What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-08-06 compared with 2021-05-07 · 847 added, 374 removed, 746 unchanged (62% of the section changed)

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• the risks and uncertainties related to the impact of the COVID-19 global pandemic, including the duration, scope and severity of the pandemic domestically and internationally;

federal, state and local government actions or restrictive measures implemented in response to COVID-19, the effectiveness of such measures, as well as the effect of any relaxation of current restrictions, and the direct and indirect impact of such measures on our and our tenants’ businesses, financial condition, results of operations, cash flows, liquidity and performance, and the U.S.

and international economy and economic activity generally;

the speed, effectiveness and distribution of vaccines, whether new or existing actions and measures continue to impact the ability of our residential tenants to generate sufficient income to pay, or make them unwilling to pay rent in a timely manner, in full or at all;

the emergence and characteristics of new variants, the speed, effectiveness and distribution of vaccines (including effectiveness against COVID-19 variant strains), whether new or existing actions and measures continue to impact the ability of our residential tenants to generate sufficient income to pay, or make them unwilling to pay rent in a timely manner, in full or at all;

the health, continued service and availability of our personnel, including our key personnel and property management teams;

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• failure to manage effectively our growth and expansion into new markets and sub-markets or to integrate acquisitions and developments successfully;

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

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

BXP is one of the largest publicly traded office real estate investment trusts (REITs) (based on total market capitalization as of March 31, 2021) in the United States that develops, owns and manages primarily Class A office properties.

Our properties are concentrated in five markets in the United States - Boston, Los Angeles, New York, San Francisco and Washington, DC.

BXP is one of the largest publicly traded office real estate investment trusts (REITs) (based on total market capitalization as of June 30, 2021) in the United States that develops, owns and manages primarily Class A office properties.

Our properties are concentrated in five markets in the United States - Boston, Los Angeles, New York, San Francisco and Washington, DC - with the expected addition of Seattle as a sixth market in the third quarter of 2021.

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

We generate revenue and cash primarily by leasing Class A office space to our tenants.

When making leasing decisions, we consider, among other things, the creditworthiness of the tenant and the industry in which it conducts business, the length of the lease, the

rental rate to be paid at inception and throughout the lease term, the costs of tenant improvements, free rent period and other landlord concessions, anticipated operating expenses and real estate taxes, current and anticipated vacancy in our properties and the market overall (including sublease space), current and expected future demand for the space, the impact of any expansion rights and general economic factors.

We generate revenue and cash primarily by leasing Class A

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office space to our tenants.

When making leasing decisions, we consider, among other things, the creditworthiness of the tenant and the industry in which it conducts business, the length of the lease, the rental rate to be paid at inception and throughout the lease term, the costs of tenant improvements, free rent periods and other landlord concessions, anticipated operating expenses and real estate taxes, current and anticipated vacancy in our properties and the market overall (including sublease space), current and expected future demand for the space, the impact of any expansion rights and general economic factors.

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

Historically, these factors have minimized our exposure in weaker economic cycles and enhanced revenues as market conditions improve.

Our tenant base is diverse across market sectors and the weighted-average lease term for our in-place leases, excluding residential units, was approximately 7.6 years, as of March 31, 2021, including leases signed by our unconsolidated joint ventures.

The weighted-average lease term for our top 20 office tenants was approximately 10.7 years as of March 31, 2021.

Our tenant base is diverse across market sectors and the weighted-average lease term for our in-place leases, excluding residential units, was approximately 7.6 years, as of June 30, 2021, including leases signed by our unconsolidated joint ventures.

The weighted-average lease term for our top 20 office tenants was approximately 11 years as of June 30, 2021.

To be successful in any leasing environment, we believe we must consider all aspects of the tenant-landlord relationship.

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• our relationships with local brokers.

Starting in March 2020, the COVID-19 pandemic negatively affected global macroeconomic conditions.

Following a significant a drop in U.S.

GDP in mid-2020, overall economic conditions began to improve in the second half of 2020 after the enactment of federal stimulus programs.

In the first quarter of 2021, millions of Americans began receiving COVID-19 vaccines, and by March 2021, the unemployment rate was approximately 6.0%, only 250 basis points above the pre-pandemic rate in February 2020.

Although conditions have improved since the middle of 2020, the pandemic continues to weigh on the U.S.

economy and operating conditions for several sectors, including commercial real estate, continue to be negatively impacted.

The health of the overall economy and employment trends among professional workers have been, and we expect will continue to be, important drivers of office market conditions, and we expect vaccine distribution and efficacy to lead to a recovery of market conditions in our sector.

Although the state and local authorities in many of our regions began easing restrictions on businesses and lifting limitations on the size of gatherings during the second half of 2020 and throughout the first quarter of 2021, the physical occupancy of our properties has remained well below capacity as infection rates fluctuated and most employers continued their COVID-19 response protocols and encouraged employees to work from home when possible.

The future impact of the pandemic on the demand for office space is unclear, as companies consider the impact on their business and their demand for labor while, at the same time, evaluate their space requirements in light of their current and projected headcounts and the continued focus on social distancing and employees’ desire for more work-location flexibility.

Real estate is, by nature, a long-term business and we do not believe these considerations and ultimate decisions by tenants will evidence a clear trend in the short-term.

In the meantime, we believe our strategically located, high-quality office properties will continue to be a component of today’s forward-thinking organizations that desire collaboration, innovation, productivity and culture, and we expect tenants will take advantage of the availability of Class A space and upgrade.

In the first quarter of 2021, we signed approximately 592,000 square feet of new leases and renewals with a weighted-average lease term of approximately 7.6 years, indicating that many prospective and existing tenants continue to commit to the long-term use of space and view our properties as their preferred choice for a premium Class A office environment.

The volume of leasing in the first quarter of 2021 was approximately 84% of the total square feet of leases executed in the first quarter of 2020.

We expect leasing volume in 2021 to remain lower than it was prior to the COVID-19 pandemic as many existing and prospective tenants defer decisions on their office space needs as they focus on workforce management strategies, safely returning their employees to an in-person work environment and managing their businesses through the economic recovery.

The development of properties in supply-constrained markets with the strongest economic growth over time continues to be a cornerstone of our long-term growth strategy.

In the first quarter of 2021, we added new developments and redevelopments to our pipeline of properties under construction, primarily focused on the life sciences sector.

The life sciences sector continues to experience strong growth and attract high levels of venture capital investment as demand increases for innovative medicines and therapies to treat an aging U.S.

Cambridge, Boston and the suburban markets of Lexington and Waltham in Massachusetts and South San Francisco and Brisbane in California have been, and continue to be, among the largest life sciences markets, with strong demand from tenants in the life sciences sector because of the close proximity to universities, research institutions and related businesses and concentrations of labor with specialized skills and knowledge specific to this sector.

In the first quarter of 2021, we commenced the development and redevelopment of three properties in two of these markets, including 180 CityPoint, an approximately 329,000 square foot lab development in Waltham, Massachusetts;

880 Winter Street, an approximately 224,000 square foot office property in Waltham, Massachusetts that will be redeveloped and converted into lab space;

and 751 Gateway, an approximately 229,000 square foot lab development in South San Francisco, California.

751 Gateway is the first phase of a multi-phase, life sciences campus development at Gateway Commons.

Upon completion, we will own 49% of 751 Gateway and future development projects at Gateway Commons.

Though all three projects are being commenced speculatively, we are seeing many new life sciences requirements in both the Waltham and South San Francisco markets and have made multiple lease proposals to potential tenants.

Also, in the first quarter of 2021, we commenced the redevelopment of the top three floors of the Prudential Center in Boston, Massachusetts into an approximately 59,000 square foot, world-class observatory attraction.

This project will be Boston’s only observatory and will feature a dramatic, 360-degree outdoor viewing deck, 11,000 square feet of outdoor space and two floors of exhibits and observatory spaces, marking a transformative addition to the City of Boston.

In total, as of March 31, 2021, we had approximately 4.3 million square feet of active developments and redevelopments in our pipeline.

As of May 3, 2021, the office portion of the development pipeline is 86% pre-leased to predominately credit-strong tenants with long-lease terms and the total development pipeline, inclusive of both office and lab/life sciences developments and excluding The Prudential Center Observatory, is 71% pre-leased.

All development projects are projected to meet required delivery milestones as defined in our leases.

Rent Collections

Cash rent payments for a particular month are generally due on the first day of that month (although tenants have varying grace periods).

Our reported rent collection amounts are based on the total amount of rent billed by us, including all amounts from consolidated operations and all unconsolidated joint ventures, other than Gateway Commons, our residential properties and one hotel because we do not handle billing.

During the first quarter of 2021, our rent collections as a percentage of the total amounts billed to all tenants were 99.0%.

• Approximately 95.2% of the total amounts billed were made to office tenants.

Our first quarter rent collections from office tenants continued to be strong at 99.6%.

Approximately 91.2% of our lease revenue in the first quarter of 2021 was generated by our office portfolio.

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

• Approximately 4.8% of the total amounts billed related to retail leases.

Our first quarter rent collections from retail tenants were approximately 89.0%.

As a result of the impact of the COVID-19 pandemic on the current economic environment and on the commercial real estate sector in particular, our first quarter 2021 revenues, when compared to first quarter 2020, continued to be adversely affected due to (1) declines in revenue from our retail tenants, parking and our hotel, and (2) a decline in occupancy in our in-service office and retail properties due to a slowdown in new leasing activity for vacant and expiring space.

Our retail tenants continue to be adversely affected by the COVID-19 pandemic.

Lease revenue from our retail leases was approximately $45.6 million in the first quarter of 2021, a decrease of approximately $3.3 million from the first quarter of 2020.

This amount represents our consolidated lease revenue plus our share of the lease

revenue from the unconsolidated joint ventures (calculated based on our ownership percentage) minus our partners’ share of lease revenue from our consolidated joint ventures (calculated based upon the partners’ percentage ownership interests).

Lease revenue in the first quarter of 2021 included approximately $4.2 million of lease termination income.

Excluding termination income, our revenue from retail leases was approximately $41.4 million, a decrease of approximately $7.5 million from the first quarter of 2020, primarily due to tenants that are receiving COVID-19 related rent abatements.

Our hotel property, the Boston Marriott Cambridge, re-opened in October 2020 but operated at diminished occupancy and generated only $0.6 million in revenue in the first quarter of 2021, a decrease of $6.2 million compared to the first quarter of 2020.

We expect hotel occupancy to remain low until a sufficient number of people have been vaccinated and the demand for travel and leisure returns to historical levels.

The overall occupancy of our in-service office and retail properties was 88.7% at March 31, 2021, a decrease of 140 basis points compared to 90.1% at December 31, 2020.

The decrease was due in part to retail space we recaptured from tenants that defaulted during 2020, as well as the result of a slowdown of leasing activity for available office space due to the ongoing pandemic.

Despite the concerns surrounding the COVID-19 pandemic and the negative impact on economic conditions in our markets, we continue to be optimistic for our industry generally and our company in particular, given low interest rates, the high quality of our properties, the supply and demand characteristics of our markets and the success of our development efforts.

In addition, we anticipate our revenue from retail, parking and our hotel will improve as the rate of vaccinations increases and as the pandemic subsides.

Employment growth, economic growth and low interest rates typically create a positive environment for real estate performance, particularly for companies in the office sector.

Following a significant drop in U.S.

GDP in 2020 due to the COVID-19 pandemic, overall economic conditions began to improve in the first half of 2021 as millions of Americans began receiving COVID-19 vaccines.

The second quarter of 2021 marked ongoing economic improvement both year-over-year compared to the second quarter of 2020 and sequentially as compared to the first quarter of 2021.

In the second quarter of 2021, GDP growth was 6.5%, an increase as compared to the first quarter of 2021, and the unemployment rate was approximately 5.9%, only 2.4% greater than the pre-pandemic rate in February 2020.

As the economic recovery continues, many companies are evaluating their space requirements based on their current and projected headcounts and employees’ desire for more work-location flexibility.

We believe as the number of vaccinations increases and employees return to their offices in greater numbers, our strategically located, high-quality office properties will remain a vital component of the strategies of today’s forward-thinking organizations that prioritize fostering collaboration, innovation, productivity and culture, and we expect tenants will take advantage of the availability of Class A space and upgrade.

We believe these factors combined to result in improved leasing activity during the second quarter of 2021, with signed leases having terms consistent with our historical averages.

BXP Priorities

Despite the concerns surrounding the COVID-19 pandemic and the lingering impact on economic conditions in our markets, we remain optimistic for our industry generally and our company in particular, given low interest rates, the demand for workers across sectors, the high quality of our properties, the supply and demand characteristics of our markets and the success of our development efforts.

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

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• completing the construction of our development properties;

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

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• actively managing our operations in a sustainable and responsible manner.

The following is an overview of portfolio activity and leasing activity in the first quarter of 2021.

During the first quarter of 2021, we signed leases across our portfolio totaling approximately 592,000 square feet and we commenced revenue recognition on approximately 1.1 million square feet of leases in second-generation space, including lease renewals.

Of these second-generation leases, approximately 735,000 square feet had been vacant for less than one year and, in the aggregate, they represent an increase in net rental obligations (gross rent less operating expenses) of approximately 15% over the prior leases.

Consistent with our long-term investment strategy to invest in high-yielding development opportunities, in the first quarter of 2021, we completed and fully placed in-service One Five Nine East 53rd Street, an approximately 220,000 square feet Class A office and retail redevelopment in the low-rise portion of 601 Lexington Avenue in New York City.

The property includes approximately 195,000 square feet of office space that is 100% leased to a university for a 30-year term.

As of March 31, 2021, our construction/redevelopment pipeline consisted of nine properties that, when completed, we expect will total approximately 4.3 million net rentable square feet.

Three of these development/redevelopment projects are owned by joint ventures.

Our share of the estimated total cost for these projects is approximately $2.7 billion, of which approximately $1.4 billion remained to be invested as of March 31, 2021.

The office portion of the development pipeline is approximately 86% pre-leased and the total development pipeline, inclusive of both office and lab/life sciences developments and excluding The Prudential Center Observatory, is 71% pre-leased as of May 3, 2021.

As we continue to focus on the development and acquisition of assets to enhance our long-term growth, we also continually review our portfolio to identify properties as potential sales candidates that either no longer fit within our portfolio strategy or could attract premium pricing in the current market environment.

For example, in the first quarter of 2021, we completed the sale of Annapolis Junction Buildings Six and Seven, two Class A office properties in Annapolis, Maryland totaling approximately 247,000 square feet, for a gross sales price of approximately $65.9 million.

The Company had a 50% ownership interest in the joint venture that owned the properties.

We expect to continue to sell select assets from time to time, subject to market conditions.

The following is an overview of portfolio activity, leasing activity and capital markets activity in the second quarter of 2021.

Leasing Activity and Occupancy

When compared to periods prior to the pandemic, our second quarter 2021 revenue continued to be adversely affected due to (1) declines in revenue from our retail tenants, parking and our hotel, and (2) a decline in occupancy in our in-service office and retail properties due to a slowdown in new leasing activity for vacant and expiring space.

However, in the second quarter of 2021, as vaccination rates in our markets increased and economic conditions began to improve, we began to see meaningful growth in tour and leasing activity across the portfolio and increases in revenue from our retail tenants, parking and our hotel as compared to the second quarter of 2020 and the first quarter of 2021, indicating that these revenue streams are slowly beginning to recover.

Lease revenue from our retail leases was approximately $42.3 million in the second quarter of 2021, a decrease of $3.4 million from the first quarter of 2021.

However, lease revenue in the first quarter of 2021 included approximately $4.5 million of lease termination income, compared to termination income of approximately $0.8 million in the second quarter of 2021.

Excluding termination income in both quarters, our revenue from retail leases increased approximately $0.3 million from the first quarter of 2021.

These amount represents our consolidated lease revenue plus our share of the lease revenue from the unconsolidated joint ventures (calculated based on our ownership percentage) minus our partners’ share of lease revenue from our consolidated joint ventures (calculated based upon the partners’ percentage ownership interests).

Our parking and other revenue was approximately $17.9 million in the second quarter of 2021, an increase of approximately $3.9 million from the second quarter of 2020 and an increase of approximately $3.4 million from the first quarter of 2021.

The increase was primarily due to improved transient parking.

We do not expect to return to pre-pandemic levels of parking revenue until the COVID-19 pandemic is sufficiently contained and monthly parking permits increase.

Our hotel property, the Boston Marriott Cambridge, is currently operating at diminished occupancy.

The hotel generated only approximately $1.6 million in revenue in the second quarter of 2021, an increase of approximately $1.5 million compared to the second quarter of 2020 and an increase of approximately $0.9 million compared to the first quarter of 2021.

While this increase marks an improvement, we expect hotel occupancy and REVPAR to remain below pre-pandemic levels until business and leisure travel return to historical levels.

The overall occupancy of our in-service office and retail properties was 88.6% at June 30, 2021, a decrease of 0.1% compared to 88.7% at March 31, 2021.

