What changed in this filing

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Item 1A. Risk Factors

2025-02-27 compared with 2024-02-27 · 58 added, 74 removed, 508 unchanged (21% of the section changed)

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Additionally, there are submarkets within our markets that are dependent upon a limited number of industries.

For example, in our Washington, DC market, we focus on leasing our properties to governmental agencies and contractors.

For example, in our Washington, DC market, we focus on leasing our properties to governmental contractors and legal firms.

In our West Coast market, our leasing is focused on clients in the technology and media industries, as well as legal firms.

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A reduction in spending by the Federal Government, sustained changes in space utilization due to remote work models, and/or a significant downturn in one or more of the foregoing sectors have resulted in, and could continue to result in, reduced demand for office space and adversely affect our results of operations.

In addition, a significant economic downturn over a period of time could result in an event or change in circumstances that results in an “other than temporary” impairment in the value of our properties or our investments in unconsolidated joint ventures.

An “other than temporary” impairment loss is recognized if the carrying amount of the asset (1) is not recoverable over its expected holding period and (2) exceeds its fair value.

During the year ended December 31, 2023, we recognized an other-than-temporary impairment loss on our investments in four unconsolidated joint ventures aggregating approximately $272.6 million (See Note 6 to the Consolidated Financial Statements).

There can be no assurance that we will not take additional charges in the future related to the impairment of our assets or investments.

Any future impairment could have a material adverse effect on our results of operations in the period in which the charge is taken.

Market and economic volatility due to adverse economic and geopolitical conditions, health crises or dislocations in the credit markets could have a material adverse effect on our results of operations, financial condition and ability to pay dividends and/or distributions.

In addition, a significant economic downturn over a period of time could result in an event or change in circumstances that results in an impairment of a long-lived asset or an “other than temporary” impairment in the value of our investments in unconsolidated joint ventures.

For the year ended December 31, 2024, we recognized an impairment of a long-lived asset of approximately $13.6 million and “other than temporary” impairments in the value of three of our investments in unconsolidated joint ventures aggregating approximately $341.3 million.

For additional information on these impairments, see Notes 3 and 6 to the Consolidated Financial Statements.

Any future impairments could have a material adverse effect on our results of operations in the period in which the charge is taken.

Market and economic volatility due to adverse economic and political conditions, health crises or dislocations in the credit markets could have a material adverse effect on our results of operations, financial condition and ability to pay dividends and/or distributions.

Our business may be adversely affected by market and economic volatility experienced by the U.S.

and global economies, the real estate industry as a whole and/or the local economic conditions in the markets in which our properties are located.

Such adverse economic and geopolitical conditions may be due to, among other issues, prolonged labor market challenges impacting the recruitment and retention of talent, continued inflation, high interest rates, volatility in the public equity and debt markets, and international economic and other conditions, including pandemics, geopolitical instability and other conditions beyond our control.

These current conditions, or similar conditions existing in the future, may adversely affect our results of operations, financial condition and ability to pay dividends and/or distributions as a result of the following, among other potential consequences:

Such adverse economic and political conditions may include, among other issues, continued inflation, elevated interest rates, policy changes by the new presidential administration, prolonged labor market challenges impacting the recruitment and retention of talent, volatility in the public equity and debt markets, and international economic and other conditions, including pandemics, geopolitical instability and other conditions beyond our control.

These current conditions, or similar conditions existing in the future, may adversely affect our results of operations, financial condition and ability to pay dividends and distributions as a result of the following, among other potential consequences:

• federal policy changes by the new presidential administration, such as the implementation of tariffs that could result in global supply chain disruptions and/or continued inflation, which could negatively impact

interest rates, potential changes to U.S.

federal tax laws and budgetary changes related to government leases;

• the financial condition of our clients may be adversely affected, which may result in client defaults under leases due to bankruptcy, lack of liquidity, lack of funding, operational failures or for other reasons;

• significant job losses and/or a sustained shift away from collective in-person work environments or relocations away from the markets in which we operate may occur, which could decrease overall demand for workplaces in the regions in which we operate and cause market rental rates and property values to be negatively impacted;

