What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-05-03 compared with 2022-11-04 · 419 added, 871 removed, 608 unchanged (68% of the section changed)

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This Quarterly Report on Form 10-Q, including the documents incorporated by reference, contain forward-looking statements within the meaning of the federal securities laws, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.

We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and are including this statement for purposes of complying with those safe harbor provisions, in each case, to the extent applicable.

We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and we are including this statement for purposes of complying with those safe harbor provisions, in each case, to the extent applicable.

The forward-looking statements are contained principally, but not only, under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” We caution investors that forward-looking statements are based on current beliefs, expectations of future events and assumptions made by, and information currently available to, our management.

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These statements are subject to risks, uncertainties and assumptions and are not guarantees of future performance or occurrences, which may be affected by known and unknown risks, trends, uncertainties and factors that are, in some cases, beyond our control.

Should one or more of these known or unknown risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those expressed or implied by the forward-looking statements.

If one or more of these known or unknown risks or uncertainties materialize, or if underlying assumptions prove incorrect, actual results may vary materially from those expressed or implied by the forward-looking statements.

We caution you that, while forward-looking statements reflect our good-faith beliefs when we make them, they are not guarantees of future performance or occurrences and are impacted by actual events when they occur after we make such statements.

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.

The most significant factors that may cause actual results to differ materially from those expressed or implied by the forward-looking statements include the impact on global and U.S.

economic conditions due to the ongoing COVID-19 pandemic, the ongoing war in Ukraine, continuing inflation, increasing interest rates, and supply-chain disruptions, as well as the risks described in (i) our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 including those described under the caption “Risk Factors,” (ii) our Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2022 including those described under the caption “Risk Factors,” (iii) our subsequent filings under the Exchange Act and (iv) the risk factors set forth in this Form 10-Q in Part II, Item 1A, if any.

The most significant factors that may cause actual results to differ materially from those expressed or implied by the forward-looking statements include the risks and uncertainties related to the impact of changes in general economic and capital market conditions, including continued inflation, increasing interest rates, supply chain disruptions, labor market disruptions, dislocation and volatility in capital markets, and potential longer-term changes in consumer and client behavior resulting from the severity and duration of any downturn in the U.S.

or global economy, sustained changes in client preferences and space utilization, as well as 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, 2022 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, if any.

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:

• the risks and uncertainties related to the impact of (1) the COVID-19 global pandemic, including the emergence of additional variants, the effectiveness, availability and distribution of vaccines, including their efficacy against new variant strains and the willingness of individuals to be vaccinated, (2) the impact of geopolitical conflicts, including the war in Ukraine, and (3) the severity and duration of the indirect economic impacts of the foregoing, such as recession, supply chain disruptions, labor market disruptions, continued inflation, increasing interest rates, dislocation and volatility in capital markets, job losses, potential longer-term changes in consumer and client behavior, as well as possible future governmental responses;

• volatile or adverse global economic and geopolitical conditions, health crises and dislocations in the credit markets could adversely affect our access to cost-effective capital and have a resulting material adverse effect on our business opportunities, results of operations and financial condition;

• risks associated with downturns in the national and local economies, continued inflation, increasing interest rates, and volatility in the securities markets;

• general risks affecting the real estate industry (including, without limitation, the inability to enter into or renew leases, client space utilization, dependence on clients’ financial condition, and competition from other developers, owners and operators of real estate);

• volatile or adverse global economic and geopolitical conditions, health crises, dislocations in the credit markets and potential financial contagion from recent or future failures of banking institutions could adversely affect economic conditions and/or restrict our access to cost-effective capital, which could have a material adverse effect on our business opportunities, results of operations and financial condition;

• general risks affecting the real estate industry (including, without limitation, the inability to enter into or renew leases, changes in client preferences and space utilization, dependence on clients’ financial condition, and competition from other developers, owners and operators of real estate);

• the impact of geopolitical conflicts, including the ongoing war in Ukraine;

• the immediate and long-term impact of the outbreak of a highly infectious or contagious disease, such as COVID-19, on our and our clients’ financial condition, results of operations and cash flows (including the impact of actions taken to contain the outbreak or mitigate its impact, the direct and indirect economic effects of the outbreak and containment measures on our clients, and the ability of our clients to successfully operate their businesses);

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

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

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

• risks and uncertainties affecting property development and construction (including, without limitation, continued inflation, supply chain disruptions, labor shortages, construction delays,

increased construction costs, cost overruns, inability to obtain necessary permits, client accounting considerations that may result in negotiated lease provisions that limit a client’s liability during construction, and public opposition to such activities);

• risks associated with the availability and terms of financing and the use of debt to fund acquisitions and developments or refinance existing indebtedness, including the impact of higher interest rates on the cost and/or availability of financing;

• risks associated with forward interest rate contracts and the effectiveness of such arrangements;

• risks associated with forward interest rate contracts and derivatives and the effectiveness of such arrangements;

• risks associated with actual or threatened terrorist attacks;

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• potential liability for uninsured losses and environmental contamination;

• risks associated with the physical effects of climate change;

• risks associated with climate change and severe weather events, as well as the regulatory efforts intended to reduce the effects of climate change;

• risks associated with security breaches through cyber attacks, cyber intrusions or otherwise, as well as other significant disruptions of our information technology (IT) networks and related systems, which support our operations and our buildings;

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Other sections of this report may include additional factors that could adversely affect our business and financial performance.

Moreover, we operate in a very competitive and rapidly changing environment, particularly in light of the circumstances relating to COVID-19 and the war in Ukraine.

Moreover, we operate in a very competitive and rapidly changing environment.

New risk factors emerge from time to time and it is not possible for management to predict all risk factors, nor can we assess the impact of all risk factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

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

BXP is one of the largest publicly traded office real estate investment trusts (REITs) (based on total market capitalization as of September 30, 2022) in the United States that develops, owns, and manages primarily premier workplaces.

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

BXP is one of the largest publicly traded office real estate investment trusts (REITs) (based on total market capitalization as of March 31, 2023) in the U.S.

that develops, owns, and manages primarily premier workplaces.

Our properties are concentrated in six dynamic gateway markets in the U.S.

- 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 premier workplaces to our clients.

When making leasing decisions, we consider, among other things, the creditworthiness of the client 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 other client’s expansion rights and general economic factors.

Our core strategy has always been to develop, acquire and manage highest quality premier workplaces in gateway markets with high barriers-to-entry and attractive demand drivers, and to focus on executing long-term leases with financially strong clients.

Our client base is diverse across market sectors and the weighted-average lease term for our in-place leases, excluding residential units, was approximately 7.8 years, as of September 30, 2022, including leases signed by our unconsolidated joint ventures.

The weighted-average lease term for our 20 largest clients, based on leased square footage, was approximately 11.0 years as of September 30, 2022.

When making leasing decisions, we consider, among other things, the creditworthiness of the client 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 amount of any security deposit or letter of credit posted by the client, 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 other clients’ expansion rights and general economic factors.

Our core strategy has always been to develop, acquire and manage premier workplaces in gateway markets with high barriers-to-entry and attractive demand drivers, and to focus on executing long-term leases with financially strong clients.

Our client base is diverse across market sectors.

As of March 31, 2023, the weighted-average lease term for our in-place leases based on square feet, including those signed by our unconsolidated joint ventures but excluding residential units, was approximately 7.6 years.

The weighted-average lease term for our 20 largest clients, based on leased square footage, was approximately 10.4 years as of March 31, 2023.

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

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• our track record of developing and operating premier workplaces in a sustainable and responsible manner;

• our reputation as a premier developer, owner and manager of the highest quality premier workplaces in our markets;

• our reputation as a high-quality developer, owner and manager of premier workplaces in our markets;

• our financial strength and our ability to maintain high building standards;

• our relationships with local brokers.

Over the last quarter, inflation has remained resilient.

Although the U.S.

GDP returned to growth in the third quarter after two consecutive quarterly contractions, consumer spending still slowed as inflation shrank buying power.

The Federal Reserve remains committed to taming the fastest rising inflation in four decades by aggressively raising interest rates and are expected to continue to do so.

This evolving operating environment impacts our operating activities as:

• business leaders may generally become more reticent to make large capital allocation decisions, such as entry into a new lease, given the uncertain economic environment;

Although we are not in a recession (traditionally defined as negative GDP growth), the effects of a cooling economy are evident.

According to FactSet, the S&P 500 is reporting a year-over-year decline in earnings of more than 3% for the first quarter of 2023, which would mark the second straight quarter the index has reported a decline in earnings.

With slowing growth, some companies are announcing corporate layoffs and reducing headcount, focusing on cost reductions and taking more time to make leasing decisions, leasing less space, offering space they have for sublease or taking a combination of one or more of the foregoing actions.

With more challenging economic conditions, the return-to-office trend continues to improve.

Companies in a variety of industries, including major technology companies, are increasing the days that workers on hybrid schedules are required to come into the office and reinforcing the importance of in-person interactions as a key contributor to overall success.

The premier workplace segment continues to outperform the broader office market, in both vacancy and net absorption, as companies see an opportunity to upgrade their workplaces as a method of attracting their workforces back to the office and recruiting new employees.

Throughout our portfolio, there has been a slow but steady increase in the number of unique occupants that are in our offices each month.

The evolving operating environment impacts various aspects of our operating activities as:

• labor market conditions shift, resulting in increasing employer demands for mandatory in-person workdays;

• volatility in the capital markets, on the heels of recent bank failures, have driven companies to be more reticent in capital outlays, including capital required for leasing new space;

• our capital costs have increased due to higher interest rates and credit spreads, and private market debt financing, both for construction and existing assets, is significantly more challenging to arrange;

• construction costs have increased for new development and, although the costs for our active development pipeline are, at this stage, relatively fixed, the cost of potential future developments continues to increase.

In light of the foregoing, we believe we are positioning ourself for success, notwithstanding the uncertain trajectory of the U.S.

and global economy, by managing our leverage while continuing to selectively invest (including both acquisitions and developments) in premier workplace opportunities.

We remain focused on the following priorities:

• continuing to embrace our leadership position in the premier workplace industry and leveraging our strength in portfolio quality, client relationships, development skills, market penetration and sustainability to profitably build market share.

Premier workplaces, the preferred choice for our current and prospective clients, are gaining market share and demonstrating the highest occupancy, net absorption levels and rental rates in the central business district (“CBD”) markets where we operate;

In light of the foregoing, we believe we are positioning ourselves for success, notwithstanding the uncertain trajectory of the U.S.

and global economies, by managing our leverage while continuing to selectively invest (including through both acquisitions and developments) in premier workplace opportunities.

We remain focused on the following strategies:

• continuing to embrace our leadership position in the premier workplace segment and leveraging our strength in portfolio quality, client relationships, development skills, market penetration and sustainability to profitably build market share.

Premier workplaces, the preferred choice for our current and prospective clients, are gaining market share compared to general office space and demonstrating the highest

occupancy, net absorption levels and rental rates in the central business districts (“CBDs”) in markets where we operate;

• leasing available space in our in-service and development properties, as well as proactively focusing on future lease expirations;

• completing the construction and leasing of our development properties;

• pursuing attractive asset class adjacencies where we have a track record of success, such as life sciences and multi-family development;

• continuing to raise the bar in the quality of our portfolio and actively recycle capital by selling assets, subject to market condition;

• pursuing attractive asset class adjacencies where we have a track record of success, such as life sciences and residential development;

• continuing to raise the bar in the quality of our portfolio and actively recycling capital by selling assets, subject to market conditions, which have been, and may continue to be, negatively impacted by a slowdown in the capital markets and the limited availability of private market debt financing;

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

• prioritizing risk management by actively managing liquidity, investing more extensively with joint venture partners to manage our debt levels, and being highly selective in new investment commitments.

The following is an overview of leasing and investment activity in the third quarter of 2022.

The following is an overview of leasing and investment activity in the first quarter of 2023.

Leasing Activity and Occupancy

In the third quarter of 2022, we signed approximately 1.4 million square feet of new leases and renewals, our strongest third quarter leasing volume since 2019.

These leases have a weighted-average lease term of approximately 9.8 years, indicating that many new and existing clients continue to commit to the long-term use of space and view our properties as their preferred choice for a premier workplace environment.

The overall occupancy of our in-service office and retail properties was 88.9% at September 30, 2022, a decrease of 60 basis points from June 30, 2022.

We experienced a slight decline in occupancy as we wait for recently signed leases to commence.

We also removed three assets from our in-service portfolio:

601 Massachusetts Avenue, which was approximately 98% leased prior to its sale, 140 Kendrick Street Building A, which is now under redevelopment and 100% pre-leased, and 760 Boylston Street which is in redevelopment and 100% pre-leased.

In the first quarter of 2023, we signed approximately 660,500 square feet of leases with a weighted-average lease term of approximately 7.7 years.

The overall occupancy of our in-service premier workplace and retail properties was 88.6% at March 31, 2023, remaining flat from December 31, 2022.

We define occupancy as space with signed leases for which revenue recognition has commenced in accordance with GAAP.

Inclusive of vacant space with signed leases that have not yet commenced in accordance with GAAP, our in-service premier workplace and retail properties would be approximately 91.0% leased at March 31, 2023.

The macroeconomic environment has resulted in softening demand in all of our markets.

While tours continue and leases under negotiation move forward, there is less urgency from clients to make new commitments.

While property tours continue and leases under negotiation move forward, there is less urgency from clients to make new commitments.

Potential clients touring space acknowledge that economic uncertainty is impacting space decisions.

As we consider our expectations for leasing in 2023, we are factoring in the impacts of a slower economy, softer business performance, and reduced demand for space.

We expect the bulk of our leasing will continue to come from small and medium-sized professional and financial services firms.

We have factored in the impacts of a slower economy, softer business performance, and reduced demand for space into our leasing expectations for the remainder of 2023.

We expect the bulk of our leasing in 2023 will continue to come from small- and medium-sized professional and financial services firms.

Investment Activity

We remain committed to developing and acquiring assets to enhance our long-term growth and to meet client demand for high-quality office, residential, and life sciences space.

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 workplaces in each of our chosen markets.

Consistent with this strategy, in September 2022, we further expanded our life sciences portfolio in Kendall Square in Cambridge, Massachusetts by completing the acquisition of 125 Broadway for a purchase price, including transaction costs, of approximately $592.4 million.

125 Broadway is a six-story, 271,000 square foot laboratory/life sciences property adjacent to our existing 2.2 million square foot portfolio in the heart of Kendall Square.

Kendall Square is considered to be among the largest and most important cluster of life sciences companies and research space in the United States.

This property is 100% leased.

In October of 2022, we entered into an agreement to acquire an approximate 27% interest in the joint venture that owns 200 Fifth Avenue, a 14-story, approximately 870,000 square-foot, LEED Gold certified, premier workplace located in New York City that is approximately 93% leased.

The acquisition of the joint venture interest will be our second investment in the vibrant Midtown South neighborhood in the past twelve months.

We will serve as the managing member and provide customary leasing and property management services for the joint venture.

We expect to close the acquisition in the fourth quarter of 2022 for a gross purchase price of approximately $280.2 million, which includes $120.1 million of cash and our pro rata share of the outstanding loan secured by the property of $160.1 million.

The mortgage loan bears interest at 4.34% per annum and matures in November 2028.

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

As of September 30, 2022, our development/redevelopment pipeline consists of 14 properties that, when completed, we expect will total approximately 4.4 million square feet.

Our share of the estimated total cost for these projects is approximately $2.7 billion, of which approximately $948.2 million remained to be invested.

The total development pipeline, inclusive of both office and laboratory/life sciences developments, but excluding the View Boston Observatory at the Prudential Center and Reston Next Residential, is 52% pre-leased.

Additional new acquisition opportunities will likely increase in this environment, and we remain committed to developing and acquiring assets to enhance our long-term growth and to meet client demand solely focused on premier workplaces, life sciences, and residential development.

Consistent with this strategy, in the first quarter of 2023, we completed the acquisition of a 50% interest in a joint venture that owns 13100 and 13150 Worldgate Drive located in Herndon, Virginia for a gross purchase price of approximately $17.0 million.

The acquisition was completed with available cash.

The joint venture intends to redevelop the property for residential use.

There can be no assurance that the joint venture will commence the development as currently contemplated or at all.

Also in the first quarter of 2023, we further expanded our life sciences portfolio in Cambridge, Massachusetts, the largest cluster of life sciences companies and research space in the U.S., by commencing the development/redevelopment of two fully pre-leased projects:

• 290 Binney Street, an approximately 566,000 square foot laboratory/life sciences property, which is 100% pre-leased to AstraZeneca for a lease term of 15 years.

• 300 Binney Street, an approximately 195,000 net rentable square foot premier workplace that is being redeveloped into approximately 236,000 net rentable square feet of laboratory/life sciences space, which is 100% pre-leased to the Broad Institute for a lease term of 15 years.

As of March 31, 2023, our development/redevelopment pipeline consisted of 15 properties that, when completed, we expect will total approximately 4.0 million net rentable square feet.

Our share of the estimated total cost for these projects is approximately $3.3 billion, of which approximately $1.9 billion remains to be invested.

The commercial space in the pipeline, which excludes View Boston at The Prudential Center and Reston Next Residential, is 52% pre-leased as of April 28, 2023.

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

In the third quarter of 2022, we completed the disposition of:

• 601 Massachusetts Avenue located in Washington, DC for a gross sale price of $531.0 million.

Net cash proceeds totaled approximately $512.3 million resulting in a gain on sale of real estate totaling approximately $237.4 million for BXP and $237.5 million for BPLP.

601 Massachusetts Avenue is an 11-

story, approximately 479,000 square foot premier workplace originally developed by us in 2013.

We will continue to provide property management services to the new owner.

• Land parcels located in Loudoun County, Virginia for a gross sale price of $27.0 million.

Net cash proceeds totaled approximately $25.6 million resulting in a gain on sale of real estate totaling approximately $24.4 million.

In October of 2022, we entered into an agreement to sell the residential component of The Avant at Reston Town Center located in Reston, Virginia.

The Avant is a 15-story, approximately 329,000 square foot, excluding retail space, 359-unit, luxury multifamily building that was 95% occupied, as of September 30, 2022.

We will retain ownership of the approximately 26,000 square foot ground-level retail space.

We expect to complete the transaction in the fourth quarter of 2022 for a gross sale price of $141 million.

There can be no assurance that we will complete the sale on the terms currently contemplated or at all.

We do not anticipate any further dispositions in 2022.

Assuming the completion of the sale of The Avant, our total dispositions in 2022 is projected to be approximately $864 million.

However, the asset sale market for all real estate asset classes has slowed dramatically with the increase in interest rates and transaction volume for office assets in the U.S.

declined materially in the first quarter of 2023.

A brief overview of each of our markets follows.

During the third quarter of 2022, we signed approximately 800,000 square feet of leases and approximately 238,000 square feet of leases commenced in the Boston region.

During the first quarter of 2023, we executed approximately 182,000 square feet of leases and approximately 290,000 square feet of leases commenced in the Boston region.

Approximately 137,000 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 36% over the prior leases.

Our Boston CBD in-service portfolio was approximately 95% leased as of September 30, 2022.

Our approximately 2.7 million square foot in-service office portfolio in Cambridge was approximately 96% leased as of September 30, 2022.

We and Biogen Inc.

terminated Biogen’s lease at 300 Binney Street in Kendall Square to facilitate the conversion and expansion of the property, which is expected to begin in early 2023.

Biogen will be vacating the property in phases through early 2023.

300 Binney Street is currently an approximately 195,000 net rentable square foot property that will be redeveloped into an approximately 240,000 net rentable square foot laboratory/life sciences space for The Broad Institute who has signed a lease for 100% of the laboratory/life sciences space.

There can be no assurance that we will commence the redevelopment on the terms and schedule currently contemplated or at all.

Our Route 128-Mass Turnpike portfolio is comprised of approximately 4.7 million square feet and was approximately 83% leased as of September 30, 2022.

We partially placed in-service 880 Winter Street, an approximately 244,000 square foot laboratory/life sciences project located in Waltham, Massachusetts.

The project is 97% pre-leased, as of November 1, 2022.

As of March 31, 2023, our Boston CBD in-service portfolio was approximately 94% occupied and approximately 97% leased (inclusive of vacant space with signed leases that have not yet commenced in accordance with GAAP).

Our approximately 2.5 million square foot in-service premier workplace portfolio in Cambridge was approximately 98% occupied as of March 31, 2023.

As of March 31, 2023, our Route 128-Mass Turnpike portfolio is comprised of approximately 4.8 million square feet and was approximately 81% occupied and approximately 82% leased (inclusive of vacant space with signed leases that have not yet commenced in accordance with GAAP).

Our Los Angeles (“LA”) in-service portfolio of approximately 2.3 million square feet is currently focused in West LA and includes Colorado Center, an approximately 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, 2022, our LA in-service properties were approximately 90% leased.

During the third quarter of 2022, we executed approximately 290,000 square feet of leases in the New York region and approximately 704,000 square feet of leases commenced.

Approximately 578,000 square feet of the leases that commenced in the third quarter had been vacant for less than one year and they represent a decrease in net rental obligations of approximately 4% over the prior leases.

As of September 30, 2022, our New York CBD in-service portfolio was approximately 89% leased.

As of March 31, 2023, our LA in-service properties were approximately 86% occupied.

During the first quarter of 2023, we executed approximately 120,000 square feet of leases in the New York region and approximately 249,000 square feet of leases commenced.

Approximately 192,000 square feet of the leases that commenced in the first quarter had been vacant for less than one year and they represent a decrease in net rental obligations of approximately 9% over the prior leases.

As of March 31, 2023, our New York CBD in-service portfolio was approximately 89% occupied and approximately 93% leased (inclusive of vacant space with signed leases that have not yet commenced in accordance with GAAP).

San Francisco

During the third quarter of 2022, we executed approximately 165,000 square feet of leases and approximately 271,000 square feet of leases commenced in the San Francisco region.

During the first quarter of 2023, we executed approximately 84,000 square feet of leases and approximately 61,000 square feet of leases commenced in the San Francisco region.

Approximately 43,000 square feet of leases that commenced had been vacant for less than one year and represent an increase in net rental obligations of approximately 6% over the prior leases.

Our San Francisco CBD in-service properties were approximately 89% leased as of September 30, 2022.

As of March 31, 2023, our San Francisco CBD in-service properties were approximately 89% occupied and approximately 90% leased (inclusive of vacant space with signed leases that have not yet commenced in accordance with GAAP).

Our Seattle in-service portfolio includes Safeco Plaza, an approximately 779,000 square foot property of which we own 33.67%, and Madison Centre, an approximately 755,000 square foot property.

As of September 30, 2022, our Seattle in-service properties were approximately 89% leased.

As of March 31, 2023, our

Seattle in-service properties were approximately 88% occupied and approximately 91% leased (inclusive of vacant space with signed leases that have not yet commenced in accordance with GAAP).

Washington, DC

During the third quarter of 2022, we executed approximately 163,000 square feet of leases and approximately 526,000 square feet of leases commenced in the Washington, DC region.

During the first quarter of 2023, we executed approximately 249,000 square feet of leases and approximately 118,000 square feet of leases commenced in the Washington, DC region.

Approximately 78,000 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 47% over the prior leases.

Our Washington, DC CBD in-service properties were approximately 84% leased as of September 30, 2022.

The large decrease in net rental obligations is due to the restructuring of an approximately 68,950 square foot lease with a theater client in Springfield, Virginia.

Excluding the theater lease, the decrease in net rental obligations is approximately 9% over the prior leases.

As of March 31, 2023, our Washington, DC CBD in-service properties were approximately 87% occupied and approximately 89% leased (inclusive of vacant space with signed leases that have not yet commenced in accordance with GAAP).

A significant component of our Washington, DC regional portfolio is in Reston Town Center, an award-winning mixed-use development in Northern Virginia.

Reston is a hub for technology, cloud services, cybersecurity and defense intelligence companies.

Our Reston, Virginia properties were approximately 92% leased as of September 30, 2022.

As of March 31, 2023, our Reston, Virginia properties were approximately 89% occupied and approximately 94% leased (inclusive of vacant space with signed leases that have not yet commenced in accordance with GAAP).

Leasing Statistics

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, 2022:

Three months ended September 30, 2022 Nine months ended September 30, 2022

The table below details the leasing activity, including 100% of the unconsolidated joint ventures, that commenced during the three months ended March 31, 2023:

Three months ended March 31, 2023

(Square Feet)

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Property dispositions/properties taken out of service (1) (333,277)

Vacant space in properties acquired (2) — 77,581

Properties placed (and partially placed) in-service (3) 62,933 894,176

Leases expiring or terminated during the period 1,067,880

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1 st generation leases

67,007 1,042,887

2 nd generation leases with new clients

595,133 2,170,648

2 nd generation lease renewals

1,085,208 2,499,016

Total space leased (2) 775,445

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Leases commencing during the period, in square feet 775,445

Weighted Average Lease Term 114 Months 103 Months

Weighted Average Free Rent Period 77 Days 97 Days

Weighted Average Lease Term 90 Months

Weighted Average Free Rent Period 175 Days

Total Transaction Costs Per Square Foot (5) $72.81

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(1) Total vacant square feet of properties taken out of service and property disposition during the three months ended September 30, 2022 consists of 117,907 square feet at 760 Boylston Street and 5,270 square feet at 601 Massachusetts Avenue.

Total vacant square feet of properties taken out of service and property dispositions during the nine months ended September 30, 2022 consists of 117,907 square feet at 760

Boylston Street, 95,180 square feet at 651 Gateway, 185,298 square feet at Virginia 95 Office Park and 5,270 square feet at 601 Massachusetts Avenue.

(2) Total vacant square feet of properties acquired during the nine months ended September 30, 2022 consists of 77,581 square feet at Madison Centre.

(3) Total vacant square feet of properties placed (and partially placed) in-service during the three months ended September 30, 2022 consists of 4,207 square feet at 2100 Pennsylvania Avenue, 7,531 square feet at Reston Next and 51,195 square feet at 880 Winter Street.

Total square feet of properties placed (and partially placed) in-service during the nine months ended September 30, 2022 consists of 51,195 square feet at 880 Winter Street, 418,221 square feet at Reston Next, 10,752 square feet at 2100 Pennsylvania Avenue and 414,008 square feet at 325 Main Street.

(4) Represents leases for which lease revenue recognition has commenced in accordance with GAAP during the three and nine months ended September 30, 2022 .

(5) Represents leases executed during the three and nine months ended September 30, 2022 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 during the three and nine months ended September 30, 2022 is 193,318 and 758,239 square feet, respectively.

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

Of the 1,680,341 and 4,669,664 square feet of second generation leases that commenced during the three and nine months ended September 30, 2022, respectively, leases for 1,498,628 and 3,923,030 square feet, respectively, were signed in prior periods.

(1) Total vacant square feet of properties taken out of service during the three months ended March 31, 2023 consists of 195,191 square feet at 300 Binney Street, 55,852 square feet at 420 Bedford Street, 57,045 square feet at 430 Bedford Street and 25,189 square feet at 2098 Gaither Road.

(2) Represents leases for which lease revenue recognition has commenced in accordance with GAAP during the three months ended March 31, 2023 .

(3) Represents leases executed during the three months ended March 31, 2023 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 during the three months ended March 31, 2023 is 186,898 square feet.

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

Of the 775,445 square feet of second generation leases that commenced during the three months ended March 31, 2023, leases for 588,547 square feet were signed in prior periods.

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

(8) Represents the increase in gross rent (base rent plus expense reimbursements) on the new versus expired leases on the 1,382,469 and 3,681,677 square feet of second generation leases that had been occupied within the prior 12 months for the three and nine months ended September 30, 2022, respectively;

(6) Represents the increase in gross rent (base rent plus expense reimbursements) on the new versus expired leases on the 505,482 square feet of second generation leases that had been occupied within the prior 12 months for the three months ended March 31, 2023;

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

(9) Represents the increase in net rent (gross rent less operating expenses) on the new versus expired leases on the 1,382,469 and 3,681,677 square feet of second generation leases that had been occupied within the prior 12 months for the three and nine months ended September 30, 2022, respectively.

Transactions during the three months ended September 30, 2022 included the following:

Acquisition activity

• On September 16, 2022, we acquired 125 Broadway in Cambridge, Massachusetts for a net purchase price, including transaction costs, of approximately $592.4 million.

The acquisition was completed with available cash and borrowings under BPLP’s unsecured credit facility.

125 Broadway is a 271,000 net rentable square foot, six-story, laboratory/life sciences property.

The property is 100% leased.

Disposition activities

• On August 30, 2022, we completed the sale of 601 Massachusetts Avenue located in Washington, DC for a gross sale price of $531.0 million.

Net cash proceeds totaled approximately $512.3 million, resulting in a gain on sale of real estate of approximately $237.4 million for BXP and approximately $237.5 million for BPLP.

601 Massachusetts Avenue is an approximately 479,000 net rentable square foot premier workplace.

• On September 15, 2022, we completed the sale of two parcels of land located in Loudoun County, Virginia for an aggregate gross sale price of $27.0 million.

Net cash proceeds totaled approximately $25.6 million, resulting in a gain on sale of real estate totaling approximately $24.4 million for BXP and BPLP.

Development activities

• On July 1, 2022, we commenced the redevelopment of 140 Kendrick Street, a premier workplace that consists of three buildings aggregating approximately 388,000 net rentable square feet located in Needham, Massachusetts.

The redevelopment is a repositioning of one building consisting of approximately 90,000 net rentable square feet into a net zero, carbon neutral premier workplace building, as defined by the LEED Zero Carbon Certification.

When completed, the building will consist of approximately 104,000 net rentable square feet.

This project is 100% pre-leased.

• On July 15, 2022, we partially placed in-service 880 Winter Street, an approximately 244,000 net rentable square foot laboratory/life sciences project located in Waltham, Massachusetts.

This project is 97% pre-leased.

• On September 8, 2022, we terminated our existing lease agreement with our client at 300 Binney Street to facilitate the conversion and expansion of the property.

300 Binney Street is a premier workplace with approximately 195,000 net rentable square feet at Kendall Center in Cambridge, Massachusetts that will be redeveloped into approximately 240,000 net rentable square feet of laboratory/life sciences space.

The commencement of construction is subject to various conditions.

There can be no assurance that we will commence the redevelopment on the terms and schedule currently contemplated or at all.

This property is 100% pre-leased to a single client.

• On September 12, 2022, we commenced the redevelopment of 760 Boylston Street, a retail project at the Prudential Center located in Boston, Massachusetts.

The redevelopment is a modernization of the space consisting of approximately 118,000 net rentable square feet.

This project is 100% pre-leased to a single client.

Unconsolidated joint venture activities

• On August 8, 2022, a joint venture in which we have a 50% interest modified the construction loan collateralized by its Dock 72 property located in Brooklyn, New York.

At the time of the modification, the loan had an outstanding balance totaling approximately $198.4 million, a total commitment amount of $250.0 million, bore interest at a variable rate equal to LIBOR plus 3.35% per annum, and was scheduled to mature on December 18, 2023.

The modified construction loan bears interest at a variable rate equal to (1) the greater of (x) SOFR or (y) 0.25% plus (2) 3.10% per annum, has a total commitment amount of approximately $198.4 million, and continues to mature on December 18, 2023.

Dock 72 is a premier workplace with approximately 669,000 net rentable square feet.

• On September 1, 2022, a joint venture in which we have a 20% interest entered into an interest rate cap agreement to cap the variable rate debt secured by its Metropolitan Square property located in Washington, DC.

The mortgage and mezzanine loans have an aggregate principal balance of $420.0 million and bear interest at a weighted average variable rate equal to SOFR plus 2.75% per annum.

The interest rate cap agreement capped SOFR at 4.50% per annum on a notional amount of $420.0 million through April 15, 2024.

Metropolitan Square is a premier workplace with approximately 657,000 net rentable square feet located in Washington, DC.

• On September 9, 2022, a joint venture in which we have an approximate 33.67% interest modified the mortgage loan collateralized by its Safeco Plaza property located in Seattle, Washington.

At the time of the modification, the loan’s outstanding balance totaled $250.0 million, bore interest at a variable rate equal to the greater of (x) 2.35% or (y) LIBOR plus 2.20% per annum, and was scheduled to mature on September 1, 2026.

The modified mortgage loan bears interest at a variable rate equal to the greater of (x) 2.35% or (y) SOFR plus 2.32% per annum and continues to mature on September 1, 2026.

In conjunction with the loan modification, the joint venture entered into an interest rate cap agreement that capped SOFR at 2.50% per annum on a notional amount of $250.0 million through September 1, 2023.

Safeco Plaza is a premier workplace with approximately 765,000 net rentable square feet.

Transactions completed subsequent to September 30, 2022 included the following:

• On October 6, 2022, we entered into an agreement to sell the residential component of The Avant at Reston Town Center, located in Reston, Virginia, for a gross sale price of $141 million.

The Avant is a 15-story, approximately 329,000 square foot, excluding retail space, 359-unit, luxury multifamily building.

We will retain ownership of the approximately 26,000 square foot ground-level retail space.

There can be no assurance that we will complete the sale on the terms currently contemplated or at all.

• On October 25, 2022, we entered into an agreement to acquire an approximate 27% interest in the joint venture that owns 200 Fifth Avenue located in New York City, for a gross purchase price of approximately $280.2 million, which includes $120.1 million of cash and our pro rata share of the outstanding loan secured by the property of $160.1 million.

The mortgage loan bears interest at 4.34% per annum and matures in November 2028.

200 Fifth Avenue is a 14-story, approximately 870,000 square-foot, LEED Gold certified, premier workplace located in the Midtown South submarket.

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

Includes the renewal of a 68,950 square foot lease with a theater client.

Excluding this renewal, the increase in second generation gross rent is 3.87%.

(7) Represents the increase in net rent (gross rent less operating expenses) on the new versus expired leases on the 505,482 square feet of second generation leases that had been occupied within the prior 12 months for the three months ended March 31, 2023.

Includes the renewal of a 68,950 square foot lease with a theater client.

Excluding this renewal, the increase in second generation net rent is 6.37%.

Transactions during the three months ended March 31, 2023 included the following:

Development/Redevelopment activities

• On January 5, 2023, we commenced the development of 290 Binney Street, an approximately 566,000 net rentable square foot laboratory/life sciences project in Cambridge, Massachusetts.

Concurrent with the commencement of this project, the Kendall Center Blue Parking Garage was taken out of service and demolished to support the development of this project.

290 Binney Street is 100% pre-leased to AstraZeneca.

• On January 30, 2023, we commenced the redevelopment of 300 Binney Street at Kendall Center in Cambridge, Massachusetts.

300 Binney Street consisted of an approximately 195,000 net rentable square foot premier workplace that is being redeveloped into approximately 236,000 net rentable square feet of laboratory/life sciences space.

BXP and BPLP recognized approximately $11.0 million of depreciation expense during the three months ended March 31, 2023 associated with the acceleration of depreciation on the assets being removed from service and demolished as part of the redevelopment of the property.

The project is 100% pre-leased to the Broad Institute.

Unconsolidated joint venture activity

• On January 31, 2023, we acquired a 50% interest in a joint venture that owns 13100 and 13150 Worldgate Drive located in Herndon, Virginia for a gross purchase price of approximately $17.0 million.

The acquisition was completed with available cash.

13100 and 13150 Worldgate Drive consists of two vacant office buildings aggregating approximately 350,000 rentable square feet and a 1,200-space structured parking deck situated on a 10-acre site.

The joint venture intends to redevelop the property for residential use.

There can be no assurance that the joint venture will commence the development as currently contemplated or at all.

Debt activity

• On January 4, 2023, BPLP entered into a credit agreement that provided for a $1.2 billion unsecured term loan facility (the “2023 Unsecured Term Loan”).

Under the credit agreement, BPLP may, at any time prior to the maturity date, increase total commitments by up to an additional $300.0 million in aggregate principal amount by increasing the existing 2023 Unsecured Term Loan or incurring one or more additional term loans, in each case, subject to syndication of the increase and other conditions.

The 2023 Unsecured Term Loan matures on May 16, 2024, with one 12-month extension option, subject to customary conditions.

Upon entry into the credit agreement, BPLP exercised its option to draw $1.2 billion under the 2023 Unsecured Term Loan, a portion of which was used to repay in full the $730.0 million outstanding under its prior unsecured credit agreement (the “2022 Unsecured Term Loan”), which was scheduled to mature on May 16, 2023.

There was no prepayment penalty associated with the repayment of the 2022 Unsecured Term Loan.

Transactions completed subsequent to March 31, 2023 included the following:

• On April 21, 2023, a joint venture in which we have a 50% interest exercised an option to extend by one year the maturity date of its $252.6 million construction loan collateralized by its 7750 Wisconsin Avenue property.

The completed 734,000 square foot build-to-suit, premier workplace is located in Bethesda, Maryland and is 100% leased to an affiliate of Marriott International, Inc.

Effective June 1, 2023, the financing will bear interest at a variable rate equal to Term SOFR plus 1.35% per annum and will now mature on April 26, 2024, with a one-year extension option, subject to certain conditions.

• On April 29, 2023, we completed and fully placed in-service 2100 Pennsylvania Avenue, a premier workplace project with approximately 480,000 net rentable square feet located in Washington, DC.

• On May 02, 2023, BPLP executed interest rate swaps in notional amounts aggregating $1.2 billion.

These interest rate swaps were entered into to fix Term SOFR under for BPLP’s 2023 Unsecured Term Loan at a weighted-average rate of 4.6420% for the period commencing on May 4, 2023 and ending on May 16, 2024.

Based on BPLP’s credit rating as of May 2, 2023, the interest rate for the 2023 Unsecured Term Loan would be 5.592%.

Critical Accounting Estimates

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There have been no significant changes in our critical accounting estimates since the year ended December 31, 2022.

Results of Operations for the Nine Months Ended September 30, 2022 and 2021

Results of Operations for the Three Months Ended March 31, 2023 and 2022

Net income attributable to Boston Properties, Inc.

common shareho lders and net income attributable to Boston Properties Limited Partnership common unitholders increased by approximately $415.5 million and $465.6 million for the nine months ended September 30, 2022 compared to 2021, 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, 2022 to the nine months ended September 30, 2021” within “ Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations .”

and net income attributable to Boston Properties Limited Partnership decreased approximately $65.2 million and $73.0 million, respectively, for the three months ended March 31, 2023 compared to 2022, as detailed in the following tables and for the reasons discussed below under the heading “ Comparison of the three months ended March 31, 2023 to the three months ended March 31, 2022” 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 nine months ended September 30, 2022 and 2021.

to Net Operating Income and Net Income Attributable to Boston Properties Limited Partnership to Net Operating Income for the three months ended March 31, 2023 and 2022.

For a detailed discussion of net operating income (“NOI”), including the reasons management believes NOI is useful to investors, see page 43.

Nine months ended September 30,

Three months ended March 31,

2023 2022 Increase/

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Net Income Attributable to Boston Properties, Inc.

Common Shareholders

$ 77,890 $ 143,047 $ (65,157) (45.55) %

Preferred stock redemption charge — 6,412 (6,412) (100.00) %

Preferred dividends

— 2,560 (2,560) (100.00) %

Net Income Attributable to Boston Properties, Inc.

727,144 320,652 406,492 126.77 %

Net Income Attributable to Noncontrolling Interests:

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Interest expense 134,207 101,228 32,979 32.58 %

317,216 320,015 (2,799) (0.87) %

Losses from early extinguishment of debt — 898 (898) (100.00) %

Loss from unconsolidated joint ventures 1,389 1,745 (356) (20.40) %

Other Income:

Unrealized gain on non-real estate investment 259 — 259 100.00 %

Gains (losses) from investments in securities 1,665 (2,262) 3,927 173.61 %

Other income - assignment fee 6,624 — 6,624 100.00 %

Interest and other income (loss)

Gains on sales of real estate

10,941 1,228 9,713 790.96 %

Gains on sales of real estate — 22,701 (22,701) (100.00) %

Income (loss) from unconsolidated joint ventures (7,569) 2,189 (9,758) (445.77) %

Other Expenses:

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Net Operating Income $ 491,006 $ 469,316 $ 21,690 4.62 %

Nine months ended September 30,

Three months ended March 31,

2023 2022 Increase/

(in thousands)

Net Income Attributable to Boston Properties Limited Partnership Common Unitholders

$ 819,195 $ 353,633 $ 465,562 131.65 %

Preferred unit redemption charge — 6,412 (6,412) (100.00) %

Preferred distributions

— 2,560 (2,560) (100.00) %

Net Income Attributable to Boston Properties Limited Partnership $ 88,830 $ 161,829 $ (72,999) (45.11) %

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134,207 101,228 32,979 32.58 %

Losses from early extinguishment of debt — 898 (898) (100.00) %

Loss from unconsolidated joint ventures 1,389 1,745 (356) (20.40) %

Other Income:

Unrealized gain on non-real estate investment 259 — 259 100.00 %

Gains (losses) from investments in securities 1,665 (2,262) 3,927 173.61 %

Other income - assignment fee 6,624 — 6,624 100.00 %

Interest and other income (loss)

Gains on sales of real estate

10,941 1,228 9,713 790.96 %

Gains on sales of real estate — 23,384 (23,384) (100.00) %

Income (loss) from unconsolidated joint ventures (7,569) 2,189 (9,758) (445.77) %

Other Expenses:

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Net Operating Income $ 491,006 $ 469,316 $ 21,690 4.62 %

At September 30, 2022 and 2021, we owned or had joint venture interests in a portfolio of 193 and 202 commercial real estate properties, respectively (in each case, the “Total Property Portfolio”).

At March 31, 2023 and 2022, we owned or had joint venture interests in a portfolio of 192 and 201 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 provides a complete understanding of our operating results.

Therefore, the comparison of operating results for the three and nine months ended September 30, 2022 and 2021 show separately the changes attributable to the properties that were owned by us and in-service throughout each period compared (the “Same Property Portfolio”) and the changes attributable to the properties included in the Acquired, Placed In-Service, Development or Redevelopment or Sold Portfolios.

Therefore, the comparison of operating results for the three months ended March 31, 2023 and 2022 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.

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, 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, other income - assignment fee, interest and other income (loss), gains on sales of real estate, direct reimbursements of payroll and related costs from management services contracts and development and management services revenue.

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

NOI is a non-GAAP financial measure equal to net income attributable to Boston Properties, Inc.

and net income attributable to Boston Properties Limited Partnership, as applicable, the most directly comparable GAAP financial measures, plus (1) net income attributable to noncontrolling interests, interest expense, depreciation and amortization expense, transaction costs, payroll and related costs from management services contracts and

corporate general and administrative expense less (2) unrealized gain on non-real estate investment, 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.

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.

common shareholders and net income attributable to Boston Properties Limited Partnership common unitholders.

and net income attributable to Boston Properties Limited Partnership.

For example, interest expense is not necessarily linked to the operating performance of a real estate asset and is often incurred at the corporate level as opposed to the property level.

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We believe that in order to understand our operating results, NOI should be examined in conjunction with net income attributable to Boston Properties, Inc.

common shareholders and net income attributable to Boston Properties Limited Partnership common unitholders as presented in our Consolidated Financial Statements.

and net income attributable to Boston Properties Limited Partnership as presented in our Consolidated Financial Statements.

NOI should not be considered as a substitute for net income attributable to Boston Properties, Inc.

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

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

or net income attributable to Boston Properties Limited Partnership (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.

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

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

Comparison of the nine months ended September 30, 2022 to the nine months ended September 30, 2021

Comparison of the three months ended March 31, 2023 to the three months ended March 31, 2022

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

The Same Property Portfolio consists of 126 properties totaling approximately 38.2 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, 2021 and owned and in service through September 30, 2022.

The Total Property Portfolio includes the effects of the other properties either acquired, placed in-service, in development or redevelopment after January 1, 2021 or disposed of on or prior to September 30, 2022.

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, 2022 and 2021 with respect to the properties that were acquired, placed in-service, in development or redevelopment or sold.

Same Property Portfolio Properties Acquired Portfolio Properties

The Same Property Portfolio includes properties acquired or placed in-service on or prior to January 1, 2022 and owned and in-service through March 31, 2023.

The Total Property Portfolio includes the effects of the other properties either acquired, placed in-service, in or held for development or redevelopment after January 1, 2022 or disposed of on or prior to March 31, 2023.

This table includes a reconciliation from the Same Property Portfolio to the Total Property Portfolio by also providing information for the three months ended March 31, 2023 and 2022 with respect to the properties that were acquired, placed in-service, in or held for development or redevelopment or sold.

Same Property Portfolio Properties

Acquired Portfolio Properties

Placed In-Service

Portfolio Properties in Development or Redevelopment Portfolio Properties Sold Portfolio Total Property Portfolio

Portfolio Properties in or Held for

Development or

Redevelopment

Portfolio Properties Sold Portfolio Total Property Portfolio

2023 2022 Increase/

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687,874 679,602 8,272 1.22 % 23,426 — 33,930 6,890 123 5,218 342 13,742 745,695 705,452 40,243 5.70 %

Parking and Other

73,672 57,067 16,605 29.10 % 1,461 — 29 14 — 201 807 822 75,969 58,104 17,865 30.75 %

Parking and Other Revenue 22,389 18,720 3,669 19.60 % 950 — 127 — (3) 2,437 — 279 23,463 21,436 2,027 9.46 %

Total Rental Revenue (1) 710,263 698,322 11,941 1.71 % 24,376 — 34,057 6,890 120 7,655 342 14,021 769,158 726,888 42,270 5.82 %

Real Estate Operating Expenses 269,871 255,164 14,707 5.76 % 3,950 — 8,800 2,114 3,142 2,329 82 4,216 285,845 263,823 22,022 8.35 %

Net Operating Income, Excluding Residential and Hotel 1,319,385 1,287,995 31,390 2.44 % 23,079 2,943 45,382 11,975 1,277 3,062 23,636 38,749 1,412,759 1,344,724 68,035 5.06 %

Net Operating Income (Loss), Excluding Residential and Hotel 440,392 443,158 (2,766) (0.62) % 20,426 — 25,257 4,776 (3,022) 5,326 260 9,805 483,313 463,065 20,248 4.37 %

Residential Net Operating Income (2) 6,263 4,843 1,420 29.32 % — — — — — — — 1,691 6,263 6,534 (271) (4.15) %

Hotel Net Operating Income (Loss) (2) 1,430 (283) 1,713 605.30 % — — — — — — — — 1,430 (283) 1,713 605.30 %

Net Operating Income $ 1,348,892 $ 1,299,116 $ 49,776 3.83 % $ 23,079 $ 2,943 $ 45,382 $ 11,975 $ 1,277 $ 3,062 $ 23,636 $ 38,749 $ 1,442,266 $ 1,355,845 $ 86,421 6.37 %

Net Operating Income (Loss) $ 448,085 $ 447,718 $ 367 0.08 % $ 20,426 $ — $ 25,257 $ 4,776 $ (3,022) $ 5,326 $ 260 $ 11,496 $ 491,006 $ 469,316 $ 21,690 4.62 %

_______________

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(2) For a detailed discussion of NOI, including the reasons management believes NOI is useful to investors, see page 43.

Residential Net Operating Income for the nine months ended September 30, 2022 and 2021 is comprised of Residential Revenue of $44,218 and $29,832 less Residential Expenses of $23,274 and $18,100, respectively.

Hotel Net Operating Income (Loss) for the nine months ended September 30, 2022 and 2021 is comprised of Hotel Revenue of $28,395 and $7,382 less Hotel Expenses of $19,832 and $7,993, respectively, per the Consolidated Statements of Operations.

Residential Net Operating Income for the three months ended March 31, 2023 and 2022 is comprised of Residential Revenue of $11,726 and $12,966 less Residential Expenses of $5,463 and $6,432, respectively.

Hotel Net Operating Income (Loss) for the three months ended March 31, 2023 and 2022 is comprised of Hotel Revenue of $8,101 and $4,557 less Hotel Expenses of $6,671 and $4,840, 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 $67.7 million for the nine months ended September 30, 2022 compared to 2021.

The increase was a result of our average revenue per square foot increasing by approximately $2.95, contributing approximately $74.6 million, partially offset by average occupancy decreasing from 91.6% to 91.2%, resulting in a decrease of approximately $6.9 million.

Lease revenue (excluding termination income) from the Same Property Portfolio increased by approximately $10.2 million for the three months ended March 31, 2023 compared to 2022.

The increase was a result of our average revenue per square foot increasing by approximately $2.25, contributing approximately $19.9 million, partially offset by an approximately $9.7 million decrease due to our average occupancy decreasing from 91.7% to 90.4%.

Termination Income

Termination income decreased by approximately $5.9 million for the nine months ended September 30, 2022 compared to 2021.

Termination income for the nine months ended September 30, 2022 related to 23 clients across the Same Property Portfolio and totaled approximately $5.0 million, which was primarily related to clients that terminated leases early in New York City.

Termination income decreased by approximately $1.9 million for the three months ended March 31, 2023 compared to 2022.

Termination income for the three months ended March 31, 2023 related to seven clients across the Same Property Portfolio and totaled approximately $0.2 million, which was primarily related to clients that terminated leases early in New York City.

Termination income for the three months ended March 31, 2022 related to ten clients across the Same Property Portfolio and totaled approximately $1.5 million, which was primarily related to clients that terminated leases early in San Francisco.

In addition, we received a distribution from our unsecured credit claim against Lehman Brothers, Inc.

of approximately $0.6 million.

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

Parking and Other Revenue

Parking and other revenue increased by approximately $16.6 million for the nine months ended September 30, 2022 compared to 2021.

Parking and other revenue increased by approximately $3.7 million for the three months ended March 31, 2023 compared to 2022.

Parking revenue increased by approximately $3.8 million and was partially offset by a decrease in other revenue of approximately $0.1 million.

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Real Estate Operating Expenses

Real estate operating expenses from the Same Property Portfolio increased by approximately $47.0 million, or 6.5%, for the nine months ended September 30, 2022 compared to 2021, due primarily to an increase in operating expenses, including cleaning, utilities, repairs and maintenance, and roads/grounds/security.

The increase in operating expenses was driven by an increase in physical occupancy.

Real estate operating expenses from the Same Property Portfolio increased by approximately $14.7 million, or 5.8%, for the three months ended March 31, 2023 compared to 2022, due primarily to an increase in real estate taxes of approximately $7.2 million, or 5.8%, and other real estate operating expenses of $7.5 million, or 5.8%.

The increase in real estate taxes was primarily in the Boston region.

Properties Acquired Portfolio

The table below lists the properties acquired between January 1, 2021 and September 30, 2022.

Rental revenue and real estate operating expenses increased by approximately $26.7 million and $6.6 million, respectively, for the nine months ended September 30, 2022 compared to 2021, as detailed below.

The table below lists the properties acquired between January 1, 2022 and March 31, 2023.

Rental revenue and real estate operating expenses increased by approximately $24.4 million and $4.0 million, respectively, for the three months ended March 31, 2023 compared to 2022, as detailed below.

Square Feet Rental Revenue Real Estate Operating Expenses

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(dollars in thousands)

153 & 211 Second Avenue June 2, 2021 136,882 $ 7,669 $ 3,101 $ 4,568 $ 840 $ 319 $ 521

Shady Grove Innovation District August 2, 2021 232,278 2,237 495 1,742 1,361 334 1,027

Madison Centre May 17, 2022 754,988 $ 14,258 $ — $ 14,258 $ 2,960 $ — $ 2,960

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1,025,988 $ 24,376 $ — $ 24,376 $ 3,950 $ — $ 3,950

______________

(1) Rental revenue for the nine months ended September 30, 2022 includes approximately $0.4 million of termination income.

Properties Placed In-Service Portfolio

The table below lists the properties that were placed in-service or partially placed in-service between January 1, 2021 and September 30, 2022.

Rental revenue and real estate operating expenses from our Properties Placed In-Service Portfolio increased by approximately $43.1 million and $9.7 million, respectively, for the nine months ended September 30, 2022 compared to 2021, as detailed below.

The table below lists the properties that were placed in-service or partially placed in-service between January 1, 2022 and March 31, 2023.

Rental revenue and real estate operating expenses from our Properties Placed In-Service Portfolio increased by approximately $27.2 million and $6.7 million, respectively, for the three months ended March 31, 2023 compared to 2022, as detailed below.

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

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(dollars in thousands)

One Five Nine East 53rd Street (1) First Quarter, 2021 First Quarter, 2021 220,000 $ 13,356 $ 10,600 $ 2,756 $ 2,078 $ 2,046 $ 32

200 West Street (2) Fourth Quarter, 2020 Fourth Quarter, 2021 273,365 12,522 4,900 7,622 4,223 2,168 2,055

Reston Next Fourth Quarter, 2021 N/A 1,062,000 24,029 — 24,029 7,861 — 7,861

Reston Next Fourth Quarter, 2021 Fourth Quarter, 2022 1,063,236 $ 11,335 $ 6,890 $ 4,445 $ 3,880 $ 2,114 $ 1,766

325 Main Street Second Quarter, 2022 Second Quarter, 2022 414,565 11,526 — 11,526 1,858 — 1,858

2100 Pennsylvania Avenue (1) Second Quarter, 2022 N/A 480,000 5,141 — 5,141 1,727 — 1,727

880 Winter Street (4) Third Quarter, 2022 N/A 244,000 684 2,476 (1,792) 376 1,509 (1,133)

880 Winter Street (2) Third Quarter, 2022 Fourth Quarter, 2022 243,618 6,055 — 6,055 1,335 — 1,335

2,201,419 $ 34,057 $ 6,890 $ 27,167 $ 8,800 $ 2,114 $ 6,686

______________

(1) This is the low-rise portion of 601 Lexington Avenue.

(2) Includes 138,444 square feet of redevelopment that was fully placed in-service in December 2021.

(3) Real estate operating expenses for the nine months ended September 30, 2021 were related to demolition costs.

(1) See Note 13 to the Consolidated Financial Statements.

(2) Conversion of a 224,000 square foot office property located in Waltham, Massachusetts to laboratory space.

Properties in Development or Redevelopment Portfolio

The table below lists the properties that were in development or redevelopment between January 1, 2021 and September 30, 2022.

Rental revenue and real estate operating expenses from our Properties in Development or Redevelopment Portfolio decreased by approximately $2.4 million and $0.6 million, respectively, for the nine months ended September 30, 2022 compared to 2021, as detailed below.

Properties in or Held for Development or Redevelopment Portfolio

The table below lists the properties that were in or held for development or redevelopment between January 1, 2022 and March 31, 2023.

Rental revenue from our Properties in or Held for Development or Redevelopment Portfolio decreased by approximately $7.5 million and real estate operating expenses from our Properties in or Held for Development or Redevelopment Portfolio increased by approximately $0.8 million, for the three months ended March 31, 2023 compared to 2022, as detailed below.

Rental Revenue Real Estate Operating Expenses

Name Date Commenced Development / Redevelopment Square Feet 2022 2021 Change 2022 2021 Change

Name Date Commenced or Held for Development / Redevelopment Square Feet 2023 2022 Change 2023 2022 Change

(dollars in thousands)

3625-3635 Peterson Way (1) April 16, 2021 218,000 $ — $ 1,753 $ (1,753) $ — $ 459 $ (459)

140 Kendrick - Building A July 1, 2022 104,000 2,876 3,244 (368) 991 889 102

140 Kendrick Street - Building A July 1, 2022 104,000 $ — $ 1,103 $ (1,103) $ — $ 337 $ (337)

760 Boylston Street September 12, 2022 118,000 — — — — 221 (221)

105 Carnegie Center November 30, 2022 73,000 — 304 (304) — 234 (234)

2096 Gaither Road December 1, 2022 50,000 — 53 (53) 34 93 (59)

RTC Next-Hotel (1) December 19, 2022 N/A 201 — 201 2 — 2

Kendall Center Blue Parking Garage (2) January 4, 2023 N/A 25 2,439 (2,414) 2,277 324 1,953

300 Binney Street January 30, 2023 236,000 (900) 2,927 (3,827) 117 462 (345)

Lexington Office Park (3) March 31, 2023 166,779 629 684 (55) 611 592 19

2098 Gaither Road (3) March 31, 2023 50,000 165 145 20 101 66 35

797,779 $ 120 $ 7,655 $ (7,535) $ 3,142 $ 2,329 $ 813

______________

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

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

(1) On December 19, 2022, this lease was reclassified as a sales-type lease.

(2) The Kendall Center Blue Parking Garage was taken out of service on January 4, 2023 to support the development of 290 Binney Street.

Real estate operating expenses for the three months ended March 31, 2023 included approximately $2.3 million of demolition costs.

(3) Lexington Office Park and 2098 Gaither Road are no longer considered “in-service” as each property’s occupied percentage is below 50% and we are no longer actively leasing the properties in anticipation of a future development/redevelopment.

Properties Sold Portfolio

The table below lists the properties we sold between January 1, 2021 and September 30, 2022.

Rental revenue and real estate operating expenses from our Properties Sold Portfolio decreased by approximately $21.5 million and $6.4 million, respectively, for the nine months ended September 30, 2022 compared to 2021, as detailed below.

The table below lists the properties we sold between January 1, 2022 and March 31, 2023.

Rental revenue and real estate operating expenses from our Properties Sold Portfolio decreased by approximately $16.6 million and $5.4 million, respectively, for the three months ended March 31, 2023 compared to 2022, as detailed below.

Rental Revenue Real Estate Operating Expenses

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(dollars in thousands)

181, 191 and 201 Spring Street October 25, 2021 Office 333,000 $ — $ 11,588 $ (11,588) $ — $ 3,545 $ (3,545)

195 West Street March 31, 2022 Office 63,500 $ — $ 749 $ (749) $ — $ 242 $ (242)

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1,275,588 — 14,021 (14,021) — 4,216 (4,216)

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.”

The Avant at Reston Town Center (1) November 8, 2022 Residential 329,195 342 2,938 (2,596) 82 1,247 (1,165)

Total Residential 329,195 342 2,938 (2,596) 82 1,247 (1,165)

1,604,783 $ 342 $ 16,959 $ (16,617) $ 82 $ 5,463 $ (5,381)

______________

(1) We retained and continue to own approximately 26,000 square feet of ground-level retail space.

Rental Revenue and Real Estate Operating Expenses for the three months ended March 31, 2023 represent the ground-level retail space.

Rental Revenue and Real Estate Operating Expenses for the three months ended March 31, 2022 represent the entire property and not just the portion sold.

Residential Net Operating Income

Net operating income for our residential same properties increased by approximately $9.2 million for the nine months ended September 30, 2022 compared to 2021.

The following reflects our occupancy and rate information for our residential same properties for the nine months ended September 30, 2022 and 2021.

Net operating income for our residential same properties increased by approximately $1.4 million for the three months ended March 31, 2023 compared to 2022.

The following reflects our occupancy and rate information for our residential same properties for the three months ended March 31, 2023 and 2022.

Average Monthly Rental Rate (1) Average Rental Rate Per Occupied Square Foot Average Physical Occupancy (2) Average Economic Occupancy (3)

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The Lofts at Atlantic Wharf $ 4,428 $ 3,933 12.6 % $ 4.91 $ 4.36 12.6 % 95.4 % 96.1 % (0.7) % 95.4 % 95.6 % (0.2) %

The Avant at Reston Town Center (4) $ 2,400 $ 2,225 7.9 % $ 2.61 $ 2.46 6.1 % 95.2 % 94.2 % 1.1 % 95.3 % 93.6 % 1.8 %

Signature at Reston $ 2,677 $ 2,580 3.8 % $ 2.77 $ 2.66 4.1 % 93.7 % 94.2 % (0.5) % 93.1 % 93.5 % (0.4) %

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

(4) See Note 13 to the Consolidated Financial Statements.

Hotel Net Operating Income (Loss)

The Boston Marriott Cambridge hotel had net operating income of approximately $8.6 million for the nine months ended September 30, 2022, representing an increase of approximately $9.2 million compared to the nine months ended September 30, 2021.

The following reflects our occupancy and rate information for the Boston Marriott Cambridge hotel for the nine months ended September 30, 2022 and 2021.

The Boston Marriott Cambridge hotel had net operating income of approximately $1.4 million for the three months ended March 31, 2023, representing an increase of approximately $1.7 million compared to the three months ended March 31, 2022.

The following reflects our occupancy and rate information for the Boston Marriott Cambridge hotel for the three months ended March 31, 2023 and 2022.

Occupancy 61.3 % 40.4 % 51.7 %

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Development and Management Services Revenue

Development and management services revenue decreased by approximately $0.5 million for the nine months ended September 30, 2022 compared to 2021.

Development services revenue decreased by approximately $1.7 million and management services revenue increased by approximately $1.2 million.

The decrease in development services revenue was primarily related to a decrease in development fees earned from unconsolidated joint venture properties in the Washington, DC and Boston regions, which were placed in-service during prior periods.

The increase in management services revenue was primarily related to an increase in property management fees from an unconsolidated joint venture in the Boston region and asset management fees from an unconsolidated joint venture in the Seattle region.

Development and management services revenue increased by approximately $3.1 million for the three months ended March 31, 2023 compared to 2022.

Development services revenue and management services revenue increased by approximately $0.9 million and $2.2 million, respectively.

The increase in development management services revenue was primarily related to an increase in development fees from unconsolidated joint ventures in the San Francisco and Washington, DC regions.

The increase in management services revenue was primarily related to an increase in property management fees earned from an unconsolidated joint venture in New York City and a third-party owned building in the Washington, DC region and asset management fees earned from an unconsolidated joint venture in the Los Angeles region.

General and Administrative Expense

General and administrative expense decreased by approximately $7.5 million for the nine months ended September 30, 2022 compared to 2021 primarily due to a decrease in compensation expense of approximately $13.2 million, partially offset by an approximately $5.7 million increase in other general and administrative expenses.

The decrease in compensation expense related to an approximately $12.2 million decrease in the value of our deferred compensation plan and an approximately $1.0 million decrease in other compensation expenses.

General and administrative expense increased by approximately $12.6 million for the three months ended March 31, 2023 compared to 2022 primarily due to increases in compensation expense and other general and administrative expenses of approximately $11.6 million and $1.0 million, respectively.

The increase in compensation expense was related to (1) an approximately $4.0 million increase in the value of our deferred compensation plan and (2) an approximately $7.6 million increase in other compensation expenses, primarily due to age-based vesting.

The increase in other general and administrative expenses was primarily related to an increase 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 nine months ended September 30, 2022 and 2021 were approximately $12.0 million and $10.1 million, respectively.

Capitalized wages for the three months ended March 31, 2023 and 2022 were approximately $4.5 million and $4.0 million, respectively.

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

Transaction Costs

Transaction costs decreased by approximately $0.8 million for the nine months ended September 30, 2022 compared to 2021 due primarily to costs incurred in connection with the pursuit and formation of new joint ventures in 2021 that did not occur at the same levels in 2022.

Transaction costs increased by approximately $0.9 million for the three months ended March 31, 2023 compared to 2022 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 joint ventures and the pursuit of other transactions are expensed as incurred.

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

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

Depreciation and amortization expense increased by approximately $11.6 million for the nine months ended September 30, 2022 compared to 2021, as detailed below.

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

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

Depreciation and amortization expense increased by approximately $31.1 million for the three months ended March 31, 2023 compared to 2022, as detailed below.

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

2023 2022 Change

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______________

(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 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.

Depreciation and amortization expense increased by approximately $13.0 million for the nine months ended September 30, 2022 compared to 2021, as detailed below.

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

(1) During the three months ended March 31, 2023, the Kendall Center Blue Parking Garage was taken out of service and demolished to support the development of 290 Binney Street, an approximately 566,000 net rentable square foot laboratory/life sciences project in Cambridge, Massachusetts.

As a result, during the three months ended March 31, 2023, we recorded approximately $0.8 million of accelerated depreciation expense for the demolition of the garage, of which approximately $0.2 million related to the step-up of real estate assets.

Depreciation and amortization expense increased by approximately $31.0 million for the three months ended March 31, 2023 compared to 2022, as detailed below.

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

2023 2022 Change

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______________

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 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.

As a result, during the three months ended March 31, 2023, we recorded approximately $0.6 million of accelerated depreciation expense for the demolition of the garage.

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

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Other Income and Expense Items

Loss from Unconsolidated Joint Ventures

For the nine months ended September 30, 2022 compared to 2021, loss from unconsolidated joint ventures decreased by approximately $0.4 million primarily due to an approximately $10.0 million increase in net income from placing in-service (1) 7750 Wisconsin Avenue (Marriott International Headquarters) in Bethesda, Maryland and (2) 100 Causeway Street in Boston, Massachusetts.

This increase was partially offset by a $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.

Income (loss) from Unconsolidated Joint Ventures

For the three months ended March 31, 2023 compared to 2022, income (loss) from unconsolidated joint ventures decreased by approximately $9.8 million due primarily to an increase in interest expense due to increasing interest rates on variable rate debt.

Gains on Sales of Real Estate

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

Gains on sales of real estate increased by approximately $373.2 million for the nine months ended September 30, 2022 compared to 2021, as detailed below.

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

(dollars in millions)

195 West Street March 31, 2022 Office 63,500 $ 37.7 $ 35.4 $ 22.7

Virginia 95 Office Park June 15, 2022 Office/Flex 733,421 127.5 121.9 96.2

601 Massachusetts Avenue August 30, 2022 Office 478,667 531.0 512.3 237.4

Broadrun Land Parcel September 15, 2022 Land N/A 27.0 25.6 24.4

$ 723.2 $ 695.2 $ 380.7 (1)

6595 Springfield Center Drive December 13, 2018 Office 634,000 N/A N/A $ 8.1 (2)

N/A N/A $ 8.1

_____________

(1) Excludes approximately $0.6 million of gains on sales of real estate recognized during the nine months ended September 30, 2022 related to gains on sales of real estate occurring in the prior periods.

(2) 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.

The development project achieved final completion during the third quarter of 2021 at which time 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.

Gains on sales of real estate increased by approximately $377.2 million for the nine months ended September 30, 2022 compared to 2021, as detailed below.

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

(dollars in millions)

195 West Street March 31, 2022 Office 63,500 $ 37.7 $ 35.4 $ 23.4

Virginia 95 Office Park June 15, 2022 Office/Flex 733,421 127.5 121.9 99.5

601 Massachusetts Avenue August 30, 2022 Office 478,667 531.0 512.3 237.5

Broadrun Land Parcel September 15, 2022 Land N/A 27.0 25.6 24.4

$ 723.2 $ 695.2 $ 384.8 (1)

6595 Springfield Center Drive December 13, 2018 Office 634,000 N/A N/A $ 8.1 (2)

N/A N/A $ 8.1

_____________

(1) Excludes approximately $0.5 million of gains on sales of real estate recognized during the nine months ended September 30, 2022 related to gains on sales of real estate occurring in the prior periods.

(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.

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

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

Gains on sales of real estate decreased by approximately $22.7 million for the three months ended March 31, 2023 compared to 2022.

During the three months ended March 31, 2022, we recognized a gain of approximately $22.7 million related to the sale of 195 West Street in Waltham, Massachusetts.

Gains on sales of real estate decreased by approximately $23.4 million for the three months ended March 31, 2023 compared to 2022.

During the three months ended March 31, 2022, we recognized a gain of approximately $23.4 million related to the sale of 195 West Street in Waltham, Massachusetts.

Interest and Other Income (Loss)

Interest and other income (loss) increased by approximately $2.0 million for the nine months ended September 30, 2022 compared to 2021, due primarily to an increase of approximately $2.0 million in interest income due to increased interest earned on our deposits.

Other Income - Assignment Fee

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.

On April 7, 2022, we executed an agreement to assign the right to acquire 11251 Roger Bacon Drive to a third party for an assignment fee of approximately $6.9 million.

Net cash proceeds totaled approximately $6.6 million and is reflected as Other income - assignment fee.

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

The property was 100% leased.

Interest and other income (loss) increased by approximately $9.7 million for the three months ended March 31, 2023 compared to 2022, due primarily to an increase of approximately $10.1 million in interest income due to increased interest earned on our deposits.

Gains (Losses) from Investments in Securities

Gains (losses) from investments in securities for the nine months ended September 30, 2022 and 2021 related to investments that we have made to reduce our market risk relating to deferred compensation plans that we maintain for BXP’s officers and former non-employee directors.

Gains (losses) from investments in securities for the three months ended March 31, 2023 and 2022 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.

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

During the nine months ended September 30, 2022 and 2021, we recognized gains (losses) of approximately $(8.5) million and $3.7 million, respectively, on these investments.

By comparison, our general and administrative expense increased (decreased) by approximately $(8.5) million and $3.7 million during the nine months ended September 30, 2022 and 2021, respectively, as a result of increases (decreases) in our liability under our deferred compensation plans that was

associated with the performance of the specific investments selected by officers and former non-employee directors of BXP participating in the plans.

Losses From Early Extinguishment of Debt

On February 14, 2021, BPLP completed the redemption of $850.0 million in aggregate principal amount of its 4.125% senior notes due May 15, 2021.

The redemption price was approximately $858.7 million, which was equal to the stated principal plus approximately $8.7 million of accrued and unpaid interest to, but not including, the redemption date.

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 term loan facility (“Delayed Draw Facility”) under its 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 the acceleration of remaining unamortized financing costs.

Interest Expense

Interest expense decreased by approximately $2.8 million for the nine months ended September 30, 2022 compared to 2021, as detailed below.

Component Change in interest expense for the nine months ended September 30, 2022 compared to September 30, 2021

(in thousands)

Increases to interest expense due to:

Issuance of $850 million in aggregate principal of 2.450% senior notes due 2033 on September 29, 2021 $ 15,521

Increase in interest associated with unsecured credit facilities and term loans 9,672

Issuance of $850 million in aggregate principal of 2.550% senior notes due 2032 on March 16, 2021 4,577

Amortization expense of financing fees primarily related to the unsecured term loan 2,208

Total increases to interest expense 31,978

Decreases to interest expense due to:

Redemption of $1.0 billion in aggregate principal of 3.85% senior notes due 2023 on October 15, 2021 (29,051)

Redemption of $850 million in aggregate principal of 4.125% senior notes due 2021 on February 14, 2021 (4,279)

Increase in capitalized interest related to development projects (855)

Other interest expense (excluding senior notes) (592)

Total decreases to interest expense (34,777)

Total change in interest expense $ (2,799)

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

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

Interest capitalized for the nine months ended September 30, 2022 and 2021 was approximately $40.0 million and $39.3 million, respectively.

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

We expect our interest expense will be materially greater in 2023 compared to 2022 due to the cessation of capitalized interest on our development deliveries, acquisitions funded by debt, higher interest rates on our floating rate debt, and the impact of refinancing our 2023 debt maturities at materially higher interest rates.

At September 30, 2022, our variable rate debt consisted of BPLP’s $1.5 billion revolving facility (the “Revolving Facility”) and BPLP’s $730.0 million unsecured credit agreement (the “ Unsecured Term Loan”.) T he Revolving Facility and Unsecured Term Loan had approximately $1.1 billion outstanding as of September 30, 2022.

For a summary of our consolidated debt as of September 30, 2022 and 2021 refer to the heading “ Liquidity and Capital Resources—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 $2.3 million for the nine months ended September 30, 2022 compared to 2021, as detailed below.

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

2022 2021 Change

(in thousands)

767 Fifth Avenue (the General Motors Building) $ 9,338 $ 8,873 $ 465

Times Square Tower 15,394 14,915 479

601 Lexington Avenue (1) 9,281 11,245 (1,964)

100 Federal Street 9,814 10,211 (397)

Atlantic Wharf Office Building (2) 11,069 7,358 3,711

$ 54,896 $ 52,602 $ 2,294

_____________

(1) The decrease was primarily attributable to an increase in operating expenses.

(2) The increase was primarily attributable to an increase in lease revenue from our clients.

Noncontrolling Interest—Common Units of the Operating Partnership

For BXP, noncontrolling interest—common units of the Operating Partnership increased by approximately $47.4 million for the nine months ended September 30, 2022 compared to 2021 due primarily to an increase in allocable income, which was the result of recognizing a greater gain on sales of real estate amount during 2022.

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

Preferred Stock/Unit Redemption Charge

On March 2, 2021, BXP issued a redemption notice for 80,000 shares of its Series B Preferred Stock, which constituted all of the outstanding Series B Preferred Stock, and the corresponding Depositary Shares, each representing 1/100th of a share of Series B Preferred Stock.

The redemption price per share of Series B Preferred Stock was $2,500, plus all accrued and unpaid dividend to, but not including, the redemption date, totaling $2,516.41 per share.

On March 31, 2021, we transferred the full redemption price for all outstanding shares of Series B Preferred Stock of approximately $201.3 million, including approximately $1.3 million of accrued and unpaid dividends to, but not including, the redemption date, to the redemption agent.

The excess of the redemption price over the carrying value of the Series B Preferred Stock and Series B Preferred Units of approximately $6.4 million relates to the original issuance costs and is reflected as a reduction to Net Income Attributable to Boston Properties, Inc.

common shareholders and Net Income Attributable to Boston Properties Limited Partnership common unitholders on the Consolidated Income Statement.

Results of Operations for the Three Months Ended September 30, 2022 and 2021

Net income attributable to Boston Properties, Inc.

and net income attributable to Boston Properties Limited Partnership increased approximately $252.7 million and $281.6 million for the three months ended September 30, 2022 compared to 2021, respectively, as detailed in the following tables and for the reasons discussed below under the heading “ Comparison of the three months ended September 30, 2022 to the three months ended September 30, 2021” 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.

to Net Operating Income and Net Income Attributable to Boston Properties Limited Partnership to Net Operating Income for the three months ended September 30, 2022 and 2021.

For a detailed discussion of NOI, including the reasons management believes NOI is useful to investors, see page 68.

Three months ended September 30,

2022 2021 Increase/

(in thousands)

Net Income Attributable to Boston Properties, Inc.

$ 360,977 $ 108,297 $ 252,680 233.32 %

Net Income Attributable to Noncontrolling Interests:

Noncontrolling interest—common units of the Operating Partnership

40,883 11,982 28,901 241.20 %

Noncontrolling interests in property partnerships

18,801 18,971 (170) (0.90) %

Net Income 420,661 139,250 281,411 202.09 %

Other Expenses:

Interest expense 111,846 105,794 6,052 5.72 %

Losses from investments in securities 1,571 190 1,381 726.84 %

Loss from unconsolidated joint ventures 3,524 5,597 (2,073) (37.04) %

Other Income:

Interest and other income (loss)

3,728 1,520 2,208 145.26 %

Gains on sales of real estate 262,345 348 261,997 75,286.49 %

Other Expenses:

Depreciation and amortization expense 190,675 179,412 11,263 6.28 %

Transaction costs

1,650 1,888 (238) (12.61) %

Payroll and related costs from management services contracts

3,900 3,006 894 29.74 %

General and administrative expense

32,519 34,560 (2,041) (5.91) %

Other Revenue:

Direct reimbursements of payroll and related costs from management services contracts

3,900 3,006 894 29.74 %

Development and management services revenue

7,465 6,094 1,371 22.50 %

Net Operating Income $ 488,908 $ 458,729 $ 30,179 6.58 %

Three months ended September 30,

2022 2021 Increase/

(in thousands)

Net Income Attributable to Boston Properties Limited Partnership $ 403,578 $ 122,014 $ 281,564 230.76 %

Net Income Attributable to Noncontrolling Interests:

Noncontrolling interests in property partnerships

18,801 18,971 (170) (0.90) %

Net Income 422,379 140,985 281,394 199.59 %

Other Expenses:

Interest expense

111,846 105,794 6,052 5.72 %

Losses from investments in securities 1,571 190 1,381 726.84 %

Loss from unconsolidated joint ventures 3,524 5,597 (2,073) (37.04) %

Other Income:

Interest and other income (loss)

3,728 1,520 2,208 145.26 %

Gains on sales of real estate 262,357 348 262,009 75,289.94 %

Other Expenses:

Depreciation and amortization expense 188,969 177,677 11,292 6.36 %

Transaction costs

1,650 1,888 (238) (12.61) %

Payroll and related costs from management services contracts

3,900 3,006 894 29.74 %

General and administrative expense

32,519 34,560 (2,041) (5.91) %

Other Revenue:

Direct reimbursements of payroll and related costs from management services contracts

3,900 3,006 894 29.74 %

Development and management services revenue

7,465 6,094 1,371 22.50 %

Net Operating Income $ 488,908 $ 458,729 $ 30,179 6.58 %

NOI is a non-GAAP financial measure equal to net income attributable to Boston Properties, Inc.

and net income attributable to Boston Properties Limited Partnership, as applicable, the most directly comparable GAAP financial measures, plus (1) net income attributable to noncontrolling interests, interest expense, losses from investments in securities, 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) interest and other income (loss), gains on sales of real estate, direct reimbursements of payroll and related costs from management services contracts and development and management services revenue.

and net income attributable to Boston Properties Limited Partnership.

For example, interest expense is not necessarily linked to the operating performance of a real estate asset and is often incurred at the corporate level as opposed to the property level.

Similarly, interest expense may be incurred at the property level even though the financing proceeds may be used at the corporate level (e.g., used for other investment activity).

In addition, depreciation and amortization expense, because of historical cost accounting and useful life estimates, may distort operating performance measures at the property level.

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

We believe that in order to understand our operating results, NOI should be examined in conjunction with net income attributable to Boston Properties, Inc.

and net income attributable to Boston Properties Limited Partnership as presented in our Consolidated Financial Statements.

NOI should not be considered as a substitute for net

income attributable to Boston Properties, Inc.

Comparison of the three months ended September 30, 2022 to the three months ended September 30, 2021

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

The Same Property Portfolio consists of 128 properties totaling approximately 38.6 million net rentable square feet, excluding unconsolidated joint ventures.

The Same Property Portfolio includes properties acquired or placed in-service on or prior to July 1, 2021 and owned and in-service through September 30, 2022.

The Total Property Portfolio includes the effects of the other properties either acquired, placed in-service, in development or redevelopment after July 1, 2021 or disposed of on or prior to September 30, 2022.

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, 2022 and 2021 with respect to the properties that were acquired, placed in-service, in development or redevelopment or sold.

Same Property Portfolio Properties

Acquired Portfolio Properties

Placed In-Service

Portfolio Properties in

Development or

Redevelopment

Portfolio Properties Sold Portfolio Total Property Portfolio

2022 2021 Increase/

Change 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 Increase/

(dollars in thousands)

Rental Revenue:

Lease Revenue (Excluding Termination Income)

$ 678,399 $ 657,377 $ 21,022 3.20 % $ 13,444 $ 495 $ 24,744 $ 1,752 $ — $ 1,366 $ 6,855 $ 18,754 $ 723,442 $ 679,744 $ 43,698 6.43 %

Termination Income

1,711 1,874 (163) (8.70) % 269 — — — — — — — 1,980 1,874 106 5.66 %

Lease Revenue

680,110 659,251 20,859 3.16 % 13,713 495 24,744 1,752 — 1,366 6,855 18,754 725,422 681,618 43,804 6.43 %

Parking and Other

26,511 22,972 3,539 15.41 % 937 — — — — — 199 283 27,647 23,255 4,392 18.89 %

Total Rental Revenue (1) 706,621 682,223 24,398 3.58 % 14,650 495 24,744 1,752 — 1,366 7,054 19,037 753,069 704,873 48,196 6.84 %

Real Estate Operating Expenses 262,076 244,283 17,793 7.28 % 3,894 334 5,947 1,162 501 560 2,260 5,897 274,678 252,236 22,442 8.90 %

Net Operating Income (Loss), Excluding Residential and Hotel 444,545 437,940 6,605 1.51 % 10,756 161 18,797 590 (501) 806 4,794 13,140 478,391 452,637 25,754 5.69 %

Residential Net Operating Income (2) 7,316 4,849 2,467 50.88 % — — — — — — — — 7,316 4,849 2,467 50.88 %

Hotel Net Operating Income (2) 3,201 1,243 1,958 157.52 % — — — — — — — — 3,201 1,243 1,958 157.52 %

Net Operating Income (Loss) $ 455,062 $ 444,032 $ 11,030 2.48 % $ 10,756 $ 161 $ 18,797 $ 590 $ (501) $ 806 $ 4,794 $ 13,140 $ 488,908 $ 458,729 $ 30,179 6.58 %

_______________

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

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

(2) For a detailed discussion of NOI, including the reasons management believes NOI is useful to investors, see page 68.

Residential Net Operating Income for the three months ended September 30, 2022 and 2021 is comprised of Residential Revenue of $14,340 and $10,894 less Residential Expenses of $7,024 and $6,045, respectively.

Hotel Net Operating Income for the three months ended September 30, 2022 and 2021 is comprised of Hotel Revenue of $11,749 and $5,189 less Hotel Expenses of $8,548 and $3,946, 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 $21.0 million for the three months ended September 30, 2022 compared to 2021.

The increase was a result of our average revenue per square foot increasing by approximately $2.88, contributing approximately $25.4 million, partially offset by an approximately $4.4 million decrease due to our average occupancy decreasing from 91.4% to 90.8%.

Termination Income

Termination income decreased by approximately $0.2 million for the three months ended September 30, 2022 compared to 2021.

Termination income for the three months ended September 30, 2022 related to eight clients across the Same Property Portfolio and totaled approximately $1.7 million, which was primarily related to clients that terminated leases early in San Francisco.

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

Parking and Other Revenue

Parking and other revenue increased by approximately $3.5 million for the three months ended September 30, 2022 compared to 2021.

Parking revenue increased by approximately $3.9 million and was partially offset by a decrease in other revenue of approximately $0.4 million.

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

Real Estate Operating Expenses

Real estate operating expenses from the Same Property Portfolio increased by approximately $17.8 million, or 7.3%, for the three months ended September 30, 2022 compared to 2021, due primarily to an increase in operating expenses, including cleaning, utilities, repairs and maintenance, and roads/grounds/security.

The increase in operating expenses was driven by an increase in physical occupancy.

Properties Acquired Portfolio

The table below lists the properties acquired between July 1, 2021 and September 30, 2022.

Rental revenue and real estate operating expenses increased by approximately $14.2 million and $3.6 million, respectively, for the three months ended September 30, 2022 compared to 2021, as detailed below.

Square Feet Rental Revenue Real Estate Operating Expenses

Name Date acquired 2022 2021 Change 2022 2021 Change

(dollars in thousands)

Shady Grove Innovation District August 2, 2021 232,278 $ 735 $ 495 $ 240 $ 561 $ 334 $ 227

Madison Centre (1) May 17, 2022 754,988 12,293 — 12,293 3,125 — 3,125

125 Broadway September 16, 2022 271,000 1,622 — 1,622 208 — 208

1,258,266 $ 14,650 $ 495 $ 14,155 $ 3,894 $ 334 $ 3,560

______________

(1) Rental revenue for the three months ended September 30, 2022 includes approximately $0.3 million of termination income.

Properties Placed In-Service Portfolio

The table below lists the properties that were placed in-service or partially placed in-service between July 1, 2021 and September 30, 2022.

Rental revenue and real estate operating expenses from our Properties Placed In-Service Portfolio increased by approximately $23.0 million and $4.8 million, respectively, for the three months ended September 30, 2022 compared to 2021, as detailed below.

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

Name Square Feet 2022 2021 Change 2022 2021 Change

(dollars in thousands)

200 West Street (1) Fourth Quarter, 2020 Fourth Quarter, 2021 273,365 $ 4,767 $ 1,752 $ 3,015 $ 1,633 $ 932 $ 701

Reston Next Fourth Quarter, 2021 N/A 1,062,000 9,051 — 9,051 2,830 — 2,830

325 Main Street (2) Second Quarter, 2022 Second Quarter, 2022 414,008 10,082 — 10,082 820 169 651

2100 Pennsylvania Avenue Second Quarter, 2022 N/A 480,000 160 — 160 288 — 288

880 Winter Street (3) Third Quarter, 2022 N/A 244,000 684 — 684 376 61 315

2,473,373 $ 24,744 $ 1,752 $ 22,992 $ 5,947 $ 1,162 $ 4,785

______________

(1) Includes 138,444 square feet of redevelopment that was fully placed in-service in December 2021.

(2) Real estate operating expenses for the three months ended September 30, 2021 were related to demolition costs.

(3) Conversion of a 224,000 square foot office property located in Waltham, Massachusetts to laboratory space.

Properties in Development or Redevelopment Portfolio

The table below lists the properties that were in development or redevelopment between July 1, 2021 and September 30, 2022.

Rental revenue and real estate operating expenses from our Properties in Development or Redevelopment Portfolio decreased by approximately $1.4 million and $0.1 million, respectively, for the three months ended September 30, 2022 compared to 2021, as detailed below.

Rental Revenue Real Estate Operating Expenses

Name Date Commenced Development / Redevelopment Square Feet 2022 2021 Change 2022 2021 Change

(dollars in thousands)

140 Kendrick - Building A July 1, 2022 104,000 $ — $ 1,119 $ (1,119) $ 321 $ 310 $ 11

760 Boylston Street September 12, 2022 118,000 — 247 (247) 180 250 (70)

222,000 $ — $ 1,366 $ (1,366) $ 501 $ 560 $ (59)

Properties Sold Portfolio

The table below lists the properties we sold between July 1, 2021 and September 30, 2022.

Rental revenue and real estate operating expenses from our Properties Sold Portfolio decreased by approximately $12.0 million and $3.6 million, respectively, for the three months ended September 30, 2022 compared to 2021, as detailed below.

Rental Revenue Real Estate Operating Expenses

Name Date Sold Property Type Square Feet 2022 2021 Change 2022 2021 Change

(dollars in thousands)

181, 191 and 201 Spring Street October 25, 2021 Office 333,000 $ — $ 4,019 $ (4,019) $ — $ 1,368 $ (1,368)

195 West Street March 31, 2022 Office 63,500 — 727 (727) — 189 (189)

Virginia 95 Office Park June 15, 2022 Office/Flex 733,421 — 3,397 (3,397) — 925 (925)

601 Massachusetts Avenue August 30, 2022 Office 478,667 7,054 10,894 (3,840) 2,260 3,415 (1,155)

1,608,588 $ 7,054 $ 19,037 $ (11,983) $ 2,260 $ 5,897 $ (3,637)

Residential Net Operating Income

Net operating income for our residential same properties increased by approximately $2.5 million for the three months ended September 30, 2022 compared to 2021.

The following reflects our occupancy and rate information for our residential same properties for the three months ended September 30, 2022 and 2021.

Average Monthly Rental Rate (1) Average Rental Rate Per Occupied Square Foot Average Physical Occupancy (2) Average Economic Occupancy (3)

Name 2022 2021 Change (%) 2022 2021 Change (%) 2022 2021 Change (%) 2022 2021 Change (%)

Proto Kendall Square $ 2,895 $ 2,642 9.6 % $ 5.32 $ 4.82 10.4 % 95.6 % 94.5 % 1.2 % 94.9 % 93.9 % 1.1 %

The Lofts at Atlantic Wharf $ 4,238 $ 3,747 13.1 % $ 4.71 $ 4.17 12.9 % 99.6 % 96.5 % 3.2 % 99.3 % 95.4 % 4.1 %

The Avant at Reston Town Center (4) $ 2,450 $ 2,299 6.6 % $ 2.67 $ 2.50 6.8 % 95.4 % 96.3 % (0.9) % 95.3 % 96.3 % (1.0) %

Signature at Reston $ 2,671 $ 2,429 10.0 % $ 2.75 $ 2.51 9.6 % 96.3 % 93.2 % 3.3 % 95.9 % 92.0 % 4.2 %

The Skylyne $ 3,400 $ 3,307 2.8 % $ 4.27 $ 3.92 8.9 % 92.8 % 48.3 % 92.1 % 90.2 % 41.0 % 120.0 %

_______________

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

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

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

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

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

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

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

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

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

(4) See Note 13 to the Consolidated Financial Statements.

Hotel Net Operating Income

The Boston Marriott Cambridge hotel had net operating income of approximately $3.2 million for the three months ended September 30, 2022, representing an increase of approximately $2.0 million compared to the three months ended September 30, 2021.

The following reflects our occupancy and rate information for the Boston Marriott Cambridge hotel for the three months ended September 30, 2022 and 2021.

Occupancy 75.8 % 49.4 % 53.4 %

Average daily rate $ 328.40 $ 222.31 47.7 %

REVPAR $ 249.06 $ 109.86 126.7 %

Other Operating Revenue and Expense Items

Development and Management Services Revenue

Development and management services revenue increased by approximately $1.4 million for the three months ended September 30, 2022 compared to 2021.

Management services revenue increased by approximately $1.4 million and was primarily related to an increase in property management fees from an unconsolidated joint venture in the Boston region and asset management fees from an unconsolidated joint venture in the Los Angeles region.

General and Administrative Expense

General and administrative expense decreased by approximately $2.0 million for the three months ended September 30, 2022 compared to 2021 primarily due to a decrease in compensation expense of approximately $3.9 million, partially offset by an increase of approximately $1.9 million in other general and administrative expenses.

The decrease in compensation expense primarily related to an approximately $1.4 million decrease in the value of

our deferred compensation plan, and an approximately $2.5 million decrease in other compensation expenses.

The increase in other general and administrative expenses was primarily related to an increase in professional fees.

Capitalized wages for the three months ended September 30, 2022 and 2021 were approximately $3.9 million and $3.4 million, respectively.

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

Transaction Costs

Transaction costs decreased by approximately $0.2 million for the three months ended September 30, 2022 compared to 2021 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 joint ventures and the pursuit of other transactions are expensed as incurred.

Depreciation and Amortization Expense

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

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

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

Depreciation and amortization expense increased by approximately $11.3 million for the three months ended September 30, 2022 compared to 2021, as detailed below.

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

2022 2021 Change

(in thousands)

Same Property Portfolio $ 169,996 $ 174,548 $ (4,552)

Properties Acquired Portfolio 10,399 737 9,662

Properties Placed In-Service Portfolio 7,980 379 7,601

Properties in Development or Redevelopment Portfolio 1,076 277 799

Properties Sold Portfolio 1,224 3,471 (2,247)

$ 190,675 $ 179,412 $ 11,263

Depreciation and amortization expense increased by approximately $11.3 million for the three months ended September 30, 2022 compared to 2021, as detailed below.

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

2022 2021 Change

(in thousands)

Same Property Portfolio $ 168,290 $ 172,813 $ (4,523)

Properties Acquired Portfolio 10,399 737 9,662

Properties Placed In-Service Portfolio 7,980 379 7,601

Properties in Development or Redevelopment Portfolio 1,076 277 799

Properties Sold Portfolio 1,224 3,471 (2,247)

$ 188,969 $ 177,677 $ 11,292

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

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

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

Other Income and Expense Items

Loss from Unconsolidated Joint Ventures

For the three months ended September 30, 2022 compared to 2021, loss from unconsolidated joint ventures decreased by approximately $2.1 million due primarily to an approximately $2.2 million increase in net income from placing in service (1) 7750 Wisconsin Avenue (Marriott International Headquarters) in Bethesda, Maryland and (2) 100 Causeway Street in Boston, Massachusetts.

Gains on Sales of Real Estate

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

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

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

Gains on sales of real estate increased by approximately $262.0 million for the three months ended September 30, 2022 compared to 2021, as detailed below.

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

(dollars in millions)

601 Massachusetts Avenue August 30, 2022 Office 478,667 $ 531.0 $ 512.3 $ 237.4

Broadrun Land Parcel September 15, 2022 Land N/A 27.0 25.6 24.4

$ 558.0 $ 537.9 $ 261.8 (1)

6595 Springfield Center Drive December 13, 2018 Office 634,000 N/A N/A $ 0.3 (2)

N/A N/A $ 0.3

(1) Excludes approximately $0.5 million of gains on sales of real estate recognized during the three months ended September 30, 2022 related to gains on sales of real estate occurring in the prior periods.

(2) 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.

As a result, we recognized a gain of approximately $0.3 million.

Gains on sales of real estate increased by approximately $262.0 million for the three months ended September 30, 2022 compared to 2021, as detailed below.

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

(dollars in millions)

601 Massachusetts Avenue August 30, 2022 Office 478,667 $ 531 $ 512.3 $ 237.5

Broadrun Land Parcel September 15, 2022 Land N/A 27.0 25.6 24.4

$ 558.0 $ 537.9 $ 261.9 (1)

6595 Springfield Center Drive December 13, 2018 Office 634,000 N/A N/A $ 0.3 (2)

N/A N/A $ 0.3

(1) Excludes approximately $0.4 million of gains on sales of real estate recognized during the three months ended September 30, 2022 related to the sale of real estate occurring in the prior periods.

(2) 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.

As a result, we recognized a gain of approximately $0.3 million.

Interest and Other Income (Loss)

Interest and other income (loss) increased by approximately $2.2 million for the three months ended September 30, 2022 compared to 2021, due primarily to an increase of approximately $2.2 million in interest income due to increased interest earned on our deposits.

Losses from Investments in Securities

Losses from investments in securities for the three months ended September 30, 2022 and 2021 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.

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

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

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

During the three months ended September 30, 2022 and 2021, we recognized losses of approximately $1.6 million and $0.2 million, respectively, on these investments.

By comparison, our general and administrative expense decreased by approximately $1.6 million and $0.2 million during the three months ended September 30, 2022 and 2021, respectively, as a result of 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 three months ended March 31, 2023 and 2022, we recognized gains (losses) of approximately $1.7 million and $(2.3) million, respectively, on these investments.

By comparison, our general and administrative expense increased (decreased) by approximately $1.7 million and $(2.3) million during the three months ended March 31, 2023 and 2022, 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.

Unrealized Gain on Non-Real Estate Investment

During the year ended December 31, 2022, we began investing in non-real estate investments, which are primarily environmentally-focused investment funds.

As a result, for the three months ended March 31, 2023, we recognized an unrealized gain of $0.3 million due to the observable changes in the fair value of the investments.

Interest Expense

Interest expense increased by approximately $6.1 million for the three months ended September 30, 2022 compared to 2021, as detailed below.

Component Change in interest expense for the three months ended September 30, 2022 compared to September 30, 2021

Interest expense increased by approximately $33.0 million for the three months ended March 31, 2023 compared to 2022, as detailed below.

Component Change in interest expense for the three months ended March 31, 2023 compared to March 31, 2022

(in thousands)

Increases to interest expense due to:

Increase in interest associated with unsecured credit facilities and term loans $ 7,401

Issuance of $850 million in aggregate principal of 2.450% senior notes due 2033 on September 29, 2021 5,097

Decrease in capitalized interest related to development projects 1,880

Increase in interest associated with unsecured term loan $ 16,210

Issuance of $750 million in aggregate principal of 6.750% senior notes due 2027 on November 17, 2022 12,675

Increase in interest due to finance lease for one in-service property 1,894

Amortization expense of financing fees primarily related to unsecured term loan 1,386

Total increases to interest expense 15,785

Decreases to interest expense due to:

Redemption of $1.0 billion in aggregate principal of 3.85% senior notes due 2023 on October 15, 2021 (9,684)

Decrease in capitalized interest related to development projects 1,308

Other interest expense (excluding senior notes) 44

Total decreases to interest expense (9,733)

Total increases to interest expense 33,517

Decrease to interest expense due to:

Decrease in interest associated with unsecured credit facilities (538)

Total decrease to interest expense (538)

Total change in interest expense $ 32,979

1 unchanged sentence

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 September 30, 2022 and 2021 was approximately $12.2 million and $14.2 million, respectively.

Interest capitalized for the three months ended March 31, 2023 and 2022 was approximately $10.6 million and $13.7 million, respectively.

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

At September 30, 2022, our outstanding variable rate debt consisted of BPLP’s $1.5 billion Revolving Facility and $730.0 million Unsecured Term Loan.

T he Revolving Facility and Unsecured Term Loan had approximately $1.1 billion outstanding as of September 30, 2022.

For a summary of our consolidated debt as of September 30, 2022 and September 30, 2021 refer to the heading “ Liquidity and Capital Resources—Debt Financing” within “ Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations.

At March 31, 2023, our variable rate debt consisted of BPLP’s $1.5 billion unsecured credit facility (the “Revolving Facility”) and $1.2 billion 2023 Unsecured Term Loan.

For a summary of our consolidated debt as of March 31, 2023 and March 31, 2022 refer to the heading “ Liquidity and Capital Resources—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 decreased by approximately $0.2 million for the three months ended September 30, 2022 compared to 2021, as detailed below.

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

Noncontrolling interests in property partnerships increased by approximately $1.1 million for the three months ended March 31, 2023 compared to 2022, as detailed below.

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

2023 2022 Change

7 unchanged sentences

_______________

(1) The decrease was primarily attributable to an increase in operating expenses.

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

Noncontrolling Interest—Common Units of the Operating Partnership

For BXP, noncontrolling interest—common units of the Operating Partnership increased by approximately $28.9 million for the three months ended September 30, 2022 compared to 2021 due primarily to an increase in

allocable income, which was the result of recognizing a greater gain on sales of real estate during 2022.

For BXP, noncontrolling interest—common units of the Operating Partnership decreased by approximately $7.3 million for the three months ended March 31, 2023 compared to 2022 due primarily to a decrease in allocable income, which included recognizing a greater gain on sales of real estate during 2022.

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

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• fund normal recurring expenses;

• meet debt service and principal repayment obligations, including the Unsecured Term Loan and balloon payments on maturing debt;

• meet debt service and principal repayment obligations and balloon payments on maturing debt, including $500 million of 3.125% unsecured senior notes due September 1, 2023 and $700 million of 3.800% unsecured senior notes due February 1, 2024;

• fund development and redevelopment costs;

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

• sales of real estate;

• sales of real estate and interests in joint ventures owning real estate;

• private equity sources, including through our Strategic Capital Program (“SCP”) with large institutional investors;

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

The following table presents information on properties under construction and redevelopment as of September 30, 2022 (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 September 30, 2022

The following table presents information on properties under construction/redevelopment as of March 31, 2023 (dollars in thousands):

Construction/Redevelopment 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 March 31, 2023

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

140 Kendrick - Building A (Redevelopment) Third Quarter, 2023 Needham, MA 1 104,000 $ 19,133 $ 26,600 $ — $ — $ 7,467 100 %

Fourth Quarter, 2023 Reston, VA 2 1,062,000 560,445 715,300 — — 154,855 87 % (6)

2100 Pennsylvania Avenue Third Quarter, 2024 Washington, DC 1 480,000 334,638 375,900 — — 41,262 84 % (6)

360 Park Avenue South (42% ownership) First Quarter, 2025 New York, NY 1 450,000 200,474 219,000 92,774 87,299 13,051 — % (8)

360 Park Avenue South (42% ownership) Fourth Quarter, 2025 New York, NY 1 450,000 206,950 248,000 92,774 89,677 37,953 — % (7)

Reston Next Office Phase II Second Quarter, 2025 Reston, VA 1 90,000 29,578 61,000 — — 31,422 — %

Platform 16 Building A (55% ownership) Fourth Quarter, 2026 San Jose, CA 1 389,500 93,161 231,900 — — 138,739 — % (8)

Total Office Properties under Construction 7 2,575,500 1,159,864 1,609,900 92,774 87,299 444,561 51 %

Total Office Properties under Construction/Redevelopment 5 1,513,500 683,460 943,400 92,774 89,677 256,843 34 %

Laboratory/Life Sciences

880 Winter Street (Redevelopment) First Quarter, 2023 Waltham, MA 1 244,000 100,112 108,000 — — 7,888 97 % (10)

751 Gateway (49% ownership) Second Quarter, 2024 South San Francisco, CA 1 231,000 95,636 127,600 — — 31,964 100 %

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180 CityPoint Fourth Quarter, 2024 Waltham, MA 1 329,000 168,668 274,700 — — 106,032 43 %

300 Binney Street First Quarter, 2025 Cambridge, MA 1 236,000 14,914 210,200 — — 195,286 100 %

105 Carnegie Center (Redevelopment) Second Quarter, 2025 Princeton, NJ 1 73,000 1,030 40,600 — — 39,570 — %

651 Gateway (50% ownership) (Redevelopment) Fourth Quarter, 2025 South San Francisco, CA 1 327,000 46,074 146,500 — — 100,426 7 %

Total Laboratory/Life Sciences Properties under Construction 5 1,244,000 367,563 771,900 — — 404,337 49 %

290 Binney Street Second Quarter, 2026 Cambridge, MA 1 566,000 124,026 1,185,200 — — 1,061,174 100 %

Total Laboratory/Life Sciences Properties under Construction/Redevelopment 7 1,875,000 510,660 2,099,900 — — 1,589,240 64 %

Reston Next Residential (508 units) (20% ownership) Second Quarter, 2026 Reston, VA 1 417,000 11,509 47,700 28,000 5,045 13,236 — %

Total Residential Property under Construction 1 417,000 11,394 47,700 28,000 4,116 12,422 —

Total Residential Properties under Construction 1 417,000 11,509 47,700 28,000 5,045 13,236 —

760 Boylston Street (Redevelopment) Second Quarter, 2024 Boston, MA 1 118,000 4,047 43,800 — — 39,753 100 %

Total Retail Property under Construction 1 118,000 2,355 43,800 — — 41,445 100 %

Reston Next Retail Fourth Quarter, 2025 Reston, VA 1 33,000 18,495 26,600 — — 8,105 — %

Total Retail Properties under Construction/Redevelopment 2 151,000 22,542 70,400 — — 47,858 78 %

View Boston Observatory at The Prudential Center (Redevelopment) N/A Boston, MA — 59,000 161,945 182,300 — — 20,355 N/A (9)

Total Properties under Construction 14 4,413,500 $ 1,678,072 $ 2,655,600 $ 120,774 $ 91,415 $ 948,169 52 % (12)

Total Properties under Construction/Redevelopment 15 4,015,500 $ 1,390,116 $ 3,343,700 $ 120,774 $ 94,722 $ 1,927,532 52 % (10)

(1) Represents our share.

(2) Each of Investment to Date, Estimated Total Investment and Estimated Future Equity Requirement represent 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 September 30, 2022.

(3) Includes approximately $174.1 million of unpaid but accrued construction costs and leasing commissions.

(4) Excludes approximately $174.1 million of unpaid but accrued construction costs and leasing commissions.

(5) Represents percentage leased as of November 1, 2022, including leases with future commencement dates.

(6) The property was 69% placed in-service as of September 30, 2022.

(7) The property was 6% placed in-service as of September 30, 2022.

(5) Represents percentage leased as of April 28, 2023, including leases with future commencement dates.

(6) The property was 64% placed in-service as of March 31, 2023.

See Note 13 to the Consolidated Financial Statements.

(7) Investment to Date includes all related costs incurred prior to the contribution of the property by us to the joint venture on December 15, 2021 totaling approximately $107 million and our proportionate share of the loan.

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(8) Estimated total investment represents the costs to complete Building A, a 389,500 square foot building, and Building A’s proportionate share of land and garage costs.

In conjunction with the construction of Building A, garage and site work will be completed for Phase II, which will support approximately 700,000 square feet of development in two office buildings, budgeted to be an incremental $141 million.

(10) The property was 25% placed in-service as of September 30, 2022.

(9) We expect to place this project in-service and open to the public in the second quarter of 2023.

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

Estimated total investment excludes approximately $210 million related to the redevelopment of 300 Binney Street which is currently in-service.

We terminated our existing lease agreement with Biogen at 300 Binney Street to facilitate the redevelopment of the property, which is expected to begin in early 2023.

Biogen will be vacating the property in phases through early 2023.

The project is 100% pre-leased.

The commencement of construction is subject to various conditions.

There can be no assurance that we will commence the redevelopment on the terms and schedule currently contemplated or at all.

Lease revenue (which includes recoveries from clients), 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.

Lease revenue (which includes recoveries from clients), other income from operations, available cash balances, proceeds from mortgage financings and offerings of unsecured indebtedness, draws on BPLP’s Revolving Facility, and funding from institutional private equity partners 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.

We seek to maximize income from our existing properties by maintaining quality standards for our properties that promote high occupancy rates and permit increases in rental rates while reducing client turnover and controlling operating expenses.

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Material adverse changes in one or more sources of capital may adversely affect our net cash flows.

We expect our primary uses of capital over the next twelve months will be to fund the anticipated acquisition of an approximate 27% interest in the joint venture that owns 200 Fifth Avenue in New York City, the commencement, continuation and completion of our current and committed development and redevelopment projects, repaying debt maturities (as discussed below), servicing the interest payments on our outstanding indebtedness, and satisfying our REIT distribution requirements.

As of September 30, 2022, we had 14 properties under development or redevelopment.

Our share of the remaining development and redevelopment costs of active development and redevelopment projects that we expect to fund through 2026 was approximately $948.2 million (excluding costs related to 300 Binney Street).

In the third quarter of 2022, we commenced two redevelopment projects and committed to begin a third redevelopment project in early 2023 described below:

• 140 Kendrick Street Building A in Needham, Massachusetts.

When completed, the building will consist of approximately 104,000 net rentable square feet and will be the first net zero, carbon neutral office repositioning of this scale in Massachusetts.

This project is 100% pre-leased.

• 760 Boylston Street, a retail property at the Prudential Center in Boston, Massachusetts.

The redevelopment is a modernization of the approximately 118,000 net rentable square foot space.

This project is 100% pre-leased.

We expect our primary uses of capital over the next twelve months will be to fund the continuation and completion of our current and committed development and redevelopment projects, repay debt maturities (as discussed below), service the interest payments on our outstanding indebtedness, and satisfy our REIT distribution requirements.

As of March 31, 2023, we had 15 properties under development or redevelopment.

Our share of the estimated total cost for these projects is approximately $3.3 billion, of which approximately $1.9 billion remains to be funded with equity through 2026.

In the first quarter of 2023, we commenced the development/redevelopment of:

• 290 Binney Steet in Cambridge, Massachusetts, an approximately 566,000 net rentable square foot laboratory/life sciences project.

The project has a total budget of approximately $1.2 billion and is expected to be completed in 2026.

The project is 100% pre-leased to AstraZeneca.

• 300 Binney Street in Cambridge, Massachusetts.

The conversion of this approximately 195,000 net rentable square foot property into an approximately 240,000 net rentable square foot laboratory/life sciences property has a total budgeted cost of $210.0 million and is expected to begin in early 2023.

This project is 100% pre-leased.

There can be no assurance that we will commence the redevelopment on the terms and schedule currently contemplated or at all.

On September 16, 2022, we acquired 125 Broadway in Cambridge, Massachusetts for a net purchase price, including transaction costs, of approximately $592.4 million.

The acquisition was completed with available cash and borrowings under BPLP’s Revolving Facility.

125 Broadway is a 271,000 square foot, six-story, laboratory/life sciences property.

The property is 100% leased.

In the third quarter of 2022, we completed the sale of 601 Massachusetts Avenue located in Washington, DC and two parcels of land located in Loudoun County, Virginia for aggregate net proceeds of $537.9 million.

On October 6, 2022, we entered into an agreement to sell the residential component of The Avant at Reston Town Center located in Reston, Virginia for a gross sale price of $141 million.

There can be no assurance that we will complete the sale on the terms currently contemplated or at all.

In July 2021, we announced the formation of the SCP with two partners each having a targeted equity commitment of $1.0 billion and a $250 million commitment from us.

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

All investments are discretionary to each partner.

The SCP 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, enhances our returns through fee income, and in some investments provides us the opportunity to realize a greater share of income upon achieving certain success criteria.

These large financial partners are among the world’s largest sovereign wealth funds and pension plans.

As we move forward, we anticipate increasing our use of joint venture partner equity to manage our debt levels.

We have no remaining debt maturities in 2022.

Our 2023 debt maturities include (1) the Unsecured Term Loan, which matures on May 16, 2023, and (2) $500.0 million aggregate principal amount of BPLP’s 3.125% senior unsecured notes, which mature on September 1, 2023.

In our unconsolidated joint venture portfolio, we have approximately $533.6 million (our share) of debt maturating in 2023.

We expect to fund 2023 debt maturities using available cash balances, proceeds from asset sales, BPLP’s Revolving Facility, and/or through refinancings.

As of November 1, 2022, we had available cash of approximately $268.5 million (of which approximately $100.3 million is attributable to our consolidated joint venture partners).

Our liquidity and capital resources depend on a wide range of factors and we believe that our access to capital and our strong liquidity, including the approximately $1.1 billion available under the Revolving Facility and our available cash, as of November 1, 2022, are sufficient to fund our remaining capital requirements on existing development and redevelopment projects, fund acquisitions, repay or refinance our maturing indebtedness when due, satisfy our REIT distribution requirements and still allow us to act opportunistically on attractive investment opportunities.

The redevelopment of this approximately 195,000 net rentable square foot property into an approximately 236,000 net rentable square foot laboratory/life sciences property has a total budgeted cost of $210.2 million.

This project is 100% pre-leased to the Broad Institute.

On January 4, 2023, we entered into the 2023 Unsecured Term Loan, which provided for a $1.2 billion unsecured term loan facility that matures in May 2024, with one, twelve-month extension, subject to the satisfaction of customary conditions.

Upon entry into the credit agreement, we borrowed the full $1.2 billion available under the 2023 Unsecured Term Loan, a portion of which was used to repay in full the $730.0 million 2022 Unsecured Term Loan, which was scheduled to mature on May 16, 2023.

After repayment of the 2022 Unsecured Term Loan on January 4, 2023, our remaining 2023 and 2024 debt maturities include (1) $500.0 million aggregate principal amount of BPLP’s 3.125% senior unsecured notes, which mature on September 1, 2023, (2) $700.0 million aggregate principal amount of BPLP’s 3.800% senior unsecured notes, which mature on February 1, 2024 and (3) the $1.2 billion 2023 Unsecured Term Loan (unless extended as noted above).

In our unconsolidated joint venture portfolio, after extending the construction loan collateralized by 7750 Wisconsin Avenue in April 2023 (see Note 13 to the Consolidated Financial Statements), we have approximately $481.2 million (our share) of debt maturing through 2024.

We expect to fund 2023 and 2024 debt maturities using available cash balances, proceeds from asset sales, draws on BPLP’s Revolving Facility, and/or through refinancings using secured debt, unsecured debt or both.

We expect our quarterly interest expense will increase moderately for the remainder of 2023 compared to the first quarter of 2023 primarily due to the cessation of capitalized interest on our 2023 development deliveries.

As of April 28, 2023, we had available cash of approximately $670.2 million (of which approximately $99.9 million is attributable to our consolidated joint venture partners).

Our liquidity and capital resources depend on a wide range of factors, and we believe that our access to capital and our strong liquidity, including the approximately $1.5 billion available under BPLP’s Revolving Facility and our available cash, as of April 28, 2023, are sufficient to fund our remaining capital requirements on existing development and redevelopment projects, fund acquisitions, repay our maturing indebtedness when due (if not refinanced), satisfy our REIT distribution requirements and still allow us to act opportunistically on attractive investment opportunities.

We may seek to enhance our liquidity to fund our current and future development activity, pursue additional attractive investment opportunities and refinance or repay indebtedness.

Depending on interest rates, the overall conditions in the debt and public and private equity markets, and our leverage at the time, we may decide to access one or more of these capital sources (including utilization of BXP’s $600.0 million “at the market” equity offering program).

Doing so may result in us carrying additional cash and cash equivalents pending our use of the proceeds, which could increase our net interest expense or be dilutive to our earnings, or both.

We have not sold any shares under BXP’s $600.0 million “at the market” equity offering program.

Depending on interest rates, the overall conditions in the debt and public and private equity markets, and our leverage at the time, we may decide to access one or more of these capital sources.

Doing so may result in us carrying additional cash and cash equivalents

pending our use of the proceeds, which could increase our net interest expense or be dilutive to our earnings, or both.

We have not sold any shares under BXP’s $600.0 million “at the market” equity offering program, which is scheduled to expire on May 22, 2023.

We expect to replace the “at the market” equity offering program prior to its expiration.

REIT Tax Distribution Considerations

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

Cash and cash equivalents and cash held in escrows aggregated approximately $448.9 million and $1.1 billion at September 30, 2022 and 2021, respectively, representing a decrease of approximately $633.0 million.

Cash and cash equivalents and cash held in escrows aggregated approximately $964.3 million and $482.3 million at March 31, 2023 and 2022, respectively, representing an increase of approximately $482.0 million.

The following table sets forth changes in cash flows:

Nine months ended September 30,

Three months ended March 31,

2023 2022 Change

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Our principal source of cash flow is related to the operation of our properties.

The weighted-average term of our in-place leases, including leases signed by our unconsolidated joint ventures, excluding residential units, was approximately 7.8 years as of September 30, 2022, with occupancy rates historically in the range of 88% to 94%.

The weighted-average term of our in-place leases, including leases signed by our unconsolidated joint ventures, excluding residential units, was approximately 7.6 years as of March 31, 2023, with occupancy rates historically in the range of 88% to 94%.

Generally, our properties generate a relatively consistent stream of cash flow that provides us with resources to pay operating expenses, debt service and fund regular quarterly dividend and distribution payment requirements.

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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 our market position.

Cash used in investing activities for the nine months ended September 30, 2022 and September 30, 2021 is detailed below:

Nine months ended September 30,

Cash used in investing activities for the three months ended March 31, 2023 and March 31, 2022 is detailed below:

Three months ended March 31,

(in thousands)

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Proceeds from the sales of real estate (2) — 35,397

Proceeds from assignment fee (4) 6,624 —

Capital contributions to unconsolidated joint ventures (3) (60,745) (26,293)

Capital distributions from unconsolidated joint ventures (4) — 20,095

Proceeds from sale of investment in unconsolidated joint venture (7) — 17,789

Proceeds from note receivable (8) 10,000 —

Investment in non-real estate investments (733) —

Investments in securities, net 1,843 5,338

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

(1) On September 16, 2022, we acquired 125 Broadway in Cambridge, Massachusetts for a net purchase price, including transaction costs, of approximately $592.4 million.

The acquisition was completed with available cash and borrowings under BPLP’s Revolving Facility.

125 Broadway is a 271,000 net rentable square foot, six-story, laboratory/life sciences property.

On May 17, 2022, we completed the acquisition of Madison Centre in Seattle, Washington, for an aggregate purchase price, including transaction costs, of approximately $724.3 million.

Madison Centre is an approximately 755,000 net rentable square foot, 37-story, LEED-Platinum certified, premier workplace.

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.

(2) Construction in progress for the nine months ended September 30, 2022 included ongoing expenditures associated with Reston Next, 2100 Pennsylvania Avenue and 880 Winter Street, each of which are partially placed in-service, and 325 Main Street, which was completed and fully placed in-service during the nine months ended September 30, 2022.

In addition, we incurred costs associated with our continued development/redevelopment of 180 CityPoint, View Boston Observatory at The Prudential Center, 103 CityPoint, Reston Next Office Phase II, 140 Kendrick Street Building A and 760 Boylston Street.

Construction in progress for the nine months ended September 30, 2021 included 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.

(3) On August 30, 2022, we completed the sale of 601 Massachusetts Avenue located in Washington, DC for a gross sale price of $531.0 million.

Net cash proceeds totaled approximately $512.3 million, resulting in a gain on sale of real estate totaling approximately $237.4 million for BXP and approximately $237.5 million for BPLP.

601 Massachusetts Avenue is an approximately 479,000 net rentable square foot premier workplace.

On September 15, 2022, we completed the sale of two parcels of land located in Loudoun County, Virginia for a gross sale price of $27.0 million.

Net cash proceeds totaled approximately $25.6 million, resulting in a gain on sale of real estate totaling approximately $24.4 million for BXP and BPLP.

On June 15, 2022, we completed the sale of our Virginia 95 Office Park properties located in Springfield, Virginia for an aggregate gross sale price of $127.5 million.

Net cash proceeds totaled approximately $121.9 million, resulting in a gain on sale of real estate totaling approximately $96.2 million for BXP and approximately $99.5 million for BPLP.

Virginia 95 Office Park consists of eleven office/flex properties aggregating approximately 733,000 net rentable square feet.

(1) Construction in progress for the three months ended March 31, 2023 included ongoing expenditures associated with 2100 Pennsylvania Avenue, which was partially placed in-service during the three months ended March 31, 2023.

Construction in progress for the three months ended March 31, 2022 included ongoing expenditures associated with Reston Next, which is partially placed in-service.

In addition, we incurred costs associated with our continued development/redevelopment of 325 Main Street, 2100 Pennsylvania Avenue, 180 CityPoint, View Boston Observatory at The Prudential Center, 880 Winter Street and 103 CityPoint.

(2) On March 31, 2022, we completed the sale of 195 West Street located in Waltham, Massachusetts for a gross sale price of $37.7 million.

Net cash proceeds totaled approximately $35.4 million, resulting in a gain on sale of real estate totaling approximately $22.7 million for BXP and approximately $23.4 million for BPLP.

195 West Street is an approximately 63,500 net rentable square foot office property.

(4) 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.

On April 7, 2022, we executed an agreement to assign the right to acquire 11251 Roger Bacon Drive to a third party for an assignment fee of approximately $6.9 million.

Net cash proceeds totaled approximately $6.6 million.

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

The property was 100% leased.

(5) Capital contributions to unconsolidated joint ventures for the nine months ended September 30, 2022 consisted primarily of cash contributions of approximately $44.8 million, $31.6 million and $16.4 million to our Gateway Commons, Platform 16 and 751 Gateway joint ventures, respectively.

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.

(6) Capital distributions from unconsolidated joint ventures for the nine months ended September 30, 2022 consisted primarily of a cash distribution totaling approximately $21.6 million and $11.6 million from our Metropolitan Square and 7750 Wisconsin Avenue joint ventures, respectively.

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

Net cash proceeds to us totaled approximately $17.8 million after repayment of our share of debt totaling approximately $15.1 million.

(8) An affiliate of The Bernstein Companies exercised its option to borrow $10.0 million from us, and we provided the financing on June 1, 2020.

The financing bore interest at a fixed rate of 8.00% per annum, compounded monthly, and was scheduled to mature on the fifth anniversary of the date on which the base building of the affiliate of The Bernstein Companies’ hotel property was substantially completed.

On June 27, 2022, the borrower repaid the loan in full, including approximately $1.6 million of accrued interest.

Cash provided by financing activities for the nine months ended September 30, 2022 totaled approximately $348.5 million.

This amount consisted primarily of borrowings under BPLP’s Revolving Facility and Unsecured Term Loan partially offset by the payment of our regular dividends and distributions to our shareholders and unitholders and distributions to noncontrolling interests in property partnerships.

195 West Street is an approximately 63,500 net rentable square foot premier workplace.

(3) Capital contributions to unconsolidated joint ventures for the three months ended March 31, 2023 consisted primarily of cash contributions of approximately $17.3 million, $15.6 million, $11.6 million, $6.5 million and $4.0 million to our Worldgate Drive, Gateway Commons, Platform 16, Dock 72 and 751 Gateway joint ventures, respectively.

On January 31, 2023, we entered into a new joint venture for 13100 and 13150 Worldgate Drive located in Herndon, Virginia.

Capital contributions to unconsolidated joint ventures for the three months ended March 31, 2022 consisted primarily of cash contributions of approximately $14.1 million and $7.9 million to our Gateway Commons and Platform 16 joint ventures, respectively.

(4) Capital distributions from unconsolidated joint ventures for the three months ended March 31, 2022 consisted primarily of a cash distribution totaling approximately $20.1 million from our Metropolitan Square joint venture resulting from the excess proceeds from the refinancing of the mortgage and mezzanine loans on the property.

Cash provided by financing activities for the three months ended March 31, 2023 totaled approximately $279.1 million.

This amount consisted primarily of borrowings under the 2023 Unsecured Term Loan, partially offset by the repayment of our 2022 Unsecured Term Loan and payment of our regular dividends and distributions to our

shareholders and unitholders and distributions to noncontrolling interests in property partnerships.

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

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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):

September 30, 2022

March 31, 2023

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

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_______________

(1) Values are based on the closing price per share of BXP’s Common Stock on the New York Stock Exchange on September 30, 2022 of $74.97.

(2) Includes long-term incentive plan units (including 2012 OPP Units and 2013 - 2019 MYLTIP Units) but excludes the 2020 - 2022 MYLTIP Units because the three-year performance periods have not ended.

(1) Values are based on the closing price per share of BXP’s Common Stock on the New York Stock Exchange on March 31, 2023 of $54.12.

(2) Includes long-term incentive plan units (including 2012 OPP Units and 2013 - 2020 MYLTIP Units) but excludes the 2021 - 2023 MYLTIP Units because the three-year performance periods had not ended as of March 31, 2023.

(3) See page 64 for additional information.

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(1) our consolidated debt;

(2) the product of (x) the closing price per share of BXP Common Stock on September 30, 2022, 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 March 31, 2023, as reported by the New York Stock Exchange, multiplied by (y) the sum of:

(i) the number of outstanding shares of Common Stock of BXP,

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The calculation of consolidated market capitalization does not include LTIP Units issued in the form of MYLTIP Awards unless and until certain performance thresholds are achieved and they are earned.

Because their three-year performance periods have not yet ended, 2020 - 2022 MYLTIP Units are not included in this calculation as of September 30, 2022.

Because their three-year performance periods have not yet ended, 2021 - 2023 MYLTIP Units are not included in this calculation as of March 31, 2023.

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.

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Debt Financing

As of September 30, 2022, we had approximately $13.8 billion of outstanding consolidated indebtedness, representing approximately 51.33% of our Consolidated Market Capitalization as calculated above consisting of approximately (1) $9.5 billion (net of discount and deferred financing fees) in publicly traded unsecured senior notes having a GAAP weighted-average interest rate of 3.43% per annum and maturities in 2023 through 2033, (2) $3.3 billion (net of deferred financing fees) of property-specific mortgage debt having a GAAP weighted-average interest rate of 3.42% per annum and a weighted-average term of 6.1 years, (3) $340.0 million outstanding under BPLP’s Revolving Facility that matures on June 15, 2026 and (4) $730.0 million outstanding under BPLP’s Unsecured Term Loan that matures on May 16, 2023.

The table below summarizes the aggregate carrying value of our mortgage notes payable and BPLP’s unsecured senior notes, line of credit, and Unsecured Term Loan, as well as Consolidated Debt Financing Statistics at September 30, 2022 and September 30, 2021.

September 30,

As of March 31, 2023, we had approximately $14.7 billion of outstanding consolidated indebtedness, representing approximately 60.77% of our Consolidated Market Capitalization as calculated above consisting of approximately (1) $10.2 billion (net of discount and deferred financing fees) in publicly traded unsecured senior notes having a GAAP weighted-average interest rate of 3.69% per annum and maturities in 2023 through 2033, (2) $3.3 billion (net of deferred financing fees) of property-specific mortgage debt having a GAAP weighted-average interest rate of 3.42% per annum and a weighted-average term of 5.6 years and (3) $1.2 billion outstanding under BPLP’s 2023 Unsecured Term Loan that matures on May 16, 2024.

The table below summarizes the aggregate carrying value of our mortgage notes payable and BPLP’s unsecured senior notes, unsecured line of credit, and unsecured term loan, as well as Consolidated Debt Financing Statistics at March 31, 2023 and March 31, 2022.

(dollars in thousands)

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BXP’s Share of Debt $ 14,955,407 $ 13,078,509

September 30,

Consolidated Debt Financing Statistics:

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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.

Based on BPLP’s September 30, 2022 credit rating, (1) the applicable Eurocurrency and LIBOR Daily Floating Rate margins are 0.775%, (2) the alternate base rate margin is zero basis points and (3) the facility fee is 0.15% per annum.

At September 30, 2022, BPLP had $340.0 million of borrowings under its Revolving Facility and outstanding letters of credit totaling approximately $6.4 million, with the ability to borrow approximately $1.2 billion.

At November 1, 2022, BPLP had $440.0 million of borrowings under its Revolving Facility and outstanding letters of credit totaling approximately $6.4 million, with the ability to borrow approximately $1.1 billion.

Based on BPLP’s March 31, 2023 credit rating, (1) the applicable Eurocurrency and LIBOR Daily Floating Rate margins are 0.775%, (2) the alternate base rate margin is zero basis points and (3) the facility fee is 0.15% per annum.

The 2021 Credit Facility includes provisions which allow LIBOR Daily Floating Rate to be switched to SOFR.

At March 31, 2023, BPLP had no borrowings under its Revolving Facility and outstanding letters of credit totaling approximately $6.4 million, with the ability to borrow approximately $1.5 billion.

At April 28, 2023, BPLP had no borrowings under its Revolving Facility and outstanding letters of credit totaling approximately $6.4 million, with the ability to borrow approximately $1.5 billion.

Unsecured Term Loan

On May 17, 2022, BPLP entered into an Unsecured Term Loan providing for a single borrowing of up to $730.0 million.

The Unsecured Term Loan matures on May 16, 2023.

At BPLP’s option, the Unsecured Term Loan will bear interest at a rate per annum equal to (A) (1) a base rate per annum equal to the greater of (a) the federal funds rate plus 0.5%, (b) the administrative agent’s prime rate, (c) term SOFR plus 1.00% and (d) 1.00%, or (2) a term SOFR rate per annum equal to the forward-looking SOFR term rate administered by CME Group Benchmark Administration (“CME”) two business days prior to the commencement of such interest period;

or if the rate is unavailable, then the forward-looking SOFR term rate administered by CME on the first business day immediately prior thereto, in each case, plus 0.10%, and (B) a margin ranging from zero to 160 basis points based on BPLP’s credit rating.

On May 17, 2022, BPLP exercised its option to draw $730.0 million under the Unsecured Term Loan (See Notes 3 and 6 to the Consolidated Financial Statements).

As of September 30, 2022, the Unsecured Term Loan bears interest at a variable rate equal to term SOFR plus 0.95% per annum based on BPLP’s current credit rating at September 30, 2022.

At September 30, 2022, BPLP had $730.0 million outstanding under its Unsecured Term Loan.

On January 4, 2023, BPLP entered into the 2023 Unsecured Term Loan, which provided for a single borrowing

of up to $1.2 billion.

The 2023 Unsecured Term Loan matures on May 16, 2024, with one 12-month extension option, subject to customary conditions.

At BPLP’s option, loans under the 2023 Unsecured Term Loan will bear interest at a rate per annum equal to (1) a base rate equal to the greatest of (a) the Federal Funds rate plus 0.5%, (b) the administrative agent’s prime rate, (c) Term SOFR for a one-month period plus 1.00%, and (d) 1.00%, in each case, plus a margin ranging from 0 to 60 basis points based on BPLP’s credit rating;

or (2) a rate equal to adjusted Term SOFR with a one-month period plus a margin ranging from 75 to 160 basis points based on BPLP’s credit rating.

On January 4, 2023, upon entry into the credit agreement, BPLP exercised its option to draw $1.2 billion under the 2023 Unsecured Term Loan, a portion of which was used to repay in full the 2022 Unsecured Term Loan, which was scheduled to mature on May 16, 2023.

There was no prepayment penalty associated with the repayment of the 2022 Unsecured Term Loan.

As of March 31, 2023, the 2023 Unsecured Term Loan bears interest at a rate equal to adjusted Term SOFR plus 0.85% per annum based on BPLP’s current credit rating at March 31, 2023 (See Note 13 to the Consolidated Financial Statements).

At March 31, 2023, BPLP had $1.2 billion outstanding under the 2023 Unsecured Term Loan.

Unsecured Senior Notes

The following summarizes the unsecured senior notes outstanding as of September 30, 2022 (dollars in thousands):

The following summarizes the unsecured senior notes outstanding as of March 31, 2023 (dollars in thousands):

Coupon/Stated Rate Effective Rate(1) Principal Amount Maturity Date(2)

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5 Year Unsecured Senior Notes 6.750 % 6.924 % 750,000 December 1, 2027

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

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

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

At September 30, 2022, BPLP was in compliance with each of these financial restrictions and requirements.

At March 31, 2023, 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 September 30, 2022:

The following represents the outstanding principal balances due under the mortgage notes payable at March 31, 2023:

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

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

As of September 30, 2022, the maximum funding obligation under the guarantee was approximately $14.9

As of March 31, 2023, the maximum funding obligation under the guarantee was approximately $12.5 million.

We earn a fee from the joint venture for providing the guarantee and have an agreement with our partners to reimburse the joint venture for their share of any payments made under the guarantee (See Note 7 to the Consolidated Financial Statements).

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

Sixteen of these ventures have mortgage indebtedness.

Seventeen of these ventures have mortgage indebtedness.

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

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See also Note 5 to the Consolidated Financial Statements.

At September 30, 2022, the aggregate carrying amount of debt, including both our and our partners’ share, incurred by these ventures was approximately $3.4 billion (of which our proportionate share is approximately $1.5 billion).

The table below summarizes the outstanding debt of these joint venture properties at September 30, 2022.

At March 31, 2023, the aggregate carrying amount of debt, including both our and our partners’ share, incurred by these ventures was approximately $4.0 billion (of which our proportionate share is approximately $1.6 billion).

The table below summarizes the outstanding debt of these joint venture properties at March 31, 2023.

In addition to other guarantees specifically noted in the table, we have agreed to customary environmental indemnifications and nonrecourse carve-outs (e.g., guarantees against fraud, misrepresentation and bankruptcy) as well as the completion of development projects on certain of the loans.

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500 North Capitol Street, NW 30.00 % 4.15 % 4.20 % 105,000 (10) 104,990 31,497 (2) June 6, 2023

200 Fifth Avenue 26.69 % 4.34 % 5.60 % 600,000 (9,424) 590,576 149,196 (2)(13) November 24, 2028

901 New York Avenue 25.00 % 3.61 % 3.69 % 211,039 (313) 210,726 52,682 January 5, 2025

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(2) The loan requires interest only payments with a balloon payment due at maturity.

(3) The loan bears interest at a variable rate equal to LIBOR plus 1.28% per annum and matures on July 19, 2025.

(3) The loan includes certain extension options, subject to certain conditions.

(4) The loan bears interest at a variable rate equal to SOFR plus 1.38% per annum.

A subsidiary of the joint venture entered into interest rate swap contracts with notional amounts aggregating $300.0 million through April 1, 2025, resulting in a fixed rate of approximately 4.059% per annum through the expiration of the interest rate swap contracts.

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

(5) The construction financing has a borrowing capacity of $198.4 million.

The construction financing bears interest at a variable rate equal to (1) the greater of (x) SOFR or (y) 0.25%, plus (2) 3.10% per annum and matures on December 18, 2023.

(6) The construction financing had a borrowing capacity of $204.6 million.

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, 2023.

(7) The loan bears interest at a variable rate equal to SOFR plus 1.35% per annum and matures on June 17, 2032.

(5) The loan bears interest at a variable rate equal to the greater of (1) the sum of (x) SOFR and (y) 2.41% or (2) 2.80% per annum.

(6) The construction financing bears interest at a variable rate equal to (1) the greater of (x) SOFR or (y) 0.25%, plus (2) 2.50% per annum.

(7) The construction financing bears interest at a variable rate equal to LIBOR plus 2.25% per annum.

(8) The loan bears interest at a variable rate equal to SOFR plus 1.35% per annum.

The joint venture entered into interest rate swap contracts with notional amounts aggregating $185.0 million through April 10, 2032, resulting in a fixed rate of approximately 4.432% per annum through the expiration of the interest rate swap contracts.

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

The construction financing bears interest at a variable rate equal to LIBOR plus 1.50% per annum (LIBOR plus 1.375% per annum upon stabilization, as defined in the loan agreement) and matures on September 5, 2023, with two, one-year extension options, subject to certain conditions.

(9) The construction financing has a borrowing capacity of $255.0 million.

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 Adjusted Term SOFR plus 2.40% per annum and matures on December 14, 2024, with two, one-year extension options, subject to certain conditions.

(9) The construction financing bears interest at a variable rate equal to LIBOR plus 1.50% per annum (LIBOR plus 1.375% per annum upon stabilization, as defined in the loan agreement).

(10) The construction financing bears interest at a variable rate equal to LIBOR plus 1.25% per annum.

The maturity date of the loan has been extended to April 26, 2024 (See Note 13 to the Consolidated Financial Statements).

(11) The loan bears interest at a variable rate equal to Adjusted Term SOFR plus 2.40% per annum.

The spread on the variable rate may be reduced, subject to certain conditions.

(11) The loan bears interest at a variable rate equal to the greater of (x) 2.35% or (y) SOFR plus 2.32% per annum and matures on September 1, 2026.

The joint venture entered into an interest rate cap agreement with a financial institution to limit its exposure to increases in the SOFR rate at a cap of 2.50% per annum on a notional amount of $250.0 million through September 1, 2023.

(12) The loan bears interest at a variable rate equal to the greater of (x) 2.35% or (y) SOFR plus 2.32% per annum.

The joint venture entered into an interest rate cap agreement with a financial institution to limit its exposure to

increases in the SOFR rate at a cap of 2.50% per annum on a notional amount of $250.0 million through September 1, 2023.

(13) The loan bears interest at a variable rate equal to LIBOR plus 1.30% per annum.

The joint venture entered into interest rate swap contracts with notional amounts aggregating $600.0 million through June 2028, resulting in a fixed rate of approximately 4.34% per annum through the expiration of the interest rate swap contracts.

In addition to items noted in footnote one above, the GAAP interest rate includes the adjustment required to reflect the loan at fair value upon acquisition.

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

The loan bears interest at a variable rate equal to LIBOR plus 3.50% per annum and matures on July 13, 2023, with extension options, subject to certain conditions.

The loan bears interest at a variable rate equal to LIBOR plus 3.50% per annum.

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

As of September 30, 2022, the loan has approximately $17.3 million of accrued interest due at the maturity date.

(13) The indebtedness consists of (x) a $305.0 million mortgage loan payable which bears interest at a variable rate equal to SOFR plus approximately 1.81% and matures on April 9, 2024 with three, one-year extension options, subject to certain conditions, and (y) a $115.0 million mezzanine note payable which bears interest at a variable rate equal to SOFR plus 5.25% and matures on April 9, 2024 with three, one-year extension options, subject to certain conditions.

As of March 31, 2023, the loan has approximately $21.0 million of accrued interest due at the maturity date.

(15) The indebtedness consists of (x) a $305.0 million mortgage loan payable which bears interest at a variable rate equal to SOFR plus approximately 1.81%, and (y) a $115.0 million mezzanine note payable which bears interest at a variable rate equal to SOFR plus 5.25%.

The joint venture entered into an interest rate cap agreement with a financial institution to limit its exposure to increases in the SOFR rate at a cap of 4.50% per annum on a notional amount of $420.0 million through April 15, 2024.

(16) The construction financing has a borrowing capacity of $140.0 million.

The construction financing bears interest at a variable rate equal to SOFR plus 2.00% per annum and matures on May 13, 2026, with two, one-year extension options, subject to certain conditions.

The construction financing bears interest at a variable rate equal to SOFR plus 2.00% per annum.

State and Local Tax Matters

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Pursuant to the revised definition of Funds from Operations adopted by the Board of Governors of the National Association of Real Estate Investment Trusts (“Nareit”), we calculate Funds from Operations, or “FFO,” for each of BXP and BPLP by adjusting net income (loss) attributable to Boston Properties, Inc.

and net income (loss) attributable to Boston Properties Limited Partnership (computed in accordance with GAAP), respectively, for gains (or losses) from sales of properties, impairment losses on depreciable real estate consolidated on our balance sheet, impairment losses on our investments in unconsolidated joint ventures driven by a measurable decrease in

the fair value of depreciable real estate held by the unconsolidated joint ventures and our share of real estate-related depreciation and amortization.

FFO is a non-GAAP financial measure.

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to FFO attributable to Boston Properties, Inc.

for the three months ended September 30, 2022 and 2021:

Three months ended September 30,

for the three months ended March 31, 2023 and 2022:

Three months ended March 31,

(in thousands)

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Noncontrolling interest—common units of the Operating Partnership 9,078 16,361

40,883 11,982

Noncontrolling interests in property partnerships 18,660 17,549

18,801 18,971

Net income 105,628 176,957

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Noncontrolling interests in property partnerships’ share of depreciation and amortization (17,711) (17,653)

(17,706) (16,773)

BXP’s share of depreciation and amortization from unconsolidated joint ventures 25,645 22,044

21,485 17,803

Corporate-related depreciation and amortization (469) (404)

Gains on sales of real estate — 22,701

Unrealized gain on non-real estate investment 259 —

Noncontrolling interests in property partnerships 18,660 17,549

18,801 18,971

Funds from Operations (FFO) attributable to the Operating Partnership 302,908 318,318

Noncontrolling interest—common units of the Operating Partnership’s share of funds from operations 30,957 32,182

33,787 29,453

Funds from Operations attributable to Boston Properties, Inc.

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Our percentage share of Funds from Operations—basic 89.78 % 89.89 %

89.87 % 90.18 %

Weighted average shares outstanding—basic 156,803 156,650

Reconciliation to Diluted Funds from Operations:

Three months ended September 30,

(Numerator) Shares/Units

(Denominator) Income

(Numerator) Shares/Units

(Denominator)

The following tables presents a reconciliation of net income attributable to Boston Properties, Inc.

to Diluted FFO attributable to Boston Properties, Inc.

for income (numerator) and shares/units (denominator) for the three months ended March 31, 2023 and 2022:

Three months ended March 31,

(in thousands)

Net income attributable to Boston Properties, Inc.

$ 77,890 $ 143,047

Noncontrolling interest—common units of the Operating Partnership 9,078 16,361

Noncontrolling interests in property partnerships 18,660 17,549

Net income 105,628 176,957

Depreciation and amortization 208,734 177,624

Noncontrolling interests in property partnerships’ share of depreciation and amortization (17,711) (17,653)

BXP’s share of depreciation and amortization from unconsolidated joint ventures 25,645 22,044

Corporate-related depreciation and amortization (469) (404)

Gains on sales of real estate — 22,701

Unrealized gain on non-real estate investment 259 —

Noncontrolling interests in property partnerships 18,660 17,549

Funds from Operations (FFO) attributable to the Operating Partnership 302,908 318,318

Effect of Dilutive Securities:

Stock based compensation — —

Diluted FFO 302,908 318,318

Noncontrolling interest—common units of the Operating Partnership’s share of diluted FFO 30,927 32,118

Diluted FFO attributable to Boston Properties, Inc.

(1) $ 271,981 $ 286,200

(1) BXP’s share of diluted Funds from Operations was 89.79% and 89.91% for the three months ended March 31, 2023 and 2022, respectively.

Three months ended March 31,

shares/units (in thousands)

Basic Funds from Operations 174,652 174,276

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Noncontrolling interest—common units of the Operating Partnership’s share of diluted Funds from Operations 17,849 17,626

33,687 17,662 29,393 17,011

Diluted Funds from Operations attributable to Boston Properties, Inc.

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_______________

(1) BXP’s share of diluted Funds from Operations was 89.90% and 90.20% for the three months ended September 30, 2022 and 2021, respectively.

The following table presents a reconciliation of net income attributable to Boston Properties Limited Partnership to FFO attributable to Boston Properties Limited Partnership for the three months ended September 30, 2022 and 2021:

Three months ended September 30,

(1) BXP’s share of diluted Funds from Operations was 89.79% and 89.91% for the three months ended March 31, 2023 and 2022, respectively.

Three months ended March 31,

(in thousands)

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Gains on sales of real estate — 23,384

Unrealized gain on non-real estate investment 259 —

Noncontrolling interests in property partnerships 18,660 17,549

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(1) Our calculation includes OP Units and vested LTIP Units (including vested 2012 OPP Units and vested 2013 - 2020 MYLTIP Units).

Reconciliation to Diluted Funds from Operations:

Three months ended September 30,

(Numerator) Shares/Units

(Denominator) Income

(Numerator) Shares/Units

(Denominator)

The following tables presents a reconciliation of net income attributable to Boston Properties Limited Partnership to Diluted FFO attributable to Boston Properties Limited Partnership for income (numerator) and shares/units (denominator) for the three months ended March 31, 2023 and 2022:

Three months ended March 31,

(in thousands)

Net income attributable to Boston Properties Limited Partnership $ 88,830 $ 161,829

Noncontrolling interests in property partnerships 18,660 17,549

Net income 107,490 179,378

Depreciation and amortization 206,872 175,886

Noncontrolling interests in property partnerships’ share of depreciation and amortization (17,711) (17,653)

BXP’s share of depreciation and amortization from unconsolidated joint ventures 25,645 22,044

Corporate-related depreciation and amortization (469) (404)

Gains on sales of real estate — 23,384

Unrealized gain on non-real estate investment 259 —

Noncontrolling interests in property partnerships 18,660 17,549

Funds from Operations attributable to Boston Properties Limited Partnership (1) 302,908 318,318

Effect of Dilutive Securities:

Stock based compensation — —

Diluted Funds from Operations attributable to Boston Properties Limited Partnership $ 302,908 $ 318,318

_______________

(1) Our calculation includes OP Units and vested LTIP Units (including vested 2012 OPP Units and vested 2013 - 2020 MYLTIP Units).

Three months ended March 31,

shares/units (in thousands)

Basic Funds from Operations 174,652 174,276

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Contract terms are generally between three and five years.

During the three months ended September 30, 2022, we paid approximately $60.1 million to fund client-related obligations, including tenant improvements and leasing commissions.

In addition, during the three months ended September 30, 2022, we and our unconsolidated joint venture partners incurred approximately $100.3 million of new client-related obligations associated with approximately 1.0 million square feet of second generation leases, or approximately $99 per square foot.

During the three months ended March 31, 2023, we paid approximately $103.1 million to fund tenant-related obligations, including tenant improvements and leasing commissions.

In addition, during the three months ended March 31, 2023, we and our unconsolidated joint venture partners incurred approximately $61.9 million of new client-related obligations associated with approximately 643,000 square feet of second generation leases, or approximately $96 per square foot.

We signed approximately 17,500 square feet of first generation leases.

The client-related obligations for the development properties are included within the projects’ “Estimated Total Investment” referred to in “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.” In aggregate during the third quarter of 2022, we signed leases for approximately 1.4 million square feet of space and incurred aggregate client-related obligations of approximately $198.9 million, or approximately $137 per square foot.

2023, we signed leases for approximately 660,500 million square feet of space and incurred aggregate client-related obligations of approximately $66.2 million, or approximately $100 per square foot.

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