In the second quarter of 2021, we signed approximately 1.2 million square feet of new leases and renewals with a weighted-average lease term of approximately 7.5 years, indicating that many prospective and existing tenants continue to commit to the long-term use of space and view our properties as their preferred choice for a premium Class A office environment.

The volume of leasing in the second quarter of 2021 was more than double the volume achieved in the first quarter of 2021 and only 10% below our long-term second quarter average.

We expect leasing volume in 2021 to remain below pre-pandemic levels as many existing and prospective tenants defer decisions on their office space needs as they focus on workforce management strategies, safely returning their employees to an in-person work environment and managing their businesses through the economic recovery.

We anticipate occupancy for the remainder of 2021 will be relatively steady with occupancy for the second quarter of 2021, as our remaining 2021 lease expirations are backfilled by signed leases that have not yet commenced and we are actively pursuing new leases and lease renewals.

Investment Activity

We remain committed to developing and acquiring assets to enhance our long-term growth and to meet tenant demand for high-quality office and lab space.

We continually evaluate current and prospective markets for possible

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acquisitions of “value-add” assets that require lease-up or repositioning, and acquisitions that are otherwise consistent with our long-term strategy of owning, managing, developing and improving, premier Class A properties in each of our chosen markets.

Since the beginning of the second quarter of 2021, we have entered into agreements to acquire four properties.

We believe these investments align with several elements of our growth strategy, including entering new markets or submarkets that exhibit strong demand and limitations on supply, uncovering opportunities that utilize our leasing and redevelopment skills to increase value, broadening our portfolio to meet the current and anticipated future demand of tenants in the life sciences sector and utilizing private equity to increase our returns and enhance our investment capacity.

The four recent acquisitions and pending acquisitions include:

• Safeco Plaza, an approximately 800,000 square-foot Class A office building in Seattle, Washington.

The property is approximately 90% leased.

This potential acquisition marks our initial entry into the Seattle market, one of the most vibrant markets in the U.S.

for companies in the technology, life sciences, manufacturing and financial services sectors.

We expect to close the acquisition in the third quarter of 2021 for a purchase price of approximately $465 million.

We expect to purchase this in a joint venture and to hold up to a 51% ownership in the property.

• 360 Park Avenue South, an approximately 450,000 square-foot, 20-story Class A office property located in the Midtown South submarket of Manhattan, New York.

The property is fully leased to a single tenant who will be vacating in late 2021, providing us with the opportunity to complete extensive upgrades and transform the property into a premier modern building that will attract Class A clients.

We expect to close the acquisition in the fourth quarter of 2021 for a purchase price of approximately $300 million, including the assumption of approximately $202 million of debt and the issuance of approximately $98 million of operating partnership units.

• Shady Grove Bio+Tech Campus, consisting of seven buildings totaling approximately 435,000 square-feet in the Shady Grove area of Rockville, Maryland, a region that is home to more than 400 companies in the biotechnology and life sciences sector.

We plan to convert the office buildings on the campus to lab space to meet current and growing demand in the region from biotechnology companies for new, Class A lab space.

We expect to begin reconstruction on three of the buildings, which are currently vacant, promptly after closing.

On August 2, 2021, we closed on this acquisition for a purchase price of approximately $116.5 million.

• 153 & 211 Second Avenue, two lab properties comprising approximately 137,000 square-feet in Waltham, Massachusetts, a highly desirable location for leading and emerging companies in the life sciences and biotechnology sector.

We acquired the two lab buildings in June 2021 for a gross purchase price of approximately $100.2 million in cash.

The properties were 100% leased as of June 30, 2021.

These strategic value-add acquisitions and pending acquisitions complement our focus on development and redevelopment, which also continues to be a cornerstone of our long-term growth strategy, specifically focused on properties in supply-constrained markets with the strongest economic growth over time.

In the second quarter of 2021, we continued the construction of our developments and redevelopment projects in our pipeline, which consists of nine properties that, when completed, we expect will total approximately 4.3 million net rentable square feet.

As of June 30, 2021, our share of the estimated total cost for these projects is approximately $2.7 billion, of which approximately $1.2 billion of equity remained to be invested.

The total development pipeline, inclusive of both office and lab/life sciences developments, but excluding The Prudential Center Observatory, is 71% pre-leased as of August 3, 2021.

The office development projects in our current pipeline, which total approximately 3.3 million square feet, are 87% pre-leased, as of August 2, 2021, to predominately credit-strong tenants with long-lease terms.

In early 2021 we added several new development and redevelopment projects to our development pipeline focused on the specific needs of tenants in the life sciences sector.

Our lab/life sciences developments in our pipeline total 920,000 square feet and include properties in Waltham, Massachusetts and South San Francisco, California, which have been, and continue to be, two of the largest life sciences clusters in the United States, with strong demand from tenants because of the close proximity to universities, research institutions and related businesses and concentrations of labor with specialized skills and knowledge.

We expect all active developments and redevelopments in our pipeline to be delivered on time and budget.

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As we continue to focus on new investments to drive future growth, we also continually review our portfolio to identify properties as potential sales candidates because they may either no longer fit within our portfolio strategy or they could attract premium pricing in the current market environment.

In July 2021, we entered into an agreement to sell 181,191 and 201 Spring Street, a three-building complex aggregating approximately 333,000 square feet in Lexington, Massachusetts, for an aggregate gross sales price of $191.5 million.

The three-buildings are 100% leased.

We anticipate closing on the sale in the third quarter of 2021.

We will continue to evaluate the sale of similar properties.

There can be no assurance that the acquisitions and disposition outlined above will be consummated on the terms currently contemplated or at all.

A brief overview of each of our markets follows.

Our Boston central business district (“CBD”) in-service portfolio was approximately 95% leased as of March 31, 2021.

This includes approximately 212,700 square feet, or approximately 2.2% of our Boston CBD portfolio, of space that we terminated with tenants that defaulted in 2020 due to non-payment of rent.

During the first quarter of 2021, we executed approximately 165,000 square feet of leases and approximately 258,000 square feet of leases commenced in the Boston region.

The Boston region is home to the largest cluster of life sciences companies in the world, and these companies are growing and increasing demand and rents in the region.

Our Boston central business district (“CBD”) in-service portfolio was approximately 96% leased as of June 30, 2021.

During the second quarter of 2021, we executed approximately 194,000 square feet of leases and approximately 420,000 square feet of leases commenced in the Boston region.

Approximately 273,000 square feet of the leases that commenced had been vacant for less than one year and represent an increase in net rental obligations of approximately 56% over the prior leases.

Our approximately 2.0 million square foot in-service office portfolio in Cambridge was approximately 99% leased as of March 31, 2021.

During the first quarter of 2021, we continued our development of 325 Main Street at Kendall Center in Cambridge, Massachusetts, which is 90% pre-leased to an office tenant for a term of 15 years and we expect to deliver into service in 2022.

In the first quarter of 2021, we received approximately one million square feet of new entitlements at Kendall Center in Cambridge, Massachusetts for potential future development.

Our approximately 2.0 million square foot in-service office portfolio in Cambridge was approximately 99% leased as of June 30, 2021.

During the second quarter of 2021, we continued our development of 325 Main Street at Kendall Center in Cambridge, Massachusetts, which is 90% pre-leased to an office tenant for a term of 15 years and we expect to deliver into service in 2022.

In early 2021, we received approximately one million square feet of new entitlements at Kendall Center in Cambridge, Massachusetts for potential future development.

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

In the first quarter of 2021, we signed a 63,500 square foot, 16-year lease with a healthcare company at 195 West Street in Waltham, Massachusetts, bringing that property to 100% leased.

We also continued the redevelopment of 200 West Street, an approximately 273,000 square feet Class A office property in Waltham, Massachusetts.

The redevelopment is a conversion of approximately 138,000 square feet into life sciences space that is 100% pre-leased to a biotechnology tenant with occupancy expected by year-end 2021.

To enable us to meet current and future demand from tenants in the life sciences sector in this region, in the first quarter of 2021, we commenced the redevelopment of 880 Winter Street, an approximately 224,000 square foot office property in Waltham, Massachusetts that will be converted into lab space, and we commenced the development of 180 CityPoint, an approximately 329,000 square foot lab development in Waltham, Massachusetts.

These properties are expected to be delivered in 2023 and 2024, respectively.

In the second quarter of 2021, we continued the redevelopment of 880 Winter Street, an approximately 224,000 square foot office property in Waltham, Massachusetts that will be converted into lab space.

We also continued the conversion of 200 West Street in Waltham, Massachusetts, into life sciences/lab space, and we continued the development of 180 CityPoint, an approximately 329,000 square foot lab development in Waltham, Massachusetts, which is expected to be delivered in 2024.

To further enable us to meet current and future demand from tenants in the life sciences sector in this region, in the second quarter of 2021, we acquired 153 & 211 Second Avenue in Waltham, Massachusetts, two life sciences lab buildings aggregating approximately 137,000 square feet that are adjacent to our 200 West Street redevelopment.

The Second Avenue properties consist primarily of lab space, are 100% leased to a pharmaceutical company and have 120,000 square feet of additional development rights, which may be increased when combined with excess development capacity of our adjacent 200 West Street site.

We own or control a significant amount of land in the Boston region that we expect will enable us to aggressively compete for and meet the demand from the emerging and growing tenants in these industries.

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

As of March 31, 2021, our LA in-service properties were approximately 82% leased.

Our occupancy declined in the first quarter of 2021 from 93.5% at December 31, 2020, primarily due to the expiration of an approximately 200,000 square foot lease with an office tenant in the Santa Monica Business Park.

In the first quarter of 2021, we signed a 72,000 square foot, 10-year lease with a new tenant in the digital media sector at Colorado Center in Los Angeles, California.

With this lease, which we commenced revenue recognition in April 2021, our LA in-service properties are approximately 85% leased.

During the first quarter of 2021, we had approximately 43,000 square feet of leases commence in the LA region.

Approximately 22,000 square feet of the leases that commenced had been vacant for less than one year and represent an increase in net rental obligations of approximately 24% over the prior leases.

We continue to explore opportunities to increase our presence by seeking investments where our financial, operational, redevelopment and development expertise provide the opportunity, either alone or with partners, to achieve accretive returns.

As of March 31, 2021, our New York CBD in-service portfolio was approximately 89% leased.

In addition, we executed approximately 50,000 square feet of leases and approximately 390,000 square feet of leases commenced in the first quarter of 2021.

Of these leases, approximately 34,000 square feet had been vacant for less than one year and the net rental obligations rate was relatively flat as compared to prior leases.

In the first quarter of 2021, tour and leasing activity remained slow due to the ongoing pandemic but leasing activity has increased and we conducted more physical tours in New York City than we had in the comparable quarter in either 2019 or 2020.

We are actively negotiating 14 leases totaling approximately 170,000 square feet, including a full floor lease at Dock 72, our joint venture property in Brooklyn, New York.

During the first quarter of 2021, we signed new leases with several small tenants across the New York portfolio as well as a 25,000 square foot, 14-year expansion with a multinational asset management company at 399 Park Avenue in New York City, bringing the total space leased by the tenant to approximately 100,000 square feet.

As of June 30, 2021, our LA in-service properties were approximately 84% leased.

In the second quarter of 2021, we signed a 351,000 square-foot, seven-year renewal and expansion lease with a leading entertainment company at Colorado Center and a 140,000 square-foot expansion lease with a technology company at Santa Monica Business Park in Santa Monica, California.

We expect our occupancy to increase later this year upon commencement of this 140,000 square foot lease expansion.

In total, we executed approximately 491,000 square feet of leases and approximately 204,000 square feet of leases commenced in the Los Angeles region.

Approximately 184,000 square feet of the leases that commenced had been vacant for less than one year and represent a decrease in net rental obligations of approximately 5% over the prior leases.

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As of June 30, 2021, our New York CBD in-service portfolio was approximately 90% leased.

During the second quarter of 2021, (1) we signed leases covering approximately 152,000 square feet, including a 25,000 square foot, 11-year expansion with a financial services company at 399 Park Avenue in New York City, and (2) approximately 194,000 square feet of leases commenced.

Approximately 71,000 square feet of the leases that commenced had been vacant for less than one year and represent a decrease in net rental obligations of approximately 44% over the prior leases.

Excluding 33,289 square feet of retail leases that commenced, however, net rental obligations increased approximately 8% over the prior leases.

In the second quarter of 2021, overall leasing activity increased from the first quarter of 2021 as we conducted more physical tours in New York City than we had in the comparable quarter in either 2019 or 2020.

We are actively negotiating approximately 400,000 square feet of leases, of which approximately 250,000 square feet is at Dock 72, our joint venture property in Brooklyn, New York.

We are also seeing a significant reduction in the amount of sublease space available in New York due to a combination of tenants taking back sublease space and market absorption of sublease space.

San Francisco

In the first quarter of 2021, governmental authorities in San Francisco began lifting travel quarantines, stay-at-home orders and restrictions on the types of businesses that could continue to operate, including offices.

As these restrictions were lifted, the pace of new leasing activity began to increase, although activity remains well below pre- pandemic levels.

Our San Francisco CBD in-service properties were approximately 93% leased as of March 31, 2021.

During the first quarter of 2021, we executed approximately 167,000 square feet of leases and we commenced approximately 40,000 square feet of leases in the San Francisco region.

In the second quarter of 2021, governmental authorities in San Francisco lifted all remaining travel quarantines, stay-at-home orders and restrictions on the types of businesses that could continue to operate, including offices.

California was the last state among our regions to lift these restrictions.

As these restrictions were lifted, the pace of new leasing activity began to increase, although activity remains well below pre-pandemic levels due to the lagging impact of these restrictions and the increase in sublease space in the market that occurred during the pandemic.

Our San Francisco CBD in-service properties were approximately 93% leased as of June 30, 2021.

During the second quarter of 2021, we executed approximately 120,000 square feet of leases and we commenced approximately 220,000 square feet of leases in the San Francisco region.

Of these leases, approximately 194,000 square feet had been vacant for less than one year and represent an increase in net rental obligations of approximately 47% over the prior leases.

Also during the first quarter of 2021, we commenced development of 751 Gateway, an approximately 229,000 square foot lab development in South San Francisco, California.

751 Gateway is the first phase of a multi-phase life sciences campus development.

We will own 49% of 751 Gateway and future development projects at Gateway Commons upon completion.

We are actively negotiating leases for over 140,000 square feet in the San Francisco CBD.

Washington , DC

During the first quarter of 2021, we executed approximately 126,000 square feet of leases and we commenced approximately 566,000 square feet of leases in the Washington, DC region.

Of these leases, approximately 440,000 square feet had been vacant for less than one year and represent an increase in net rental obligations of approximately 4% over the prior leases.

Our Washington, DC CBD in-service properties were approximately 83% leased, as of March 31, 2021, with modest near-term exposure, and we have reduced our exposure in the Washington, DC CBD market significantly over the past few years through the dispositions of assets.

During the second quarter of 2021, we executed approximately 283,000 square feet of leases and we commenced approximately 317,000 square feet of leases in the Washington, DC region, including over 170,000 square feet in Reston, Virginia.

Of these leases, approximately 254,000 square feet had been vacant for less than one year and represent a decrease in net rental obligations of approximately 8% over the prior leases.

Our Washington, DC CBD in-service properties were approximately 84% leased, as of June 30, 2021, with modest near-term exposure, and we have reduced our exposure in the Washington, DC CBD market significantly over the past few years through the dispositions of assets.

Our Washington, DC suburban properties include our significant presence in Reston, Virginia, where demand from technology and cybersecurity tenants remains strong.

Our Washington, DC suburban properties were approximately 87% leased as of March 31, 2021.

Our Washington, DC suburban properties were approximately 86% leased as of June 30, 2021.

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Leasing Statistics

The table below details the leasing activity, including 100% of the unconsolidated joint ventures, that commenced during the three months ended March 31, 2021:

Three months ended March 31, 2021

Total Square Feet

The table below details the leasing activity, including 100% of the unconsolidated joint ventures, that commenced during the three and six months ended June 30, 2021:

Three months ended June 30, 2021 Six months ended June 30, 2021

Total Square Feet Total Square Feet

Vacant space available at the beginning of the period 5,131,799 4,517,385

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1 st generation leases

2,154 203,556

2 nd generation leases with new tenants

814,522 1,417,019

2 nd generation lease renewals

540,464 1,033,480

Total space leased (3) 1,357,140 2,654,055

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Leases commencing during the period, in square feet 1,354,986 2,450,499

Weighted Average Lease Term 84 Months

Weighted Average Free Rent Period 137 Days

Weighted Average Lease Term 90 Months 87 Months

Weighted Average Free Rent Period 194 Days 168 Days

Total Transaction Costs Per Square Foot (6) $74.26 $77.92

Increase in Gross Rents (7) 9.47 %

Increase in Net Rents (8) 14.67 %

Increase (Decrease) in Gross Rents (7) (0.13) % 3.42 %

Increase (Decrease) in Net Rents (8) (0.28) % 4.89 %

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(1) Total square feet of property dispositions during the three months ended March 31, 2021 consists of 29,595 square feet due to the sale of Annapolis Junction Building Six.

Total square feet of properties taken out of service during the three months ended March 31, 2021 consists of 34,290 square feet at 880 Winter Street and 40,728 square feet at 800 Boylston Street - The Prudential Center , both due to redevelopment.

(2) Total square feet of properties placed (and partially placed) in-service during the three months ended March 31, 2021 consists of 195,326 square feet of office and 31,950 square feet of retail at One Five Nine East 53rd Street, located in New York City .

(3) Represents leases for which lease revenue recognition has commenced in accordance with GAAP during the three months ended March 31, 2021.

(4) Represents leases executed during the three months ended March 31, 2021 for which we either (1) commenced lease revenue recognition in such period or (2) will commence lease revenue recognition in subsequent periods, in accordance with GAAP, and includes leases at properties currently under development.

The total square feet of leases executed and recognized in the three months ended March 31, 2021 is 86,652 .

Amounts for the three months ended March 31, 2021 exclude lease modifications related to COVID-19 covering an aggregate of 208,000 square feet that were executed in the three months ended March 31, 2021, to provide cash rent deferrals and/or abatements.

Of these lease modifications, the lease terms associated with 67,387 square feet were extended for a period of 12 or more months during the three months ended March 31, 2021.

(1) Total square feet of property dispositions during the six months ended June 30, 2021 consists of 29,595 square feet due to the sale of Annapolis Junction Building Six.

Total square feet of properties taken out of service during the six months ended June 30, 2021 consists of 34,290 square feet at 880 Winter Street and 40,728 square feet at 800 Boylston Street - The Prudential Center , both due to redevelopment.

(2) Total square feet of properties placed (and partially placed) in-service during the three months ended June 30, 2021 consists of 2,154 square feet at 100 Causeway Street.

Total square feet of properties placed (and partially placed) in-service during the six months ended June 30, 2021 consists of 195,326 square feet of office and 31,950 square feet of retail at One Five Nine East 53rd Street and 2,154 square feet at 100 Causeway Street .

(3) Represents leases for which lease revenue recognition has commenced in accordance with GAAP during the three and six months ended June 30, 2021.

(4) Represents leases executed during the three and six months ended June 30, 2021 for which we either (1) commenced lease revenue recognition in such period or (2) will commence lease revenue recognition in subsequent periods, in accordance with GAAP, and includes leases at properties currently under development.

The total square feet of leases e xecuted and recognized in the three and six months ended June 30, 2021 is 327,426 and 414,078, respectively.

Amounts for the three and six months ended June 30, 2021 exclude lease modifications related to COVID-19 to provide cash rent deferrals and/or abatements.

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

Of the 1,095,513 square feet of second generation leases that commenced during the three months ended March 31, 2021, leases for 1,011,835 square feet were signed in prior periods.

Of the 1,354,986 and 2,450,499 square feet of second generation leases that commenced during the three and six months ended June 30, 2021, respectively, leases for 1,029,714 and 2,041,549 square feet, respectively, were signed in prior periods.

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

(7) Represents the increase in gross rent (base rent plus expense reimbursements) on the new versus expired leases on the 735,432 square feet of second generation leases that had been occupied within the prior 12 months for the three months ended March 31, 2021;

(7) Represents the increase in gross rent (base rent plus expense reimbursements) on the new versus expired leases on the 975,749 and 1,711,181 square feet of second generation leases that had been occupied within the prior 12 months for the three and six months ended June 30, 2021, respectively;

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

(8) Represents the increase in net rent (gross rent less operating expenses) on the new versus expired leases on the 735,432 square feet of second generation leases that had been occupied within the prior 12 months for the three months ended March 31, 2021;

Excluding retail leases, gross rent increased 14.14% on the new versus expired leases on the 928,977

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square feet of second generation leases that had been occupied within the prior 12 months for the three months ended June 30, 2021.

(8) Represents the increase in net rent (gross rent less operating expenses) on the new versus expired leases on the 975,749 and 1,711,181 square feet of second generation leases that had been occupied within the prior 12 months for the three and six months ended June 30, 2021, respectively;

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

Transactions during the three months ended March 31, 2021 included the following:

Excluding retail leases, net rent increased 21.03% on the new versus expired leases on the 928,977 square feet of second generation leases that had been occupied within the prior 12 months for the three months ended June 30, 2021.

Transactions during the three months ended June 30, 2021 included the following:

Acquisitions/pending acquisitions activities

• On April 19, 2021, we entered into an agreement to acquire 11251 Roger Bacon Drive, in Reston, Virginia, for an aggregate purchase price of approximately $5.6 million.

The closing is scheduled to occur in the first quarter of 2022.

11251 Roger Bacon Drive is an approximately 65,000 square foot office building situated on approximately 2.6 acres.

The property is 100% leased to a single tenant with a lease expiration prior to the planned closing.

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

• On June 2, 2021, we acquired 153 & 211 Second Avenue located in Waltham, Massachusetts for an aggregate purchase price of approximately $100.2 million in cash.

153 & 211 Second Avenue consists of two life sciences lab buildings totaling approximately 137,000 net rentable square feet.

The properties are 100% leased.

• On June 7, 2021, we entered into an agreement to acquire Shady Grove Bio+Tech Campus in Rockville, Maryland, for an aggregate purchase price of approximately $116.5 million.

The closing is scheduled to occur in the third quarter of 2021.

Our refundable deposit of $10.0 million is reflected as Cash and Cash Equivalents in our Consolidated Balance Sheets.

Shady Grove Bio+Tech Campus is an approximately 435,000 net rentable square foot, seven-building office park situated on an approximately 31-acre site.

We intend to reposition three of the buildings, which are currently vacant, to support life sciences uses (See Note 15 to the Consolidated Financial Statements).

• On June 25, 2021, we entered into an agreement to acquire 360 Park Avenue South in New York City, New York for an aggregate purchase price of approximately $300.0 million, including (1) the assumption of the mortgage loan collateralized by the property totaling approximately $202.0 million and (2) BPLP’s issuance of approximately $98.0 million of OP Units, with a floor price of $111.00 per OP Unit.

The closing is scheduled to occur in the fourth quarter of 2021.

Our deposit of $30.0 million is reflected as Cash Held in Escrows in our Consolidated Balance Sheets.

360 Park Avenue South is an approximately 450,000 square foot Class A office building.

Upon acquisition, the building will be vacant and we intend to redevelop or reposition the building.

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

• On June 29, 2021, we entered into an escrow agreement in connection with an option granted to us to purchase Safeco Plaza in Seattle, Washington.

Our refundable deposit of $46.5 million is reflected as Cash and Cash Equivalents in our Consolidated Balance Sheets.

Safeco Plaza is an approximately 800,000 square foot Class A office building.

There can be no assurance that the acquisition will be consummated on the terms currently contemplated or at all (See Note 15 to the Consolidated Financial Statements ).

Developments/redevelopments activities

• On February 1, 2021, we 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 our 601 Lexington Avenue property with approximately 220,000 net rentable square feet located in New York City.

• On February 25, 2021, we 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, we 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, we 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.

• On April 16, 2021, we removed 3625-3635 Peterson Way from our in-service portfolio following the lease expiration of the last tenant on April 15, 2021.

We intend to demolish the building and redevelop the site at a future date.

3625-3635 Peterson Way is an approximately 218,000 net rentable square foot Class A office building located in Santa Clara, California.

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Unconsolidated joint venture activities

• On February 25, 2021, a joint venture in which we have 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, we 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 we own a 50% interest.

On March 31, 2021, we had a 54% interest in the joint venture.

We will own a 49% interest in any development project, including 751 Gateway.

• On March 30, 2021, we completed the sale of our 50% ownership interest in Annapolis Junction NFM LLC (the “Annapolis Junction Joint Venture”) to our joint venture partner for a gross sales price of $65.9 million.

Net cash proceeds totaled approximately $17.6 million after repayment of our share of debt totaling approximately $15.1 million and the deferment of a $0.2 million payment due from the purchaser.

We recognized a gain on sale of investment totaling approximately $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, we 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 2 47,000 net rentable square feet.

With the sale of our ownership interest in the Annapolis Junction Joint Venture, we no longer have any assets in Annapolis, Maryland.

Capital markets activities

• On February 14, 2021, BPLP 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.

We recognized a loss from early extinguishment of debt totaling approximately $0.4 million related to unamortized origination costs.

• On March 16, 2021, BPLP 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.

• On March 16, 2021, BPLP repaid all amounts borrowed under the delayed draw term loan facility (“Delayed Draw Facility”) ($500.0 million).

We recognized a loss from early extinguishment of debt totaling approximately $0.5 million, related to unamortized financing costs.

• On March 26, 2021, we used available cash to repay the mortgage loan collateralized by our 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.

• On June 11, 2021, a joint venture in which we have a 50% interest partially placed in-service 100 Causeway Street, a Class A office project with approximately 632,000 net rentable square feet located in Boston, Massachusetts.

• On June 29, 2021, we enhanced our investment capacity through the creation of a co-investment program with two partners, which will target an aggregate equity investment of $1.0 billion.

The program expects to employ leverage allowing for an initial investment capacity of approximately $2.0 billion.

Under the two-year agreement, we will provide our partners first offers to form joint ventures with us to invest in acquisition opportunities that meet the program’s target investment criteria.

Each investment opportunity is discretionary.

• On May 19, 2021, we amended the ground lease at Sumner Square in Washington, DC.

The amendment extends the ground lease for an additional 15 years.

Prior to the amendment, the ground lease was scheduled to expire on August 10, 2066.

The ground lease will now expire on August 9, 2081.

Sumner Square is an approximately 210,000 net rentable square foot Class A office building.

Equity Transaction

• On March 2, 2021, BXP 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 (the “Depositary Shares”), 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 dividends to, but not including, the redemption date, totaling $2,516.41 per share.

On March 31, 2021, BXP 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 BPLP.

The excess of the redemption price over the 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.

Transactions completed subsequent to March 31, 2021 included the following:

• On April 1, 2021, BXP 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.

We paid an aggregate $201.3 million including $1.3 million of accrued but unpaid interest.

• On May 3, 2021, we 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.

We expect 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.

The redemption price for all outstanding shares of Series B Preferred Stock was approximately $201.3 million, including approximately $1.3 million of accrued and unpaid dividends to, but not including, the redemption date.

Capital markets activities

• On June 15, 2021, BPLP amended and restated its unsecured revolving credit agreement (as amended and restated, the “2021 Credit Facility”).

The 2021 Credit Facility provides for borrowings of up to $1.5 billion (the “Revolving Facility”), subject to customary conditions.

Among other things, the amendment and restatement (1) extended the maturity date to June 15, 2026, (2) eliminated the $500.0 million delayed draw term loan facility (“Delayed Draw Facility”) provided under the previous credit agreement (the “2017 Credit Facility”), (3) reduced the per annum variable interest rates on borrowings and (4) added a sustainability-linked pricing component.

Under the 2021 Credit Facility, BPLP may increase the total commitment by up to $500.0 million by increasing the amount of the Revolving Facility and/or by incurring one or more term loans, in each case, subject to syndication of the increase and other conditions.

The 2021 Credit Facility replaced the 2017 Credit Facility, which was scheduled to expire on April 24, 2022.

Transactions completed subsequent to June 30, 2021 included the following:

• On July 13, 2021, we entered into an agreement to sell our 181,191 and 201 Spring Street properties located in Lexington, Massachusetts for an aggregate gross sale price of $191.5 million.

181,191 and 201 Spring Street are three Class A office properties aggregating approximately 333,000 net rentable square feet and are 100% leased.

• On July 20, 2021, we agreed to acquire Safeco Plaza in Seattle, Washington for an aggregate cash purchase price of approximately $465.0 million.

We and our prospective partner have funded a deposit of $51.5 million of which our share of the deposit is $26.3 million.

Safeco Plaza is an approximately 800,000 square foot Class A office building.

The acquisition is subject to customary closing conditions for a transaction of this type, and there can be no assurance that the acquisition will be consummated on the terms currently contemplated or at all (See Note 3 to the Consolidated Financial Statements ).

• On August 2, 2021, we acquired Shady Grove Bio+Tech Campus in Rockville, Maryland for an aggregate purchase price of approximately $116.5 million.

Shady Grove Bio+Tech Campus is an approximately 435,000 net rentable square foot, seven-building office park situated on an approximately 31-acre site.

We intend to reposition three of the buildings, which are currently vacant, to support life sciences uses (See Note 3 to the Consolidated Financial Statements ).

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Critical Accounting Policies

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

Results of Operations for the Three Months Ended March 31, 2021 and 2020

Results of Operations for the Six Months Ended June 30, 2021 and 2020

Net income attributable to Boston Properties, Inc.

common shareho lders and net income attributable to Boston Properties Limited Partnership common unitholders decreased approximately $405.9 million and $460.6 million for the three months ended March 31, 2021 compared to 2020, respectively, as set forth in the following tables and for the reasons discussed below under the heading “ Comparison of the three months ended March 31, 2021 to the three months ended March 31, 2020” within “ Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations .”

common shareho lders and net income attributable to Boston Properties Limited Partnership common unitholders decreased approximately $560.9 million and $636.7 million for the six months ended June 30, 2021 compared to 2020, respectively, as set forth in the following tables and for the reasons discussed below under the heading “ Comparison of the six months ended June 30, 2021 to the six months ended June 30, 2020” within “ Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations .”

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

Common Shareholders to Net Operating Income and Net Income Attributable to Boston Properties Limited Partnership Common Unitholders to Net Operating Income for the three months ended March 31, 2021 and 2020 (in thousands):

Common Shareholders to Net Operating Income and Net Income Attributable to Boston Properties Limited Partnership Common Unitholders to Net Operating Income for the six months ended June 30, 2021 and 2020 (in thousands):

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Boston Properties, Inc.

Three months ended March 31,

Six months ended June 30,

2021 2020 Increase/

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7,756 613,932 (606,176) (98.74) %

Income (loss) from unconsolidated joint ventures 5,225 (369) 5,594 1,515.99 %

Income from unconsolidated joint ventures 3,852 1,463 2,389 163.29 %

Other Expenses:

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Net Operating Income $ 897,116 $ 874,057 $ 23,059 2.64 %

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Boston Properties Limited Partnership

Three months ended March 31,

Six months ended June 30,

2021 2020 Increase/

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7,756 626,895 (619,139) (98.76) %

Income (loss) from unconsolidated joint ventures 5,225 (369) 5,594 1,515.99 %

Income from unconsolidated joint ventures 3,852 1,463 2,389 163.29 %

Other Expenses:

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Net Operating Income $ 897,116 $ 874,057 $ 23,059 2.64 %

At each of March 31, 2021 and 2020, we owned or had joint venture interests in a portfolio of 196 commercial real estate properties (in each case, the “Total Property Portfolio”).

At June 30, 2021 and 2020, we owned or had joint venture interests in a portfolio of 197 and 195 commercial real estate properties, respectively (in each case, the “Total Property Portfolio”).

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

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

Therefore, the comparison of operating results for the three months ended March 31, 2021 and 2020 show separately the changes attributable to the properties that were owned by us and in-service throughout each period compared (the “Same Property Portfolio”) and the changes attributable to the properties included in the Acquired, Placed In-Service, Development or Redevelopment or Sold Portfolios.

Therefore, the comparison of operating results for the three and six months ended June 30, 2021 and 2020 show separately the changes attributable to the properties that were owned by us and in-service throughout each period compared (the “Same Property Portfolio”) and the changes attributable to the properties included in the Acquired, Placed In-Service, Development or Redevelopment or Sold Portfolios.

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

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

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Net operating income (“NOI”) is a non-GAAP financial measure equal to net income attributable to Boston Properties, Inc.

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

Comparison of the three months ended March 31, 2021 to the three months ended March 31, 2020

Comparison of the six months ended June 30, 2021 to the six months ended June 30, 2020

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

The Same Property Portfolio consists of 140 properties totaling approximately 39.0 million net rentable square feet, excluding unconsolidated joint ventures.

The Same Property Portfolio includes properties acquired or placed in-service on or prior to January 1, 2020 and owned and in service through March 31, 2021.

The Total Property Portfolio includes the effects of the other properties either acquired, placed in-service, in development or redevelopment after January 1, 2020 or disposed of on or prior to March 31, 2021.

This table includes a reconciliation from the Same Property Portfolio to the Total Property Portfolio by also providing information for the three months ended March 31, 2021 and 2020 with respect to the properties that were acquired, placed in-service, in development or redevelopment or sold.

The Same Property Portfolio includes properties acquired or placed in-service on or prior to January 1, 2020 and owned and in service through June 30, 2021.

This table includes a reconciliation from the Same Property Portfolio to the Total Property Portfolio by also providing information for the six months ended June 30, 2021 and 2020 with respect to the properties that were acquired, placed in-service, in development or redevelopment or sold.

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Same Property Portfolio Properties Acquired Portfolio Properties

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Real Estate Operating Expenses 482,026 478,972 3,054 0.64 % 1,130 1 5,814 3,440 3,252 4,176 1,815 8,135 494,037 494,724 (687) (0.14) %

Net Operating Income (Loss), Excluding Residential and Hotel

432,646 452,788 (20,142) (4.45) % (104) — 6,473 1,949 1,691 1,751 1,612 9,269 442,318 465,757 (23,439) (5.03) %

Net Operating Income, Excluding Residential and Hotel 869,709 841,453 28,256 3.36 % 434 15 14,384 2,734 4,125 5,842 3,435 14,554 892,087 864,598 27,489 3.18 %

Residential Net Operating Income (Loss) (2) 9,102 11,329 (2,227) (19.66) % — — (2,219) — — — — — 6,883 11,329 (4,446) (39.24) %

Hotel Net Operating Income (Loss) (2) (1,419) 4 (1,423) (35,575.00) % — — — — — — — — (1,419) 4 (1,423) (35,575.00) %

Net Operating Income (Loss)

$ 435,640 $ 458,684 $ (23,044) (5.02) % $ (104) $ — $ 5,108 $ 1,949 $ 1,691 $ 1,751 $ 1,612 $ 9,269 $ 443,947 $ 471,653 $ (27,706) (5.87) %

Hotel Net Operating Loss (2) (1,854) (1,870) 16 0.86 % — — — — — — — — (1,854) (1,870) 16 0.86 %

Net Operating Income $ 876,957 $ 850,912 $ 26,045 3.06 % $ 434 $ 15 $ 12,165 $ 2,734 $ 4,125 $ 5,842 $ 3,435 $ 14,554 $ 897,116 $ 874,057 $ 23,059 2.64 %

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(2) For a detailed discussion of NOI, including the reasons management believes NOI is useful to investors, see page 59.

Residential Net Operating Income for the three months ended March 31, 2021 and 2020 is comprised of Residential Revenue of $9,175 and $9,956 less Residential Expenses of $6,127 and $4,064, respectively.

Hotel Net Operating Income for the three months ended March 31, 2021 and 2020 is comprised of Hotel Revenue of $632 and $6,825 less Hotel Expenses of $2,051 and $6,821, respectively, per the Consolidated Statements of Operations.

Residential Net Operating Income for the six months ended June 30, 2021 and 2020 is comprised of Residential Revenue of $18,938 and $19,358 less Residential Expenses of $12,055 and $8,029, respectively.

Hotel Net Operating Income for the six months ended June 30, 2021 and 2020 is comprised of Hotel Revenue of $2,193 and $6,924 less Hotel Expenses of $4,047 and $8,794, respectively, per the Consolidated Statements of Operations.

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Same Property Portfolio

Lease Revenue (Excluding Termination Income)

Lease revenue (excluding termination income) from the Same Property Portfolio decreased by approximately $19.7 million for the three months ended March 31, 2021 compared to 2020.

The decrease was a result of our average occupancy decreasing from 94.3% to 91.6%.

Average revenue per square foot was approximately the same for both periods.

As a result of COVID-19, for the Same Property Portfolio, during the three months ended March 31, 2021, we executed lease modification agreements for approximately 127,000 square feet and granted approximately $5.3 million of cash rent abatements and deferrals, of which approximately $2.5 million related to tenant charges for the three months ended March 31, 2021.

In addition, during the three months ended March 31, 2021, we recognized approximately $5.9 million related to tenant charges for lease modifications signed during 2020.

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

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

Lease revenue (excluding termination income) from the Same Property Portfolio increased by approximately $30.6 million for the six months ended June 30, 2021 compared to 2020.

The increase was primarily due to approximately $52.1 million of write-offs, which are discussed below.

The increase was partially offset by an approximately $35.2 million decrease due to our average occupancy decreasing from 93.9% to 91.4%, which was partially offset by our average revenue per square foot increasing by approximately $0.81, contributing approximately $13.7 million.

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

As a result, during the six months ended June 30, 2021, for our Same Property Portfolio, we wrote off approximately $1.1 million and $0.1 million of accrued rent and accounts receivable balances, respectively.

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

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

Each quarter since the second quarter of 2020, the number of executed COVID-19 lease modifications has decreased.

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Termination Income

Termination income increased by approximately $1.9 million for the three months ended March 31, 2021 compared to 2020.

Termination income for the three months ended March 31, 2021 related to 11 tenants across the Same Property Portfolio and totaled approximately $4.3 million, of which $3.7 million was related to a retail tenant in the Boston region that closed all its retail stores.

Termination income for the three months ended March 31, 2020 related to 14 tenants across the Same Property Portfolio and totaled approximately $2.4 million, which was primarily related to tenants that terminated leases early in New York City and the Boston region.

Termination income increased by approximately $4.0 million for the six months ended June 30, 2021 compared to 2020.

Termination income for the six months ended June 30, 2021 related to 19 tenants across the Same Property Portfolio and totaled approximately $9.6 million, which was primarily related to tenants that terminated leases early in New York City and the Boston region.

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

Parking and Other Revenue

Parking and other revenue decreased by approximately $7.2 million for the three months ended March 31, 2021 compared to 2020.

Parking and other revenue decreased by approximately $3.3 million for the six months ended June 30, 2021 compared to 2020.

Parking revenue decreased by approximately $5.0 million while other revenue increased by approximately $1.7 million.

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

The increase in other revenue was primarily due to insurance proceeds related to damage at one of our properties in the New York region due to a water main break.

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

The increase in other revenue was primarily due to insurance proceeds related to damage at one of our properties in the New York region due to a water main break, offset by a decrease in other revenue.

Expenses of $2.8 million related to this insurance claim are included within real estate operating expenses.

During the first quarter of 2021, stay-at-home orders continued to be partially lifted, businesses began to re-open, vaccines began to be distributed and people began to return to work in an office setting.

We expect to see an increase in parking revenue as the return to office work grows.

For the three months ended March 31, 2021, transient and monthly parking decreased by approximately $4.6 million and $3.6 million, respectively, compared to the three months ended March 31, 2020.

For the six months ended June 30, 2021, monthly parking decreased by approximately $4.6 million, offset by an increase in transient parking of approximately $0.7 million, compared to the six months ended June 30, 2020.

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

Real Estate Operating Expenses

Real estate operating expenses from the Same Property Portfolio decreased by approximately $4.8 million, or 1.9%, for the three months ended March 31, 2021 compared to 2020, due primarily to a decrease in cleaning expenses of approximately $4.8 million, or 21.2%.

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

Real estate operating expenses from the Same Property Portfolio increased by approximately $3.1 million, or 0.6%, for the six months ended June 30, 2021 compared to 2020, due primarily to an increase in utility expense and expenses related to the insurance claim mentioned above, partially offset by a decrease in cleaning expense.

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

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Properties Acquired Portfolio

The table below lists the properties acquired between January 1, 2020 and March 31, 2021.

Rental revenue and real estate operating expenses increased by approximately $0.3 million and $0.5 million, respectively, for the three months ended March 31, 2021 compared to 2020, as detailed below.

The table below lists the properties acquired between January 1, 2020 and June 30, 2021.

Rental revenue and real estate operating expenses increased by approximately $1.5 million and $1.1 million, respectively, for the six months ended June 30, 2021 compared to 2020, as detailed below.

Square Feet Rental Revenue Real Estate Operating Expenses

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777 Harrison Street (1) June 26, 2020 N/A $ 808 $ 16 $ 792 $ 1,059 $ 1 $ 1,058

153 & 211 Second Avenue June 4, 2021 136,882 756 — 756 71 — 71

136,882 $ 1,564 $ 16 $ 1,548 $ 1,130 $ 1 $ 1,129

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Properties Placed In-Service Portfolio

The table below lists the properties that were placed in-service or partially placed in-service between January 1, 2020 and March 31, 2021.

Rental revenue and real estate operating expenses from our Properties Placed In-Service Portfolio increased by approximately $6.4 million and $3.3 million, respectively, for the three months ended March 31, 2021 compared to 2020, as detailed below.

The table below lists the properties that were placed in-service or partially placed in-service between January 1, 2020 and June 30, 2021.

Rental revenue and real estate operating expenses from our Properties Placed In-Service Portfolio increased by approximately $15.0 million and $5.6 million, respectively, for the six months ended June 30, 2021 compared to 2020, as detailed below.

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

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_____________

(1) This is the low-rise portion of 601 Lexington Avenue and was in development for the three months ended March 31, 2020.

(1) This is the low-rise portion of 601 Lexington Avenue, which was in development for the six months ended June 30, 2020.

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

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Properties in Development or Redevelopment Portfolio

The table below lists the properties that were in development or redevelopment between January 1, 2020 and March 31, 2021.

Rental revenue and real estate operating expenses from our Properties in Development or Redevelopment Portfolio each decreased by approximately $0.7 million for the three months ended March 31, 2021 compared to 2020.

The table below lists the properties that were in development or redevelopment between January 1, 2020 and June 30, 2021.

Rental revenue and real estate operating expenses from our Properties in Development or Redevelopment Portfolio decreased by approximately $2.6 million and $0.9 million, respectively, for the six months ended June 30, 2021 compared to 2020, as detailed below.

Rental Revenue Real Estate Operating Expenses

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880 Winter Street (3) February 25, 2021 224,000 2,476 4,313 (1,837) 1,448 1,632 (184)

3625-3635 Peterson Way (4) April 16, 2021 218,000 1,753 3,076 (1,323) 459 689 (230)

818,000 $ 7,377 $ 10,018 $ (2,641) $ 3,252 $ 4,176 $ (924)

_______________

(1) Real estate operating expenses for the three months ended March 31, 2021 and 2020 were related to demolition costs.

(1) Real estate operating expenses for the six months ended June 30, 2021 and 2020 were related to demolition costs.

(2) Conversion of a 126,000 square foot portion of the property to life sciences space from office space.

(3) On February 25, 2021, we commenced the redevelopment and conversion of 880 Winter Street, a 224,000 square foot office property located in Waltham, Massachusetts, to laboratory space.

(4) On April 16, 2021, we removed 3625-3635 Peterson Way, located in Santa Clara, California, from our in-service portfolio.

We intend to demolish the building and redevelop the site at a future date.

Properties Sold Portfolio

The table below lists the properties we sold between January 1, 2020 and March 31, 2021.

Rental revenue and real estate operating expenses from our Properties Sold Portfolio decreased by approximately $11.9 million and $4.2 million, respectively, for the three months ended March 31, 2021 compared to 2020, as detailed below.

The table below lists the properties we sold between January 1, 2020 and June 30, 2021.

Rental revenue and real estate operating expenses from our Properties Sold Portfolio decreased by approximately $17.4 million and $6.3 million, respectively, for the six months ended June 30, 2021 compared to 2020, as detailed below.

Rental Revenue Real Estate Operating Expenses

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Residential Net Operating Income

Net operating income for our residential same properties decreased by approximately $1.5 million for the three months ended March 31, 2021 compared to 2020.

The following reflects our occupancy and rate information for The Lofts at Atlantic Wharf, The Avant at Reston Town Center, Signature at Reston and Proto Kendall Square for the three months ended March 31, 2021 and 2020.

Net operating income for our residential same properties decreased by approximately $2.2 million for the six months ended June 30, 2021 compared to 2020.

The following reflects our occupancy and rate information for The Lofts at Atlantic Wharf, The Avant at Reston Town Center, Signature at Reston and Proto Kendall Square for the six months ended June 30, 2021 and 2020.

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

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

Hotel Net Operating Income (Loss)

Net operating income (loss) for the Boston Marriott Cambridge hotel property decreased by approximately $1.4 million for the three months ended March 31, 2021 compared to 2020.

Hotel Net Operating Loss

The Boston Marriott Cambridge hotel property continues to operate at a loss, however, the net operating loss has decreased approximately $16,000 for the six months ended June 30, 2021 compared to 2020.

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.

We expect hotel occupancy to remain low until a sufficient number of people have been vaccinated and the demand for business and leisure travel returns to historical levels .

The following reflects our occupancy and rate information for the Boston Marriott Cambridge hotel for the three months ended March 31, 2021 and 2020.

The hotel re-opened on October 2, 2020 but has operated at a reduced 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, and the 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.

We expect hotel occupancy to remain low until the demand for business and leisure travel returns to historical levels .

The following reflects our occupancy and rate information for the Boston Marriott Cambridge hotel for the six months ended June 30, 2021 and 2020.

Occupancy 16.5 % 29.8 % (44.6) %

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Development and Management Services Revenue

Development and management services revenue decreased by approximately $1.1 million for the three months ended March 31, 2021 compared to 2020.

Development and management services revenue decreased by approximately $1.9 million for the six months ended June 30, 2021 compared to 2020.

Development services revenue decreased by approximately $2.8 million while management services revenue increased by approximately $0.9 million.

The decrease in development services revenue was primarily related to a decrease in development fees earned from a third-party owned building in the Washington, DC region.

The increase in management services revenue was primarily related to an increase in property management fees earned from third-party owned buildings in the Washington, DC region.

The increase in management services revenue was primarily related to an increase in leasing commissions earned in the Washington, DC region and from an unconsolidated joint venture in the Los Angeles region.

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General and Administrative Expense

General and administrative expense increased by approximately $8.5 million for the three months ended March 31, 2021 compared to 2020 primarily due to an increase in compensation expense of approximately $9.3 million, partially offset by an approximately $0.8 million decrease in other general and administrative expenses.

The increase in compensation expense was related to (1) an approximately $7.1 million increase in the value of our deferred compensation plan and (2) an approximately $2.2 million increase in other compensation-related expenses, primarily due to age-based vesting.

General and administrative expense increased by approximately $9.2 million for the six months ended June 30, 2021 compared to 2020 primarily due to an increase in compensation expense of approximately $11.1 million, partially offset by an approximately $1.9 million decrease in other general and administrative expenses.

The increase in compensation expense was related to (1) an approximately $4.8 million increase in the value of our deferred compensation plan and (2) an approximately $6.3 million increase in other compensation expenses, primarily due to age-based vesting.

The decrease in other general and administrative expenses was primarily related to a decrease in professional fees.

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

Capitalized wages for the three months ended March 31, 2021 and 2020 were approximately $3.3 million and $2.8 million, respectively.

Capitalized wages for the six months ended June 30, 2021 and 2020 were approximately $6.8 million and $6.2 million, respectively.

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

Transaction Costs

Transaction costs decreased by approximately $0.3 million for the three months ended March 31, 2021 compared to 2020 due primarily to costs incurred in connection with the pursuit and formation of new joint ventures.

Transaction costs increased by approximately $0.1 million for the six months ended June 30, 2021 compared to 2020 due primarily to costs incurred in connection with the pursuit and formation of new joint ventures.

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

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Boston Properties, Inc.

Depreciation and amortization expense increased by approximately $5.5 million for the three months ended March 31, 2021 compared to 2020, as detailed below.

Portfolio Depreciation and Amortization for the three months ended March 31,

Depreciation and amortization expense increased by approximately $11.1 million for the six months ended June 30, 2021 compared to 2020, as detailed below.

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

2021 2020 Change

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(1) During the three months ended March 31, 2021, we commenced 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.

As a result, during the three months ended March 31, 2021, we recorded approximately $2.6 million of accelerated depreciation expense for the demolition of the space, of which approximately $0.8 million related to the step-up of real estate assets.

(1) During the six months ended June 30, 2021, we commenced 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.

As a result, during the six months ended June 30, 2021, we recorded approximately $2.6 million of accelerated depreciation expense for the demolition of the space, of which approximately $0.8 million related to the step-up of real estate assets.

(2) On February 25, 2021, we commenced redevelopment of 880 Winter Street in Waltham, Massachusetts.

As a result, during the three months ended March 31, 2021, we recorded approximately $3.2 million of accelerated depreciation expense for the demolition of a portion of the building.

As a result, during the six months ended June 30, 2021, we recorded approximately $13.7 million of accelerated depreciation expense for the demolition of a portion of the building.

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Boston Properties Limited Partnership

Depreciation and amortization expense increased by approximately $4.2 million for the three months ended March 31, 2021 compared to 2020, as detailed below.

Portfolio Depreciation and Amortization for the three months ended March 31,

Depreciation and amortization expense increased by approximately $9.9 million for the six months ended June 30, 2021 compared to 2020, as detailed below.

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

2021 2020 Change

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_______________

As a result, during the three months ended March 31, 2021, we recorded approximately $1.8 million of accelerated depreciation expense for the demolition of the space.

As a result, during the six months ended June 30, 2021, we recorded approximately $1.8 million of accelerated depreciation expense for the demolition of the space.

(2) On February 25, 2021, we commenced redevelopment of 880 Winter Street in Waltham, Massachusetts.

As a result, during the three months ended March 31, 2021, we recorded approximately $3.2 million of accelerated depreciation expense for the demolition of a portion of the building.

As a result, during the six months ended June 30, 2021, we recorded approximately $13.7 million of accelerated depreciation expense for the demolition of a portion of the building.

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

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Other Income and Expense Items

Income (loss) from Unconsolidated Joint Ventures

For the three months ended March 31, 2021 compared to 2020, income (loss) from unconsolidated joint ventures increased by approximately $5.6 million primarily due to an approximately $10.3 million gain on sale of investment from the sale of our Annapolis Junction joint venture during the three months ended March 31, 2021 (See Note 5 to the Consolidated Financial Statements).

This increase was partially offset by an approximately (1) $2.9 million decrease in net income from our Dock 72 and Metropolitan Square joint ventures, primarily related to depreciation and amortization and (2) $0.8 million decrease in net income from our Colorado Center joint venture, primarily due to lease expirations.

Income from Unconsolidated Joint Ventures

For the six months ended June 30, 2021 compared to 2020, income from unconsolidated joint ventures increased by approximately $2.4 million primarily due to an approximately $10.3 million gain on sale of investment from the sale of our Annapolis Junction joint venture interest during the six months ended June 30, 2021 (See Note 5 to the Consolidated Financial Statements), partially offset by an approximately (1) $5.8 million gain on sale of real estate from the sale of Annapolis Junction Building Eight and two undeveloped land parcels during the six months ended June 30, 2020 and (2) $3.3 million decrease in net income from our Dock 72 joint venture, primarily related to depreciation and amortization.

Gains on Sales of Real Estate

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

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Boston Properties, Inc.

Gains on sales of real estate decreased by approximately $410.2 million for the three months ended March 31, 2021 compared to 2020, as detailed below.

Gains on sales of real estate decreased by approximately $606.2 million for the six months ended June 30, 2021 compared to 2020, as detailed below.

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

(dollars in millions)

601, 611 and 651 Gateway

January 28, 2020 Office 768,000 $ 350.0 $ — $ 217.7

New Dominion Technology Park

February 20, 2020 Office 493,000 256.0 254.0 192.3

6595 Springfield Center Drive December 13, 2018 Office 634,000 N/A N/A $ 7.8 (1)

N/A N/A $ 7.8

601, 611 and 651 Gateway January 28, 2020 Office 768,000 $ 350.0 $ — $ 217.7

New Dominion Technology Park February 20, 2020 Office 493,000 256.0 254.0 192.3

Capital Gallery June 25, 2020 Office 455,000 253.7 246.9 203.8

$ 859.7 $ 500.9 $ 613.8 (2)

(1) Excludes approximately $0.2 million of gains on sales of real estate recognized during the three months ended March 31, 2020 related to gain amounts from sales of real estate occurring in the prior year.

(1) On December 13, 2018, we sold our 6595 Springfield Center Drive development project located in Springfield, Virginia.

Concurrently with the sale, we agreed to act as development manager and guaranteed the completion of the project (See Note 9 to the Consolidated Financial Statements).

The development project was completed during the second quarter of 2021 and, upon completion of the project, the total cost of development was determined to be below the estimated total investment at the time of sale.

As a result, upon completion, we recognized a gain of approximately $7.8 million.

(2) Excludes approximately $0.2 million of gains on sales of real estate recognized during the six months ended June 30, 2020 related to gain amounts from sales of real estate occurring in the prior year.

Boston Properties Limited Partnership

Gains on sales of real estate decreased by approximately $419.7 million for the three months ended March 31, 2021 compared to 2020, as detailed below.

Gains on sales of real estate decreased by approximately $619.1 million for the six months ended June 30, 2021 compared to 2020, as detailed below.

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

(dollars in millions)

601, 611 and 651 Gateway

January 28, 2020 Office 768,000 $ 350.0 $ — $ 222.4

New Dominion Technology Park

February 20, 2020 Office 493,000 256.0 254.0 197.1

6595 Springfield Center Drive December 13, 2018 Office 634,000 N/A N/A $ 7.8 (1)

N/A N/A $ 7.8

601, 611 and 651 Gateway January 28, 2020 Office 768,000 $ 350.0 $ — $ 222.4

New Dominion Technology Park February 20, 2020 Office 493,000 256.0 254.0 197.1

Capital Gallery June 25, 2020 Office 455,000 253.7 246.9 207.2

$ 859.7 $ 500.9 $ 626.7 (2)

(1) On December 13, 2018, we sold our 6595 Springfield Center Drive development project located in Springfield, Virginia.

Concurrently with the sale, we agreed to act as development manager and guaranteed the completion of the project (See Note 9 to the Consolidated Financial Statements).

As a result, upon completion, we recognized a gain of approximately $7.8 million.

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Interest and Other Income (Loss)

Interest and other income (loss) decreased by approximately $1.8 million for the three months ended March 31, 2021 compared to 2020, due primarily to a decrease in interest income as a result of lower interest earned on our deposits.

Interest and other income decreased by approximately $1.7 million for the six months ended June 30, 2021 compared to 2020, due primarily to a decrease of approximately $2.6 million in interest income as a result of lower interest earned on our deposits, partially offset by an approximately $0.9 million decrease in the allowance for current expected credit losses, which results in higher income.

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

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

Gains (losses) from Investments in Securities

Gains (losses) from investments in securities for the three months ended March 31, 2021 and 2020 related to investments that we have made to reduce our market risk relating to deferred compensation plans that we maintain for BXP’s officers and former non-employee directors.

Gains (losses) from investments in securities for the six months ended June 30, 2021 and 2020 related to investments that we have made to reduce our market risk relating to deferred compensation plans that we maintain for BXP’s officers and former non-employee directors.

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

In order to reduce our market risk relating to these plans, we typically acquire, in a separate account that is not restricted as to

its use, similar or identical investments as those selected by each officer or non-employee director.

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

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

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

During the three months ended March 31, 2021 and 2020, we recognized gains (losses) of approximately $1.7 million and $(5.4) million, respectively, on these investments.

By comparison, our general and administrative expense increased (decreased) by approximately $1.7 million and $(5.4) million during the three months ended March 31, 2021 and 2020, respectively, as a result of increases (decreases) in our liability under our deferred compensation plans that was associated with the performance of the specific investments selected by officers and former non-employee directors of BXP participating in the plans.

During the six months ended June 30, 2021 and 2020, we recognized gains (losses) of approximately $3.9 million and $(0.9) million, respectively, on these investments.

By comparison, our general and administrative expense increased (decreased) by approximately $3.9 million and $(0.9) million during the six months ended June 30, 2021 and 2020, respectively, as a result of increases (decreases) in our liability under our deferred compensation plans that was associated with the performance of the specific investments selected by officers and former non-employee directors of BXP participating in the plans.

Losses From Early Extinguishment of Debt

On February 14, 2021, BPLP 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.

The redemption price was approximately $858.7 million, which was equal to the stated principal 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.

We recognized a loss from early extinguishment of debt totaling approximately $0.4 million related to unamortized origination costs.

On March 16, 2021, BPLP repaid $500.0 million of its borrowings under the Delayed Draw Facility.

On March 16, 2021, BPLP repaid $500.0 million, representing all amounts outstanding on its Delayed Draw Facility under the 2017 Credit Facility.

We recognized a loss from early extinguishment of debt totaling approximately $0.5 million related to unamortized financing costs.

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Interest Expense

Interest expense increased by approximately $6.3 million for the three months ended March 31, 2021 compared to 2020, as detailed below.

Component Change in interest expense for the three months ended March 31, 2021 compared to March 31, 2020

Interest expense increased by approximately $5.5 million for the six months ended June 30, 2021 compared to 2020, as detailed below.

Component Change in interest expense for the six months ended June 30, 2021 compared to June 30, 2020

(in thousands)

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

Increase in interest due to finance leases that are related to development properties 1,772

Issuance of $850 million in aggregate principal of 2.550% senior notes due 2032 on March 16, 2021 6,406

Increase in interest due to finance leases that are related to development properties 2,051

Increase in interest due to finance leases for two in-service properties 1,157

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Redemption of $850 million in aggregate principal of 4.125% senior notes due 2021 on February 14, 2021 (13,605)

Decrease in interest rates for the 2017 Credit Facility

Decrease in interest rates for the 2017 and 2021 Credit Facilities and the repayment of the unsecured term loan on March 16, 2021 (1) (4,215)

Increase in capitalized interest related to development projects that had finance leases (769)

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Total change in interest expense $ 5,488

_______________

(1) On June 15, 2021, BPLP entered into the 2021 Credit Facility, which replaced the 2017 Credit Facility (See Note 8 to the Consolidated Financial Statements).

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

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

Interest capitalized for the three months ended March 31, 2021 and 2020 was approximately $12.0 million and $14.1 million, respectively.

Interest capitalized for the six months ended June 30, 2021 and 2020 was approximately $25.0 million and $27.9 million, respectively.

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

At March 31, 2021, our variable rate debt consisted of BPLP’s $1.5 billion revolving line of credit (the “Revolving Facility”).

T he Revolving Facility did not have an outstanding balance as of March 31, 2021.

For a summary of our consolidated debt as of March 31, 2021 and March 31, 2020 refer to the heading “ Liquidity and Capital Resources—Capitalization—Debt Financing” within “ Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations.

At June 30, 2021, our variable rate debt consisted of BPLP’s $1.5 billion Revolving Facility.

T he Revolving Facility did not have an outstanding balance as of June 30, 2021.

For a summary of our consolidated debt as of June 30, 2021 and June 30, 2020 refer to the heading “ Liquidity and Capital Resources—Capitalization—Debt Financing” within “ Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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Noncontrolling Interests in Property Partnerships

Noncontrolling interests in property partnerships decreased by approximately $3.0 million for the three months ended March 31, 2021 compared to 2020, as detailed below.

Property Noncontrolling Interests in Property Partnerships for the three months ended March 31,

Noncontrolling interests in property partnerships increased by approximately $14.9 million for the six months ended June 30, 2021 compared to 2020, as detailed below.

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

2021 2020 Change

7 unchanged sentences

_______________

(1) The decrease was primarily due to a decrease in lease revenue from signage and a tenant in the retail industry.

During 2020, we executed a lease modification with a tenant in the retail industry, which involved a decrease in rent as well as a space reduction.

(2) The decrease was primarily due to a decrease in lease revenue from our retail tenants and a tenant that terminated its space during the three months ended March 31, 2020.

(1) The increase was primarily attributable to an increase in lease revenue from our tenants.

In addition, during the six months ended June 30, 2020, we accelerated amortization expense related to a below-market lease that terminated early.

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

Approximately $12.0 million represents our partners’ share of the write-offs.

(3) The decrease was primarily due to a decrease in lease revenue from our retail tenants and a tenant that terminated its space during the six months ended June 30, 2020, partially offset by the increase in revenue related to placing in-service One Five Nine East 53rd Street.

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

Approximately $1.3 million represents our partners’ share of the write-offs.

Noncontrolling Interest—Common Units of the Operating Partnership

For BXP, noncontrolling interest—common units of the Operating Partnership decreased by approximately $46.5 million for the three months ended March 31, 2021 compared to 2020 due primarily to a decrease in allocable income, which was the result of recognizing a greater gain on sales of real estate amount during 2020.

For BXP, noncontrolling interest—common units of the Operating Partnership decreased by approximately $64.1 million for the six months ended June 30, 2021 compared to 2020 due primarily to a decrease in allocable income, which was the result of recognizing a greater gain on sales of real estate amount during 2020.

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

Results of Operations for the Three Months Ended June 30, 2021 and 2020

Net income attributable to Boston Properties, Inc.

common shareholders and net income attributable to Boston Properties Limited Partnership common unitholders decreased approximately $154.8 million and $176.1 million for the three months ended June 30, 2021 compared to 2020, respectively, as detailed in the following tables and for the reasons discussed below under the heading “ Comparison of the three months ended June 30, 2021 to the three months ended June 30, 2020” within “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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

common shareholders to NOI and net income attributable to Boston Properties Limited Partnership common unitholders to NOI for the three months ended June 30, 2021 and 2020.

For a detailed discussion of NOI, including the reasons management believes NOI is useful to investors, see page 59.

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Boston Properties, Inc.

Three months ended June 30,

2021 2020 Increase/

(in thousands)

Net Income Attributable to Boston Properties, Inc.

Common Shareholders

$ 111,703 $ 266,525 $ (154,822) (58.09) %

Preferred dividends

— 2,625 (2,625) (100.00) %

Net Income Attributable to Boston Properties, Inc.

111,703 269,150 (157,447) (58.50) %

Net Income Attributable to Noncontrolling Interests:

Noncontrolling interest—common units of the Operating Partnership

12,383 30,197 (17,814) (58.99) %

Noncontrolling interests in property partnerships

17,164 (767) 17,931 2,337.81 %

Net Income 141,250 298,580 (157,330) (52.69) %

Other Expenses:

Interest expense 106,319 107,142 (823) (0.77) %

Other Income:

Gains from investments in securities

2,275 4,552 (2,277) (50.02) %

Interest and other income (loss)

1,452 1,305 147 11.26 %

Gains on sales of real estate 7,756 203,767 (196,011) (96.19) %

Income (loss) from unconsolidated joint ventures (1,373) 1,832 (3,205) (174.95) %

Other Expenses:

Depreciation and amortization expense 183,838 178,188 5,650 3.17 %

Transaction costs

751 332 419 126.20 %

Payroll and related costs from management services contracts

2,655 2,484 171 6.88 %

General and administrative expense

38,405 37,743 662 1.75 %

Other Revenue:

Direct reimbursements of payroll and related costs from management services contracts

2,655 2,484 171 6.88 %

Development and management services revenue

7,284 8,125 (841) (10.35) %

Net Operating Income $ 453,169 $ 402,404 $ 50,765 12.62 %

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Boston Properties Limited Partnership

Three months ended June 30,

2021 2020 Increase/

(in thousands)

Net Income Attributable to Boston Properties Limited Partnership Common Unitholders

$ 125,846 $ 301,975 $ (176,129) (58.33) %

Preferred distributions

— 2,625 (2,625) (100.00) %

Net Income Attributable to Boston Properties Limited Partnership 125,846 304,600 (178,754) (58.68) %

Net Income Attributable to Noncontrolling Interests:

Noncontrolling interests in property partnerships

17,164 (767) 17,931 2,337.81 %

Net Income 143,010 303,833 (160,823) (52.93) %

Other Expenses:

Interest expense

106,319 107,142 (823) (0.77) %

Other Income:

Gains from investments in securities

2,275 4,552 (2,277) (50.02) %

Interest and other income (loss)

1,452 1,305 147 11.26 %

Gains on sales of real estate 7,756 207,241 (199,485) (96.26) %

Income (loss) from unconsolidated joint ventures (1,373) 1,832 (3,205) (174.95) %

Other Expenses:

Depreciation and amortization expense 182,078 176,409 5,669 3.21 %

Transaction costs

751 332 419 126.20 %

Payroll and related costs from management services contracts

2,655 2,484 171 6.88 %

General and administrative expense

38,405 37,743 662 1.75 %

Other Revenue:

Direct reimbursements of payroll and related costs from management services contracts

2,655 2,484 171 6.88 %

Development and management services revenue

7,284 8,125 (841) (10.35) %

Net Operating Income $ 453,169 $ 402,404 $ 50,765 12.62 %

Comparison of the three months ended June 30, 2021 to the three months ended June 30, 2020

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

The Same Property Portfolio consists of 141 properties totaling approximately 39.3 million net rentable square feet, excluding unconsolidated joint ventures.

The Same Property Portfolio includes properties acquired or placed in-service on or prior to April 1, 2020 and owned and in-service through June 30, 2021.

The Total Property Portfolio includes the effects of the other properties either acquired, placed in-service, in development or redevelopment after April 1, 2020 or disposed of on or prior to June 30, 2021.

This table includes a reconciliation from the Same Property Portfolio to the Total Property Portfolio by also providing information for the three months ended June 30, 2021 and 2020 with respect to the properties that were acquired, placed in-service, in development or redevelopment or sold.

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Same Property Portfolio Properties

Acquired Portfolio Properties

Placed In-Service

Portfolio Properties in

Development or

Redevelopment

Portfolio Properties Sold Portfolio Total Property Portfolio

2021 2020 Increase/

Change 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 Increase/

(dollars in thousands)

Rental Revenue:

Lease Revenue (Excluding Termination Income)

$ 656,819 $ 605,044 $ 51,775 8.56 % $ 1,041 $ 16 $ 5,849 $ (510) $ 2,904 $ 4,932 $ 2,493 $ 8,084 $ 669,106 $ 617,566 $ 51,540 8.35 %

Termination Income

5,355 3,264 2,091 64.06 % — — — — — — — 45 5,355 3,309 2,046 61.83 %

Lease Revenue

662,174 608,308 53,866 8.86 % 1,041 16 5,849 (510) 2,904 4,932 2,493 8,129 674,461 620,875 53,586 8.63 %

Parking and Other

17,396 13,549 3,847 28.39 % 176 — 3 6 201 — 307 233 18,083 13,788 4,295 31.15 %

Total Rental Revenue (1) 679,570 621,857 57,713 9.28 % 1,217 16 5,852 (504) 3,105 4,932 2,800 8,362 692,544 634,663 57,881 9.12 %

Real Estate Operating Expenses 237,923 229,685 8,238 3.59 % 679 1 1,441 1,013 1,755 2,046 977 3,077 242,775 235,822 6,953 2.95 %

Net Operating Income (Loss), Excluding Residential and Hotel 441,647 392,172 49,475 12.62 % 538 15 4,411 (1,517) 1,350 2,886 1,823 5,285 449,769 398,841 50,928 12.77 %

Residential Net Operating Income (Loss) (2) 4,689 5,437 (748) (13.76) % — — (854) — — — — — 3,835 5,437 (1,602) (29.46) %

Hotel Net Operating Loss (2) (435) (1,874) 1,439 76.79 % — — — — — — — — (435) (1,874) 1,439 76.79 %

Net Operating Income (Loss) $ 445,901 $ 395,735 $ 50,166 12.68 % $ 538 $ 15 $ 3,557 $ (1,517) $ 1,350 $ 2,886 $ 1,823 $ 5,285 $ 453,169 $ 402,404 $ 50,765 12.62 %

_______________

(1) Rental Revenue is equal to Revenue less Development and Management Services Revenue and Direct Reimbursements of Payroll and Related Costs from Management Services Revenue per the Consolidated Statements of Operations, excluding the residential and hotel revenue that is noted below.

We use Rental Revenue internally as a performance measure and in calculating other non-GAAP financial measures (e.g., NOI), which provides investors with information regarding our performance that is not immediately apparent from the comparable non-GAAP measures and allows investors to compare operating performance between periods.

(2) For a detailed discussion of NOI, including the reasons management believes NOI is useful to investors, see page 59.

Residential Net Operating Income for the three months ended June 30, 2021 and 2020 is comprised of Residential Revenue of $9,763 and $9,402 less Residential Expenses of $5,928 and $3,965, respectively.

Hotel Net Operating Income for the three months ended June 30, 2021 and 2020 is comprised of Hotel Revenue of $1,561 and $99 less Hotel Expenses of $1,996 and $1,973, respectively, per the Consolidated Statements of Operations.

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Same Property Portfolio

Lease Revenue (Excluding Termination Income)

Lease revenue from the Same Property Portfolio increased by approximately $51.8 million for the three months ended June 30, 2021 compared to 2020.

Approximately $50.3 million of the increase was related to write-offs, which are discussed below.

Excluding the write-offs, the remaining increase was a result of our average revenue per square foot increasing by approximately $2.23, contributing approximately $19.1 million, partially offset by an approximately $17.6 million decrease due to our average occupancy decreasing from 93.7% to 91.2%.

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

As a result, during the three months ended June 30, 2021, for our Same Property Portfolio, we wrote off approximately $0.5 million and $0.3 million of accrued rent and accounts receivable balances, respectively.

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

Each quarter since the second quarter of 2020, the number of executed COVID-19 lease modifications has decreased.

We expect the volume of lease modifications to further decrease as the economy recovers.

However, the degree to which our tenants’ businesses have been negatively impacted by COVID-19 and any resulting downturn in their business may leave some tenants still unable to meet their rental payment obligations and result in a reduction in our cash flows.

Termination Income

Termination income increased by approximately $2.1 million for the three months ended June 30, 2021 compared to 2020.

Termination income for the three months ended June 30, 2021 related to 13 tenants across the Same Property Portfolio and totaled approximately $5.4 million, which was primarily related to tenants that terminated leases early in New York City.

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

Parking and Other Revenue

Parking and other revenue increased by approximately $3.8 million for the three months ended June 30, 2021 compared to 2020.

Parking revenue increased by approximately $4.3 million while other revenue decreased by approximately $0.5 million.

The increase in parking revenue was primarily due to an increase in transient parking.

Real Estate Operating Expenses

Real estate operating expenses from the Same Property Portfolio increased by approximately $8.2 million, or 3.6%, for the three months ended June 30, 2021 compared to 2020, due primarily to increases in utility and other real estate operating expenses of approximately $3.7 million, or 21.2%, and $4.5 million, or 2.1%, respectively.

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

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Properties Acquired Portfolio

The table below lists the properties acquired between April 1, 2020 and June 30, 2021.

Rental revenue and real estate operating expenses increased by approximately $1.2 million and $0.7 million, respectively, for the three months ended June 30, 2021 compared to 2020, as detailed below.

Square Feet Rental Revenue Real Estate Operating Expenses

Name Date acquired 2021 2020 Change 2021 2020 Change

(dollars in thousands)

777 Harrison Street (1) June 26, 2020 N/A $ 461 $ 16 $ 445 $ 608 $ 1 $ 607

153 & 211 Second Avenue June 4, 2021 136,882 756 — 756 71 — 71

136,882 $ 1,217 $ 16 $ 1,201 $ 679 $ 1 $ 678

_______________

(1) Formerly known as Fourth + Harrison and 425 Fourth Street and includes operating results for 759 Harrison Street, which was fully acquired on December 16, 2020 .

Properties Placed In-Service Portfolio

The table below lists the properties that were placed in-service or partially placed in-service between April 1, 2020 and June 30, 2021.

Rental revenue and real estate operating expenses from our Properties Placed In-Service Portfolio increased by approximately $7.0 million and $2.0 million, respectively, for the three months ended June 30, 2021 compared to 2020, as detailed below.

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

Name Square Feet 2021 2020 Change 2021 2020 Change

(dollars in thousands)

20 CityPoint Second Quarter, 2019 Second Quarter, 2020 211,476 $ 1,837 $ 1,775 $ 62 $ 762 $ 734 $ 28

One Five Nine East 53rd Street (1) First Quarter, 2021 First Quarter, 2021 220,000 4,015 (2,279) 6,294 679 279 400

Total Office 431,476 5,852 (504) 6,356 1,441 1,013 428

The Skylyne Third Quarter, 2020 Third Quarter, 2020 330,996 690 — 690 1,544 — 1,544

Total Residential 330,996 690 — 690 1,544 — 1,544

762,472 $ 6,542 $ (504) $ 7,046 $ 2,985 $ 1,013 $ 1,972

_______________

(1) This is the low-rise portion of 601 Lexington Avenue, which was in development for the three months ended June 30, 2020.

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

Properties in Development or Redevelopment Portfolio

The table below lists the properties that were in development or redevelopment between April 1, 2020 and June 30, 2021.

Rental revenue and real estate operating expenses from our Properties in Development or Redevelopment Portfolio decreased by approximately $1.8 million and $0.3 million, respectively, for the three months ended June 30, 2021 compared to 2020.

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Rental Revenue Real Estate Operating Expenses

Name Date Commenced Development / Redevelopment Square Feet 2021 2020 Change 2021 2020 Change

(dollars in thousands)

325 Main Street (1) May 9, 2019 115,000 $ — $ 36 $ (36) $ 92 $ (75) $ 167

200 West Street (2) September 30, 2019 261,000 1,647 1,325 322 866 938 (72)

880 Winter Street (3) February 25, 2021 224,000 1,141 2,033 (892) 690 827 (137)

3625-3635 Peterson Way (4) April 16, 2021 218,000 317 1,538 (1,221) 107 356 (249)

818,000 $ 3,105 $ 4,932 $ (1,827) $ 1,755 $ 2,046 $ (291)

_______________

(1) Real estate operating expenses for the three months ended June 30, 2021 are related to demolition costs.

(2) Conversion of a 126,000 square foot portion of the property to life sciences space from office space.

(3) On February 25, 2021, we commenced the redevelopment and conversion of 880 Winter Street, a 224,000 square foot office property located in Waltham, Massachusetts, to laboratory space.

(4) On April 16, 2021, we removed 3625-3635 Peterson Way, located in Santa Clara, California, from our in-service portfolio.

We intend to demolish the building and redevelop the site at a future date.

Properties Sold Portfolio

The table below lists the properties we sold between April 1, 2020 and June 30, 2021.

Rental revenue and real estate operating expenses from our Properties Sold Portfolio decreased by approximately $5.6 million and $2.1 million, respectively, for the three months ended June 30, 2021 compared to 2020, as detailed below.

Rental Revenue Real Estate Operating Expenses

Name Date Sold Property Type Square Feet 2021 2020 Change 2021 2020 Change

(dollars in thousands)

Capital Gallery (1) June 25, 2020 Office 631,000 $ 2,800 $ 8,362 $ (5,562) $ 977 $ 3,077 $ (2,100)

631,000 $ 2,800 $ 8,362 $ (5,562) $ 977 $ 3,077 $ (2,100)

_______________

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

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

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

We continue to own the land, underground parking garage and remaining commercial office and retail space.

The amounts shown represent the entire property and not just the portion sold .

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

Residential Net Operating Income

Net operating income for our residential same properties decreased by approximately $0.7 million for the three months ended June 30, 2021 compared to 2020.

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

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

2021 2020 Change (%) 2021 2020 Change (%) 2021 2020 Change (%) 2021 2020 Change (%)

Average Monthly Rental Rate (1)

$ 3,156 $ 4,530 (30.3) % $ 2,180 $ 2,371 (8.1) % $ 2,143 $ 2,320 (7.6) % $ 2,504 $ 2,891 (13.4) %

Average Rental Rate Per Occupied Square Foot

$ 3.51 $ 5.01 (29.9) % $ 2.38 $ 2.60 (8.5) % $ 2.22 $ 2.45 (9.4) % $ 4.60 $ 5.31 (13.4) %

Average Physical Occupancy (2)

96.1 % 91.9 % 4.6 % 95.0 % 89.5 % 6.1 % 87.2 % 81.5 % 7.0 % 91.7 % 92.5 % (0.9) %

Average Economic Occupancy (3)

93.7 % 91.7 % 2.2 % 94.3 % 88.4 % 6.7 % 83.1 % 76.7 % 8.3 % 90.2 % 91.9 % (1.8) %

_______________

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

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

(3) Average Economic Occupancy is defined as (1) total possible revenue less vacancy loss divided by (2) total possible revenue, expressed as a percentage.

Total possible revenue is determined by valuing average occupied units at contract rates and average vacant units at Market Rents.

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

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

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

Actual market rents and trends in such rents for a region as reported by others may vary materially from Market Rents used by us.

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

Hotel Net Operating Loss

The Boston Marriott Cambridge hotel property continues to operate at a loss, however, the net operating loss has decreased approximately $1.4 million for the three months ended June 30, 2021 compared to 2020.

The Boston Marriott Cambridge closed in March 2020 due to COVID-19.

The hotel re-opened on October 2, 2020 but has operated at a reduced occupancy due to the continued impact of COVID-19 on business and leisure travel.

We expect hotel occupancy to remain low until the demand for business and leisure travel returns to historical levels .

The following reflects our occupancy and rate information for the Boston Marriott Cambridge hotel for the three months ended June 30, 2021 and 2020.

Occupancy 21.7 % — % 100.0 %

Average daily rate $ 160.96 $ — 100.0 %

REVPAR $ 34.86 $ — 100.0 %

Other Operating Revenue and Expense Items

Development and Management Services Revenue

Development and management services revenue decreased by approximately $0.8 million for the three months ended June 30, 2021 compared to 2020.

Development services revenue decreased by approximately $1.3 million while management services revenue increased by approximately $0.5 million.

The decrease in development services revenue was primarily related to a decrease in development fees earned in the Boston region and from a third-party owned building in the Washington, DC region.

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General and Administrative Expense

General and administrative expense increased by approximately $0.7 million for the three months ended June 30, 2021 compared to 2020 primarily due to an increase in compensation expense of approximately $1.8 million, partially offset by a decrease of approximately $1.1 million in other general and administrative expenses.

The increase in compensation expense was related to an approximately $4.1 million increase in other compensation-related expenses, partially offset by a decrease in compensation expense related to an approximately $2.3 million decrease in the value of our deferred compensation plan.

The decrease in other general and administrative expenses was primarily related to a decrease in professional fees.

Capitalized wages for the three months ended June 30, 2021 and 2020 were approximately $3.5 million and $3.4 million, respectively.

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

Transaction Costs

Transaction costs increased by approximately $0.4 million for the three months ended June 30, 2021 compared to 2020 due primarily to costs incurred in connection with the pursuit and formation of new joint ventures.

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

Depreciation and Amortization Expense

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

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

The difference between the real estate assets of BXP as compared to BPLP for certain properties having an allocation of the real estate step-up will result in a corresponding difference in depreciation expense.

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

Boston Properties, Inc.

Depreciation and amortization expense increased by approximately $5.7 million for the three months ended June 30, 2021 compared to 2020, as detailed below.

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

2021 2020 Change

(in thousands)

Same Property Portfolio $ 164,320 $ 173,666 $ (9,346)

Properties Acquired Portfolio 977 — 977

Properties Placed In-Service Portfolio 3,821 577 3,244

Properties in Development or Redevelopment Portfolio (1) 14,390 2,759 11,631

Properties Sold Portfolio 330 1,186 (856)

$ 183,838 $ 178,188 $ 5,650

_______________

(1) On February 25, 2021, we commenced redevelopment of 880 Winter Street in Waltham, Massachusetts.

As a result, during the three months ended June 30, 2021, we recorded approximately $10.5 million in accelerated depreciation expense for the demolition of a portion of the building.

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Boston Properties Limited Partnership

Depreciation and amortization expense increased by approximately $5.7 million for the three months ended June 30, 2021 compared to 2020, as detailed below.

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

2021 2020 Change

(in thousands)

Same Property Portfolio $ 162,560 $ 171,887 $ (9,327)

Properties Acquired Portfolio 977 — 977

Properties Placed In-Service Portfolio 3,821 577 3,244

Properties in Development or Redevelopment Portfolio (1) 14,390 2,759 11,631

Properties Sold Portfolio 330 1,186 (856)

$ 182,078 $ 176,409 $ 5,669

_______________

(1) On February 25, 2021, we commenced redevelopment of 880 Winter Street in Waltham, Massachusetts.

As a result, during the three months ended June 30, 2021, we recorded approximately $10.5 million in accelerated depreciation expense for the demolition of a portion of the building.

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

We have determined that amounts reimbursed for payroll and related costs received from third parties in connection with management services contracts should be reflected on a gross basis instead of on a net basis as we have determined that we are the principal under these arrangements.

We anticipate that these two financial statement line items will generally offset each other.

Other Income and Expense Items

Income (loss) from Unconsolidated Joint Ventures

For the three months ended June 30, 2021 compared to 2020, income (loss) from unconsolidated joint ventures decreased by approximately $3.2 million due to a $5.8 million gain on sale of real estate from the sale of Annapolis Junction Building Eight and two undeveloped land parcels during the three months ended June 30, 2020.

This decrease was partially offset by an approximately $1.0 million increase in net income from our Hub on Causeway - Podium joint venture, primarily related to termination income.

Gains on Sales of Real Estate

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

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

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

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Boston Properties, Inc.

Gains on sales of real estate decreased by approximately $196.0 million for the three months ended June 30, 2021 compared to 2020, as detailed below.

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

(dollars in millions)

6595 Springfield Center Drive December 13, 2018 Office 634,000 N/A N/A $ 7.8 (1)

N/A N/A $ 7.8

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

$ 253.7 $ 246.9 $ 203.8

(1) On December 13, 2018, we sold our 6595 Springfield Center Drive development project located in Springfield, Virginia.

Concurrently with the sale, we agreed to act as development manager and guaranteed the completion of the project (See Note 9 to the Consolidated Financial Statements).

As a result, upon completion, we recognized a gain of approximately $7.8 million.

Boston Properties Limited Partnership

Gains on sales of real estate decreased by approximately $199.5 million for the three months ended June 30, 2021 compared to 2020, as detailed below.

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

(dollars in millions)

6595 Springfield Center Drive December 13, 2018 Office 634,000 N/A N/A $ 7.8 (1)

N/A N/A $ 7.8

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

$ 253.7 $ 246.9 $ 207.2

(1) On December 13, 2018, we sold our 6595 Springfield Center Drive development project located in Springfield, Virginia.

Concurrently with the sale, we agreed to act as development manager and guaranteed the completion of the project (See Note 9 to the Consolidated Financial Statements).

As a result, upon completion, we recognized a gain of approximately $7.8 million.

Interest and Other Income (Loss)

Interest and other income (loss) decreased by approximately $0.1 million for the three months ended June 30, 2021 compared to 2020, due to a decrease of approximately $0.9 million in interest income as a result of lower interest earned on our deposits, partially offset by an approximately $0.8 million decrease in the allowance for current expected credit losses, which results in higher income.

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

Gains from Investments in Securities

Gains from investments in securities for the three months ended June 30, 2021 and 2020 related to investments that we have made to reduce our market risk relating to deferred compensation plans that we maintain

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for BXP’s officers and former non-employee directors.

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

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

During the three months ended June 30, 2021 and 2020, we recognized gains of approximately $2.3 million and $4.6 million, respectively, on these investments.

By comparison, our general and administrative expense increased by approximately $2.3 million and $4.6 million during the three months ended June 30, 2021 and 2020, respectively, as a result of increases in our liability under our deferred compensation plans that was associated with the performance of the specific investments selected by officers and former non-employee directors of BXP participating in the plans.

Interest Expense

Interest expense decreased by approximately $0.8 million for the three months ended June 30, 2021 compared to 2020, as detailed below.

Component Change in interest expense for the three months ended June 30, 2021 compared to June 30, 2020

(in thousands)

Increases to interest expense due to:

Issuance of $850 million in aggregate principal of 2.550% senior notes due 2032 on March 16, 2021 $ 5,491

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

Increase in interest due to finance leases for two in-service properties 624

Decrease in capitalized interest related to development projects 424

Increase in interest due to finance leases that are related to development properties 279

Total increases to interest expense 10,780

Decreases to interest expense due to:

Redemption of $850 million in aggregate principal of 4.125% senior notes due 2021 on February 14, 2021 (8,943)

Decrease in interest rates for the 2017 and 2021 Credit Facilities and the repayment of the unsecured term loan on March 16, 2021 (1) (2,016)

Increase in capitalized interest related to development projects that had finance leases (424)

Other interest expense (excluding senior notes) (169)

Decrease in interest related to the repayment of University Place mortgage loan (51)

Total decreases to interest expense (11,603)

Total change in interest expense $ (823)

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(1) On June 15, 2021, BPLP entered into the 2021 Credit Facility, which replaced the 2017 Credit Facility (See Note 8 to the Consolidated Financial Statements).

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

Interest capitalized for the three months ended June 30, 2021 and 2020 was approximately $13.0 million and $13.7 million, respectively.

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

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At June 30, 2021, our outstanding variable rate debt consisted of BPLP’s $1.5 billion Revolving Facility.

T he Revolving Facility did not have an outstanding balance as of June 30, 2021.

Noncontrolling Interests in Property Partnerships

Noncontrolling interests in property partnerships increased by approximately $17.9 million for the three months ended June 30, 2021 compared to 2020, as detailed below.

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

2021 2020 Change

(in thousands)

767 Fifth Avenue (the General Motors Building) (1) $ 3,171 $ 441 $ 2,730

Times Square Tower (2) 5,020 (10,216) 15,236

601 Lexington Avenue 3,057 3,115 (58)

100 Federal Street 3,441 3,648 (207)

Atlantic Wharf Office Building 2,475 2,245 230

$ 17,164 $ (767) $ 17,931

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(1) The increase was primarily attributable to an increase in lease revenue from our tenants.

In addition, during the three months ended June 30, 2020, we accelerated amortization expense related to a below-market lease that terminated early.

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

Approximately $12.0 million represents our partners’ share of the write-offs.

Noncontrolling Interest—Common Units of the Operating Partnership

For BXP, noncontrolling interest—common units of the Operating Partnership decreased by approximately $17.8 million for the three months ended June 30, 2021 compared to 2020 due primarily to a decrease in allocable income, which was the result of recognizing a greater gain on sales of real estate amount during 2020.

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

Liquidity and Capital Resources

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• fund capital expenditures, including major renovations, tenant improvements and leasing costs;

• fund planned and possible acquisitions of properties, either directly or indirectly through the acquisition of equity interests therein;

• fund pending and possible acquisitions of properties, either directly or indirectly through the acquisition of equity interests therein;

• make the minimum distribution required to enable BXP to maintain its REIT qualification under the Internal Revenue Code of 1986, as amended.

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• long-term secured and unsecured indebtedness (including unsecured exchangeable indebtedness);

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• sales of real estate;

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

The following table presents information on properties under construction and redevelopment as of March 31, 2021 (dollars in thousands):

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The following table presents information on properties under construction and redevelopment as of June 30, 2021 (dollars in thousands):

Construction Properties Estimated Stabilization Date Location # of Buildings Estimated Square Feet Investment to Date (1)(2)(3) Estimated Total Investment (1)(2) Total Available (1) Outstanding at 6/30/2021 (1)

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(1) Represents our share.

(2) Investment to Date, Estimated Total Investment and Estimated Future Equity Requirement all include our share of acquisition expenses, as applicable, and reflect our share of the estimated net revenue/expenses that we expect to incur prior to stabilization of the project, including any amounts actually received or paid through March 31, 2021.

(3) Includes approximately $73.3 million of unpaid but accrued construction costs and leasing commissions.

(4) Excludes approximately $73.3 million of unpaid but accrued construction costs and leasing commissions.

(5) Represents percentage leased as of May 3, 2021, including leases with future commencement dates.

(6) Represents a portion of the property under redevelopment for conversion to life sciences space.

(5) Represents percentage leased as of August 2, 2021, including leases with future commencement dates.

(6) This property was 2% placed in-service as of June 30, 2021.

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

(8) Percentage leased excludes The Prudential Center Observatory redevelopment at 800 Boylston Street - The Prudential Center.

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

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Material adverse changes in one or more sources of capital, whether due to the impacts of the COVID-19 pandemic or otherwise, may adversely affect our net cash flows.

During the first quarter of 2021, our rent collections remained strong as we collected 99.6% of rents from our office tenants and 99.0% of rents from all tenants, including retail tenants.

The COVID-19 pandemic also continued to cause material declines in parking and other revenue and revenue from our hotel for the first quarter of 2021 when compared to pre-COVID-19 levels.

Cash rent abatements and deferrals primarily related to COVID-19 were approximately $9.1 million in the first quarter, approximately 51% less than the average of the three most recent fiscal quarters.

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

To date, these impacts have not adversely affected our ability to fund operating expenses, dividends and distributions, debt service payments, maintenance and repositioning capital expenditures and tenant improvements.

Any future material adverse change in the cash provided by our operations may affect our ability to comply with the financial covenants under BPLP’s 2017 Credit Facility or its unsecured senior notes.

Our primary uses of capital over the next twelve months will be the completion of our current and committed development and redevelopment projects.

During the first quarter of 2021, we utilized our available cash balances and proceeds from BPLP’s issuance of $850 million aggregate principal amount of green bonds to repay or redeem an aggregate of approximately $1.6 billion of debt and preferred equity, including the:

• redemption of the $850 million aggregate principal amount of BPLP’s 4.125% senior unsecured notes due 2021,

• repayment of BPLP’s $500 million unsecured Delayed Draw Facility,

• redemption of all $200 million of BXP’s outstanding shares of its Series B Preferred Stock, and

• repayment of the mortgage loan collateralized by University Place located in Cambridge, Massachusetts totaling approximately $0.9 million.

Leasing activity and ancillary revenue from transient parking and our hotel improved during the second quarter of 2021.

We signed approximately 1.2 million square feet of leases in the quarter, which represents more than double the leasing volume in the first quarter of 2021 and is approximately 90% of our pre-pandemic average for the second quarter.

Our parking and hotel revenue also increased approximately 28% as compared to the first quarter 2021.

As the return to in-person work accelerates, we expect these trends to continue to improve over time.

Our primary uses of capital over the next twelve months will be the completion of our current and committed development and redevelopment projects, funding the capital required to close our pending acquisitions, servicing the principal and interest payments on our outstanding indebtedness and satisfying our REIT distribution requirements.

During the second quarter of 2021 we amended and restated our 2017 Credit Facility, to among other things, extend the maturity through June 15, 2026.

In addition, we fully redeemed 80,000 shares of Series B Preferred Stock at par utilizing $200.0 million of cash.

As of June 30, 2021, we had nine properties under development or redevelopment.

Our share of the remaining development and redevelopment costs that we expect to fund through 2024 was approximately $1.2 billion.

During the second quarter of 2021, we enhanced our investment capacity through the creation of a co-investment program with two partners, which will target an aggregate equity investment of $1.0 billion.

The program expects to employ leverage allowing for an initial investment capacity of approximately $2.0 billion.

Under the two-year agreement, we will provide our partners first offers to form joint ventures with us to invest in acquisition opportunities that meet the program’s target investment criteria.

Each investment opportunity is discretionary.

Since the beginning of the second quarter of 2021, we announced the following planned investments:

• We entered into an agreement to acquire SafeCo Plaza, located in Seattle, Washington, for a purchase price of approximately $465 million.

We expect to obtain mortgage debt secured by the property and partner with one or more partners investing up to 51% of the equity required.

Assuming 50% debt and a 51% ownership by us in the joint venture that owns SafeCo Plaza, our share of equity at closing is estimated to be approximately $118.6 million.

The transaction is expected to close in the third quarter of 2021.

• We entered into an agreement to acquire 360 Park Avenue South, located in New York, New York, for a purchase price of approximately $300 million.

At closing, we will assume approximately $202 million of mortgage debt and issue approximately $98 million of OP Units, with a floor price of $111 per OP Unit.

Other than customary closing costs, no cash is required to close the transaction.

We expect to fund future investment in this asset through an approximate 50%/50% joint venture with an equity partner.

• On August 2, 2021, we acquired Shady Grove Bio+Tech Campus, located in Rockville, Maryland, for a purchase price of approximately $116.5 million, funded through available cash and funds from BPLP’s 2021 Credit Facility.

• We entered into an agreement to acquire 11251 Roger Bacon Drive, located in Reston, Virginia, for a purchase price of approximately $5.6 million.

The transaction is expected to close in the first quarter of 2022.

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In addition, we entered into an agreement to sell our 181, 191 and 201 Spring Street properties, located in Lexington, Massachusetts, for a gross sales price of $191.5 million.

The transaction is expected to close in the third quarter of 2021.

There can be no assurance that the acquisitions and disposition outlined above will be consummated on the terms currently contemplated or at all.

We have no debt maturities during the remainder of 2021, other than one loan borrowed by an unconsolidated joint venture of which our share is approximately $87.1 million.

We have one loan totaling approximately $622.7 million maturing in 2022 and our unconsolidated joint ventures have two loans maturing in 2022, of which our share is approximately $145.8 million.

As of March 31, 2021, our share of the remaining development and redevelopment costs that we expect to fund through 2024 was approximately $1.4 billion, which includes new development and redevelopment starts in the first quarter of 2021 with an aggregate estimated investment of approximately $692.6 million, the majority of which are new lab/life sciences developments and conversions.

In addition, during the first quarter, we sold our remaining interest in Annapolis Junction Buildings Six and Seven for a gross sale price of approximately $65.9 million, generating net proceeds of $17.6 million after repayment of our share of the debt.

We also have tentative agreements to sell three buildings within our VA95 Business Park in Springfield, Virginia and a three-building suburban portfolio that we expect, if completed, will total approximately $260 million of net proceeds.

We are evaluating additional assets sales, which, if completed, could generate aggregate additional net proceeds in excess of $200 million.

However, there can be no assurance that the dispositions will be consummated on the terms currently contemplated, or at all.

Although the full impact of COVID-19 on our liquidity and capital resources, as well as the duration of such impact, will depend on a wide range of factors, we believe that our access to capital and our strong liquidity, including the approximately $1.5 billion available under the 2017 Credit Facility and available cash of approximately $593.2 million (of which approximately $123.9 million is attributable to our consolidated joint venture partners), as of May 3, 2021, is sufficient to fund our remaining capital requirements on existing development and redevelopment projects, repay our maturing indebtedness when due, satisfy our REIT distribution requirements and still allow us to act opportunistically on attractive investment opportunities.

In addition, to further enhance our investment capacity and capital resources, we expect to finalize an agreement with two institutional investors to pursue and co-invest in select office acquisitions.

In the aggregate, BXP and its partners would commit $1.0 billion of equity and would have the opportunity to invest in each identified transaction at their discretion.

However, there can be no assurance that the agreement or the co-investments contemplated thereby will be consummated on the terms currently contemplated, or at all.

Although the current and future impact of COVID-19 on our liquidity and capital resources will depend on a wide range of factors, we believe that our access to capital and our strong liquidity, including the approximately $1.3 billion available under the 2021 Credit Facility and available cash of approximately $236.6 million (of which approximately $102.1 million is attributable to our consolidated joint venture partners), as of August 2, 2021, is sufficient to fund our remaining capital requirements on existing development and redevelopment projects, repay our maturing indebtedness when due, satisfy our REIT distribution requirements and still allow us to act opportunistically on attractive investment opportunities.

We have not sold any shares under BXP’s $600.0 million “at the market” equity offering program.

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At a minimum, we expect that BXP would distribute at least that amount of proceeds necessary for BXP to avoid paying corporate level tax on the applicable gains realized from any asset sales.

From time to time in selected cases, whether due to a change in use, structuring issues to comply with applicable REIT regulations or other reasons, we may sell an asset that is held by a taxable REIT subsidiary (“TRS”).

From time to time in select cases, whether due to a change in use, structuring issues to comply with applicable REIT regulations or other reasons, we may sell an asset that is held by a taxable REIT subsidiary (“TRS”).

Such a sale by a TRS would be subject to federal and local taxes.

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The following summary discussion of our cash flows is based on the Consolidated Statements of Cash Flows and is not meant to be an all-inclusive discussion of the changes in our cash flows for the periods presented below.

Cash and cash equivalents and cash held in escrows aggregated approximately $0.9 billion and $0.9 billion at March 31, 2021 and 2020, respectively, representing an increase of approximately $0.1 billion.

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Cash and cash equivalents and cash held in escrows aggregated approximately $0.6 billion and $2.0 billion at June 30, 2021 and 2020, respectively, representing a decrease of approximately $1.4 billion.

The following table sets forth changes in cash flows:

Three months ended March 31,

Six months ended June 30,

2021 2020 Increase (Decrease)

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Our principal source of cash flow is related to the operation of our properties.

The weighted-average term of our in-place leases, excluding residential units, was approximately 7.6 years as of March 31, 2021, including leases signed by our unconsolidated joint ventures, with occupancy rates historically in the range of 88% to 94%.

The weighted-average term of our in-place leases, excluding residential units, was approximately 7.6 years as of June 30, 2021, including leases signed by our unconsolidated joint ventures, with occupancy rates historically in the range of 88% to 94%.

Generally, our properties generate a relatively consistent stream of cash flow that provides us with resources to pay operating expenses, debt service and fund regular quarterly dividend and distribution payment requirements.

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any material adverse effect on these parties could also have a material adverse effect on us.

For the three months ended March 31, 2021, our total dividend and distribution payments were approximately $171.6 million, which exceeded our cash flow from operating activities by approximately $19.5 million.

We funded the dividend and distribution payments using cash flow from operating activities, approximately $17.6 million of proceeds from sale of investment in unconsolidated joint ventures and cash on hand.

Cash is used in investing activities to fund acquisitions, development, net investments in unconsolidated joint ventures and maintenance and repositioning capital expenditures.

We selectively invest in new projects that enable us to take advantage of our development, leasing, financing and property management skills and invest in existing buildings to enhance or maintain their market position.

Cash used in investing activities for the three months ended March 31, 2021 consisted primarily of development projects, building and tenant improvements and capital contributions to unconsolidated joint ventures, partially offset by proceeds from sale of investment in unconsolidated joint ventures.

Cash used in investing activities for the three months ended March 31, 2020 consisted of development projects, building and tenant improvements and capital contributions to unconsolidated joint ventures, partially offset by the proceeds from the sale of real estate, as detailed below:

Three months ended March 31,

Cash used in investing activities for the six months ended June 30, 2021 consisted primarily of development projects, building and tenant improvements and capital contributions to unconsolidated joint ventures, partially offset by proceeds from sale of investment in unconsolidated joint ventures.

Cash used in investing activities for the six months ended June 30, 2020 consisted of development projects, building and tenant improvements and capital contributions to unconsolidated joint ventures, partially offset by the proceeds from the sale of real estate and capital distribution from unconsolidated joint ventures, as detailed below:

Six months ended June 30,

(in thousands)

Acquisitions of real estate (1) $ (100,176) $ (133,406)

Construction in progress (2) (235,577) (247,615)

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Proceeds from sale of investment in unconsolidated joint venture (5) 17,789 —

Issuance of note receivable, net (6) — (9,800)

Investments in securities, net 1,915 3,006

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Cash used in investing activities changed primarily due to the following:

(1) Construction in progress for the three months ended March 31, 2021 includes ongoing expenditures associated with One Five Nine East 53rd Street , which was completed and fully placed in-service during the three months ended March 31, 2021.

(1) On June 2, 2021, we acquired 153 & 211 Second Avenue located in Waltham, Massachusetts for a purchase price of approximately $100.2 million in cash.

153 & 211 Second Avenue consists of two life sciences lab buildings totaling approximately 137,000 net rentable square feet.

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

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

(2) Construction in progress for the six months ended June 30, 2021 includes ongoing expenditures associated with One Five Nine East 53rd Street , which was completed and fully placed in-service during the six months ended June 30, 2021.

In addition, we incurred costs associated with our continued development/redevelopment of 200 West Street, 325 Main Street, 2100 Pennsylvania Avenue, Reston Next , 180 CityPoint, The Prudential Center Observatory and 880 Winter Street.

Construction in progress for the three months ended March 31, 2020 includes ongoing expenditures associated with 17Fifty Presidents Street, which was completed and placed in-service during the three months ended March 31, 2020 and 20 CityPoint, which was partially placed in-service during the year ended December 31, 2019.

Construction in progress for the six months ended June 30, 2020 includes ongoing expenditures associated with 17Fifty Presidents Street and 20 CityPoint, which were completed and placed in-service during the six months ended June 30, 2020.

In addition, we incurred costs associated with our continued development/redevelopment of One Five Nine East 53rd Street, Reston Next, 2100 Pennsylvania Avenue, 200 West Street, The Skylyne and 325 Main Street.

(3) On June 25, 2020, we completed the sale of a portion of our Capital Gallery property located in Washington, DC for a gross sale price of approximately $253.7 million.

Net cash proceeds totaled approximately $246.9 million, resulting in a gain on sale of real estate totaling approximately $203.8 million for BXP and approximately $207.2 million for BPLP.

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

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

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

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

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

(3) Capital contributions to unconsolidated joint ventures for the three months ended March 31, 2021 consisted primarily of cash contributions of approximately $11.4 million to our Santa Monica Business Park joint venture.

Capital contributions to unconsolidated joint ventures for the three months ended March 31, 2020 consisted primarily of cash contributions of approximately $64.5 million, $16.8 million and $4.0 million to our Platform 16, 3 Hudson Boulevard and Metropolitan Square joint ventures, respectively.

(4) Capital contributions to unconsolidated joint ventures for the six months ended June 30, 2021 consisted primarily of cash contributions of approximately $11.4 million to our Santa Monica Business Park joint venture.

Capital contributions to unconsolidated joint ventures for the six months ended June 30, 2020 consisted primarily of cash contributions of approximately $70.2 million, $23.9 million and $6.5 million to our Platform 16, 3 Hudson Boulevard and Metropolitan Square joint ventures, respectively.

(5) On March 30, 2021, we completed the sale of our 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 us totaled approximately $17.6 million after repayment of our share of debt totaling approximately $15.1 million and the deferment of a $0.2 million payment due from the purchaser.

Cash used in financing activities for the three months ended March 31, 2021 totaled approximately $679.9 million.

This amount consisted primarily of (1) the redemption of BPLP’s $850.0 million in aggregate principal amount of its 4.125% senior notes due 2021, (2) the repayment of the Delayed Draw Facility, (3) payment of our regular dividends and distributions to our shareholders and unitholders and (4) distributions to noncontrolling interest holders in property partnership.

Net cash proceeds to us totaled approximately $17.8 million after repayment of our share of debt totaling approximately $15.1 million.

(6) Issuance of notes receivable, net consisted of the $10.0 million of financing provided to an affiliate of our partner in the joint venture that owns and is developing 7750 Wisconsin Avenue located in Bethesda, Maryland.

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 our partner’s hotel property is substantially completed .

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

Cash used in financing activities for the six months ended June 30, 2021 totaled approximately $1.1 billion.

This amount consisted primarily of (1) the redemption of BPLP’s $850.0 million in aggregate principal amount of its 4.125% senior notes due 2021, (2) the repayment of the Delayed Draw Facility under the 2017 Credit Facility, (3) redemption of the Series B Preferred Stock, (4) payment of our regular dividends and distributions to our shareholders and unitholders and (5) distributions to noncontrolling interest holders in property partnership.

These decreases were partially offset by the proceeds from the issuance by BPLP of $850.0 million in aggregate principal amount of its 2.550% senior unsecured notes due 2032.

Future debt payments are discussed below under the heading “Capitalization—Debt Financing .”

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Capitalization

The following table presents Consolidated Market Capitalization and BXP’s Share of Market Capitalization, as well as the corresponding ratios of Consolidated Debt to Consolidated Market Capitalization and BXP’s Share of Debt to BXP’s Share of Market Capitalization (in thousands except for percentages):

March 31, 2021

June 30, 2021

Shares / Units Outstanding Common Stock Equivalent Equivalent Value (1)

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(1) Values are based on the closing price per share of BXP’s Common Stock on the New York Stock Exchange on March 31, 2021 of $101.26.

(1) Values are based on the closing price per share of BXP’s Common Stock on the New York Stock Exchange on June 30, 2021 of $114.59.

(2) Includes long-term incentive plan units (including 2012 OPP Units and 2013 - 2018 MYLTIP Units) but excludes MYLTIP Units granted between 2019 and 2021 because the three-year performance period has not ended.

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(1) our consolidated debt;

(2) the product of (x) the closing price per share of BXP common stock on March 31, 2021, as reported by the New York Stock Exchange, multiplied by (y) the sum of:

(2) the product of (x) the closing price per share of BXP common stock on June 30, 2021, as reported by the New York Stock Exchange, multiplied by (y) the sum of:

(i) the number of outstanding shares of common stock of BXP,

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The calculation of consolidated market capitalization does not include LTIP Units issued in the form of MYLTIP Awards unless and until certain performance thresholds are achieved and they are earned.

Because their three-year performance periods have not yet ended, 2019 - 2021 MYLTIP Units are not included in this calculation as of March 31, 2021.

Because their three-year performance periods have not yet ended, 2019 - 2021 MYLTIP Units are not included in this calculation as of June 30, 2021.

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We also present BXP’s Share of Market Capitalization and BXP’s Share of Debt/BXP’s Share of Market Capitalization, which are calculated in the same manner, except that BXP’s Share of Debt is utilized instead of our consolidated debt in both the numerator and the denominator.

BXP’s Share of Debt is defined as our consolidated debt plus our share of debt from our unconsolidated joint ventures (calculated based upon our ownership percentage), minus our partners’ share of debt from our consolidated joint ventures (calculated based upon the

partners’ percentage ownership interests adjusted for basis differentials).

Management believes that BXP’s Share of Debt provides useful information to investors regarding our financial condition because it includes our share of debt from unconsolidated joint ventures and excludes our partners’ share of debt from consolidated joint ventures, in each case presented on the same basis.

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Debt Financing

As of March 31, 2021, we had approximately $12.5 billion of outstanding consolidated indebtedness, representing approximately 41.62% of our Consolidated Market Capitalization as calculated above consisting of approximately (1) $9.6 billion (net of discount and deferred financing fees) in publicly traded unsecured senior notes having a GAAP weighted-average interest rate of 3.57% per annum and maturities in 2023 through 2032 (See Note 7 to the Consolidated Financial Statements) and (2) $2.9 billion (net of deferred financing fees) of property-specific mortgage debt having a GAAP weighted-average interest rate of 3.89% per annum and a weighted-average term of 5.1 years.

The table below summarizes the aggregate carrying value of our mortgage notes payable and BPLP’s unsecured senior notes, line of credit and term loan, as well as Consolidated Debt Financing Statistics at March 31, 2021 and March 31, 2020.

As of June 30, 2021, we had approximately $12.5 billion of outstanding consolidated indebtedness, representing approximately 38.65% of our Consolidated Market Capitalization as calculated above consisting of approximately (1) $9.6 billion (net of discount and deferred financing fees) in publicly traded unsecured senior notes having a GAAP weighted-average interest rate of 3.57% per annum and maturities in 2023 through 2032 and (2) $2.9 billion (net of deferred financing fees) of property-specific mortgage debt having a GAAP weighted-average interest rate of 3.89% per annum and a weighted-average term of 4.8 years.

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(dollars in thousands)

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Unsecured Credit Facility

On April 24, 2017, BPLP entered into the 2017 Credit Facility.

Among other things, the 2017 Credit Facility (1) increased the total commitment of 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 Facility that permitted BPLP to draw until the first anniversary of the closing date.

Based on BPLP’s current credit rating, (1) the applicable Eurocurrency margins for the Revolving Facility and Delayed Draw Facility are 87.5 basis points and 95 basis points, respectively, and (2) the facility fee on the Revolving Facility commitment is 0.15% per annum.

On April 24, 2018, BPLP 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 BPLP’s credit rating.

As of March 31, 2021 and May 3, 2021, BPLP had no borrowings under its 2017 Credit Facility and outstanding letters of credit totaling approximately $2.3 million and $6.3 million, respectively, with the ability to borrow approximately $1.5 billion under the Revolving Facility.

On March 16, 2021, BPLP repaid $500.0 million, representing all amounts outstanding, on the Delayed Draw Facility under the 2017 Credit Facility.

We recognized a loss from early extinguishment of debt totaling approximately $0.5 million, related to unamortized financing costs.

On June 15, 2021, BPLP amended and restated the 2017 Credit Facility and entered into the 2021 Credit Facility.

The 2021 Credit Facility provides for borrowings of up to $1.5 billion through the Revolving Facility, subject to customary conditions.

Among other things, the amendment and restatement (1) extended the maturity date to June 15, 2026, (2) eliminated the $500.0 million Delayed Draw Facility provided under the 2017 Credit Facility, (3) reduced the per annum variable interest rates on borrowings and (4) added a sustainability-linked pricing component.

Under the 2021 Credit Facility, BPLP may increase the total commitment by up to $500.0 million by

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increasing the amount of the Revolving Facility and/or by incurring one or more term loans, in each case, subject to syndication of the increase and other conditions (See Note 8 to the Consolidated Financial Statements).

The 2021 Credit Facility replaces the 2017 Credit Facility, which consisted of a $1.5 billion unsecured revolving line of credit and a $500.0 million Delayed Draw Facility, and was scheduled to expire on April 24, 2022.

As of June 30, 2021, BPLP had no borrowings under its 2021 Credit Facility and outstanding letters of credit totaling approximately $6.3 million, with the ability to borrow approximately $1.5 billion.

As of August 2, 2021, BPLP had $205 million of borrowings under its 2021 Credit Facility and outstanding letters of credit totaling approximately $6.3 million, with the ability to borrow approximately $1.3 billion.

Unsecured Senior Notes

For a description of BPLP’s outstanding unsecured senior notes as of March 31, 2021, see Note 7 to the Consolidated Financial Statements.

For a description of BPLP’s outstanding unsecured senior notes as of June 30, 2021, see Note 7 to the Consolidated Financial Statements.

On February 14, 2021, BPLP 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.

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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, BPLP was in compliance with each of these financial restrictions and requirements.

At June 30, 2021, BPLP was in compliance with each of these financial restrictions and requirements.

Mortgage Notes Payable

The following represents the outstanding principal balances due under the mortgage notes payable at March 31, 2021:

Properties Stated

Interest Rate GAAP

Interest Rate (1) Stated

Principal Amount Deferred Financing Costs, Net Carrying Amount Carrying Amount (Partners ’ Share)

The following represents the outstanding principal balances due under the mortgage notes payable at June 30, 2021:

Properties Stated Interest Rate GAAP Interest Rate (1) Stated Principal Amount Deferred Financing Costs, Net Carrying Amount Carrying Amount (Partners ’ Share)

Maturity Date

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601 Lexington Avenue 4.75 % 4.79 % 622,691 (251) 622,440 280,098 (5) April 10, 2022

2,926,612 (21,940) 2,904,672 1,193,260

Total $ 2,922,691 $ (20,982) $ 2,901,709 $ 1,191,879

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(4) In connection with the refinancing of the loan, we guaranteed the consolidated entity’s obligation to fund various reserves for tenant improvement costs and allowances, leasing commissions and free rent obligations in lieu of cash deposits.

As of March 31, 2021, the maximum funding obligation under the guarantee was approximately $23.1 million.

As of June 30, 2021, the maximum funding obligation under the guarantee was approximately $21.5 million.

We earn a fee from the joint venture for providing the guarantee and have an agreement with our partners to reimburse the joint venture for their share of any payments made under the guarantee (See Note 9 to the Consolidated Financial Statements).

(5) This property is owned by a consolidated entity in which we have a 55% interest.

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Off-Balance Sheet Arrangements—Joint Venture Indebtedness

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See also Note 5 to the Consolidated Financial Statements.

At March 31, 2021, the aggregate carrying amount of debt, including both our and our partners’ share, incurred by these ventures was approximately $2.7 billion (of which our proportionate share is approximately $1.2 billion).

The table below summarizes the outstanding debt of these joint venture properties at March 31, 2021.

At June 30, 2021, the aggregate carrying amount of debt, including both our and our partners’ share, incurred by these ventures was approximately $2.7 billion (of which our proportionate share is approximately $1.2 billion).

The table below summarizes the outstanding debt of these joint venture properties at June 30, 2021.

In addition to other guarantees specifically noted in the table, we have agreed to customary environmental indemnifications and nonrecourse carve-outs (e.g., guarantees against fraud, misrepresentation and bankruptcy) as well as the completion of development projects on certain of the loans.

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The construction financing bears interest at a variable rate equal to LIBOR plus 2.00% per annum and matures on April 19, 2022, with two, one-year extension options, subject to certain conditions.

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(8) The construction financing has a borrowing capacity of $400.0 million.

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common shareholders or net income attributable to Boston Properties Limited Partnership common unitholders (determined in accordance with GAAP) or any other GAAP financial measures and should only be considered together with and as a supplement to our financial information prepared in accordance with GAAP.

The impact that COVID-19 has had on our business, financial position and results of operations during the first quarter of 2021 is discussed throughout this report.

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

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

The impact of COVID-19 on our revenue, in particular lease, parking and hotel revenue was negatively impacted by COVID-19 for the three months ended March 31, 2021, thus negatively impacting our FFO.

These decreases are discussed under the heading “ Comparison of the three months ended March 31, 2021 to the three months ended March 31, 2020 ” within “ Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations .”

Boston Properties, Inc.

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common shareholders to FFO attributable to Boston Properties, Inc.

common shareholders for the three months ended March 31, 2021 and 2020:

Three months ended March 31,

common shareholders for the three months ended June 30, 2021 and 2020:

Three months ended June 30,

(in thousands)

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$ 111,703 $ 266,525

Preferred stock redemption charge 6,412 —

Preferred dividends — 2,625

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Noncontrolling interests in property partnerships

16,467 19,486

Net income 141,250 298,580

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Noncontrolling interests in property partnerships

16,467 19,486

Preferred dividends — 2,625

Preferred stock redemption charge 6,412 —

Funds from Operations (FFO) attributable to the Operating Partnership common unitholders (including Boston Properties, Inc.)

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Weighted average shares outstanding—basic 156,107 155,386

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Reconciliation to Diluted Funds from Operations:

Three months ended March 31,

Three months ended June 30,

(Numerator) Shares/Units

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_______________

(1) BXP’s share of diluted Funds from Operations was 90.13% and 89.95% for the three months ended March 31, 2021 and 2020, respectively.

(1) BXP’s share of diluted Funds from Operations was 90.18% and 90.00% for the three months ended June 30, 2021 and 2020, respectively.

Boston Properties Limited Partnership

The following table presents a reconciliation of net income attributable to Boston Properties Limited Partnership common unitholders to FFO attributable to Boston Properties Limited Partnership common unitholders for the three months ended March 31, 2021 and 2020:

Three months ended March 31,

Three months ended June 30,

(in thousands)

Net income attributable to Boston Properties Limited Partnership common unitholders $ 125,846 $ 301,975

Preferred unit redemption charge 6,412 —

Preferred distributions — 2,625

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Preferred distributions — 2,625

Preferred unit redemption charge 6,412 —

Funds from Operations attributable to Boston Properties Limited Partnership common unitholders (1) $ 297,961 $ 263,243

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(1) Our calculation includes OP Units and vested LTIP Units (including vested 2012 OPP Units and vested 2013 - 2018 MYLTIP Units).

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Reconciliation to Diluted Funds from Operations:

Three months ended March 31,

Three months ended June 30,

(in thousands)

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Contract terms are generally between three and five years.

During the three months ended March 31, 2021, we paid approximately $109.8 million to fund tenant-related obligations, including tenant improvements and leasing commissions.

In addition, during the three months ended March 31, 2021, we and our unconsolidated joint venture partners incurred approximately $53 million of new tenant-related obligations associated with approximately 588,000 square feet, which included approximately 67,000 square feet of lease modifications related to COVID-19, of second generation leases, or approximately $91 per square foot.

We signed approximately 4,000 square feet of

first generation leases.

The tenant-related obligations for the development properties are included within the projects’ “Estimated Total Investment” referred to in “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.” In aggregate during the first quarter of 2021, we signed leases for approximately 592,000 square feet of space and incurred aggregate tenant-related obligations of approximately $54 million, or approximately $91 per square foot.

During the three months ended June 30, 2021, we paid approximately $78.9 million to fund tenant-related obligations, including tenant improvements and leasing commissions.

In addition, during the three months ended June 30, 2021, we and our unconsolidated joint venture partners incurred approximately $122 million of new tenant-related obligations associated with approximately 1.2 million square feet, which included lease modifications related to COVID-19, of second generation leases, or approximately $98 per square foot.

We did not sign any first generation leases.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis