended June 30, 2020 and 2019.

Table of Content s

Net operating income for our residential same properties decreased by approximately $0.5 million for the three months ended September 30, 2020 compared to 2019.

Net operating income for the three months ended September 30, 2020 includes approximately $0.7 million of termination income from a retail tenant.

The Lofts at Atlantic Wharf The Avant at Reston Town Center Signature at Reston Proto Kendall Square

14 unchanged sentences

Vacancy loss is determined by valuing vacant units at current Market Rents.

By measuring vacant units at their Market Rents, Average Economic Occupancy takes into account the fact that units of different sizes and locations within a residential property have different economic impacts on a residential property’s total possible gross revenue.

By measuring vacant units at their Market Rents, Average Economic Occupancy takes into account the

Table of Conte n ts

fact that units of different sizes and locations within a residential property have different economic impacts on a residential property’s total possible gross revenue.

Market Rents used by us in calculating Economic Occupancy are based on the current market rates set by the managers of our residential properties based on their experience in renting their residential property’s units and publicly available market data.

1 unchanged sentence

Market Rents for a period are based on the average Market Rents during that period and do not reflect any impact for cash concessions.

Hotel Net Operating Income

Net operating income for the Boston Marriott Cambridge hotel property decreased by approximately $7.6 million for the three months ended June 30, 2020 compared to 2019.

As a result of COVID-19, we closed the Boston Marriott Cambridge in March 2020 and it did not re-open during the second quarter of 2020.

We do not know when the hotel will re-open.

Hotel Net Operating Income (Loss)

Net operating income (loss) for the Boston Marriott Cambridge hotel property decreased by approximately $7.3 million for the three months ended September 30, 2020 compared to 2019.

The Boston Marriott Cambridge closed in March 2020 due to COVID-19 and did not re-open until October 2, 2020.

The hotel is operating at a monthly deficit.

“Risk Factors” for additional details.

The following reflects our occupancy and rate information for the Boston Marriott Cambridge hotel for the three months ended June 30, 2020 and 2019.

The following reflects our occupancy and rate information for the Boston Marriott Cambridge hotel for the three months ended September 30, 2020 and 2019.

Occupancy — % 90.7 % (100.0) %

3 unchanged sentences

Development and Management Services Revenue

Development and management services revenue decreased by approximately $1.9 million for the three months ended June 30, 2020 compared to 2019.

Development services revenue decreased by approximately $2.4 million while management services revenue increased by approximately $0.5 million.

The decrease in development services revenue was primarily related to a decrease of approximately $1.8 million in development fees earned in the Boston and New York regions and a decrease of approximately $0.6 million in fees associated with tenant improvement projects earned in the Boston region.

Table of Content s

Development and management services revenue decreased by approximately $3.0 million for the three months ended September 30, 2020 compared to 2019.

Development services revenue and management services revenue decreased by approximately $2.6 million and $0.4 million, respectively.

The decrease in development services revenue was primarily related to a decrease of approximately $2.3 million in development fees earned in the Washington, DC and Boston regions and a decrease of approximately $0.3 million in fees associated with tenant improvement projects earned in the San Francisco region.

The decrease in management services revenue was primarily related to a decrease in leasing commissions earned from our unconsolidated joint ventures in the Boston region, partially offset by property management fees earned from third-party owned buildings in the Washington, DC region.

General and Administrative Expense

General and administrative expense increased by approximately $2.7 million for the three months ended June 30, 2020 compared to 2019 primarily due to increases in compensation expense and other general and administrative expenses of approximately $2.3 million and $0.4 million, respectively.

The increase in compensation expense was primarily due to an approximately $3.4 million increase in the value of our deferred compensation plan, partially offset by a decrease in other compensation expenses.

General and administrative expense decreased by approximately $3.3 million for the three months ended September 30, 2020 compared to 2019 primarily due to decreases in compensation expense and other general and administrative expenses of approximately $2.9 million and $0.4 million, respectively.

The decrease in other general and administrative expenses was primarily related to a decrease in meals and travel expense.

Capitalized wages for the three months ended June 30, 2020 and 2019 were approximately $3.4 million and $2.6 million, respectively.

Capitalized wages for the three months ended September 30, 2020 and 2019 were approximately $3.4 million and $2.6 million, respectively.

These costs are not included in the general and administrative expenses discussed above.

Transaction Costs

Transaction costs decreased by approximately $85,000 for the three months ended June 30, 2020 compared to 2019 due primarily to costs incurred in connection with the pursuit and formation of new joint ventures.

Transaction costs decreased by approximately $0.2 million for the three months ended September 30, 2020 compared to 2019 due primarily to costs incurred in connection with the pursuit and formation of new joint ventures.

In general, transaction costs relating to the formation of new and pending joint ventures and the pursuit of other transactions are expensed as incurred.

Table of Conte n ts

Depreciation and Amortization Expense

4 unchanged sentences

Boston Properties, Inc.

Depreciation and amortization expense increased by approximately $0.8 million for the three months ended June 30, 2020 compared to 2019, as detailed below.

Portfolio Depreciation and Amortization for the three months ended June 30,

Depreciation and amortization expense increased by approximately $0.6 million for the three months ended September 30, 2020 compared to 2019, as detailed below.

Portfolio Depreciation and Amortization for the three months ended September 30,

2020 2019 Change

6 unchanged sentences

$ 166,456 $ 165,862 $ 594

_______________

(1) On May 9, 2019, we commenced development of 325 Main Street in Cambridge, Massachusetts.

As a result, during the three months ended June 30, 2019, we recorded approximately $9.9 million of accelerated depreciation expense for the demolition of the building, of which approximately $0.4 million related to the step-up of real estate assets.

Table of Content s

Boston Properties Limited Partnership

Depreciation and amortization expense increased by approximately $1.2 million for the three months ended June 30, 2020 compared to 2019, as detailed below.

Portfolio Depreciation and Amortization for the three months ended June 30,

Depreciation and amortization expense increased by approximately $0.7 million for the three months ended September 30, 2020 compared to 2019, as detailed below.

Portfolio Depreciation and Amortization for the three months ended September 30,

2020 2019 Change

6 unchanged sentences

$ 164,706 $ 164,020 $ 686

_______________

(1) On May 9, 2019, we commenced development of 325 Main Street in Cambridge, Massachusetts.

As a result, during the three months ended June 30, 2019, we recorded approximately $9.5 million of accelerated depreciation expense for the demolition of the building.

Direct Reimbursements of Payroll and Related Costs From Management Services Contracts and Payroll and Related Costs From Management Service Contracts

2 unchanged sentences

Other Income and Expense Items

Income from Unconsolidated Joint Ventures

For the three months ended June 30, 2020 compared to 2019, income from unconsolidated joint ventures decreased by approximately $46.1 million primarily due to an approximately $47.8 million gain on sale of real estate from the sale of 540 Madison Avenue during the three months ended June 30, 2019 and the resulting loss of income thereafter, along with the addition of our Gateway Commons joint venture and the partial placing in-service of the Hub50House joint venture in South San Francisco, CA and Boston, MA, respectively.

These joint ventures reduced our net income by approximately $2.5 million for the three months ended June 30, 2020.

