BXP, Inc. 10-Q

ITEM 1—Financial Statements. BOSTON PROPERTIES, INC. CONSOLIDATED BALANCE SHEETS (unaudited and in thousands, except for share and par value amounts) March 31, 2021 December 31, 2020 ASSETS Real estate, at cost (amounts related to variable interest entities (“VIEs”) of $ 6,615,237 and $ 6,592,019 at March 31, 2021 and December 31, 2020, respectively) $ 23,156,924 $ 22,969,110 Right of use assets - finance leases (amounts related to VIEs of $ 21,000 and $ 21,000 at March 31, 2021 and December 31, 2020, respectively) 237,017 237,393 Right of use assets - operating leases 144,143 146,406 Less: accumulated depreciation (amounts related to VIEs of $( 1,188,554 ) and $( 1,158,548 ) at March 31, 2021 and December 31, 2020, respectively) ( 5,665,061 ) ( 5,534,102 ) Total real estate 17,873,023 17,818,807 Cash and cash equivalents (amounts related to VIEs of $ 289,737 and $ 340,642 at March 31, 2021 and December 31, 2020, respectively) 697,369 1,668,742 Cash held in escrows 251,814 50,587 Investments in securities 39,002 39,457 Tenant and other receivables, net (amounts related to VIEs of $ 5,846 and $ 10,911 at March 31, 2021 and December 31, 2020, respectively) 51,271 77,411 Related party note receivable, net 77,640 77,552 Notes receivable, net 18,891 18,729 Accrued rental income, net (amounts related to VIEs of $ 341,772 and $ 336,594 at March 31, 2021 and December 31, 2020, respectively) 1,145,066 1,122,502 Deferred charges, net (amounts related to VIEs of $ 177,647 and $ 183,306 at March 31, 2021 and December 31, 2020, respectively) 622,649 640,085 Prepaid expenses and other assets (amounts related to VIEs of $ 45,075 and $ 13,137 at March 31, 2021 and December 31, 2020, respectively) 129,102 33,840 Investments in unconsolidated joint ventures 1,307,725 1,310,478 Total assets $ 22,213,552 $ 22,858,190 LIABILITIES AND EQUITY Liabilities: Mortgage notes payable, net (amounts related to VIEs of $ 2,904,672 and $ 2,907,590 at March 31, 2021 and December 31, 2020, respectively) $ 2,904,672 $ 2,909,081 Unsecured senior notes, net 9,631,592 9,639,287 Unsecured line of credit — — Unsecured term loan, net — 499,390 Lease liabilities - finance leases (amounts related to VIEs of $ 20,345 and $ 20,306 at March 31, 2021 and December 31, 2020, respectively) 239,361 236,492 Lease liabilities - operating leases 200,383 201,713 Accounts payable and accrued expenses (amounts related to VIEs of $ 15,957 and $ 23,128 at March 31, 2021 and December 31, 2020, respectively) 260,875 336,264 Dividends and distributions payable 171,003 171,082 Accrued interest payable 76,675 106,288 Preferred stock redemption liability 200,000 — Other liabilities (amounts related to VIEs of $ 141,547 and $ 158,805 at March 31, 2021 and December 31, 2020, respectively) 399,965 412,084 Total liabilities 14,084,526 14,511,681 Commitments and contingencies (See Note 9) 1 Table of Contents BOSTON PROPERTIES, INC. CONSOLIDATED BALANCE SHEETS (unaudited and in thousands, except for share and par value amounts) March 31, 2021 December 31, 2020 Redeemable deferred stock units— 75,834 and 72,966 units outstanding at redemption value at March 31, 2021 and December 31, 2020, respectively 7,679 6,897 Equity: Stockholders’ equity attributable to Boston Properties, Inc.: Excess stock, $ 0.01 par value, 150,000,000 shares authorized, none issued or outstanding — — Preferred stock, $ 0.01 par value, 50,000,000 shares authorized; 5.25 % Series B cumulative redeemable preferred stock, $ 0.01 par value, liquidation preference $ 2,500 per share, 92,000 shares authorized, 80,000 shares issued and outstanding at December 31, 2020 — 200,000 Common stock, $ 0.01 par value, 250,000,000 shares authorized, 156,153,100 and 155,797,725 issued and 156,074,200 and 155,718,825 outstanding at March 31, 2021 and December 31, 2020, respectively 1,561 1,557 Additional paid-in capital 6,392,923 6,356,791 Dividends in excess of earnings ( 570,982 ) ( 509,653 ) Treasury common stock at cost, 78,900 shares at March 31, 2021 and December 31, 2020 ( 2,722 ) ( 2,722 ) Accumulated other comprehensive loss ( 45,139 ) ( 49,890 ) Total stockholders’ equity attributable to Boston Properties, Inc. 5,775,641 5,996,083 Noncontrolling interests: Common units of Boston Properties Limited Partnership 620,106 616,596 Property partnerships 1,725,600 1,726,933 Total equity 8,121,347 8,339,612 Total liabilities and equity $ 22,213,552 $ 22,858,190 The accompanying notes are an integral part of these consolidated financial statements. 2 Table of Contents BOSTON PROPERTIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited and in thousands, except for per share amounts) Three months ended March 31, 2021 2020 Revenue Lease $ 685,817 $ 710,111 Parking and other 16,938 24,504 Hotel 632 6,825 Development and management services 6,803 7,879 Direct reimbursements of payroll and related costs from management services contracts 3,505 3,237 Total revenue 713,695 752,556 Expenses Operating Rental 257,389 262,966 Hotel 2,051 6,821 General and administrative 44,959 36,454 Payroll and related costs from management services contracts 3,505 3,237 Transaction costs 331 615 Depreciation and amortization 176,565 171,094 Total expenses 484,800 481,187 Other income (expense) Income (loss) from unconsolidated joint ventures 5,225 ( 369 ) Gains on sales of real estate — 410,165 Interest and other income (loss) 1,168 3,017 Gains (losses) from investments in securities 1,659 ( 5,445 ) Losses from early extinguishment of debt ( 898 ) — Interest expense ( 107,902 ) ( 101,591 ) Net income 128,147 577,146 Net income attributable to noncontrolling interests Noncontrolling interests in property partnerships ( 16,467 ) ( 19,486 ) Noncontrolling interest—common units of the Operating Partnership ( 11,084 ) ( 57,539 ) Net income attributable to Boston Properties, Inc. 100,596 500,121 Preferred dividends ( 2,560 ) ( 2,625 ) Preferred stock redemption charge ( 6,412 ) — Net income attributable to Boston Properties, Inc. common shareholders $ 91,624 $ 497,496 Basic earnings per common share attributable to Boston Properties, Inc. common shareholders: Net income $ 0.59 $ 3.20 Weighted average number of common shares outstanding 155,928 155,011 Diluted earnings per common share attributable to Boston Properties, Inc. common shareholders: Net income $ 0.59 $ 3.20 Weighted average number of common and common equivalent shares outstanding 156,099 155,258 The accompanying notes are an integral part of these consolidated financial statements. 3 Table of Contents BOSTON PROPERTIES, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited and in thousands) Three months ended March 31, 2021 2020 Net income $ 128,147 $ 577,146 Other comprehensive income (loss): Effective portion of interest rate contracts 3,740 ( 9,720 ) Amortization of interest rate contracts (1) 1,676 1,666 Other comprehensive income (loss) 5,416 ( 8,054 ) Comprehensive income 133,563 569,092 Net income attributable to noncontrolling interests ( 27,551 ) ( 77,025 ) Other comprehensive (income) loss attributable to noncontrolling interests ( 665 ) 689 Comprehensive income attributable to Boston Properties, Inc. $ 105,347 $ 492,756 _______________ (1) Amounts reclassified from comprehensive income primarily to interest expense within Boston Properties, Inc.’s Consolidated Statements of Operations . The accompanying notes are an integral part of these consolidated financial statements. 4 Table of Contents BOSTON PROPERTIES, INC. CONSOLIDATED STATEMENTS OF EQUITY (unaudited and in thousands) Common Stock Preferred Stock Additional Paid-in Capital Dividends in Excess of Earnings Treasury Stock, at cost Accumulated Other Comprehensive Loss Noncontrolling Interests - Common Units Noncontrolling Interests - Property Partnerships Total Shares Amount Equity, December 31, 2020 155,719 $ 1,557 $ 200,000 $ 6,356,791 $ ( 509,653 ) $ ( 2,722 ) $ ( 49,890 ) $ 616,596 $ 1,726,933 $ 8,339,612 Redemption of operating partnership units to common stock 118 1 — 4,197 — — — ( 4,198 ) — — Allocated net income for the year — — — — 100,596 — — 11,084 16,467 128,147 Dividends/distributions declared — — — — ( 155,513 ) — — ( 17,287 ) — ( 172,800 ) Shares issued pursuant to stock purchase plan 5 — — 484 — — — — — 484 Net activity from stock option and incentive plan 232 3 — 20,002 — — — 18,462 — 38,467 Preferred stock redemption — — ( 200,000 ) 6,377 — — — — — ( 193,623 ) Preferred stock redemption charge — — — — ( 6,412 ) — — — — ( 6,412 ) Contributions from noncontrolling interests in property partnerships — — — — — — — — 281 281 Distributions to noncontrolling interests in property partnerships — — — — — — — — ( 18,225 ) ( 18,225 ) Effective portion of interest rate contracts — — — — — — 3,370 370 — 3,740 Amortization of interest rate contracts — — — — — — 1,381 151 144 1,676 Reallocation of noncontrolling interest — — — 5,072 — — — ( 5,072 ) — — Equity, March 31, 2021 156,074 $ 1,561 $ — $ 6,392,923 $ ( 570,982 ) $ ( 2,722 ) $ ( 45,139 ) $ 620,106 $ 1,725,600 $ 8,121,347 Equity, December 31, 2019 154,790 $ 1,548 $ 200,000 $ 6,294,719 $ ( 760,523 ) $ ( 2,722 ) $ ( 48,335 ) $ 600,860 $ 1,728,689 $ 8,014,236 Cumulative effect of a change in accounting principle — — — — ( 1,505 ) — — ( 174 ) ( 1,679 ) Redemption of operating partnership units to common stock 462 5 — 15,490 — — — ( 15,495 ) — — Allocated net income for the period — — — — 500,121 — — 57,539 19,486 577,146 Dividends/distributions declared — — — — ( 154,833 ) — — ( 17,444 ) — ( 172,277 ) Shares issued pursuant to stock purchase plan 2 — — 325 — — — — — 325 Net activity from stock option and incentive plan 61 — — 7,383 — — — 15,677 — 23,060 Contributions from noncontrolling interests in property partnerships — — — — — — — — 3,876 3,876 Distributions to noncontrolling interests in property partnerships — — — — — — — — ( 15,750 ) ( 15,750 ) Effective portion of interest rate contracts — — — — — — ( 8,732 ) ( 988 ) — ( 9,720 ) Amortization of interest rate contracts — — — — — — 1,367 155 144 1,666 Reallocation of noncontrolling interest — — — 3,558 — — — ( 3,558 ) — — Equity, March 31, 2020 155,315 $ 1,553 $ 200,000 $ 6,321,475 $ ( 416,740 ) $ ( 2,722 ) $ ( 55,700 ) $ 636,572 $ 1,736,445 $ 8,420,883 The accompanying notes are an integral part of these consolidated financial statements. 5 Table of Contents BOSTON PROPERTIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited and in thousands) Three months ended March 31, 2021 2020 Cash flows from operating activities: Net income $ 128,147 $ 577,146 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 176,565 171,094 Amortization of right of use assets - operating leases 2,263 583 Non-cash compensation expense 20,090 17,525 Loss (income) from unconsolidated joint ventures ( 5,225 ) 369 Distributions of net cash flow from operations of unconsolidated joint ventures 3,972 5,917 (Gains) losses from investments in securities ( 1,659 ) 5,445 Allowance for current expected credit losses ( 128 ) — Non-cash portion of interest expense 5,984 5,646 Settlement of accreted debt discount on redemption of unsecured senior notes ( 6,290 ) — Losses from early extinguishments of debt 898 — Gains on sales of real estate — ( 410,165 ) Change in assets and liabilities: Tenant and other receivables, net 26,020 17,784 Notes receivable, net ( 140 ) ( 128 ) Accrued rental income, net ( 9,413 ) ( 27,285 ) Prepaid expenses and other assets ( 96,351 ) ( 93,819 ) Lease liabilities - operating leases ( 1,330 ) 393 Accounts payable and accrued expenses ( 21,578 ) ( 48,591 ) Accrued interest payable ( 28,970 ) ( 7,644 ) Other liabilities ( 24,177 ) ( 21,296 ) Tenant leasing costs ( 16,615 ) ( 17,777 ) Total adjustments 23,916 ( 401,949 ) Net cash provided by operating activities 152,063 175,197 Cash flows from investing activities: Construction in progress ( 119,496 ) ( 143,160 ) Building and other capital improvements ( 32,717 ) ( 39,154 ) Tenant improvements ( 93,201 ) ( 64,172 ) Proceeds from sales of real estate — 259,489 Capital contributions to unconsolidated joint ventures ( 16,684 ) ( 89,997 ) Capital distributions from unconsolidated joint ventures 122 — Proceeds from sale of investment in unconsolidated joint venture 17,589 — Investments in securities, net 2,114 3,201 Net cash used in investing activities ( 242,273 ) ( 73,793 ) Cash flows from financing activities: Repayments of mortgage notes payable ( 5,374 ) ( 4,212 ) Proceeds from unsecured senior notes 846,345 — Redemption of unsecured senior notes ( 843,710 ) — Borrowings on unsecured line of credit — 265,000 Repayments of unsecured line of credit — ( 15,000 ) Repayment of unsecured term loan ( 500,000 ) — Deferred financing costs ( 7,145 ) ( 11 ) 6 Table of Contents BOSTON PROPERTIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited and in thousands) Three months ended March 31, 2021 2020 Debt prepayment and extinguishment costs ( 185 ) — Net proceeds from equity transactions 19,643 3,349 Dividends and distributions ( 171,566 ) ( 171,964 ) Contributions from noncontrolling interests in property partnerships 281 3,876 Distributions to noncontrolling interests in property partnerships ( 18,225 ) ( 15,750 ) Net cash provided by (used in) financing activities ( 679,936 ) 65,288 Net increase (decrease) in cash and cash equivalents and cash held in escrows ( 770,146 ) 166,692 Cash and cash equivalents and cash held in escrows, beginning of period 1,719,329 691,886 Cash and cash equivalents and cash held in escrows, end of period $ 949,183 $ 858,578 Reconciliation of cash and cash equivalents and cash held in escrows: Cash and cash equivalents, beginning of period $ 1,668,742 $ 644,950 Cash held in escrows, beginning of period 50,587 46,936 Cash and cash equivalents and cash held in escrows, beginning of period $ 1,719,329 $ 691,886 Cash and cash equivalents, end of period $ 697,369 $ 660,733 Cash held in escrows, end of period 251,814 197,845 Cash and cash equivalents and cash held in escrows, end of period $ 949,183 $ 858,578 Supplemental disclosures: Cash paid for interest $ 146,781 $ 114,696 Interest capitalized $ 12,032 $ 14,149 Non-cash investing and financing activities: Write-off of fully depreciated real estate $ ( 25,161 ) $ ( 38,782 ) Change in real estate included in accounts payable and accrued expenses $ ( 42,778 ) $ ( 27,415 ) Preferred stock redemption liability $ 200,000 $ — Accrued rental income, net deconsolidated $ — $ ( 4,558 ) Tenant leasing costs, net deconsolidated $ — $ ( 3,462 ) Building and other capital improvements, net deconsolidated $ — $ ( 111,889 ) Tenant improvements, net deconsolidated $ — $ ( 12,331 ) Investment in unconsolidated joint venture recorded upon deconsolidation $ — $ 347,898 Deferred distributions from sale of investment in unconsolidated joint venture $ 5,808 $ — Deferred proceeds from sale of investment in unconsolidated joint venture $ 200 $ — Dividends and distributions declared but not paid $ 171,003 $ 171,026 Conversions of noncontrolling interests to stockholders’ equity $ 4,198 $ 15,495 Issuance of restricted securities to employees and non-employee directors $ 41,255 $ 43,104 The accompanying notes are an integral part of these consolidated financial statements. 