What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-11-05 compared with 2021-08-06 · 479 added, 571 removed, 1022 unchanged (51% of the section changed)

9 unchanged sentences

Accordingly, investors should use caution in relying on forward-looking statements, which are based on results and trends at the time they are made, to anticipate future results or trends.

One of the most significant factors that may cause actual results to differ materially from those expressed or implied by the forward-looking statements is the ongoing impact of the global COVID-19 pandemic on the U.S.

and global economies, which has impacted, and is likely to continue to impact, us and, directly or indirectly, many of the other important factors below and the risks described in (i) our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 including those described under the caption “Risk Factors,” (ii) our subsequent filings under the Exchange Act and (iii) the risk factors set forth in this Form 10-Q in Part II, Item 1A.

Some of the risks and uncertainties that may cause our actual results, performance or achievements to differ materially from those expressed or implied by forward-looking statements include, among others, the following:

T he most significant factors that may cause actual results to differ materially from those expressed or implied by the forward-looking statements include the ongoing impact of the global COVID-19 pandemic on the U.S.

and global economies, which has impacted, and is likely to continue to impact, us, the risks described in (i) our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 including those described under the caption “Risk Factors,” (ii) our subsequent filings under the Exchange Act and (iii) the risk factors set forth in this Form 10-Q in Part II, Item 1A, and the following:

• 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;

7 unchanged sentences

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

Ta ble of Contents

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

21 unchanged sentences

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

BXP is one of the largest publicly traded office real estate investment trusts (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.

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

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

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

We generate revenue and cash primarily by leasing Class A

Ta ble of Contents

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.

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 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 attractive demand drivers, 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 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.

Our tenant base is diverse across market sectors and the weighted-average lease term for our in-place leases, excluding residential units, was approximately 7.5 years, as of September 30, 2021, including leases signed by our unconsolidated joint ventures.

The weighted-average lease term for our 20 largest office tenants was approximately 10.5 years as of September 30, 2021.

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

5 unchanged sentences

• our relationships with local brokers.

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.

The United States economy continues to recover from the COVID-19 pandemic, although quarter-over-quarter GDP growth slowed to an annual rate of 2.0% in the third quarter of 2021 compared to 6.7% in the second quarter of 2021.

This slowdown reflects the impacts of the Delta variant and moderation in government stimulus spending.

Since the end of the third quarter, however, daily COVID infection levels have decreased by more than 50% from the recent highs in September 2021.

We believe the positive trend in infection rates, combined with relatively low unemployment rates, bodes well for continuing economic growth in our markets.

The overall economic recovery is having a positive impact on our leasing activity.

Although additional COVID variants and supply-chain issues may emerge, 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.

Annual inflation increased to 5.4% in September 2021, driven largely by energy prices, which increased approximately 25% compared to one year ago.

Energy is a component of our operating expenses our largest energy cost is electricity.

We have limited most of our exposure to additional potential increases through 2022, and we have been increasing our procurement from green power.

We remain exposed to the marginal cost of electrical generation in the Boston region where we expect increases in 2022 of greater than 10% compared to last year.

Costs for security, cleaning and engineering labor continues to increase due to labor shortages across all trades.

However, we are able to mitigate the risks from these increased costs to our results due to the nature of our lease contracts, which generally take one of two forms:

(1) net leases, under which all of the operating expense and real estate taxes are paid by the tenant, and (2) gross leases with a base year that is set upon the lease commencement with increases in expenses over that base year added to the rental obligation of the tenant.

Our near-term exposure to increases in operating expenses is primarily on our vacant space and for new or renewal leases where we are setting a base year.

Our vacancy was approximately 11.6% at September 30, 2021, and our 2021 and 2022 lease expirations total approximately 7.6% of our portfolio.

We do not expect an increase in operating expenses to have a material adverse effect on our results of operations for the remainder of 2021 or 2022.

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:

Despite the concerns surrounding COVID-19 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.

We remain focused on the following priorities:

• ensuring tenant health, safety and satisfaction;

1 unchanged sentence

• completing the construction of our development properties;

Ta ble of Contents

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

• maintaining discipline in our underwriting of investment opportunities;

• identifying new investment opportunities that meet our criteria while maintaining discipline in our underwriting;

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

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

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

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

In the third quarter of 2021, we signed approximately 1.4 million square feet of new leases and renewals with a weighted-average lease term of approximately 9.2 years, indicating that many new 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 third quarter of 2021 (measured by square feet) was more than double the volume achieved in the first quarter of 2021 and approximately 90% of our pre-pandemic historical third quarter average.

The overall occupancy of our in-service office and retail properties was 88.4% at September 30, 2021, a decrease of 0.2% compared to 88.6% at June 30, 2021.

We anticipate occupancy for the remainder of 2021 will be relatively flat with occupancy for the third quarter of 2021, but will begin to improve as we head into 2022, as our remaining 2021 and 2022 lease expirations are backfilled by signed leases that have not yet commenced and new leases.

Our parking and other revenue was approximately $23.5 million in the third quarter of 2021, an increase of approximately $5.2 million from the second quarter of 2021.

The increase was primarily due to improved transient parking and greater insurance proceeds from a water main break at a New York property.

The third quarter 2021 parking and other revenue was 92% of pre-pandemic parking and other revenue from the third quarter of 2019.

We expect to return to pre-pandemic levels of parking revenue as workers increasingly return to work in their offices.

Our hotel property, the Boston Marriott Cambridge, generated approximately $1.2 million of net operating income during the third quarter of 2021.

This was the first quarter since the start of the pandemic in which the hotel made a positive contribution to our results.

Given the hotel’s location in the heart of Cambridge, Massachusetts and adjacent to MIT, we expect hotel occupancy and REVPAR to improve to pre-pandemic levels over time as business and leisure travel return to historical levels.

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

Ta ble of Contents

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.

We continually evaluate current and prospective markets for possible 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.

During the third quarter of 2021, we continued to execute on our strategy and completed two acquisitions.

demand of tenants in the life sciences sector and employing our Strategic Capital Program (“SCP”) (Refer to the heading “ Liquidity and Capital Resources” within “ Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations ” for a description of the SCP.) to utilize private equity to increase our returns and enhance our investment capacity.

These acquisitions included:

• Safeco Plaza, an approximately 765,000 net rentable square-foot Class A office building in Seattle, Washington.

The property was approximately 91% leased at September 30, 2021.

This acquisition marked our initial entry into the Seattle market, one of the most vibrant markets in the United States for companies in the technology, life sciences, manufacturing and financial services sectors.

The acquisition was completed through a newly formed joint venture with two institutional partners that are part of our SCP.

• 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 the third quarter of 2021, we continued the construction of the 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 September 30, 2021, our share of the estimated total cost for these projects is approximately $2.7 billion, of which approximately $1.1 billion of equity remained to be invested.

The total development pipeline, inclusive of both office and lab/life sciences developments, but excluding the View Boston Observatory at The Prudential Center, is 72% pre-leased as of November 2, 2021.

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

In addition, during September and October of 2021, we completed and delivered approximately 1.5 million square feet of space to tenants from our development pipeline.

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.

Ta ble of Contents

Our lab/life sciences developments in our pipeline total approximately 920,000 square feet and include properties in Waltham, Massachusetts and South San Francisco, California.

Although Shady Grove Bio+Tech Campus is not currently included in our development pipeline, we anticipate converting the office buildings on the campus to lab space.

Our lab/life sciences developments are located in some 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.

Supply-chain concerns impact our business both in time to completion and increased costs.

Our construction schedule is one of the criteria we use when we evaluate bids for development projects and capital improvements.

We have been successful in awarding bids and maintaining schedules through the pandemic.

However, there are fewer choices for materials, and we are working closely with our consultants and contractors to ensure there are not items used in the development or redevelopment process that could impact schedules.

We are intentionally minimizing the amount of materials we acquire from overseas, releasing material packages as early as possible and stock-piling materials off-site.

In addition, when budgeting new development projects, we are including projected cost increases of approximately 5-6%.

We currently expect to deliver all active developments and redevelopments on time and budget, but we cannot assure you that we will not experience greater cost increases or that the materials we need will continue to be available so that we are able to complete the project.

A failure to deliver a project on time could expose us to additional costs under the signed pre-leases for those projects.

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.

On October 25, 2021, we completed the sale of 181,191 and 201 Spring Street, a three-building complex aggregating approximately 333,000 net rentable 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.

Excluding Seattle, which we entered on September 1, 2021, a brief overview of each of our markets follows.

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.

During the third quarter of 2021, we signed approximately 769,000 square feet of leases and approximately 782,000 square feet of leases commenced.

Approximately 148,000 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 17% over the prior leases.

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.

Our Boston central business district (“CBD”) in-service portfolio was approximately 94% leased as of September 30, 2021.

During the third quarter of 2021, we executed an approximately 524,000 square foot, 10-year lease extension with Wellington Management at Atlantic Wharf, approximately four years prior to the lease expiration, supporting our belief in the commitment of employers to office space and the attractiveness of our asset.

In addition, we completed and delivered 440,000 square feet of space leased to an affiliate of Verizon Communications at our 100 Causeway Street development project in Boston, Massachusetts.

100 Causeway Street is an approximately 632,000 square foot office building in which we have a 50% ownership interest.

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

During the third 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 the building into service in 2022.

In early 2021, we received approximately one million square feet of new entitlements at Kendall Center 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 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.

Since the third quarter of 2021, we signed leases for approximately 52,000 square feet at 880 Winter Street, an approximately 224,000 square foot office property in Waltham, Massachusetts that is being converted into lab space.

We expect to deliver this project in early 2023.

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 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.

Ta ble of Contents

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.

Our Los Angeles (“LA”) in-service portfolio of approximately 2.3 million square feet is currently focused in 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 September 30, 2021, our LA in-service properties were approximately 83% leased.

We expect our occupancy to increase later this year upon commencement of an approximately 140,000 square foot lease expansion that was signed in the second quarter of 2021 with a technology company at Santa Monica Business Park in Santa Monica, California.

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

During the third quarter of 2021, (1) we signed leases covering approximately 169,000 square feet, including an approximately 39,000 square foot expansion with a financial services company at 399 Park Avenue, increasing their total square footage to approximately 373,000 square feet, and (2) approximately 259,000 square feet of leases commenced.

Approximately 200,000 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 27% 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.

Excluding approximately 55,000 square feet of short term leases that commenced, the net rental obligations decreased approximately 13% over the prior leases.

In the third quarter of 2021, sublease space continued to be removed from the market and high-quality buildings experienced increased leasing activity.

We are actively negotiating approximately 340,000 square feet of leases, of which approximately 200,000 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.

In October 2021, we signed a 42,000 square foot lease at Dock 72.

San Francisco

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.

The recovery in San Francisco continues to lag our other markets as fewer businesses have commenced their return to work, street-level retail remains closed or slow and the streets are quiet.

As restrictions are lifted, we believe the pace of new leasing activity will begin to increase.

Our San Francisco CBD in-service properties were approximately 92% leased as of September 30, 2021.

During the third quarter of 2021, we executed approximately 185,000 square feet of leases, including over 100,000 square feet at Embarcadero Center.

We executed four full floor leases at Embarcadero Center at average rental rates of over $100 per square foot.

In addition, we commenced approximately 91,000 square feet of leases in the San Francisco region.

Of these leases, approximately 57,000 square feet had been vacant for less than one year and represent an increase in net rental obligations of approximately 9% over the prior leases.

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

Life sciences activity at our Gateway Commons joint venture in which we own an approximately 52% interest continues to be productive.

The joint venture has signed a letter of intent to lease the entirety of 751 Gateway Commons, a 229,000 square foot project in our development pipeline.

During the third quarter of 2021, we completed two full-building leases aggregating approximately 58,000 square feet in the Mountain View submarket.

We are experiencing greater tour activity, including large technology tenant requirements for existing and new products.

Due to the limited supply of new, high-quality office space in this submarket, we are evaluating when to restart the first phase of our Platform 16 development project, an approximately 1.1 million aggregate square foot future development next to Diridon Station in San Jose.

Washington, DC

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.

During the third quarter of 2021, we executed approximately 300,000 square feet of leases and we commenced approximately 163,000 square feet of leases in the Washington, DC region.

Of these leases, approximately 96,000 square feet had been vacant for less than one year and represent a decrease in net rental obligations of approximately 22% 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 CBD in-service properties were approximately 84% leased, as of September 30, 2021, with modest near-term rollover 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 86% leased as of June 30, 2021.

Ta ble of Contents

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

During the third quarter of 2021, we completed approximately 70,000 square feet of office leases in Reston and are in negotiations for another 125,000 square feet.

In October, we completed and delivered approximately 285,000 square feet at Reston Next, a Class A office project with approximately 1.1 million net rentable square feet located in Reston, Virginia.

This project is 85% pre-leased as of November 2, 2021.

In addition, on October 29, 2021, a joint venture in which we own a 50% interest, fully placed in-service 7750 Wisconsin Avenue, a Class A office project with approximately 734,000 net rentable square feet located in Bethesda, Maryland.

Leasing Statistics

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

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

Total Square Feet Total Square Feet

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

Three months ended September 30, 2021 Nine months ended September 30, 2021

(Square Feet)

Vacant space available at the beginning of the period 5,186,818 4,517,385

Property dispositions/properties taken out of service (1) — (104,613)

Vacant space in properties acquired (2) 143,848 143,848

Properties placed (and partially placed) in-service (3) 503,024 732,454

18 unchanged sentences

__________________

(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.

(1) Total square feet of property dispositions during the nine months ended September 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 nine months ended September 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 vacant space in properties acquired during the three and nine months ended September 30, 2021 consists of 69,581 square feet at Safeco Plaza and 74,267 square feet at Shady Grove Bio+Tech Campus.

(3) Total square feet of properties placed (and partially placed) in-service during the three months ended September 30, 2021 consists of 6,709 square feet at 685 Gateway and 496,315 square feet at 100 Causeway Street.

Total square feet of properties placed (and partially placed) in-service during the nine months ended September 30, 2021 consists of 195,326 square feet of office and 31,950 square feet of retail at One Five Nine East 53rd Street, 6,709 square feet at 685 Gateway and 498,469 square feet at 100 Causeway Street.

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

(5) Represents leases executed during the three and nine months ended September 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 nine months ended September 30, 2021 is 320,719 and 734,797, respectively.

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

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.

Of the 718,572 and 3,169,071 square feet of second generation leases that commenced during the three and nine months ended September 30, 2021, respectively, leases for 397,853 and 2,439,402 square feet, respectively, were signed in prior periods.

(7) 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 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.

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

Ta ble of Contents

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;

(8) Represents the decrease in gross rent (base rent plus expense reimbursements) on the new versus expired leases on the 507,899 and 2,219,080 square feet of second generation leases that had been occupied within the prior 12 months for the three and nine months ended September 30, 2021, respectively;

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

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.

(9) Represents the decrease in net rent (gross rent less operating expenses) on the new versus expired leases on the 507,899 and 2,219,080 square feet of second generation leases that had been occupied within the prior 12 months for the three and nine months ended September 30, 2021, respectively.

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

Acquisition/disposition activities

• On August 2, 2021, we acquired Shady Grove Bio+Tech Campus in Rockville, Maryland, for a purchase price, including transaction costs, of approximately $118.5 million in cash.

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 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.

Ta ble of Contents

Unconsolidated joint venture activities

• 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 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 and all of the outstanding Depositary Shares.

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.

We intend to reposition three of the buildings, which are currently vacant, to support lab or life sciences uses.

As a result, the three vacant buildings are not part of our in-service portfolio.

We anticipate that we will redevelop or convert the remaining four buildings to lab or life sciences-related uses as each becomes vacant.

• 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 sales 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 ).

Ta ble of Contents

The sale was completed on October 25, 2021 (See below).

Unconsolidated joint venture activities

• On August 31, 2021, a joint venture in which we have a 50% interest extended the construction loan collateralized by its The Hub on Causeway – Podium property.

At the time of the extension, the outstanding balance of the loan totaled approximately $174.3 million, bore interest at a variable rate equal to LIBOR plus 2.25% per annum and was scheduled to mature on September 6, 2021, with two, one-year extension options, subject to certain conditions.

The extended loan continues to bear interest at a variable rate equal to LIBOR plus 2.25% per annum and matures on September 6, 2023.

The Hub on Causeway - Podium is a retail and office property with approximately 382,000 net rentable square feet located in Boston, Massachusetts.

• On September 1, 2021, we entered into a joint venture to acquire Safeco Plaza, a Class A office property located in Seattle, Washington, for a gross purchase price of approximately $465.0 million.

Safeco Plaza is a 50-story, approximately 765,000 net rentable square-foot, Class A office property.

The acquisition was completed through a newly formed joint venture with two institutional partners.

Each of the institutional partners invested approximately $71.9 million of cash for its 33.165% ownership interest in the joint venture.

We invested approximately $72.6 million for our 33.67% interest in the joint venture and are providing customary operating, property management and leasing services to the joint venture.

Our ownership includes (1) a 33.0% direct interest in the joint venture, and (2) an additional 1% interest in each of the two entities (each, a “Safeco Partner Entity”) through which each partner owns its interest in the joint venture.

Subject to the occurrence of certain events and the joint venture achieving certain return thresholds, we are entitled to earn promote distributions.

Some of the promote distributions may be payable in cash or, at our election, equity interest(s) in the Safeco Partner Entity(ies).

The purchase price was funded with cash and proceeds from a new mortgage loan secured by the property.

The mortgage loan has a principal amount of $250.0 million, bears interest at a variable rate equal to the greater of (x) 2.35% or (y) LIBOR plus 2.20% per annum and matures on September 1, 2026.

Debt Transaction

• On September 29, 2021, BPLP completed a public offering of $850.0 million in aggregate principal amount of its 2.450% unsecured senior notes due 2033.