At June 30, 2020, the Hub50House was only 35% leased and we do not expect it to be stabilized until the first quarter of 2022.

Loss from Unconsolidated Joint Ventures

For the three months ended September 30, 2020 compared to 2019, loss from unconsolidated joint ventures increased by approximately $6.2 million due to a $2.9 million reduction of our net income at our Colorado Center joint venture, primarily due to a write-off of lease revenue during the three months ended September 30, 2020, along with the addition of our Gateway Commons joint venture and the placing in-service of the Hub50House joint

Table of Conte n ts

venture in South San Francisco, California and Boston, Massachusetts, respectively.

These joint ventures reduced our net income by approximately $1.9 million for the three months ended September 30, 2020.

During the three months ended September 30, 2020, Hub50House was fully placed in-service and we do not expect it to be stabilized until the first quarter of 2022.

The decrease in net income from the Gateway Commons joint venture was primarily related to depreciation and amortization.

The decrease in our net income was also due to a $0.8 million decrease at our Metropolitan Square joint venture in Washington, DC mainly attributable to increased interest expense related to the mortgage refinancing.

Under ASC 842, any write-off for bad debt, including accrued rent, will be recorded as a reduction to lease revenue.

As a result, during the three months ended June 30, 2020, for our unconsolidated joint ventures, we wrote off our share of the accrued rent and accounts receivable balances of approximately $0.7 million and $1.0 million, respectively.

As a result, during the three months ended September 30, 2020, for our unconsolidated joint ventures, we wrote off our share of the accrued rent and accounts receivable balances of approximately $1.9 million and $0.5 million, respectively.

These write-offs related to tenants that either terminated their leases or for which we determined that their accrued rent and/or accounts receivable balances were no longer probable of collection.

In addition, as a result of COVID-19, for properties owned by our unconsolidated joint ventures, during the third quarter of 2020, the joint ventures executed lease modification agreements for approximately 181,000 square feet.

As a result of these lease modification agreements, our share of the total cash rent abatements and deferrals granted was approximately $0.5 million, all of which related to rental charges for the third quarter of 2020.

As a result of the lease modification agreements that extended the lease term, we expect to see an increase in cash rent received in the future.

Table of Content s

In April 2020, the FASB staff issued the 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.

The joint ventures expect to continue to execute lease modification agreements as a result of COVID-19.

2 unchanged sentences

“Risk Factors” for additional details.

Gains on Sales of Real Estate

Gains on sales of real estate may differ between BXP and BPLP as a result of previously applied acquisition accounting by BXP for the issuance of common stock in connection with non-sponsor OP Unit redemptions by BPLP.

This accounting resulted in a step-up of the real estate assets at BXP that was allocated to certain properties.

The difference between the real estate assets of BXP as compared to BPLP for certain properties having an allocation of the real estate step-up will result in a corresponding difference in the gains on sales of real estate when those properties are sold.

For additional information, see the Explanatory Note that follows the cover page of this Quarterly Report on Form 10-Q.

Boston Properties, Inc.

Gains on sales of real estate increased by approximately $202.1 million for the three months ended June 30, 2020 compared to 2019, as detailed below.

Name Date Sold Property Type Square Feet Sale Price Net Cash Proceeds Gain (Loss) on Sale of Real Estate

(dollars in millions)

Capital Gallery June 25, 2020 Office 455,000 $ 253.7 $ 246.9 $ 203.8 (1)

One Tower Center

June 3, 2019 Office 410,000 $ 38.0 $ 36.6 $ (0.8)

164 Lexington Road

June 28, 2019 Office 64,000 4.0 3.8 2.5

$ 42.0 $ 40.4 $ 1.7

_______________

(1) We completed the sale of a portion of our Capital Gallery property located in Washington, DC.

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.

We continue to own the land, underground parking garage and remaining commercial office and retail space (See Note 3 to the Consolidated Financial Statements).

Table of Content s

Boston Properties Limited Partnership

Gains on sales of real estate increased by approximately $205.4 million for the three months ended June 30, 2020 compared to 2019, as detailed below.

Name Date Sold Property Type Square Feet Sale Price Net Cash Proceeds Gain (Loss) on Sale of Real Estate

(dollars in millions)

Capital Gallery June 25, 2020 Office 455,000 $ 253.7 $ 246.9 $ 207.2 (1)

One Tower Center

June 3, 2019 Office 410,000 $ 38.0 $ 36.6 $ (0.8)

164 Lexington Road

June 28, 2019 Office 64,000 4.0 3.8 2.6

$ 42.0 $ 40.4 $ 1.8

(1) We completed the sale of a portion of our Capital Gallery property located in Washington, DC.

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.

We continue to own the land, underground parking garage and remaining commercial office and retail space (See Note 3 to the Consolidated Financial Statements).

Losses on Sales of Real Estate

During the three months ended September 30, 2020, we incurred approximately $0.2 million of additional expenses related to the sale of a portion of Capital Gallery in Washington, DC, thus resulting in a loss on sale of real estate (See Note 3 to the Consolidated Financial Statements).

Interest and Other Income (Loss)

Interest and other income (loss) decreased by approximately $2.3 million for the three months ended June 30, 2020 compared to 2019.

Interest income and the credit loss allowance decreased by approximately $1.8 million and $0.5 million, respectively.

The decrease in interest income is primarily due to a decrease in interest rates.

On January 1, 2020, we adopted ASU 2016-13 and, as a result, were required to record a credit loss allowance related to our outstanding (1) related party note receivable, (2) notes receivable and (3) off-balance sheet credit exposures (See Note 2 to the Consolidated Financial Statements).

Interest and other income (loss) decreased by approximately $7.2 million for the three months ended September 30, 2020 compared to 2019.

Interest and other income decreased by approximately $5.7 million due primarily to a decrease in interest rates.

On January 1, 2020, we adopted ASU 2016-13 and, as a result, we were required to record anallowance for current expected credit losses related to our outstanding (1) related party note receivable, (2) notes receivable and (3) off-balance sheet credit exposures (See Note 2 to the Consolidated Financial Statements).

For the three months ended September 30, 2020 the allowance for current expected credit losses was $1.5 million.

Gains from Investments in Securities

Gains from investments in securities for the three months ended June 30, 2020 and 2019 related to investments that we have made to reduce our market risk relating to deferred compensation plans that we maintain for BXP’s officers and former non-employee directors.

Gains from investments in securities for the three months ended September 30, 2020 and 2019 related to investments that we have made to reduce our market risk relating to deferred compensation plans that we maintain for BXP’s officers and former non-employee directors.

Under the deferred compensation plans, each officer or non-employee director who is eligible to participate is permitted to defer a portion of the officer’s current income or the

Table of Conte n ts

non-employee director’s compensation on a pre-tax basis and receive a tax-deferred return on these deferrals based on the performance of specific investments selected by the officer or non-employee director.

1 unchanged sentence

The performance of these investments is recorded as gains from investments in securities.

During the three months ended June 30, 2020 and 2019, we recognized gains of approximately $4.6 million and $1.2 million, respectively, on these investments.

By comparison, our general and administrative expense increased by approximately $4.6 million and $1.2 million during the three months ended June 30, 2020 and 2019, respectively, as a result of increases in our liability under our deferred compensation plans that was associated with the performance of the specific investments selected by officers and former non-employee directors of BXP participating in the plans.

Table of Content s

During the three months ended September 30, 2020 and 2019, we recognized gains of approximately $1.9 million and $0.1 million, respectively, on these investments.

By comparison, our general and administrative expense increased by approximately $1.9 million and $0.1 million during the three months ended September 30, 2020 and 2019, respectively, as a result of increases in our liability under our deferred compensation plans that was associated with the performance of the specific investments selected by officers and former non-employee directors of BXP participating in the plans.

Loss From Early Extinguishment of Debt

On September 18, 2019, BPLP completed the redemption of $700.0 million in aggregate principal amount of its 5.625% senior notes due November 15, 2020.

The redemption price was approximately $740.7 million.

The redemption price included approximately $13.5 million of accrued and unpaid interest to, but not including, the redemption date.

Excluding the accrued and unpaid interest, the redemption price was approximately 103.90% of the principal amount being redeemed.

We recognized a loss from early extinguishment of debt totaling approximately $28.0 million, which amount included the payment of the redemption premium totaling approximately $27.3 million.

Interest Expense

Interest expense increased by approximately $4.8 million for the three months ended June 30, 2020 compared to 2019, as detailed below.

Component Change in interest expense for the three months ended June 30, 2020 compared to June 30, 2019

Interest expense increased by approximately $4.5 million for the three months ended September 30, 2020 compared to 2019, as detailed below.

Component Change in interest expense for the three months ended September 30, 2020 compared to September 30, 2019

(in thousands)

Increases to interest expense due to:

Issuance of $850 million in aggregate principal of 3.400% senior notes due 2029 on June 21, 2019

Issuance of $1.25 billion in aggregate principal of 3.250% senior notes due 2031 on May 5, 2020

12 unchanged sentences

As portions of properties are placed in-service, we cease capitalizing interest on that portion and interest is then expensed.

Interest capitalized for the three months ended June 30, 2020 and 2019 was approximately $13.7 million and $13.3 million, respectively.

As portions of properties are placed in-service, we cease capitalizing interest on that portion and interest is

Table of Conte n ts

then expensed.

Interest capitalized for the three months ended September 30, 2020 and 2019 was approximately $13.5 million and $16.2 million, respectively.

These costs are not included in the interest expense referenced above.

At June 30, 2020, our outstanding variable rate debt consisted of BPLP’s $2.0 billion 2017 Credit Facility, which includes the $500.0 million Delayed Draw Facility and the $1.5 billion Revolving Facility.

The Delayed Draw Facility had $500.0 million outstanding as of June 30, 2020.

The Revolving Facility did not have an outstanding balance as of June 30, 2020.

On May 5, 2020, BPLP completed a public offering of $1.25 billion in aggregate principal amount of its 3.250% unsecured senior notes due 2031 (See Note 6 to the Consolidated Financial Statements).

We used a portion of the net proceeds from this offering for the repayment of borrowings outstanding under the Revolving Facility.

Table of Content s

At September 30, 2020, our outstanding variable rate debt consisted of BPLP’s $2.0 billion 2017 Credit Facility, which includes the $500.0 million Delayed Draw Facility and the $1.5 billion Revolving Facility.

The Delayed Draw Facility had $500.0 million outstanding as of September 30, 2020.

The Revolving Facility did not have an outstanding balance as of September 30, 2020.

Noncontrolling Interests in Property Partnerships

Noncontrolling interests in property partnerships decreased by approximately $18.2 million for the three months ended June 30, 2020 compared to 2019, as detailed below.

Property Noncontrolling Interests in Property Partnerships for the three months ended June 30,

Noncontrolling interests in property partnerships decreased by approximately $2.9 million for the three months ended September 30, 2020 compared to 2019, as detailed below.

Property Noncontrolling Interests in Property Partnerships for the three months ended September 30,

2020 2019 Change

7 unchanged sentences

_______________

(1) During the three months ended June 30, 2020, we wrote off approximately $26.8 million of accrued rent and accounts receivable balances for tenants that either terminated their leases or for which we determined their accrued rent and/or accounts receivable balances, primarily retail tenants, were no longer probable of collection.

Approximately $14.7 million represents our share of the write-offs.

(2) During the three months ended June 30, 2020, we wrote off approximately $2.9 million of accrued rent and accounts receivable balances for tenants that either terminated their leases or for which we determined their accrued rent and/or accounts receivable balances, primarily retail tenants, were no longer probable of collection.

(1) The increase during the three months ended September 30, 2020 was related to above-/below-market lease assets that were fully amortized in 2020.

(2) The decrease during the three months ended September 30, 2020 was related to leases that were terminated during the three months ended June 30, 2020 as a result of COVID-19.

(3) During the three months ended September 30, 2020, we wrote off approximately $0.5 million of accrued rent and accounts receivable balances for tenants whose balances we determined were no longer probable of collection.

Approximately $0.3 million represents our share of the write-offs.

Noncontrolling Interest—Common Units of the Operating Partnership

For BXP, noncontrolling interest—common units of the Operating Partnership increased by approximately $11.2 million for the three months ended June 30, 2020 compared to 2019 due primarily to an increase in allocable income, which was the result of recognizing a greater gain on sales of real estate amount during 2020 partially offset by a decrease in the noncontrolling interest’s ownership percentage.

For BXP, noncontrolling interest—common units of the Operating Partnership decreased by approximately $2.5 million for the three months ended September 30, 2020 compared to 2019 due primarily to a decrease in allocable income and a decrease in the noncontrolling interest’s ownership percentage.

Due to our ownership structure, there is no corresponding line item on BPLP’s financial statements.

9 unchanged sentences

We expect to satisfy these needs using one or more of the following:

Table of Conte n ts

• cash flow from operations;

5 unchanged sentences

• sales of real estate;

Table of Content s

• issuances of BXP equity securities and/or additional preferred or common units of partnership interest in BPLP.

3 unchanged sentences

Although we may seek to fund our development projects with construction loans, which may require guarantees by BPLP, the financing for each particular project ultimately depends on several factors, including, among others, the project’s size and duration, the extent of pre-leasing and our available cash and access to cost effective capital at the given time.

Table of Content s

The following table presents information on properties under construction and redevelopment as of June 30, 2020 (dollars in thousands):

Construction Properties Estimated Stabilization Date Location # of Buildings Estimated Square Feet Investment to Date (1)(2)(3) Estimated Total Investment (1)(2) Total Available (1) Outstanding at 6/30/2020 (1) Estimated Future Equity Requirement (1)(2)(4) Percentage Leased (5)

Table of Conte n ts

The following table presents information on properties under construction and redevelopment as of September 30, 2020 (dollars in thousands):

Estimated Future Equity Requirement (1)(2)(4) Percentage Leased (5)

Dock 72 (50% ownership)

Third Quarter, 2021 Brooklyn, NY 1 670,000 $ 203,461 $ 243,150 $ 125,000 $ 93,322 $ 8,011 33 % (6)

Second Quarter, 2022 Brooklyn, NY 1 670,000 $ 209,795 $ 243,150 $ 125,000 $ 98,206 $ 6,561 33 % (6)

325 Main Street

10 unchanged sentences

7 3,998,000 1,093,533 2,199,150 452,500 254,841 918,004 78 %

Hub50House (440 units) (50% ownership)

First Quarter, 2022 Boston, MA 1 320,000 144,507 153,500 90,000 81,428 421 47 % (7)

The Skylyne (402 units)

First Quarter, 2022 Oakland, CA 1 324,000 235,496 263,600 — — 28,104 — (8)

Total Residential Properties under Construction

2 644,000 380,003 417,100 90,000 81,428 28,525 47 %

Redevelopment Properties

8 unchanged sentences

(1) Represents our share.

(2) Investment to Date, Estimated Total Investment and Estimated Future Equity Requirement all include our share of acquisition expenses, as applicable, and reflect our share of the estimated net revenue/expenses that we expect to incur prior to stabilization of the project, including any amounts actually received or paid through June 30, 2020.

(3) Includes approximately $98.2 million of unpaid but accrued construction costs and leasing commissions.

(4) Excludes approximately $98.2 million of unpaid but accrued construction costs and leasing commissions.

(5) Represents percentage leased as of August 3, 2020, including leases with future commencement dates.

(6) This property is 34% placed in-service as of June 30, 2020.

(7) This property is 81% placed in-service as of June 30, 2020.

(8) This development is subject to a 99-year ground lease (including extension options) with an option to purchase in the future.

(5) Represents percentage leased as of November 3, 2020, including leases with future commencement dates.

(6) This property was 34% placed in-service as of September 30, 2020.

(7) Represents the low-rise portion of 601 Lexington Avenue.

(8) Represents a portion of the property under redevelopment for conversion to laboratory space.

(11) Percentage leased excludes residential units.

Table of Content s

Table of Conte n ts

Lease revenue (which includes recoveries from tenants), other income from operations, available cash balances, mortgage financings, unsecured indebtedness and draws on BPLP’s Revolving Facility are the principal sources of capital that we use to fund operating expenses, debt service, maintenance and repositioning capital expenditures, tenant improvements and the minimum distribution required to enable BXP to maintain its REIT qualification.

3 unchanged sentences

Material adverse changes in one or more sources of capital, including from the impacts of COVID-19, may adversely affect our net cash flows.

For example, during the second quarter of 2020, our rent collections remained strong as we collected 99% of rents from our office tenants and 96% of rents from all tenants, including retail tenants.

However, COVID-19 resulted in the write-off of accrued rent and accounts receivable balances for primarily retail tenants, decreases in parking and other revenue and the closure of our hotel, which reduced our revenue.

For example, during the third quarter of 2020, our rent collections remained strong as we collected 99% of rents from our office tenants and 97% of rents from all tenants, including retail tenants.

However, COVID-19 resulted in the write-off of accrued rent and accounts receivable balances for primarily retail, fitness and entertainment tenants, decreases in parking and other revenue and the continued closure of our hotel, which reduced our revenue.

In turn, if these impacts are material, they could adversely affect our ability to fund operating expenses, dividends and distributions, debt service payments, maintenance and repositioning capital expenditures and tenant improvements.

1 unchanged sentence

Our primary uses of capital over the next twelve months will be the completion of our current and committed development and redevelopment projects and the repayment of $850 million aggregate principal amount of BPLP’s 4.125% senior unsecured notes that mature in May 2021.

As of June 30, 2020, our share of the remaining development and redevelopment costs that we expect to fund through 2024 is approximately $1.1 billion.

To satisfy these capital needs, as of August 3, 2020 we had approximately $1.4 billion of cash and cash equivalents, of which approximately $103 million is attributable to our consolidated joint venture partners, as well as approximately $250 million held in escrow for 1031 exchanges.

On May 5, 2020, we enhanced our liquidity through BPLP’s issuance of $1.25 billion of 3.250% unsecured senior notes due 2031.

We used $250.0 million of the net proceeds from the offering to repay borrowings outstanding under the Revolving Facility.

In addition, during the second quarter of 2020, (1) we sold a portion of our Capital Gallery property which was comprised of approximately 455,000 net rentable square feet of commercial office space for approximately $254 million, which resulted in net proceeds of approximately $247 million and (2) a joint venture in which we own 50% sold Annapolis Junction Building Eight, a vacant 126,000 square foot office building, and two additional land parcels at Annapolis Junction Business Park for approximately $47 million which resulted in net proceeds to us of approximately $15 million, after the repayment of the debt.

Although the full extent to which COVID-19 will impact our liquidity and capital resources, as well as the duration of such impact, will depend on a wide range of factors, all of which are highly uncertain and cannot be predicted with confidence at this time, we believe tha t our strong liquidity, including the approximately $1.5 billion available under the Revolving Facility and available cash, as of August 3, 2020, is sufficient to fund our remaining capital requirements on existing development and redevelopment projects, repay our maturing indebtedness when due and still allow us to act opportunistically on attractive investment opportunities.

We also renewed BXP’s $600.0 million “at the market” (“ATM”) equity offering program in May 2020 through which BXP 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.

Under the ATM stock offering program, BXP may also engage in forward sale transactions with affiliates of certain sales agents for the sale of its common stock on a forward basis.

BXP has not sold any shares under the renewed program.

As of September 30, 2020, our share of the remaining development and redevelopment costs that we expect to fund through 2024 was approximately $1.0 billion.

To satisfy these capital needs, as of November 2, 2020, we had approximately $1.6 billion of cash and cash equivalents, of which approximately $117 million is attributable to our consolidated joint venture partners.

Although the full extent to which COVID-19 will impact our liquidity and capital resources, as well as the duration of such impact, will depend on a wide range of factors, all of which are highly uncertain and cannot be predicted with confidence at this time, we believe that our strong liquidity, including the approximately $1.5 billion available under the Revolving Facility and available cash, as of November 2, 2020, is sufficient to fund our remaining capital requirements on existing development and redevelopment projects, repay our maturing indebtedness when due and still allow us to act opportunistically on attractive investment opportunities.

We have not sold any shares under BXP’s $600.0 million “at the market” equity offering program.

We may seek to enhance our liquidity to provide sufficient capacity to fund our remaining capital requirements on existing development/redevelopment projects, fund our foreseeable potential development activity, pursue additional attractive investment opportunities and refinance or repay indebtedness.

Our unconsolidated joint ventures have approximately $313.8 million of debt maturing in 2020, of which our share is approximately $156.9 million.

On October 30, 2020, a joint venture in which we have a 50% interest refinanced the mortgage loan collateralized by its Market Square North property located in Washington, DC.

The outstanding balance of the loan totaled approximately $114.2 million and was scheduled to mature on November 1, 2020.

The new mortgage loan totals $125.0 million and matures on November 10, 2025.

With the refinancing of Market Square North, our unconsolidated joint ventures have approximately $208.5 million of debt maturing in 2020, of which our share is approximately $104.3 million.

Depending on interest rates and overall conditions in the debt and equity markets, we may decide to access either or both of these markets in advance of the need for the funds.

Doing so may result in us carrying additional cash and cash equivalents pending our use of the proceeds, which would increase our net interest expense and be dilutive to our earnings.

Table of Content s

REIT Tax Distribution Considerations

1 unchanged sentence

Our policy is for BXP to distribute at least 100% of its taxable income, including capital gains, to avoid paying federal tax.

On December 17, 2019, the Board of Directors of BXP increased our regular quarterly dividend from $0.95 per common share to $0.98 per common share, or 3%, beginning with the fourth quarter of 2019.

On December 17, 2019, the Board of Directors of BXP increased our regular quarterly

Table of Conte n ts

dividend from $0.95 per common share to $0.98 per common share, or 3%, beginning with the fourth quarter of 2019.

Common and LTIP unitholders of limited partnership interest in BPLP, received the same total distribution per unit.

BXP’s Board of Directors will continue to evaluate BXP’s dividend rate in light of our actual and projected taxable income, liquidity requirements and other circumstances, including the impact of COVID-19, and there can be no assurance that the future dividends declared by BXP’s Board of Directors will not differ materially from the current quarterly dividend amount.

BXP’s Board of Directors will continue to evaluate BXP’s dividend rate in light of our actual and projected taxable income (including gains on sales), liquidity requirements and other circumstances, including the impact of COVID-19, and there can be no assurance that the future dividends declared by BXP’s Board of Directors will not differ materially from the current quarterly dividend amount.

To the extent that we sell assets at a gain and cannot efficiently use the proceeds in a tax deferred manner for either our development activities or attractive acquisitions, BXP would, at the appropriate time, decide whether it is better to declare a special dividend, adopt a stock repurchase program, reduce indebtedness or retain the cash for future investment opportunities.

5 unchanged sentences

The following summary discussion of our cash flows is based on the Consolidated Statements of Cash Flows and is not meant to be an all-inclusive discussion of the changes in our cash flows for the periods presented below.

Cash and cash equivalents and cash held in escrows aggregated approximately $2.0 billion and $1.2 billion at June 30, 2020 and 2019, respectively, representing an increase of approximately $0.8 billion.

Cash and cash equivalents and cash held in escrows aggregated approximately $1.8 billion and $0.8 billion at September 30, 2020 and 2019, respectively, representing an increase of approximately $1.0 billion.

The following table sets forth changes in cash flows:

Six months ended June 30,

Nine months ended September 30,

2020 2019 Increase

11 unchanged sentences

“Risk Factors” for additional details.

Table of Content s

Cash is used in investing activities to fund acquisitions, development, net investments in unconsolidated joint ventures and maintenance and repositioning capital expenditures.

We selectively invest in new projects that enable us to take advantage of our development, leasing, financing and property management skills and invest in existing buildings to enhance or maintain their market position.

Cash used in investing activities for the six months ended June 30, 2020 consisted primarily of acquisitions of real estate, development projects, building and tenant improvements and capital contributions to unconsolidated joint ventures, partially offset by the proceeds from the sales of real estate and capital distributions from unconsolidated joint ventures.

Cash used in investing activities for the six months ended June 30, 2019 consisted primarily of the acquisition of real estate, development projects, building and tenant improvements and capital contributions to unconsolidated joint ventures, partially offset by the proceeds from the sale of real estate and capital distributions from unconsolidated joint ventures, as detailed below:

Six months ended June 30,

Cash used in investing activities for the nine months ended September 30, 2020 consisted primarily of acquisitions of real estate, development projects, building and tenant improvements and capital contributions to unconsolidated joint ventures, partially offset by the proceeds from the

Table of Conte n ts

sales of real estate and capital distributions from unconsolidated joint ventures.

Cash used in investing activities for the nine months ended September 30, 2019 consisted primarily of the acquisition of real estate, development projects, building and tenant improvements and capital contributions to unconsolidated joint ventures, partially offset by the proceeds from the sale of real estate and capital distributions from unconsolidated joint ventures, as detailed below:

Nine months ended September 30,

(in thousands)

3 unchanged sentences

Tenant improvements (172,401) (191,532)

Right of use assets - finance leases — (5,152)

Proceeds from sales of real estate (3) 505,679 83,486

1 unchanged sentence

Capital distributions from unconsolidated joint ventures (5) 55,123 136,807

Cash and cash equivalents deconsolidated — (24,112)

Issuance of notes receivable, net (6) (9,800) —

4 unchanged sentences

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

On July 31, 2020, we acquired an undivided ownership interest in real property at 759 Harrison Street located in San Francisco, California for a purchase price totaling approximately $2.3 million.

On January 10, 2019, we acquired land parcels at our Carnegie Center property located in Princeton, New Jersey for a gross purchase price of approximately $51.5 million, which includes an aggregate of approximately $8.6 million of additional amounts that are payable in the future to the seller upon the development or sale of each of the parcels.

The land parcels will support approximately 1.7 million square feet of development.

(2) Construction in progress for the six months ended June 30, 2020 includes ongoing expenditures associated with 17Fifty Presidents Street and 20 CityPoint, which were completed and fully placed in-service during the six months ended June 30, 2020.

In addition, we incurred costs associated with our continued development/redevelopment of One Five Nine East 53rd Street, Reston Next (formerly Reston Gateway), 2100 Pennsylvania Avenue, 200 West Street, The Skylyne and 325 Main Street.

Construction in progress for the six months ended June 30, 2019 includes ongoing expenditures associated with Salesforce Tower, which was placed in-service during the year ended December 31, 2018.

In addition, we incurred costs associated with our continued development/redevelopment of One Five Nine East 53rd Street, 145 Broadway, 20 CityPoint, 17Fifty Presidents Street, Reston Next (formerly Reston Gateway), The Skylyne and 325 Main Street.

On August 27, 2019, we acquired 880 and 890 Winter Street located in Waltham, Massachusetts for a gross

purchase price of approximately $106.0 million in cash, including transaction costs.

880 and 890 Winter

Street consists of two Class A office properties aggregating approximately 392,000 net rentable square feet.

(2) Construction in progress for the nine months ended September 30, 2020 includes ongoing expenditures associated with 17Fifty Presidents Street, 20 CityPoint and The Skylyne, which were partially or fully placed in-service during the nine months ended September 30, 2020.

In addition, we incurred costs associated with our continued development/redevelopment o f One Five Nine East 53rd Street, Reston Next (formerly Reston Gateway), 2100 Pennsylvania Avenue, 200 West Street and 325 Main Street.

Construction in progress for the nine months ended September 30, 2019 includes ongoing expenditures associated with Salesforce Tower, which was placed in-service during the year ended December 31, 2018.

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

Net cash proceeds totaled approximately $254.0 million, resulting in a gain on sale of real estate totaling approximately $192.3 million for BXP and approximately $197.1 million for BPLP.

Net cash proceeds totaled approximately $254.0 million, resulting in a gain on sale of real estate totaling approximately $192.3 million for BXP and approximately

Table of Conte n ts

$197.1 million for BPLP.

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

Table of Content s

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

12 unchanged sentences

164 Lexington Road is an approximately 64,000 net rentable square foot Class A office property.

(4) Capital contributions to unconsolidated joint ventures for the six months ended June 30, 2020 consisted primarily of cash contributions of approximately $70.2 million, $23.9 million and $6.5 million to our Platform 16, 3 Hudson Boulevard and Metropolitan Square joint ventures, respectively.

Capital contributions to unconsolidated joint ventures for the six months ended June 30, 2019 consisted primarily of cash contributions of approximately $36.2 million and $8.6 million to our Hub on Causeway and Dock 72 joint ventures, respectively.

(5) Capital distributions from unconsolidated joint ventures for the six months ended June 30, 2020 consisted of (1) a cash distribution totaling approximately $22.5 million from our Metropolitan Square joint venture resulting from the excess proceeds from the refinancing of the mortgage loan on the property, (2) a cash distribution totaling approximately $17.9 million from our Annapolis Junction joint venture resulting from available cash and the net proceeds from the sale of Annapolis Junction Building Eight and two land parcels after the pay down of the mortgage loan and (3) a cash distribution totaling approximately $14.0 million from our Colorado Center joint venture resulting from the excess proceeds from the mortgage financing on the property that occurred during 2017, which proceeds were released from lender reserves.

Capital distributions from unconsolidated joint ventures for the six months ended June 30, 2019 consisted of a cash distribution totaling approximately $105.0 million from our 540 Madison Avenue joint venture resulting from the net proceeds from the sale of the property.

On September 20, 2019, we sold a 45% interest in our Platform 16 property located in San Jose, California for a gross sale price of approximately $23.1 million.

Net cash proceeds totaled approximately $23.1 million.

We ceased accounting for the property on a consolidated basis and now account for the property on an unconsolidated basis using the equity method of accounting as we reduced our ownership interest in the property and no longer have a controlling financial or operating interest in the property.

We did not recognize a gain on the retained or sold interest in the property as the fair value of the property approximated its carrying value.

Platform 16 consists of a 65-year ground lease for land totaling approximately 5.6 acres that will support the development of approximately 1.1 million square feet of commercial office space.

(4) Capital contributions to unconsolidated joint ventures for the nine months ended September 30, 2020 consisted primarily of cash contributions of approximately $75.0 million, $39.0 million, $27.2 million and $7.5 million to our Platform 16, 3 Hudson Boulevard, Beach Cities Media Center and Metropolitan Square joint ventures, respectively.

Capital contributions to unconsolidated joint ventures for the nine months ended September 30, 2019

consisted primarily of cash contributions of approximately $41.4 million, $12.1 million and $7.0 million to our

Hub on Causeway, Dock 72 and 3 Hudson Boulevard joint ventures, respectively.

(5) Capital distributions from unconsolidated joint ventures for the nine months ended September 30, 2020 consisted of (1) a cash distribution totaling approximately $22.5 million from our Metropolitan Square joint venture resulting from the excess proceeds from the refinancing of the mortgage loan on the property, (2) a cash distribution totaling approximately $17.9 million from our Annapolis Junction joint venture resulting from available cash and the net proceeds from the sale of Annapolis Junction Building Eight and two land parcels after the pay down of the mortgage loan and (3) a cash distribution totaling approximately $14.0 million from our Colorado Center joint venture resulting from the excess proceeds from the mortgage financing on the property that occurred during 2017, which proceeds were released from lender reserves.

Capital distributions from unconsolidated joint ventures for the nine months ended September 30, 2019 consisted of (1) cash distributions totaling approximately $104.1 million from our 540 Madison Avenue joint venture resulting from the net proceeds from the sale of the property, (2) a cash distribution totaling approximately $17.6 million from our 100 Causeway Street joint venture resulting from the proceeds from the construction loan financing and (3) a cash distribution totaling approximately $15.1 million from our 7750 Wisconsin Avenue joint venture resulting from the proceeds from the construction loan financing.

Table of Conte n ts

(6) Issuance of notes receivable, net consisted of the $10.0 million of financing provided to an affiliate of our partner in the joint venture that owns and is developing 7750 Wisconsin Avenue located in Bethesda, Maryland.

1 unchanged sentence

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

Cash provided by financing activities for the six months ended June 30, 2020 totaled approximately $866.0 million.

Cash provided by financing activities for the nine months ended September 30, 2020 totaled approximately $678.9 million.

This consisted primarily of the proceeds from the issuance by BPLP of $1.25 billion in aggregate principal amount of its 3.250% senior unsecured notes due 2031, partia lly offset by the payment of our regular dividends and distributions to our shareholders and unitholders.

Future debt payments are discussed below under the heading “ Capitalization—Debt Financing .”

Table of Content s

Capitalization

The following table presents Consolidated Market Capitalization and BXP’s Share of Market Capitalization, as well as the corresponding ratios of Consolidated Debt to Consolidated Market Capitalization and BXP’s Share of Debt to BXP’s Share of Market Capitalization (in thousands except for percentages):

June 30, 2020

September 30, 2020

Shares / Units Outstanding Common Stock Equivalent Equivalent Value (1)

13 unchanged sentences

_______________

(1) Except for the Series B Cumulative Redeemable Preferred Stock, which is valued at the liquidation preference of $2,500 per share, values are based on the closing price per share of BXP’s Common Stock on the New York Stock Exchange on June 30, 2020 of $90.38.

(2) Includes long-term incentive plan units (including 2012 OPP Units and 2013 - 2017 MYLTIP Units), but excludes MYLTIP Units granted between 2018 and 2020.

5 unchanged sentences

(1) our consolidated debt;

(2) the product of (x) the closing price per share of BXP common stock on June 30, 2020, as reported by the New York Stock Exchange, multiplied by (y) the sum of:

(2) the product of (x) the closing price per share of BXP common stock on September 30, 2020, as reported by the New York Stock Exchange, multiplied by (y) the sum of:

Table of Conte n ts

(i) the number of outstanding shares of common stock of BXP,

3 unchanged sentences

(3) the aggregate liquidation preference ($2,500 per share) of the outstanding shares of BXP’s 5.25% Series B Cumulative Redeemable Preferred Stock.

Table of Content s

The calculation of consolidated market capitalization does not include LTIP Units issued in the form of MYLTIP Awards unless and until certain performance thresholds are achieved and they are earned.

Because their three-year performance periods have not yet ended, 2018 - 2020 MYLTIP Units are not included in this calculation as of June 30, 2020.

Because their three-year performance periods have not yet ended, 2018 - 2020 MYLTIP Units are not included in this calculation as of September 30, 2020.

We also present BXP’s Share of Market Capitalization and BXP’s Share of Debt/BXP’s Share of Market Capitalization, which are calculated in the same manner, except that BXP’s Share of Debt is utilized instead of our consolidated debt in both the numerator and the denominator.

11 unchanged sentences

For a discussion of our unconsolidated joint venture indebtedness, see “ Liquidity and Capital Resources—Capitalization—Off-Balance Sheet Arrangements—Joint Venture Indebtedness ” within “ Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations ” and for a discussion of our consolidated joint venture indebtedness see “Liquidity and Capital Resources—Capitalization—Mortgage Notes Payable, Net ” within “ Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations .”

Table of Conte n ts

Debt Financing

As of June 30, 2020, we had approximately $13.0 billion of outstanding consolidated indebtedness, representing approximately 45.16% of our Consolidated Market Capitalization as calculated above consisting of approximately (1) $9.6 billion (net of discount and deferred financing fees) in publicly traded unsecured senior notes having a GAAP weighted-average interest rate of 3.71% per annum and maturities in 2021 through 2031 (See Note 6 to the Consolidated Financial Statements), (2) $2.9 billion (net of deferred financing fees) of property-specific mortgage debt having a GAAP weighted-average interest rate of 3.90% per annum and a weighted-average term of 5.8 years and (3) $499.2 million (net of deferred financing fees) outstanding under BPLP’s 2017 Credit Facility that matures on April 24, 2022.

Table of Content s

The table below summarizes the aggregate carrying value of our mortgage notes payable and BPLP’s unsecured senior notes, line of credit and term loan, as well as Consolidated Debt Financing Statistics at June 30, 2020 and June 30, 2019.

As of September 30, 2020, we had approximately $13.0 billion of outstanding consolidated indebtedness, representing approximately 48.06% of our Consolidated Market Capitalization as calculated above consisting of approximately (1) $9.6 billion (net of discount and deferred financing fees) in publicly traded unsecured senior notes having a GAAP weighted-average interest rate of 3.71% per annum and maturities in 2021 through 2031 (See Note 6 to the Consolidated Financial Statements), (2) $2.9 billion (net of deferred financing fees) of property-specific mortgage debt having a GAAP weighted-average interest rate of 3.89% per annum and a weighted-average term of 5.6 years and (3) $499.3 million (net of deferred financing fees) outstanding under BPLP’s 2017 Credit Facility that matures on April 24, 2022.

September 30,

(dollars in thousands)

8 unchanged sentences

BXP’s Share of Debt $ 12,966,235 $ 11,561,991

September 30,

Consolidated Debt Financing Statistics:

18 unchanged sentences

(2) See page 93 for additional information.

Table of Content s

Table of Conte n ts

Unsecured Credit Facility

2 unchanged sentences

0 million Delayed Draw Facility that permitted BPLP to draw until the first anniversary of the closing date.

Based on BPLP’s current credit rating, (1) the applicable Eurocurrency margins for the Revolving Facility and Delayed Draw Facility are 87.5 basis points and 95 basis points, respectively, and (2) the facility fee on the Revolving Facility commitment is 0.15% per annum, which represent slight increases from the margins in effect during the six months ended June 30, 2020 due to a change in BPLP’s credit rating that occurred on August 3, 2020.

On April 24, 2018, BPLP exercised its option to draw $500.0 million on its Delayed Draw Facility.

The Delayed Draw Facility bears interest at a variable rate equal to LIBOR plus 0.90% per annum based on BPLP’s June 30, 2020 credit rating and matures on April 24, 2022.

As of June 30, 2020 and August 3, 2020, BPLP had $500.0 million of borrowings outstanding under its Delayed Draw Facility, no borrowings under its Revolving Facility and letters of credit totaling approximately $2.5 million outstanding with the ability to borrow approximately $1.5 billion under the Revolving Facility.

The Delayed Draw Facility bears interest at a variable rate equal to LIBOR plus 0.90% per annum based on BPLP’s September 30, 2020 credit rating and matures on April 24, 2022.

As of September 30, 2020 and November 2, 2020, BPLP had $500.0 million of borrowings outstanding under its Delayed Draw Facility, no borrowings under its Revolving Facility and letters of credit totaling approximately $2.5 million outstanding with the ability to borrow approximately $1.5 billion under the Revolving Facility.

Unsecured Senior Notes, Net

For a description of BPLP’s outstanding unsecured senior notes as of June 30, 2020, see Note 6 to the

For a description of BPLP’s outstanding unsecured senior notes as of September 30, 2020, see Note 6 to the

Consolidated Financial Statements.

4 unchanged sentences

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, BPLP was in compliance with each of these financial restrictions and requirements.

At September 30, 2020, BPLP was in compliance with each of these financial restrictions and requirements.

Mortgage Notes Payable, Net

The following represents the outstanding principal balances due under the mortgage notes payable at June 30, 2020:

The following represents the outstanding principal balances due under the mortgage notes payable at September 30, 2020:

Properties Stated

16 unchanged sentences

The partners’ share of the carrying amount has been adjusted for basis differentials.

Table of Content s

(4) In connection with the refinancing of the loan, we 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 June 30, 2020, the maximum funding obligation under the guarantee was approximately $48.9 million.

Table of Conte n ts

As of September 30, 2020, the maximum funding obligation under the guarantee was approximately $37.2 million.

We earn a fee from the joint venture for providing the guarantee and have an agreement with our partners to reimburse the joint venture for their share of any payments made under the guarantee (See Note 7 to the Consolidated Financial Statements).

6 unchanged sentences

See also Note 5 to the Consolidated Financial Statements.

At June 30, 2020, the aggregate carrying amount of debt, including both our and our partners’ share, incurred by these ventures was approximately $2.5 billion (of which our proportionate share is approximately $1.1 billion).

The table below summarizes the outstanding debt of these joint venture properties at June 30, 2020.

At September 30, 2020, the aggregate carrying amount of debt, including both our and our partners’ share, incurred by these ventures was approximately $2.6 billion (of which our proportionate share is approximately $1.1 billion).

The table below summarizes the outstanding debt of these joint venture properties at September 30, 2020.

In addition to other guarantees specifically noted in the table, we have agreed to customary environmental indemnifications and nonrecourse carve-outs (e.g., guarantees against fraud, misrepresentation and bankruptcy) as well as the completion of development projects on certain of the loans.

4 unchanged sentences

Market Square North

50 % 4.85 % 4.91 % 114,869 (21) 114,848 57,424 October 1, 2020

50 % 4.85 % 4.85 % 114,201 (65) 114,136 57,068 (4) November 1, 2020

Annapolis Junction Building Six

27 unchanged sentences

(3) The loan bears interest at a variable rate equal to LIBOR plus 1.28% per annum and matures on July 19, 2025.

A subsidiary of the joint venture entered into interest rate swap contracts with notional amounts

Table of Content s

aggregating $300.0 million through April 1, 2025, resulting in a fixed rate of approximately 4.063% per annum through the expiration of the interest rate swap contracts.

A subsidiary of the joint venture entered into interest rate swap contracts with notional amounts aggregating $300.0 million through April 1, 2025, resulting in a fixed rate of approximately 4.063% per annum through the expiration of the interest rate swap contracts.

Table of Conte n ts

(4) On September 30, 2020, the joint venture extended the maturity date to November 1, 2020.

Then, on October 30, 2020, the joint venture refinanced the mortgage loan.

See Notes 5 and 13 to the Consolidated Financial Statements.

(5) The loan bears interest at a variable rate equal to LIBOR plus 2.00% per annum and matures on November 17, 2020.

(5) Annapolis Junction Building Eight was sold on June 25, 2020 (See Note 5 to the Consolidated Financial Statements).

Simultaneously with the sale of Annapolis Junction Building Eight, the joint venture modified the mortgage loan to release 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.

(6) The loan bears interest at a variable rate equal to LIBOR plus 2.35% per annum and matures on March 25, 2021.

(7) The construction financing has a borrowing capacity of $250.0 million.

12 unchanged sentences

The loan has been reflected as Related Party Note Receivable, Net on our Consolidated Balance Sheets.

(12) On June 9, 2020, the joint venture obtained new mortgage financing with a new lender.

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

In conjunction with the new mortgage financing, 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 3.0% per annum on a notional amount of $325.0 million through July 7, 2022.

(13) The loan bears interest at a variable rate equal to (1) the greater of (x) LIBOR or (y) 0.65%, plus (2) 4.75% per annum, and matures on July 7, 2022.

State and Local Tax Matters

7 unchanged sentences

Pursuant to the revised definition of Funds from Operations adopted by the Board of Governors of the National Association of Real Estate Investment Trusts (“Nareit”), we calculate Funds from Operations, or “FFO,” for each of BXP and BPLP by adjusting net income (loss) attributable to Boston Properties, Inc.

common shareholders and net income (loss) attributable to Boston Properties Limited Partnership common unitholders (computed in accordance with GAAP), respectively, for gains (or losses) from sales of properties, impairment losses on depreciable real estate consolidated on our balance sheet, impairment losses on our investments in unconsolidated joint ventures driven by a measurable decrease in the fair value of depreciable real estate held by the unconsolidated joint

Table of Content s

ventures and our share of real estate-related depreciation and amortization.

FFO is a non-GAAP financial measure.

We believe the presentation of FFO, combined with the presentation of required GAAP financial measures, has improved the understanding of operating results of REITs among the investing public and has helped make comparisons of REIT operating results more meaningful.

Management generally considers FFO to be useful measures for understanding and comparing our operating results because, by excluding gains and losses related to sales of previously depreciated operating real estate assets, impairment losses and real estate asset depreciation and amortization (which can differ across owners of similar assets in similar condition based on historical cost accounting and useful life estimates), FFO can help investors compare the operating performance of a company’s real estate across reporting periods and to the operating performance of other companies.

Table of Conte n ts

accounting and useful life estimates), FFO can help investors compare the operating performance of a company’s real estate across reporting periods and to the operating performance of other companies.

Our computation of FFO may not be comparable to FFO reported by other REITs or real estate companies that do not define the term in accordance with the current Nareit definition or that interpret the current Nareit definition differently.

3 unchanged sentences

common shareholders or net income attributable to Boston Properties Limited Partnership common unitholders (determined in accordance with GAAP) or any other GAAP financial measures and should only be considered together with and as a supplement to our financial information prepared in accordance with GAAP.

The impact that COVID-19 has had on our business, financial position and results of operations during the second quarter of 2020 is discussed throughout this report.

The full extent of the impact of COVID-19 on our business, o perations and financial results will depend on numerous evolving factors that we may not be able to accurately predict.

The impact of COVID-19 on our revenue, in particular lease, parking and hotel revenue was negatively impacted by COVID-19 for the three and six months ended June 30, 2020, thus negatively impacting our FFO.

These decreases are discussed under the heading “ Comparison of the six months ended June 30, 2020 to the six months ended June 30, 2019 ” within “ Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations ” and under the heading “ Comparison of the three months ended June 30, 2020 to the three months ended June 30, 201 9” within “ Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations .”

Table of Content s

The impact that COVID-19 has had on our business, financial position and results of operations during the second and third quarters of 2020 is discussed throughout this report.

The full extent of the impact of COVID-19 on our business, operations and financial results will depend on numerous evolving factors that we may not be able to accurately predict.

The impact of COVID-19 on our revenue, in particular lease, parking and hotel revenue was negatively impacted by COVID-19 for the three and nine months ended September 30, 2020, thus negatively impacting our FFO.

These decreases are discussed under the heading “ Comparison of the nine months ended September 30, 2020 to the nine months ended September 30, 2019 ” within “ Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations ” and under the heading “ Comparison of the three months ended September 30, 2020 to the three months ended September 30, 2019 ” within “ Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations .”

Table of Conte n ts

Boston Properties, Inc.

1 unchanged sentence

common shareholders to FFO attributable to Boston Properties, Inc.

common shareholders for the three months ended June 30, 2020 and 2019:

Three months ended June 30,

common shareholders for the three months ended September 30, 2020 and 2019:

Three months ended September 30,

(in thousands)

6 unchanged sentences

Noncontrolling interests in property partnerships

15,561 18,470

Net income 118,060 141,370

5 unchanged sentences

Corporate-related depreciation and amortization

Gain on sale of real estate included within income from unconsolidated joint ventures

Gains on sales of real estate 203,767 1,686

Gain on sale of real estate included within income (loss) from unconsolidated joint ventures — (487)

Losses on sales of real estate (209) (15)

Noncontrolling interests in property partnerships

15,561 18,470

Preferred dividends 2,625 2,625

9 unchanged sentences

Weighted average shares outstanding—basic 155,645 154,577

Table of Content s

Table of Conte n ts

Reconciliation to Diluted Funds from Operations:

Three months ended June 30,

Three months ended September 30,

(Numerator) Shares/Units

12 unchanged sentences

_______________

(1) BXP’s share of diluted Funds from Operations was 90.00% and 89.77% for the three months ended June 30, 2020 and 2019, respectively.

(1) BXP’s share of diluted Funds from Operations was 90.14% and 89.77% for the three months ended September 30, 2020 and 2019, respectively.

Boston Properties Limited Partnership

The following table presents a reconciliation of net income attributable to Boston Properties Limited Partnership common unitholders to FFO attributable to Boston Properties Limited Partnership common unitholders for the three months ended June 30, 2020 and 2019:

Three months ended June 30,

Three months ended September 30,

(in thousands)

3 unchanged sentences

Noncontrolling interests in property partnerships

15,561 18,470

Net income 119,810 143,212

6 unchanged sentences

Corporate-related depreciation and amortization

Gain on sale of real estate included within income from unconsolidated joint ventures

Gains on sales of real estate

207,241 1,835

Gain on sale of real estate included within income (loss) from unconsolidated joint ventures

Losses on sales of real estate (209) (15)

Noncontrolling interests in property partnerships

15,561 18,470

Preferred distributions

3 unchanged sentences

172,677 172,215

Table of Content s

Table of Conte n ts

_______________

1 unchanged sentence

Reconciliation to Diluted Funds from Operations:

Three months ended June 30,

Three months ended September 30,

(Numerator) Shares/Units

12 unchanged sentences

Contract terms are generally between three and five years.

During the three months ended June 30, 2020, we paid approximately $74.0 million to fund tenant-related obligations, including tenant improvements and leasing commissions.

In addition, during the three months ended June 30, 2020, we and our unconsolidated joint venture partners incurred approximately $120 million of new tenant-related obligations associated with approximately 1.2 million square feet, which included approximately 297,000 square feet of lease modifications related to COVID-19, of second generation leases, or approximately $97 per square foot.

We signed approximately 5,000 square feet of first generation leases.

The tenant-related obligations for the development properties are included within the projects’ “Estimated Total Investment” referred to in “ Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.” In aggregate during the second quarter of 2020, we signed leases for approximately 1.2 million square feet of space and incurred aggregate tenant-related obligations of approximately $121 million, or approximately $98 per square foot.

During the three months ended September 30, 2020, we paid approximately $69.1 million to fund tenant-related obligations, including tenant improvements and leasing commissions.

In addition, during the three months ended September 30, 2020, we and our unconsolidated joint venture partners incurred approximately $35 million of new tenant-related obligations associated with approximately 988,000 square feet, which included approximately 177,000 square feet of lease modifications related to COVID-19, of second generation leases, or approximately $36 per square foot.

We did not sign any first generation leases.

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 2. Management’s Discussion and Analysis