7 Table of Contents BOSTON PROPERTIES LIMITED PARTNERSHIP CONSOLIDATED BALANCE SHEETS (unaudited and in thousands, except for unit amounts) March 31, 2021 December 31, 2020 ASSETS Real estate, at cost (amounts related to variable interest entities (“VIEs”) of $ 6,615,237 and $ 6,592,019 at March 31, 2021 and December 31, 2020, respectively) $ 22,781,429 $ 22,592,301 Right of use assets - finance leases (amounts related to VIEs of $ 21,000 and $ 21,000 at March 31, 2021 and December 31, 2020, respectively) 237,017 237,393 Right of use assets - operating leases 144,143 146,406 Less: accumulated depreciation (amounts related to VIEs of $( 1,188,554 ) and $( 1,158,548 ) at March 31, 2021 and December 31, 2020, respectively) ( 5,557,784 ) ( 5,428,576 ) Total real estate 17,604,805 17,547,524 Cash and cash equivalents (amounts related to VIEs of $ 289,737 and $ 340,642 at March 31, 2021 and December 31, 2020, respectively) 697,369 1,668,742 Cash held in escrows 251,814 50,587 Investments in securities 39,002 39,457 Tenant and other receivables, net (amounts related to VIEs of $ 5,846 and $ 10,911 at March 31, 2021 and December 31, 2020, respectively) 51,271 77,411 Related party note receivable, net 77,640 77,552 Notes receivable, net 18,891 18,729 Accrued rental income, net (amounts related to VIEs of $ 341,772 and $ 336,594 at March 31, 2021 and December 31, 2020, respectively) 1,145,066 1,122,502 Deferred charges, net (amounts related to VIEs of $ 177,647 and $ 183,306 at March 31, 2021 and December 31, 2020, respectively) 622,649 640,085 Prepaid expenses and other assets (amounts related to VIEs of $ 45,075 and $ 13,137 at March 31, 2021 and December 31, 2020, respectively) 129,102 33,840 Investments in unconsolidated joint ventures 1,307,725 1,310,478 Total assets $ 21,945,334 $ 22,586,907 LIABILITIES AND CAPITAL Liabilities: Mortgage notes payable, net (amounts related to VIEs of $ 2,904,672 and $ 2,907,590 at March 31, 2021 and December 31, 2020, respectively) $ 2,904,672 $ 2,909,081 Unsecured senior notes, net 9,631,592 9,639,287 Unsecured line of credit — — Unsecured term loan, net — 499,390 Lease liabilities - finance leases (amounts related to VIEs of $ 20,345 and $ 20,306 at March 31, 2021 and December 31, 2020, respectively) 239,361 236,492 Lease liabilities - operating leases 200,383 201,713 Accounts payable and accrued expenses (amounts related to VIEs of $ 15,957 and $ 23,128 at March 31, 2021 and December 31, 2020, respectively) 260,875 336,264 Dividends and distributions payable 171,003 171,082 Accrued interest payable 76,675 106,288 Preferred unit redemption liability 200,000 — Other liabilities (amounts related to VIEs of $ 141,547 and $ 158,805 at March 31, 2021 and December 31, 2020, respectively) 399,965 412,084 Total liabilities 14,084,526 14,511,681 Commitments and contingencies (See Note 9) 8 Table of Contents BOSTON PROPERTIES LIMITED PARTNERSHIP CONSOLIDATED BALANCE SHEETS (unaudited and in thousands, except for unit amounts) March 31, 2021 December 31, 2020 Redeemable deferred stock units— 75,834 and 72,966 units outstanding at redemption value at March 31, 2021 and December 31, 2020, respectively 7,679 6,897 Noncontrolling interests: Redeemable partnership units— 16,053,640 and 16,037,121 common units and 1,525,306 and 1,336,115 long term incentive units outstanding at redemption value at March 31, 2021 and December 31, 2020, respectively 1,780,044 1,643,024 Capital: 5.25 % Series B cumulative redeemable preferred units, liquidation preference $ 2,500 per unit, 80,000 units issued and outstanding at March 31, 2021 and December 31, 2020 — 193,623 Boston Properties Limited Partnership partners’ capital— 1,736,531 and 1,730,921 general partner units and 154,337,669 and 153,987,904 limited partner units outstanding at March 31, 2021 and December 31, 2020, respectively 4,392,624 4,554,639 Accumulated other comprehensive loss ( 45,139 ) ( 49,890 ) Total partners’ capital 4,347,485 4,698,372 Noncontrolling interests in property partnerships 1,725,600 1,726,933 Total capital 6,073,085 6,425,305 Total liabilities and capital $ 21,945,334 $ 22,586,907 The accompanying notes are an integral part of these consolidated financial statements. 9 Table of Contents BOSTON PROPERTIES LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited and in thousands, except for per unit amounts) Three months ended March 31, 2021 2020 Revenue Lease $ 685,817 $ 710,111 Parking and other 16,938 24,504 Hotel 632 6,825 Development and management services 6,803 7,879 Direct reimbursements of payroll and related costs from management services contracts 3,505 3,237 Total revenue 713,695 752,556 Expenses Operating Rental 257,389 262,966 Hotel 2,051 6,821 General and administrative 44,959 36,454 Payroll and related costs from management services contracts 3,505 3,237 Transaction costs 331 615 Depreciation and amortization 173,500 169,285 Total expenses 481,735 479,378 Other income (expense) Income (loss) from unconsolidated joint ventures 5,225 ( 369 ) Gains on sales of real estate — 419,654 Interest and other income (loss) 1,168 3,017 Gains (losses) from investments in securities 1,659 ( 5,445 ) Losses from early extinguishment of debt ( 898 ) — Interest expense ( 107,902 ) ( 101,591 ) Net income 131,212 588,444 Net income attributable to noncontrolling interests Noncontrolling interests in property partnerships ( 16,467 ) ( 19,486 ) Net income attributable to Boston Properties Limited Partnership 114,745 568,958 Preferred distributions ( 2,560 ) ( 2,625 ) Preferred unit redemption charge ( 6,412 ) — Net income attributable to Boston Properties Limited Partnership common unitholders $ 105,773 $ 566,333 Basic earnings per common unit attributable to Boston Properties Limited Partnership Net income $ 0.61 $ 3.28 Weighted average number of common units outstanding 173,018 172,549 Diluted earnings per common unit attributable to Boston Properties Limited Partnership Net income $ 0.61 $ 3.27 Weighted average number of common and common equivalent units outstanding 173,189 172,796 The accompanying notes are an integral part of these consolidated financial statements. 10 Table of Contents BOSTON PROPERTIES LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited and in thousands) Three months ended March 31, 2021 2020 Net income $ 131,212 $ 588,444 Other comprehensive income (loss): Effective portion of interest rate contracts 3,740 ( 9,720 ) Amortization of interest rate contracts (1) 1,676 1,666 Other comprehensive income (loss) 5,416 ( 8,054 ) Comprehensive income 136,628 580,390 Comprehensive income attributable to noncontrolling interests ( 16,611 ) ( 19,630 ) Comprehensive income attributable to Boston Properties Limited Partnership $ 120,017 $ 560,760 _______________ (1) Amounts reclassified from comprehensive income primarily to interest expense within Boston Properties Limited Partnership’s Consolidated Statements of Operations. The accompanying notes are an integral part of these consolidated financial statements. 11 Table of Contents BOSTON PROPERTIES LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF CAPITAL AND NONCONTROLLING INTERESTS (unaudited and in thousands) Units Capital General Partner Limited Partner Partners’ Capital (General and Limited Partners) Preferred Units Accumulated Other Comprehensive Loss Noncontrolling Interests - Property Partnerships Total Capital Noncontrolling Interests - Redeemable Partnership Units Equity, December 31, 2020 1,731 153,988 $ 4,554,639 $ 193,623 $ ( 49,890 ) $ 1,726,933 $ 6,425,305 $ 1,643,024 Net activity from contributions and unearned compensation 4 233 20,489 — — — 20,489 18,462 Allocated net income for the period — — 101,101 2,560 — 16,467 120,128 11,084 Distributions — — ( 152,953 ) ( 2,560 ) — — ( 155,513 ) ( 17,287 ) Preferred unit redemption — — — ( 193,623 ) — — ( 193,623 ) — Preferred unit redemption charge — — ( 6,412 ) — — — ( 6,412 ) — Conversion of redeemable partnership units 2 117 4,198 — — — 4,198 ( 4,198 ) Adjustment to reflect redeemable partnership units at redemption value — — ( 128,438 ) — — — ( 128,438 ) 128,438 Effective portion of interest rate contracts — — — — 3,370 — 3,370 370 Amortization of interest rate contracts — — — — 1,381 144 1,525 151 Contributions from noncontrolling interests in property partnerships — — — — — 281 281 — Distributions to noncontrolling interests in property partnerships — — — — — ( 18,225 ) ( 18,225 ) — Equity, March 31, 2021 1,737 154,338 $ 4,392,624 $ — $ ( 45,139 ) $ 1,725,600 $ 6,073,085 $ 1,780,044 Equity, December 31, 2019 1,727 153,063 $ 3,380,175 $ 193,623 $ ( 48,335 ) $ 1,728,689 $ 5,254,152 $ 2,468,753 Cumulative effect of a change in accounting principle — — ( 1,505 ) — — — ( 1,505 ) ( 174 ) Net activity from contributions and unearned compensation 1 63 7,708 — — — 7,708 15,677 Allocated net income for the period — — 508,794 2,625 — 19,486 530,905 57,539 Distributions — — ( 152,208 ) ( 2,625 ) — — ( 154,833 ) ( 17,444 ) Conversion of redeemable partnership units 3 458 15,495 — — — 15,495 ( 15,495 ) Adjustment to reflect redeemable partnership units at redemption value — — 868,168 — — — 868,168 ( 868,168 ) Effective portion of interest rate contracts — — — — ( 8,732 ) — ( 8,732 ) ( 988 ) Amortization of interest rate contracts — — — — 1,367 144 1,511 155 Contributions from noncontrolling interests in property partnerships — — — — — 3,876 3,876 — Distributions to noncontrolling interests in property partnerships — — — — — ( 15,750 ) ( 15,750 ) — Equity, March 31, 2020 1,731 153,584 $ 4,626,627 $ 193,623 $ ( 55,700 ) $ 1,736,445 $ 6,500,995 $ 1,639,855 The accompanying notes are an integral part of these consolidated financial statements. 12 Table of Contents BOSTON PROPERTIES LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited and in thousands) Three months ended March 31, 2021 2020 Cash flows from operating activities: Net income $ 131,212 $ 588,444 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 173,500 169,285 Amortization of right of use assets - operating leases 2,263 583 Non-cash compensation expense 20,090 17,525 Loss (income) from unconsolidated joint ventures ( 5,225 ) 369 Distributions of net cash flow from operations of unconsolidated joint ventures 3,972 5,917 (Gains) losses from investments in securities ( 1,659 ) 5,445 Allowance for current expected credit losses ( 128 ) — Non-cash portion of interest expense 5,984 5,646 Settlement of accreted debt discount on redemption of unsecured senior notes ( 6,290 ) — Losses from early extinguishments of debt 898 — Gains on sales of real estate — ( 419,654 ) Change in assets and liabilities: Tenant and other receivables, net 26,020 17,784 Notes receivable, net ( 140 ) ( 128 ) Accrued rental income, net ( 9,413 ) ( 27,285 ) Prepaid expenses and other assets ( 96,351 ) ( 93,819 ) Lease liabilities - operating leases ( 1,330 ) 393 Accounts payable and accrued expenses ( 21,578 ) ( 48,591 ) Accrued interest payable ( 28,970 ) ( 7,644 ) Other liabilities ( 24,177 ) ( 21,296 ) Tenant leasing costs ( 16,615 ) ( 17,777 ) Total adjustments 20,851 ( 413,247 ) Net cash provided by operating activities 152,063 175,197 Cash flows from investing activities: Construction in progress ( 119,496 ) ( 143,160 ) Building and other capital improvements ( 32,717 ) ( 39,154 ) Tenant improvements ( 93,201 ) ( 64,172 ) Proceeds from sales of real estate — 259,489 Capital contributions to unconsolidated joint ventures ( 16,684 ) ( 89,997 ) Capital distributions from unconsolidated joint ventures 122 — Proceeds from sale of investment in unconsolidated joint venture 17,589 — Investments in securities, net 2,114 3,201 Net cash used in investing activities ( 242,273 ) ( 73,793 ) Cash flows from financing activities: Repayments of mortgage notes payable ( 5,374 ) ( 4,212 ) Proceeds from unsecured senior notes 846,345 — Redemption of unsecured senior notes ( 843,710 ) — Borrowings on unsecured line of credit — 265,000 Repayments of unsecured line of credit — ( 15,000 ) Repayment of unsecured term loan ( 500,000 ) — Deferred financing costs ( 7,145 ) ( 11 ) 13 Table of Contents BOSTON PROPERTIES LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited and in thousands) Three months ended March 31, 2021 2020 Debt prepayment and extinguishment costs ( 185 ) — Net proceeds from equity transactions 19,643 3,349 Distributions ( 171,566 ) ( 171,964 ) Contributions from noncontrolling interests in property partnerships 281 3,876 Distributions to noncontrolling interests in property partnerships ( 18,225 ) ( 15,750 ) Net cash provided by (used in) financing activities ( 679,936 ) 65,288 Net increase (decrease) in cash and cash equivalents and cash held in escrows ( 770,146 ) 166,692 Cash and cash equivalents and cash held in escrows, beginning of period 1,719,329 691,886 Cash and cash equivalents and cash held in escrows, end of period $ 949,183 $ 858,578 Reconciliation of cash and cash equivalents and cash held in escrows: Cash and cash equivalents, beginning of period $ 1,668,742 $ 644,950 Cash held in escrows, beginning of period 50,587 46,936 Cash and cash equivalents and cash held in escrows, beginning of period $ 1,719,329 $ 691,886 Cash and cash equivalents, end of period $ 697,369 $ 660,733 Cash held in escrows, end of period 251,814 197,845 Cash and cash equivalents and cash held in escrows, end of period $ 949,183 $ 858,578 Supplemental disclosures: Cash paid for interest $ 146,781 $ 114,696 Interest capitalized $ 12,032 $ 14,149 Non-cash investing and financing activities: Write-off of fully depreciated real estate $ ( 23,847 ) $ ( 38,782 ) Change in real estate included in accounts payable and accrued expenses $ ( 42,778 ) $ ( 27,415 ) Preferred stock redemption liability $ 200,000 $ — Accrued rental income, net deconsolidated $ — $ ( 4,558 ) Tenant leasing costs, net deconsolidated $ — $ ( 3,462 ) Building and other capital improvements, net deconsolidated $ — $ ( 111,889 ) Tenant improvements, net deconsolidated $ — $ ( 12,331 ) Investment in unconsolidated joint venture recorded upon deconsolidation $ — $ 347,898 Deferred distributions from sale of investment in unconsolidated joint venture $ 5,808 $ — Deferred proceeds from sale of investment in unconsolidated joint venture $ 200 $ — Distributions declared but not paid $ 171,003 $ 171,026 Conversions of redeemable partnership units to partners’ capital $ 4,198 $ 15,495 Issuance of restricted securities to employees and non-employee directors $ 41,255 $ 43,104 The accompanying notes are an integral part of these consolidated financial statements. 14 Table of Contents BOSTON PROPERTIES, INC. AND BOSTON PROPERTIES LIMITED PARTNERSHIP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. Organization Boston Properties, Inc., a Delaware corporation, is a fully integrated, self-administered and self-managed real estate investment trust (“REIT”). Boston Properties, Inc. is the sole general partner of Boston Properties Limited Partnership, its operating partnership, and at March 31, 2021 owned an approximate 89.9 % ( 90.0 % at December 31, 2020) general and limited partnership interest in Boston Properties Limited Partnership. Unless stated otherwise or the context requires, the “Company” refers to Boston Properties, Inc. and its subsidiaries, including Boston Properties Limited Partnership and its consolidated subsidiaries. Partnership interests in Boston Properties Limited Partnership include: • common units of partnership interest (also referred to as “OP Units”), • long term incentive units of partnership interest (also referred to as “LTIP Units”), and • preferred units of partnership interest (also referred to as “Preferred Units”). Unless specifically noted otherwise, all references to OP Units exclude units held by Boston Properties, Inc. A holder of an OP Unit may present such OP Unit to Boston Properties Limited Partnership for redemption at any time (subject to restrictions agreed upon at the time of issuance of OP Units to particular holders that may restrict such redemption right for a period of time, generally one year from issuance). Upon presentation of an OP Unit for redemption, Boston Properties Limited Partnership is obligated to redeem the OP Unit for cash equal to the value of a share of common stock of Boston Properties, Inc. (“Common Stock”). In lieu of a cash redemption, Boston Properties, Inc. may elect to acquire the OP Unit for one share of Common Stock. Because the number of shares of Common Stock outstanding at all times equals the number of OP Units that Boston Properties, Inc. owns, one share of Common Stock is generally the economic equivalent of one OP Unit, and the quarterly distribution that may be paid to the holder of an OP Unit equals the quarterly dividend that may be paid to the holder of a share of Common Stock. The Company uses LTIP Units as a form of time-based, restricted equity compensation and as a form of performance-based equity compensation for employees, and has previously granted LTIP Units in the form of (1) 2012 outperformance plan awards (“2012 OPP Units”) and (2) 2013 - 2021 multi-year, long-term incentive program awards (also referred to as “MYLTIP Units”), each of which, upon the satisfaction of certain performance and vesting conditions, is convertible into one OP Unit. The three-year measurement periods for the 2012 OPP Units and the 2013 - 2018 MYLTIP Units have ended and Boston Properties, Inc.’s total stockholder return (“TSR”) was sufficient for employees to earn and therefore become eligible to vest in a portion of the awards. Unless and until they are earned, the rights, preferences and privileges of the 2019 - 2021 MYLTIP Units differ from other LTIP Units granted to employees (including the 2012 OPP Units and the 2013 - 2018 MYLTIP Units, which have been earned). Therefore, unless specifically noted otherwise, all references to LTIP Units exclude the 2019 - 2021 MYLTIP Units. LTIP Units (including the earned 2012 OPP Units and the earned 2013 - 2018 MYLTIP Units), whether vested or not, will receive the same quarterly per unit distributions as OP Units, which equal per share dividends on Common Stock (See Notes 10 and 14). At December 31, 2020, there was one series of Preferred Units outstanding (i.e., Series B Preferred Units). The Series B Preferred Units were issued to Boston Properties, Inc. on March 27, 2013 in connection with the issuance of 80,000 shares ( 8,000,000 depositary shares each representing 1/100th of a share) of 5.25 % Series B Cumulative Redeemable Preferred Stock (the “Series B Preferred Stock”). Boston Properties, Inc. contributed the net proceeds from the offering to Boston Properties Limited Partnership in exchange for 80,000 Series B Preferred Units having terms and preferences generally mirroring those of the Series B Preferred Stock (See Note 11). On March 2, 2021, Boston Properties, Inc. issued a redemption notice for 80,000 shares of Series B Preferred Stock, which constituted all of the outstanding Series B Preferred Stock, and the corresponding depositary shares, each representing 1/100th of a share of Series B Preferred Stock (the “Depositary Shares”), and recorded it as a liability. Upon redemption of the Series B Preferred Stock, the Series B Preferred Units were also redeemed. On March 31, 2021, Boston Properties, Inc. transferred the full redemption price for all outstanding shares of Series B Preferred Stock of approximately $ 201.3 million, including approximately $ 1.3 million of accrued and unpaid dividends to, but not including, the redemption date, to the redemption agent and recorded the amount within Cash held in escrows on the Consolidated Balance Sheet (See Notes 11 and 15). 15 Table of Contents Properties At March 31, 2021, the Company owned or had joint venture interests in a portfolio of 196 commercial real estate properties (the “Properties”) aggregating approximately 51.6 million net rentable square feet of primarily Class A office properties, including nine properties under construction/redevelopment totaling approximately 4.3 million net rentable square feet. At March 31, 2021, the Properties consisted of: • 177 office properties (including nine properties under construction/redevelopment); • 12 retail properties; • six residential properties; and • one hotel. The Company considers Class A office properties to be well-located buildings that are modern structures or have been modernized to compete with newer buildings and professionally managed and maintained. As such, these properties attract high-quality tenants and command upper-tier rental rates. 2. Basis of Presentation and Summary of Significant Accounting Policies Boston Properties, Inc. does not have any other significant assets, liabilities or operations, other than its investment in Boston Properties Limited Partnership, nor does it have employees of its own. Boston Properties Limited Partnership, not Boston Properties, Inc., generally executes all significant business relationships other than transactions involving securities of Boston Properties, Inc. All majority-owned subsidiaries and joint ventures over which the Company has financial and operating control and variable interest entities (“VIEs”) in which the Company has determined it is the primary beneficiary are included in the consolidated financial statements. All significant intercompany balances and transactions have been eliminated in consolidation. The Company accounts for all other unconsolidated joint ventures using the equity method of accounting. Accordingly, the Company’s share of the earnings of these joint ventures and companies is included in consolidated net income. The accompanying interim financial statements are unaudited; however, the financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial information and in conjunction with the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the disclosures required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting solely of normal recurring matters) necessary for a fair statement of the financial statements for these interim periods have been included. The results of operations for the interim periods are not necessarily indicative of the results to be obtained for other interim periods or for the full fiscal year. The year-end consolidated balance sheet data was derived from audited financial statements, but does not include all disclosure required by GAAP. These financial statements should be read in conjunction with the Company’s financial statements and notes thereto contained in the Company’s Annual Report in the Company’s Form 10-K for its fiscal year ended December 31, 2020. The Company bases its estimates on historical experience and on various other assumptions that it considers to be reasonable under the circumstances, including the impact of extraordinary events such as the novel coronavirus (“COVID-19”) pandemic, the results of which form the basis for making significant judgments about the carrying values of assets and liabilities, assessments of future collectability, and other areas of the financial statements that are impacted by the use of estimates. Actual results may differ from these estimates under different assumptions or conditions. Variable Interest Entities (VIEs) Consolidated VIEs are those for which the Company is considered to be the primary beneficiary of a VIE. The primary beneficiary is the entity that has a controlling financial interest in the VIE, which is defined by the entity having both of the following characteristics: (1) the power to direct the activities that, when taken together, most significantly impact the VIE’s performance and (2) the obligation to absorb losses or the right to receive the returns from the VIE that could potentially be significant to the VIE. The Company has determined that it is the primary beneficiary for six of the seven entities that are VIEs. Consolidated Variable Interest Entities As of March 31, 2021, Boston Properties, Inc. has identified six consolidated VIEs, including Boston Properties Limited Partnership. Excluding Boston Properties Limited Partnership, the VIEs consisted of the following five in-service properties: 767 Fifth Avenue (the General Motors Building), Times Square Tower, 601 Lexington Avenue, Atlantic Wharf Office Building and 100 Federal Street. 16 Table of Contents The Company consolidates these VIEs because it is the primary beneficiary. The third parties’ interests in these consolidated entities (excluding Boston Properties Limited Partnership’s interest) are reflected as noncontrolling interests in property partnerships in the accompanying consolidated financial statements (See Note 10). In addition, Boston Properties, Inc.’s only significant asset is its investment in Boston Properties Limited Partnership and, consequently, substantially all of Boston Properties, Inc.’s assets and liabilities are the assets and liabilities of Boston Properties Limited Partnership. Variable Interest Entities Not Consolidated The Company has determined that the Platform 16 Holdings LP joint venture is a VIE. The Company does not consolidate this entity as the Company does not have the power to direct the activities that, when taken together, most significantly impact the VIE’s performance and, therefore, the Company is not considered to be the primary beneficiary. Fair Value of Financial Instruments The Company follows the authoritative guidance for fair value measurements when valuing its financial instruments for disclosure purposes. The table below presents the financial instruments that are being valued for disclosure purposes as well as the Level at which they are categorized (as defined in Accounting Standards Codification (“ASC”) 820 “Fair Value Measurements and Disclosures” (“ASC 820”)). Financial Instrument Level Unsecured senior notes (1) Level 1 Related party note receivable Level 3 Notes receivable Level 3 Mortgage notes payable Level 3 Unsecured line of credit (2) Level 3 _______________ (1) If trading value for the period is low, the valuation could be categorized as Level 2. (2) As of March 31, 2021, there were no amounts outstanding under the unsecured line of credit. Because the Company’s valuations of its financial instruments are based on the above Levels and involve the use of estimates, the actual fair values of its financial instruments may differ materially from those estimates. The following table identifies the range and weighted average of significant unobservable inputs for the Company’s Level 3 fair value measured instruments. Financial Instrument Level Range Weighted Average Related party note receivable Level 3 3.61 % 3.61 % Notes receivable Level 3 3.60 % - 8.00 % 5.85 % Mortgage notes payable Level 3 2.75 % - 3.07 % 2.82 % In addition, the Company’s estimated fair values for these instruments as of the end of the applicable reporting period are not projections of, nor necessarily indicative of, estimated or actual fair values in future reporting periods. The following table presents the aggregate carrying value of the Company’s related party note receivable, net, notes receivable, net, mortgage notes payable, net, unsecured senior notes, net, unsecured line of credit and unsecured term loan, net and the Company’s corresponding estimate of fair value as of March 31, 2021 and December 31, 2020 (in thousands): 17 Table of Contents March 31, 2021 December 31, 2020 Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value Related party note receivable, net $ 77,640 $ 84,205 $ 77,552 $ 84,579 Notes receivable, net 18,891 19,541 18,729 19,372 Total $ 96,531 $ 103,746 $ 96,281 $ 103,951 Mortgage notes payable, net $ 2,904,672 $ 3,025,986 $ 2,909,081 $ 3,144,150 Unsecured senior notes, net 9,631,592 10,216,659 9,639,287 10,620,527 Unsecured line of credit — — — — Unsecured term loan, net — — 499,390 500,326 Total $ 12,536,264 $ 13,242,645 $ 13,047,758 $ 14,265,003 3. Real Estate Boston Properties, Inc. Real estate consisted of the following at March 31, 2021 and December 31, 2020 (in thousands): March 31, 2021 December 31, 2020 Land $ 5,068,843 $ 5,069,206 Right of use assets - finance leases 237,017 237,393 Right of use assets - operating leases 144,143 146,406 Land held for future development (1) 421,349 450,954 Buildings and improvements 14,004,418 13,777,691 Tenant improvements 2,816,726 2,752,880 Furniture, fixtures and equipment 51,549 49,606 Construction in progress 794,039 868,773 Total 23,538,084 23,352,909 Less: Accumulated depreciation ( 5,665,061 ) ( 5,534,102 ) $ 17,873,023 $ 17,818,807 _______________ (1) Includes pre-development costs. Boston Properties Limited Partnership Real estate consisted of the following at March 31, 2021 and December 31, 2020 (in thousands): March 31, 2021 December 31, 2020 Land $ 4,971,990 $ 4,971,990 Right of use assets - finance leases 237,017 237,393 Right of use assets - operating leases 144,143 146,406 Land held for future development (1) 421,349 450,954 Buildings and improvements 13,725,776 13,498,098 Tenant improvements 2,816,726 2,752,880 Furniture, fixtures and equipment 51,549 49,606 Construction in progress 794,039 868,773 Total 23,162,589 22,976,100 Less: Accumulated depreciation ( 5,557,784 ) ( 5,428,576 ) $ 17,604,805 $ 17,547,524 _______________ (1) Includes pre-development costs. 18 Table of Contents Developments On February 1, 2021, the Company completed and fully placed in-service One Five Nine East 53rd Street, a Class A office and retail redevelopment of the low-rise portion of its 601 Lexington Avenue property with approximately 220,000 net rentable square feet located in New York City. On February 25, 2021, the Company commenced the development of 180 CityPoint, located in Waltham, Massachusetts. When completed, the building will consist of approximately 329,000 net rentable square feet of laboratory space. On February 25, 2021, the Company commenced the redevelopment of 880 Winter Street, located in Waltham, Massachusetts. When completed, the building will consist of approximately 224,000 net rentable square feet of laboratory space. On February 25, 2021, the Company commenced the redevelopment of The Prudential Center Observatory, a 59,000 net rentable square foot redevelopment of the top three floors of 800 Boylston Street - The Prudential Center, located in Boston, Massachusetts. 4. Leases The Company must make estimates as to the collectability of its accrued rent and accounts receivable related to lease revenue. Management analyzes accrued rent and accounts receivable by considering tenant creditworthiness, current economic trends, including the impact of COVID-19 on tenants’ businesses, and changes in tenants’ payment patterns when evaluating the collectability of the tenant’s receivable balance, including the accrued rent receivable, on a lease-by-lease basis. As a result of this analysis, during the three months ended March 31, 2021 and 2020, the Company wrote off approximately $ 0.6 million and $ 1.2 million, respectively, related to accrued rent, net balances and approximately $( 0.2 ) million and $ 0.3 million, respectively, related to accounts receivable, net balances. The write-offs were for tenants, primarily in the retail sector, that either terminated their leases or that the Company considered their accrued rent and/or accounts receivable balances no longer probable of collection. The following table summarizes the components of lease revenue recognized during the three months ended March 31, 2021 and 2020 included within the Company's Consolidated Statements of Operations (in thousands): Three months ended March 31, Lease Revenue 2021 2020 Fixed contractual payments $ 575,353 $ 586,957 Variable lease payments 110,464 123,154 $ 685,817 $ 710,111 19 Table of Contents 5. Investments in Unconsolidated Joint Ventures The investments in unconsolidated joint ventures consist of the following at March 31, 2021 and December 31, 2020: Carrying Value of Investment (1) Entity Properties Nominal % Ownership March 31, 2021 December 31, 2020 (in thousands) Square 407 Limited Partnership Market Square North 50.0 % $ ( 3,293 ) $ ( 3,766 ) BP/CRF Metropolitan Square LLC Metropolitan Square 20.0 % ( 12,971 ) ( 13,584 ) 901 New York, LLC 901 New York Avenue 25.0 % (2) ( 12,198 ) ( 12,264 ) WP Project Developer LLC Wisconsin Place Land and Infrastructure 33.3 % (3) 34,887 35,297 Annapolis Junction NFM LLC Annapolis Junction 50.0 % (4) — 13,463 540 Madison Venture LLC 540 Madison Avenue 60.0 % (5) — 122 500 North Capitol Venture LLC 500 North Capitol Street, NW 30.0 % ( 7,187 ) ( 6,945 ) 501 K Street LLC 1001 6th Street 50.0 % (6) 42,607 42,499 Podium Developer LLC The Hub on Causeway - Podium 50.0 % 48,398 48,818 Residential Tower Developer LLC Hub50House 50.0 % 49,520 50,943 Hotel Tower Developer LLC The Hub on Causeway - Hotel Air Rights 50.0 % 11,032 10,754 Office Tower Developer LLC 100 Causeway Street 50.0 % 56,458 56,312 1265 Main Office JV LLC 1265 Main Street 50.0 % 3,899 3,787 BNY Tower Holdings LLC Dock 72 50.0 % 27,936 29,536 BNYTA Amenity Operator LLC Dock 72 50.0 % 1,672 1,846 CA-Colorado Center Limited Partnership Colorado Center 50.0 % 229,094 227,671 7750 Wisconsin Avenue LLC 7750 Wisconsin Avenue 50.0 % 58,697 58,112 BP-M 3HB Venture LLC 3 Hudson Boulevard 25.0 % 115,869 113,774 SMBP Venture LP Santa Monica Business Park 55.0 % 159,545 145,761 Platform 16 Holdings LP Platform 16 55.0 % (7) 108,358 108,393 Gateway Portfolio Holdings LLC Gateway Commons 50.0 % (8) 332,591 336,206 Rosecrans-Sepulveda Partners 4, LLC Beach Cities Media Campus 50.0 % 27,162 27,184 $ 1,272,076 $ 1,273,919 _______________ (1) Investments with deficit balances aggregating approximately $ 35.6 million and $ 36.6 million at March 31, 2021 and December 31, 2020, respectively, are included within Other Liabilities in the Company’s Consolidated Balance Sheets. (2) The Company’s economic ownership has increased based on the achievement of certain return thresholds. At March 31, 2021 and December 31, 2020, the Company’s economic ownership was approximately 50 %. (3) The Company’s wholly-owned subsidiary that owns Wisconsin Place Office also owns a 33.3 % interest in the joint venture entity that owns the land, parking garage and infrastructure of the project. (4) On March 30, 2021, the Company sold its interest in the joint venture to the partner. See below for additional details. (5) T he property was sold on June 27, 2019. As of December 31, 2020, the investment consisted of undistributed cash. All remaining cash has been distributed as of March 31, 2021. (6) Under the joint venture agreement for this land parcel, the partner will be entitled to up to two additional payments from the venture based on increases in total entitled square footage of the project above 520,000 square feet and achieving certain project returns at stabilization. (7) This entity is a VIE (See Note 2). (8) As a result of the partner’s deferred contribution, the Company owned an approximately 54 % and 55 % interest in the joint venture at March 31, 2021 and December 31, 2020, respectively. Future development projects will be owned 49 % by the Company and 51 % by its partner. 20 Table of Contents Certain of the Company’s unconsolidated joint venture agreements include provisions whereby, at certain specified times, each partner has the right to initiate a purchase or sale of its interest in the joint ventures. With limited exceptions under these provisions, the Company is not compelled to purchase the interest of its outside joint venture partners. Under certain of the Company’s joint venture agreements, if certain return thresholds are achieved, the partners or the Company will be entitled to an additional promoted interest or payments. The combined summarized balance sheets of the Company’s unconsolidated joint ventures are as follows: March 31, 2021 December 31, 2020 (in thousands) ASSETS Real estate and development in process, net (1) $ 4,711,593 $ 4,708,571 Other assets 505,554 531,071 Total assets $ 5,217,147 $ 5,239,642 LIABILITIES AND MEMBERS’/PARTNERS’ EQUITY Mortgage and notes payable, net $ 2,662,616 $ 2,637,911 Other liabilities (2) 599,354 650,433 Members’/Partners’ equity 1,955,177 1,951,298 Total liabilities and members’/partners’ equity $ 5,217,147 $ 5,239,642 Company’s share of equity $ 933,739 $ 936,087 Basis differentials (3) 338,337 337,832 Carrying value of the Company’s investments in unconsolidated joint ventures (4) $ 1,272,076 $ 1,273,919 _______________ (1) At March 31, 2021 and December 31, 2020, this amount included right of use assets - finance leases totaling approximately $ 248.9 million and $ 248.9 million, respectively, and right of use assets - operating leases totaling approximately $ 22.2 million and $ 22.5 million, respectively. (2) At March 31, 2021 and December 31, 2020, this amount included lease liabilities - finance leases totaling approximately $ 387.9 million and $ 388.7 million, respectively, and lease liabilities - operating leases totaling approximately $ 29.2 million and $ 29.0 million, respectively. (3) This amount represents the aggregate difference between the Company’s historical cost basis and the basis reflected at the joint venture level, which is typically amortized over the life of the related assets and liabilities. Basis differentials result from impairments of investments, acquisitions through joint ventures with no change in control and upon the transfer of assets that were previously owned by the Company into a joint venture. In addition, certain acquisition, transaction and other costs may not be reflected in the net assets at the joint venture level. The Company’s basis differences are as follows: March 31, 2021 December 31, 2020 (in thousands) Property Colorado Center $ 306,903 $ 307,328 Gateway Commons 50,682 51,875 Dock 72 ( 51,708 ) ( 52,243 ) These basis differentials (excluding land) will be amortized over the remaining lives of the related assets and liabilities. (4) Investments with deficit balances aggregating approximately $ 35.6 million and $ 36.6 million at March 31, 2021 and December 31, 2020, respectively, are reflected within Other Liabilities in the Company’s Consolidated Balance Sheets. 21 Table of Contents The combined summarized statements of operations of the Company’s unconsolidated joint ventures are as follows: Three months ended March 31, 2021 2020 (in thousands) Total revenue (1) $ 87,266 $ 93,203 Expenses Operating 37,134 35,401 Transaction costs 7 — Depreciation and amortization 34,103 32,035 Total expenses 71,244 67,436 Other income (expense) Interest expense ( 25,556 ) ( 22,583 ) Net income (loss) $ ( 9,534 ) $ 3,184 Company’s share of net income (loss) $ ( 3,640 ) $ 1,252 Gain on sale of investment (2) 10,257 — Basis differential (3) ( 1,392 ) ( 1,621 ) Income (loss) from unconsolidated joint ventures $ 5,225 $ ( 369 ) _______________ (1) Includes straight-line rent adjustments of approximately $ 1.1 million and $ 9.7 million for the three months ended March 31, 2021 and 2020, respectively. For the three months ended March 31, 2021, write-offs of accounts receivable and accrued rent balances totaled approximately $ 0.3 million. (2) During the three months ended March 31, 2021, the Company completed the sale of its 50 % ownership interest in Annapolis Junction NFM LLC. The Company recognized a gain on sale of investment of approximately $ 10.3 million. (3) Includes straight-line rent adjustments of approximately $ 0.5 million and $ 0.5 million for the three months ended March 31, 2021 and 2020, respectively. Also includes net above-/below-market rent adjustments of approximately $ 0.1 million and $ 0.3 million for the three months ended March 31, 2021 and 2020, respectively. On February 25, 2021, a joint venture in which the Company has a 54 % interest, commenced the development of 751 Gateway, a speculative laboratory building located in South San Francisco, California, that is expected to be approximately 229,000 net rentable square feet upon completion. 751 Gateway is the first phase of a multi-phase development plan at Gateway Commons. Upon the formation of the joint venture in 2020, the Company had an approximately 55 % ownership interest in the joint venture as a result of the partner’s deferred contribution and the partner is obligated to fund all required capital until such time as the Company owns a 50 % interest. On March 31, 2021, the Company had a 54 % interest in the joint venture. The Company will own a 49 % interest in any development project, including 751 Gateway. On March 30, 2021, the Company completed the sale of its 50 % ownership interest in Annapolis Junction NFM LLC (the “Annapolis Junction Joint Venture”) to the joint venture partner for a gross sales price of $ 65.9 million. Net cash proceeds to the Company totaled approximately $ 17.6 million after repayment of the Company's share of debt totaling approximately $ 15.1 million and the deferment of a $ 0.2 million payment due from the purchaser. The Company recognized a gain on sale of investment totaling approximatel y $ 10.3 million , w hich is included in Income (Loss) from Unconsolidated Joint Ventures in the accompanying Consolidated Statements of Operations. In addition to net cash proceeds from the sale, the Company will be distributed approximately $ 5.8 million of available cash subsequent to March 31, 2021. Annapolis Junction Buildings Six and Seven are Class A office properties totaling approximately 247,000 net rentable square feet. With the sale of the Company’s ownership interest in the Annapolis Junction Joint Venture, the Company no longer has any assets in Annapolis, Maryland. 22 Table of Contents 6. Mortgage Notes Payable On March 26, 2021, the Company used available cash to repay the mortgage loan collateralized by its University Place property located in Cambridge, Massachusetts totaling approximately $ 0.9 million. The mortgage loan bore interest at a fixed rate of 6.94 % per annum and was scheduled to mature on August 1, 2021. There was no prepayment penalty. 7. Unsecured Senior Notes The following summarizes the unsecured senior notes outstanding as of March 31, 2021 (dollars in thousands): Coupon/ Stated Rate Effective Rate(1) Principal Amount Maturity Date(2) 11 Year Unsecured Senior Notes 3.850 % 3.954 % $ 1,000,000 February 1, 2023 10.5 Year Unsecured Senior Notes 3.125 % 3.279 % 500,000 September 1, 2023 10.5 Year Unsecured Senior Notes 3.800 % 3.916 % 700,000 February 1, 2024 7 Year Unsecured Senior Notes 3.200 % 3.350 % 850,000 January 15, 2025 10 Year Unsecured Senior Notes 3.650 % 3.766 % 1,000,000 February 1, 2026 10 Year Unsecured Senior Notes 2.750 % 3.495 % 1,000,000 October 1, 2026 10 Year Unsecured Senior Notes 4.500 % 4.628 % 1,000,000 December 1, 2028 10 Year Unsecured Senior Notes 3.400 % 3.505 % 850,000 June 21, 2029 10.5 Year Unsecured Senior Notes 2.900 % 2.984 % 700,000 March 15, 2030 10.75 Year Unsecured Senior Notes 3.250 % 3.343 % 1,250,000 January 30, 2031 11 Year Unsecured Senior Notes 2.550 % 2.671 % 850,000 April 1, 2032 Total principal 9,700,000 Less: Net unamortized discount 18,736 Deferred financing costs, net 49,672 Total $ 9,631,592 _______________ (1) Yield on issuance date including the effects of discounts on the notes, settlements of interest rate contracts and the amortization of financing costs. (2) No principal amounts are due prior to maturity. On February 14, 2021, Boston Properties Limited Partnership completed the redemption of $ 850.0 million in aggregate principal amount of its 4.125 % senior notes due May 15, 2021. The redemption price was approximately $ 858.7 million, which was equal to par plus approximately $ 8.7 million of accrued and unpaid interest to, but not including, the redemption date. Excluding the accrued and unpaid interest, the redemption price was equal to the principal amount being redeemed. The Company recognized a loss from early extinguishment of debt totaling approximately $ 0.4 million related to unamortized origination costs. On March 16, 2021, Boston Properties Limited Partnership completed a public offering of $ 850.0 million in aggregate principal amount of its 2.550 % unsecured senior notes due 2032. The notes were priced at 99.570 % of the principal amount to yield an effective rate (including financing fees) of approximately 2.671 % per annum to maturity. The notes will mature on April 1, 2032, unless earlier redeemed. The aggregate net proceeds from the offering were approximately $ 839.2 million after deducting underwriting discounts and transaction expenses. The indenture relating to the unsecured senior notes contains certain financial restrictions and requirements, including (1) a leverage ratio not to exceed 60%, (2) a secured debt leverage ratio not to exceed 50%, (3) an interest coverage ratio of greater than 1.50, and (4) an unencumbered asset value of not less than 150% of unsecured debt. At March 31, 2021, Boston Properties Limited Partnership was in compliance with each of these financial restrictions and requirements. 23 Table of Contents 8. Unsecured Credit Facility On April 24, 2017, Boston Properties Limited Partnership amended and restated its unsecured revolving credit agreement (as amended and restated, the “2017 Credit Facility”). Among other things, the 2017 Credit Facility (1) increased the total commitment of the revolving line of credit (the “Revolving Facility”) from $ 1.0 billion to $ 1.5 billion, (2) extended the maturity date from July 26, 2018 to April 24, 2022, (3) reduced the per annum variable interest rates, and (4) added a $ 500.0 million delayed draw term loan facility (the “Delayed Draw Facility”) that permitted Boston Properties Limited Partnership to draw upon it provided that amounts drawn and subsequently repaid may not be borrowed again. In addition, Boston Properties Limited Partnership may increase the total commitment under the 2017 Credit Facility by up to $ 500.0 million through increases in the Revolving Facility or the Delayed Draw Facility, or both, subject to syndication of the increase and other conditions. On April 24, 2018, Boston Properties Limited Partnership exercised its option to draw $ 500.0 million on its Delayed Draw Facility. Prior to its repayment on March 16, 2021, the Delayed Draw Facility bore interest at a variable rate equal to LIBOR plus 0.95 % per annum based on Boston Properties Limited Partnership’s credit rating. On March 16, 2021, Boston Properties Limited Partnership repaid all amounts borrowed under the Delayed Draw Facility. The Company recognized a loss from early extinguishment of debt totaling approximately $ 0.5 million, related to unamortized financing costs. At March 31, 2021, Boston Properties Limited Partnership had no amounts outstanding under its 2017 Credit Facility. The 2017 Credit Facility contains customary representations and warranties, affirmative and negative covenants and events of default provisions, including failure to pay indebtedness, breaches of covenants, and bankruptcy and other insolvency events, which could result in the acceleration of all amounts and cancellation of all commitments outstanding under the Credit Agreement. Among other covenants, the 2017 Credit Facility requires that Boston Properties Limited Partnership maintain on an ongoing basis: (1) a leverage ratio not to exceed 60%, however, the leverage ratio may increase to no greater than 65% provided that it is reduced back to 60% within one year, (2) a secured debt leverage ratio not to exceed 55%, (3) a fixed charge coverage ratio of at least 1.40, (4) an unsecured debt leverage ratio not to exceed 60%, however, the unsecured debt leverage ratio may increase to no greater than 65% provided that it is reduced to 60% within one year, (5) an unsecured debt interest coverage ratio of at least 1.75 and (6) limitations on permitted investments. At March 31, 2021, Boston Properties Limited Partnership was in compliance with each of these financial and other covenant requirements. 9. Commitments and Contingencies General In the normal course of business, the Company guarantees its performance of services or indemnifies third parties against its negligence. In addition, in the normal course of business, the Company guarantees to certain tenants the obligations of its subsidiaries for the payment of tenant improvement allowances and brokerage commissions in connection with their leases and limited costs arising from delays in delivery of their premises. The Company has letter of credit and performance obligations related to lender and development requirements that total approximately $ 20.2 million at March 31, 2021. Certain of the Company’s joint venture agreements include provisions whereby, at certain specified times, each partner has the right to initiate a purchase or sale of its interest in the joint ventures. With limited exception, under these provisions, the Company is not compelled to purchase the interest of its outside joint venture partners. From time to time, under certain of the Company’s joint venture agreements, if certain return thresholds are achieved, either the Company or its partners may be entitled to an additional promoted interest or payments. From time to time, the Company (or ventures in which the Company has an ownership interest) has agreed, and may in the future agree, to (1) guarantee portions of the principal, interest and other amounts in connection with their borrowings, (2) provide customary environmental indemnifications and nonrecourse carve-outs (e.g., guarantees against fraud, misrepresentation and bankruptcy) in connection with their borrowings and (3) provide guarantees to lenders, tenants and other third parties for the completion of development projects. The Company has agreements with its outside partners whereby the partners agree to reimburse the joint venture for their share of any payments made under the guarantee. In some cases, the Company earns a fee from the applicable joint venture for providing the guarantee. In connection with the refinancing of 767 Fifth Avenue’s (the General Motors Building) secured loan by the Company’s consolidated joint venture entity, 767 Venture, LLC, the Company guaranteed the consolidated entity’s Table of Contents obligation to fund various reserves for tenant improvement costs and allowances, leasing commissions and free rent obligations in lieu of cash deposits. As of March 31, 2021, the maximum funding obligation under the guarantee was approximately $ 23.1 million. The Company earns a fee from the joint venture for providing the guarantee and has an agreement with the outside partners to reimburse the joint venture for their share of any payments made under the guarantee. As of March 31, 2021, no amounts related to the guarantee are recorded as liabilities in the Company’s consolidated financial statements. Pursuant to the lease agreement with Marriott, the Company has guaranteed the completion of the office building and parking garage on behalf of its 7750 Wisconsin Avenue joint venture and has also provided a financing guaranty as required with respect to the third-party construction financing. The Company earns fees from the joint venture for providing the guarantees and any amounts the Company pays under the guarantee(s) will be deemed to be capital contributions by the Company to the joint venture. The Company has also agreed to fund construction costs through capital contributions to the joint venture in the event of insufficiency of third-party construction financing. In addition, the Company has guaranteed to Marriott, as hotel manager, the completion of a hotel being developed by an affiliate of The Bernstein Companies (the Company’s partner in the 7750 Wisconsin Avenue joint venture) adjacent to the office property, for which the Company earns a fee from the affiliate of The Bernstein Companies. In addition, the Company entered into agreements with affiliates of The Bernstein Companies whereby the Company could be required to act as a mezzanine and/or mortgage lender and finance the construction of the hotel property. An affiliate of The Bernstein Companies exercised its option to borrow $ 10.0 million from the Company under such agreements, which financing was provided by the Company on June 1, 2020. The financing bears interest at a fixed rate of 8.00 % per annum, compounded monthly, and matures on the fifth anniversary of the date on which the base building of the affiliate of The Bernstein Companies’ hotel property is substantially completed. The financing is collateralized by a pledge of the partner’s equity interest in the joint venture that owns and is developing 7750 Wisconsin Avenue . To secure such financing arrangements, affiliates of The Bernstein Companies are required to provide certain security, which varies depending on the specific loan, by pledges of their equity interest in the office property, a fee mortgage on the hotel property, or both. As of March 31, 2021, no amounts related to the contingent aspect of any of the guarantees are recorded as liabilities in the Company’s consolidated financial statements. In connection with the sale and development of the Company’s 6595 Springfield Center Drive development project, the Company has guaranteed the completion of the project and the payment of certain cost overruns in accordance with the development management agreement with the buyer. Although the project has been sold and the lease with the Federal Government tenant has been assigned to the buyer, pursuant to the terms of the Federal Government lease, the Federal Government tenant is not obligated to release the prior owner/landlord from such landlord’s obligations under the lease until completion of the construction. As a result, the entity which previously owned the land remains liable to the Federal Government tenant for the completion of the construction obligations under the lease. The buyer is obligated to fund the balance of the costs to meet such construction obligations, subject to the Company’s obligation to fund cost overruns (if any), as noted above. An affiliate of the buyer has provided a guaranty of the obligations of the buyer to fund such construction costs and the buyer has agreed to use commercially reasonable efforts to require the construction lender to provide certain remedies to the Company in the event the buyer does not fund such construction obligations. As of March 31, 2021, no amounts related to the contingent aspect of the guarantee are recorded as a liability in the Company’s consolidated financial statements. In connection with the redevelopment of the Company’s 325 Main Street property located in Cambridge, Massachusetts, the Company was required, pursuant to the local zoning ordinance and urban renewal plan, to commence construction of a residential building of at least 200,000 square feet with 25 % of the project designated as income-restricted (with a minimum of 20 % of the square footage devoted to home ownership units) prior to the occupancy of the 325 Main Street property, which is expected to occur during the third quarter of 2022. The zoning ordinance and urban renewal plan were each recently amended to decouple the residential requirement from the occupancy of the 325 Main Street property. The amendment to the urban renewal plan is subject to final approvals and completion of administrative processes. 325 Main Street consisted of an approximately 115,000 net rentable square foot Class A office property that was demolished and is being developed into an approximately 420,000 net rentable square foot Class A office property, including approximately 41,000 net rentable square feet of retail space. Insurance The Company’s property insurance program per occurrence limits are $ 1.0 billion for its portfolio insurance program, including coverage for acts of terrorism other than nuclear, biological, chemical or radiological terrorism (“Terrorism Coverage”). The Company also carries $ 250 million of Terrorism Coverage for 601 Lexington Avenue, New York, New York (“601 Lexington Avenue”) in excess of the $ 1.0 billion of coverage in the Company’s property insurance program. Certain properties, including the General Motors Building located at 767 Fifth Avenue in New 25 Table of Contents York, New York (“767 Fifth Avenue”), are currently insured in separate insurance programs. The property insurance program per occurrence limits for 767 Fifth Avenue are $ 1.625 billion, including Terrorism Coverage. The Company also currently carries nuclear, biological, chemical and radiological terrorism insurance coverage for acts of terrorism certified under the Federal Terrorism Risk Insurance Act (as amended, “TRIA”) (“NBCR Coverage”), which is provided by IXP as a direct insurer, for the properties in the Company’s portfolio, including 767 Fifth Avenue, but excluding certain other properties owned in joint ventures with third parties or which the Company manages. The per occurrence limit for NBCR Coverage is $ 1.0 billion. Under TRIA, after the payment of the required deductible and coinsurance, the NBCR Coverage provided by IXP is backstopped by the Federal Government if the aggregate industry insured losses resulting from a certified act of terrorism exceed a “program trigger.” The program trigger is $ 200 million, the coinsurance is 20 % and the deductible is 20 % of the premiums earned by the insurer for the year prior to a claim. If the Federal Government pays out for a loss under TRIA, it is mandatory that the Federal Government recoup the full amount of the loss from insurers offering TRIA coverage after the payment of the loss pursuant to a formula in TRIA. The Company may elect to terminate the NBCR Coverage if the Federal Government seeks recoupment for losses paid under TRIA, if TRIA is not extended after its expiration on December 31, 2027, if there is a change in its portfolio or for any other reason. The Company intends to continue to monitor the scope, nature and cost of available terrorism insurance. The Company also currently carries earthquake insurance on its properties located in areas known to be subject to earthquakes. In addition, this insurance is subject to a deductible in the amount of 3 % of the value of the affected property. Specifically, the Company currently carries earthquake insurance which covers its San Francisco and Los Angeles regions with a $ 240 million per occurrence limit, and a $ 240 million annual aggregate limit, $ 20 million of which is provided by IXP, as a direct insurer. The amount of the Company’s earthquake insurance coverage may not be sufficient to cover losses from earthquakes. In addition, the amount of earthquake coverage could impact the Company’s ability to finance properties subject to earthquake risk. The Company may discontinue earthquake insurance or change the structure of its earthquake insurance program on some or all of its properties in the future if the premiums exceed the Company’s estimation of the value of the coverage. IXP, a captive insurance company which is a wholly-owned subsidiary of the Company, acts as a direct insurer with respect to a portion of the Company’s earthquake insurance coverage for its Greater San Francisco and Los Angeles properties and the Company’s NBCR Coverage. Insofar as the Company owns IXP, it is responsible for its liquidity and capital resources, and the accounts of IXP are part of the Company’s consolidated financial statements. In particular, if a loss occurs which is covered by the Company’s NBCR Coverage but is less than the applicable program trigger under TRIA, IXP would be responsible for the full amount of the loss without any backstop by the Federal Government. IXP would also be responsible for any recoupment charges by the Federal Government in the event losses are paid out and its insurance policy is maintained after the payout by the Federal Government. If the Company experiences a loss and IXP is required to pay under its insurance policy, the Company would ultimately record the loss to the extent of the required payment. Therefore, insurance coverage provided by IXP should not be considered as the equivalent of third-party insurance, but rather as a modified form of self-insurance. In addition, Boston Properties Limited Partnership has issued a guarantee to cover liabilities of IXP in the amount of $ 20.0 million. Due to the current COVID-19 pandemic, the Company anticipates the possibility of business interruption, loss of lease revenue and/or other associated expenses related to the Company’s operations across its portfolio. Because this is an ongoing situation it is not yet possible to quantify the Company’s losses and expenses, which continue to develop. Because of the complexity of the Company’s insurance policies and limited precedent for claims being made related to pandemics, it is not yet possible to determine if such losses and expenses will be covered by the Company’s insurance policies. Therefore, at this time, the Company is providing notice to the applicable insurers of the potential for claims in order to protect the Company’s rights under its policies. The Company continues to monitor the state of the insurance market in general, and the scope and costs of coverage for acts of terrorism, California earthquake risk and pandemics, in particular, but the Company cannot anticipate what coverage will be available on commercially reasonable terms in future policy years. There are other types of losses, such as from wars, for which the Company cannot obtain insurance at all or at a reasonable cost. With respect to such losses and losses from acts of terrorism, earthquakes, pandemics or other catastrophic events, if the Company experiences a loss that is uninsured or that exceeds policy limits, the Company could lose the capital invested in the damaged properties, as well as the anticipated future revenues from those properties. Depending on the specific circumstances of each affected property, it is possible that the Company could be liable for mortgage indebtedness or other obligations related to the property. Any such loss could materially and adversely affect the Company’s business and financial condition and results of operations. 26 Table of Contents 10. Noncontrolling Interests Noncontrolling interests relate to the interests in Boston Properties Limited Partnership not owned by Boston Properties, Inc. and interests in consolidated property partnerships not wholly-owned by the Company. As of March 31, 2021, the noncontrolling interests in Boston Properties Limited Partnership consisted of 16,053,640 OP Units, 1,525,306 LTIP Units (including 451,043 LTIP Units earned by employees under the Company’s multi-year long-term incentive awards granted between 2012-2018 (i.e., 2012 OPP and 2013-2018 MYLTIP awards)), 219,916 2019 MYLTIP Units, 203,278 2020 MYLTIP Units and 352,021 2021 MYLTIP Units held by parties other than Boston Properties, Inc. Noncontrolling Interest—Common Units During the three months ended March 31, 2021, 118,290 OP Units were presented by the holders for redemption (includi ng 64,799 O P Units issued upon conversion of LTIP Units, 2012 OPP Units and MYLTIP Units) and were redeemed by Boston Properties, Inc. in exchange for an equal number of shares of Common Stock. At March 31, 2021, Boston Properties Limited Partnership had outstanding 219,916 2019 MYLTIP Units, 203,278 2020 MYLTIP Units and 352,021 2021 MYLTIP Units. Prior to the end of the respective three -year performance period for each plan, holders of MYLTIP Units are entitled to receive per unit distributions equal to one-tenth ( 10 %) of the regular quarterly distributions payable on an OP Unit, but will not be entitled to receive any special distributions. After the measurement date, the number of MYLTIP Units, both vested and unvested, that MYLTIP award recipients have earned, if any, based on the establishment of a performance pool, will be entitled to receive distributions in an amount per unit equal to distributions, both regular and special, payable on an OP Unit. On February 5, 2021, the measurement period for the Company’s 2018 MYLTIP awards ended and, based on Boston Properties, Inc.’s relative TSR performance, the final awards were determined to be 29.2 % of target, or an aggregate of approximately $ 4.6 million (after giving effect to employee separations). As a result, an aggregate of 285,925 2018 MYLTIP Units that had been previously granted were automatically forfeited. The following table presents Boston Properties Limited Partnership’s distributions on the OP Units and LTIP Units (including the 2012 OPP Units, 2013 - 2017 MYLTIP Units and, after the February 5, 2021 measurement date, the 2018 MYLTIP Units) and its distributions on the 2018 MYLTIP Units (prior to the February 5, 2021 measurement date) and 2019 - 2021 MYLTIP Units (after the February 2, 2021 issuance date of the 2021 MYLTIP Units) that occurred during the three months ended March 31, 2021: Record Date Payment Date Distributions per OP Unit and LTIP Unit Distributions per MYLTIP Unit March 31, 2021 April 30, 2021 $ 0.98 $ 0.098 December 31, 2020 January 28, 2021 $ 0.98 $ 0.098 The following table presents Boston Properties Limited Partnership’s distributions on the OP Units and LTIP Units (including the 2012 OPP Units, 2013 - 2016 MYLTIP Units and, after the February 6, 2020 measurement date, the 2017 MYLTIP Units) and its distributions on the 2017 MYLTIP Units (prior to the February 6, 2020 measurement date) and 2018 - 2020 MYLTIP Units (after the February 4, 2020 issuance date of the 2020 MYLTIP Units) that occurred during the three months ended March 31, 2020: Record Date Payment Date Distributions per OP Unit and LTIP Unit Distributions per MYLTIP Unit March 31, 2020 April 30, 2020 $ 0.98 $ 0.098 December 31, 2019 January 30, 2020 $ 0.98 $ 0.098 A holder of an OP Unit may present the OP Unit to Boston Properties Limited Partnership for redemption at any time (subject to restrictions agreed upon at the time of issuance of OP Units to particular holders that may restrict such redemption right for a period of time, generally one year from issuance). Upon presentation of an OP Unit for redemption, Boston Properties Limited Partnership must redeem the OP Unit for cash equal to the then value of a share of Common Stock of Boston Properties, Inc. Boston Properties, Inc. may, in its sole discretion, elect to assume and satisfy the redemption obligation by paying either cash or issuing one share of Common Stock. The value of the OP Units (not owned by Boston Properties, Inc. and LTIP Units (including the 2012 OPP Units and 2013 - 2018 MYLTIP Units) assuming that all conditions had been met for the conversion thereof) had all of such 27 Table of Contents units been redeemed at March 31, 2021 was approximately $ 1.8 billion based on the last reported price of a share of Common Stock on the New York Stock Exchange of $ 101.26 per share on March 31, 2021. Noncontrolling Interests—Property Partnerships The noncontrolling interests in property partnerships consist of the outside equity interests in ventures that are consolidated with the financial results of the Company because the Company exercises control over the entities that own the properties. The equity interests in these ventures that are not owned by the Company, totaling approxim ately $ 1.7 billion at March 31, 2021 and December 31, 2020, are included in Noncontrolling Interests—Property Partnerships on the accompanying Consolidated Balance Sheets. 11. Stockholders’ Equity / Partners’ Capital Boston Properties, Inc. As of March 31, 2021, Boston Properties, Inc. had 156,074,200 shares of Common Stock outstanding. As of March 31, 2021, Boston Properties, Inc. owned 1,736,531 general partnership units and 154,337,669 limited partnership units in Boston Properties Limited Partnership. On May 22, 2020, Boston Properties, Inc. renewed its “at the market” (“ATM”) stock offering program through which it may sell from time to time up to an aggregate of $ 600.0 million of its Common Stock through sales agents over a three -year period. Under the ATM stock offering program, Boston Properties, Inc. may also engage in forward sale transactions with affiliates of certain sales agents for the sale of its Common Stock on a forward basis. This program replaced Boston Properties, Inc.’s prior $ 600.0 million ATM stock offering program that was scheduled to expire on June 2, 2020. Boston Properties, Inc. intends to use the net proceeds from any offering for general business purposes, which may include investment opportunities and debt reduction. No shares of Common Stock have been issued under this ATM stock offering program. During the three months ended March 31, 2021, Boston Properties, Inc. issued 206,377 shares of Common Stock upon the exercise of options to purchase Common Stock. During the three months ended March 31, 2021, Boston Properties, Inc. issued 118,290 shares of Common Stock in connection with the redemption of an equal number of redeemable OP Units from limited partners. The following table presents Boston Properties, Inc.’s dividends per share and Boston Properties Limited Partnership’s distributions per OP Unit and LTIP Unit paid or declared in 2021 and during the three months ended March 31, 2020: Record Date Payment Date Dividend (Per Share) Distribution (Per Unit) March 31, 2021 April 30, 2021 $ 0.98 $ 0.98 December 31, 2020 January 28, 2021 $ 0.98 $ 0.98 March 31, 2020 April 30, 2020 $ 0.98 $ 0.98 December 31, 2019 January 30, 2020 $ 0.98 $ 0.98 Preferred Stock On March 2, 2021, Boston Properties, Inc. issued a redemption notice for 80,000 shares of its Series B Preferred Stock, which constituted all of the outstanding Series B Preferred Stock, and the corresponding Depositary Shares, each representing 1/100th of a share of Series B Preferred Stock, and recorded it as a liability. The redemption price per share of Series B Preferred Stock was equal to $ 2,500 plus all accrued and unpaid dividend to, but not including, the redemption date, totaling $ 2,516.41 per share. On March 31, 2021, the Company transferred the full redemption price for all outstanding shares of Series B Preferred Stock of approximately $ 201.3 million including approximately $ 1.3 million of accrued and unpaid dividends to, but not including, the redemption date, to the redemption agent and recorded that amount within Cash held in escrows on the Consolidated Balance Sheets. Upon redemption of the Series B Preferred Stock, all outstanding shares of the Series B Preferred Units, which had terms and preferences generally mirroring those of the Series B Preferred Stock, were redeemed by Boston Properties Limited Partnership. The excess of the redemption price over the 28 Table of Contents carrying value of the Series B Preferred Stock and Series B Preferred Units of approximately $ 6.4 million relates to the original issuance costs and will be reflected as a reduction to Net Income Attributable to Boston Properties, Inc. common shareholders and Net Income Attributable to Boston Properties Limited Partnership common unitholders on the Consolidated Income Statement (See Note 15). The following table presents Boston Properties, Inc.’s dividends per share on its outstanding Series B Preferred Stock paid or declared during 2021 and during the three months ended March 31, 2020: Record Date Payment Date Dividend (Per Share) February 5, 2021 February 16, 2021 $ 32.8125 May 1, 2020 May 15, 2020 $ 32.8125 February 4, 2020 February 18, 2020 $ 32.8125 12. Segment Information The following tables present reconciliations of Net Income Attributable to Boston Properties, Inc. Common Shareholders to the Company’s share of Net Operating Income and Net Income Attributable to Boston Properties Limited Partnership Common Unitholders to the Company’s share of Net Operating Income for the three months ended March 31, 2021 and 2020. Boston Properties, Inc. Three months ended March 31, 2021 2020 (in thousands) Net income attributable to Boston Properties, Inc. common shareholders $ 91,624 $ 497,496 Add: Preferred stock redemption charge 6,412 — Preferred dividends 2,560 2,625 Noncontrolling interest—common units of the Operating Partnership 11,084 57,539 Noncontrolling interests in property partnerships 16,467 19,486 Interest expense 107,902 101,591 Losses from early extinguishment of debt 898 — Net operating income from unconsolidated joint ventures 24,795 28,758 Depreciation and amortization expense 176,565 171,094 Transaction costs 331 615 Payroll and related costs from management services contracts 3,505 3,237 General and administrative expense 44,959 36,454 Less: Net operating income attributable to noncontrolling interests in property partnerships 44,376 47,661 Gains (losses) from investments in securities 1,659 ( 5,445 ) Interest and other income (loss) 1,168 3,017 Gains on sales of real estate — 410,165 Income (loss) from unconsolidated joint ventures 5,225 ( 369 ) Direct reimbursements of payroll and related costs from management services contracts 3,505 3,237 Development and management services revenue 6,803 7,879 Company’s share of Net Operating Income $ 424,366 $ 452,750 29 Table of Contents Boston Properties Limited Partnership Three months ended March 31, 2021 2020 (in thousands) Net income attributable to Boston Properties Limited Partnership common unitholders $ 105,773 $ 566,333 Add: Preferred unit redemption charge 6,412 — Preferred distributions 2,560 2,625 Noncontrolling interests in property partnerships 16,467 19,486 Interest expense 107,902 101,591 Losses from early extinguishment of debt 898 — Net operating income from unconsolidated joint ventures 24,795 28,758 Depreciation and amortization expense 173,500 169,285 Transaction costs 331 615 Payroll and related costs from management services contracts 3,505 3,237 General and administrative expense 44,959 36,454 Less: Net operating income attributable to noncontrolling interests in property partnerships 44,376 47,661 Gains (losses) from investments in securities 1,659 ( 5,445 ) Interest and other income (loss) 1,168 3,017 Gains on sales of real estate — 419,654 Income (loss) from unconsolidated joint ventures 5,225 ( 369 ) Direct reimbursements of payroll and related costs from management services contracts 3,505 3,237 Development and management services revenue 6,803 7,879 Company’s share of Net Operating Income $ 424,366 $ 452,750 Net operating income (“NOI”) is a non-GAAP financial measure equal to net income attributable to Boston Properties, Inc. common shareholders and net income attributable to Boston Properties Limited Partnership common unitholders, as applicable, the most directly comparable GAAP financial measures, plus (1) preferred stock/unit redemption charge, preferred dividends/distributions, net income attributable to noncontrolling interests, interest expense, losses from early extinguishment of debt, 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 (loss) from unconsolidated joint ventures, direct reimbursements of payroll and related costs from management services contracts and development and management services revenue. The Company believes NOI is useful to investors as a performance measure and believes it provides useful information to investors regarding its results of operations and financial condition because, when compared across periods, it reflects the impact on operations from trends in occupancy rates, rental rates, operating costs and acquisition and development activity on an unleveraged basis, providing perspective not immediately apparent from net income attributable to Boston Properties, Inc. common shareholders and net income attributable to Boston Properties Limited Partnership common unitholders. For example, interest expense is not necessarily linked to the operating performance of a real estate asset and is often incurred at the corporate level as opposed to the property level. Similarly, interest expense may be incurred at the property level even though the financing proceeds may be used at the corporate level (e.g., used for other investment activity). In addition, depreciation and amortization expense, because of historical cost accounting and useful life estimates, may distort operating performance measures at the property level. NOI presented by the Company may not be comparable to NOI reported by other REITs or real estate companies that define NOI differently. 30 Table of Contents The Company’s internal reporting utilizes its share of NOI, which includes its share of NOI from consolidated and unconsolidated joint ventures, which is a non-GAAP financial measure that is calculated as the consolidated amount, plus the Company’s share of the amount from the Company’s unconsolidated joint ventures (calculated based upon the Company’s economic percentage ownership interest and, in some cases, after priority allocations), minus the Company’s partners’ share of the amount from the Company’s consolidated joint ventures (calculated based upon the partners’ economic percentage ownership interests and, in some cases, after priority allocations, income allocation to private REIT shareholders and their share of fees due to the Company). The Company’s share of NOI from unconsolidated joint ventures does not include its share of gains on sales of real estate from unconsolidated joint ventures, both of which are included within Income From Unconsolidated Joint Ventures in the Company’s Consolidated Statements of Operations. Management utilizes its share of NOI in assessing its performance as the Company has several significant joint ventures and, in some cases, the Company exercises significant influence over, but does not control, the joint venture, in which case GAAP requires that the Company account for the joint venture entity using the equity method of accounting and the Company does not consolidate it for financial reporting purposes. In other cases, GAAP requires that the Company consolidate the venture even though the Company’s partner(s) owns a significant percentage interest. As a result, the presentations of the Company’s share of NOI should not be considered a substitute for, and should only be considered together with and as a supplement to, the Company’s financial information presented in accordance with GAAP. Asset information by segment is not reported because the Company does not use this measure to assess performance. Therefore, depreciation and amortization expense is not allocated among segments. Preferred stock/unit redemption charge, preferred dividends/distributions, interest expense, losses from early extinguishment of debt, depreciation and amortization expense, transaction costs, payroll and related costs from management services contracts, corporate general and administrative expense, gains (losses) from investments in securities, interest and other income (loss), gains on sales of real estate, income (loss) from unconsolidated joint ventures, direct reimbursements of payroll and related costs from management services contracts and development and management services revenue are not included in NOI and are provided as reconciling items to the Company’s reconciliations of its share of NOI to net income attributable to common shareholders/unitholders. The Company’s segments are based on the Company’s method of internal reporting which classifies its operations by geographic area. The Company’s segments by geographic area are Boston, Los Angeles, New York, San Francisco and Washington, DC. The Company also presents information for each segment by property type, including Office, Residential and Hotel. Included within the Office property type are commercial office and retail leases, as well as parking revenue. Upon the adoption of ASC 842, any write-off for bad debt, including accrued rent, will be recorded as a reduction to lease revenue. As a result of COVID-19, during the three months ended March 31, 2021, the Company wrote off approximately $ 0.6 million related to accrued rent, net balances and approximately $( 0.2 ) million related to accounts receivable, net balances. During the three months ended March 31, 2020, the Company wrote off approximately $ 1.2 million related to accrued rent, net balances and approximately $ 0.3 million related to accounts receivable, net balances. The write-offs were for tenants, primarily in the retail sector, that either terminated their leases or that the Company considered their accrued rent and/or accounts receivable balances no longer probable of collection. In addition, parking and other revenue for the three months ended March 31, 2021 decreased by approximately $ 7.6 million compared to 2020. These decreases were primarily in transient and monthly parking revenue. The Boston Marriott Cambridge closed in March 2020 due to COVID-19. The hotel re-opened on October 2, 2020 and it has operated at a diminished occupancy due to the continued impact of COVID-19 on business and leisure travel. 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 and thus the results of the Company’s Hotel property type. 31 Table of Contents Information by geographic area and property type (dollars in thousands): For the three months ended March 31, 2021: Boston Los Angeles New York San Francisco Washington, DC Total Rental Revenue: (1) Office $ 230,403 $ — $ 250,164 $ 130,598 $ 82,415 $ 693,580 Residential 3,045 — — 321 5,809 9,175 Hotel 632 — — — — 632 Total 234,080 — 250,164 130,919 88,224 703,387 % of Grand Totals 33.28 % — % 35.57 % 18.61 % 12.54 % 100.00 % Rental Expenses: Office 79,881 — 99,385 40,249 31,747 251,262 Residential 1,455 — — 1,686 2,986 6,127 Hotel 2,051 — — — — 2,051 Total 83,387 — 99,385 41,935 34,733 259,440 % of Grand Totals 32.14 % — % 38.31 % 16.16 % 13.39 % 100.00 % Net operating income $ 150,693 $ — $ 150,779 $ 88,984 $ 53,491 $ 443,947 % of Grand Totals 33.94 % — % 33.97 % 20.04 % 12.05 % 100.00 % Less: Net operating income attributable to noncontrolling interests in property partnerships ( 10,224 ) — ( 34,152 ) — — ( 44,376 ) Add: Company’s share of net operating income from unconsolidated joint ventures 2,281 14,192 ( 793 ) 3,480 5,635 24,795 Company’s share of net operating income $ 142,750 $ 14,192 $ 115,834 $ 92,464 $ 59,126 $ 424,366 % of Grand Totals 33.64 % 3.34 % 27.30 % 21.79 % 13.93 % 100.00 % _______________ (1) Rental Revenue is equal to Total Revenue per the Company’s Consolidated Statements of Operations, less Development and Management Services Revenue and Direct Reimbursements of Payroll and Related Costs from Management Services Contracts Revenue per the Consolidated Statements of Operations. 32 Table of Contents For the three months ended March 31, 2020: Boston Los Angeles New York San Francisco Washington, DC Total Rental Revenue: (1) Office $ 239,498 $ — $ 255,286 $ 136,739 $ 93,136 $ 724,659 Residential 4,068 — — — 5,888 9,956 Hotel 6,825 — — — — 6,825 Total 250,391 — 255,286 136,739 99,024 741,440 % of Grand Totals 33.77 % — % 34.43 % 18.44 % 13.36 % 100.00 % Rental Expenses: Office 82,545 — 99,140 42,569 34,648 258,902 Residential 1,340 — — — 2,724 4,064 Hotel 6,821 — — — — 6,821 Total 90,706 — 99,140 42,569 37,372 269,787 % of Grand Totals 33.62 % — % 36.75 % 15.78 % 13.85 % 100.00 % Net operating income $ 159,685 $ — $ 156,146 $ 94,170 $ 61,652 $ 471,653 % of Grand Totals 33.85 % — % 33.11 % 19.97 % 13.07 % 100.00 % Less: Net operating income attributable to noncontrolling interests in property partnerships ( 10,663 ) — ( 36,998 ) — — ( 47,661 ) Add: Company’s share of net operating income from unconsolidated joint ventures 3,099 15,930 756 3,159 5,814 28,758 Company’s share of net operating income $ 152,121 $ 15,930 $ 119,904 $ 97,329 $ 67,466 $ 452,750 % of Grand Totals 33.60 % 3.52 % 26.48 % 21.50 % 14.90 % 100.00 % _______________ (1) Rental Revenue is equal to Total Revenue per the Company’s Consolidated Statements of Operations, less Development and Management Services Revenue and Direct Reimbursements of Payroll and Related Costs from Management Services Contracts Revenue per the Consolidated Statements of Operations. 13. Earnings Per Share / Common Unit Boston Properties, Inc. The following table provides a reconciliation of both the net income attributable to Boston Properties, Inc. common shareholders and the number of common shares used in the computation of basic earnings per share (“EPS”), which is calculated by dividing net income attributable to Boston Properties, Inc. common shareholders by the weighted-average number of common shares outstanding during the period. Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are also participating securities. As such, unvested restricted common stock of Boston Properties, Inc. and Boston Properties Limited Partnership’s LTIP Units, 2012 OPP Units and MYLTIP Units are considered participating securities. Participating securities are included in the computation of basic EPS of Boston Properties, Inc. using the two-class method. Participating securities are included in the computation of diluted EPS of Boston Properties, Inc. using the if-converted method if the impact is dilutive. Because the 2012 OPP Units and 2013 - 2018 MYLTIP Units required, and the 2019 - 2021 MYLTIP Units require, Boston Properties, Inc. to outperform absolute and/or relative return thresholds, unless such thresholds have been met by the end of the applicable reporting period, Boston Properties, Inc. excludes such units from the diluted EPS calculation. Other potentially dilutive common shares, including stock options, restricted stock and other securities of Boston Properties Limited Partnership that are exchangeable for Boston Properties, Inc.’s Common Stock, and the related impact on earnings, are considered when calculating diluted EPS. 33 Table of Contents Three months ended March 31, 2021 Income (Numerator) Shares (Denominator) Per Share Amount (in thousands, except for per share amounts) Basic Earnings: Net income attributable to Boston Properties, Inc. common shareholders $ 91,624 155,928 $ 0.59 Effect of Dilutive Securities: Stock Based Compensation — 171 — Diluted Earnings: Net income attributable to Boston Properties, Inc. common shareholders $ 91,624 156,099 $ 0.59 Three months ended March 31, 2020 Income (Numerator) Shares (Denominator) Per Share Amount (in thousands, except for per share amounts) Basic Earnings: Net income attributable to Boston Properties, Inc. common shareholders $ 497,496 155,011 $ 3.21 Allocation of undistributed earnings to participating securities ( 1,011 ) — ( 0.01 ) Net income attributable to Boston Properties, Inc. common shareholders $ 496,485 155,011 $ 3.20 Effect of Dilutive Securities: Stock Based Compensation — 247 — Diluted Earnings: Net income attributable to Boston Properties, Inc. common shareholders $ 496,485 155,258 $ 3.20 Boston Properties Limited Partnership The following table provides a reconciliation of both the net income attributable to Boston Properties Limited Partnership common unitholders and the number of common units used in the computation of basic earnings per common unit, which is calculated by dividing net income attributable to Boston Properties Limited Partnership common unitholders by the weighted-average number of common units outstanding during the period. Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are also participating securities. As such, unvested restricted common stock of Boston Properties, Inc. and Boston Properties Limited Partnership’s LTIP Units, 2012 OPP Units and MYLTIP Units are considered participating securities. Participating securities are included in the computation of basic earnings per common unit using the two-class method. Participating securities are included in the computation of diluted earnings per common unit using the if-converted method if the impact is dilutive. Because the 2012 OPP Units and 2013 - 2018 MYLTIP Units required, and the 2019 - 2021 MYLTIP Units require, Boston Properties, Inc. to outperform absolute and/or relative return thresholds, unless such thresholds have been met by the end of the applicable reporting period, Boston Properties Limited Partnership excludes such units from the diluted earnings per common unit calculation. Other potentially dilutive common units and the related impact on earnings are considered when calculating diluted earnings per common unit. Included in the number of units (the denominator) below are approximately 17,089,000 and 17,538,000 redeemable common units for the three months ended March 31, 2021, and 2020, respectively. 34 Table of Contents Three months ended March 31, 2021 Income (Numerator) Units (Denominator) Per Unit Amount (in thousands, except for per unit amounts) Basic Earnings: Net income attributable to Boston Properties Limited Partnership common unitholders $ 105,773 173,018 $ 0.61 Effect of Dilutive Securities: Stock Based Compensation — 171 — Diluted Earnings: Net income attributable to Boston Properties Limited Partnership common unitholders $ 105,773 173,189 $ 0.61 Three months ended March 31, 2020 Income (Numerator) Units (Denominator) Per Unit Amount (in thousands, except for per unit amounts) Basic Earnings: Net income attributable to Boston Properties Limited Partnership common unitholders $ 566,333 172,549 $ 3.28 Allocation of undistributed earnings to participating securities ( 1,126 ) — — Net income attributable to Boston Properties Limited Partnership common unitholders $ 565,207 172,549 $ 3.28 Effect of Dilutive Securities: Stock Based Compensation — 247 ( 0.01 ) Diluted Earnings: Net income attributable to Boston Properties Limited Partnership common unitholders $ 565,207 172,796 $ 3.27 14. Stock Option and Incentive Plan On February 2, 2021, Boston Properties, Inc.’s Compensation Committee approved the 2021 MYLTIP awards under the Boston Properties, Inc. 2012 Stock Option and Incentive Plan (the “2012 Plan”) to certain officers and employees of Boston Properties, Inc. The 2021 MYLTIP awards consist of two, equally-weighted (50% each) components that utilize Boston Properties, Inc.’s TSR over a three-year measurement period as the performance metric. The first component of the 2021 MYLTIP, which represents one-half (50%) of the target grant-date value, retains the basic general structure of the 2020 MYLTIP awards with certain changes, including a change to the custom index against which Boston Properties, Inc.’s TSR is compared. The number of LTIP Units that can be earned under this component ranges from zero to 200% of the target number of LTIP Units, based on Boston Properties, Inc.’s annualized relative TSR performance compared to a custom index. Under this component, 100% of the target number of LTIP Units will be earned if Boston Properties, Inc.’s TSR equals the custom index TSR; for relative TSR performance between -1,000 basis points and +1,000 basis points, the number of LTIP Units earned will be determined using linear interpolation. The second component represents the remaining one-half (50%) of the target grant-date value of the 2021 MYLTIP. The number of LTIP Units that can be earned under this component ranges from zero to 200% of the target number of LTIP Units, based on Boston Properties, Inc.’s cumulative absolute TSR during the performance period. Under this component, 100% of the target number of LTIP Units will be earned if Boston Properties, Inc.’s achieves an absolute TSR equal to +1,000 basis points; if Boston Properties, Inc.’s absolute TSR is greater than -4,000 basis points but less than +6,000 basis points, then the number of LTIP Units earned will be determined using linear interpolation. 35 Table of Contents Total earned awards under the 2021 MYLTIP, if any, is the sum of the number of LTIP Units earned under the first and second components and will range from zero to a maximum of 352,021 LTIP Units with a target of approximately 176,009 LTIP Units and linear interpolation between zero and maximum. Earned awards (if any) will vest 100% on February 1, 2024, but may not be converted, redeemed, sold or otherwise transferred for one additional year thereafter. Vesting will be accelerated in the event of a change in control, termination of employment by Boston Properties, Inc. without cause, or termination of employment by the award recipient for good reason, death, disability or retirement. If there is a change of control prior to February 1, 2024, earned awards will be calculated based on TSR performance up to the date of the change of control. The 2021 MYLTIP awards are in the form of LTIP Units issued on the grant date, and they are subject to forfeiture to the extent awards are not earned. Prior to the performance measurement date holders of the 2021 MYLTIP Units are only entitled to one-tenth ( 10 %) of the regular quarterly distributions payable on common partnership units. Following the completion of the three -year performance period, Boston Properties, Inc. will also make a “catch-up” cash payment on the 2021 MYLTIP Units that are ultimately earned in an amount equal to the regular and special distributions, if any, declared during the performance period on Boston Properties, Inc.’s common stock, less the distributions actually paid to holders of 2021 MYLTIP Units during the performance period on all of the awarded 2021 MYLTIP Units. Under ASC 718 “Compensation - Stock Compensation,” the 2021 MYLTIP awards have an aggregate value of approximately $ 15.3 million, which amount will generally be amortized into earnings under the graded vesting method. On February 5, 2021, the measurement period for the Company’s 2018 MYLTIP awards ended and, based on Boston Properties, Inc.’s relative TSR performance, the final awards were determined to be 29.2 % of target, or an aggregate of approximately $ 4.6 million (after giving effect to employee separations). As a result, an aggregate of 285,925 2018 MYLTIP Units that had been previously granted were automatically forfeited. During the three months ended March 31, 2021, Boston Properties, Inc. issued 34,644 shares of restricted common stock and Boston Properties Limited Partnership issued 273,930 LTIP Units and 352,021 2021 MYLTIP Units to employees under the 2012 Plan. Employees paid $ 0.01 per share of restricted common stock and $ 0.25 per LTIP Unit and 2021 MYLTIP Unit. When issued, LTIP Units are not economically equivalent in value to a share of Common Stock, but over time can increase in value to one-for-one parity with Common Stock if there is sufficient appreciation in the value of the Company’s assets. The aggregate value of the LTIP Units is included in noncontrolling interests in the Consolidated Balance Sheets of Boston Properties, Inc. and Boston Properties Limited Partnership. A substantial majority of the grants of restricted common stock and LTIP Units to employees vest in four equal annual installments. Restricted common stock is measured at fair value on the date of grant based on the number of shares granted and the closing price of Boston Properties, Inc.’s Common Stock on the date of grant as quoted on the New York Stock Exchange. Such value is recognized as an expense ratably over the corresponding employee service period. The shares of restricted common stock granted during the three months ended March 31, 2021 were valued at approximately $ 3.2 million ($ 91.67 per share weighted-average). The LTIP Units granted were valued at approximately $ 23.0 million (approximately $ 83.85 per unit weighted-average fair value) using a Monte Carlo simulation method model. The per unit fair values of the LTIP Units granted were estimated on the dates of grant and for a substantial majority of such units were valued using the following assumptions: an expected life of 5.7 years, a risk-free interest rate of 0.65 % and an expected price volatility of 30.0 %. Because the 2012 OPP Units and 2013 - 2021 MYLTIP Units are subject to both a service condition and a market condition, the Company recognizes the related compensation expense under the graded vesting attribution method. Under the graded vesting attribution method, each portion of the award that vests at a different date is accounted for as a separate award and recognized over the period appropriate to that portion so that the compensation cost for each portion should be recognized in full by the time that portion vests. The Company recognizes forfeitures as they occur on its awards of stock-based compensation. Dividends paid on both vested and unvested shares of restricted stock are charged directly to Dividends in Excess of Earnings in Boston Properties, Inc.’s Consolidated Balance Sheets and Partners’ Capital in Boston Properties Limited Partnership’s Consolidated Balance Sheets. Aggregate stock-based compensation expense associated with restricted stock, LTIP Units and 2016 - 2021 MYLTIP Units was approximately $ 19.8 million and $ 17.2 million for the three months ended March 31, 2021 and 2020, respectively. At March 31, 2021, there was (1) an aggregate of approximately $ 33.4 million of unrecognized compensation expense related to unvested restricted stock, LTIP Units and 2018 MYLTIP Units and (2) an aggregate of approximately $ 19.2 million of unrecognized compensation expense related to unvested 2019 - 2021 MYLTIP Units that is expected to be recognized over a weighted-average period of approximately 2.4 years. Table of Contents 15. Subsequent Events On April 1, 2021 , Boston Properties, Inc. redeemed 80,000 shares of Series B Preferred Stock (including the corresponding 8,000,000 Depositary Shares), which represented all of the outstanding shares of Series B Preferred Stock. Upon redemption of the Series B Preferred Stock, all outstanding shares of the Series B Preferred Units, which had terms and preferences generally mirroring those of the Series B Preferred Stock, were redeemed by Boston Properties Limited Partnership. The Company paid an aggregate $ 201.3 million including $ 1.3 million of accrued but unpaid interest (See Note 11). On May 3, 2021, the Company entered into an agreement to acquire two life sciences lab buildings located in Waltham, Massachusetts for a purchase price of approximately $ 100.0 million. These two life sciences lab buildings aggregate approximately 137,000 net rentable square feet. The properties are 100 % leased. The Company expects to close on the acquisition during the second quarter of 2021. The transaction is subject to the satisfaction of customary closing conditions. There can be no assurance that the acquisition will be consummated on the terms currently contemplated, or at all. 37 Table of Contents