The notes were priced at 99.959% of the principal amount to yield an effective rate (including financing fees) of approximately 2.524% per annum to maturity.

The notes will mature on October 1, 2033, unless earlier redeemed.

The aggregate net

proceeds from the offering were approximately $842.5 million after deducting underwriting discounts and transaction expenses.

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

• On October 15, 2021, BPLP used available cash and funds under its unsecured revolving credit agreement (the “2021 Credit Facility”) to complete the redemption of $1.0 billion in aggregate principal amount of its 3.85% senior notes due February 1, 2023.

The redemption price was approximately $1.05 billion, which included approximately $7.9 million of accrued and unpaid interest to, but not including, the redemption date and an early redemption premium and unamortized financing costs totaling approximately $43.9 million.

• On O cto ber 19, 2021, we partially placed in-service Reston Next, a Class A office project with approximately 1.1 million net rentable square feet located in Reston, Virginia.

• On October 25, 2021, we completed the sale of our 181,191 and 201 Spring Street properties located in Lexington, Massachusetts for an aggregate gross sales price of $191.5 million, as described above under “- Acquisition/disposition activities”.

• On October 29, 2021, a joint venture in which we have a 50% interest fully placed in-service 7750 Wisconsin Avenue, a Class A office project with approximately 734,000 net rentable square feet located in Bethesda, Maryland.

Critical Accounting Policies

7 unchanged sentences

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

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

Results of Operations for the Nine Months Ended September 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 $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 .”

common shareho lders and net income attributable to Boston Properties Limited Partnership common unitholders decreased approximately $542.9 million and $616.3 million for the nine months ended September 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 nine months ended September 30, 2021 to the nine months ended September 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 six months ended June 30, 2021 and 2020 (in thousands):

Ta ble of Contents

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

Boston Properties, Inc.

Six months ended June 30,

Nine months ended September 30,

2021 2020 Increase/

17 unchanged sentences

Losses from early extinguishment of debt 898 — 898 100.00 %

Loss from unconsolidated joint ventures 1,745 5,410 (3,665) (67.74) %

Other Income:

Gains (losses) from investments in securities 3,934 (893) 4,827 540.54 %

Gains from investments in securities 3,744 965 2,779 287.98 %

Interest and other income (loss) 4,140 4,277 (137) (3.20) %

1 unchanged sentence

8,104 613,723 (605,619) (98.68) %

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

Other Expenses:

12 unchanged sentences

Net Operating Income $ 1,355,845 $ 1,295,723 $ 60,122 4.64 %

Ta ble of Contents

Boston Properties Limited Partnership

Six months ended June 30,

Nine months ended September 30,

2021 2020 Increase/

13 unchanged sentences

Losses from early extinguishment of debt 898 — 898 100.00 %

Loss from unconsolidated joint ventures 1,745 5,410 (3,665) (67.74) %

Other Income:

Gains (losses) from investments in securities 3,934 (893) 4,827 540.54 %

Gains from investments in securities 3,744 965 2,779 287.98 %

Interest and other income (loss) 4,140 4,277 (137) (3.20) %

1 unchanged sentence

8,104 626,686 (618,582) (98.71) %

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

Other Expenses:

12 unchanged sentences

Net Operating Income $ 1,355,845 $ 1,295,723 $ 60,122 4.64 %

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”).

At September 30, 2021 and 2020, we owned or had joint venture interests in a portfolio of 202 and 196 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 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.

Accordingly, we do not believe that our period-to-period financial data with respect to the Total Property Portfolio provides a complete understanding of our operating results.

Therefore, the comparison of operating results for the three and nine months ended September 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 more meaningful, it is important to provide information for properties that were in-service and owned by us throughout each period presented.

We refer to properties acquired or placed in-service prior to the beginning of the earliest period presented and owned by us and in-service through the end of the latest period presented as our Same Property Portfolio.

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.

Ta ble of Contents

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

common shareholders and net income attributable to Boston Properties Limited Partnership common unitholders, as applicable, the most directly comparable GAAP financial measures, plus (1) preferred stock/unit redemption charge, preferred dividends/distributions, net income attributable to noncontrolling interests, interest expense, losses from early extinguishment of debt, depreciation and amortization expense, transaction costs, payroll and related costs from management services contracts and corporate general and administrative expense less (2) gains (losses) from investments in securities, interest and other income (loss), gains on sales of real estate, income (loss) from unconsolidated joint ventures, direct reimbursements of payroll and related costs from management services contracts and development and management services revenue.

common shareholders and net income attributable to Boston Properties Limited Partnership common unitholders, as applicable, the most directly comparable GAAP financial measures, plus (1) preferred stock/unit redemption charge, preferred dividends/distributions, net income attributable to noncontrolling interests, interest expense, losses from early extinguishment of debt, loss from unconsolidated joint ventures, depreciation and amortization expense, transaction costs, payroll and related costs from management services contracts and corporate general and administrative expense less (2) gains (losses) from investments in securities, interest and other income (loss), gains (losses) on sales of real estate, direct reimbursements of payroll and related costs from management services contracts and development and management services revenue.

We use NOI internally as a performance measure and believe it provides useful information to investors regarding our results of operations and financial condition because, when compared across periods, it reflects the impact on operations from trends in occupancy rates, rental rates, operating costs and acquisition and development activity on an unleveraged basis, providing perspective not immediately apparent from net income attributable to Boston Properties, Inc.

12 unchanged sentences

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

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

Comparison of the nine months ended September 30, 2021 to the nine months ended September 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 June 30, 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 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.

Ta ble of Contents

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

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

Same Property Portfolio Properties Acquired Portfolio Properties

15 unchanged sentences

Real Estate Operating Expenses 728,119 726,296 1,823 0.25 % 2,294 443 8,586 5,778 4,414 6,224 2,860 9,289 746,273 748,030 (1,757) (0.23) %

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 %

Net Operating Income (Loss), Excluding Residential and Hotel 1,309,169 1,252,831 56,338 4.50 % 2,811 (143) 22,628 7,353 4,715 8,547 5,401 15,987 1,344,724 1,284,575 60,149 4.68 %

Residential Net Operating Income (Loss) (2) 14,833 16,809 (1,976) (11.76) % — — (3,101) (717) — — — — 11,732 16,092 (4,360) (27.09) %

Hotel Net Operating Loss (2) (611) (4,944) 4,333 87.64 % — — — — — — — — (611) (4,944) 4,333 87.64 %

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 %

Net Operating Income (Loss) $ 1,323,391 $ 1,264,696 $ 58,695 4.64 % $ 2,811 $ (143) $ 19,527 $ 6,636 $ 4,715 $ 8,547 $ 5,401 $ 15,987 $ 1,355,845 $ 1,295,723 $ 60,122 4.64 %

_______________

2 unchanged sentences

(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 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.

Ta ble of Contents

Residential Net Operating Income for the nine months ended September 30, 2021 and 2020 is comprised of Residential Revenue of $29,832 and $29,076 less Residential Expenses of $18,100 and $12,984, respectively.

Hotel Net Operating Loss for the nine months ended September 30, 2021 and 2020 is comprised of Hotel Revenue of $7,382 and $7,014 less Hotel Expenses of $7,993 and $11,958, respectively, per the Consolidated Statements of Operations.

Same Property Portfolio

Lease Revenue (Excluding Termination Income)

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.

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.

Lease revenue (excluding termination income) from the Same Property Portfolio increased by approximately $51.8 million for the nine months ended September 30, 2021 compared to 2020.

Approximately $59.6 million of the increase was related to write-offs of accrued rent and accounts receivable balances that occurred during the nine months ended September 30, 2020 and did not recur in 2021, for primarily retail tenants that either terminated their leases or we determined that the accrued rent and/or accounts receivable balances were no longer probable of collection.

Excluding the write-offs, the Same Property Portfolio decreased by approximately $7.8 million due to average occupancy decreasing from 93.4% to 91.7%, resulting in a decrease of approximately $62.9 million, partially offset by an increase in average revenue per square foot by approximately $1.08, contributing approximately $55.1 million.

We continue to evaluate the collectability of our accrued rent and accounts receivable balances related to lease revenue.

If after a write-off has been recorded, (1) we subsequently determine that we are probable we will collect substantially all the remaining lessee’s lease payments under the lease term and (2) the lease has not been modified since the write-off, we will then reinstate the accrued rent and accounts receivable write-offs, adjusting for the amount related to the period when the lease payments were considered not probable of collection.

If our estimate of collectability differs from the cash received, then the timing and amount of our reported revenue could be impacted.

Each quarter since the second quarter of 2020, the number of executed COVID-19 lease modifications has decreased and as of the third quarter of 2021, we are executing COVID-19 modifications on a limited basis.

Termination Income

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.

Termination income increased by approximately $3.1 million for the nine months ended September 30, 2021 compared to 2020.

Termination income for the nine months ended September 30, 2021 related to 23 tenants across the Same Property Portfolio and totaled approximately $11.5 million, which was primarily related to tenants that terminated leases early in New York City and the Boston region.

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

Parking and Other Revenue

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 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.

Parking and other revenue increased by approximately $3.3 million for the nine months ended September 30, 2021 compared to 2020.

Parking revenue and other revenue increased by approximately $0.8 million and $2.5 million, respectively.

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

The increase in other revenue was primarily due to approximately $5.1 million in insurance proceeds related to damage at one of our properties in the New York region due to a water main break, partially offset by a decrease in other revenue of approximately $2.6 million related to tenant restoration obligation payments in 2020 that did not recur in 2021.

Expenses of $5.1 million related to the insurance claim are included within real estate operating expenses.

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

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.

For the nine months ended September 30, 2021, monthly parking decreased by approximately $4.3 million, offset by an increase in transient parking of approximately $5.6 million, compared to the nine months ended September 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 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.

Real estate operating expenses from the Same Property Portfolio increased by approximately $1.8 million, or 0.3%, for the nine months ended September 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 real estate taxes and cleaning expenses.

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.

Ta ble of Contents

Properties Acquired Portfolio

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.

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

Rental revenue and real estate operating expenses increased by approximately $4.8 million and $1.9 million, respectively, for the nine months ended September 30, 2021 compared to 2020, as detailed below.

Square Feet Rental Revenue Real Estate Operating Expenses

3 unchanged sentences

153 & 211 Second Avenue June 2, 2021 136,882 3,101 — 3,101 319 — 319

Shady Grove Bio+Tech Campus August 2, 2021 233,452 495 — 495 334 — 334

370,334 $ 5,105 $ 300 $ 4,805 $ 2,294 $ 443 $ 1,851

2 unchanged sentences

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 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.

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

Rental revenue and real estate operating expenses from our Properties Placed In-Service Portfolio increased by approximately $19.9 million and $7.0 million, respectively, for the nine months ended September 30, 2021 compared to 2020, as detailed below.

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

11 unchanged sentences

_____________

(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.

Ta ble of Contents

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

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

Properties in Development or Redevelopment Portfolio

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.

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

Rental revenue and real estate operating expenses from our Properties in Development or Redevelopment Portfolio decreased by approximately $5.6 million and $1.8 million, respectively, for the nine months ended September 30, 2021 compared to 2020, as detailed below.

Rental Revenue Real Estate Operating Expenses

7 unchanged sentences

_______________

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

(1) Real estate operating expenses for the nine months ended September 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.

1 unchanged sentence

(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.

We are demolishing the building and expect to redevelop the site at a future date.

Properties Sold Portfolio

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.

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

Rental revenue and real estate operating expenses from our Properties Sold Portfolio decreased by approximately $17.0 million and $6.4 million, respectively, for the nine months ended September 30, 2021 compared to 2020, as detailed below.

Rental Revenue Real Estate Operating Expenses

12 unchanged sentences

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—Gains on Sales of Real Estate” within “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

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

Residential Net Operating Income

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.

Ta ble of Contents

Net operating income for our residential same properties decreased by approximately $2.0 million for the nine months ended September 30, 2021 compared to 2020.

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

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

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

19 unchanged sentences

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 hotel property operated at a loss of approximately $0.6 million for the nine months ended September 30, 2021.

This is approximately $4.3 million less than the nine months ended September 30, 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.

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.

The hotel re-opened on October 2, 2020 and has operated at lower occupancy levels 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 lower 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.

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

Occupancy 27.8 % 19.8 % 40.4 %

3 unchanged sentences

Development and Management Services Revenue

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

Development and management services revenue decreased by approximately $3.1 million for the nine months ended September 30, 2021 compared to 2020.

Development services revenue decreased by approximately $3.8 million while management services revenue increased by approximately $0.7 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 leasing commissions earned in the Washington, DC region and from an unconsolidated joint venture in the Los Angeles region.

Ta ble of Contents

The decrease in development

services revenue was primarily related to a decrease in development fees earned from a building owned by a third-party in the Washington, DC region and an unconsolidated joint venture in New York City and fees associated with tenant improvement projects 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 leasing commissions earned from a third-party owned building in the Washington, DC region.

General and Administrative Expense

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.

General and administrative expense increased by approximately $15.9 million for the nine months ended September 30, 2021 compared to 2020 primarily due to an increase in compensation and health care expenses of approximately $17.5 million, partially offset by an approximately $1.6 million decrease in other general and administrative expenses.

The increase in compensation expense was related to (1) an approximately $2.7 million increase in the value of our deferred compensation plan, (2) an approximately $13.4 million increase in other compensation expenses, primarily due to age-based vesting and (3) an approximately $1.4 million increase in health care costs.

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

Capitalized wages for the nine months ended September 30, 2021 and 2020 were approximately $10.1 million and $9.6 million, respectively.

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

Transaction Costs

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.

Transaction costs increased by approximately $1.7 million for the nine months ended September 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.

5 unchanged sentences

Boston Properties, Inc.

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,

Depreciation and amortization expense increased by approximately $24.1 million for the nine months ended September 30, 2021 compared to 2020, as detailed below.

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

2021 2020 Change

7 unchanged sentences

_______________

(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.

(1) During the nine months ended September 30, 2021, we commenced redevelopment of View Boston Observatory at The Prudential Center, 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 nine months ended September 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 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.

Ta ble of Contents

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

Boston Properties Limited Partnership

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,

Depreciation and amortization expense increased by approximately $22.9 million for the nine months ended September 30, 2021 compared to 2020, as detailed below.

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

2021 2020 Change

7 unchanged sentences

_______________

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.

As a result, during the nine months ended September 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 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.

As a result, during the nine months ended September 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

2 unchanged sentences

Other Income and Expense Items

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.

Loss from Unconsolidated Joint Ventures

For the nine months ended September 30, 2021 compared to 2020, loss from unconsolidated joint ventures decreased by approximately $3.7 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 nine months ended September 30, 2021 (See Note 5 to the Consolidated Financial Statements).

This increase was partially offset by (1) an approximately $5.8 million gain on sale of real estate from the sale of Annapolis Junction Building Eight and two undeveloped land parcels during the nine months ended September 30, 2020 and (2) an approximately $1.1 million decrease in net income from our Metropolitan Square joint venture, primarily related to increased interest expense related to the mortgage refinancing.

Gains on Sales of Real Estate

3 unchanged sentences

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

Ta ble of Contents

Boston Properties, Inc.

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.

Gains on sales of real estate decreased by approximately $605.6 million for the nine months ended September 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

8 unchanged sentences

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.

The development project achieved final completion during the third 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, we recognized a gain of approximately $8.1 million.

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

Boston Properties Limited Partnership

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.

Gains on sales of real estate decreased by approximately $618.6 million for the nine months ended September 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

8 unchanged sentences

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.

Ta ble of Contents

As a result, we recognized a gain of approximately $8.1 million.

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

Interest and Other Income (Loss)

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.

Interest and other income (loss) decreased by approximately $0.1 million for the nine months ended September 30, 2021 compared to 2020, due primarily to a decrease of approximately $2.9 million in interest income as a result of lower interest earned on our deposits, partially offset by an approximately $2.8 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 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.

Gains from Investments in Securities

Gains from investments in securities for the nine months ended September 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.

2 unchanged sentences

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

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.

During the nine months ended September 30, 2021 and 2020, we recognized gains of approximately $3.7 million and $1.0 million, respectively, on these investments.

By comparison, our general and administrative expense increased by approximately $3.7 million and $1.0 million during the nine months ended September 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.

Losses From Early Extinguishment of Debt

3 unchanged sentences

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, representing all amounts outstanding on its Delayed Draw Facility under the 2017 Credit Facility.

On March 16, 2021, BPLP repaid $500.0 million, representing all amounts outstanding on its delayed draw term loan (“Delayed Draw Facility”) under our prior unsecured revolving credit agreement (the “2017 Credit Facility”).

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

Ta ble of Contents

Interest Expense

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

Interest expense increased by approximately $0.3 million for the nine months ended September 30, 2021 compared to 2020, as detailed below.

Component Change in interest expense for the nine months ended September 30, 2021 compared to September 30, 2020

(in thousands)

2 unchanged sentences

Issuance of $850 million in aggregate principal of 2.550% senior notes due 2032 on March 16, 2021 11,897

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

Decrease in capitalized interest related to development projects 3,645

Increase in interest due to finance leases for two in-service properties 1,604

Increase in interest due to finance leases that are related to development properties 1,052

Issuance of $850 million in aggregate principal of 2.450% senior notes due 2033 on September 29, 2021 116

Total increases to interest expense 32,469

11 unchanged sentences

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

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

Interest capitalized for the nine months ended September 30, 2021 and 2020 was approximately $36.6 million and $41.3 million, respectively.

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

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.

Ta ble of Contents

On October 15, 2021, BPLP used available cash and funds under its 2021 Credit Facility to complete the redemption of $1.0 billion in aggregate principal amount of its 3.85% senior notes due February 1, 2023.

The redemption price was approximately $1.05 billion, which was equal to par plus approximately $7.9 million of accrued and unpaid interest to, but not including, the redemption date and an early redemption premium and unamortized financing costs totaling approximately $43.9 million.

We expect to recognize a loss from early extinguishment of debt related primarily to the payment of the redemption premium in the fourth quarter.

At September 30, 2021, our variable rate debt consisted of BPLP’s $1.5 billion revolving facility (the “Revolving Facility”).

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

For a summary of our consolidated debt as of September 30, 2021 and September 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.

Noncontrolling Interests in Property Partnerships

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,

Noncontrolling interests in property partnerships increased by approximately $18.3 million for the nine months ended September 30, 2021 compared to 2020, as detailed below.

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

2021 2020 Change

8 unchanged sentences

(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.

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

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

Approximately $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.

(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 nine months ended September 30, 2020, partially offset by the increase in revenue related to placing in-service One Five Nine East 53rd Street.

During the nine months ended September 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 $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.

For BXP, noncontrolling interest—common units of the Operating Partnership decreased by approximately $61.7 million for the nine months ended September 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

Results of Operations for the Three Months Ended September 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.

common shareholders and net income attributable to Boston Properties Limited Partnership common unitholders increased approximately $18.4 million and $20.4 million for the three months ended September 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 September 30, 2021 to the three months ended September 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.

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

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

Ta ble of Contents

Boston Properties, Inc.

Three months ended June 30,

Three months ended September 30,

2021 2020 Increase/

15 unchanged sentences

Interest expense 105,794 110,993 (5,199) (4.68) %

Loss from unconsolidated joint ventures 5,597 6,873 (1,276) (18.57) %

Other Income:

Gains from investments in securities

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

Gains (losses) from investments in securities (190) 1,858 (2,048) (110.23) %

Interest and other income (loss)

1,520 (45) 1,565 3,477.78 %

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) %

Gains (losses) on sales of real estate 348 (209) 557 266.51 %

Other Expenses:

12 unchanged sentences

Net Operating Income $ 458,729 $ 421,666 $ 37,063 8.79 %

Ta ble of Contents

Boston Properties Limited Partnership

Three months ended June 30,

Three months ended September 30,

2021 2020 Increase/

12 unchanged sentences

105,794 110,993 (5,199) (4.68) %

Loss from unconsolidated joint ventures 5,597 6,873 (1,276) (18.57) %

Other Income:

Gains from investments in securities

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

Gains (losses) from investments in securities (190) 1,858 (2,048) (110.23) %

Interest and other income (loss)

1,520 (45) 1,565 3,477.78 %

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) %

Gains (losses) on sales of real estate 348 (209) 557 266.51 %

Other Expenses:

12 unchanged sentences

Net Operating Income $ 458,729 $ 421,666 $ 37,063 8.79 %

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

Comparison of the three months ended September 30, 2021 to the three months ended September 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 143 properties totaling approximately 39.7 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.

Ta ble of Contents

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

The Total Property Portfolio includes the effects of the other properties either acquired, placed in-service, in development or redevelopment after July 1, 2020 or disposed of on or prior to September 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 September 30, 2021 and 2020 with respect to the properties that were acquired, placed in-service, in development or redevelopment or sold.

We did not sell any properties during the three months ended September 30, 2021 and 2020.

Same Property Portfolio Properties

4 unchanged sentences

Redevelopment

Portfolio Properties Sold Portfolio Total Property Portfolio

Portfolio Total Property Portfolio

2021 2020 Increase/

14 unchanged sentences

Residential Net Operating Income (Loss) (2) 5,731 5,480 251 4.58 % — — (882) (717) — — 4,849 4,763 86 1.81 %

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

Hotel Net Operating Income (Loss) (2) 1,243 (3,074) 4,317 140.44 % — — — — — — 1,243 (3,074) 4,317 140.44 %

Net Operating Income (Loss) $ 453,502 $ 419,824 $ 33,678 8.02 % $ 2,258 $ — $ 2,379 $ (863) $ 590 $ 2,705 $ 458,729 $ 421,666 $ 37,063 8.79 %

3 unchanged sentences

(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.

Ta ble of Contents

Residential Net Operating Income for the three months ended September 30, 2021 and 2020 is comprised of Residential Revenue of $10,894 and $9,718 less Residential Expenses of $6,045 and $4,955, respectively.

Hotel Net Operating Income (Loss) for the three months ended September 30, 2021 and 2020 is comprised of Hotel Revenue of $5,189 and $90 less Hotel Expenses of $3,946 and $3,164, respectively, per the Consolidated Statements of Operations.

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.

Lease revenue from the Same Property Portfolio increased by approximately $21.8 million for the three months ended September 30, 2021 compared to 2020.

Approximately $7.5 million of the increase related to write-offs of accrued rent and accounts receivable balances that occurred during the three months ended September 30, 2020 and did not recur in 2021, for primarily retail tenants that either terminated their leases or we determined that the accrued rent and/or accounts receivable balances were no longer probable of collection.

Excluding the write-offs, the Same Property Portfolio increased by approximately $14.3 million primarily due to our average revenue per square foot increasing by approximately $2.77, resulting in an increase of approximately $24.1 million, partially offset by an approximately $9.8 million decrease due to our average occupancy decreasing from 92.4% to 91.0%.

We continue to evaluate the collectability of our accrued rent and accounts receivable balances related to lease revenue.

If our estimate of collectability differs from the cash received, then the timing and amount of our reported revenue could be impacted.

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.

Termination income decreased by approximately $0.8 million for the three months ended September 30, 2021 compared to 2020.

Termination income for the three months ended September 30, 2021 related to six tenants across the Same Property Portfolio and totaled approximately $1.9 million, which was primarily related to tenants that terminated leases early in New York City.

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

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.

Parking and other revenue increased by approximately $7.1 million for the three months ended September 30, 2021 compared to 2020.

Parking revenue and other revenue increased by approximately $6.3 million and $0.8 million, respectively.

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.

Real estate operating expenses from the Same Property Portfolio decreased by approximately $1.1 million, or 0.4%, for the three months ended September 30, 2021 compared to 2020, due primarily to a decrease in real estate taxes of approximately $5.9 million, or 4.4%, offset by an increase in utility and other real estate operating expenses of approximately $3.1 million, or 12.1%, and $1.7 million, or 1.9%, respectively.

The decrease in real estate taxes was primarily experienced in New York City.

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.

Ta ble of Contents

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.

The table below lists the properties acquired between July 1, 2020 and September 30, 2021.

Rental revenue and real estate operating expenses increased by approximately $2.8 million and $0.6 million, respectively, for the three months ended September 30, 2021 compared to 2020, as detailed below.

Square Feet Rental Revenue Real Estate Operating Expenses

1 unchanged sentence

(dollars in thousands)

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

153 & 211 Second Avenue June 2, 2021 136,882 $ 2,345 $ — $ 2,345 $ 248 $ — $ 248

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

Shady Grove Bio+Tech Campus August 2, 2021 233,452 495 — 495 334 — 334

370,334 $ 2,840 $ — $ 2,840 $ 582 $ — $ 582

(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.

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

Rental revenue and real estate operating expenses from our Properties Placed In-Service Portfolio increased by approximately $4.5 million and $1.3 million, respectively, for the three months ended September 30, 2021 compared to 2020, as detailed below.

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

1 unchanged sentence

(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 $ 3,909 $ 161 $ 3,748 $ 648 $ 307 $ 341

4 unchanged sentences

_______________

(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.

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

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.

Ta ble of Contents

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

Rental revenue and real estate operating expenses from our Properties in Development or Redevelopment Portfolio decreased by approximately $3.0 million and $0.9 million, respectively, for the three months ended September 30, 2021 compared to 2020.

Rental Revenue Real Estate Operating Expenses

7 unchanged sentences

_______________

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

(1) Real estate operating expenses for the three months ended September 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.

1 unchanged sentence

(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.”

We are demolishing the building and expect to redevelop the site at a future date.

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.

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

Ta ble of Contents

Net operating income for our residential same properties increased by approximately $0.3 million for the three months ended September 30, 2021 compared to 2020.

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

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

18 unchanged sentences

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

Hotel Net Operating 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.

Hotel Net Operating Income (Loss)

The Boston Marriott Cambridge hotel property operated at an approximately $1.2 million profit during the three months ended September 30, 2021.

This is approximately $4.3 million greater than the three months ended September 30, 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.

The hotel re-opened on October 2, 2020 and has operated at lower occupancy levels 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.

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

Occupancy 49.4 % — % 100.0 %

3 unchanged sentences

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.

Ta ble of Contents

Development and management services revenue decreased by approximately $1.2 million for the three months ended September 30, 2021 compared to 2020.

Development and management services revenue decreased by approximately $1.1 million and $0.1 million, respectively.

The decrease in development services revenue was primarily related to a decrease of approximately $0.6 million in development fees earned in New York City from an unconsolidated joint venture and a decrease of approximately $0.5 million in fees associated with tenant improvement projects earned from a building owned by a third-party in the Washington, DC region.

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

General and Administrative Expense

General and administrative expense increased by approximately $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.

General and administrative expense increased by approximately $6.7 million for the three months ended September 30, 2021 compared to 2020 primarily due to an increase in compensation expense of approximately $6.4 million, and an increase of approximately $0.3 million in other general and administrative expenses.

The increase in compensation expense was partially offset by a decrease of approximately $2.1 million in the value of our deferred compensation plan.

The increase in other general and administrative expenses was primarily related to an increase in meals and travel expense.

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

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

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.

Transaction costs increased by approximately $1.6 million for the three months ended September 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.

5 unchanged sentences

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,

Depreciation and amortization expense increased by approximately $13.0 million for the three months ended September 30, 2021 compared to 2020, as detailed below.

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

2021 2020 Change

4 unchanged sentences

Properties in Development or Redevelopment Portfolio 379 2,647 (2,268)

Properties Sold Portfolio 330 1,186 (856)

$ 179,412 $ 166,456 $ 12,956

_______________

(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.

Ta ble of Contents

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,

Depreciation and amortization expense increased by approximately $13.0 million for the three months ended September 30, 2021 compared to 2020, as detailed below.

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

2021 2020 Change

4 unchanged sentences

Properties in Development or Redevelopment Portfolio 379 2,647 (2,268)

Properties Sold Portfolio 330 1,186 (856)

$ 177,677 $ 164,706 $ 12,971

_______________

(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

2 unchanged sentences

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.

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

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

Ta ble of Contents

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.

Loss from Unconsolidated Joint Ventures

For the three months ended September 30, 2021 compared to 2020, loss from unconsolidated joint ventures decreased by approximately $1.3 million due to a $2.2 million increase in net income at our Colorado Center joint venture, primarily due to a write-off of lease revenue during the three months ended September 30, 2020.

This increase was partially offset by an approximately $1.1 million decrease in net income from our Dock 72 joint venture, primarily related to depreciation and amortization.

Gains (Losses) on Sales of Real Estate

Gains (losses) on sales of real estate increased by approximately $0.6 million for the three months ended September 30, 2021 compared to 2020.

During the three months ended September 30, 2021, we recognized a gain of approximately $0.3 million related to the sale of 6595 Springfield Center Drive (See Note 3 to the Consolidated Financial Statements).

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

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

Ta ble of Contents

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

Interest and other income (loss) increased by approximately $1.6 million for the three months ended September 30, 2021 compared to 2020, due to an approximately $1.9 million decrease in the allowance for current

expected credit losses, which results in higher income, partially offset by a decrease of approximately $0.3 million in interest income as a result of lower interest earned on our deposits.

On January 1, 2020, we adopted 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 September 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.

1 unchanged sentence

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.

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

During the three months ended September 30, 2021 and 2020, we recognized gains (losses) of approximately $(0.2) million and $1.9 million, respectively, on these investments.

By comparison, our general and administrative expense increased (decreased) by approximately $(0.2) million and $1.9 million during the three months ended September 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.

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

Interest expense decreased by approximately $5.2 million for the three months ended September 30, 2021 compared to 2020, as detailed below.

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

(in thousands)

1 unchanged sentence

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 2,876

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

Increase in interest due to finance leases for two in-service properties 447

Issuance of $850 million in aggregate principal of 2.450% senior notes due 2033 on September 29, 2021 116

Total increases to interest expense 8,930

1 unchanged sentence

Redemption of $850 million in aggregate principal of 4.125% senior notes due 2021 on February 14, 2021 (8,945)

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 (2,876)

Decrease in interest due to finance leases that are related to development properties (999)

Decrease in interest rates for the 2017 and 2021 Credit Facilities and the repayment of the unsecured term loan on March 16, 2021 (1) (981)

Other interest expense (excluding senior notes) (286)

6 unchanged sentences

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

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

Interest capitalized for the three months ended September 30, 2021 and 2020 was approximately $11.6 million and $13.5 million, respectively.

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

Ta ble of Contents

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.

We expect to recognize a loss from early extinguishment of debt related primarily to the payment of the redemption premium in the fourth quarter.

At September 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 September 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,

Noncontrolling interests in property partnerships increased by approximately $3.4 million for the three months ended September 30, 2021 compared to 2020, as detailed below.

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

2021 2020 Change

8 unchanged sentences

(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.

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

Approximately $0.2 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.

For BXP, noncontrolling interest—common units of the Operating Partnership increased by approximately $2.0 million for the three months ended September 30, 2021 compared to 2020 due primarily to an increase in allocable income.

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

13 unchanged sentences

• long-term secured and unsecured indebtedness (including unsecured exchangeable indebtedness);

Ta ble of Contents

• sales of real estate;

4 unchanged sentences

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

Ta ble of Contents

The following table presents information on properties under construction and redevelopment as of June 30, 2021 (dollars in thousands):

The following table presents information on properties under construction and redevelopment as of September 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 9/30/2021 (1)

2 unchanged sentences

100 Causeway Street (50% ownership) Third Quarter, 2022 Boston, MA 1 632,000 229,627 267,300 200,000 148,603 — 95 % (6)

7750 Wisconsin Avenue (Marriott International Headquarters) (50% ownership) Second Quarter, 2022 Bethesda, MD 1 734,000 165,438 198,900 127,500 99,426 5,388 100 %

7750 Wisconsin Avenue (Marriott International Headquarters) (50% ownership) First Quarter, 2022 Bethesda, MD 1 734,000 168,945 198,900 127,500 104,036 6,491 100 % (7)

Fourth Quarter, 2023 Reston, VA 2 1,062,000 507,726 715,300 — — 207,574 85 % (8)

7 unchanged sentences

Total Lab/Life Sciences Properties under Construction 3 920,000 106,469 558,100 — — 451,631 21 %

The Prudential Center Observatory (Redevelopment) N/A Boston, MA — 59,000 31,409 182,300 — — 150,891 N/A

View Boston Observatory at The Prudential Center (Redevelopment) N/A Boston, MA — 59,000 45,158 182,300 — — 137,142 N/A

Total Properties under Construction 9 4,307,000 $ 1,551,038 $ 2,696,400 $ 327,500 $ 252,639 $ 1,084,225 72 % (10)

(1) Represents our share.

(2) Investment to Date, Estimated Total Investment and Estimated Future Equity Requirement all include our share of acquisition expenses, as applicable, and reflect our share of the estimated net revenue/expenses that we expect to incur prior to stabilization of the project, including any amounts actually received or paid through June 30, 2021.

(3) Includes approximately $77.8 million of unpaid but accrued construction costs and leasing commissions.

(4) Excludes approximately $77.8 million of unpaid but accrued construction costs and leasing commissions.

(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.

(5) Represents percentage leased as of November 2, 2021, including leases with future commencement dates.

(6) This property was 79% placed in-service as of September 30, 2021.

(7) On October 29, 2021, this project was fully placed in-service (See Note 15 to the Consolidated Financial Statements).

(8) On October 19, 2021, approximately 285,000 square feet of the project was placed in-service.

(9) 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.

Ta ble of Contents

(10) Percentage leased excludes View Boston Observatory at The Prudential Center (redevelopment) at 800 Boylston Street - The Prudential Center.

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

3 unchanged sentences

Material adverse changes in one or more sources of capital, whether due to the impacts of the COVID-19 pandemic or otherwise, may adversely affect our net cash flows.

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.

Leasing activity and revenue from transient parking and our hotel improved during the third quarter of 2021.

We signed approximately 1.4 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 third quarter.

Our parking and hotel revenue also increased approximately 36% compared to the second quarter of 2021.

We expect parking revenue to continue to improve gradually as the return to in-person work accelerates and hotel occupancy to remain low until the demand for business and leisure travel returns to historical levels .

Our primary uses of capital over the next twelve months will be the completion of our current and committed development and redevelopment projects, servicing the principal and interest payments on our outstanding indebtedness and satisfying our REIT distribution requirements.

As of September 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 $1.1 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.

During the third quarter of 2021, BPLP completed a public “green bond” offering of $850.0 million of 2.450% unsecured senior notes due October 2033.

The offering marked BPLP’s fourth green bond offering and represented the lowest coupon ever issued by BPLP.

The net proceeds from the offering along with available cash and borrowings under BPLP’s Revolving Facility were used to fully redeem the $1.0 billion aggregate principal amount of 3.85% unsecured senior notes that were scheduled to mature in February 2023.

The early repayment will result in a loss from early extinguishment of debt of approximately $43.9 million in the fourth quarter of 2021.

This amount includes approximately $1.0 million of unamortized financing and other costs.

We have a SCP that provides us the opportunity to partner with large institutional investors and capitalize our investment opportunities partially through private equity.

The SCP enhances our access to capital and investment capacity and further enhances our returns through fees paid to us, and in certain partnerships, a greater share of income upon achieving certain success criteria.

These large financial partners include some of the world’s largest sovereign wealth funds and pension plans.

Our use of the SCP is consistent with our ongoing strategy to create value through opportunistic investments in high-quality office properties in markets with the strongest economic growth over time while maintaining a strong balance sheet and modest leverage.

As part of the broader SCP, we announced in July 2021 the formation of an investment program with two large partners committing a targeted equity investment of $1.0 billion, including $250 million from us.

Under this agreement, we will provide these partners, for up to two years, exclusive first offers to form joint ventures with us to invest in assets that meet the SCP’s target criteria.

All investments are discretionary to each partner.

For example, during the third quarter of 2021, we partnered with two SCP partners to acquire Safeco Plaza, a 50-story, approximately 765,000 net rentable square foot, LEED-Platinum certified, Class A office property located in Seattle, Washington.

After mortgage financing, the partners contributed approximately $215 million to fund the acquisition.

Each partner owns approximately a one-third ownership interest in the property (See Note 5 to the Consolidated Financial Statements).

In addition, we expect to acquire 360 Park Avenue South, located in New York, New York, for a purchase price of approximately $300 million in the fourth quarter of 2021.

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.

Ta ble of Contents

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.

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 expect to fund future investment in this asset through a joint venture with one or more financial partners from the SC Program.

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

On October 25, 2021, we completed the sale of our 181, 191 and 201 Spring Street properties, located in Lexington, Massachusetts, for a gross sales price of $191.5 million.

We have no debt maturities during the remainder of 2021.

We have one loan maturing in 2022 that has an outstanding principal balance of approximately $618.7 million (of which our share is approximately $340.3 million).

The loan is secured by our 601 Lexington Avenue property in New York.

Our unconsolidated joint ventures have two loans maturing in 2022, of which our share of outstanding principal is approximately $147.0 million.

We are currently in the market to refinance the 601 Lexington Avenue mortgage.

Due to the increase in cash flow from this asset, due in part to the redevelopment completed earlier in 2021, we anticipate increasing the principal amount of the mortgage and reducing the interest rate as part of the refinancing.

There can be no assurance that this refinancing 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 $1.2 billion available under the 2021 Credit Facility and available cash of approximately $362.7 million (of which approximately $122.2 million is attributable to our consolidated joint venture partners), as of November 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.

5 unchanged sentences

Our policy is for BXP to distribute at least 100% of its taxable income, including capital gains, to avoid paying federal tax.

Common and LTIP unitholders of limited partnership interest in BPLP, received the same total distribution per unit.

BXP’s Board of Directors will continue to evaluate BXP’s dividend rate in light of our actual and projected taxable income (including gains on sales), liquidity requirements and other circumstances, including the impact of COVID-19, and there can be no assurance that the future dividends declared by BXP’s Board of Directors will not differ materially from the current quarterly dividend amount.

6 unchanged sentences

The following summary discussion of our cash flows is based on the Consolidated Statements of Cash Flows and is not meant to be an all-inclusive discussion of the changes in our cash flows for the periods presented below.

Ta ble of Contents

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.

Cash and cash equivalents and cash held in escrows aggregated approximately $1.1 billion and $1.8 billion at September 30, 2021 and 2020, respectively, representing a decrease of approximately $0.7 billion.

The following table sets forth changes in cash flows:

Six months ended June 30,

Nine months ended September 30,

2021 2020 Increase (Decrease)

4 unchanged sentences

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 June 30, 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 7.5 years as of September 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.

4 unchanged sentences

Cash is used in investing activities to fund acquisitions, development, net investments in unconsolidated joint ventures and maintenance and repositioning capital expenditures.

We selectively invest in new projects that enable us to take advantage of our development, leasing, financing and property management skills and invest in existing buildings to enhance or maintain their market position.

Cash used in investing activities for the six months ended June 30, 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,

Cash used in investing activities for the nine months ended September 30, 2021 consisted primarily of acquisitions of real estate, 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 nine months ended September 30, 2020 consisted primarily of acquisitions of real estate, development projects, building and tenant improvements and capital contributions to unconsolidated joint ventures, partially offset by the proceeds from the sale of real estate and capital distribution from unconsolidated joint ventures, as detailed below:

Nine months ended September 30,

(in thousands)

11 unchanged sentences

Cash used in investing activities changed primarily due to the following:

(1) On August 2, 2021, we acquired Shady Grove Bio+Tech Campus in Rockville, Maryland, for a purchase price, including transaction costs, of approximately $118.5 million in cash.

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.

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.

Ta ble of Contents

On July 31, 2020, we acquired an undivided ownership interest in real property at 759 Harrison Street located in San Francisco, California for a purchase price totaling approximately $2.3 million.

On 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 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.

(2) Construction in progress for the nine months ended September 30, 2021 includes ongoing expenditures associated with One Five Nine East 53rd Street , which was completed and fully placed in-service during the nine months ended September 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, View Boston Observatory at The Prudential Center and 880 Winter Street.

Construction in progress for the nine months ended September 30, 2020 includes ongoing expenditures associated with 17Fifty Presidents Street, 20 CityPoint and The Skylyne, which were partially or fully placed in-service during the nine months ended September 30, 2020.

In addition, we incurred costs associated with our continued development/redevelopment o f One Five Nine East 53rd Street, Reston Next , 2100 Pennsylvania Avenue, 200 West Street 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 sales price of approximately $253.7 million.

Net cash proceeds totaled approximately $246.6 million, resulting in a gain on sale of real estate totaling approximately $203.6 million for BXP and approximately $207.0 million for BPLP.

2 unchanged sentences

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.

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

Net cash proceeds totaled approximately $254.0 million, resulting in a gain on sale of real estate totaling approximately $192.3 million for BXP and approximately $197.1 million for BPLP.

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

(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.

(4) Capital contributions to unconsolidated joint ventures for the nine months ended September 30, 2021 consisted primarily of cash contributions of approximately $72.6 million and $11.4 million to our Safeco Plaza and Santa Monica Business Park joint ventures, respectively.

On September 1, 2021, we entered into a new joint venture for Safeco Plaza located in Seattle, Washington (See Note 5 to the Consolidated Financial Statements).

Capital contributions to unconsolidated joint ventures for the nine months ended September 30, 2020 consisted primarily of cash contributions of approximately $75.0 million, $39.0 million, $27.2 million and $7.5 million to our Platform 16, 3 Hudson Boulevard, Beach Cities Media Center and Metropolitan Square joint ventures, respectively.

(5) Capital distributions from unconsolidated joint ventures for the nine months ended September 30, 2020 consisted of cash distributions totaling (1) approximately $22.5 million from our Metropolitan Square joint venture resulting from the excess proceeds from the refinancing of the mortgage loan on the property, (2) approximately $17.9 million from our Annapolis Junction joint venture resulting from available cash and the

net proceeds from the sale of Annapolis Junction Building Eight and two land parcels after the pay down of the mortgage loan and (3) approximately $14.0 million from our Colorado Center joint venture resulting from the excess proceeds from the mortgage financing on the property that occurred during 2017, which proceeds were released from lender reserves.

(6) 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.

3 unchanged sentences

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.

Cash used in financing activities for the nine months ended September 30, 2021 totaled approximately $425.9 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 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.

These decreases were partially offset by the proceeds from the issuance by BPLP of (1) $850.0 million in aggregate principal amount of its 2.550% senior unsecured notes due 2032 and (2) $850.0 million in aggregate principal amount of its 2.450% senior unsecured notes due 2033.

Future debt payments are discussed below under the heading “Capitalization—Debt Financing .”

Ta ble of Contents

Capitalization

The following table presents Consolidated Market Capitalization and BXP’s Share of Market Capitalization, as well as the corresponding ratios of Consolidated Debt to Consolidated Market Capitalization and BXP’s Share of Debt to BXP’s Share of Market Capitalization (in thousands except for percentages):

June 30, 2021

September 30, 2021

Shares / Units Outstanding Common Stock Equivalent Equivalent Value (1)

11 unchanged sentences

_______________

(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.

(1) Values are based on the closing price per share of BXP’s Common Stock on the New York Stock Exchange on September 30, 2021 of $108.35.

(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.

5 unchanged sentences

(1) our consolidated debt;

(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:

(2) the product of (x) the closing price per share of BXP common stock on September 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,

3 unchanged sentences

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 June 30, 2021.

Ta ble of Contents

Because their three-year performance periods have not yet ended, 2019 - 2021 MYLTIP Units are not included in this calculation as of September 30, 2021.

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.

9 unchanged sentences

Investors should understand that these ratios are, in part, a function of the market price of the common stock of BXP and as such will fluctuate with changes in such price, and they do not necessarily reflect our capacity to incur additional debt to finance our activities or our ability to manage our existing debt obligations.

However, for a company like BXP, whose assets are primarily income-producing real estate, these ratios may provide investors with an alternate indication of leverage, so long as they are evaluated along with the ratio of indebtedness to other measures of asset value used by financial analysts and other financial ratios, as well as the various components of our outstanding indebtedness.

For a discussion of our unconsolidated joint venture indebtedness, see “ Liquidity and Capital Resources—Capitalization—Off-Balance Sheet Arrangements—Joint Venture Indebtedness ” within “ Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations ” and for a discussion of our consolidated joint venture indebtedness see “Liquidity and Capital Resources—Capitalization—Mortgage Notes Payable, Net ” within “ Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations .”

value used by financial analysts and other financial ratios, as well as the various components of our outstanding indebtedness.

For a discussion of our unconsolidated joint venture indebtedness, see “ Liquidity and Capital Resources—Capitalization—Off-Balance Sheet Arrangements—Joint Venture Indebtedness ” within “ Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations ” and for a discussion of our consolidated joint venture indebtedness see “Liquidity and Capital Resources—Capitalization—Mortgage Notes Payable ” within “ Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations .”

Debt Financing

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.

The table below summarizes the aggregate carrying value of our mortgage notes payable and BPLP’s unsecured senior notes, line of credit and term loan, as well as Consolidated Debt Financing Statistics at June 30, 2021 and June 30, 2020.

Ta ble of Contents

As of September 30, 2021, we had approximately $13.4 billion of outstanding consolidated indebtedness, representing approximately 41.55% of our Consolidated Market Capitalization as calculated above consisting of approximately (1) $10.5 billion (net of discount and deferred financing fees) in publicly traded unsecured senior notes having a GAAP weighted-average interest rate of 3.48% per annum and maturities in 2023 through 2033 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 4.6 years.

September 30,

(dollars in thousands)

8 unchanged sentences

BXP’s Share of Debt $ 13,477,453 $ 12,966,235

September 30,

Consolidated Debt Financing Statistics:

25 unchanged sentences

Under the 2021 Credit Facility, BPLP may increase the total commitment by up to $500.0 million by

Ta ble of Contents

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.

As of September 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 November 2, 2021, BPLP had $310.0 million of borrowings under its 2021 Credit Facility and outstanding letters of credit totaling approximately $6.3 million, with the ability to borrow approximately $1.2 billion.

Unsecured Senior Notes

For a description of BPLP’s outstanding unsecured senior notes as of June 30, 2021, see Note 7 to the Consolidated Financial Statements.

For a description of BPLP’s outstanding unsecured senior notes as of September 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.

6 unchanged sentences

The aggregate net proceeds from the offering were approximately $839.2 million after deducting underwriting discounts and transaction expenses.

On September 29, 2021, BPLP completed a public offering of $850.0 million in aggregate principal amount of its 2.450% unsecured senior notes due 2033.

The notes were priced at 99.959% of the principal amount to yield an effective rate (including financing fees) of approximately 2.524% per annum to maturity.

The notes will mature on October 1, 2033, unless earlier redeemed.

The aggregate net proceeds from the offering were approximately $842.5 million after deducting underwriting discounts and transaction expenses.

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

At June 30, 2021, BPLP was in compliance with each of these financial restrictions and requirements.

At September 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 June 30, 2021:

The following represents the outstanding principal balances due under the mortgage notes payable at September 30, 2021:

Properties Stated Interest Rate GAAP Interest Rate (1) Stated Principal Amount Deferred Financing Costs, Net Carrying Amount Carrying Amount (Partners ’ Share)

12 unchanged sentences

(4) In connection with the refinancing of the loan, we guaranteed the consolidated entity’s obligation to fund various reserves for tenant improvement costs and allowances, leasing commissions and free rent obligations in lieu of cash deposits.

As of June 30, 2021, the maximum funding obligation under the guarantee was approximately $21.5 million.

As of September 30, 2021, the maximum funding obligation under the guarantee was approximately $20.3 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.

Ta ble of Contents

Off-Balance Sheet Arrangements—Joint Venture Indebtedness

We have investments in unconsolidated joint ventures with our effective ownership interests ranging from 20% to 55%.

Thirteen of these ventures have mortgage indebtedness.

Fourteen of these ventures have mortgage indebtedness.

We exercise significant influence over, but do not control, these entities.

1 unchanged sentence

See also Note 5 to the Consolidated Financial Statements.

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.

At September 30, 2021, the aggregate carrying amount of debt, including both our and our partners’ share, incurred by these ventures was approximately $3.0 billion (of which our proportionate share is approximately $1.3 billion).

The table below summarizes the outstanding debt of these joint venture properties at September 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.

17 unchanged sentences

50.00 % 1.34 % 1.88 % 208,071 (2,204) 205,867 102,933 (2)(9) April 26, 2023

Safeco Plaza 33.67 % 2.35 % 2.50 % 250,000 (1,798) 248,202 83,570 (2)(10) September 1, 2026

500 North Capitol Street, NW

17 unchanged sentences

On September 16, 2019, the joint venture paid down the construction loan principal balance in the amount of approximately $28.8 million, reducing the borrowing capacity to $175.8 million.

The construction financing bears interest at a variable rate equal to LIBOR plus 2.25% per annum and matures on September 6, 2021, with two, one-year extension options, subject to certain conditions.

The construction financing bears interest at a variable rate equal to LIBOR plus 2.25% per annum and matures on September 6, 2023.

(7) The construction financing has a borrowing capacity of $180.0 million.

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.

Ta ble of Contents

(8) The construction financing has a borrowing capacity of $400.0 million.

2 unchanged sentences

The construction financing bears interest at a variable rate equal to LIBOR plus 1.25% per annum and matures on April 26, 2023, with two, one-year extension options, subject to certain conditions.

(10) The loan bears interest at a variable rate equal to the greater of (x) 2.35% or (y) LIBOR plus 2.20% per annum and matures on September 1, 2026.

(11) We provided $80.0 million of mortgage financing to the joint venture.

1 unchanged sentence

The loan has been reflected as Related Party Note Receivable, Net on our Consolidated Balance Sheets.

As of September 30, 2021, the loan has approximately $13.1 million of accrued interest due at the maturity date.

(12) The loan bears interest at a variable rate equal to (1) the greater of (x) LIBOR or (y) 0.65%, plus (2) 4.75% per annum and matures on July 7, 2022 with two, one-year extension options, subject to certain conditions.

11 unchanged sentences

FFO is a non-GAAP financial measure.

We believe the presentation of FFO, combined with the presentation of required GAAP financial measures, improves the understanding of operating results of REITs among the investing public and helps make comparisons of REIT operating results more meaningful.

of REIT operating results more meaningful.

Management generally considers FFO to be useful measures for understanding and comparing our operating results because, by excluding gains and losses related to sales of previously depreciated operating real estate assets, impairment losses and real estate asset depreciation and amortization (which can differ across owners of similar assets in similar condition based on historical cost accounting and useful life estimates), FFO can help investors compare the operating performance of a company’s real estate across reporting periods and to the operating performance of other companies.

4 unchanged sentences

common shareholders or net income attributable to Boston Properties Limited Partnership common unitholders (determined in accordance with GAAP) or any other GAAP financial measures and should only be considered together with and as a supplement to our financial information prepared in accordance with GAAP.

Ta ble of Contents

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

3 unchanged sentences

common shareholders to FFO attributable to Boston Properties, Inc.

common shareholders for the three months ended June 30, 2021 and 2020:

Three months ended June 30,

common shareholders for the three months ended September 30, 2021 and 2020:

Three months ended September 30,

(in thousands)

6 unchanged sentences

Noncontrolling interests in property partnerships

18,971 15,561

Net income 139,250 118,060

5 unchanged sentences

Corporate-related depreciation and amortization

Gain on sale of investment included within income (loss) from unconsolidated joint ventures — 5,946

Gains on sales of real estate 7,756 203,767

Gains (losses) on sales of real estate 348 (209)

Noncontrolling interests in property partnerships

18,971 15,561

Preferred dividends — 2,625

9 unchanged sentences

Weighted average shares outstanding—basic 156,183 155,645

Ta ble of Contents

Reconciliation to Diluted Funds from Operations:

Three months ended June 30,

Three months ended September 30,

(Numerator) Shares/Units

12 unchanged sentences

_______________

(1) BXP’s share of diluted Funds from Operations was 90.18% and 90.00% for the three months ended June 30, 2021 and 2020, respectively.

(1) BXP’s share of diluted Funds from Operations was 90.20% and 90.14% for the three months ended September 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 June 30, 2021 and 2020:

Three months ended June 30,

Three months ended September 30,

(in thousands)

7 unchanged sentences

Corporate-related depreciation and amortization (443) (444)

Gain on sale of investment included within (loss) income from unconsolidated joint ventures — 5,946

Gains on sales of real estate 7,756 207,241

Gains (losses) on sales of real estate 348 (209)

Noncontrolling interests in property partnerships 18,971 15,561

4 unchanged sentences

(1) Our calculation includes OP Units and vested LTIP Units (including vested 2012 OPP Units and vested 2013 - 2018 MYLTIP Units).

Ta ble of Contents

Reconciliation to Diluted Funds from Operations:

Three months ended June 30,

Three months ended September 30,

(in thousands)

12 unchanged sentences

Contract terms are generally between three and five years.

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.

During the three months ended September 30, 2021, we paid approximately $67.8 million to fund tenant-related obligations, including tenant improvements and leasing commissions.

In addition, during the three months ended September 30, 2021, we and our unconsolidated joint venture partners incurred approximately $102.9 million of new tenant-related obligations associated with approximately 1.4 million square feet of second generation leases, or approximately $73 per square foot.

We did not sign any first generation leases during the three months ended September 30, 2021.

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.”

Ta ble of Contents

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