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• tightening labor market conditions may adversely affect our ability to recruit and retain talent, which may result in lack of business continuity and increased costs to address the labor challenges;

• our ability to borrow on terms and conditions that we find acceptable, or at all, may be limited, which could reduce our ability to pursue acquisition and development opportunities and refinance existing debt, reduce our returns from our acquisition and development activities and increase our future interest expense;

• our inability to borrow on terms and conditions that we find acceptable, or at all, which could reduce our ability to pursue acquisition and development opportunities and refinance existing debt, reduce our returns from our acquisition and development activities and increase our future interest expense;

• reduced values of our properties may limit our ability to dispose of assets at attractive prices or to obtain debt financing secured by our properties and may reduce the availability of unsecured loans;

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Thomas, Chief Executive Officer, Douglas T.

Linde, President, and Raymond A.

Ritchey, Senior Executive Vice President.

Linde, President, Raymond A.

Ritchey, Senior Executive Vice President, and Michael E.

LaBelle, Executive Vice President, Chief Financial Officer & Treasurer.

Among the reasons that Messrs.

Thomas, Linde and Ritchey are important to our success is that each has a national reputation, which attracts business and investment opportunities and assists us in negotiations with lenders, joint venture partners and other investors.

Thomas, Linde, Ritchey and LaBelle are important to our success is that each has a national reputation, which attracts business and investment opportunities and assists us in negotiations with lenders, joint venture partners and other investors.

If we lost their services, our relationships with lenders, potential clients and industry personnel could diminish.

Our Chief Financial Officer and Regional Managers also have strong reputations.

Our Regional Managers also have strong reputations.

Their reputations aid us in identifying opportunities, having opportunities brought to us, and negotiating with clients and build-to-suit prospects.

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• vacancies, changes in market rental rates and the need to periodically repair, renovate and re-let space;

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• delays in completion of development and redevelopment projects due to supply chain disruptions and labor shortages;

• increased costs to maintain, renovate and develop our properties related to inflation;

• changes in space utilization by our clients due to technology, economic conditions and business culture;

• increased operating costs, including insurance expense, utilities, real estate taxes, state and local taxes and heightened security costs;

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This shortfall could adversely affect our cash flow and results of operations.

On November 6, 2023, WeWork Inc.

and certain of its direct and indirect subsidiaries (collectively, “WeWork”) filed voluntary petitions to commence proceedings under Chapter 11 of title 11 of the United States Code in the United States Bankruptcy Court for the District of New Jersey.

As of December 31, 2023, WeWork was one of our 20 largest clients (based on our share of square footage).

There can be no assurance that WeWork will not reject one or more of the four leases.

Our properties face significant competition.

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• we may be unable to proceed with the development of properties because we cannot obtain financing on favorable terms or at all;

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• we may incur construction costs for a development project that exceed our original estimates due to increased materials, labor, leasing or other costs, increases in interest rates, or supply chain disruptions, any of which could make completion of the project less profitable because market rents may not increase sufficiently to compensate for the increase in construction costs;

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• occupancy rates and rents at newly developed properties may fluctuate depending on a number of factors, including market and economic conditions, and may result in our investments being less profitable than we expected or not profitable at all.

We face risks associated with the development of mixed-use commercial properties.

We operate, are currently developing, and may in the future develop, properties either alone or through joint ventures with other persons that are known as “mixed-use” developments.

This means that in addition to the development of office space, the project may also include space for residential, retail, hotel or other commercial purposes.

We face risks associated with the development of mixed-use commercial and residential properties.

We operate, are currently developing, and may in the future develop, properties either alone or through joint ventures with other parties that are known as “mixed-use” properties.

For mixed-use developments, this means that in addition to the development of office space, the project may also include space for residential, retail, hotel or other commercial purposes.

We are also developing, and may in the future develop, residential buildings.

We have less experience in developing and managing non-office and non-retail real estate than we do with office real estate.

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Our use of joint ventures may limit our control over and flexibility with jointly owned investments and other assets we may wish to acquire.

In appropriate circumstances, we intend to acquire and recapitalize or develop, as applicable, properties in joint ventures with other persons or entities.

We currently have joint ventures that are and are not consolidated

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within our financial statements.

In appropriate circumstances, we intend to acquire and recapitalize or develop, as applicable, properties in joint ventures with other parties.

We currently have joint ventures that are and are not consolidated within our financial statements.

Our participation in joint ventures subjects us to risks, including but not limited to, the following risks that:

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• if we loan funds to a joint venture and the joint venture is unable to make required payments of interest and principal, or both, then we may exercise remedies available to us in the joint venture agreement that could allow us to increase our ownership interest or our control over major decisions, or both, which could result in an unconsolidated joint venture becoming consolidated with our financial statement;

doing so could

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require us to reallocate the purchase price among the various asset and liability components and this could result in material changes to our reported results of operations and financial condition.

doing so could require us to reallocate the purchase price among the various asset and liability components and this could result in material changes to our reported results of operations and financial condition.

We face risks associated with property acquisitions.

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• liabilities incurred in the ordinary course of business;

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• claims for indemnification by general partners, directors, officers and others indemnified by the former owners of the properties.

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• our hotel property is subject to the fluctuating and seasonal demands of business travelers and tourism;

• our hotel property is subject to general and local economic and social conditions that may affect demand for travel in general, including public health concerns, war and terrorism.

• our hotel property is subject to general and local economic and social conditions that may affect demand for travel in general, including fluctuations in consumer spending, public health concerns, war and terrorism.

In addition, because our hotel property is located in Cambridge, Massachusetts, it is subject to the Cambridge market’s fluctuations in demand, increases in operating costs and increased competition from additions in supply.

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Failure to comply with Federal Government contractor requirements could result in substantial costs and loss of substantial revenue.

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We also carry $1.35 billion of property insurance in excess of the $1.0 billion of coverage in our property insurance program for 601 Lexington Avenue, New York, New York, consisting of $750 million of property and Terrorism Coverage in excess of our property insurance program and $600 million of Terrorism Coverage only in excess of the $1.75 billion of coverage.

Certain properties, including the General Motors Building located at 767 Fifth Avenue in New York, New York (“767 Fifth Avenue”), are currently insured in separate insurance programs.

Certain properties, including the General Motors Building located at 767

Fifth Avenue in New York, New York (“767 Fifth Avenue”), are currently insured in separate insurance programs.

The property insurance program per occurrence limits for 767 Fifth Avenue are $1.625 billion, including Terrorism Coverage.

We also currently carry nuclear, biological, chemical and radiological terrorism insurance coverage for acts of terrorism certified under the Federal Terrorism Risk Insurance Act (as amended, “TRIA”) (“NBCR Coverage”), which is provided by IXP as a direct insurer, for the properties in our portfolio, including 767 Fifth Avenue, but excluding certain other properties owned in joint ventures with third parties or which we manage.

We also currently carry nuclear, biological, chemical and radiological terrorism insurance coverage for acts of terrorism certified under the Federal Terrorism Risk Insurance Act (as amended, “TRIA”) (“NBCR Coverage”), which is provided by IXP, LLC (“IXP”) as a direct insurer, for the properties in our portfolio, including 767 Fifth Avenue, but excluding certain other properties owned in joint ventures with third parties or which we manage.

The per occurrence limit for NBCR Coverage is $1.0 billion.

Under TRIA, after the payment of the required deductible

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and coinsurance, the NBCR Coverage provided by IXP is backstopped by the Federal Government if the aggregate industry insured losses resulting from a certified act of terrorism exceed a “program trigger.” The program trigger is $200 million, the coinsurance is 20% and the deductible is 20% of the premiums earned by the insurer for the year prior to a claim.

Under TRIA, after the payment of the required deductible and coinsurance, the NBCR Coverage provided by IXP is backstopped by the Federal Government if the aggregate industry insured losses resulting from a certified act of terrorism exceed a “program trigger.” The program trigger is $200 million, the coinsurance is 20% and the deductible is 20% of the premiums earned by the insurer for the year prior to a claim.

If the Federal Government pays out for a loss under TRIA, it is mandatory that the Federal Government recoup the full amount of the loss from insurers offering TRIA coverage after the payment of the loss pursuant to a formula in TRIA.

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Depending on the specific circumstances of each affected property, it is possible that we could be liable for mortgage indebtedness or other obligations related to the property.

Any such loss could materially and adversely affect our business and financial condition and results of operations.

Any such loss could materially and adversely affect our business, financial condition and results of operations.

Actual or threatened terrorist attacks may adversely affect our ability to generate revenues and the value of our properties.

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As a result, some clients in these markets may choose to relocate their businesses to other markets or to lower-profile office buildings within these markets that may be perceived to be less likely targets of future terrorist activity.

This could result in an overall decrease in the demand for office space in these markets generally or in our properties in particular, which could increase vacancies in our properties or necessitate that we lease our properties on less favorable terms or both.

This could result in an overall decrease in the demand for office space in these markets

generally or in our properties in particular, which could increase vacancies in our properties or necessitate that we lease our properties on less favorable terms or both.

In addition, future terrorist attacks in these markets could directly or indirectly damage our properties, both physically and financially, or cause losses that materially exceed our insurance coverage.

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See also “ —Some potential losses are not covered by insurance.

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We face risks associated with security breaches, incidents, and compromises through cyber-attacks, cyber intrusions or otherwise, as well as other significant disruptions of our information technology (IT) networks and related systems.

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Cybersecurity in this Form 10-K for more information.

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The use of technology based on artificial intelligence and machine learning presents risks and challenges that may adversely affect our business and results of operations.

We use artificial intelligence and machine learning technology (collectively, “AI”) capabilities with the goal of enhancing efficiencies in conducting our business.

Our deployment and application of AI remains ongoing.

While these AI tools hold promise in optimizing our work processes and driving efficiencies, they also present risks, challenges and unintended consequences that could adversely affect our business and results of operations or those of our clients.

These include, but are not limited to:

• the release, leak or disclosure of proprietary, confidential, sensitive or otherwise valuable information as a result of or in connection with our use of AI tools,

• the incorporation of AI by our clients, vendors, contractors and other third-parties into their products or services, with or without our knowledge, in a manner that could give rise to issues pertaining to data privacy, information security and intellectual property considerations, and

• the evolving legal regulations relating to AI, which may require significant resources to modify and maintain business practices to comply with applicable law or otherwise result in legal or regulatory action or create additional liabilities, the nature of which cannot be determined at this time.

While we aim to use AI responsibly and securely and attempt to mitigate ethical and legal issues presented by its use, we may ultimately be unsuccessful in identifying or resolving issues before they arise.

There can be no assurance that we will properly implement AI, and the failure to do so could have a material adverse effect on our results of operations or financial condition.

We face risks associated with our clients and contractual counterparties being designated “Prohibited Persons” by the Office of Foreign Assets Control.

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The full extent to which any future pandemic or similar outbreak may impact our operations and those of our clients will depend on future developments, which are highly uncertain and cannot be predicted.

We have previously experienced adverse impacts on our business from the COVID-19 pandemic, and factors related to any future public health crises that could have a material adverse effect on our results of operations and financial condition include:

Factors related to any public health crises that could have a material adverse effect on our results of operations and financial condition include:

• changes made by companies in response to a pandemic that could lead to a sustained shift away from collective in-person work environments or relocations away from the markets in which we operate, either of which could adversely affect the overall demand for workplaces in the regions in which we operate;

• reduced economic activity and/or supply chain disruptions or delays in delivery of products, services or other materials necessary for our clients that impact our clients’ businesses, financial condition or liquidity may cause, one or more of our clients to be unable to meet their obligations to us, including their ability to make timely rental payments, in full or at all, or to otherwise seek modifications of such obligations, including rent concessions, deferrals or abatements, or to declare bankruptcy.

obligations, including rent concessions, deferrals or abatements, or to declare bankruptcy.

Any one or more of the foregoing could:

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• we may be unable to restructure or amend leases with certain of our clients on terms favorable to us or at all;

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• the impact and validity of interpretations of lease provisions and applicable laws related to claims by clients regarding their obligations to pay rent as a result of a pandemic, and any adverse court rulings or decisions interpreting these provisions and laws, could have a material adverse effect on our results of operations and liquidity;

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For example, many of our properties are located along the East and West coasts, particularly those in the central business districts of Boston, Los Angeles, New York, San Francisco, Seattle and Washington, DC.

To the extent climate change causes changes in weather patterns, our markets could experience increases in storm intensity, extreme temperatures, rising sea-levels and/or drought.

To the extent climate change causes changes in weather patterns, our markets could experience increases in storm intensity, extreme temperatures, rising sea-levels, extreme drought and/or wildfires.

Over time, these conditions could result in declining demand for office space in our buildings or increased costs associated with infrastructure-related remediation projects.

Climate change may also have indirect effects on our business by making property insurance unavailable or by increasing the cost of (i) property insurance on terms we find acceptable, (ii) real estate taxes or other assessments, (iii) energy and (iv) property maintenance.

In addition, we face transition risks related to federal, state and local legislation and regulations that are being implemented, are under consideration to mitigate the effects of climate change or that require increased environmental disclosures and reporting.

In addition, we face transition risks related to federal, state and local legislation and regulations that are being implemented, are under consideration to

mitigate the effects of climate change or that require increased environmental disclosures and reporting.

The costs of complying with evolving regulatory requirements, including GHG emissions regulations and policies, could negatively impact our financial results.

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Specifically, we carry a pollution legal liability policy with a $20 million limit per incident and a policy aggregate limit of $40 million.

The presence or migration of hazardous or toxic

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substances or petroleum products or the failure to properly remediate contamination may give rise to third-party claims for bodily injury, property damage and/or response costs and may materially and adversely affect our ability to borrow against, sell or rent an affected property.

The presence or migration of hazardous or toxic substances or petroleum products or the failure to properly remediate contamination may give rise to third-party claims for bodily injury, property damage and/or response costs and may materially and adversely affect our ability to borrow against, sell or rent an affected property.

In addition, applicable environmental laws create liens on contaminated sites in favor of the government for damages and costs it incurs in connection with contamination.

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Noncompliance could result in the imposition of fines by the federal government or the award of damages to private litigants.

If, under the Americans

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with Disabilities Act, we are required to make substantial alterations and capital expenditures in one or more of our properties, including the removal of access barriers, it could adversely affect our financial condition and results of operations, as well as the amount of cash available for distribution to our securityholders.

If, under the Americans with Disabilities Act, we are required to make substantial alterations and capital expenditures in one or more of our properties, including the removal of access barriers, it could adversely affect our financial condition and results of operations, as well as the amount of cash available for distribution to our securityholders.

Our properties are subject to various federal, state and local regulatory requirements, such as state and local fire and life safety requirements.

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Risks Related to Our Indebtedness and Financing

A sustained increase in interest rates would increase our interest costs on variable rate debt and could adversely impact our ability to refinance existing debt or sell assets on favorable terms or at all.

Elevated interest rates have, and may continue to increase our interest costs on variable rate debt and could adversely impact our ability to refinance existing debt or sell assets on favorable terms or at all.

As of February 21, 2025, we had $2.4 billion outstanding indebtedness, excluding our unconsolidated joint ventures, that bears interest at a variable rate, and we may incur more indebtedness in the future.

All of our variable rate debt has all been hedged with interest rates swaps to fix SOFR for all, or a portion of the applicable debt term.

Interest rates increased throughout 2023, and may remain elevated throughout 2024.

As interest rates have increased, the interest costs on our unhedged variable rate debt have also increased, which, if sustained or continues to increase, could adversely affect our cash flow and our ability to pay principal and interest on our debt and our ability to make distributions to our securityholders.

Further, rising interest rates could limit our ability to refinance existing debt when it matures or significantly increase our future interest expense.

Approximately $0.9 billion of our variable rate debt has all been hedged with interest rates swaps to fix SOFR for all, or a portion of the applicable debt term.

Interest rates remained elevated throughout 2024 and are expected to remain elevated through 2025.

As interest rates remain high, the interest costs on our unhedged variable rate debt have increased, which, if current rates are sustained or continue to increase, could adversely affect our cash flow and our ability to pay principal and interest on our debt and our ability to make distributions to our securityholders.

Further, elevated interest rates could limit our ability to refinance existing debt when it matures or significantly increase our future interest expense.

From time to time, we enter into interest rate swap agreements and other interest rate hedging contracts, including swaps, caps and floors.

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addition, an increase in interest rates could decrease the amounts third-parties are willing to pay for our assets, thereby limiting our ability to change our portfolio promptly in response to changes in economic or other conditions.

While these agreements are intended to lessen the impact of rising interest rates on us, they also expose us to the risk that the other parties to the agreements will not perform, we could incur significant costs associated with the settlement of the agreements, the agreements will be unenforceable and the underlying transactions will fail to qualify as highly-effective cash flow hedges under guidance included in ASC 815 “Derivatives and Hedging.” In addition, high interest rates could decrease the amounts third-parties are willing to pay for our assets, thereby limiting our ability to change our portfolio promptly in response to changes in economic or other conditions.

Covenants in our debt agreements could adversely affect our financial condition.

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As of February 21, 2025, our Consolidated Debt was approximately $15.7 billion (excluding unconsolidated joint venture debt).

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The following table presents Consolidated Market Capitalization as well as the corresponding ratios of Consolidated Debt to Consolidated Market Capitalization (dollars and shares / units in thousands):

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A decline in the value of our investment or a delay or suspension of our right to redeem may have a material adverse effect on our results of operations or financial condition.

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Risks Related to Our Organization and Structure

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BPLP’s Partnership Agreement

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holders of BXP common stock in the transaction or (2) limited partnership units that, among other things, would entitle the holders, upon redemption of these units, to receive shares of common equity of a publicly traded company or the same consideration as holders of BXP common stock received in the transaction.

BXP has agreed in the limited partnership agreement of BPLP not to engage in specified extraordinary transactions, including, among others, business combinations, unless limited partners of BPLP other than BXP receive, or have the opportunity to receive, either (1) the same consideration for their partnership interests as holders of BXP common stock in the transaction or (2) limited partnership units that, among other things, would entitle the holders, upon redemption of these units, to receive shares of common equity of a publicly traded company or the same consideration as holders of BXP common stock received in the transaction.

If these limited partners would not receive such consideration, we cannot engage in the transaction unless limited partners holding at least 75% of the common units of limited partnership interest, other than those held by BXP or its affiliates, consent to the transaction.

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• BXP would not be allowed a deduction for dividends paid to stockholders in computing its taxable income and would be subject to federal income tax at regular corporate rates;

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• BXP also could be subject to the federal alternative minimum tax for tax years ending before January 1, 2018 and possibly increased state and local taxes;

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These increased tax costs could adversely affect our financial condition and results of operations and the amount of cash available for the payment of dividends and distributions to our securityholders.

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General Risk Factors

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An unfavorable resolution of any legal proceeding or other claim could have a material adverse effect on our financial condition or results from operations.

Regardless of its outcome, legal proceedings and other claims may result in substantial costs and expenses and significantly divert

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the attention of our management.

Regardless of its outcome, legal proceedings and other claims may result in substantial costs and expenses and significantly divert the attention of our management.

With respect to any legal proceeding or other claim, there can be no assurance that we will be able to prevail, or achieve a favorable settlement or outcome, or that our insurance or the insurance and/or any contractual indemnities of our vendors, contractors, clients or other contractual parties will be enough to cover all of our defense costs or any resulting liabilities.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors