Table of ContentContents

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 2019March 31, 2020
or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from             to             
Commission File Number: 1-13087 (Boston Properties, Inc.)
Commission File Number: 0-50209 (Boston Properties Limited Partnership)
 
BOSTON PROPERTIES, INC.
BOSTON PROPERTIES LIMITED PARTNERSHIP
(Exact name of Registrants as specified in its charter)
 
Boston Properties, Inc.Delaware04-2473675
 (State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification Number)
   
Boston Properties Limited PartnershipDelaware04-3372948
 (State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification Number)
Prudential Center, 800 Boylston Street, Suite 1900, Boston, Massachusetts 02199-8103
(Address of principal executive offices) (Zip Code)
((617)617) 236-3300
(Registrants’ telephone number, including area code)
 
Securities registered pursuant to Section 12(b) of the Act:
RegistrantTitle of each classTrading Symbol(s)Name of each exchange on which registered
Boston Properties, Inc.Common Stock, par value $0.01 per shareBXPNew York Stock Exchange
Boston Properties, Inc.Depository Shares Each Representing 1/100th of a shareBXP PRBNew York Stock Exchange
of 5.25% Series B Cumulative Redeemable Preferred Stock, par value $0.01 per share


Table of ContentContents

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  
Boston Properties, Inc.:    Yes  x   No  ☐         Boston Properties Limited Partnership:    Yes  x    No  ☐    
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    
Boston Properties, Inc.:    Yes  x    No  ☐         Boston Properties Limited Partnership:    Yes  x    No  ☐    
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Boston Properties, Inc.:    
Large accelerated filer  x         Accelerated filer  ☐         Non-accelerated filer  ☐         Smaller reporting company  ☐         Emerging growth company  ☐

Boston Properties Limited Partnership:
Large accelerated filer  ☐         Accelerated filer  ☐         Non-accelerated filer  x           Smaller reporting company  ☐           Emerging growth company  ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Boston Properties, Inc. ☐                 Boston Properties Limited Partnership ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    
Boston Properties, Inc.:    Yes  ☐    No  x        Boston Properties Limited Partnership:    Yes  ☐    No  x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Boston Properties, Inc.Common Stock, par value $0.01 per share154,567,750155,369,141
(Registrant)(Class)(Outstanding on August 2, 2019)May 5, 2020)
 


Table of ContentContents

EXPLANATORY NOTE
This report combines the quarterly reports on Form 10-Q for the period ended June 30, 2019March 31, 2020 of Boston Properties, Inc. and Boston Properties Limited Partnership. Unless stated otherwise or the context otherwise requires, references to “BXP” mean Boston Properties, Inc., a Delaware corporation and real estate investment trust (“REIT”), and references to “BPLP” and the “Operating Partnership” mean Boston Properties Limited Partnership, a Delaware limited partnership. 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. BXP is the sole general partner and also a limited partner of BPLP. As the sole general partner of BPLP, BXP has exclusive control of BPLP’s day-to-day management. Therefore, unless stated otherwise or the context requires, references to the “Company,” “we,” “us” and “our” mean collectively BXP, BPLP and those entities/subsidiaries consolidated by BXP.
As of June 30, 2019,March 31, 2020, BXP owned an approximate 89.6%89.7% ownership interest in BPLP. The remaining approximate 10.4%10.3% interest was owned by limited partners. The other limited partners of BPLP are (1) persons who contributed their direct or indirect interests in properties to BPLP in exchange for common units or preferred units of limited partnership interest in BPLP and/or (2) recipients of long termlong-term incentive plan units of BPLP pursuant to BXP’s Stock Option and Incentive Plans. Under the limited partnership agreement of BPLP, unitholders may present their common units of BPLP for redemption at any time (subject to restrictions agreed upon at the time of issuance of the units that may restrict such right for a period of time, generally one year from issuance). Upon presentation of a common unit for redemption, BPLP must redeem the unit for cash equal to the then value of a share of BXP’s common stock. In lieu of a cash redemption by BPLP, however, BXP may elect to acquire any common units so tendered by issuing shares of BXP common stock in exchange for the common units. If BXP so elects, its common stock will be exchanged for common units on a one-for-one basis. This one-for-one exchange ratio is subject to specified adjustments to prevent dilution. BXP generally expects that it will elect to issue its common stock in connection with each such presentation for redemption rather than having BPLP pay cash. With each such exchange or redemption, BXP’s percentage ownership in BPLP will increase. In addition, whenever BXP issues shares of its common stock other than to acquire common units of BPLP, BXP must contribute any net proceeds it receives to BPLP and BPLP must issue to BXP an equivalent number of common units of BPLP. This structure is commonly referred to as an umbrella partnership REIT, or UPREIT.
The Company believes that combining the quarterly reports on Form 10-Q of BXP and BPLP into this single report provides the following benefits:
enhances investors’ understanding of BXP and BPLP by enabling investors to view the business as a whole in the same manner as management views and operates the business;
eliminates duplicative disclosure and provides a more concise and readable presentation because a substantial portion of the disclosure applies to both BXP and BPLP; and
creates time and cost efficiencies through the preparation of one combined report instead of two separate reports.
The Company believes it is important to understand the few differences between BXP and BPLP in the context of how BXP and BPLP operate as a consolidated company. The financial results of BPLP are consolidated into the financial statements of BXP. BXP does not have any other significant assets, liabilities or operations, other than its investment in BPLP, nor does it have employees of its own. BPLP, not BXP, generally executes all significant business relationships other than transactions involving the securities of BXP. BPLP holds substantially all of the assets of BXP, including ownership interests in joint ventures. BPLP conducts the operations of the business and is structured as a partnership with no publicly traded equity. Except for the net proceeds from equity offerings by BXP, which are contributed to the capital of BPLP in exchange for common or preferred units of partnership in BPLP, as applicable, BPLP generates all remaining capital required by the Company’s business. These sources include working capital, net cash provided by operating activities, borrowings under its credit facilities, the issuance of secured and unsecured debt and equity securities and proceeds received from the disposition of certain properties and interests in joint ventures.
Shareholders’ equity, partners’ capital and noncontrolling interests are the main areas of difference between the consolidated financial statements of BXP and BPLP. The limited partners of BPLP are accounted for as partners’ capital in BPLP’s financial statements and as noncontrolling interests in BXP’s financial statements. The noncontrolling interests in BPLP’s financial statements include the interests of unaffiliated partners in various consolidated partnerships. The noncontrolling interests in BXP’s financial statements include the same

Table of ContentContents

noncontrolling interests at BPLP’s level and limited partners of BPLP. The differences between shareholders’ equity and partners’ capital result from differences in the equity issued at BXP and BPLP levels.
In addition, the consolidated financial statements of BXP and BPLP differ in total real estate assets resulting from previously applied acquisition accounting by BXP for the issuance of common stock in connection with non-sponsor redemptions of common units of BPLP. This accounting resulted in a step-up of the real estate assets at BXP. This resulted in a difference between the net real estate of BXP as compared to BPLP of approximately $295.0$280.0 million, or 1.7%1.6% at June 30, 2019March 31, 2020, and a corresponding difference in depreciation expense, impairmentsimpairment losses and gains on sales of real estate upon the sale of certain properties having an allocation of the real estate step-up. The acquisition accounting was nullified on a prospective basis beginning in 2009 as a result of the Company’s adoption of a new accounting standard requiring any future redemptions to be accounted for solely as an equity transaction.
To help investors better understand the key differences between BXP and BPLP, certain information for BXP and BPLP in this report has been separated, as set forth below:
Item 1. Financial Statements (unaudited), which includes the following specific disclosures for BXP and BPLP:
•Note 3.3. Real Estate;
•Note 9.8. Stockholders’ Equity / Partners’ Capital;
•Note 10.9. Earnings Per Share / Common Unit; and
•Note 12.11. Segment Information
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations includes information specific to each entity, where applicable; and
Item 2. Liquidity and Capital Resources includes separate reconciliations of amounts to each entity’s financial statements, where applicable.
This report also includes separate Part I - Item 4. Controls and Procedures and Part II - Item 2. Unregistered Sales of Equity Securities and Use of Proceeds sections for each of BXP and BPLP, as well as separate Exhibits 31 and 32 certifications for each of BXP and BPLP.



Table of ContentContents


BOSTON PROPERTIES, INC. AND BOSTON PROPERTIES LIMITED PARTNERSHIP
FORM 10-Q
for the quarter ended June 30, 2019March 31, 2020
TABLE OF CONTENTS
   
  Page
PART I. FINANCIAL INFORMATION
 
ITEM 1.
Financial Statements (unaudited)
1
   
Boston Properties, Inc. 
 
a) Consolidated Balance Sheets as of June 30, 2019March 31, 2020 and December 31, 20182019
1
 
b) Consolidated Statements of Operations for the three and six months ended June 30,March 31, 2020 and 2019 and 2018
3
 
c) Consolidated Statements of Comprehensive Income for the three and six months ended June 30,March 31, 2020 and 2019 and 2018
4
 
d) Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30,March 31, 2020 and 2019 and 2018
5
 
e) Consolidated Statements of Cash Flows for the sixthree months ended June 30,March 31, 2020 and 2019 and 2018
76
   
Boston Properties Limited Partnership 
 
a) Consolidated Balance Sheets as of June 30, 2019March 31, 2020 and December 31, 20182019
98
 
b) Consolidated Statements of Operations for the three and six months ended June 30,March 31, 2020 and 2019 and 2018
1110
 
c) Consolidated Statements of Comprehensive Income for the three and six months ended June 30,March 31, 2020 and 2019 and 2018
1211
 
d) Consolidated Statements of Capital and Noncontrolling Interests for the three and six months ended June 30,March 31, 2020 and 2019 and 2018
1312
 
e) Consolidated Statements of Cash Flows for the sixthree months ended June 30,March 31, 2020 and 2019 and 2018
1513
   
Boston Properties, Inc. and Boston Properties Limited Partnership 
 
Notes to the Consolidated Financial Statements
1715
 


 
ITEM 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
4838
ITEM 3.
Quantitative and Qualitative Disclosures about Market Risk
9475
ITEM 4.
Controls and Procedures
9475
  
PART II. OTHER INFORMATION
 
ITEM 1.
Legal Proceedings
9676
ITEM 1A.
Risk Factors
9676
ITEM 2.
Unregistered Sales of Equity Securities and Use of Proceeds
9679
ITEM 3.
Defaults Upon Senior Securities
9780
ITEM 4.
Mine Safety Disclosures
9780
ITEM 5.
Other Information
9780
ITEM 6.
Exhibits
9881
  
SIGNATURES
9982


Table of ContentContents

PART I. FINANCIAL INFORMATION
ITEM 1—Financial Statements.


BOSTON PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
BOSTON PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited and in thousands, except for share and par value amounts)

BOSTON PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited and in thousands, except for share and par value amounts)

 June 30, 2019 December 31, 2018
 (in thousands, except for share and par value amounts) March 31,
2020		 December 31,
2019
ASSETS        
Real estate, at cost (amounts related to variable interest entities (“VIEs”) of $6,426,427 and $7,481,015 at June 30, 2019 and December 31, 2018, respectively) $21,943,208
 $21,649,896
Right of use assets - finance leases (amount related to VIEs of $21,000 at June 30, 2019) 187,269
 —
Real estate, at cost (amounts related to variable interest entities (“VIEs”) of $6,564,762 and $6,497,031 at March 31, 2020 and December 31, 2019, respectively) $22,342,209
 $22,502,976
Right of use assets - finance leases (amounts related to VIEs of $21,000 and $21,000 at March 31, 2020 and December 31, 2019, respectively) 237,394
 237,394
Right of use assets - operating leases 149,839
 —
 148,057
 148,640
Less: accumulated depreciation (amounts related to VIEs of $(1,011,743) and $(965,500) at June 30, 2019 and December 31, 2018, respectively) (5,050,606) (4,897,777)
Less: accumulated depreciation (amounts related to VIEs of $(1,082,486) and$(1,058,495) at March 31, 2020 and December 31, 2019, respectively) (5,209,487) (5,266,798)
Total real estate 17,229,710
 16,752,119
 17,518,173
 17,622,212
Cash and cash equivalents (amounts related to VIEs of $245,444 and $296,806 at June 30, 2019 and December 31, 2018, respectively) 1,087,001
 543,359
Cash and cash equivalents (amounts related to VIEs of $268,415 and $280,033 at March 31, 2020 and December 31, 2019, respectively) 660,733
 644,950
Cash held in escrows 75,923
 95,832
 197,845
 46,936
Investments in securities 33,411
 28,198
 28,101
 36,747
Tenant and other receivables (amounts related to VIEs of $10,309 and $15,519 at June 30, 2019 and December 31, 2018, respectively) 87,727
 86,629
Note receivable 19,718
 19,468
Related party note receivable 80,000
 80,000
Accrued rental income (amounts related to VIEs of $283,891 and $272,466 at June 30, 2019 and December 31, 2018, respectively) 973,167
 934,896
Deferred charges, net (amounts related to VIEs of $226,426 and $263,402 at June 30, 2019 and December 31, 2018, respectively) 676,082
 678,724
Prepaid expenses and other assets (amounts related to VIEs of $25,635 and $26,513 at June 30, 2019 and December 31, 2018, respectively) 68,701
 80,943
Tenant and other receivables, net (amounts related to VIEs of $19,954 and $28,918 at March 31, 2020 and December 31, 2019, respectively) 89,431
 112,807
Related party note receivable, net 78,800
 80,000
Note receivable, net 15,794
 15,920
Accrued rental income, net (amounts related to VIEs of $308,482 and $298,318 at March 31, 2020 and December 31, 2019, respectively) 1,059,677
 1,038,788
Deferred charges, net (amounts related to VIEs of $205,688 and $214,769 at March 31, 2020 and December 31, 2019, respectively) 667,076
 689,213
Prepaid expenses and other assets (amounts related to VIEs of $52,641 and $20,931 at March 31, 2020 and December 31, 2019, respectively) 136,730
 41,685
Investments in unconsolidated joint ventures 936,835
 956,309
 1,377,338
 955,647
Total assets $21,268,275
 $20,256,477
 $21,829,698
 $21,284,905
LIABILITIES AND EQUITY        
Liabilities:        
Mortgage notes payable, net (amounts related to VIEs of $2,924,151 and $2,929,326 at June 30, 2019 and December 31, 2018, respectively) $2,956,833
 $2,964,572
Mortgage notes payable, net (amounts related to VIEs of $2,916,068 and $2,918,806 at March 31, 2020 and December 31, 2019, respectively) $2,919,157
 $2,922,408
Unsecured senior notes, net 8,390,708
 7,544,697
 8,393,009
 8,390,459
Unsecured line of credit —
 —
 250,000
 —
Unsecured term loan, net 498,700
 498,488
 499,058
 498,939
Lease liabilities - finance leases (amount related to VIEs of $20,107 at June 30, 2019) 172,902
 —
Lease liabilities - finance leases (amounts related to VIEs of $20,198 and $20,189 at March 31, 2020 and December 31, 2019, respectively) 227,067
 224,042
Lease liabilities - operating leases 199,344
 —
 200,573
 200,180
Accounts payable and accrued expenses (amounts related to VIEs of $45,917 and $75,786 at June 30, 2019 and December 31, 2018, respectively) 418,429
 276,645
Accounts payable and accrued expenses (amounts related to VIEs of $28,437 and $45,777 at March 31, 2020 and December 31, 2019, respectively) 293,831
 377,553
Dividends and distributions payable 165,419
 165,114
 171,026
 170,713
Accrued interest payable 89,289
 89,267
 82,388
 90,016
Other liabilities (amounts related to VIEs of $128,504 and $200,344 at June 30, 2019 and December 31, 2018, respectively) 355,984
 503,726
Other liabilities (amounts related to VIEs of $142,381 and $140,110 at March 31, 2020 and December 31, 2019, respectively) 366,852
 387,994
Total liabilities 13,247,608
 12,042,509
 13,402,961
 13,262,304
Commitments and contingencies —
 —
 —
 —
Equity:    
Stockholders’ equity attributable to Boston Properties, Inc.:    
    
Redeemable deferred stock units— 63,475 and 60,676 units outstanding at redemption value at March 31, 2020 and December 31, 2019, respectively 5,854
 8,365

BOSTON PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited and in thousands, except for share and par value amounts)

  March 31,
2020		 December 31,
2019
Equity:    
Stockholders’ equity attributable to Boston Properties, Inc.:    
Excess stock, $0.01 par value, 150,000,000 shares authorized, none issued or outstanding —
 —
Preferred stock, $0.01 par value, 50,000,000 shares authorized;    
5.25% Series B cumulative redeemable preferred stock, $0.01 par value, liquidation preference $2,500 per share, 92,000 shares authorized, 80,000 shares issued and outstanding at March 31, 2020 and December 31, 2019 200,000
 200,000
Common stock, $0.01 par value, 250,000,000 shares authorized, 155,393,455 and 154,869,198 issued and 155,314,555 and 154,790,298 outstanding at March 31, 2020 and December 31, 2019, respectively 1,553
 1,548
Additional paid-in capital 6,321,475
 6,294,719
Dividends in excess of earnings (416,740) (760,523)
Treasury common stock at cost, 78,900 shares at March 31, 2020 and December 31, 2019 (2,722) (2,722)
Accumulated other comprehensive loss (55,700) (48,335)
Total stockholders’ equity attributable to Boston Properties, Inc. 6,047,866
 5,684,687
Noncontrolling interests:    
Common units of Boston Properties Limited Partnership 636,572
 600,860
Property partnerships 1,736,445
 1,728,689
Total equity 8,420,883
 8,014,236
Total liabilities and equity $21,829,698
 $21,284,905
Table of Content

BOSTON PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
  June 30, 2019 December 31, 2018
  (in thousands, except for share and par value amounts)
Excess stock, $0.01 par value, 150,000,000 shares authorized, none issued or outstanding —
 —
Preferred stock, $0.01 par value, 50,000,000 shares authorized;    
5.25% Series B cumulative redeemable preferred stock, $0.01 par value, liquidation preference $2,500 per share, 92,000 shares authorized, 80,000 shares issued and outstanding at June 30, 2019 and December 31, 2018 200,000
 200,000
Common stock, $0.01 par value, 250,000,000 shares authorized, 154,642,030 and 154,537,378 issued and 154,563,130 and 154,458,478 outstanding at June 30, 2019 and December 31, 2018, respectively 1,546
 1,545
Additional paid-in capital 6,278,961
 6,407,623
Dividends in excess of earnings (710,592) (675,534)
Treasury common stock at cost, 78,900 shares at June 30, 2019 and December 31, 2018 (2,722) (2,722)
Accumulated other comprehensive loss (51,340) (47,741)
Total stockholders’ equity attributable to Boston Properties, Inc. 5,715,853
 5,883,171
Noncontrolling interests:    
Common units of Boston Properties Limited Partnership 608,593
 619,352
Property partnerships 1,696,221
 1,711,445
Total equity 8,020,667
 8,213,968
Total liabilities and equity $21,268,275
 $20,256,477
























The accompanying notes are an integral part of these consolidated financial statements.
Table of Content


BOSTON PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)(Unaudited and in thousands, except for per share amounts)
Three months ended June 30, Six months ended June 30,
2019 2018 2019 2018Three months ended March 31,
(in thousands, except for per share amounts)2020 2019
Revenue          
Lease$680,189
 $—
 $1,359,440
 $—
$710,111
 $679,251
Base rent—
 516,439
 —
 1,035,946
Recoveries from tenants—
 95,259
 —
 190,377
Parking and other26,319
 26,904
 51,225
 53,038
24,504
 24,906
Hotel revenue14,844
 14,607
 23,782
 23,709
Hotel6,825
 8,938
Development and management services9,986
 9,305
 19,263
 17,710
7,879
 9,277
Direct reimbursements of payroll and related costs from management services contracts2,403
 1,970
 5,798
 4,855
3,237
 3,395
Total revenue733,741
 664,484
 1,459,508
 1,325,635
752,556
 725,767
Expenses          
Operating          
Rental257,971
 237,790
 515,488
 478,119
262,966
 257,517
Hotel9,080
 8,741
 16,943
 16,814
6,821
 7,863
General and administrative35,071
 28,468
 76,833
 64,362
36,454
 41,762
Payroll and related costs from management services contracts2,403
 1,970
 5,798
 4,855
3,237
 3,395
Transaction costs417
 474
 877
 495
615
 460
Depreciation and amortization177,411
 156,417
 342,005
 322,214
171,094
 164,594
Total expenses482,353
 433,860
 957,944
 886,859
481,187
 475,591
Other income (expense)          
Income from unconsolidated joint ventures47,964
 769
 48,177
 1,230
Gains on sales of real estate1,686
 18,292
 781
 114,689
Income (loss) from unconsolidated joint ventures(369) 213
Gains (losses) on sales of real estate410,165
 (905)
Interest and other income3,615
 2,579
 7,368
 4,227
3,017
 3,753
Gains from investments in securities1,165
 505
 4,134
 379
Gains (losses) from investments in securities(5,445) 2,969
Impairment loss—
 —
 (24,038) —
—
 (24,038)
Interest expense(102,357) (92,204) (203,366) (182,424)(101,591) (101,009)
Net income203,461
 160,565
 334,620
 376,877
577,146
 131,159
Net income attributable to noncontrolling interests          
Noncontrolling interests in property partnerships(17,482) (14,400) (36,312) (31,634)(19,486) (18,830)
Noncontrolling interest—common units of Boston Properties Limited Partnership(19,036) (14,859) (30,627) (35,311)
Noncontrolling interest—common units of the Operating Partnership(57,539) (11,599)
Net income attributable to Boston Properties, Inc.166,943
 131,306
 267,681
 309,932
500,121
 100,730
Preferred dividends(2,625) (2,625) (5,250) (5,250)(2,625) (2,625)
Net income attributable to Boston Properties, Inc. common shareholders$164,318
 $128,681
 $262,431
 $304,682
$497,496
 $98,105
Basic earnings per common share attributable to Boston Properties, Inc. common shareholders:          
Net income$1.06
 $0.83
 $1.70
 $1.97
$3.20
 $0.63
Weighted average number of common shares outstanding154,555
 154,415
 154,540
 154,400
155,011
 154,525
Diluted earnings per common share attributable to Boston Properties, Inc. common shareholders:          
Net income$1.06
 $0.83
 $1.69
 $1.97
$3.20
 $0.63
Weighted average number of common and common equivalent shares outstanding154,874
 154,571
 154,859
 154,638
155,258
 154,844









The accompanying notes are an integral part of these consolidated financial statements.
Table of Content


BOSTON PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)(Unaudited and in thousands)
 
Three months ended June 30, Six months ended June 30,
2019 2018 2019 2018 Three months ended March 31,
(in thousands) 2020 2019
Net income$203,461
 $160,565
 $334,620
 $376,877
 $577,146
 $131,159
Other comprehensive income (loss):       
Other comprehensive (loss):    
Effective portion of interest rate contracts(4,426) —
 (7,054) —
 (9,720) (2,628)
Amortization of interest rate contracts (1)1,666
 1,666
 3,332
 3,332
 1,666
 1,666
Other comprehensive income (loss)(2,760) 1,666
 (3,722) 3,332
Other comprehensive (loss) (8,054) (962)
Comprehensive income200,701
 162,231
 330,898
 380,209
 569,092
 130,197
Net income attributable to noncontrolling interests(36,518) (29,259) (66,939) (66,945) (77,025) (30,429)
Other comprehensive loss (income) attributable to noncontrolling interests154
 (299) 123
 (598)
Other comprehensive (income) loss attributable to noncontrolling interests 689
 (31)
Comprehensive income attributable to Boston Properties, Inc.$164,337
 $132,673
 $264,082
 $312,666
 $492,756
 $99,737
_______________
(1)
(1)Amounts reclassified from comprehensive income primarily to interest expense within the Boston Properties, Inc.’s Consolidated Statements of Operations.

































The accompanying notes are an integral part of these consolidated financial statements.
Table of Content


BOSTON PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited and in thousands)

BOSTON PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited and in thousands)

BOSTON PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited and in thousands)

Common Stock Preferred Stock Additional Paid-in Capital Dividends in Excess of Earnings Treasury Stock, at cost Accumulated Other Comprehensive Loss Noncontrolling Interests - Common Units Noncontrolling Interests - Property Partnerships TotalCommon Stock Preferred Stock Additional Paid-in Capital Dividends in Excess of Earnings 
Treasury Stock,
at cost
 Accumulated Other Comprehensive Loss Noncontrolling Interests - Common Units Noncontrolling Interests - Property Partnerships Total
Shares Amount Shares Amount 
Equity, March 31, 2019154,515
 $1,545
 $200,000
 $6,414,612
 $(728,083) $(2,722) $(48,734) $623,061
 $1,710,608
 $8,170,287
Redemption of operating partnership units to common stock21
 1
 —
 719
 —
 —
 —
 (720) —
 —
Allocated net income for the year—
 —
 —
 —
 166,951
 —
 —
 19,028
 17,482
 203,461
Dividends/distributions declared—
 —
 —
 —
 (149,460) —
 —
 (17,206) —
 (166,666)
Shares issued pursuant to stock purchase plan—
 —
 —
 —
 —
 —
 —
 —
 —
 —
Net activity from stock option and incentive plan27
 —
 —
 1,495
 —
 —
 —
 9,368
 —
 10,863
Acquisition of noncontrolling interest in property partnership—
 —
 —
 (162,505) —
 —
 —
 —
 (24,501) (187,006)
Contributions from noncontrolling interests in property partnerships—
 —
 —
 —
 —
 —
 —
 —
 7,761
 7,761
Distributions to noncontrolling interests in property partnerships—
 —
 —
 —
 —
 —
 —
 —
 (15,273) (15,273)
Effective portion of interest rate contracts—
 —
 —
 —
 —
 —
 (3,973) (453) —
 (4,426)
Amortization of interest rate contracts—
 —
 —
 —
 —
 —
 1,367
 155
 144
 1,666
Reallocation of noncontrolling interest—
 —
 —
 24,640
 —
 —
 —
 (24,640) —
 —
Equity, June 30, 2019154,563
 $1,546
 $200,000
 $6,278,961
 $(710,592) $(2,722) $(51,340) $608,593
 $1,696,221
 $8,020,667


                  
Equity, March 31, 2018154,362
 $1,544
 $200,000
 $6,384,147
 $(654,879) $(2,722) $(49,062) $619,347
 $1,685,715
 $8,184,090
Equity, December 31, 2019154,790
 $1,548
 $200,000
 $6,294,719
 $(760,523) $(2,722) $(48,335) $600,860
 $1,728,689
 $8,014,236
Cumulative effect of a change in accounting principle—
 —
 —
 —
 (1,505) —
 —
 (174) —
 (1,679)
Redemption of operating partnership units to common stock11
 —
 —
 364
 —
 —
 —
 (364) —
 —
462
 5
 —
 15,490
 —
 —
 —
 (15,495) —
 —
Allocated net income for the year—
 —
 —
 —
 131,286
 —
 —
 14,879
 14,400
 160,565
—
 —
 —
 —
 500,121
 —
 —
 57,539
 19,486
 577,146
Dividends/distributions declared—
 —
 —
 —
 (126,154) —
 —
 (14,357) —
 (140,511)—
 —
 —
 —
 (154,833) —
 —
 (17,444) —
 (172,277)
Shares issued pursuant to stock purchase plan—
 —
 —
 —
 —
 —
 —
 —
 —
 —
2
 —
 —
 325
 —
 —
 —
 —
 —
 325
Net activity from stock option and incentive plan39
 —
 —
 785
 —
 —
 —
 7,725
 —
 8,510
61
 —
 —
 7,383
 —
 —
 —
 15,677
 —
 23,060
Contributions from noncontrolling interests in property partnerships—
 —
 —
 —
 —
 —
 —
 —
 12,265
 12,265
—
 —
 —
 —
 —
 —
 —
 —
 3,876
 3,876
Distributions to noncontrolling interests in property partnerships—
 —
 —
 —
 —
 —
 —
 —
 (13,343) (13,343)—
 —
 —
 —
 —
 —
 —
 —
 (15,750) (15,750)
Effective portion of interest rate contracts—
 —
 —
 —
 —
 —
 (8,732) (988) —
 (9,720)
Amortization of interest rate contracts—
 —
 —
 —
 —
 —
 1,367
 155
 144
 1,666
—
 —
 —
 —
 —
 —
 1,367
 155
 144
 1,666
Reallocation of noncontrolling interest—
 —
 —
 6,164
 —
 —
 —
 (6,164) —
 —
—
 —
 —
 3,558
 —
 —
 —
 (3,558) —
 —
Equity, June 30, 2018154,412
 $1,544
 $200,000
 $6,391,460
 $(649,747) $(2,722) $(47,695) $621,221
 $1,699,181
 $8,213,242
Equity, March 31, 2020155,315
 $1,553
 $200,000
 $6,321,475
 $(416,740) $(2,722) $(55,700) $636,572
 $1,736,445
 $8,420,883
                   
Equity, December 31, 2018154,458
 $1,545
 $200,000
 $6,407,623
 $(675,534) $(2,722) $(47,741) $619,352
 $1,711,445
 $8,213,968
Cumulative effect of a change in accounting principle—
 —
 —
 —
 (3,864) —
 —
 (445) (70) (4,379)
Redemption of operating partnership units to common stock14
 —
 —
 492
 —
 —
 —
 (492) —
 —
Allocated net income for the year—
 —
 —
 —
 100,730
 —
 —
 11,599
 18,830
 131,159
Dividends/distributions declared—
 —
 —
 —
 (149,415) —
 —
 (17,185) —
 (166,600)
Shares issued pursuant to stock purchase plan4
 —
 —
 373
 —
 —
 —
 —
 —
 373
Net activity from stock option and incentive plan39
 —
 —
 3,059
 —
 —
 —
 13,410
 —
 16,469
Contributions from noncontrolling interests in property partnerships—
 —
 —
 —
 —
 —
 —
 —
 4,387
 4,387
Distributions to noncontrolling interests in property partnerships—
 —
 —
 —
 —
 —
 —
 —
 (24,128) (24,128)
Effective portion of interest rate contracts—
 —
 —
 —
 —
 —
 (2,359) (269) —
 (2,628)
Amortization of interest rate contracts—
 —
 —
 —
 —
 —
 1,366
 156
 144
 1,666
Reallocation of noncontrolling interest—
 —
 —
 3,065
 —
 —
 —
 (3,065) —
 —
Equity, March 31, 2019154,515
 $1,545
 $200,000
 $6,414,612
 $(728,083) $(2,722) $(48,734) $623,061
 $1,710,608
 $8,170,287

The accompanying notes are an integral part of these consolidated financial statements.
Table of Content


BOSTON PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited and in thousands)

 Common Stock Preferred Stock Additional Paid-in Capital Dividends in Excess of Earnings Treasury Stock, at cost Accumulated Other Comprehensive Loss Noncontrolling Interests - Common Units Noncontrolling Interests - Property Partnerships Total
 Shares Amount  
Equity, December 31, 2018154,458
 $1,545
 $200,000
 $6,407,623
 $(675,534) $(2,722) $(47,741) $619,352
 $1,711,445
 $8,213,968
Cumulative effect of a change in accounting principle—
 —
 —
 —
 (3,864) —
 —
 (445) (70) (4,379)
Redemption of operating partnership units to common stock35
 1
 —
 1,211
 —
 —
 —
 (1,212) —
 —
Allocated net income for the year—
 —
 —
 —
 267,681
 —
 —
 30,627
 36,312
 334,620
Dividends/distributions declared—
 —
 —
 —
 (298,875) —
 —
 (34,391) —
 (333,266)
Shares issued pursuant to stock purchase plan4
 —
 —
 373
 —
 —
 —
 —
 —
 373
Net activity from stock option and incentive plan66
 —
 —
 4,554
 —
 —
 —
 22,778
 —
 27,332
Acquisition of noncontrolling interest in property partnership—
 —
 —
 (162,505) —
 —
 —
 —
 (24,501) (187,006)
Contributions from noncontrolling interests in property partnerships—
 —
 —
 —
 —
 —
 —
 —
 12,148
 12,148
Distributions to noncontrolling interests in property partnerships—
 —
 —
 —
 —
 —
 —
 —
 (39,401) (39,401)
Effective portion of interest rate contracts—
 —
 —
 —
 —
 —
 (6,332) (722) —
 (7,054)
Amortization of interest rate contracts—
 —
 —
 —
 —
 —
 2,733
 311
 288
 3,332
Reallocation of noncontrolling interest—
 —
 —
 27,705
 —
 —
 —
 (27,705) —
 —
Equity, June 30, 2019154,563
 $1,546
 $200,000
 $6,278,961
 $(710,592) $(2,722) $(51,340) $608,593
 $1,696,221
 $8,020,667
                    
Equity, December 31, 2017154,325
 $1,543
 $200,000
 $6,377,908
 $(712,343) $(2,722) $(50,429) $604,739
 $1,683,760
 $8,102,456
Cumulative effect of a change in accounting principle—
 —
 —
 —
 4,933
 —
 —
 563
 —
 5,496
Redemption of operating partnership units to common stock35
 1
 —
 1,195
 —
 —
 —
 (1,196) —
 —
Allocated net income for the year—
 —
 —
 —
 309,932
 —
 —
 35,311
 31,634
 376,877
Dividends/distributions declared—
 —
 —
 —
 (252,269) —
 —
 (28,708) —
 (280,977)
Shares issued pursuant to stock purchase plan3
 —
 —
 429
 —
 —
 —
 —
 —
 429
Net activity from stock option and incentive plan49
 —
 —
 600
 —
 —
 —
 21,530
 —
 22,130
Contributions from noncontrolling interests in property partnerships—
 —
 —
 —
 —
 —
 —
 —
 27,532
 27,532
Distributions to noncontrolling interests in property partnerships—
 —
 —
 —
 —
 —
 —
 —
 (44,033) (44,033)
Amortization of interest rate contracts—
 —
 —
 —
 —
 —
 2,734
 310
 288
 3,332
Reallocation of noncontrolling interest—
 —
 —
 11,328
 —
 —
 —
 (11,328) —
 —
Equity, June 30, 2018154,412
 $1,544
 $200,000
 $6,391,460
 $(649,747) $(2,722) $(47,695) $621,221
 $1,699,181
 $8,213,242
BOSTON PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited and in thousands)

 For the three months ended March 31,
 2020 2019
Cash flows from operating activities:   
Net income$577,146
 $131,159
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization171,094
 164,594
Amortization of right of use assets - operating leases583
 605
Impairment loss—
 24,038
Non-cash compensation expense17,525
 15,050
Loss (income) from unconsolidated joint ventures369
 (213)
Distributions of net cash flow from operations of unconsolidated joint ventures5,917
 2,650
Losses (gains) from investments in securities5,445
 (2,969)
Non-cash portion of interest expense5,646
 5,447
(Gains) losses on sales of real estate(410,165) 905
Change in assets and liabilities:   
Tenant and other receivables, net17,784
 (14,000)
Note receivable, net(128) (125)
Accrued rental income, net(27,285) (15,570)
Prepaid expenses and other assets(93,819) (68,554)
Lease liabilities - operating leases393
 370
Accounts payable and accrued expenses(48,591) 258
Accrued interest payable(7,644) (160)
Other liabilities(21,296) (17,831)
Tenant leasing costs(17,777) (18,420)
Total adjustments(401,949) 76,075
Net cash provided by operating activities175,197
 207,234
Cash flows from investing activities:   
Acquisition of real estate—
 (43,061)
Construction in progress(143,160) (85,632)
Building and other capital improvements(39,154) (32,719)
Tenant improvements(64,172) (54,242)
Proceeds from sales of real estate259,489
 20,019
Capital contributions to unconsolidated joint ventures(89,997) (26,995)
Investments in securities, net3,201
 (885)
Net cash used in investing activities(73,793) (223,515)
    


BOSTON PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited and in thousands)

 For the three months ended March 31,
 2020 2019
Cash flows from financing activities:   
Repayments of mortgage notes payable(4,212) (5,645)
Borrowings on unsecured line of credit265,000
 50,000
Repayments of unsecured line of credit(15,000) (50,000)
Payments on finance lease obligations—
 (470)
Deferred financing costs(11) (186)
Net proceeds from equity transactions3,349
 1,792
Dividends and distributions(171,964) (166,362)
Contributions from noncontrolling interests in property partnerships3,876
 4,387
Distributions to noncontrolling interests in property partnerships(15,750) (24,128)
Net cash provided by (used in) financing activities65,288
 (190,612)
Net increase (decrease) in cash and cash equivalents and cash held in escrows166,692
 (206,893)
Cash and cash equivalents and cash held in escrows, beginning of year691,886
 639,191
Cash and cash equivalents and cash held in escrows, end of year$858,578
 $432,298
    
Reconciliation of cash and cash equivalents and cash held in escrows:   
Cash and cash equivalents, beginning of period$644,950
 $543,359
Cash held in escrows, beginning of period46,936
 95,832
Cash and cash equivalents and cash held in escrows, beginning of period$691,886
 $639,191
    
Cash and cash equivalents, end of period$660,733
 $360,091
Cash held in escrows, end of period197,845
 72,207
Cash and cash equivalents and cash held in escrows, end of period$858,578
 $432,298
    
Supplemental disclosures:   
Cash paid for interest$114,696
 $107,094
Interest capitalized$14,149
 $11,813
    
Non-cash investing and financing activities:   
Write-off of fully depreciated real estate$(38,782) $(31,640)
Change in real estate included in accounts payable and accrued expenses$(27,415) $49,689
Real estate acquired through finance lease$—
 $122,563
Accrued rental income, net deconsolidated$(4,558) $—
Tenant leasing costs, net deconsolidated$(3,462) $—
Building and other capital improvements, net deconsolidated$(111,889) $—
Tenant improvements, net deconsolidated$(12,331) $—
Investment in unconsolidated joint venture recorded upon deconsolidation$347,898
 $—
Dividends and distributions declared but not paid$171,026
 $165,352
Conversions of noncontrolling interests to stockholders’ equity$15,495
 $492
Issuance of restricted securities to employees$43,104
 $37,428

The accompanying notes are an integral part of these consolidated financial statements.
Table of Content

BOSTON PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 For the six months ended June 30,
 2019 2018
 (in thousands)
Cash flows from operating activities:   
Net income$334,620
 $376,877
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization342,005
 322,214
Amortization of right of use assets - operating leases1,213
 —
Impairment loss24,038
 —
Non-cash compensation expense25,444
 23,243
Income from unconsolidated joint ventures(48,177) (1,230)
Distributions of net cash flow from operations of unconsolidated joint ventures3,890
 1,663
Gains from investments in securities(4,134) (379)
Non-cash portion of interest expense10,900
 10,607
Gains on sales of real estate(781) (114,689)
Change in assets and liabilities:   
Tenant and other receivables, net(11,514) 33,012
Note receivable(250) —
Accrued rental income, net(37,473) (45,759)
Prepaid expenses and other assets(9,319) (4,641)
Lease liabilities - operating leases780
 —
Accounts payable and accrued expenses17,458
 (9,899)
Accrued interest payable(78) 12,999
Other liabilities(30,503) 11,571
Tenant leasing costs(52,515) (54,743)
Total adjustments230,984
 183,969
Net cash provided by operating activities565,604
 560,846
Cash flows from investing activities:   
Acquisition of real estate(43,061) —
Construction in progress(203,259) (380,565)
Building and other capital improvements(79,943) (96,730)
Tenant improvements(115,940) (83,982)
Proceeds from sales of real estate60,398
 141,249
Capital contributions to unconsolidated joint ventures(50,068) (65,250)
Capital distributions from unconsolidated joint ventures105,000
 —
Investments in securities, net(1,079) (523)
Net cash used in investing activities(327,952) (485,801)
    
    
    
Table of Content

BOSTON PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 For the six months ended June 30,
 2019 2018
 (in thousands)
Cash flows from financing activities:   
Repayments of mortgage notes payable(9,702) (9,192)
Proceeds from unsecured senior notes848,428
 —
Borrowings on unsecured line of credit380,000
 345,000
Repayments of unsecured line of credit(380,000) (390,000)
Proceeds from unsecured term loan—
 500,000
Payments on finance lease obligations(628) —
Payments on real estate financing transactions—
 (960)
Deferred financing costs(7,112) (263)
Net proceeds from equity transactions2,261
 (684)
Dividends and distributions(332,961) (280,754)
Contributions from noncontrolling interests in property partnerships12,148
 27,532
Distributions to noncontrolling interests in property partnerships(39,401) (44,033)
Acquisition of noncontrolling interest in property partnership(186,952) —
Net cash provided by financing activities286,081
 146,646
Net increase in cash and cash equivalents and cash held in escrows523,733
 221,691
Cash and cash equivalents and cash held in escrows, beginning of period639,191
 505,369
Cash and cash equivalents and cash held in escrows, end of period$1,162,924
 $727,060
    
Reconciliation of cash and cash equivalents and cash held in escrows:   
Cash and cash equivalents, beginning of period$543,359
 $434,767
Cash held in escrows, beginning of period95,832
 70,602
Cash and cash equivalents and cash held in escrows, beginning of period$639,191
 $505,369
    
Cash and cash equivalents, end of period$1,087,001
 $472,555
Cash held in escrows, end of period75,923
 254,505
Cash and cash equivalents and cash held in escrows, end of period$1,162,924
 $727,060
    
Supplemental disclosures:   
Cash paid for interest$216,754
 $192,898
Interest capitalized$25,069
 $34,999
Non-cash investing and financing activities:   
Write-off of fully depreciated real estate$(61,283) $(78,900)
Additions to real estate included in accounts payable and accrued expenses$115,150
 $326
Real estate acquired through finance lease$122,563
 $—
Dividends and distributions declared but not paid$165,419
 $139,263
Conversions of noncontrolling interests to stockholders’ equity$1,212
 $1,196
Issuance of restricted securities to employees$38,923
 $37,342



The accompanying notes are an integral part of these consolidated financial statements.
Table of Content



BOSTON PROPERTIES LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
(Unaudited)
  June 30, 2019 December 31, 2018
  (in thousands, except for unit amounts)
ASSETS    
Real estate, at cost (amounts related to variable interest entities (“VIEs”) of $6,426,427 and $7,481,015 at June 30, 2019 and December 31, 2018, respectively) $21,547,409
 $21,251,540
Right of use assets - finance leases (amount related to VIEs of $21,000 at June 30, 2019) 187,269
 —
Right of use assets - operating leases 149,839
 —
Less: accumulated depreciation (amounts related to VIEs of $(1,011,743) and $(965,500) at June 30, 2019 and December 31, 2018, respectively) (4,949,822) (4,800,475)
Total real estate 16,934,695
 16,451,065
Cash and cash equivalents (amounts related to VIEs of $245,444 and $296,806 at June 30, 2019 and December 31, 2018, respectively) 1,087,001
 543,359
Cash held in escrows 75,923
 95,832
Investments in securities 33,411
 28,198
Tenant and other receivables (amounts related to VIEs of $10,309 and $15,519 at June 30, 2019 and December 31, 2018, respectively) 87,727
 86,629
Note receivable 19,718
 19,468
Related party note receivable 80,000
 80,000
Accrued rental income (amounts related to VIEs of $283,891 and $272,466 at June 30, 2019 and December 31, 2018, respectively) 973,167
 934,896
Deferred charges, net (amounts related to VIEs of $226,426 and $263,402 at June 30, 2019 and December 31, 2018, respectively) 676,082
 678,724
Prepaid expenses and other assets (amounts related to VIEs of $25,635 and $26,513 at June 30, 2019 and December 31, 2018, respectively) 68,701
 80,943
Investments in unconsolidated joint ventures 936,835
 956,309
Total assets $20,973,260
 $19,955,423
LIABILITIES AND CAPITAL    
Liabilities:    
Mortgage notes payable, net (amounts related to VIEs of $2,924,151 and $2,929,326 at June 30, 2019 and December 31, 2018, respectively) $2,956,833
 $2,964,572
Unsecured senior notes, net 8,390,708
 7,544,697
Unsecured line of credit —
 —
Unsecured term loan, net 498,700
 498,488
Lease liabilities - finance leases (amount related to VIEs of $20,107 at June 30, 2019) 172,902
 —
Lease liabilities - operating leases 199,344
 —
Accounts payable and accrued expenses (amounts related to VIEs of $45,917 and $75,786 at June 30, 2019 and December 31, 2018, respectively) 418,429
 276,645
Distributions payable 165,419
 165,114
Accrued interest payable 89,289
 89,267
Other liabilities (amounts related to VIEs of $128,504 and $200,344 at June 30, 2019 and December 31, 2018, respectively) 355,984
 503,726
Total liabilities 13,247,608
 12,042,509
Commitments and contingencies —
 —
Noncontrolling interests:    
Redeemable partnership units—16,828,230 and 16,783,558 common units and 1,189,117 and 991,577 long term incentive units outstanding at redemption value at June 30, 2019 and December 31, 2018, respectively 2,324,238
 2,000,591
BOSTON PROPERTIES LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
(Unaudited and in thousands, except for unit amounts)

  March 31,
2020		 December 31,
2019
ASSETS    
Real estate, at cost (amounts related to variable interest entities (“VIEs”) of $6,564,762 and $6,497,031 at March 31, 2020 and December 31, 2019, respectively) $21,959,932
 $22,107,755
Right of use assets - finance leases (amounts related to VIEs of $21,000 and $21,000 at March 31, 2020 and December 31, 2019, respectively) 237,394
 237,394
Right of use assets - operating leases 148,057
 148,640
Less: accumulated depreciation (amounts related to VIEs of $(1,082,486) and$(1,058,495) at March 31, 2020 and December 31, 2019, respectively) (5,107,243) (5,162,908)
Total real estate 17,238,140
 17,330,881
Cash and cash equivalents (amounts related to VIEs of $268,415 and $280,033 at March 31, 2020 and December 31, 2019, respectively) 660,733
 644,950
Cash held in escrows 197,845
 46,936
Investments in securities 28,101
 36,747
Tenant and other receivables, net (amounts related to VIEs of $19,954 and $28,918 at March 31, 2020 and December 31, 2019, respectively) 89,431
 112,807
Related party note receivable, net 78,800
 80,000
Note receivable, net 15,794
 15,920
Accrued rental income, net (amounts related to VIEs of $308,482 and $298,318 at March 31, 2020 and December 31, 2019, respectively) 1,059,677
 1,038,788
Deferred charges, net (amounts related to VIEs of $205,688 and $214,769 at March 31, 2020 and December 31, 2019, respectively) 667,076
 689,213
Prepaid expenses and other assets (amounts related to VIEs of $52,641 and $20,931 at March 31, 2020 and December 31, 2019, respectively) 136,730
 41,685
Investments in unconsolidated joint ventures 1,377,338
 955,647
Total assets $21,549,665
 $20,993,574
LIABILITIES AND CAPITAL    
Liabilities:    
Mortgage notes payable, net (amounts related to VIEs of $2,916,068 and $2,918,806 at March 31, 2020 and December 31, 2019, respectively) $2,919,157
 $2,922,408
Unsecured senior notes, net 8,393,009
 8,390,459
Unsecured line of credit 250,000
 —
Unsecured term loan, net 499,058
 498,939
Lease liabilities - finance leases (amounts related to VIEs of $20,198 and $20,189 at March 31, 2020 and December 31, 2019, respectively) 227,067
 224,042
Lease liabilities - operating leases 200,573
 200,180
Accounts payable and accrued expenses (amounts related to VIEs of $28,437 and $45,777 at March 31, 2020 and December 31, 2019, respectively) 293,831
 377,553
Dividends and distributions payable 171,026
 170,713
Accrued interest payable 82,388
 90,016
Other liabilities (amounts related to VIEs of $142,381 and $140,110 at March 31, 2020 and December 31, 2019, respectively) 366,852
 387,994
Total liabilities 13,402,961
 13,262,304
     
Commitments and contingencies —
 —
     
Redeemable deferred stock units— 63,475 and 60,676 units outstanding at redemption value at March 31, 2020 and December 31, 2019, respectively 5,854
 8,365
Table of Content


BOSTON PROPERTIES LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
(Unaudited)
  June 30, 2019 December 31, 2018
  (in thousands, except for unit amounts)
Capital:    
5.25% Series B cumulative redeemable preferred units, liquidation preference $2,500 per unit, 80,000 units issued and outstanding at June 30, 2019 and December 31, 2018 193,623
 193,623
Boston Properties Limited Partnership partners’ capital — 1,725,805 and 1,722,336 general partner units and 152,837,325 and 152,736,142 limited partner units outstanding at June 30, 2019 and December 31, 2018, respectively 3,562,910
 4,054,996
Accumulated other comprehensive loss (51,340) (47,741)
Total partners’ capital 3,705,193
 4,200,878
Noncontrolling interests in property partnerships 1,696,221
 1,711,445
Total capital 5,401,414
 5,912,323
Total liabilities and capital $20,973,260
 $19,955,423


BOSTON PROPERTIES LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
(Unaudited and in thousands, except for unit amounts)

  March 31,
2020		 December 31,
2019
Noncontrolling interests:    
Redeemable partnership units— 16,421,888 and 16,764,466 common units and 1,343,299 and 1,143,215 long term incentive units outstanding at redemption value at March 31, 2020 and December 31, 2019, respectively 1,639,855
 2,468,753
Capital:    
5.25% Series B cumulative redeemable preferred units, liquidation preference $2,500 per unit, 80,000 units issued and outstanding at March 31, 2020 and December 31, 2019 193,623
 193,623
Boston Properties Limited Partnership partners’ capital— 1,730,797 and 1,726,980 general partner units and 153,583,758 and 153,063,318 limited partner units outstanding at March 31, 2020 and December 31, 2019, respectively 4,626,627
 3,380,175
Accumulated other comprehensive loss (55,700) (48,335)
Total partners’ capital 4,764,550
 3,525,463
Noncontrolling interests in property partnerships 1,736,445
 1,728,689
Total capital 6,500,995
 5,254,152
Total liabilities and capital $21,549,665
 $20,993,574





























The accompanying notes are an integral part of these consolidated financial statements.
Table of Content


BOSTON PROPERTIES LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)(Unaudited and in thousands, except for per unit amounts)
 Three months ended June 30, Six months ended June 30,
 2019 2018 2019 2018
 (in thousands, except for per unit amounts)
Revenue       
Lease$680,189
 $—
 $1,359,440
 $—
Base rent—
 516,439
 —
 1,035,946
Recoveries from tenants—
 95,259
 —
 190,377
Parking and other26,319
 26,904
 51,225
 53,038
Hotel revenue14,844
 14,607
 23,782
 23,709
Development and management services9,986
 9,305
 19,263
 17,710
Direct reimbursements of payroll and related costs from management services contracts2,403
 1,970
 5,798
 4,855
Total revenue733,741
 664,484
 1,459,508
 1,325,635
Expenses       
Operating       
Rental257,971
 237,790
 515,488
 478,119
Hotel9,080
 8,741
 16,943
 16,814
General and administrative35,071
 28,468
 76,833
 64,362
Payroll and related costs from management services contracts2,403
 1,970
 5,798
 4,855
Transaction costs417
 474
 877
 495
Depreciation and amortization175,199
 154,474
 337,881
 318,327
Total expenses480,141
 431,917
 953,820
 882,972
Other income (expense)       
Income from unconsolidated joint ventures47,964
 769
 48,177
 1,230
Gains on sales of real estate1,835
 18,770
 930
 117,677
Interest and other income3,615
 2,579
 7,368
 4,227
Gains from investments in securities1,165
 505
 4,134
 379
Impairment loss—
 —
 (22,272) —
Interest expense(102,357) (92,204) (203,366) (182,424)
Net income205,822
 162,986
 340,659
 383,752
Net income attributable to noncontrolling interests       
Noncontrolling interests in property partnerships(17,482) (14,400) (36,312) (31,634)
Net income attributable to Boston Properties Limited Partnership188,340
 148,586
 304,347
 352,118
Preferred distributions(2,625) (2,625) (5,250) (5,250)
Net income attributable to Boston Properties Limited Partnership common unitholders$185,715
 $145,961
 $299,097
 $346,868
Basic earnings per common unit attributable to Boston Properties Limited Partnership common unitholders:       
Net income$1.08
 $0.85
 $1.74
 $2.02
Weighted average number of common units outstanding172,202
 171,916
 172,167
 171,892
Diluted earnings per common unit attributable to Boston Properties Limited Partnership common unitholders:       
Net income$1.08
 $0.85
 $1.73
 $2.01
Weighted average number of common and common equivalent units outstanding172,521
 172,072
 172,486
 172,130
 Three months ended March 31,
 2020 2019
Revenue   
Lease$710,111
 $679,251
Parking and other24,504
 24,906
Hotel6,825
 8,938
Development and management services7,879
 9,277
Direct reimbursements of payroll and related costs from management services contracts3,237
 3,395
Total revenue752,556
 725,767
Expenses   
Operating   
Rental262,966
 257,517
Hotel6,821
 7,863
General and administrative36,454
 41,762
Payroll and related costs from management services contracts3,237
 3,395
Transaction costs615
 460
Depreciation and amortization169,285
 162,682
Total expenses479,378
 473,679
Other income (expense)   
Income (loss) from unconsolidated joint ventures(369) 213
Gains (losses) on sales of real estate419,654
 (905)
Interest and other income3,017
 3,753
Gains (losses) from investments in securities(5,445) 2,969
Impairment loss—
 (22,272)
Interest expense(101,591) (101,009)
Net income588,444
 134,837
Net income attributable to noncontrolling interests   
Noncontrolling interests in property partnerships(19,486) (18,830)
Net income attributable to Boston Properties Limited Partnership568,958
 116,007
Preferred distributions(2,625) (2,625)
Net income attributable to Boston Properties Limited Partnership common unitholders$566,333
 $113,382
Basic earnings per common unit attributable to Boston Properties Limited Partnership   
Net income$3.28
 $0.66
Weighted average number of common units outstanding172,549
 172,131
Diluted earnings per common unit attributable to Boston Properties Limited Partnership   
Net income$3.27
 $0.66
Weighted average number of common and common equivalent units outstanding172,796
 172,450








The accompanying notes are an integral part of these consolidated financial statements.
Table of Content


BOSTON PROPERTIES LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)(Unaudited and in thousands)
 
Three months ended June 30, Six months ended June 30,
2019 2018 2019 2018 Three months ended March 31,
(in thousands) 2020 2019
Net income$205,822
 $162,986
 $340,659
 $383,752
 $588,444
 $134,837
Other comprehensive income (loss):       
Other comprehensive (loss):    
Effective portion of interest rate contracts(4,426) —
 (7,054) —
 (9,720) (2,628)
Amortization of interest rate contracts (1)1,666
 1,666
 3,332
 3,332
 1,666
 1,666
Other comprehensive income (loss)(2,760) 1,666
 (3,722) 3,332
Other comprehensive (loss) (8,054) (962)
Comprehensive income203,062
 164,652
 336,937
 387,084
 580,390
 133,875
Comprehensive income attributable to noncontrolling interests(17,626) (14,544) (36,600) (31,922) (19,630) (18,974)
Comprehensive income attributable to Boston Properties Limited Partnership$185,436
 $150,108
 $300,337
 $355,162
 $560,760
 $114,901
_______________
(1)
(1)Amounts reclassified from comprehensive income primarily to interest expense within the Boston Properties Limited Partnership’s Consolidated Statements of Operations.






































The accompanying notes are an integral part of these consolidated financial statements.
Table of Content


BOSTON PROPERTIES LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CAPITAL AND NONCONTROLLING INTERESTS
(Unaudited and in thousands)

 Units Capital  
 General Partner Limited Partner Partners’ Capital (General and Limited Partners) Preferred Units 
Accumulated
Other
Comprehensive Loss
 
Noncontrolling
Interests - Property Partnerships
 Total Capital Noncontrolling interests - Redeemable Partnership Units
    
Equity, March 31, 20191,725
 152,790
 $3,603,174
 $193,623
 $(48,734) $1,710,608
 $5,458,671
 $2,414,240
Cumulative effect of a change in accounting principle—
 —
 —
 —
 —
 —
 —
 —
Contributions1
 26
 882
 —
 —
 —
 882
 1,082
Allocated net income for the year—
 —
 166,687
 2,625
 —
 17,482
 186,794
 19,028
Distributions—
 —
 (146,835) (2,625) —
 —
 (149,460) (17,206)
Unearned compensation—
 —
 613
 —
 —
 —
 613
 8,286
Conversion of redeemable partnership units—
 21
 720
 —
 —
 —
 720
 (720)
Adjustment to reflect redeemable partnership units at redemption value—
 —
 100,174
 —
 —
 —
 100,174
 (100,174)
Effective portion of interest rate contracts—
 —
 —
 —
 (3,973) —
 (3,973) (453)
Amortization of interest rate contracts—
 —
 —
 —
 1,367
 144
 1,511
 155
Acquisition of noncontrolling interest in property partnership—
 —
 (162,505) —
 —
 (24,501) (187,006) —
Contributions from noncontrolling interests in property partnerships—
 —
 —
 —
 —
 7,761
 7,761
 —
Distributions to noncontrolling interests in property partnerships—
 —
 —
 —
 —
 (15,273) (15,273) —
Equity, June 30, 20191,726
 152,837
 $3,562,910
 $193,623
 $(51,340) $1,696,221
 $5,401,414
 $2,324,238
                
Equity, March 31, 20181,722
 152,640
 $3,842,862
 $193,623
 $(49,062) $1,685,715
 $5,673,138
 $2,196,603
Cumulative effect of a change in accounting principle—
 —
 —
 —
 —
 —
 —
 —
Contributions—
 39
 233
 —
 —
 —
 233
 715
Allocated net income for the year—
 —
 131,082
 2,625
 —
 14,400
 148,107
 14,879
Distributions—
 —
 (123,529) (2,625) —
 —
 (126,154) (14,357)
Unearned compensation—
 —
 552
 —
 —
 —
 552
 7,010
Conversion of redeemable partnership units—
 10
 364
 —
 —
 —
 364
 (364)
Adjustment to reflect redeemable partnership units at redemption value—
 —
 (30,791) —
 —
 —
 (30,791) 30,791
Effective portion of interest rate contracts—
 —
 —
 —
 —
 —
 —
 —
Amortization of interest rate contracts—
 —
 —
 —
 1,367
 144
 1,511
 155
Contributions from noncontrolling interests in property partnerships—
 —
 —
 —
 —
 12,265
 12,265
 —
Distributions to noncontrolling interests in property partnerships—
 —
 —
 —
 —
 (13,343) (13,343) —
Equity, June 30, 20181,722
 152,689
 $3,820,773
 $193,623
 $(47,695) $1,699,181
 $5,665,882
 $2,235,432


Table of Content

BOSTON PROPERTIES LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CAPITAL AND NONCONTROLLING INTERESTS
(Unaudited and in thousands)

 Units Capital  
 General Partner Limited Partner Partners’ Capital (General and Limited Partners) Preferred Units 
Accumulated
Other
Comprehensive Loss
 
Noncontrolling
Interests - Property Partnerships
 Total Capital Noncontrolling interests - Redeemable Partnership Units
    
Equity, December 31, 20181,722
 152,736
 $4,054,996
 $193,623
 $(47,741) $1,711,445
 $5,912,323
 $2,000,591
Cumulative effect of a change in accounting principle—
 —
 (3,864) —
 —
 (70) (3,934) (445)
Contributions3
 67
 5,702
 —
 —
 —
 5,702
 35,482
Allocated net income for the year—
 —
 268,470
 5,250
 —
 36,312
 310,032
 30,627
Distributions—
 —
 (293,625) (5,250) —
 —
 (298,875) (34,391)
Unearned compensation—
 —
 (775) —
 —
 —
 (775) (12,704)
Conversion of redeemable partnership units1
 34
 1,212
 —
 —
 —
 1,212
 (1,212)
Adjustment to reflect redeemable partnership units at redemption value—
 —
 (306,701) —
 —
 —
 (306,701) 306,701
Effective portion of interest rate contracts—
 —
 —
 —
 (6,332) —
 (6,332) (722)
Amortization of interest rate contracts—
 —
 —
 —
 2,733
 288
 3,021
 311
Acquisition of noncontrolling interest in property partnership—
 —
 (162,505) —
 —
 (24,501) (187,006) —
Contributions from noncontrolling interests in property partnerships—
 —
 —
 —
 —
 12,148
 12,148
 —
Distributions to noncontrolling interests in property partnerships—
 —
 —
 —
 —
 (39,401) (39,401) —
Equity, June 30, 20191,726
 152,837
 $3,562,910
 $193,623
 $(51,340) $1,696,221
 $5,401,414
 $2,324,238
                
Equity, December 31, 20171,720
 152,606
 $3,664,436
 $193,623
 $(50,429) $1,683,760
 $5,491,390
 $2,292,263
Cumulative effect of a change in accounting principle—
 —
 4,933
 —
 —
 —
 4,933
 563
Contributions1
 50
 1,685
 —
 —
 —
 1,685
 34,973
Allocated net income for the year—
 —
 314,182
 2,625
 —
 31,634
 348,441
 35,311
Distributions—
 —
 (249,644) (2,625) —
 —
 (252,269) (28,708)
Unearned compensation—
 —
 (656) —
 —
 —
 (656) (13,443)
Conversion of redeemable partnership units1
 33
 1,196
 —
 —
 —
 1,196
 (1,196)
Adjustment to reflect redeemable partnership units at redemption value—
 —
 84,641
 —
 —
 —
 84,641
 (84,641)
Effective portion of interest rate contracts—
 —
 —
 —
 —
 —
 —
 —
Amortization of interest rate contracts—
 —
 —
 —
 2,734
 288
 3,022
 310
Contributions from noncontrolling interests in property partnerships—
 —
 —
 —
 —
 27,532
 27,532
 —
Distributions to noncontrolling interests in property partnerships—
 —
 —
 —
 —
 (44,033) (44,033) —
Equity, June 30, 20181,722
 152,689
 $3,820,773
 $193,623
 $(47,695) $1,699,181
 $5,665,882
 $2,235,432

The accompanying notes are an integral part of these consolidated financial statements.
Table of Content

BOSTON PROPERTIES LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) 
 For the six months ended June 30,
 2019 2018
 (in thousands)
Cash flows from operating activities:   
Net income$340,659
 $383,752
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization337,881
 318,327
Amortization of right of use assets - operating leases1,213
 —
Impairment loss22,272
 —
Non-cash compensation expense25,444
 23,243
Income from unconsolidated joint ventures(48,177) (1,230)
Distributions of net cash flow from operations of unconsolidated joint ventures3,890
 1,663
Gains from investments in securities(4,134) (379)
Non-cash portion of interest expense10,900
 10,607
Gains on sales of real estate(930) (117,677)
Change in assets and liabilities:   
Tenant and other receivables, net(11,514) 33,012
Note receivable(250) —
Accrued rental income, net(37,473) (45,759)
Prepaid expenses and other assets(9,319) (4,641)
Lease liabilities - operating leases780
 —
Accounts payable and accrued expenses17,458
 (9,899)
Accrued interest payable(78) 12,999
Other liabilities(30,503) 11,571
Tenant leasing costs(52,515) (54,743)
Total adjustments224,945
 177,094
Net cash provided by operating activities565,604
 560,846
Cash flows from investing activities:   
Acquisition of real estate(43,061) —
Construction in progress(203,259) (380,565)
Building and other capital improvements(79,943) (96,730)
Tenant improvements(115,940) (83,982)
Proceeds from sales of real estate60,398
 141,249
Capital contributions to unconsolidated joint ventures(50,068) (65,250)
Capital distributions from unconsolidated joint ventures105,000
 —
Investments in securities, net(1,079) (523)
Net cash used in investing activities(327,952) (485,801)
    
    
Table of Content

BOSTON PROPERTIES LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) 
 For the six months ended June 30,
 2019 2018
 (in thousands)
Cash flows from financing activities:   
Repayments of mortgage notes payable(9,702) (9,192)
Proceeds from unsecured senior notes848,428
 —
Borrowings on unsecured line of credit380,000
 345,000
Repayments of unsecured line of credit(380,000) (390,000)
Proceeds from unsecured term loan—
 500,000
Payments on finance lease obligations(628) —
Payments on real estate financing transaction—
 (960)
Deferred financing costs(7,112) (263)
Net proceeds from equity transactions2,261
 (684)
Distributions(332,961) (280,754)
Contributions from noncontrolling interests in property partnerships12,148
 27,532
Distributions to noncontrolling interests in property partnerships(39,401) (44,033)
Acquisition of noncontrolling interest in property partnership(186,952) —
Net cash provided by financing activities286,081
 146,646
Net increase in cash and cash equivalents and cash held in escrows523,733
 221,691
Cash and cash equivalents and cash held in escrows, beginning of period639,191
 505,369
Cash and cash equivalents and cash held in escrows, end of period$1,162,924
 $727,060
    
Reconciliation of cash and cash equivalents and cash held in escrows:   
Cash and cash equivalents, beginning of period$543,359
 $434,767
Cash held in escrows, beginning of period95,832
 70,602
Cash and cash equivalents and cash held in escrows, beginning of period$639,191
 $505,369
    
Cash and cash equivalents, end of period$1,087,001
 $472,555
Cash held in escrows, end of period75,923
 254,505
Cash and cash equivalents and cash held in escrows, end of period$1,162,924
 $727,060
    
Supplemental disclosures:   
Cash paid for interest$216,754
 $192,898
Interest capitalized$25,069
 $34,999
Non-cash investing and financing activities:   
Write-off of fully depreciated real estate$(61,283) $(78,900)
Additions to real estate included in accounts payable and accrued expenses$115,150
 $326
Real estate acquired through finance lease$122,563
 $—
Distributions declared but not paid$165,419
 $139,263
Conversions of redeemable partnership units to partners’ capital$1,212
 $1,196
Issuance of restricted securities to employees$38,923
 $37,342





BOSTON PROPERTIES LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CAPITAL AND NONCONTROLLING INTERESTS
(Unaudited and in thousands)

 Units Capital  
 General Partner Limited Partner Partners’ Capital (General and Limited Partners) Preferred Units 
Accumulated
Other
Comprehensive Loss
 
Noncontrolling
Interests - Property Partnerships
 Total Capital Noncontrolling Interests - Redeemable Partnership Units
    
Equity, December 31, 20191,727
 153,063
 $3,380,175
 $193,623
 $(48,335) $1,728,689
 $5,254,152
 $2,468,753
Cumulative effect of a change in accounting principle—
 —
 (1,505) —
 —
 —
 (1,505) (174)
Contributions1
 63
 6,712
 —
 —
 —
 6,712
 39,741
Allocated net income for the period—
 —
 508,794
 2,625
 —
 19,486
 530,905
 57,539
Distributions—
 —
 (152,208) (2,625) —
 —
 (154,833) (17,444)
Unearned compensation—
 —
 996
 —
 —
 —
 996
 (24,064)
Conversion of redeemable partnership units3
 458
 15,495
 —
 —
 —
 15,495
 (15,495)
Adjustment to reflect redeemable partnership units at redemption value—
 —
 868,168
 —
 —
 —
 868,168
 (868,168)
Effective portion of interest rate contracts—
 —
 —
 —
 (8,732) —
 (8,732) (988)
Amortization of interest rate contracts—
 —
 —
 —
 1,367
 144
 1,511
 155
Contributions from noncontrolling interests in property partnerships—
 —
 —
 —
 —
 3,876
 3,876
 —
Distributions to noncontrolling interests in property partnerships—
 —
 —
 —
 —
 (15,750) (15,750) —
Equity, March 31, 20201,731
 153,584
 $4,626,627
 $193,623
 $(55,700) $1,736,445
 $6,500,995
 $1,639,855
                
Equity, December 31, 20181,722
 152,736
 $4,054,996
 $193,623
 $(47,741) $1,711,445
 $5,912,323
 $2,000,591
Cumulative effect of a change in accounting principle—
 —
 (3,864) —
 —
 (70) (3,934) (445)
Contributions2
 41
 4,820
 —
 —
 —
 4,820
 34,400
Allocated net income for the year—
 —
 101,783
 2,625
 —
 18,830
 123,238
 11,599
Distributions—
 —
 (146,790) (2,625) —
 —
 (149,415) (17,185)
Unearned compensation—
 —
 (1,388) —
 —
 —
 (1,388) (20,990)
Conversion of redeemable partnership units1
 13
 492
 —
 —
 —
 492
 (492)
Adjustment to reflect redeemable partnership units at redemption value—
 —
 (406,875) —
 —
 —
 (406,875) 406,875
Effective portion of interest rate contracts—
 —
 —
 —
 (2,359) —
 (2,359) (269)
Amortization of interest rate contracts—
 —
 —
 —
 1,366
 144
 1,510
 156
Contributions from noncontrolling interests in property partnerships—
 —
 —
 —
 —
 4,387
 4,387
 —
Distributions to noncontrolling interests in property partnerships—
 —
 —
 —
 —
 (24,128) (24,128) —
Equity, March 31, 20191,725
 152,790
 $3,603,174
 $193,623
 $(48,734) $1,710,608
 $5,458,671
 $2,414,240


The accompanying notes are an integral part of these consolidated financial statements.

Table
BOSTON PROPERTIES LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited and in thousands)
 For the three months ended March 31,
 2020 2019
Cash flows from operating activities:   
Net income$588,444
 $134,837
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization169,285
 162,682
Amortization of right of use assets - operating leases583
 605
Impairment loss—
 22,272
Non-cash compensation expense17,525
 15,050
Loss (income) from unconsolidated joint ventures369
 (213)
Distributions of net cash flow from operations of unconsolidated joint ventures5,917
 2,650
Losses (gains) from investments in securities5,445
 (2,969)
Non-cash portion of interest expense5,646
 5,447
(Gains) losses on sales of real estate(419,654) 905
Change in assets and liabilities:   
Tenant and other receivables, net17,784
 (14,000)
Note receivable, net(128) (125)
Accrued rental income, net(27,285) (15,570)
Prepaid expenses and other assets(93,819) (68,554)
Lease liabilities - operating leases393
 370
Accounts payable and accrued expenses(48,591) 258
Accrued interest payable(7,644) (160)
Other liabilities(21,296) (17,831)
Tenant leasing costs(17,777) (18,420)
Total adjustments(413,247) 72,397
Net cash provided by operating activities175,197
 207,234
Cash flows from investing activities:   
Acquisition of real estate—
 (43,061)
Construction in progress(143,160) (85,632)
Building and other capital improvements(39,154) (32,719)
Tenant improvements(64,172) (54,242)
Proceeds from sales of real estate259,489
 20,019
Capital contributions to unconsolidated joint ventures(89,997) (26,995)
Investments in securities, net3,201
 (885)
Net cash used in investing activities(73,793) (223,515)
    

BOSTON PROPERTIES LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited and in thousands)
 For the three months ended March 31,
 2020 2019
Cash flows from financing activities:   
Repayments of mortgage notes payable(4,212) (5,645)
Borrowings on unsecured line of credit265,000
 50,000
Repayments of unsecured line of credit(15,000) (50,000)
Payments on finance lease obligations—
 (470)
Deferred financing costs(11) (186)
Net proceeds from equity transactions3,349
 1,792
Distributions(171,964) (166,362)
Contributions from noncontrolling interests in property partnerships3,876
 4,387
Distributions to noncontrolling interests in property partnerships(15,750) (24,128)
Net cash provided by (used in) financing activities65,288
 (190,612)
Net increase (decrease) in cash and cash equivalents and cash held in escrows166,692
 (206,893)
Cash and cash equivalents and cash held in escrows, beginning of year691,886
 639,191
Cash and cash equivalents and cash held in escrows, end of year$858,578
 $432,298
    
Reconciliation of cash and cash equivalents and cash held in escrows:   
Cash and cash equivalents, beginning of period$644,950
 $543,359
Cash held in escrows, beginning of period46,936
 95,832
Cash and cash equivalents and cash held in escrows, beginning of period$691,886
 $639,191
    
Cash and cash equivalents, end of period$660,733
 $360,091
Cash held in escrows, end of period197,845
 72,207
Cash and cash equivalents and cash held in escrows, end of period$858,578
 $432,298
    
Supplemental disclosures:   
Cash paid for interest$114,696
 $107,094
Interest capitalized$14,149
 $11,813
    
Non-cash investing and financing activities:   
Write-off of fully depreciated real estate$(38,782) $(31,640)
Change in real estate included in accounts payable and accrued expenses$(27,415) $49,689
Real estate acquired through finance lease$—
 $122,563
Accrued rental income, net deconsolidated$(4,558) $—
Tenant leasing costs, net deconsolidated$(3,462) $—
Building and other capital improvements, net deconsolidated$(111,889) $—
Tenant improvements, net deconsolidated$(12,331) $—
Investment in unconsolidated joint venture recorded upon deconsolidation$347,898
 $—
Distributions declared but not paid$171,026
 $165,352
Conversions of redeemable partnership units to partners’ capital$15,495
 $492
Issuance of restricted securities to employees$43,104
 $37,428

The accompanying notes are an integral part of Content
these consolidated financial statements.


BOSTON PROPERTIES, INC. AND BOSTON PROPERTIES LIMITED PARTNERSHIP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Organization
Boston Properties, Inc., a Delaware corporation, is a fully integrated, self-administered and self-managed real estate investment trust (“REIT”). Boston Properties, Inc. is the sole general partner of Boston Properties Limited Partnership, its operating partnership, and at June 30, 2019March 31, 2020 owned an approximate 89.6% (89.7%89.7% (89.6% at December 31, 2018)2019) general and limited partnership interest in Boston Properties Limited Partnership. Unless stated otherwise or the context requires, the “Company” refers to Boston Properties, Inc. and its subsidiaries, including Boston Properties Limited Partnership and its consolidated subsidiaries. Partnership interests in Boston Properties Limited Partnership include:
common units of partnership interest (also referred to as “OP Units”),
long term incentive units of partnership interest (also referred to as “LTIP Units”), and
preferred units of partnership interest (also referred to as “Preferred Units”).
Unless specifically noted otherwise, all references to OP Units exclude units held by Boston Properties, Inc. A holder of an OP Unit may present such OP Unit to Boston Properties Limited Partnership for redemption at any time (subject to restrictions agreed upon at the time of issuance of OP Units to particular holders that may restrict such redemption right for a period of time, generally one1 year from issuance). Upon presentation of an OP Unit for redemption, Boston Properties Limited Partnership is obligated to redeem the OP Unit for cash equal to the value of a share of common stock of Boston Properties, Inc. (“Common Stock”). In lieu of a cash redemption, Boston Properties, Inc. may elect to acquire the OP Unit for one1 share of Common Stock. Because the number of shares of Common Stock outstanding at all times equals the number of OP Units that Boston Properties, Inc. owns, one1 share of Common Stock is generally the economic equivalent of one1 OP Unit, and the quarterly distribution that may be paid to the holder of an OP Unit equals the quarterly dividend that may be paid to the holder of a share of Common Stock.
The Company uses LTIP Units as a form of equity-based award for annual long-termlong term incentive equity compensation. The Company has also issued LTIP Units to employees in the form of (1) 2012 outperformance plan awards (“2012 OPP Units”) and (2) 2013 2014, 2015, 2016, 2017, 2018 and 2019- 2020 multi-year, long-term incentive program awards (also referred to as “MYLTIP Units”), each of which, upon the satisfaction of certain performance and vesting conditions, is convertible into one OP Unit. The three-year measurement periods for the 2012 OPP Units and the 2013 - 2017 MYLTIP Units 2014 MYLTIP Units, 2015 MYLTIP Units and 2016 MYLTIP Units expired on February 6, 2015, February 4, 2016, February 3, 2017, February 4, 2018 and February 9, 2019, respectively,have ended and Boston Properties, Inc.’s total stockholder return (“TSR”) was sufficient for employees to earn and therefore become eligible to vest in a portion of the awards. Unless and until they are earned, the rights, preferences and privileges of the 2017 MYLTIP Units, 2018 MYLTIP Units and 2019- 2020 MYLTIP Units differ from other LTIP Units granted to employees (including the 2012 OPP Units and the 2013 MYLTIP Units, the 2014 MYLTIP Units, the 2015 MYLTIP Units and the 2016- 2017 MYLTIP Units, which have been earned). Therefore, unless specifically noted otherwise, all references to LTIP Units exclude the 2017 MYLTIP Units, 2018 MYLTIP Units and 2019- 2020 MYLTIP Units. LTIP Units (including the earned 2012 OPP Units and the earned 2013 MYLTIP Units, the 2014 MYLTIP Units, the 2015 MYLTIP Units and 2016- 2017 MYLTIP Units), whether vested or not, will receive the same quarterly per unit distributions as OP Units, which equal per share dividends on Common Stock (See Notes 8, 97 and 11)10).
At June 30, 2019,March 31, 2020, there was one1 series of Preferred Units outstanding (i.e., Series B Preferred Units). The Series B Preferred Units were issued to Boston Properties, Inc. on March 27, 2013 in connection with the issuance of 80,000 shares (8,000,000 depositary shares each representing 1/100th of a share) of 5.25% Series B Cumulative Redeemable Preferred Stock (the “Series B Preferred Stock”). Boston Properties, Inc. contributed the net proceeds from the offering to Boston Properties Limited Partnership in exchange for 80,000 Series B Preferred Units having terms and preferences generally mirroring those of the Series B Preferred Stock (See Note 9)8).
Properties
At June 30, 2019,March 31, 2020, the Company owned or had interests in a portfolio of 193196 commercial real estate properties (the “Properties”) aggregating approximately 50.951.8 million net rentable square feet of primarily Class A office properties, including twelve10 properties under construction/redevelopment totaling approximately 5.75.2 million net rentable square feet. At June 30, 2019,March 31, 2020, the Properties consisted of:
Table of Content


174177 office properties (including ten8 properties under construction/redevelopment);
twelve12 retail properties;
six6 residential properties (including two2 properties under construction); and
one
1 hotel.
The Company considers Class A office properties to be well-located buildings that are professionally managed and maintained, attract high-quality tenants and command upper-tier rental rates, and that are modern structures or have been modernized to compete with newer buildings.
2. Basis of Presentation and Summary of Significant Accounting Policies
Boston Properties, Inc. does not have any other significant assets, liabilities or operations, other than its investment in Boston Properties Limited Partnership, nor does it have employees of its own. Boston Properties Limited Partnership, not Boston Properties, Inc., generally executes all significant business relationships other than transactions involving securities of Boston Properties, Inc. All majority-owned subsidiaries and joint ventures over which the Company has financial and operating control and variable interest entities (“VIEs”) in which the Company has determined it is the primary beneficiary are included in the consolidated financial statements. All significant intercompany balances and transactions have been eliminated in consolidation. The Company accounts for all other unconsolidated joint ventures using the equity method of accounting. Accordingly, the Company’s share of the earnings of these joint ventures and companies is included in consolidated net income.
The accompanying interim financial statements are unaudited; however, the financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial information and in conjunction with the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the disclosures required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting solely of normal recurring matters) necessary for a fair statement of the financial statements for these interim periods have been included. The results of operations for the interim periods are not necessarily indicative of the results to be obtained for other interim periods or for the full fiscal year. The year-end consolidated balance sheet data was derived from audited financial statements, but does not include all disclosure required by GAAP.  These financial statements should be read in conjunction with the Company’s financial statements and notes thereto contained in the Company’s Annual Report in the Company’s Form 10-K for its fiscal year ended December 31, 2018.
Fair Value of Financial Instruments2019.
The Company follows the authoritative guidance for fair value measurements when valuingbases its financial instruments for disclosure purposes. Boston Properties Limited Partnership determines the fair value of its unsecured senior notes using market prices. The inputs used in determining the fair value of Boston Properties Limited Partnership’s unsecured senior notes is categorized at a Level 1 basis (as defined in Accounting Standards Codification (“ASC”) 820 “Fair Value Measurementsestimates on historical experience and Disclosures” (“ASC 820”)) due to the facton various other assumptions that it uses quoted market ratesconsiders to value these instruments. However,be reasonable under the inputs used in determiningcircumstances, including the fair value could be categorized at a Level 2impact of extraordinary events such as the novel coronavirus (“COVID-19”) pandemic, the results of which form the basis (as defined in ASC 820) if trading volumes are low. The Company determinesfor making significant judgments about the fair valuecarrying values of its related party note receivable, note receivableassets and mortgage notes payable using discounted cash flow analysis by discounting the spread between theliabilities, assessments of future contractual interest paymentscollectability, and hypothetical future interest payments on note receivables / mortgage debt based on current market rates for similar securities. In determining the current market rates, the Company adds its estimates of market spreads to the quoted yields on federal government treasury securities with similar maturity dates to its debt. The inputs used in determining the fair valueother areas of the Company’s related party note receivable, note receivable, and mortgage notes payablefinancial statements that are categorized at a Level 3 basis (as defined in ASC 820) due toimpact by the fact that the Company considers the rates used in the valuation techniques to be unobservable inputs. To the extent that there are outstanding borrowings under the unsecured lineuse of credit or unsecured term loan, the Company utilizes a discounted cash flow methodology in order to estimate the fair value. To the extent that credit spreads have changed since the origination, the net present value of the difference between future contractual interest payments and future interest payments based on the Company’s estimate of a current market rate would represent the difference between the book value and the fair value. The Company’s estimate of a current market rate is based upon the rate, considering current market conditions and Boston Properties Limited Partnership’s specific credit profile, at which it estimates it could obtain similar borrowings. To the extent there are outstanding borrowings, this current market rate is estimated and therefore would be primarily based upon a Level 3 input.
Table of Content

Because the Company’s valuations of its financial instruments are based on these types of estimates, the actual fair values of its financial instrumentsestimates. Actual results may differ materially from thosethese estimates and the Company’s estimated fair values for these instruments as of the end of the applicable reporting period are not projections of nor necessarily indicative of estimatedunder different assumptions or actual fair values in future reporting periods. The following table presents the aggregate carrying value of the Company’s related party note receivable, note receivable, mortgage notes payable, net, unsecured senior notes, net, unsecured line of credit and unsecured term loan, net and the Company’s corresponding estimate of fair value as of June 30, 2019 and December 31, 2018 (in thousands):
 
June 30, 2019
 December 31, 2018
 
Carrying
Amount
   
Estimated
Fair Value
 
Carrying
Amount
   
Estimated
Fair Value
Related party note receivable$80,000
   $80,321
 $80,000
   $80,000
Note receivable19,718
   18,205
 19,468
   19,468
 $99,718
   $98,526
 $99,468
   $99,468
            
Mortgage notes payable, net$2,956,833
    $3,013,338
 $2,964,572
    $2,903,925
Unsecured senior notes, net8,390,708
    8,745,888
 7,544,697
    7,469,338
Unsecured line of credit—
   —
 —
   —
Unsecured term loan, net498,700
   500,673
 498,488
   500,783
Total$11,846,241
    $12,259,899
 $11,007,757
    $10,874,046

conditions.
Variable Interest Entities (VIEs)
Consolidated VIEs are those for which the Company is considered to be the primary beneficiary of a VIE. The primary beneficiary is the entity that has a controlling financial interest in the VIE, which is defined by the entity having both of the following characteristics: (1) the power to direct the activities that, when taken together, most significantly impact the VIE’s performance and (2) the obligation to absorb losses or the right to receive the returns from the VIE that could potentially be significant to the VIE. The Company has determined that it is the primary beneficiary for six6 of the nine 7entities that are VIEs.
Consolidated Variable Interest Entities
As of June 30, 2019,March 31, 2020, Boston Properties, Inc. has identified six6 consolidated VIEs, including Boston Properties Limited Partnership. Excluding Boston Properties Limited Partnership, the VIEs consisted of the following five5 in-service properties: 767 Fifth Avenue (the General Motors Building), Times Square Tower, 601 Lexington Avenue, Atlantic Wharf Office Building and 100 Federal Street.
The Company consolidates these VIEs because it is the primary beneficiary.  The third parties’ interests in these consolidated entities (i.e., excluding Boston Properties Limited Partnership’s interest) are reflected as noncontrolling interest in property partnerships in the accompanying Consolidated Financial Statementsconsolidated financial statements (See Note 8)7). 
In addition, Boston Properties, Inc.’s only significant asset is its investment in Boston Properties Limited Partnership and, consequently, substantially all of Boston Properties, Inc.’s assets and liabilities are the assets and liabilities of Boston Properties Limited Partnership.

Variable Interest Entities Not Consolidated
The Company has determined that its 7750 Wisconsin Avenue LLC and Office Tower Developer LLC joint ventures, which own 7750 Wisconsin Avenue and 100 Causeway Street (which is the office component of The Hub on Causeway mixed-use development project), respectively, are VIEs. The Company also determined that the landlord entity for its Platform 16 ground leaseHoldings LP joint venture is a VIE. The Company does not consolidate these entitiesthis entity as the Company does not have the power to direct the activities that, when taken together, most significantly impact the VIE’s performance and, therefore, the Company is not considered to be the primary beneficiary.
TableFair Value of Content
Financial Instruments

New Accounting Pronouncements
New Accounting Pronouncements Adopted
Leases    
On January 1, 2019,The Company follows the Company adoptedauthoritative guidance for fair value measurements when valuing its financial instruments for disclosure purposes. The table below presents the financial instruments that are being valued for disclosure purposes as well as the Level they are categorized at (as defined in Accounting Standards UpdateCodification (“ASU”ASC”) 2016-02, “Leases (Topic 842)”820 “Fair Value Measurements and Disclosures” (“ASU 2016-02” or “Topic 842”ASC 820”)). For information pertaining to the Company’s adoption and disclosures with respect to leases, see Note 4.
3. Real Estate
Boston Properties, Inc.
Real estate consisted of the following at June 30, 2019 and December 31, 2018 (in thousands):
 
June 30, 2019
 December 31, 2018
Land$5,056,046
 $5,072,568
Right of use assets - finance leases187,269
 —
Right of use assets - operating leases149,839
 —
Land held for future development (1)272,332
 200,498
Buildings and improvements13,271,691
 13,356,751
Tenant improvements2,486,269
 2,396,932
Furniture, fixtures and equipment44,462
 44,351
Construction in progress812,408
 578,796
Total22,280,316
 21,649,896
Less: Accumulated depreciation(5,050,606) (4,897,777)
 $17,229,710
 $16,752,119
_______________
(1)Financial InstrumentIncludes pre-development costs.
Boston Properties Limited Partnership
Real estate consisted of the following at June 30, 2019 and December 31, 2018 (in thousands):
 
June 30, 2019
 December 31, 2018
Land$4,955,593
 $4,971,475
Right of use assets - finance leases187,269
 —
Right of use assets - operating leases149,839
 —
Land held for future development (1)272,332
 200,498
Buildings and improvements12,976,345
 13,059,488
Tenant improvements2,486,269
 2,396,932
Furniture, fixtures and equipment44,462
 44,351
Construction in progress812,408
 578,796
Total21,884,517
 21,251,540
Less: Accumulated depreciation(4,949,822) (4,800,475)
 $16,934,695
 $16,451,065
_______________
Level
Unsecured senior notes (1)Includes pre-development costs.Level 1
Related party note receivableLevel 3
Note receivableLevel 3
Mortgage notes payableLevel 3
Unsecured term loan / line of creditLevel 3
Development
On May 9, 2019,_______________
(1) If trading value for the Company entered into a 15-year lease with Google, LLC for approximately 379,000 net rentable square feet of Class A office space in a build-to-suit development project toperiod is low, the valuation could be located atcategorized as Level 2.
Because the Company’s 325 Main Street property at Kendall Center in Cambridge, Massachusetts. 325 Main Street currently consistsvaluations of an approximately 115,000 net rentable square foot Class A office property that will be demolished and developed into an approximately 420,000 net rentable square foot Class A office property, including approximately 41,000 net
Table of Content

rentable square feet of retail space. On May 9, 2019, the Company commenced development of the project. Boston Properties, Inc. and Boston Properties Limited Partnership recognized approximately $9.9 million and $9.5 million, respectively, of depreciation expense associated with the acceleration of depreciationits financial instruments are based on the assets being removedabove Levels and involve the use of estimates, the actual fair values of its financial instruments may differ materially from servicethose estimates.
The following table identifies the range and demolished as partweighted average of the redevelopment of the property.
Ground Lease
On January 24, 2019, the ground lessor undersignificant unobservable inputs for the Company’s 65-year ground lease for land totaling approximately 5.6 acres at Platform 16 located in San Jose, California made available for lease to the Company the remaining land parcels. As a result, the Company recognized the remaining portion of the right of use finance lease asset and finance lease liability. During 2018, the Company executed the ground lease. However, at the inception of the ground lease only a portion of the land was available for lease from the lessor, resulting in the Company recognizing only a portion of the ground lease. In the aggregate, the land will support the development of approximately 1.1 million square feet of commercial office space. The ground lease provides the Company with the right to purchase all of the land during a 12-month period commencing February 1, 2020 at a purchase price of approximately $134.8 million. The Company is reasonably certain that it will exercise the option to purchase the land and as a result, the Company has concluded that the lease should be accounted for as a finance lease. As a result, the Company recorded an approximately $122.6 million right of use asset - finance lease and a lease liability - finance lease on the Company’s Consolidated Balance Sheets reflecting the remaining land parcels made available for lease to the Company. Finance lease assets and liabilities are accounted for at the lower ofLevel 3 fair market value or the present value of future lease payments. The finance lease is for land only. Therefore, the Company will not depreciate the right of use asset - finance lease because land is assumed to have an indefinite life.
As of January 24, 2019, the lease payments from the finance lease related to the remaining parcels made available for lease to the Company are as follows (in thousands):measured instruments.
Period from January 24, 2019 through December 31, 2019$17,918
2020109,460
Total expected minimum lease payments127,378
Interest portion(4,815)
Present value of expected net lease payments$122,563
Financial InstrumentLevelRangeWeighted Average
Related party note receivableLevel 34.49%4.49%
Note receivableLevel 33.62%3.62%
Mortgage notes payableLevel 32.82% - 3.25%2.91%
Unsecured term loan / line of creditLevel 31.84%1.84%

Acquisitions
On January 10, 2019,In addition, the Company acquired land parcels at its Carnegie Center property located in Princeton, New JerseyCompany’s estimated fair values for a gross purchase price of approximately $51.5 million, which includes an aggregate of approximately $8.6 million of additional amounts that are payable in the future to the seller upon the development or sale of eachthese instruments as of the parcels.end of the applicable reporting period are not projections of, nor necessarily indicative of, estimated or actual fair values in future reporting periods. The land parcels could support approximately 1.7 million square feet of development.
Dispositions
On January 24, 2019,following table presents the Company completed the sale of its 2600 Tower Oaks Boulevard property located in Rockville, Maryland for a gross sale price of approximately $22.7 million. Net cash proceeds totaled approximately $21.4 million, resulting in a loss on sale of real estate totaling approximately $0.6 million. The Company recognized an impairment loss totaling approximately $3.1 million for Boston Properties, Inc. and approximately $1.5 million for Boston Properties Limited Partnership during the year ended December 31, 2018. 2600 Tower Oaks Boulevard is an approximately 179,000 net rentable square foot Class A office property. 2600 Tower Oaks contributed approximately $(0.2) million of net loss to the Company for the period from January 1, 2019 through January 23, 2019 and contributed approximately $(0.1) million and $(0.3) million of net loss to the Company for the three and six months ended June 30, 2018, respectively.
At March 31, 2019, the Company evaluated the expected hold period of its One Tower Center property and, based on a shorter-than-expected hold period, the Company reduced theaggregate carrying value of the property to its estimatedCompany’s related party note receivable, net, note receivable, net, mortgage notes payable, net, unsecured senior notes, net, unsecured line of credit and unsecured term loan, net and the Company’s corresponding estimate of fair value atas of March 31, 2020 and December 31, 2019 and recognized an impairment loss totaling approximately $24.0 million for Boston Properties, Inc. and approximately $22.3 million for Boston Properties Limited Partnership. The Company’s estimated fair value was based on a pending offer from a third party to acquire the property and the subsequent execution of a purchase and sale agreement on April 18, 2019 for a gross sale price of $38.0 million. On June 3, 2019, the Company completed the sale of the property. Net cash proceeds totaled approximately $36.6 million, resulting in a loss on sale of real estate totaling approximately $0.8 million. One Tower Center is an approximately(in thousands):
 March 31, 2020 December 31, 2019
 
Carrying
Amount
 
Estimated
Fair Value
 
Carrying
Amount
 
Estimated
Fair Value
Related party note receivable, net$78,800
 $83,707
 $80,000
 $81,931
Note receivable, net15,794
 15,593
 15,920
 14,978
Total$94,594
 $99,300
 $95,920
 $96,909
        
Mortgage notes payable, net$2,919,157
 $3,054,533
 $2,922,408
 $2,984,956
Unsecured senior notes, net8,393,009
 8,449,511
 8,390,459
 8,826,375
Unsecured line of credit250,000
 249,873
 —
 —
Unsecured term loan, net499,058
 500,506
 498,939
 500,561
Total$12,061,224
 $12,254,423
 $11,811,806
 $12,311,892
Table of Content

410,000 net rentable square foot Class A office property located in East Brunswick, New Jersey. One Tower Center contributed approximately $(0.1) million and $(0.9) million of net loss to the Company for the period from April 1, 2019 through June 2, 2019 and the period from January 1, 2019 through June 2, 2019, respectively, and contributed approximately $(0.7) million and $(1.3) million of net loss to the Company for the three and six months ended June 30, 2018, respectively.


On June 28, 2019, the Company completed the sale of its 164 Lexington Road property located in Billerica, Massachusetts for a gross sale price of $4.0 million. Net cash proceeds totaled approximately $3.8 million, resulting in a gain on sale of real estate totaling approximately $2.5 million for Boston Properties, Inc. and approximately $2.6 million for Boston Properties Limited Partnership. 164 Lexington Road is an approximately 64,000 net rentable square foot Class A office property. 164 Lexington Road contributed approximately $(0.1) million and $(0.1) million of net loss to the Company for the period from April 1, 2019 through June 27, 2019 and the period from January 1, 2019 through June 27, 2019, respectively, and contributed approximately $(0.1) million and $(0.1) million of net loss to the Company for the three and six months ended June 30, 2018, respectively.New Accounting Pronouncements Adopted
4. Leases
General AdoptionFinancial Instruments - Credit Losses    
In FebruaryJune 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-02, which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). ASU 2016-02 requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease for accounting purposes is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to the prior guidance in ASC 840 -“Leases” (“Topic 840”2016-13”). ASU 2016-022016-13 is intended to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date by replacing the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires lessorsconsideration of a broader range of reasonable and supportable information to account for leases using an approach that is substantially equivalent to Topic 840 for sales-type leases, direct financing leases and operating leases. ASU 2016-02 supersedes previous leasing standards.
On July 30,inform credit loss estimates. In November 2018, the FASB issued ASU 2018-11, “Leases (Topic 842): Targeted Improvements”2018-19, “Codification Improvements to Topic 326, Financial Instruments - Credit Losses” (“ASU 2018-11”2018-19”),. ASU 2018-19 clarifies that (1) simplifies transition requirements for both lesseesreceivables arising from operating leases are not within the scope of ASC 326-20, “Financial Instruments - Credit Losses - Measured at Amortized Cost,” which addresses financial assets measured at amortized cost basis, including net investments in leases arising from sales-type and lessors by adding an option that permits an organization to apply the transition provisionsdirect financing leases. Instead, impairment of the new standard at its adoption date instead of at the earliest comparative period presented in its financial statements and (2) allows lessors to elect, as a practical expedient, by class of underlying asset, to not separate nonlease componentsreceivables arising from the associated lease component and, instead, to account for those components as a single component if the nonlease components otherwise wouldoperating leases should be accounted for under the revenue guidance (ASU 2014-09, “Revenue from Contracts with Customers (Topic 606) (“ASC 606”)) that was adopted on January 1, 2018, and both of the following are met:
(1) the timing and pattern of transfer of the nonlease component(s) and associated lease components are the same; and
(2) the lease component, if accounted for separately, would be classified as an operating lease.
If the nonlease component or components associated with the lease component are the predominant component of the combined component, an entity is required to account for the combined component in accordance with ASC 606.
842 - “Leases” (“ASC 842”). ASU 2016-13 and ASU 2018-19 were effective for the Company for reporting periods beginning after December 15, 2019, with early adoption permitted. ASU 2016-13 and ASU 2018-19 are applicable to the Company with respect to (1) certain of its accounts receivable, except for amounts arising from operating leases accounted for under ASC 842, (2) its related party note receivable, (3) its note receivable and (4) certain of its off-balance sheet credit exposures. The Company adopted ASU 2016-022016-13 and ASU 2018-112018-19 effective January 1, 2019. For purposes2020 using the modified retrospective approach. The adoption of transition,ASU 2016-13 and ASU 2018-19 resulted in the Company electedrecognizing an allowance for current expected credit losses associated with (1) its related party note receivable, (2) its note receivable and (3) an off-balance sheet loan commitment arrangement. As a result, the practical expedient package, which has been applied consistently to all of its leases, but did not elect the hindsight practical expedient. The practical expedient package did not requiremodified retrospective approach resulted in the Company to reassess the following: (i) whether an expired or existing contract meets the definition of a lease; (ii) the lease classification at the adoption date for existing leases; and (iii) whether costs previously capitalized as initial direct costs would continue to be amortized. This allows the Company to continue to account for its ground leases as operating leases. However, as ofrecognizing on January 1, 2019, any new or modified ground leases may be classified as financing leases unless they meet certain conditions. The Company also elected to apply2020, the transition provisions ascumulative effect of the adoption date, January 1, 2019,adopting ASU 2016-13 and not change its comparative statements. The Company recorded an adjustment to the opening balance of retained earnings related to initial direct costs that, as of January 1, 2019, had not started to amortize and are no longer allowed to be capitalized in accordance with ASU 2016-02, totaling
Table of Content

2018-19 aggregating approximately $3.9$1.5 million to Dividends in Excess of Earnings of Boston Properties, Inc. and Partners’ Capital of Boston Properties Limited Partnership and approximately $0.4$0.2 million to Noncontrolling interestsInterests - Common Units of Boston Properties, Inc. and Noncontrolling InterestInterests - Redeemable Partnership Units of Boston Properties Limited Partnership and $70,000 to Noncontrolling Interests - Property Partnerships of Boston Properties, Inc. and Noncontrolling Interests in Property Partnerships of Boston Properties Limited Partnership on the corresponding Consolidated Balance Sheets.
The Company made the policy election, when it is the lessee, to not apply the revenue recognition requirements of Topic 842 to short-term leases. This policy election is made by class of underlying assets and as described below, the Company considers real estate to be a class of underlying assets, and will not be further delineating it into specific uses of the real estate asset as the risk profiles are similar in nature. The Company will recognize the lease payments in net income on a straight-line basis over the lease term.
Lease payments from operating leases are recognized on a straight-line basis over the term of the leases. The cumulative difference between lease revenue recognized under this method and the contractual lease payment terms is recorded as deferred rent receivable on our consolidated balance sheets. The Company reviews its trade accounts receivable, including its straight-line rent receivable, related to base rents, straight-line rent, expense reimbursements and other revenues for collectability. The Company analyzes its accounts receivable, customer credit worthiness and current economic trends when evaluating the adequacy of the collectability of the lessee’s total accounts receivable balance on a lease-by-lease basis. In addition, tenants in bankruptcy are analyzed and considerations are made in connection with the expected recovery of pre-petition and post-petition claims. If a lessee’s accounts receivable balance is considered uncollectible the Company will write-off the receivable balances associated with the lease to Lease revenue and cease to recognize lease income, including straight-line rent unless cash is received. If the Company subsequently determines that it is probable it will collect substantially all the remaining lessee’s lease payments under the lease term, the Company will then reinstate the straight-line balance adjusting for the amount related to the period when the lease payments were considered not probable. The Company’s reported net earnings are directly affected by management’s estimate of the collectability of its trade accounts receivable.Fair Value Measurement
In JanuaryAugust 2018, the FASB issued ASU 2018-01, “Leases2018-13, “Fair Value Measurement (Topic 842)820): Land Easement Practical ExpedientDisclosure Framework - Changes to the Disclosure Requirements for Transition to Topic 842”Fair Value Measurement” (“ASU 2018-01”2018-13”), which provides an optional transition practical expedient. ASU 2018-13 is intended to not evaluate, under Topic 842, existing or expired land easements that were not previously accountedimprove the effectiveness of disclosures required by entities regarding recurring and nonrecurring fair value measurements. ASU 2018-13 was effective for as leases under the leases guidance in Topic 840.  An entity that elects this practical expedient should evaluate new or modified land easements under Topic 842Company for reporting periods beginning at the date that the entity adopts Topic 842.  An entity that does not elect this practical expedient should evaluate all existing or expired land easements in connectionafter December 15, 2019, with theearly adoption of the new lease requirements in Topic 842 to assess whether they meet the definition of a lease.  The effective date and transition requirements for ASU 2018-01 are the same as the effective date and transition requirements in ASU 2016-02.permitted. The Company adopted ASU 2018-012018-13 on January 1, 2019.2020 and the adoption did not have a material impact on the Company’s consolidated financial statements.
LesseeDerivatives and Hedging
For leases in whichIn October 2018, the FASB issued ASU 2018-16, “Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes” (“ASU 2018-16”). ASU 2018-16 permits the use of the overnight index swap rate based on the Secured Overnight Financing Rate (“SOFR”) to be used as a U.S. benchmark interest rate for purposes of applying hedge accounting under ASC 815, “Derivatives and Hedging (Topic 815)” . ASU 2018-16 was effective for the Company, iswhich has already adopted ASU 2017-12, “Derivatives and Hedging (Topic 815):Targeted Improvements to Accounting for Hedging Activities” for reporting periods beginning after December 15, 2018 and was required to be adopted on a prospective basis for qualifying new or re-designated hedging relationships entered into on or after the lessee (generally ground leases),date of adoption. The Company adopted ASU 2018-16 on January 1, 2019 and the adoption did not have a material impact on the Company’s consolidated financial statements.
In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”). ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the three months ended March 31, 2020, the Company recognized a right-of-use assetelected to apply the hedge accounting expedients related to probability and a lease liabilitythe assessments of approximately $151.8 million and $199.3 million, respectively.effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives.

Application of these expedients preserves the presentation of derivatives consistent with past presentation. The leases liability was equalCompany continues to evaluate the present valueimpact of the minimum lease paymentsguidance and may apply other elections as applicable as additional changes in accordance with Topic ASC 840. the market occur.
Consolidation
In addition,October 2018, the FASB issued ASU 2018-17, “Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities” (“ASU 2018-17”). ASU 2018-17 is intended to improve the accounting when considering indirect interests held through related parties under common control for determining whether fees paid to decision makers and service providers are variable interests. ASU 2018-17 was effective for the Company for reporting periods beginning after December 15, 2019, with early adoption permitted. The Company adopted ASU 2018-17 on January 1, 2020 and the adoption did not know the rate implicit in any of its ground leases that were classified as operating leases, and accordingly usedhave a material impact on the Company’s incremental borrowing rate (“IBR”) to determine the net present value of the minimum lease payments.consolidated financial statements.    
In order to determine the IBR, the Company utilized a market-based approach to estimate the incremental borrowing rate for each individual lease. The approach required significant judgment. Therefore, the Company utilized different data sets to estimate base IBRs via an analysis
3. Real Estate
Boston Properties, Inc.
Real estate consisted of the following weighted-components: 
The interpolated rates from yields on outstanding U.S. Treasury issuances for up to 30 yearsat March 31, 2020 and for years 31 and beyond, longer-term publicly traded educational institution debt issued by high credit quality educational institutions with maturity dates up to 2116,
Observable mortgage rates spread over U.S. Treasury issuances, and
Unlevered property yields and discount rates.
The Company then applied adjustments to account for considerations related to term and interpolated the IBR.
Table of Content

The Company has four non-cancelable ground lease obligations, which were classified as operating leases, with various initial term expiration dates through 2114. The Company recognizes ground rent expense on a straight-line basis over the term of the respective ground lease agreements. None of the amounts disclosed below for these ground leases contain variable payments, extension options or residual value guarantees. One of the ground leases does have an extension option. However, lease payments for this ground lease are based on fair market value and as such have not been included in the analysis below.
The Company has four finance lease obligations with various initial term expiration dates through 2036.
The following table provides lease cost information for the Company’s operating and finance leases for the three and six months ended June 30, 2019 (in thousands):
 Three months ended June 30, 2019 Six months ended June 30, 2019
Lease costs   
Operating lease costs$3,656
 $7,333
Finance lease costs   
Amortization of right of use asset (1)$(14) $2
Interest on lease liabilities (2)$12
 $24
_______________
(1)The finance leases relate to either land, buildings or assets that remain in development. The Company’s policy is not to depreciate finance lease assets related to land because it is assumed to have an indefinite life. For assets under development, depreciation may commence once the asset is placed in-service and depreciation would be recognized in accordance with the Company’s policy.
(2)Three of the finance leases relate to assets under development and as such, the entire interest amount was capitalized.
The following table provides other quantitative information for the Company’s operating and finance leases as of June 30, 2019:
June 30, 2019
Other information
Weighted-average remaining lease term (in years)
Operating leases51
Finance leases5
Weighted-average discount rate
Operating leases5.7%
Finance leases4.1%

The following table provides a maturity analysis for the Company’s future contractual minimum lease payments to be made by the Company as of December 31, 2018, under non-cancelable ground leases which expire on various dates through 2114:
Years Ending December 31,(in thousands)
2019$11,425
202018,425
202125,310
20228,894
20239,084
Thereafter567,232

Table of Content

The following table provides a maturity analysis for the Company's future minimum lease payments, as of December 31, 2018, related to the four capital leases, through 2036:
Years Ending December 31,(in thousands)
2019$1,441
202012,682
20212,123
20221,253
2023944
Thereafter73,241
Total expected minimum lease payments91,684
Interest portion(27,497)
Present value of expected net minimum lease payments$64,187

The following table provides a maturity analysis for the Company’s lease liabilities related to its operating and finance leases as of June 30, 2019 (in thousands):
 Operating Finance (1)
July 1, 2019 - December 31, 2019$4,872
 $2,494
202010,050
 121,499
202124,953
 2,096
202218,041
 1,632
202310,326
 1,039
Thereafter567,232
 73,241
Total lease payments635,474
 202,001
Less: interest portion(436,130) (29,099)
Present value of lease payments$199,344
 $172,902
  March 31, 2020 December 31, 2019
Land $5,070,208
 $5,111,606
Right of use assets - finance leases 237,394
 237,394
Right of use assets - operating leases 148,057
 148,640
Land held for future development (1) 264,893
 254,828
Buildings and improvements 13,517,218
 13,646,054
Tenant improvements 2,641,448
 2,656,439
Furniture, fixtures and equipment 44,263
 44,313
Construction in progress 804,179
 789,736
Total 22,727,660
 22,889,010
Less: Accumulated depreciation (5,209,487) (5,266,798)
  $17,518,173
 $17,622,212

_______________
(1)Finance lease payments in 2020 and 2024 include approximately $119.8 million and $38.7 million, respectively, related to purchase options that the Company is reasonably certain that it will exercise.Includes pre-development costs.

Boston Properties Limited Partnership
LessorReal estate consisted of the following at March 31, 2020 and December 31, 2019 (in thousands):
The
  March 31, 2020 December 31, 2019
Land $4,972,992
 $5,011,153
Right of use assets - finance leases 237,394
 237,394
Right of use assets - operating leases 148,057
 148,640
Land held for future development (1) 264,893
 254,828
Buildings and improvements 13,232,157
 13,351,286
Tenant improvements 2,641,448
 2,656,439
Furniture, fixtures and equipment 44,263
 44,313
Construction in progress 804,179
 789,736
Total 22,345,383
 22,493,789
Less: Accumulated depreciation (5,107,243) (5,162,908)
  $17,238,140
 $17,330,881
_______________
(1)Includes pre-development costs.

Developments
On January 28, 2020, the Company leasesexercised its option to acquire real property at 425 Fourth Street located in San Francisco, California for a purchase price totaling approximately $134.1 million. 425 Fourth Street is expected to support the development of approximately 804,000 square feet of primarily commercial office space. There can be no assurance that the acquisition will be consummated on the terms currently contemplated or at all.
On March 26, 2020, the Company completed and fully placed in-service 17Fifty Presidents Street located in Reston, Virginia. 17Fifty Presidents Street is a build-to-suit project with approximately 276,000 net rentable square feet of Class A office retailspace that is 100% leased.
Dispositions
On January 28, 2020, the Company entered into a joint venture with a third party to own, operate and residential space to tenants. These leases may contain extensiondevelop properties at its Gateway Commons complex located in South San Francisco, California. The Company contributed its 601, 611 and termination options that are predominately651 Gateway properties and development rights with an agreed upon value aggregating approximately $350.0 million for its 50% interest in the joint venture. 601, 611 and 651 Gateway consist of 3 Class A office properties aggregating approximately 768,000 net rentable square feet. The partner contributed 3 properties and development rights with an agreed upon value aggregating approximately $280.8 million at closing and will contribute cash totaling approximately $69.2 million in the sole discretionfuture for its 50% ownership interest in the joint venture. As a result of the tenant, provided certain conditions are satisfied. In a few instances,partner’s deferred contribution, the leases also contain purchase options, which wouldCompany has an initial approximately 55% interest in the joint venture. Future development projects will be exercisable at fair market value. Also, certain ofowned 49% by the Company’s leases include rental payments that are basedCompany and 51% by its partner. Upon the third party’s contribution, the Company ceased accounting for the joint venture entity on a percentageconsolidated basis and is accounting for the joint venture entity on an unconsolidated basis using the equity method of accounting, as it has reduced its ownership interest in the tenant salesjoint venture entity and no longer has a controlling financial or operating interest in excess of contractual amounts.
ASU 2018-11 provides lessorsthe joint venture entity (See Note 5). The Company recognized a practical expedient to not separate nonlease components from the associated lease component if certain criteria stated above are met for each class of underlying assets. The guidance in Topic 842 defines “underlying asset” as “an asset that is the subject of a lease for which a right to use that asset has been conveyed to a lessee. The underlying asset could be a physically distinct portion of a single asset.” Basedgain on the above guidance, the Company considersretained and sold interest in the real estate assetscontributed to the joint venture totaling approximately $217.7 million for Boston Properties, Inc. and $222.4 million for Boston Properties Limited Partnership during the three months ended March 31, 2020 within Gains (Losses) on Sales of Real Estate on the respective Consolidated Statements of Operations, as a class of underlying assets and will not be further delineating it into specific usesthe fair value of the real estate asset asexceeded its carrying value. 601, 611 and 651 Gateway contributed approximately $0.2 million of net income to the risk profiles are similarCompany for the period from January 1, 2020 through January 27, 2020 and contributed approximately $2.9 million of net income to the Company for the three months ended March 31, 2019.
On February 20, 2020, the Company completed the sale of New Dominion Technology Park located in nature.
Lease components are elementsHerndon, Virginia for a gross sale price of an arrangement that provide the customer with the right to use an identified asset. Nonlease components are distinct elements$256.0 million. Net cash proceeds totaled approximately $254.0 million, resulting in a gain on sale of a contract that are not related to securing the use of the leased asset and revenue is recognized in accordance with ASC 606. The Company considers common area maintenance (CAM) and service income associated with tenant work orders to be nonlease components because they represent delivery of a separate service but are not considered a cost of securing the identified asset. In the case of the Company’s business, the identified asset would be the leased real estate (office, retail or residential).totaling approximately $192.3 million for Boston Properties, Inc. and approximately $197.1 million for Boston Properties Limited Partnership. New Dominion Technology Park is comprised of 2 Class A office properties aggregating approximately 493,000 net rentable square feet. New Dominion Technology Park contributed approximately $1.6 million of net income to the Company for the period from January 1, 2020 through February 19, 2020 and contributed approximately $2.1 million of net income to the Company for the three months ended March 31, 2019.
Table of Content

4. Leases
The Company assessedmust make estimates as to the collectability of its accrued rent and concluded thataccounts receivable related to lease revenue. Management analyzes accrued rent and accounts receivable by considering tenant creditworthiness, current economic trends, including the timingimpact of COVID-19 on tenants’ businesses, and pattern of transfer for nonlease components andchanges in tenants’ payment patterns when evaluating the associated lease component are the same. The Company determined that the predominate component was the lease component and as such its leases will continue to qualify as operating leases and the Company has made a policy election to account for and present the lease component and the nonlease component as a single component in the revenue sectioncollectability of the Consolidated Statements of Operations labeled Lease. Prior totenant’s receivable balance, including the adoption of Topic 842, nonlease components had been included within Recoveries from Tenants Revenue, Parking and Other Revenue and Development and Management Services Revenue on the Company’s Consolidated Statements of Operations.accrued rent receivable.
In addition, under ASU 2016-02, lessors will only capitalize incremental direct leasing costs. As a result, starting January 1, 2019, the Company no longer capitalizes non-incremental legal costs and internal leasing wages. These costs are expensed as incurred. The expensing of these items is included within General and Administrative Expense on the Consolidated Statements of Operations.
The following table summarizes the components of lease revenue recognized during the three and six months ended June 30,March 31, 2020 and 2019 included within the Company’sCompany's Consolidated Statements of Operations (in thousands):
Lease Revenue Three months ended June 30, 2019 Six months ended June 30, 2019
Fixed Contractual Payments $557,820
 $1,111,806
Variable lease payments 122,369
 247,634
  $680,189
 $1,359,440

The Company’s properties are leased to tenants under operating leases with initial term expiration dates ranging from 2019 to 2049.
The future contractual minimum lease payments to be received (excluding operating expense reimbursements) by the Company as of December 31, 2018, under non-cancelable operating leases which expire on various dates through 2049: 
Years Ending December 31,(in thousands)
2019$2,088,171
20202,106,963
20212,015,031
20221,838,699
20231,736,636
Thereafter12,295,464

The future contractual lease payments to be received (excluding operating expense reimbursements) by the Company as of June 30, 2019, under non-cancelable operating leases which expire on various dates through 2049: 
 (in thousands)
July 1, 2019 - December 31, 2019$1,053,967
20202,144,485
20212,111,755
20221,982,534
20231,910,896
Thereafter14,416,019
  Three months ended March 31,
Lease Revenue 2020 2019
Fixed contractual payments $586,957
 $553,986
Variable lease payments 123,154
 125,265
  $710,111
 $679,251

Table of Content

5. Investments in Unconsolidated Joint Ventures
The investments in unconsolidated joint ventures consist of the following at June 30, 2019March 31, 2020 and December 31, 2018:
2019:
 Nominal % Ownership Carrying Value of Investment (1)   Carrying Value of Investment (1)
Entity Properties  
June 30, 2019
 December 31, 2018 Properties 
Nominal %
Ownership
 March 31,
2020		 December 31,
2019
   (in thousands)   (in thousands)
Square 407 Limited Partnership Market Square North 50.0% $(5,518) $(6,424) Market Square North 50.0% $(4,469) $(4,872)
The Metropolitan Square Associates LLC Metropolitan Square 20.0% 5,827
 2,644
BP/CRF 901 New York Avenue LLC 901 New York Avenue 25.0%(2) (12,859) (13,640)
BP/CRF Metropolitan Square, LLC Metropolitan Square 20.0% 13,130
 9,134
901 New York, LLC 901 New York Avenue 25.0%(2) (12,069) (12,113)
WP Project Developer LLC Wisconsin Place Land and Infrastructure 33.3%(3) 37,521
 38,214
 Wisconsin Place Land and Infrastructure 33.3%(3) 36,446
 36,789
Annapolis Junction NFM LLC Annapolis Junction 50.0%(4) 25,290
 25,268
 Annapolis Junction 50.0%(4) 25,461
 25,391
540 Madison Venture LLC 540 Madison Avenue 60.0%(5)9,200
 66,391
 540 Madison Avenue 60.0%(5) 2,961
 2,953
500 North Capitol Venture LLC 500 North Capitol Street, NW 30.0% (5,451) (5,026) 500 North Capitol Street, NW 30.0% (5,688) (5,439)
501 K Street LLC 1001 6th Street 50.0%(6) 42,473
 42,557
 1001 6th Street 50.0%(6) 42,774
 42,496
Podium Developer LLC The Hub on Causeway - Podium 50.0% 58,637
 69,302
 The Hub on Causeway - Podium 50.0% 49,605
 49,466
Residential Tower Developer LLC The Hub on Causeway - Residential 50.0% 48,201
 47,505
 Hub50House 50.0% 54,414
 55,092
Hotel Tower Developer LLC The Hub on Causeway - Hotel Air Rights 50.0% 3,626
 3,022
 The Hub on Causeway - Hotel Air Rights 50.0% 9,889
 9,883
Office Tower Developer LLC 100 Causeway Street 50.0%(7)69,551
 23,804
 100 Causeway Street 50.0% 57,079
 56,606
1265 Main Office JV LLC 1265 Main Street 50.0% 4,125
 3,918
 1265 Main Street 50.0% 3,636
 3,780
BNY Tower Holdings LLC Dock 72 50.0% 91,134
 82,520
 Dock 72 50.0% 95,362
 94,804
BNYTA Amenity Operator LLC Dock 72 50.0% —
 —
CA-Colorado Center Limited Partnership Colorado Center 50.0% 254,122
 253,495
 Colorado Center 50.0% 251,146
 252,069
7750 Wisconsin Avenue LLC 7750 Wisconsin Avenue 50.0%(7)70,122
 69,724
 7750 Wisconsin Avenue 50.0% 57,003
 56,247
BP-M 3HB Venture LLC 3 Hudson Boulevard 25.0% 47,966
 46,993
 3 Hudson Boulevard 25.0% 84,301
 67,499
SMBP Venture LP Santa Monica Business Park 55.0% 169,040
 180,952
 Santa Monica Business Park 55.0% 151,997
 163,937
Platform 16 Holdings LP Platform 16 55.0%(7)93,991
 29,501
Gateway Portfolio Holdings LLC Gateway Commons 50.0%(8)348,143
 N/A
   $913,007
 $931,219
   $1,355,112
 $933,223
_______________
(1)
Investments with deficit balances aggregating approximately $23.8$22.2 million and $25.1$22.4 million at June 30, 2019March 31, 2020 and December 31, 2018,2019, respectively, have been reflectedare included within Other Liabilities in the Company’s Consolidated Balance Sheets.
(2)The Company’s economic ownership has increased based on the achievement of certain return thresholds. At March 31, 2020 and December 31, 2019, the Company’s economic ownership was approximately 50%.
(3)The Company’s wholly-owned subsidiary that owns Wisconsin Place Office also owns a 33.3% interest in the joint venture entity that owns the land, parking garage and infrastructure of the project.
(4)The joint venture owns three3 in-service buildings and two2 undeveloped land parcels.
(5)The
The property was sold on June 27, 2019. As of June 30,March 31, 2020 and December 31, 2019, the investment is comprised of undistributed cash. See note below for additional details.

(6)Under the joint venture agreement for this land parcel, the partner will be entitled to up to two2 additional payments from the venture based on increases in total entitled square footage of the project above 520,000 square feet and achieving certain project returns at stabilization.
(7)
This entity is a VIE (See Note 2)2).
Table of Content

(8)As a result of the partner’s deferred contribution, the Company has an initial approximately 55% interest in the joint venture. Future development projects will be owned 49% by the Company and 51% by its partner.
Certain of the Company’s unconsolidated joint venture agreements provide that,include provisions whereby, at certain specified times, each partner has the right to initiate a purchase or sale of its interest in the joint ventures. With limited exceptions under these provisions, the Company is not compelled to purchase the interest of its outside joint venture partners. Under certain of the Company’s joint venture agreements, if certain return thresholds are achieved, the partners or the Company will be entitled to an additional promoted interest or payments.
The Company classifies distributions received from equity method investees within its consolidated statements of cash flows using the nature of the distribution approach, which classifies the distributions received on the basis of the nature of the activity or activities of the investee that generated the distribution as either a return on investment (classified as cash inflows from operating activities) or a return of investment (classified as cash inflows from investing activities).
The combined summarized balance sheets of the Company’s unconsolidated joint ventures are as follows:
June 30, 2019 December 31, 2018March 31,
2020		 December 31,
2019
(in thousands)(in thousands)
ASSETS      
Real estate and development in process, net (1)$3,551,504
 $3,545,906
$4,469,460
 $3,904,400
Other assets515,923
 543,512
578,468
 502,706
Total assets$4,067,427
 $4,089,418
$5,047,928
 $4,407,106
LIABILITIES AND MEMBERS’/PARTNERS’ EQUITY      
Mortgage and notes payable, net$1,991,290
 $2,017,609
$2,312,938
 $2,218,853
Other liabilities (2)656,902
 582,006
638,892
 749,675
Members’/Partners’ equity1,419,235
 1,489,803
2,096,098
 1,438,578
Total liabilities and members’/partners’ equity$4,067,427
 $4,089,418
$5,047,928
 $4,407,106
Company’s share of equity$574,662
 $622,498
$956,136
 $591,905
Basis differentials (3)338,345
 308,721
398,976
 341,318
Carrying value of the Company’s investments in unconsolidated joint ventures (4)$913,007
 $931,219
$1,355,112
 $933,223
 _______________
(1)
At June 30,March 31, 2020 and December 31, 2019,, this amount includes right of use assets - finance leases totaling approximately $248.9 million and $383.9 million, respectively, and right of use assets - operating leases totaling approximately $248.9$11.9 million and $12.5$12.1 million, respectively.
(2)
At June 30,March 31, 2020 and December 31, 2019,, this amount includes lease liabilities - finance leases totaling approximately $391.0 million and $510.8 million, respectively, and lease liabilities - operating leases totaling approximately $393.2$17.4 million and $17.2$17.3 million, respectively.
(3)
This amount represents the aggregate difference between the Company’s historical cost basis and the basis reflected at the joint venture level, which is typically amortized over the life of the related assets and liabilities. Basis differentials result from impairments of investments, acquisitions through joint ventures with no change in control and upon the transfer of assets that were previously owned by the Company into a joint venture. In addition, certain acquisition, transaction and other costs may not be reflected in the net assets at the joint venture level. At June 30, 2019March 31, 2020 and December 31, 2018,2019, there was an aggregate basis differential of approximately $313.3$310.1 million and $316.7$311.3 million, respectively, between the carrying value of the Company’s investment in the joint venture that owns Colorado Center and the joint venture’s basis in the assets and liabilities, whichliabilities. At March 31, 2020, there was an aggregate basis differential of approximately $55.7 million between the carrying value of the Company’s investment in the joint venture that owns Gateway Commons and the joint venture’s basis in the assets and liabilities. These basis differentials (excluding land) shall be amortized over the remaining lives of the related assets and liabilities.
(4)
Investments with deficit balances aggregating approximately $23.8$22.2 million and $25.1$22.4 million at June 30, 2019March 31, 2020 and December 31, 2018,2019, respectively, have been reflected within Other Liabilities in the Company’s Consolidated Balance Sheets.
Table of Content


The combined summarized statements of operations of the Company’s unconsolidated joint ventures are as follows:
Three months ended June 30, Six months ended June 30,Three months ended March 31,
2019 2018 2019 20182020 2019
(in thousands)(in thousands)
Total revenue (1)$80,204
 $57,096
 $163,159
 $113,582
$93,203
 $82,955
Expenses          
Operating30,134
 22,868
 60,633
 45,717
35,401
 30,499
Depreciation and amortization24,818
 14,527
 53,464
 29,252
32,035
 28,646
Total expenses54,952
 37,395
 114,097
 74,969
67,436
 59,145
Other income (expense)          
Interest expense(20,803) (14,708) (41,560) (29,132)(22,583) (20,757)
Gain on sale of real estate (2)34,572
 —
 34,572
 —
Net income$39,021
 $4,993
 $42,074
 $9,481
$3,184

$3,053
          
Company’s share of net income$22,376
 $2,105
 $23,960
 $3,931
$1,252
 $1,584
Basis differential (2) (3)25,588
 (1,336) 24,217
 (2,701)
Income from unconsolidated joint ventures$47,964
 $769
 $48,177
 $1,230
Basis differential (2)(1,621) (1,371)
Income (loss) from unconsolidated joint ventures$(369) $213
_______________ 
(1)
Includes straight-line rent adjustments of approximately $7.6$9.7 million and $3.2$5.8 million for the three months ended June 30,March 31, 2020 and 2019, and 2018, respectively, and $13.4 million and $5.0 million for the six months ended June 30, 2019 and 2018, respectively.
(2)Represents the total gain on sale of 540 Madison Avenue recognized by the joint venture, as described below. During 2008, the Company recognized an other-than-temporary impairment loss on its investment in the unconsolidated joint venture resulting in a basis differential between the carrying value of the Company’s investment in the joint venture and the joint venture’s basis in the assets and liabilities of the property. As a result of the historical basis difference, the Company recognized a gain on sale of real estate totaling approximately $47.8 million, which consists of its share of the gain on sale reported by the joint venture as well as an adjustment for the basis differential. The gain on sale is included in Income from Unconsolidated Joint Ventures in the Company’s Consolidated Statements of Operations.
(3)
Includes straight-line rent adjustments of approximately $0.5 million and $0.7$0.5 million for the three months ended June 30,March 31, 2020 and 2019, and 2018, respectively, and $1.1 million and $1.4 million for the six months ended June 30, 2019 and 2018, respectively. Also includes net above-/below-market rent adjustments of approximately $0.4$0.3 million and $0.4 million for the three months ended June 30,March 31, 2020 and 2019, and 2018, respectively, and $0.8 million and $0.8 million for the six months ended June 30, 2019 and 2018, respectively.

On January 24, 2019,28, 2020, the Company entered into a joint venture with a third party to own, operate and develop properties at its Gateway Commons complex located in South San Francisco, California. The Company contributed its 601, 611 and 651 Gateway properties and development rights with an agreed upon value aggregating approximately $350.0 million for its 50% interest in the joint venture (See Note 3). 601, 611 and 651 Gateway consist of three Class A office properties aggregating approximately 768,000 net rentable square feet. The partner contributed 3 properties and development rights with an agreed upon value aggregating approximately $280.8 million at closing and will contribute cash totaling approximately $69.2 million in the future for its 50% ownership interest in the joint venture. As a result of the partner’s deferred contribution, the Company has an initial approximately 55% interest in the joint venture. Future development projects will be owned 49% by the Company and 51% by its partner.
On January 28, 2020, a joint venture in which the Company has a 55% interest commenced development of the first phase of its Platform 16 project located in San Jose, California. The first phase of the Platform 16 development project consists of an approximately 390,000 net rentable square foot Class A office building and a below-grade parking garage. Though the joint venture has completed site preparation work, in consultation with the Company’s partner, the joint venture has paused construction activities and it will revisit its plans once the economic impact of COVID-19 becomes clearer. On February 20, 2020, the joint venture acquired the land underlying the ground lease for a purchase price totaling approximately $134.8 million. The joint venture had previously made a deposit totaling $15.0 million, which deposit was credited against the purchase price. Platform 16 consists of a parcel of land totaling approximately 5.6 acres that is expected to support the development of approximately 1.1 million square feet of commercial office space.
On March 18, 2020, a joint venture in which the Company has a 50% interest extended the mortgage loan collateralized by its Annapolis Junction Building Six property.Seven and Building Eight. At the time of the extension, the outstanding balance of the loan totaled approximately $13.0$34.6 million, and was scheduled to mature on November 17, 2019, with one, one-year extension option, subject to certain conditions. The extended loan has a total commitment amount of approximately $14.3 million, bears interest at a variable rate equal to LIBOR plus 2.00% per annum and matures on November 17, 2020. Annapolis Junction Building Six is a Class A office property with approximately 119,000 net rentable square feet located in Annapolis, Maryland.
On April 26, 2019, a joint venture in which the Company has a 50% interest obtained construction financing with a total commitment of $255.0 million collateralized by its 7750 Wisconsin Avenue development project located in Bethesda, Maryland. 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. As of June 30, 2019, there have been no amounts drawn under the loan. 7750 Wisconsin Avenue is a 734,000 net rentable square foot build-to-suit Class A office project and below-grade parking garage.
On May 28, 2019, joint ventures in which the Company has a 50% interest and that own The Hub on Causeway - Podium and 100 Causeway Street development projects entered into an infrastructure development
Table of Content

assistance agreement (the “IDAA”) with the Commonwealth of Massachusetts and the City of Boston. Per the IDAA, the Hub on Causeway - Podium development project will be reimbursed for certain costs of public infrastructure improvements using the proceeds of up to $30.0 million in aggregate principal amount of municipal bonds issued by the Commonwealth of Massachusetts. As of June 30, 2019, the joint venture had not received any reimbursements of costs for the public infrastructure improvements. In addition, the joint venture that owns the Hub on Causeway - Podium development project modified its construction loan agreement with the lender requiring the joint venture to pay down the construction loan balance using the proceeds received from the reimbursement of costs of the public infrastructure improvements. On June 15, 2019, the joint venture partially placed in-service The Hub on Causeway - Podium development project, an approximately 385,000 net rentable square foot project containing retail and office space located in Boston, Massachusetts.
On June 27, 2019, a joint venture in which the Company has a 60% interest completed the sale of 540 Madison Avenue in New York City for a gross sale price of approximately $310.3 million, including the assumption by the buyer of the mortgage loan collateralized by the property totaling $120.0 million. The mortgage loan bore interest at a variable rate equal to LIBOR plus 1.10%2.35% per annum and was scheduled to maturematured on March 6, 2020. The extended loan matures on June 5, 2023. Net cash proceeds totaled30, 2020. Annapolis Junction Building Seven and Building Eight are Class A office properties with approximately $178.7 million, of which the Company’s share was approximately $107.1 million, after the payment of transaction costs. During 2008, the Company recognized an other-than-temporary impairment loss on its investment in the unconsolidated joint venture. As a result, the Company recognized a gain on sale of real estate totaling approximately $47.8 million, which is included in Income from Unconsolidated Joint Ventures in the accompanying Consolidated Statements of Operations. 540 Madison Avenue is an approximately 284,000127,000 and 126,000 net rentable square foot Class A office property.feet, respectively, located in Annapolis, Maryland.

6. Unsecured Senior Notes
The following summarizes the unsecured senior notes outstanding as of June 30, 2019 (dollars in thousands):
 Coupon/Stated Rate Effective Rate(1) Principal Amount Maturity Date(2)
10 Year Unsecured Senior Notes5.625% 5.708% $700,000
 
November 15, 2020
10 Year Unsecured Senior Notes4.125% 4.289% 850,000
 
May 15, 2021
11 Year Unsecured Senior Notes3.850% 3.954% 1,000,000
 
February 1, 2023
10.5 Year Unsecured Senior Notes3.125% 3.279% 500,000
 
September 1, 2023
10.5 Year Unsecured Senior Notes3.800% 3.916% 700,000
 
February 1, 2024
7 Year Unsecured Senior Notes3.200% 3.350% 850,000
 
January 15, 2025
10 Year Unsecured Senior Notes3.650% 3.766% 1,000,000
 
February 1, 2026
10 Year Unsecured Senior Notes2.750% 3.495% 1,000,000
 
October 1, 2026
10 Year Unsecured Senior Notes4.500% 4.628% 1,000,000
 
December 1, 2028
10 Year Unsecured Senior Notes3.400% 3.505% 850,000
 
June 21, 2029
Total principal    8,450,000
  
Net unamortized discount    (18,802)  
Deferred financing costs, net    (40,490)  
Total    $8,390,708
  
_______________  
(1)Yield on issuance date including the effects of discounts on the notes, settlements of interest rate contracts and the amortization of financing costs.
(2)No principal amounts are due prior to maturity.
On June 21, 2019, Boston Properties Limited Partnership completed a public offering of $850.0 million in aggregate principal amount of its 3.400% unsecured senior notes due 2029. The notes were priced at 99.815% of the principal amount to yield an effective rate (including financing fees) of approximately 3.505% per annum to maturity. The notes will mature on June 21, 2029, unless earlier redeemed. The aggregate net proceeds from the offering were approximately $841.3 million after deducting underwriting discounts and transaction expenses.
Table of Content

The indenture relating to the unsecured senior notes contains certain financial restrictions and requirements, including (1) a leverage ratio not to exceed 60%, (2) a secured debt leverage ratio not to exceed 50%, (3) an interest coverage ratio of greater than 1.50 and (4) an unencumbered asset value of not less than 150% of unsecured debt. At June 30, 2019, Boston Properties Limited Partnership was in compliance with each of these financial restrictions and requirements.
7. Commitments and Contingencies
General
In the normal course of business, the Company guarantees its performance of services or indemnifies third parties against its negligence. In addition, in the normal course of business, the Company guarantees to certain tenants the obligations of its subsidiaries for the payment of tenant improvement allowances and brokerage commissions in connection with their leases and limited costs arising from delays in delivery of their premises. 
The Company has letter of credit and performance obligations related to lender and development requirements that total approximately $18.4$21.7 million.
Certain of the Company’s joint venture agreements include provisions whereby, at certain specified times, each partner has the right to initiate a purchase or sale of its interest in the joint ventures. With limited exception, under these provisions, the Company is not compelled to purchase the interest of its outside joint venture partners. From time to time, under certain of the Company’s joint venture agreements, if certain return thresholds are achieved, either the Company or its partners willmay be entitled to an additional promoted interest or payments (See Note 8).payments.
From time to time, the Company (or ventures in which the Company has an ownership interest) has agreed, and may in the future agree, to (1) guarantee portions of the principal, interest and other amounts in connection with their borrowings, (2) provide customary environmental indemnifications and nonrecourse carve-outs (e.g., guarantees against fraud, misrepresentation and bankruptcy) in connection with their borrowings and (3) provide guarantees to lenders, tenants and other third parties for the completion of development projects. The Company has agreements with its outside partners whereby the partners agree to reimburse the joint venture for their share of any payments made under the guarantee. In some cases, the Company earns a fee from the applicable joint venture for providing the guarantee.
In connection with the refinancing of 767 Fifth Avenue’s (the General Motors Building) secured loan by the Company’s consolidated joint venture entity, 767 Venture, LLC, the Company guaranteed the consolidated entity’s obligation to fund various reserves for tenant improvement costs and allowances, leasing commissions and free rent obligations in lieu of cash deposits. As of June 30, 2019,March 31, 2020, the maximum funding obligation under the guarantee was approximately $79.8$57.1 million. The Company earns a fee from the joint venture for providing the guarantee and has an agreement with the outside partners to reimburse the joint venture for their share of any payments made under the guarantee. As of June 30, 2019,March 31, 2020, no amounts related to the guarantee are recorded as liabilities in the Company’s consolidated financial statements.
Pursuant to the lease agreement with Marriott, the Company has guaranteed the completion of the office building and parking garage on behalf of its 7750 Wisconsin Avenue joint venture and has also agreed to provide anyprovided a financing guaranty that may beas required with respect to the third-party construction financing.  The Company earns fees from the joint venture for providing the guarantees and any amounts the Company pays under the guarantee(s) will be deemed to be capital contributions by the Company to the joint venture.  The Company has also agreed to fund construction costs through capital contributions to the joint venture in the event of unavailability or insufficiency of third-party construction financing.  In addition, the Company has guaranteed to Marriott, as hotel manager, the completion of a hotel being developed by an affiliate of The Bernstein Companies (the Company’s partner in the 7750 Wisconsin Avenue joint venture) adjacent to the office property, for which the Company earns a fee from the affiliate of The Bernstein Companies.  In addition, the Company entered into agreements with affiliates of The Bernstein Companies whereby the Company could be required to act as a mezzanine and/or mortgage lender and finance the construction of the hotel property.  An affiliate of The Bernstein Companies has exercised an option to borrow up to $15.0 million from the Company under such agreements. As of March 31, 2020, 0 funding request has been received by the Company. To secure such financing arrangements, affiliates of The Bernstein Companies are required to provide certain security, which varies depending on the specific loan, by pledges of their equity interest in the office property, a fee mortgage on the hotel property, or both. As of June 30, 2019, noMarch 31, 2020, 0 amounts related to the contingent aspect of any of the guarantees are recorded as liabilities in the Company’s consolidated financial statements.
Table of Content

In connection with the sale and development of the Company’s 6595 Springfield Center Drive development project, the Company has guaranteed the completion of the project and the payment of certain cost overruns in accordance with the development management agreement with the buyer. Although the project has been sold and the lease with the federal governmentFederal Government tenant has been assigned to the buyer, pursuant to the terms of the Federal Government lease, the Federal Government tenant is not obligated to release the prior owner/landlord from such landlord’s obligations under the lease until completion of the construction. As a result, the entity which previously

owned the land remains liable to the Federal Government tenant for the completion of the construction obligations under the lease.  The buyer is obligated to fund the balance of the costs to meet such construction obligations, subject to the Company’s obligation to fund cost overruns (if any), as noted above. An affiliate of the buyer has provided a guaranty of the obligations of the buyer to fund such construction costs and the buyer has agreed to use commercially reasonable efforts to require the construction lender to provide certain remedies to the Company in the event the buyer does not fund such construction obligations. As of June 30, 2019, noMarch 31, 2020, 0 amounts related to the contingent aspect of the guarantee are recorded as a liability in the Company’s consolidated financial statements.
In connection with the redevelopment of the Company’s 325 Main Street property located in Cambridge, Massachusetts, the Company is required, pursuant to the local zoning ordinance, to commence construction of a residential building of at least 200,000 square feet with 25% of the project designated as income-restricted (with a minimum of 20% of the square footage devoted to home ownership units) prior to the occupancy of the 325 Main Street property. 325 Main Street currently consistsconsisted of an approximately 115,000 net rentable square foot Class A office property that will bewas demolished and is being developed into an approximately 420,000 net rentable square foot Class A office property, including approximately 41,000 net rentable square feet of retail space (See Note 3).space.
In 2009, the Company filed a general unsecured creditor’s claim against Lehman Brothers, Inc. for approximately $45.3 million related to its rejection of a lease at 399 Park Avenue in New York City. On January 10, 2014, the trustee for the liquidation of the business of Lehman Brothers allowed the Company’s claim in the amount of approximately $45.2 million. During the years 2014 2015, 2016, 2017 andthrough 2018, the Company received distributions ofaggregating approximately $7.7$18.0 million, $8.1 million, $1.4 million, $0.4 million and $0.3 million, respectively. The Company hasleaving a remaining claim of approximately $27.2 million. The Company will continue to evaluate whether to attempt to sell the remaining claim or wait until the trustee distributes proceeds from the Lehman Brothers estate. Given the inherent uncertainties in bankruptcy proceedings, there can be no assurance as to the timing or amount of additional proceeds, if any, that the Company may ultimately realize on the remaining claim, whether by sale to a third party or by one or more distributions from the trustee. Accordingly, the Company has not recorded any estimated recoveries associated with this gain contingency within its Consolidated Financial Statements at June 30, 2019.March 31, 2020.
Insurance
The Company’s property insurance program per occurrence limits are $1.0 billion for its portfolio insurance program, including coverage for acts of terrorism other than nuclear, biological, chemical or radiological terrorism (“Terrorism Coverage”). The Company also carries $250 million of Terrorism Coverage for 601 Lexington Avenue, New York, New York (“601 Lexington Avenue”) in excess of the $1.0 billionof coverage in the Company’s property insurance program. 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. The Company also currently carries nuclear, biological, chemical and radiological terrorism insurance coverage for acts of terrorism certified under the Federal Terrorism Risk Insurance Act (as amended, “TRIA”) (“NBCR Coverage”), which is provided by IXP as a direct insurer, for the properties in the Company’s portfolio, including 767 Fifth Avenue, but excluding certain other properties owned in joint ventures with third parties or which the Company manages. The per occurrence limit for NBCR Coverage is $1.0 billion. Under TRIA, after the payment of the required deductible and coinsurance, the NBCR Coverage provided by IXP is backstopped by the Federal Government if the aggregate industry insured losses resulting from a certified act of terrorism exceed a “program trigger.” In 2019, theThe program trigger is $180$200 million, and the coinsurance is 19%, however, both will increase in subsequent years pursuant20% and the deductible is 20% of the premiums earned by the insurer for the year prior to TRIA.a claim. If the Federal Government pays out for a loss under TRIA, it is mandatory that the Federal Government recoup the full amount of the loss from insurers offering TRIA coverage after the payment of the loss pursuant to a formula in TRIA. The Company may elect to terminate the NBCR Coverage if the Federal Government seeks recoupment for losses paid under TRIA, if TRIA is not extended after its expiration on December 31, 2020,2027, if there is a change in its portfolio or for any other reason. The Company intends to continue to monitor the scope, nature and cost of available terrorism insurance.
Table of Content

The Company also currently carries earthquake insurance on its properties located in areas known to be subject to earthquakes. In addition, this insurance is subject to a deductible in the amount of 3% of the value of the affected property. Specifically, the Company currently carries earthquake insurance which covers its San Francisco and Los Angeles regions with a $240 million per occurrence limit, and a $240 million annual aggregate limit, $20 million of which is provided by IXP, as a direct insurer. The amount of the Company’s earthquake insurance coverage may not be sufficient to cover losses from earthquakes. In addition, the amount of earthquake coverage could impact the Company’s ability to finance properties subject to earthquake risk. The Company may discontinue

earthquake insurance or change the structure of its earthquake insurance program on some or all of its properties in the future if the premiums exceed the Company’s estimation of the value of the coverage.
IXP, a captive insurance company which is a wholly-owned subsidiary of the Company, acts as a direct insurer with respect to a portion of the Company’s earthquake insurance coverage for its Greater San Francisco and Los Angeles properties and the Company’s NBCR Coverage. Insofar as the Company owns IXP, it is responsible for its liquidity and capital resources, and the accounts of IXP are part of the Company’s consolidated financial statements. In particular, if a loss occurs which is covered by the Company’s NBCR Coverage but is less than the applicable program trigger under TRIA, IXP would be responsible for the full amount of the loss without any backstop by the Federal Government. IXP would also be responsible for any recoupment charges by the Federal Government in the event losses are paid out and its insurance policy is maintained after the payout by the Federal Government. If the Company experiences a loss and IXP is required to pay under its insurance policy, the Company would ultimately record the loss to the extent of the required payment. Therefore, insurance coverage provided by IXP should not be considered as the equivalent of third-party insurance, but rather as a modified form of self-insurance. In addition, Boston Properties Limited Partnership has issued a guarantee to cover liabilities of IXP in the amount of $20.0 million.
The mortgages onDue to the current COVID-19 pandemic, the Company anticipates the possibility of business interruption, loss of lease revenue and/or other associated expenses related to the Company’s properties typically contain requirements concerningoperations across its portfolio. Because this is an ongoing situation it is not yet possible to quantify the financial ratingsCompany’s losses and expenses, which continue to develop. Because of the insurers who provide policies covering the property. The Company provides the lenders on a regular basis with the identitycomplexity of the insurance companies in the Company’s insurance programs. The ratings of somepolicies and limited precedent for claims being made related to pandemics, it is not yet possible to determine if such losses and expenses will be covered by the Company’s insurance policies. Therefore, at this time, the Company is providing notice to the applicable insurers of the Company’s insurers are below the rating requirementspotential for claims in some oforder to protect the Company’s loan agreements and the lenders for these loans could attempt to claim that an event of default has occurredrights under the loan. The Company believes it could obtain insurance with insurers which satisfy the rating requirements. Additionally, in the future, the Company’s ability to obtain debt financing secured by individual properties, or the terms of such financing, may be adversely affected if lenders generally insist on ratings for insurers or amounts of insurance which are difficult to obtain or which result in a commercially unreasonable premium. There can be no assurance that a deficiency in the financial ratings of one or more of the Company’s insurers will not have a material adverse effect on the Company.its policies.
The Company continues to monitor the state of the insurance market in general, and the scope and costs of coverage for acts of terrorism, and California earthquake risk and pandemics, in particular, but the Company cannot anticipate what coverage will be available on commercially reasonable terms in future policy years. There are other types of losses, such as from wars, for which the Company cannot obtain insurance at all or at a reasonable cost. With respect to such losses and losses from acts of terrorism, earthquakes or other catastrophic events, if the Company experiences a loss that is uninsured or that exceeds policy limits, the Company could lose the capital invested in the damaged properties, as well as the anticipated future revenues from those properties. Depending on the specific circumstances of each affected property, it is possible that the Company could be liable for mortgage indebtedness or other obligations related to the property. Any such loss could materially and adversely affect the Company’s business and financial condition and results of operations.
8.7. Noncontrolling Interests
Noncontrolling interests relate to the interests in Boston Properties Limited Partnership not owned by Boston Properties, Inc. and interests in consolidated property partnerships not wholly-owned by the Company. As of June 30, 2019,March 31, 2020, the noncontrolling interests in Boston Properties Limited Partnership consisted of 16,828,23016,421,888 OP Units, 1,189,1171,343,299 LTIP Units (including 118,067105,080 2012 OPP Units, 68,65964,468 2013 MYLTIP Units, 23,100 2014 MYLTIP Units, 28,724 2015 MYLTIP Units, and 98,70689,791 2016 MYLTIP Units), 394,921Units and 116,167 2017 MYLTIP Units,Units), 336,195 2018 MYLTIP Units, and 220,734 2019 MYLTIP Units and 203,278 2020 MYLTIP Units held by parties other than Boston Properties, Inc.
Table of Content

Noncontrolling Interest—Common Units
During the sixthree months ended June 30, 2019, 34,967March 31, 2020, 461,856 OP Units were presented by the holders for redemption (including 33,76771,303 OP Units issued upon conversion of LTIP Units, 2012 OPP Units, 2013 MYLTIP Units, 2014 MYLTIP Units, 2016 MYLTIP Units and 20162017 MYLTIP Units) and were redeemed by Boston Properties, Inc. in exchange for an equal number of shares of Common Stock.
At June 30, 2019,March 31, 2020, Boston Properties Limited Partnership had outstanding 394,921 2017 MYLTIP Units, 336,195 2018 MYLTIP Units, and 220,734 2019 MYLTIP Units and 203,278 2020 MYLTIP Units. Prior to the applicable measurement date (February 6, 20205, 2021 for the 20172018 MYLTIP Units, February 5, 20214, 2022 for the 20182019 MYLTIP Units and February 4, 20223, 2023 for the 20192020 MYLTIP Units), holders of MYLTIP Units will be entitled to receive per unit distributions equal to one-tenth (10%) of the regular quarterly distributions payable on an OP Unit, but will not be entitled to receive any special distributions. After the measurement date, the number of MYLTIP Units, both vested and unvested, that MYLTIP award recipients

have earned, if any, based on the establishment of a performance pool, will be entitled to receive distributions in an amount per unit equal to distributions, both regular and special, payable on an OP Unit.
On February 9, 2019,6, 2020, the measurement period for the Company’s 20162017 MYLTIP awards ended and, based on Boston Properties, Inc.’s relative TSR performance, the final awards were determined to be 69.5%83.8% of target or an aggregate of approximately $13.6$17.6 million (after giving effect to voluntary employee separations). As a result, an aggregate of 364,980 2016270,942 2017 MYLTIP Units that had been previously granted were automatically forfeited.
The following table presents Boston Properties Limited Partnership’s distributions on the OP Units and LTIP Units (including the 2012 OPP Units, 2013 MYLTIP Units, 2014- 2016 MYLTIP Units and, after the February 6, 2020 measurement date, the 2017 MYLTIP Units) and its distributions on the 2017 MYLTIP Units (prior to the February 6, 2020 measurement date), 2018 MYLTIP Units, 2019 MYLTIP Units and 2020 MYLTIP Units (after the February 4, 2020 issuance date) that occurred during the three months ended March 31, 2020:
Record Date Payment Date Distributions per OP Unit and LTIP Unit Distributions per MYLTIP Unit
March 31, 2020 April 30, 2020 
$0.98
 
$0.098
December 31, 2019 January 30, 2020 
$0.98
 
$0.098

The following table presents Boston Properties Limited Partnership’s distributions on the OP Units and LTIP Units (including the 2012 OPP Units, 2013 - 2015 MYLTIP Units and, after the February 9, 2019 measurement date, the 2016 MYLTIP Units) and its distributions on the 2016 MYLTIP Units (prior to the February 9, 2019 measurement date), 2017 MYLTIP Units, 2018 MYLTIP Units and 2019 MYLTIP Units (after the February 5, 2019 issuance date) paid in 2019:
Record Date Payment Date Distributions per OP Unit and LTIP Unit Distributions per MYLTIP Unit
June 28, 2019 July 31, 2019 
$0.95
 
$0.095
March 29, 2019 April 30, 2019 
$0.95
 
$0.095
December 31, 2018 January 30, 2019 
$0.95
 
$0.095

The following table presents Boston Properties Limited Partnership’s distributions on the OP Units and LTIP Units (including the 2012 OPP Units, 2013 MYLTIP Units, 2014 MYLTIP Units and, after the February 4, 2018 measurement date, the 2015 MYLTIP Units) and its distributions on the 2015 MYLTIP Units (prior to the February 4, 2018 measurement date), 2016 MYLTIP Units, 2017 MYLTIP Units and 2018 MYLTIP Units (after the February 6, 2018 issuance date) that occurred during the first and second quarters of 2018:three months ended March 31, 2019:
Record Date Payment Date Distributions per OP Unit and LTIP Unit Distributions per MYLTIP Unit
June 29, 2018 July 31, 2018 
$0.80
 
$0.080
March 29, 2018 April 30, 2018 
$0.80
 
$0.080
December 31, 2017 January 30, 2018 
$0.80
 
$0.080
Record Date Payment Date Distributions per OP Unit and LTIP Unit Distributions per MYLTIP Unit
March 29, 2019 April 30, 2019 
$0.95
 
$0.095
December 31, 2018 January 30, 2019 
$0.95
 
$0.095

A holder of an OP Unit may present the OP Unit to Boston Properties Limited Partnership for redemption at any time (subject to restrictions agreed upon at the time of issuance of OP Units to particular holders that may restrict such redemption right for a period of time, generally one1 year from issuance). Upon presentation of an OP Unit for redemption, Boston Properties Limited Partnership must redeem the OP Unit for cash equal to the then value of a share of common stockCommon Stock of Boston Properties, Inc. Boston Properties, Inc. may, in its sole discretion, elect to assume and satisfy the redemption obligation by paying either cash or issuing one1 share of Common Stock. The value of the OP Units not(not owned by Boston Properties, Inc. and LTIP Units (including the 2012 OPP Units, 2013 MYLTIP Units, 2014 MYLTIP Units, 2015 MYLTIP Units and 2016- 2017 MYLTIP Units), assuming that all conditions had been met for the conversion thereof,thereof) had all of such units been redeemed at June 30, 2019March 31, 2020 was approximately $2.3$1.6 billion based on the last reported price of a share of Common Stock on the New York Stock Exchange of $129.00$92.23 per share on June 28, 2019.
Table of Content

March 31, 2020.
Noncontrolling Interests—Property Partnerships
The noncontrolling interests in property partnerships consist of the outside equity interests in ventures that are consolidated with the financial results of the Company because the Company exercises control over the entities that own the properties. The equity interests in these ventures that are not owned by the Company, totaling approximately $1.7 billion at June 30, 2019March 31, 2020 and December 31, 2018,2019, are included in Noncontrolling Interests—Property Partnerships inon the accompanying Consolidated Balance Sheets.
On May 12, 2016, the partners in the Company’s consolidated entity that owns Salesforce Tower located in San Francisco, California amended the venture agreement. Under the original venture agreement, if the Company elected to fund the construction of Salesforce Tower without a construction loan (or a construction loan of less than 50% of project costs) and the venture commenced vertical construction of the project, then the partner’s capital funding obligation would be limited, in which event the Company would fund up to 2.5% of the total project costs (i.e., 50% of the partner’s 5% interest in the venture) in the form of a loan to the partner. This loan would bear interest at the then prevailing market interest rates for construction loans. Under the amended agreement, the partners agreed to structure this funding by the Company as preferred equity rather than a loan. The preferred equity contributed by the Company earned a preferred return equal to LIBOR plus 3.00% per annum and was payable to the Company out of any distributions to which the partner would otherwise be entitled until such preferred equity and preferred return was repaid to the Company. The Company contributed an aggregate of approximately $22.6 million of preferred equity to the venture. Also, under the joint venture agreement, (a) from and after the stabilization date, the partner had the right to cause the Company to purchase all (but not less than all) of the partner’s interest and (b) from and after the third anniversary of the stabilization date, the Company had the right to acquire all (but not less than all) of the partner’s interest, in each case at an agreed upon purchase price or appraised value.  In addition, if certain threshold returns were achieved the partner would be entitled to receive an additional promoted interest with respect to cash flow distributions.  The term stabilization date was defined in the agreement to generally mean the first date after completion upon which Salesforce Tower is (1) at least 90% leased and (2) 50% occupied by tenants that are paying rent. Salesforce Tower is an approximately 1,421,000 net rentable square foot Class A office property.
On January 18, 2019, the Company and its partner amended the venture agreement. Per the amendment, the partner exercised its right to cause the Company to purchase on April 1, 2019 its 5% ownership interest and promoted profits interest in the venture for cash totaling approximately $210.9 million, which amount was reduced by approximately $24.1 million, consisting of the repayment of the Company’s preferred equity and preferred return as provided for in the venture agreement.
On April 1, 2019, the Company completed the acquisition of its partner’s 5% ownership interest and promoted profits interest in the consolidated entity for cash totaling approximately $210.9 million, which amount was reduced by approximately $24.1 million to $186.8 million to reflect the repayment of the Company's preferred equity and preferred return in the venture, as described above. The Company now owns 100% of Salesforce Tower. The Company has accounted for the transaction as an equity transaction for financial reporting purposes and has reflected the difference between the fair value of the total consideration paid and the related carrying value of the noncontrolling interest - property partnership totaling approximately $162.5 million as a decrease to Additional Paid-in Capital and Partners’ Capital in the Consolidated Balance Sheets of Boston Properties, Inc. and Boston Properties Limited Partnership, respectively.
9.8. Stockholders’ Equity / Partners’ Capital
Boston Properties, Inc.
As of June 30, 2019,March 31, 2020, Boston Properties, Inc. had 154,563,130155,314,555 shares of Common Stock outstanding.
As of June 30, 2019,March 31, 2020, Boston Properties, Inc. owned 1,725,8051,730,797 general partnership units and 152,837,325153,583,758 limited partnership units ofin Boston Properties Limited Partnership.

On June 2, 2017, Boston Properties, Inc. renewed its “at the market” (“ATM”) stock offering program through which it may sell from time to time up to an aggregate of $600.0 million of its common stock through sales agents over a three-year3-year period. This program replaced the Company’s prior $600.0 million ATM stock offering program that was scheduled to expire on June 3, 2017. The Company intends to use the net proceeds from any offering for general business purposes, which may include investment opportunities and debt reduction. No shares of common stock have been issued under this ATM stock offering program.
During the sixthree months ended June 30, 2019,March 31, 2020, Boston Properties, Inc. issued 29,70443,792 shares of Common Stock upon the exercise of options to purchase Common Stock.
During the sixthree months ended June 30, 2019,March 31, 2020, Boston Properties, Inc. issued 34,967461,856 shares of Common Stock, in connection with the redemption of an equal number of redeemable OP Units from limited partners.
Table of Content

The following table presents Boston Properties, Inc.’s dividends per share and Boston Properties Limited Partnership’s distributions per OP Unit and LTIP Unit paid or declared in 20192020 and during the first and second quarters of 2018:three months ended March 31, 2019:
Record Date Payment Date Dividend (Per Share)
 Distribution (Per Unit)
June 28, 2019 July 31, 2019 
$0.95
 
$0.95
March 29, 2019 April 30, 2019 
$0.95
 
$0.95
December 31, 2018 January 30, 2019 
$0.95
 
$0.95
       
June 29, 2018 July 31, 2018 
$0.80
 
$0.80
March 29, 2018 April 30, 2018 
$0.80
 
$0.80
December 31, 2017 January 30, 2018 
$0.80
 
$0.80
Record Date Payment Date Dividend (Per Share)
 Distribution (Per Unit)
March 31, 2020 April 30, 2020 
$0.98
 
$0.98
December 31, 2019 January 30, 2020 
$0.98
 
$0.98
       
March 29, 2019 April 30, 2019 
$0.95
 
$0.95
December 31, 2018 January 30, 2019 
$0.95
 
$0.95

Preferred Stock
As of June 30, 2019,March 31, 2020, Boston Properties, Inc. had 80,000 shares (8,000,000 depositary shares each representing 1/100th of a share) outstanding of its 5.25% Series B Cumulative Redeemable Preferred Stock with a liquidation preference of $2,500.00 per share ($25.00 per depositary share). Boston Properties, Inc. pays cumulative cash dividends on the Series B Preferred Stock at a rate of 5.25% per annum of the $2,500.00 liquidation preference per share. Boston Properties, Inc. did not have the right to redeem the Series B Preferred Stock prior to March 27, 2018, except in certain circumstances relating to the preservation of Boston Properties, Inc.’s REIT status. On and after March 27, 2018, Boston Properties, Inc., at its option, may redeem the Series B Preferred Stock for a cash redemption price of $2,500.00 per share ($25.00 per depositary share), plus all accrued and unpaid dividends. The Series B Preferred Stock is not redeemable by the holders, has no maturity date and is not convertible into any other security of Boston Properties, Inc. or its affiliates.
The following table presents Boston Properties Inc.’s dividends per share on its outstanding Series B Preferred Stock paid or declared during 20192020 and during the first and second quarters of 2018:three months ended March 31, 2019:
Record Date Payment Date Dividend (Per Share)
August 2, 2019May 1, 2020 AugustMay 15, 20192020 
$32.8125
February 4, 2020February 18, 2020
$32.8125
May 3, 2019 May 15, 2019 
$32.8125
February 4, 2019 February 15, 2019 
$32.8125
August 3, 2018August 15, 2018
$32.8125
May 4, 2018May 15, 2018
$32.8125
February 2, 2018February 15, 2018
$32.8125


10.9. Earnings Per Share / Common Unit
Boston Properties, Inc.
The following table provides a reconciliation of both the net income attributable to Boston Properties, Inc. common shareholders and the number of common shares used in the computation of basic earnings per share (“EPS”), which is calculated by dividing net income attributable to Boston Properties, Inc. common shareholders by the weighted-average number of common shares outstanding during the period. Unvested share-based payment

awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are also participating securities. As such, unvested restricted common stock of Boston Properties, Inc. and Boston Properties Limited Partnership’s LTIP Units, 2012 OPP Units and MYLTIP Units are considered participating securities. Participating securities are included in the computation of basic EPS of Boston Properties, Inc. using the two-class method. Participating securities are included in the computation of diluted EPS of Boston Properties, Inc. using the if-converted method if the impact is dilutive. Because the 2012 OPP Units and 2013 MYLTIP Units, 2014 MYLTIP Units, 2015 MYLTIP Units and 2016- 2017 MYLTIP Units required, and the 2017-20192018 - 2020 MYLTIP Units require, Boston Properties, Inc. to outperform absolute and relative return thresholds, unless such thresholds have been met by the end of the applicable reporting period, Boston Properties, Inc. excludes such units from the diluted EPS
Table of Content

calculation. Other potentially dilutive common shares, including stock options, restricted stock and other securities of Boston Properties Limited Partnership that are exchangeable for Boston Properties, Inc.’s Common Stock, and the related impact on earnings, are considered when calculating diluted EPS.
Three months ended June 30, 2019
Income
(Numerator)
 
Shares
(Denominator)
 
Per Share
Amount
(in thousands, except for per share amounts)
Basic Earnings:     
Net income attributable to Boston Properties, Inc. common shareholders$164,318
 154,555
 $1.06
Allocation of undistributed earnings to participating securities(48) —
 —
Net income attributable to Boston Properties, Inc. common shareholders$164,270
 154,555
 $1.06
Effect of Dilutive Securities:     
Stock Based Compensation—
 319
 —
Diluted Earnings:     
Net income attributable to Boston Properties, Inc. common shareholders$164,270
 154,874
 $1.06
     
Three months ended June 30, 2018Three months ended March 31, 2020
Income
(Numerator)
 
Shares
(Denominator)
 
Per Share
Amount
Income
(Numerator)
 
Shares
(Denominator)
 
Per Share
Amount
(in thousands, except for per share amounts)(in thousands, except for per share amounts)
Basic Earnings:          
Net income attributable to Boston Properties, Inc. common shareholders$128,681
 154,415
 $0.83
$497,496
 155,011
 $3.21
Allocation of undistributed earnings to participating securities(16) —
 —
(1,011) —
 (0.01)
Net income attributable to Boston Properties, Inc. common shareholders$128,665
 154,415
 $0.83
$496,485
 155,011
 $3.20
Effect of Dilutive Securities:          
Stock Based Compensation—
 156
 —
—
 247
 —
Diluted Earnings:          
Net income attributable to Boston Properties, Inc. common shareholders$128,665
 154,571
 $0.83
$496,485
 155,258
 $3.20
          
Six months ended June 30, 2019Three months ended March 31, 2019
Income
(Numerator)
 
Shares
(Denominator)
 
Per Share
Amount
Income
(Numerator)
 
Shares
(Denominator)
 
Per Share
Amount
(in thousands, except for per share amounts)(in thousands, except for per share amounts)
Basic Earnings:          
Net income attributable to Boston Properties, Inc. common shareholders$262,431
 154,540
 $1.70
$98,105
 154,525
 $0.63
Effect of Dilutive Securities:          
Stock Based Compensation—
 319
 (0.01)—
 319
 —
Diluted Earnings:          
Net income attributable to Boston Properties, Inc. common shareholders$262,431
 154,859
 $1.69
$98,105
 154,844
 $0.63
     

Table of Content

 Six months ended June 30, 2018
 
Income
(Numerator)
 
Shares
(Denominator)
 
Per Share
Amount
 (in thousands, except for per share amounts)
Basic Earnings:     
Net income attributable to Boston Properties, Inc. common shareholders$304,682
 154,400
 $1.97
Allocation of undistributed earnings to participating securities(142) —
 —
Net income attributable to Boston Properties, Inc. common shareholders$304,540
 154,400
 $1.97
Effect of Dilutive Securities:     
Stock Based Compensation—
 238
 —
Diluted Earnings:     
Net income attributable to Boston Properties, Inc. common shareholders$304,540
 154,638
 $1.97


Boston Properties Limited Partnership
The following table provides a reconciliation of both the net income attributable to Boston Properties Limited Partnership common unitholders and the number of common units used in the computation of basic earnings per common unit, which is calculated by dividing net income attributable to Boston Properties Limited Partnership common unitholders by the weighted-average number of common units outstanding during the period. Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are also participating securities. As such, unvested restricted common stock of Boston Properties, Inc. and Boston Properties Limited Partnership’s LTIP Units, 2012 OPP Units and MYLTIP Units are considered participating securities. Participating securities are included in the computation of basic earnings per common unit using the two-class method. Participating securities are included in the computation of diluted earnings per common unit using the if-converted method if the impact is dilutive. Because the 2012 OPP Units and 2013 MYLTIP Units, 2014 MYLTIP Units, 2015 MYLTIP Units and 2016- 2017 MYLTIP Units required, and the 2017-20192018 - 2020 MYLTIP Units require, Boston Properties, Inc. to outperform absolute and relative return thresholds, unless such thresholds have been met by the end of the applicable reporting period, Boston Properties Limited Partnership excludes such units from the diluted earnings per common unit calculation. Other potentially dilutive common units and the related impact on earnings are considered when calculating diluted earnings per common unit. Included in the number of units (the denominator) below are approximately 17,647,00017,538,000 and 17,501,00017,606,000 redeemable common units for the three months ended June 30,March 31, 2020 and 2019, and 2018, respectively, and 17,627,000 and 17,492,000 redeemable common units for the six months ended June 30, 2019 and 2018, respectively.
 Three months ended June 30, 2019
 
Income
(Numerator)
 
Units
(Denominator)
 
Per Unit
Amount
 (in thousands, except for per unit amounts)
Basic Earnings:     
Net income attributable to Boston Properties Limited Partnership common unitholders$185,715
 172,202
 $1.08
Allocation of undistributed earnings to participating securities(54) —
 —
Net income attributable to Boston Properties Limited Partnership common unitholders$185,661
 172,202
 $1.08
Effect of Dilutive Securities:     
Stock Based Compensation—
 319
 —
Diluted Earnings:     
Net income attributable to Boston Properties Limited Partnership common unitholders$185,661
 172,521
 $1.08
      

 Three months ended March 31, 2020
 
Income
(Numerator)
 
Units
(Denominator)
 
Per Unit
Amount
 (in thousands, except for per unit amounts)
Basic Earnings:     
Net income attributable to Boston Properties Limited Partnership common unitholders$566,333
 172,549
 $3.28
Allocation of undistributed earnings to participating securities(1,126) —
 —
Net income attributable to Boston Properties Limited Partnership common unitholders$565,207
 172,549
 $3.28
Effect of Dilutive Securities:     
Stock Based Compensation—
 247
 (0.01)
Diluted Earnings:     
Net income attributable to Boston Properties Limited Partnership common unitholders$565,207
 172,796
 $3.27
Table of Content

Three months ended June 30, 2018
Income
(Numerator)
 
Units
(Denominator)
 
Per Unit
Amount
(in thousands, except for per unit amounts)
Basic Earnings:     
Net income attributable to Boston Properties Limited Partnership common unitholders$145,961
 171,916
 $0.85
Allocation of undistributed earnings to participating securities(18) —
��—
Net income attributable to Boston Properties Limited Partnership common unitholders$145,943
 171,916
 $0.85
Effect of Dilutive Securities:     
Stock Based Compensation—
 156
 —
Diluted Earnings:     
Net income attributable to Boston Properties Limited Partnership common unitholders$145,943
 172,072
 $0.85
     
Six months ended June 30, 2019Three months ended March 31, 2019
Income
(Numerator)
 
Units
(Denominator)
 
Per Unit
Amount
Income
(Numerator)
 
Units
(Denominator)
 
Per Unit
Amount
(in thousands, except for per unit amounts)(in thousands, except for per unit amounts)
Basic Earnings:          
Net income attributable to Boston Properties Limited Partnership common unitholders$299,097
 172,167
 $1.74
$113,382
 172,131
 $0.66
Effect of Dilutive Securities:          
Stock Based Compensation—
 319
 (0.01)—
 319
 —
Diluted Earnings:          
Net income attributable to Boston Properties Limited Partnership common unitholders$299,097
 172,486
 $1.73
$113,382
 172,450
 $0.66
     
Six months ended June 30, 2018
Income
(Numerator)
 
Units
(Denominator)
 
Per Unit
Amount
(in thousands, except for per unit amounts)
Basic Earnings:     
Net income attributable to Boston Properties Limited Partnership common unitholders$346,868
 171,892
 $2.02
Allocation of undistributed earnings to participating securities(158) —
 —
Net income attributable to Boston Properties Limited Partnership common unitholders$346,710
 171,892
 $2.02
Effect of Dilutive Securities:     
Stock Based Compensation—
 238
 (0.01)
Diluted Earnings:     
Net income attributable to Boston Properties Limited Partnership common unitholders$346,710
 172,130
 $2.01
     

11.10. Stock Option and Incentive Plan
On February 5, 2019,4, 2020, Boston Properties, Inc.’s Compensation Committee approved the 20192020 MYLTIP awards under the Boston Properties, Inc.’s 2012 Stock Option and Incentive Plan (the “2012 Plan”) to certain officers and employees of Boston Properties, Inc. The 20192020 MYLTIP awards utilize Boston Properties, Inc.’s TSR over a three three-

year measurement period, on an annualized, compounded basis, as the performance metric. Earned awards will
Table of Content

be based on Boston Properties, Inc.’s TSR relative to the FTSE Russell Nareit Office Index, adjusted to include Vornado Realty Trust. Earned awards will range from zero0 to a maximum of 220,734203,278 LTIP Units depending on Boston Properties, Inc.’s TSR relative to the FTSE Russell Nareit Office Index, adjusted to include Vornado Realty Trust, with a target of approximately 110,367101,638 LTIP Units and linear interpolation between zero and maximum. Earned awards (if any) will vest 50% on February 4, 20223, 2023 and 50% on February 4, 2023,3, 2024, based on continued employment. Vesting will be accelerated in the event of a change in control, termination of employment by Boston Properties, Inc. without cause, or termination of employment by the award recipient for good reason, death, disability or retirement. If there is a change of control prior to February 4, 2022,3, 2023, earned awards will be calculated based on TSR performance up to the date of the change of control. The 20192020 MYLTIP awards are in the form of LTIP Units issued on the grant date which (i) are subject to forfeiture to the extent awards are not earned and (ii) prior to the performance measurement date are only entitled to one-tenth (10%) of the regular quarterly distributions payable on common partnership units. Under ASC 718 “Compensation - Stock Compensation”,Compensation,” the 20192020 MYLTIP awards have an aggregate value of approximately $13.5$13.7 million, which amount will generally be amortized into earnings over the four year plan period under the graded vesting method.
On February 9, 2019,6, 2020, the measurement period for the Company’s 20162017 MYLTIP awards ended and, based on Boston Properties, Inc.’s relative TSR performance, the final awards were determined to be 69.5%83.8% of target or an aggregate of approximately $13.6$17.6 million (after giving effect to voluntary employee separations). As a result, an aggregate of 364,980 2016270,942 2017 MYLTIP Units that had been previously granted were automatically forfeited.
During the sixthree months ended June 30, 2019,March 31, 2020, Boston Properties, Inc. issued 26,50324,503 shares of restricted common stock and Boston Properties Limited Partnership issued 181,919196,927 LTIP Units and 220,734 2019203,278 2020 MYLTIP Units to employees and non-employee directors under the 2012 Plan. Employees and non-employee directors paid $0.01 per share of restricted common stock and $0.25 per LTIP Unit and 20192020 MYLTIP Unit. When issued, LTIP Units are not economically equivalent in value to a share of Common Stock, but over time can increase in value to one-for-one parity with Common Stock if there is sufficient appreciation in the value of the Company’s assets. The aggregate value of the LTIP Units is included in noncontrolling interests in the Consolidated Balance Sheets.Sheets of Boston Properties, Inc. and Boston Properties Limited Partnership. A substantial majority of the grants of restricted common stock and LTIP Units to employees vest in four equal annual installments. Restricted common stock is measured at fair value on the date of grant based on the number of shares granted and the closing price of Boston Properties, Inc.’s Common Stock on the date of grant as quoted on the New York Stock Exchange. Such value is recognized as an expense ratably over the corresponding employee service period. The shares of restricted common stock granted during the sixthree months ended June 30, 2019March 31, 2020 were valued at approximately $3.5 million ($131.27143.45 per share weighted-average). The LTIP Units granted were valued at approximately $22.1$25.5 million (approximately $121.50$129.65 per unit weighted-average fair value) using a Monte Carlo simulation method model. The per unit fair values of the LTIP Units granted were estimated on the dates of grant and for a substantial majority of such units were valued using the following assumptions: an expected life of 5.7 years, a risk-free interest rate of 2.68%1.47% and an expected price volatility of 27.0%18.0%. Because the 2012 OPP Units, 2013 MYLTIP Units, 2014 MYLTIP Units, 2015 MYLTIP Units, 2016 MYLTIP Units, 2017 MYLTIP Units, 2018 MYLTIP Units, 2019 MYLTIP Units and 20192020 MYLTIP Units are subject to both a service condition and a market condition, the Company recognizes the related compensation expense under the graded vesting attribution method. Under the graded vesting attribution method, each portion of the award that vests at a different date is accounted for as a separate award and recognized over the period appropriate to that portion so that the compensation cost for each portion should be recognized in full by the time that portion vests. The Company recognizes forfeitures as they occur on its awards of stock-based compensation. Dividends paid on both vested and unvested shares of restricted stock are charged directly to Dividends in Excess of Earnings in Boston Properties, Inc.’s Consolidated Balance Sheets and Partners’ Capital in Boston Properties Limited Partnership’s Consolidated Balance Sheets. Aggregate stock-based compensation expense associated with restricted stock, non-qualified stock options, LTIP Units, 2012 OPP Units, 2013 MYLTIP Units, 2014 MYLTIP Units, 2015 MYLTIP Units, 2016 MYLTIP Units, 2017 MYLTIP Units, 2018 MYLTIP Units, 2019 MYLTIP Units and 20192020 MYLTIP Units was approximately $10.1$17.2 million and $7.9$14.8 million for the three months ended June 30,March 31, 2020 and 2019, and 2018, respectively, and approximately $24.9 million and $22.1 million for the six months ended June 30, 2019 and 2018, respectively. At June 30, 2019,March 31, 2020, there was (1) an aggregate of approximately $33.2$42.2 million of unrecognized compensation expense related to unvested restricted stock, LTIP Units and 20162017 MYLTIP Units and (2) an aggregate of approximately $17.9$19.8 million of unrecognized compensation expense related to unvested 2017 MYLTIP Units, 2018 MYLTIP Units, 2019 MYLTIP Units and 20192020 MYLTIP Units that is expected to be recognized over a weighted-average period of approximately 2.6 years.
Table of Content


12.11. Segment Information
The following tables present reconciliations of Net Income Attributable to Boston Properties, Inc. Common Shareholders to the Company’s share of Net Operating Income and Net Income Attributable to Boston Properties Limited Partnership Common Unitholders to the Company’s share of Net Operating Income for the three and six months ended June 30, 2019March 31, 2020 and 2018.2019.
Boston Properties, Inc.
Three months ended June 30, Six months ended June 30, Three months ended March 31,
2019 2018 2019 2018 2020 2019
(in thousands) (in thousands)
Net income attributable to Boston Properties, Inc. common shareholders$164,318
 $128,681
 $262,431
 $304,682
 $497,496
 $98,105
Add:           
Preferred dividends2,625
 2,625
 5,250
 5,250
 2,625
 2,625
Noncontrolling interest—common units of Boston Properties Limited Partnership19,036
 14,859
 30,627
 35,311
Noncontrolling interest—common units of the Operating Partnership 57,539
 11,599
Noncontrolling interests in property partnerships17,482
 14,400
 36,312
 31,634
 19,486
 18,830
Interest expense102,357
 92,204
 203,366
 182,424
 101,591
 101,009
Impairment loss—
 —
 24,038
 —
 —
 24,038
Net operating income from unconsolidated joint ventures24,715
 16,227
 50,064
 32,287
 28,758
 25,349
Depreciation and amortization expense177,411
 156,417
 342,005
 322,214
 171,094
 164,594
Transaction costs417
 474
 877
 495
 615
 460
Payroll and related costs from management services contracts2,403
 1,970
 5,798
 4,855
 3,237
 3,395
General and administrative expense35,071
 28,468
 76,833
 64,362
 36,454
 41,762
Less:           
Net operating income attributable to noncontrolling interests in property partnerships45,562
 43,049
 92,647
 88,958
 47,661
 47,085
Gains from investments in securities1,165
 505
 4,134
 379
Gains (losses) from investments in securities (5,445) 2,969
Interest and other income3,615
 2,579
 7,368
 4,227
 3,017
 3,753
Gains on sales of real estate1,686
 18,292
 781
 114,689
Income from unconsolidated joint ventures47,964
 769
 48,177
 1,230
Gains (losses) on sales of real estate 410,165
 (905)
Income (loss) from unconsolidated joint ventures (369) 213
Direct reimbursements of payroll and related costs from management services contracts2,403
 1,970
 5,798
 4,855
 3,237
 3,395
Development and management services revenue9,986
 9,305
 19,263
 17,710
 7,879
 9,277
Company’s share of Net Operating Income$433,454
 $379,856
 $859,433
 $751,466
 $452,750
 $425,979

Table of Content


Boston Properties Limited Partnership
 Three months ended June 30, Six months ended June 30,
 2019 2018 2019 2018
 (in thousands)
Net income attributable to Boston Properties Limited Partnership common unitholders$185,715
 $145,961
 $299,097
 $346,868
Add:       
Preferred distributions2,625
 2,625
 5,250
 5,250
Noncontrolling interests in property partnerships17,482
 14,400
 36,312
 31,634
Interest expense102,357
 92,204
 203,366
 182,424
Impairment loss—
 —
 22,272
 —
Net operating income from unconsolidated joint ventures24,715
 16,227
 50,064
 32,287
Depreciation and amortization expense175,199
 154,474
 337,881
 318,327
Transaction costs417
 474
 877
 495
Payroll and related costs from management services contracts2,403
 1,970
 5,798
 4,855
General and administrative expense35,071
 28,468
 76,833
 64,362
Less:       
Net operating income attributable to noncontrolling interests in property partnerships45,562
 43,049
 92,647
 88,958
Gains from investments in securities1,165
 505
 4,134
 379
Interest and other income3,615
 2,579
 7,368
 4,227
Gains on sales of real estate1,835
 18,770
 930
 117,677
Income from unconsolidated joint ventures47,964
 769
 48,177
 1,230
Direct reimbursements of payroll and related costs from management services contracts2,403
 1,970
 5,798
 4,855
Development and management services revenue9,986
 9,305
 19,263
 17,710
Company’s share of Net Operating Income$433,454
 $379,856
 $859,433

$751,466

  Three months ended March 31,
  2020 2019
  (in thousands)
Net income attributable to Boston Properties Limited Partnership common unitholders $566,333
 $113,382
Add:    
Preferred distributions 2,625
 2,625
Noncontrolling interests in property partnerships 19,486
 18,830
Interest expense 101,591
 101,009
Impairment loss —
 22,272
Net operating income from unconsolidated joint ventures 28,758
 25,349
Depreciation and amortization expense 169,285
 162,682
Transaction costs 615
 460
Payroll and related costs from management services contracts 3,237
 3,395
General and administrative expense 36,454
 41,762
Less:    
Net operating income attributable to noncontrolling interests in property partnerships 47,661
 47,085
Gains (losses) from investments in securities (5,445) 2,969
Interest and other income 3,017
 3,753
Gains (losses) on sales of real estate 419,654
 (905)
Income (loss) from unconsolidated joint ventures (369) 213
Direct reimbursements of payroll and related costs from management services contracts 3,237
 3,395
Development and management services revenue 7,879
 9,277
Company’s share of Net Operating Income $452,750
 $425,979
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 dividends/distributions, net income attributable to noncontrolling interests, interest expense, impairment loss, depreciation and amortization expense, transaction costs, payroll and related costs from management services contracts and corporate general and administrative expense less (2) gains (losses) from investments in securities, interest and other income, gains (losses) on sales of real estate, income (loss) from unconsolidated joint ventures, direct reimbursements of payroll and related costs from management services contracts and development and management services revenue. The Company believes NOI is useful to investors as a performance measure and believes it provides useful information to investors regarding the Company’s its results of operations and financial condition because, when compared across periods, it reflects the impact on operations from trends in occupancy rates, rental rates, operating costs and acquisition and development activity on an unleveraged basis, providing perspective not immediately apparent from net income attributable to Boston Properties, Inc. common shareholders and net income attributable to Boston Properties Limited Partnership common unitholders. For example, interest expense is not necessarily linked to the operating performance of a real estate asset and is often incurred at the corporate level as opposed to the property level. Similarly, interest expense may be incurred at the property level even though the financing proceeds may be used at the corporate level (e.g., used for other investment activity). In addition, depreciation and amortization expense, because of historical cost accounting and useful life estimates, may distort operating performance measures at the property level. NOI presented by the Company may not be comparable to NOI reported by other REITs or real estate companies that define NOI differently.
Table of Content


The Company’s internal reporting utilizes its share of NOI, which includes its share of NOI from consolidated and unconsolidated joint ventures, which is a non-GAAP financial measure that is calculated as the consolidated

amount, plus the Company’s share of the amount from the Company’s unconsolidated joint ventures (calculated based upon the Company’s economic percentage ownership interest and, in some cases, after priority allocations), minus the Company’s partners’ share of the amount from the Company’s consolidated joint ventures (calculated based upon the partners’ economic percentage ownership interests and, in some cases, after priority allocations, income allocation to private REIT shareholders and their share of fees due to the Company). The Company’s share of NOI from unconsolidated joint ventures does not include its share of gains on sale of real estate from unconsolidated joint ventures, which is included within income from unconsolidated joint venturesIncome (Loss) From Unconsolidated Joint Ventures in the Company’s Consolidated Statements of Operations.  Management utilizes its share of NOI in assessing its performance as the Company has several significant joint ventures and, in some cases, the Company exercises significant influence over, but does not control, the joint venture, in which case GAAP requires that the Company account for the joint venture entity using the equity method of accounting and the Company does not consolidate it for financial reporting purposes. In other cases, GAAP requires that the Company consolidate the venture even though the Company’s partner(s) owns a significant percentage interest. As a result, the presentations of the Company’s share of NOI should not be considered a substitute for, and should only be considered together with and as a supplement to, the Company’s financial information presented in accordance with GAAP.
Asset information by segment is not reported because the Company does not use this measure to assess performance. Therefore, depreciation and amortization expense is not allocated among segments. Preferred dividends/distributions, interest expense, impairment loss, depreciation and amortization expense, transaction costs, payroll and related costs from management services contracts, corporate general and administrative expense, gains (losses) from investments in securities, interest and other income, gains (losses) on sales of real estate, direct reimbursements of payroll and related costs from management services contracts and development and management services revenue are not included in NOI and are provided as reconciling items to the Company’s reconciliations of its share of NOI to net income attributable to common shareholders/unitholders.
The Company’s segments are based on the Company’s method of internal reporting which classifies its operations by geographic area. The Company’s segments by geographic area are Boston, Los Angeles, New York, San Francisco and Washington, DC. The Company also presents information for each segment by property type, including Office, Residential and Hotel.
Beginning in 2019,Included within the Company modified the presentation of its geographic area classification for all periods presented to include the Los Angeles geographic area to align with its method of internal reporting. The Company expanded its presence in the Los Angeles geographic area with its equity method investment in Santa Monica Business Park located in Santa Monica, California. As of June 30, 2019, the Company has equity interests in a portfolio of 27Office property type are commercial office and retail propertiesleases, as well as parking revenue.  Upon the adoption of ASC 842, any write-off for bad debt, including accrued rent, will be shown as a reduction to lease revenue.  The degree to which our commercial and retail tenants’ and parking operators’ businesses are or will continue to be negatively impacted by the ongoing COVID-19 pandemic by measures intended to reduce its spread, such as mandatory business closures and “stay-at-home” orders, could result in a reduction in the Los Angeles geographic area aggregating approximately 2.3 million net rentable square feet, allCompany’s cash flows or require that the Company write-off a tenant’s accrued rent balance, and this could have a material adverse effect on lease revenue and thus the results of which are owned through investments in unconsolidated joint ventures. The Company is presenting the Los Angeles geographic area as a reportable segment to align with its method of internal reporting given the increased significanceCompany’s Office property type. 
In addition, as a result of commencingCOVID-19, the Boston Marriott Cambridge was closed in March 2020.  The Company is uncertain as to when the hotel will re-open, and the continued closure is expected to have a full reporting period of ownershipmaterial impact on the hotel’s operations and thus the results of the Santa Monica Business Park portfolio. The inclusion of the Los Angeles geographic area has also resulted in a change in the reported measure of segment profit or loss from NOI to the Company’s share of NOI. This change has been reflected in all periods presented and the impact of the change can been seen within the tables below. The Company has not presented rental revenue and rental expensesHotel property type.  See Item 1A: “Risk Factors” for properties owned through investments in unconsolidated joint ventures, including those in the Los Angeles geographic area, as the Company accounts for these properties using the equity method of accounting.additional details.
Table of Content


Information by geographic area and property type (dollars in thousands):
For the three months ended June 30, 2019:March 31, 2020:
Boston Los Angeles New York San Francisco Washington, DC TotalBoston Los Angeles New York San Francisco Washington, DC Total
Rental Revenue: (1)                      
Office$217,961
 $—
 $251,556
 $131,506
 $96,486
 $697,509
$239,498
 $—
 $255,286
 $136,739
 $93,136
 $724,659
Residential3,222
 —
 —
 —
 5,777
 8,999
4,068
 —
 —
 —
 5,888
 9,956
Hotel14,844
 —
 —
 —
 —
 14,844
6,825
 —
 —
 —
 —
 6,825
Total236,027
 —
 251,556
 131,506
 102,263
 721,352
250,391
 —
 255,286
 136,739
 99,024
 741,440
% of Grand Totals32.72% —% 34.87% 18.23% 14.18% 100.00%33.77% —% 34.43% 18.44% 13.36% 100.00%
Rental Expenses:                      
Office77,660
 —
 96,809
 43,708
 35,672
 253,849
82,545
 —
 99,140
 42,569
 34,648
 258,902
Residential1,279
 —
 —
 —
 2,843
 4,122
1,340
 —
 —
 —
 2,724
 4,064
Hotel9,080
 —
 —
 —
 —
 9,080
6,821
 —
 —
 —
 —
 6,821
Total88,019
 —
 96,809
 43,708
 38,515
 267,051
90,706
 —
 99,140
 42,569
 37,372
 269,787
% of Grand Totals32.96% —% 36.25% 16.37% 14.42% 100.00%33.62% —% 36.75% 15.78% 13.85% 100.00%
Net operating income$148,008
 $—
 $154,747
 $87,798
 $63,748
 $454,301
$159,685
 $—
 $156,146
 $94,170
 $61,652
 $471,653
% of Grand Totals32.58% —% 34.06% 19.33% 14.03% 100.00%33.85% —% 33.11% 19.97% 13.07% 100.00%
Less: Net operating income attributable to noncontrolling interests in property partnerships(10,031) —
 (35,531) —
 —
 (45,562)(10,663) —
 (36,998) —
 —
 (47,661)
Add: Company’s share of net operating income from unconsolidated joint ventures818
 15,454
 1,696
 —
 6,747
 24,715
3,099
 15,930
 756
 3,159
 5,814
 28,758
Company’s share of net operating income$138,795
 $15,454
 $120,912
 $87,798
 $70,495
 $433,454
$152,121
 $15,930
 $119,904
 $97,329
 $67,466
 $452,750
% of Grand Totals32.01% 3.57% 27.90% 20.26% 16.26% 100.00%33.60% 3.52% 26.48% 21.50% 14.90% 100.00%
  _______________
(1)Rental Revenue is equal to Total Revenue per the Company’s Consolidated Statements of Operations, less Development and Management Services Revenue and Direct Reimbursements of Payroll and Related Costs from Management Services Contracts Revenue per the Consolidated Statements of Operations.

Table of Content


For the three months ended June 30, 2018:
 Boston Los Angeles New York San Francisco Washington, DC Total
Rental Revenue: (1)           
Office$207,810
 $—
 $234,006
 $93,482
 $98,505
 $633,803
Residential1,195
 —
 —
 —
 3,604
 4,799
Hotel14,607
 —
 —
 —
 —
 14,607
Total223,612

—
 234,006
 93,482
 102,109
 653,209
% of Grand Totals34.23% —% 35.83% 14.31% 15.63% 100.00%
Rental Expenses:           
Office77,147
 —
 91,838
 31,214
 34,678
 234,877
Residential706
 —
 —
 —
 2,207
 2,913
Hotel8,741
 —
 —
 —
 —
 8,741
Total86,594

—
 91,838
 31,214
 36,885
 246,531
% of Grand Totals35.12% —% 37.26% 12.66% 14.96% 100.00%
Net operating income$137,018

$—
 $142,168
 $62,268
 $65,224
 $406,678
% of Grand Totals33.69% —% 34.96% 15.31% 16.04% 100.00%
Less: Net operating income attributable to noncontrolling interests in property partnerships(8,418) —
 (34,751) 120
 —
 (43,049)
Add: Company’s share of net operating income from unconsolidated joint ventures781
 6,902
 1,706
 —
 6,838
 16,227
Company’s share of net operating income$129,381

$6,902

$109,123

$62,388

$72,062
 $379,856
% of Grand Totals34.06% 1.82% 28.73% 16.42% 18.97% 100.00%

 _______________
(1)Rental Revenue is equal to Total Revenue per the Company’s Consolidated Statements of Operations, less Development and Management Services Revenue and Direct Reimbursements of Payroll and Related Costs from Management Services Contracts Revenue per the Consolidated Statements of Operations.


Table of Content

For the six months ended June 30,March 31, 2019:
Boston Los Angeles New York San Francisco Washington, DC TotalBoston Los Angeles New York San Francisco Washington, DC Total
Rental Revenue: (1)                      
Office$435,372
 $—
 $510,187
 $255,561
 $192,831
 $1,393,951
$217,411
 $—
 $258,631
 $124,055
 $96,345
 $696,442
Residential5,923
 —
 —
 —
 10,791
 16,714
2,701
 —
 —
 —
 5,014
 7,715
Hotel23,782
 —
 —
 —
 —
 23,782
8,938
 —
 —
 —
 —
 8,938
Total465,077
 —
 510,187
 255,561
 203,622
 1,434,447
229,050
 —
 258,631
 124,055
 101,359
 713,095
% of Grand Totals32.42% —% 35.56% 17.82% 14.20% 100.00%32.12% —% 36.27% 17.40% 14.21% 100.00%
Rental Expenses:                      
Office157,160
 —
 193,780
 84,833
 71,819
 507,592
79,500
 —
 96,971
 41,125
 36,147
 253,743
Residential2,485
 —
 —
 —
 5,411
 7,896
1,206
 —
 —
 —
 2,568
 3,774
Hotel16,943
 —
 —
 —
 —
 16,943
7,863
 —
 —
 —
 —
 7,863
Total176,588
 —
 193,780
 84,833
 77,230
 532,431
88,569
 —
 96,971
 41,125
 38,715
 265,380
% of Grand Totals33.17% —% 36.39% 15.93% 14.51% 100.00%33.37% —% 36.54% 15.50% 14.59% 100.00%
Net operating income$288,489
 $—
 $316,407
 $170,728
 $126,392
 $902,016
$140,481
 $—
 $161,660
 $82,930
 $62,644
 $447,715
% of Grand Totals31.98% —% 35.08% 18.93% 14.01% 100.00%31.38% —% 36.11% 18.52% 13.99% 100.00%
Less: Net operating income attributable to noncontrolling interests in property partnerships(19,404) —
 (72,795) (448) —
 (92,647)(9,373) —
 (37,264) (448) —
 (47,085)
Add: Company’s share of net operating income from unconsolidated joint ventures1,590
 31,162
 3,482
 —
 13,830
 50,064
772
 15,708
 1,786
 —
 7,083
 25,349
Company’s share of net operating income$270,675
 $31,162
 $247,094
 $170,280
 $140,222
 $859,433
$131,880
 $15,708
 $126,182
 $82,482
 $69,727
 $425,979
% of Grand Totals31.49% 3.63% 28.75% 19.81% 16.32% 100.00%30.96% 3.69% 29.62% 19.36% 16.37% 100.00%
  _______________
(1)Rental Revenue is equal to total Revenue per the Company’s Consolidated Statements of Operations, less Development and Management Services Revenue and Direct Reimbursements of Payroll and Related Costs from Management Services Contracts Revenue per the Consolidated Statements of Operations.

Table of Content

For the six months ended June 30, 2018:
 Boston Los Angeles New York San Francisco Washington, DC Total
Rental Revenue: (1)           
Office$412,807
 $—
 $476,404
 $183,375
 $197,817
 $1,270,403
Residential2,347
 —
 —
 —
 6,611
 8,958
Hotel23,709
 —
 —
 —
 —
 23,709
Total438,863
 —
 476,404
 183,375
 204,428
 1,303,070
% of Grand Totals33.68% —% 36.56% 14.07% 15.69% 100.00%
Rental Expenses:           
Office157,471
 —
 185,600
 58,842
 71,021
 472,934
Residential1,220
 —
 —
 —
 3,965
 5,185
Hotel16,814
 —
 —
 —
 —
 16,814
Total175,505
 —
 185,600
 58,842
 74,986
 494,933
% of Grand Totals35.46% —% 37.50% 11.89% 15.15% 100.00%
Net operating income$263,358
 $—
 $290,804
 $124,533
 $129,442
 $808,137
% of Grand Totals32.59% —% 35.98% 15.41% 16.02% 100.00%
Less: Net operating income attributable to noncontrolling interests in property partnerships(16,547) —
 (72,697) 286
 —
 (88,958)
Add: Company’s share of net operating income from unconsolidated joint ventures1,315
 13,976
 3,367
 —
 13,629
 32,287
Company’s share of net operating income$248,126
 $13,976
 $221,474
 $124,819
 $143,071
 $751,466
% of Grand Totals33.02% 1.86% 29.47% 16.61% 19.04% 100.00%
 _______________
(1)Rental Revenue is equal to total Revenue per the Company’s Consolidated Statements of Operations, less Development and Management Services Revenue and Direct Reimbursements of Payroll and Related Costs from Management Services Contracts Revenue per the Consolidated Statements of Operations.

13.12. Subsequent Events
On July 16, 2019,There are many uncertainties regarding COVID-19, and the Company executedis closely monitoring the impact of the pandemic on all aspects of its business, including how it will impact its tenants, employees, contractors, lenders, suppliers, vendors and joint venture partners. The Company is unable to predict the impact that COVID-19 will have on its future financial position and operating results due to numerous uncertainties.
The Company has received requests from many of its retail and some of its office tenants seeking either rent concessions, deferrals, rent abatements related to lease provision interpretations, or other relief, in each case, as a 75-year ground lease withresult of COVID-19. The George Washington University for land parcels at 2100 Pennsylvania AvenueCompany is evaluating these requests on a case-by-case basis and is considering a number of factors to determine the appropriate response. The Company expects to continue to assess the evolving impact of COVID-19 and intends to make adjustments to its responses accordingly.
On April 22, 2020, a joint venture in which the Company has a 20% interest extended the mortgage loan collateralized by Metropolitan Square located in Washington, DCDC. At the time of the extension, the outstanding balance of the loan totaled approximately $156.4 million and commenced developmentwas scheduled to mature on May 5, 2020. The extended loan continues to bear interest at a fixed rate of an approximately 480,000 net rentable square foot5.75% per annum and matures on August 5, 2020. Metropolitan Square is a Class A office property pursuant to a development agreement that the Company entered into with The George Washington University in 2016. The development agreement provided for the execution of the ground lease upon completion of the entitlement process and relocation of existing tenants. Also in 2016, the Company made a deposit of $15.0 million that, upon execution of the ground lease, will be credited against ground rent payable under the ground lease. In 2017, the Company entered into a 16-year lease with a tenant for approximately 300,000654,000 net rentable square feetfeet.

On May 5, 2020, Boston Properties Limited Partnership completed a public offering of space$1.25 billion in aggregate principal amount of its 3.250% unsecured senior notes due 2031. The notes were priced at 99.850% of the property.principal amount to yield an effective rate (including financing fees) of approximately 3.343% per annum to maturity. The notes will mature on January 30, 2031, unless earlier redeemed. The aggregate net proceeds from the offering were approximately $1.24 billion after deducting underwriting discounts and estimated transaction expenses.
Table of Content


ITEM 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this report.
TheseThis Quarterly ReportsReport on Form 10-Q, including the documents incorporated by reference, contains forward-lookingcontain 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.provisions, in each case, to the extent applicable. Such 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 any such forward-looking statements are based on current beliefs or expectations of future events and on assumptions made by, and information currently available to, our management. When used, the words “anticipate,” “believe,” “budget,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “project,” “should,” “will” and similar expressions whichthat do not relate solely to historical matters are intended to identify forward-looking statements. Such 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 anticipated, estimatedexpressed or projectedimplied 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.
One of the most significant factors that may cause actual results to differ materially from those expressed or implied by the forward-looking statements is the ongoing impact of the global COVID-19 pandemic on the U.S. and global economies, which has impacted, and is likely to continue to impact, us and, directly or indirectly, many of the other important factors below and the risks described in (i) our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 including those described under the caption “Risk Factors,” (ii) our subsequent filings under the Exchange Act and (iii) the risk factors set forth in this Form 10-Q in Part II, Item 1A.
Some of the risks and uncertainties that may cause our actual results, performance or achievements to differ materially from those expressed or implied by forward-looking statements include, among others, the following:
if there is a negative change in the economy, including, but not limited to, a reversal of current job growth trends and an increase in unemployment, it could have a negative effect on the following, among other things:
the fundamentalsrisks and uncertainties related to the impact of the COVID-19 global pandemic, including the duration, scope and severity of the pandemic domestically and internationally; federal, state and local government actions or restrictive measures implemented in response to COVID-19, the effectiveness of such measures and the direct and indirect impact of such measures on our and our tenants' businesses, financial condition, results of operation, cash flows, liquidity and performance, and the U.S. and international economy and economic activity generally; whether new or existing actions and measures continue to result in increasing unemployment that impacts the ability of our business, including overall market occupancy, tenant space utilizationresidential tenants to generate sufficient income to pay, or make them unwilling to pay rent in a timely manner, in full or at all; the health, continued service and rental rates;
the financial conditionavailability of our personnel, including our key personnel and property management teams; and the effectiveness or lack of effectiveness of governmental relief in providing assistance to individuals and large and small businesses, including our tenants, many of which are financial, legal, media/telecommunication, technology and other professional firms, our lenders, counterparties to our derivative financial instruments and institutions that hold our cash balances and short-term investments, which may expose us to increased risks of default by these parties; and
the value of our real estate assets, which may limit our ability to dispose of assets at attractive prices or obtain or maintain debt financing secured by our properties or on an unsecured basis;have suffered significant adverse effects from COVID-19;
volatile or adverse global economic and political 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;
general risks affecting the real estate industry (including, without limitation, the inability to enter into or renew leases, tenant space utilization, dependence on tenants’ financial condition, and competition from other developers, owners and operators of real estate);
•
general risks affecting the real estate industry (including, without limitation, the inability to enter into or renew leases, tenant space utilization, dependence on tenants’ financial condition, and competition from other developers, owners and operators of real estate);
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, construction delays, increased construction costs, cost overruns, inability to obtain necessary permits, tenant accounting considerations that may result in negotiated lease provisions that limit a tenant’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;
Table of Content

risks associated with downturns in the national and local economies, increases in interest rates, and volatility in the securities markets;
risks associated with actual or threatened terrorist attacks;
costs of compliance with the Americans with Disabilities Act and other similar laws;
potential liability for uninsured losses and environmental contamination;
risks associated with the physical 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;
risks associated with BXP’s potential failure to qualify as a REIT under the Internal Revenue Code of 1986, as amended;
possible adverse changes in tax and environmental laws;
the impact of newly adopted accounting principles on our accounting policies and on period-to-period comparisons of financial results;
risks associated with possible state and local tax audits;
risks associated with our dependence on key personnel whose continued service is not guaranteed; and
the other risk factors identified in our most recently filed Annual ReportsReport on Form 10-K for the fiscal year ended December 31, 2019 or described herein, including those described under the caption “Risk Factors.”
The risks set forth above are not exhaustive. 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.environment, particularly in light of the rapidly developing circumstances relating to COVID-19. 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. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. Investors should also refer to our most recent Annual ReportsReport on Form 10-K and our Quarterly Reports on Form 10-Q for future periods and Current Reports on Form 8-K as we file them with the SEC, and to other materials we may furnish to the public from time to time through Current Reports on Form 8-K or otherwise, for a discussion of risks and uncertainties that may cause actual results, performance or achievements to differ materially from those expressed or implied by forward-looking statements. 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.
Overview
BXP is one of the largest publicly-traded office real estate investment trusttrusts (REIT) (based on total market capitalization) as of March 31, 2020 in the United States that develops, owns and manages primarily Class A office properties concentrated in five markets in the United States - Boston, Los Angeles, New York, San Francisco and Washington, DC. BPLP is the entity through which BXP conducts substantially all of its business and owns (either directly or through subsidiaries) substantially all of its assets. We generate revenue and cash primarily by leasing Class A office space to our tenants. When making leasing decisions, we consider, among other things, the

creditworthiness of the tenant, the length of the lease, the rental rate to be paid at inception and throughout the lease term, the costs of tenant improvements and other landlord concessions, anticipated operating expenses and real estate taxes, current and anticipated vacancy, current and expected future demand for the space, the impact of any expansion rights and general economic factors.
Our core strategy has always been to develop, acquire and manage high-quality properties in supply-constrained markets with high barriers-to-entry and to focus on executing long-term leases with financially strong tenants. Our tenant base is diverse across market sectors and the averageweighted-average lease term for our in-service officein-place leases was approximately 7.98.3 years, as of June 30, 2019,March 31, 2020, including leases signed byat our unconsolidated joint ventures. The weighted-average lease term for our top 20 office tenant leases was approximately 11.9 years. Historically, these factors have minimized our exposure in weaker economic cycles and enhanced revenues as market conditions improve. To be successful in any leasing environment, we believe we must consider all aspects of the tenant-landlord relationship. In this regard, we believe that our competitive advantage is based on the following attributes:

Table of Content

our understanding of tenants’ short- and long-term space utilization and amenity needs in the local markets;
our reputation as a premier developer, owner and manager of primarily Class A office properties;
our financial strength and our ability to maintain high building standards;
our focus on developing and operating in a sustainable and responsible manner; and
our relationships with local brokers.
Outlook
MacroeconomicIn the first quarter of 2020 macroeconomic conditions remainwere favorable and positive until COVID-19 began to escalate into a national and global pandemic in mid-March. In the first two months of the quarter, U.S. GDP remained stable and overall favorable for our Company in the second quarter of 2019. While initial U.S. GDP growth estimates for the second quarter were 2.1%, marking a decline from prior quarters, job creation remains steady asremained steady. Starting in March, COVID-19 caused a precipitous drop in economic activity globally with significant negative impacts on businesses across the U.S. economy created approximately 512,000 jobs inAs the second quarternumber of 2019unemployment claims rose and the unemployment rate remained near 50-year lows at 3.7%. Despite these relatively favorable economic statistics, global and U.S. economies are slowing andeconomy slowed, the Federal Reserve has turned increasingly dovish and decreasedU.S. Treasury implemented aggressive monetary and fiscal stimulus policies, including the overnight lendingCARES Act, to bring needed financial support to small businesses, individuals and industries most affected by the crisis. Also, the Federal Reserve quickly reduced the federal funds rate by 25 basis points in July 2019.to zero.
Notwithstanding the potential economic slowdown, we remain optimistic for our industry generallyThe effects of COVID-19 began to have an impact on us and our Company in particular giventenants near the positive economic statistics, low interest rates, strong leasing trends in mostend of the first quarter. As governments across all of our core marketsregions implemented social distancing and stay-at-home policies, we and our tenants migrated employees to a work-from-home model. All office properties throughout our portfolio remain open for tenants, although physical occupancy remains low due to these measures. By the continued successend of March, construction of our development efforts. projects paused in Boston, New York and San Francisco to comply with municipal social distancing policies, although construction continued in the Washington, DC region. Despite the work-stoppages at our development projects, we remain on schedule to meet all required delivery milestones in our leases and within budget. Our broad and deep experience as developers extends to our budgeting and planning, which have left us with ample time in our development schedules. However, we cannot be certain that work-stoppages will not extend beyond current expectations or, if they do, that we will meet the milestones and budgets. Leasing discussions remained active for leases that were in negotiation prior to COVID-19, but we have experienced a decrease in new leasing requirements and physical tours are on hold.
Our most important activity at this time is planning for the health and safety of our tenants and employees and preparing our buildings in accordance with the policies, protocols and applicable legal requirements in our regions. In early April 2020, we formed an internal Health Security Task force composed of Boston Properties’ employees, as well as outside experts in health care, industrial hygiene, cleaning and security. We designed standard operating procedures that include, but are not limited to, air filtration, water quality, janitorial products and procedures, social separation and screening during building access and use of vertical transportation, the use of personal protective equipment, signage, and management of construction activities. We began communicating the operating procedures with tenants in early May.

Rent Collections
Cash rent payments for a particular month are generally due on the first day of that month (although tenants have varying grace periods). Cash rent amounts are based on all rent billed by us, including all amounts from consolidated operations and all unconsolidated joint ventures, other than Gateway Commons for which we do not handle billing.
Our April 2020 rent collections among all tenants were approximately 93%, a reduction from prior levels as a result of COVID-19, primarily due to certain retail tenants.  Collections from our office tenants in April remained strong.  During the first quarter of 2020, approximately 87% of the aggregate amount of our consolidated revenues were derived from office leases. For the month of April, we collected approximately 97% of our total commercial rent payments due April 1 from office tenants. In some of these cases, the tenant paid its rent, but reserved its right to assert that the terms of its lease do not require the tenant to pay. Office tenants in the flexible office use and manufacturing/retail industries, which represent 3% and 5% of our office rents, respectively, present a heightened concern for rent collection, as we collected approximately 78% and 73%, respectively, from these tenants for the month of April. Unpaid April rent was approximately $1.3 million and $2.9 million for flexible office and manufacturing/retail, respectively. In addition, our share of the accrued rent for tenants in these groups is approximately $3.9 million and $7.2 million, respectively. For clarity, manufacturing/retail includes retail and consumer products office tenants.
In addition, during the first quarter of 2020, approximately 7.2% of the aggregate amount of our consolidated revenues were derived from retail leases. For the month of April, we collected approximately 36% of our total commercial rent payments due from retail tenants for rents due April 1. We are actively working on lease amendments with retail tenants in this category that we believe have justifiable financial needs.  Of the retail tenants that did not pay rent for April, our share of the accrued rent balance for these tenants is approximately $25.1 million.
We continue to analyze our accounts receivable, tenant creditworthiness and current economic trends to evaluate the adequacy of the collectability of our tenants’ total accounts receivable balances, including lease revenue, and if considered uncollectible, we will write-off the receivable and accrued rent balances associated with the leases, and record future lease revenue on a cash basis.
During 2019, our total parking revenue was approximately $100 million and our share of total parking revenue from unconsolidated joint ventures was approximately $13 million. Approximately $40 million of this aggregate amount of consolidated and unconsolidated parking revenue was derived from hourly/daily parking. The remainder of the aggregate amount of parking revenue was derived from monthly parking revenues, some of which are contractual agreements embedded in our leases, and some are at will individual agreements. In April, with stay-at-home orders and business closures, we generated minimal hourly/daily parking revenue and this trend may continue for as long as these stay-at-home orders and business closures continue.
Approximately 2% of our total revenue in 2019 was from our hotel, the Boston Marriott Cambridge. The hotel property has been closed since March 22, 2020 and is currently running at a monthly deficit. It is unclear when the hotel will open.
As a result of the impact of the current environment, we expect our 2020 revenues to be impacted from (1) lower collections, primarily from our retail tenants, parking and hotel operators, (2) a slowdown in new leasing activity for vacant and expiring space and (3) delayed revenue recognition related to tenants who are currently building out space as a result of construction delays.
Despite the near-term challenges of COVID-19, we remain confident in our ability to weather the current market downturn and manage our business throughout uncertain future market conditions.
As a leading developer, owner and manager of marquee Class A office properties in the U.S., our priorities during and following COVID-19 remain focused on the following:
ensuring tenant satisfaction;satisfaction by keeping our properties safe, open and available for occupancy;
implementing measures to ensure tenant and employee health security;
communicating openly with tenants to provide assurance before and during re-occupancy;
leasing available space in our in-service and development properties, as well as proactively focusing on sizable future lease expirations;properties;
resuming and completing the construction of our development properties;properties as conditions allow;

•
continuing and completing the redevelopment and repositioning of several key properties to increase future revenue and asset values over the long-term;
maintaining our conservative balance sheet and managing our near-term debt maturities;
actively managing our operations in a safe, sustainable and responsible manner; and
maintaining discipline in our underwriting of investment opportunities by (1) seeking significant pre-leasing commitments before beginning new construction,opportunities.
Following is an overview of portfolio activity and (2) targeting acquisitionleasing activity in non-stabilized assets near innovation centers where we see favorable prospects for overall growththe first quarter of 2020, recognizing that both leasing activities and construction activities had slowed in the majority of our operational expertise can create value;
managing our near-term debt maturities and maintaining our conservative balance sheet; and
actively managing our operations in a sustainable and responsible manner.regions by the end of the first quarter due to COVID-19.
The overall occupancy of our in-service office and retail properties was 93.4% at June 30, 2019, an increase of 50 basis points from 92.9% at March 31, 2019 and the highest occupancy rate we have achieved since 2014.2020, a slight decrease of 10 basis points as compared to December 31, 2019. During the secondfirst quarter of 2020, we signed leases across our portfolio totaling approximately 2.4 million702,000 square feet and we commenced revenue recognition on approximately 814,000995,000 square feet of leases in second generation space. Of these second generation leases, approximately 590,000727,000 square feet had been vacant for less than one year and, in the aggregate, they represent an increase in net rental obligations (gross rent less operating expenses) of approximately 25%93% over the prior leases.

Our core investment strategy remains unchanged. Other than possible selective acquisitions of “value-add” assets (e.g., assets that require lease-up or repositioning), and acquisitions that are otherwise consistent with our long-term strategy, we intend to continue to focus on investing primarily The increase in higher-yielding, new development opportunities with significant pre-leasing commitments. From time to time, due to anticipated market demand, specific tenant considerations and similar factors, we may commence a development project prior to signing leases with tenants. 
As of June 30, 2019, our construction/redevelopment pipeline consisted of 12 projects that, when completed, we expect will total approximately 5.7 million net rentable square feet. Our share ofrental obligations included the estimated total cost for these projects is approximately $3.2 billion, of which approximately $1.5 billion of equity remains to be invested as of June 30, 2019. Approximately 81% of the commercial space in these development projects was pre-leased as of August 2, 2019.
Table of Content

During the second quarter, we increased our development pipeline by commencing the redevelopment of 325 Main Street in Kendall Center in Cambridge, Massachusetts. We previously announced the signingcommencement of a long-termretail lease agreement with Google at the property. The existing 115,000 square foot building will be replaced with a new approximately 420,000 net rentable square foot Class A office property. Total incremental project costs are estimated to be approximately $418 million.
In July 2019, we commenced development of 2100 Pennsylvania Avenue, an approximately 480,000 net rentable square foot Class A office property that will include approximately 450,000 square feet of Class A office space and 30,000 square feet of retail space located in the central business district (“CBD”) of Washington, DC. The office space is approximately 66% pre-leased and we expect our total investment will be approximately $360 million.
As we continue to focusNew York region that had a significant impact on our strategy of developing and acquiring assets to enhance our long-term growth, we also continually review our portfolio to identify properties as potential sales candidates because they may either no longer fit within our portfolio strategy or they could attract premium pricingnet rents. Excluding this lease, increase in net rental obligations in the current market environment. For example, during the secondfirst quarter of 2019, we completed three dispositions including 540 Madison Avenue in New York City, a 39-story, 284,000-square foot, office building in midtown Manhattan. We and our 40% joint venture partner completed the sale of 540 Madison Avenue on June 27, 2019 for a gross sale price of approximately $310.3 million. We realized net proceeds of approximately $107.1 million from the sale after the assignment of $120.0 million of mortgage debt and closing costs. We also completed the sale of One Tower Center, a 410,000 square foot suburban office building in East Brunswick, New Jersey, for a gross sale price of $38.0 million and 164 Lexington Road, a vacant 64,000 square foot suburban building in Billerica, Massachusetts, for a gross sale price of $4.0 million.
We expect to continue to sell select non-core assets in 2019, subject to market conditions.2020 was 25%.
A brief overview of each of our markets follows:follows.
Boston
The leasing market in the greaterOur Boston region remains active and strong. The Boston CBD sub-market continues to be driven by a strong flowcentral business district (“CBD”) in-service portfolio was approximately 99% leased as of new and expanding technology and life science companies, demand from traditional financial and professional services tenants and an ongoing trend of urbanization.March 31, 2020. During the secondfirst quarter of 2019,2020, we executed approximately 1.7 million93,000 square feet of leases were executed, led byand had approximately 829,000267,000 square feet of leases executed with Google, including the build-to-suit at 325 Main Street, and a 545,000 square foot, 15-year lease agreement with Bank of America to renew and expand at 100 Federal Street. In the second quarter of 2019, approximately 409,000 square feet of leases commencedcommence in the Boston region. Of theseApproximately 183,000 square feet of the leases approximately 214,000 square feetthat commenced had been vacant for less than one year and represent an increase in net rental obligations (gross rent less operating expenses) of approximately 18%43% over the prior leases. For the majority of the first quarter of 2020, we continued development of 100 Causeway Street, an approximately 632,000 net rentable square foot office tower located in Boston, Massachusetts, of which we own 50%, that is 95% pre-leased, as of May 5, 2020.
Our approximately 1.52.0 million square foot in-service office portfolio in Cambridge is dominated by large users, is approximately 100%was 99.5% leased, and continues to generate strong rental rates. We are also actively working to meet tenant demand through increasing density and redevelopment.as of March 31, 2020. For example, in the secondmajority of the first quarter of 2020, we began redevelopmentcontinued the development of 325 Main Street at Kendall Center in Cambridge, Massachusetts, which is 90% pre-leased to Googlea tenant for a term of 15 years. We expect
In our suburban Waltham/Lexington portfolio, we continued the new 16-story building will beredevelopment of a portion of 200 West Street, an approximately 420,000 square feet (including a retail component) and will replace the existing, four-story, approximately 115,000261,000 net rentable square foot building currently on site. InClass A office property in Waltham, Massachusetts. The redevelopment is a conversion of a portion of the aggregate, Google will lease more than 800,000 square feet on a long-term basis in the Boston region.
In the suburban Waltham/Lexington sub-market, we continueproperty to experience significant demand within our existing tenant base and from other tenants in the market, particularly from technology and life-science companies seeking space to accommodate their expanding workforces.
The primary challenge we have in our Boston portfolio is the lack of availablelaboratory space to meet tenant demand. As a result, we are focused on future lease expirations and are working on expansions and early renewals that are expected to resultgrowing demand in increases in future rents. We are also actively marketing new development sites inthe life sciences sector.
Construction of our Boston and Waltham. Rents in Boston, Cambridge developments/redevelopments has temporarily stopped to comply with the social distancing policies and directives of the suburban Waltham/Lexington market have continued to experience strong increases in rental rates along with declines in concessions.cities.
Table of Content

Los Angeles
The market inOur Los Angeles (“LA”), particularly in portfolio is currently focused on West LA remains strong. Ourand includes an approximately 1.1 million square foot property, Colorado Center, complex, of which we own 50%, is 100% leased. Our 21-buildingand Santa Monica Business Park, a 21-building, approximately 1.2 million square foot property of which we own 55%, is approximately 93% leased.. We believe both properties provide us with ample opportunity for future growth, as a majority of the current leases are at below-market rents. We willAs of March 31, 2020, our LA in-service properties was approximately 96% leased. Depending on market conditions, we expect to continue to explore opportunities to increase our presence in the LA market by seeking investments where our financial, operational, redevelopment and development expertise provide the opportunity to achieve accretive returns.

New York
Occupancy inAs of March 31, 2020, our CBD New York CBD in-service portfolio was 95.3% as of June 30, 2019, an increase from 94.5% as of March 31, 2019, and an increase of 510 basis points from 90.2% at June 30, 2018.approximately 96% leased. In the secondfirst quarter 2019,of 2020, we commenced approximately 158,000263,000 square feet of leases commenced in the New York region. Of these leases, approximately 85,000143,000 square feet had been vacant for less than one year and represent an increase in net rental obligations (gross rent less operating expenses) of approximately 34%205% over the prior leases.
While Excluding the commencement of a retail lease that had a significant impact on leases, the increase in net rental rate growthobligations was 3.9%. Although the pace of new leasing activities in New York remain muted due to increased supply, leasing activity remains strong due to ongoing demand for high-quality office space, particularly in midtown Manhattan. We continue to expect stable rent and tenant improvement allowances in most of our New York submarkets.region slowed by the end of the first quarter due to COVID-19, in April 2020, we signed an approximately 24,000 square foot lease at 399 Park Avenue bringing the office portion of that property to 100% leased, and we also signed an approximately 27,000 square foot lease at Times Square Tower with a law firm.
San Francisco
TheOur San Francisco CBD leasing market remains healthy and among the strongest markets in the U.S. with high market absorption rates. The lack of vacancies and the limited number of large blocks of available sublease space have left tenants with few options and created a supply and demand imbalance. We expect these fundamentals to continue and that market rents will continue to rise due to limitations on supply, including Proposition M and litigation of the Central SoMa zoning plan. We are moving forward with seeking approval of our approximately 800,000 square foot Fourth and Harrison development site later this year. We also have several large scale development opportunities in Silicon Valley that we are marketing to tenants.
Our CBD San Francisco in-service properties are 93%were approximately 98% leased as of June 30, 2019, and, including signed leases that have not yet commenced, would be approximately 98% leased.March 31, 2020. During the secondfirst quarter of 2019,2020, we commenced approximately 215,000169,000 square feet of leases commenced in the San Francisco region. Of these leases, approximately 80,000111,000 square feet had been vacant for less than one year and represent an increase in net rental obligations (gross rent less operating expenses) of approximately 78%50% over the prior leases.
In our Silicon Valley portfolio, on February 20, 2020, we completed the acquisition of land underlying the ground lease at Platform 16 in San Jose. Platform 16 is a joint venture in which we own 55% and consists of a parcel of land totaling approximately 5.6 acres that is expected to support the development of approximately 1.1 million square feet of commercial office space. On January 28, 2020, the joint venture commenced site preparation work at Platform 16. Due to the uncertainty related to COVID-19, and in consultation with our partner, the joint venture has paused construction activities and will revisit its plans once the economic impact of COVID-19 becomes clearer.
On January 28, 2020, we entered into a joint venture with a partner to own, operate and develop approximately 1.1 million square feet of existing office and lab properties in South San Francisco, California, with the opportunity for approximately 640,000 square feet of additional future development.  Upon completion, the joint venture is expected to own an approximately 1.7 million square foot life sciences campus, including a mix of office and lab buildings.  Under the joint venture agreement, we contributed 601, 611 and 651 Gateway Boulevard, three existing office properties that total approximately 768,000 net rentable square feet, and developable land for our 50% ownership interest in the joint venture.  The partner contributed approximately 313,000 square feet of properties (including one property under construction) consisting of lab, office and amenity buildings, and developable land and will contribute cash totaling approximately $69.2 million in the future for its 50% ownership interest in the joint venture.  As a result of the partner’s deferred contribution, we have an initial approximately 55% interest in the joint venture. The South San Francisco market has experienced strong demand from companies in the life sciences sector. Depending on market conditions, we expect this joint venture will allow us to expand the amount of developable land on the combined site and efficiently capitalize on tenant demand in the life sciences sector.
Washington, DC
Market conditions in the Washington, DC CBD have not changed in any meaningful way over the past few quarters. In the Washington, DC region, our focus remains on (1) expanding our development potential in Reston, Virginia, where demand from technology and cybersecurity tenants remains strong, (2) divesting of non-core assets in Washington, DC and select suburban markets and (3) matching development sites with tenants to begin development with significant pre-leasing commitments.
Consistent with this strategy, on July 16, 2019, During the first quarter of 2020, we executed a 75-year ground lease with The George Washington University for land parcels at 2100 Pennsylvania Avenue locatedcommenced approximately 600,000 square feet of leases in the Washington, DC region. Of these leases, approximately 275,000 square feet had been vacant for less than one year and commenced developmentrepresent an increase in net rental obligations of an approximately 480,00013% over the prior leases.
In our Reston, Virginia portfolio, in the first quarter of 2020, we placed in service 17Fifty Presidents Street, a build-to-suit project with approximately 276,000 net rentable square foot property that will include approximately 450,000 square feet of Class A office space and 30,000 square feetthat is 100% leased to an affiliate of retail space. The project is located in the vibrant Foggy Bottom neighborhood of Washington, DC and is adjacent to our highly successful 2200 Pennsylvania Avenue mixed-use property. The office space in the 2100 Pennsylvania Avenue project is approximately 66% pre-leased to a tenant for a term of 16 years.
In our Reston, Virginia portfolio, weLeidos Holdings, Inc. We also continued development of Reston Gateway, our mixed-use development project, which will consist of an aggregate of approximately 4.5 million net rentable square feet. The initial phase is approximately 1.1 million net rentable square feet, of which approximately 80%72% is pre-leased to Fannie Mae. Our Reston, Virginia in-service portfolio was approximately 93%87% leased as of June 30, 2019March 31, 2020 and continues to be the strongest submarket in the region.

TableIn the first quarter of Content
2020, we completed the sale of New Dominion Technology Park located in Herndon, Virginia for a gross sale price of $256.0 million, resulting in net proceeds of approximately $254.0 million and reported gain on sale of approximately $192.3 million for BXP and approximately $197.1 million for BPLP. New Dominion Technology Park is comprised of two Class A office properties aggregating approximately 493,000 net rentable square feet.

Conversely, leasing activity in theOur Washington, DC CBD remains very competitive primarily because there has been an increase in supply without a corresponding increase in demand. We are reasonably well-leased in the CBDin-service properties were approximately 85% leased, as of March 31, 2020, with modest near-term exposure and we have reduced our exposure in the Washington, DC CBD market significantly over the past few years through dispositions of non-core assets.

Leasing Statistics
The table below details the leasing activity, including 100% of the unconsolidated joint ventures, that commenced during the three and six months ended June 30, 2019:March 31, 2020:
  Three months ended June 30, 2019 Six months ended June 30, 2019
  (Square Feet)
Vacant space available at the beginning of the period 3,182,365
 3,859,897
Property dispositions/properties taken out of service (1) (473,687) (558,706)
Properties placed (and partially placed) in-service (2) 147,061
 147,061
Leases expiring or terminated during the period 1,076,520
 2,350,626
Total space available for lease 3,932,259
 5,798,878
1st generation leases
 239,194
 483,624
2nd generation leases with new tenants
 564,060
 1,447,982
2nd generation lease renewals
 250,311
 988,578
Total space leased (3) 1,053,565
 2,920,184
Vacant space available for lease at the end of the period 2,878,694
 2,878,694
     
Leases executed during the period, in square feet (4) 2,427,209
 3,949,555
     
Second generation leasing information: (5)
    
Leases commencing during the period, in square feet 814,371
 2,436,560
Weighted Average Lease Term 98 Months
 114 Months
Weighted Average Free Rent Period 163 Days
 129 Days
Total Transaction Costs Per Square Foot (6) 
$80.60
 
$79.80
Increase in Gross Rents (7) 16.14% 8.83%
Increase in Net Rents (8) 25.01% 13.56%
Three Months Ended March 31, 2020
Total Square Feet
Vacant space available at the beginning of the period3,135,170
Vacant space in properties acquired—
Properties placed (and partially placed) in-service (1)280,965
Leases expiring or terminated during the period1,085,416
Total space available for lease4,501,551
1st generation leases
321,456
2nd generation leases with new tenants
566,136
2nd generation lease renewals
428,887
Total space leased (2)1,316,479
Vacant space available for lease at the end of the period3,185,072

Leases executed during the period, in square feet (3)701,730
Second generation leasing information: (4)
Leases commencing during the period, in square feet995,023
Weighted Average Lease Term99 Months
Weighted Average Free Rent Period108 Days
Total Transaction Costs Per Square Foot (5)
$71.96
Increase in Gross Rents (6)62.08%
Increase in Net Rents (7)93.22%
_____________________________________________
(1)Total square feet of available space associated with property dispositionsproperties placed (and partially placed) in-service during the three months ended June 30, 2019March 31, 2020 consists of 64,140 square feet5,156 at 164 Lexington Road, 50,150 square feet145 Broadway and 275,809 at 540 Madison Avenue and 249,739 square feet at One Tower Center. Total square feet of available space associated with properties taken out of service during the three months ended June 30, 2019 consists of 109,658 square feet at 325 Main17Fifty Presidents Street.
(2)
Total square feet of property partially placed in-service during the three and six months ended June 30, 2019 consists of 147,061 square feet at The Hub on Causeway Podium.
(3)
Represents leases for which rentallease revenue recognition has commenced in accordance with GAAP during the three and six months ended June 30, 2019.
March 31, 2020.
(4)(3)
Represents leases executed during the three and six months ended June 30, 2019March 31, 2020 for which we either (1) commenced rentallease revenue recognition in such period or (2) will commence rentallease revenue recognition in subsequent periods, in accordance with GAAP, and includes leases at properties currently under development. The total square feet of leases executed and recognized in the three and six months ended June 30, 2019March 31, 2020 is 173,448 and 324,523, respectively.
244,020.
(5)(4)
Second generation leases are defined as leases for space that had previously been leased by us. Of the 814,371 and 2,436,560995,023 square feet of second generation leases that commenced during the three and six months ended June 30, 2019, respectively,March 31, 2020, leases for 640,923 and 2,112,037756,159 square feet were signed in prior periods.
(6)(5)Total transaction costs include tenant improvements and leasing commissions, but exclude free rent concessions and other inducements in accordance with GAAP.
Table of Content

(7)(6)
Represents the increase in gross rent (base rent plus expense reimbursements) on the new versus expired leases on the 589,611 and 1,883,383727,342 square feet of second generation leases that had been occupied within the prior 12

months for the three months ended March 31, 2020; excludes leases that management considers temporary because the tenant is not expected to occupy the space on a long-term basis.
(7)Represents the increase in net rent (gross rent less operating expenses) on the new versus expired leases on the 727,342 square feet of second generation leases that had been occupied within the prior 12 months for the three and six months ended June 30, 2019, respectively;March 31, 2020; excludes leases that management considers temporary because the tenant is not expected to occupy the space on a long-term basis.
(8)
Represents the increase in net rent (gross rent less operating expenses) on the new versus expired leases on the 589,611 and 1,883,383 square feet of second generation leases that had been occupied within the prior 12 months for the three and six months ended June 30, 2019, respectively; excludes leases that management considers temporary because the tenant is not expected to occupy the space on a long-term basis.
Transactions during the three months ended June 30, 2019March 31, 2020 included the following:
Development activities
•
On May 9, 2019, we commenced development of 325 Main Street in Cambridge, Massachusetts (See Note 3 to the Consolidated Financial Statements).
Acquisitions and disposition activitiesDevelopment/redevelopment
On April 1, 2019,January 28, 2020, we exercised our option to acquire real property at 425 Fourth Street located in San Francisco, California for a purchase price totaling approximately $134.1 million. 425 Fourth Street is expected to support the development of approximately 804,000 square feet of primarily commercial office space. There can be no assurance that the acquisition will be consummated on the terms currently contemplated or at all.
On March 26, 2020, we completed the acquisitionand fully placed in-service 17Fifty Presidents Street located in Reston, Virginia. 17Fifty Presidents Street is a build-to-suit project with approximately 276,000 net rentable square feet of Class A office space that is 100% leased.
Dispositions
On January 28, 2020, we entered into a joint venture with a third party to own, operate and develop properties at our partner’s 5% ownership interestGateway Commons complex located in South San Francisco, California. We contributed our 601, 611 and promoted profits651 Gateway properties and development rights with an agreed upon value aggregating approximately $350.0 million for our 50% interest in the consolidated entity that owns Salesforce Tower forjoint venture. 601, 611 and 651 Gateway consist of three Class A office properties aggregating approximately 768,000 net rentable square feet. The partner contributed three properties and development rights with an agreed upon value aggregating approximately $280.8 million at closing and will contribute cash totaling approximately $210.9$69.2 million which amount was reduced by approximately $24.1 million to $186.8 million to reflect the repayment of our preferred equity and preferred return in the future for its 50% ownership interest in the joint venture. As a result of the partner’s deferred contribution, we have an initial approximately 55% interest in the joint venture. Future development projects will be owned 49% by us and 51% by the partner. We now own 100%recognized a gain on the retained and sold interest in the real estate contributed to the joint venture totaling approximately $217.7 million for BXP and $222.4 million for BPLP during the three months ended March 31, 2020, within Gains (Losses) on Sales of Salesforce Tower. We have accounted forReal Estate on the transactionrespective Consolidated Statements of Operations, as an equity transaction for financial reporting purposes and have reflected the difference between the fair value of the total consideration paid and the relatedreal estate exceeded its carrying value of the noncontrolling interest - property partnership totaling approximately $162.5 million as a decrease(See Notes 3 and 5 to Additional Paid-in Capital and Partners’ Capital in the Consolidated Balance Sheets of BXP and BPLP, respectively.Financial Statements).
On June 3, 2019,February 20, 2020, we completed the sale of our One Tower Center propertyNew Dominion Technology Park located in East Brunswick, New JerseyHerndon, Virginia for a gross sale price of $38.0$256.0 million. Net cash proceeds totaled approximately $36.6 million, resulting in a loss on sale of real estate totaling approximately $0.8 million. One Tower Center is an approximately 410,000 net rentable square foot Class A office property.
On June 28, 2019, we completed the sale of our 164 Lexington Road property located in Billerica, Massachusetts for a gross sale price of $4.0 million. Net cash proceeds totaled approximately $3.8$254.0 million, resulting in a gain on sale of real estate totaling approximately $2.5$192.3 million for BXP and approximately $2.6$197.1 million for BPLP. 164 Lexington RoadNew Dominion Technology Park is comprised of two Class A office properties aggregating approximately 493,000 net rentable square feet.
Unconsolidated joint venture activities
•
On January 28, 2020, we entered into a joint venture with a third party to own, operate and develop properties at its Gateway Commons complex located in South San Francisco, California. We will have a 50% interest in the joint venture. See “Dispositions” above for additional information.
On January 28, 2020, a joint venture in which we have a 55% interest commenced development of the first phase of its Platform 16 project located in San Jose, California. The first phase of the Platform 16 development project consists of an approximately 64,000390,000 net rentable square foot Class A office property.
Unconsolidatedbuilding and a below-grade parking garage. Though the joint venture has completed site preparation work, in consultation with our partner, the joint venture has paused construction activities and it will revisit its plans once the economic impact of COVID-19 becomes clearer. On February 20, 2020, the joint venture acquired the land underlying the ground lease for a purchase price totaling approximately $134.8 million. The joint venture had previously made a deposit totaling $15.0 million,

which deposit was credited against the purchase price. Platform 16 consists of a parcel of land totaling approximately 5.6 acres that is expected to support the development of approximately 1.1 million square feet of commercial office space.
On April 26, 2019,March 18, 2020, a joint venture in which we have a 50% interest obtained construction financing with a total commitment of $255.0 million collateralized by its 7750 Wisconsin Avenue development project located in Bethesda, Maryland. 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. As of June 30, 2019, there have been no amounts drawn under the loan. 7750 Wisconsin Avenue is a 734,000 net rentable square foot build-to-suit Class A office project and below-grade parking garage.
On June 15, 2019, a joint venture in which we have a 50% interest partially placed in-service The Hub on Causeway - Podium development project, an approximately 385,000 net rentable square foot project containing retail and office space located in Boston, Massachusetts. The property is 89% pre-leased as of August 2, 2019.
On June 27, 2019, a joint venture in which we have a 60% interest completed the sale of 540 Madison Avenue in New York City for a gross sale price of approximately $310.3 million, including the assumption by the buyer ofextended the mortgage loan collateralized by Annapolis Junction Building Seven and Building Eight. At the property totaling $120.0 million. The mortgagetime of the extension, the outstanding balance of the loan totaled approximately $34.6 million, bore interest at a variable rate equal to LIBOR plus 1.10%2.35% per annum and wasmatured on March 6, 2020. The extended loan matures on June 30, 2020. Annapolis Junction Building Seven and Building Eight are Class A office properties with approximately 127,000 and 126,000 net rentable square feet, respectively, located in Annapolis, Maryland.
Transactions completed subsequent to March 31, 2020 included the following:
TableOn April 22, 2020, a joint venture in which we have a 20% interest extended the mortgage loan collateralized by Metropolitan Square located in Washington, DC. At the time of Content

the extension, the outstanding balance of the loan totaled approximately $156.4 million and was scheduled to mature on JuneMay 5, 2023. Net cash proceeds totaled2020. The extended loan continues to bear interest at a fixed rate of 5.75% per annum and matures on August 5, 2020. Metropolitan Square is a Class A office property with approximately $178.7 million, of which our share was approximately $107.1 million, after the payment of transaction costs. We recognized a gain on sale of real estate totaling approximately $47.8 million, which is included in Income from Unconsolidated Joint Ventures in the accompanying Consolidated Statements of Operations. 540 Madison Avenue is an approximately 284,000654,000 net rentable square foot Class A office property.
Capital markets activitiesfeet.
•
On June 21, 2019,May 5, 2020, BPLP completed a public offering of $850.0 million$1.25 billion in aggregate principal amount of its 3.400%3.250% unsecured senior notes due 2029.2031. The notes were priced at 99.815%99.850% of the principal amount to yield an effective rate (including financing fees) of approximately 3.505%3.343% per annum to maturity. The notes will mature on June 21, 2029,January 30, 2031, unless earlier redeemed. The aggregate net proceeds from the offering were approximately $841.3 million$1.24 billion after deducting underwriting discounts and estimated transaction expenses.
Transactions completed subsequent to June 30, 2019 included the following:
On July 16, 2019, we executed a 75-year ground lease with The George Washington University for land parcels at 2100 Pennsylvania Avenue located in Washington, DC and commenced development of an approximately 480,000 net rentable square foot Class A office property pursuant to a development agreement that we entered into with The George Washington University in 2016. The development agreement provided for the execution of the ground lease upon completion of the entitlement process and relocation of existing tenants. Also in 2016, we made a deposit of $15.0 million that, upon execution of the ground lease, will be credited against ground rent payable under the ground lease. In 2017, we entered into a 16-year lease with a tenant for approximately 300,000 net rentable square feet of space at the property.
Critical Accounting Policies
Management’s Discussion and Analysis of Financial Condition and Results of Operations discuss our Consolidated Financial Statements, which have been prepared in accordance with generally accepted accounting principles (“GAAP”). The preparation of these financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Certain accounting policies are considered to be critical accounting policies, as they require management to make assumptions about matters that are highly uncertain at the time the estimate is made and changes in accounting estimate are reasonably likely to occur from period to period. Management bases its estimates and assumptions on historical experience and current economic conditions. On an on-going basis, management evaluates its estimates and assumptions including those related to revenue, impairment of long-lived assets and the allowance for doubtful accounts. Actual results may differ from those estimates and assumptions.
Our Annual Report on Form 10-K for the year ended December 31, 20182019 contains a discussion of our critical accounting policies, except for our policies established following the adoption of Accounting Standards Update (“ASU”) ASU 2016-02,2016-13, ASU 2018-012018-13, ASU 2018-17 and ASU 2018-11.2020-04. The adoption of each of the above pronouncements is discussed in Note 42 to our Consolidated Financial Statements. Management discusses and reviews our critical accounting policies and management’s judgments and estimates with BXP’s Audit Committee.
Results of Operations for the SixThree Months Ended June 30,March 31, 2020 and 2019 and 2018
The full extent of the impact of COVID-19 on our business, operations and financial results will depend on numerous evolving factors that we may not be able to accurately predict. In addition, we cannot predict the impact that COVID-19 will have on our tenants, employees, contractors, lenders, suppliers, vendors and joint venture partners; any material effect on these parties could also have a material adverse effect on us. The impact of COVID-19 on our revenue, in particular lease and parking revenue for the second quarter of 2020 and thereafter, also cannot be determined at present. The situation surrounding COVID-19 remains fluid, and we are actively managing our response in collaboration with tenants, government officials and joint venture partners and assessing potential impacts to our financial position and operating results, as well as potential adverse developments in our business. See Item 1A: “Risk Factors” for additional details.

Net income attributable to Boston Properties, Inc. common shareholders and net income attributable to Boston Properties Limited Partnership common unitholders decreasedincreased approximately $42.3$399.4 million and $47.8$453.0 million for the sixthree months ended June 30, 2019March 31, 2020 compared to 2018,2019, respectively, as detailed in the following tables and for the reasons discussed below under the heading “Comparison of the sixthree months ended June 30, 2019March 31, 2020 to the sixthree months ended June 30, 2018” withinMarch 31, 2019” “Itemwithin “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations.Operations.”
The following are reconciliations of net income attributableNet Income Attributable to Boston Properties, Inc. common shareholders Common Shareholders to net operating incomeNet Operating Income and net income attributableNet Income Attributable to Boston Properties Limited Partnership common unitholdersCommon Unitholders to net operating incomeNet Operating Income for the sixthree months ended June 30,March 31, 2020 and 2019 and 2018 (in thousands):

Table of Content

Boston Properties, Inc.
 Six months ended June 30, Three months ended March 31,
 2019 2018 Increase/(Decrease) %
Change		 2020 2019 Increase/
(Decrease)		 %
Change
Net Income Attributable to Boston Properties, Inc. Common Shareholders $262,431
 $304,682
 $(42,251) (13.87)% $497,496
 $98,105
 $399,391
 407.11 %
Preferred dividends 5,250
 5,250
 —
 — % 2,625
 2,625
 —
 — %
Net Income Attributable to Boston Properties, Inc. 267,681
 309,932
 (42,251) (13.63)% 500,121
 100,730
 399,391
 396.50 %
Net Income Attributable to Noncontrolling Interests:                
Noncontrolling interest—common units of the Operating Partnership 30,627
 35,311
 (4,684) (13.26)% 57,539
 11,599
 45,940
 396.07 %
Noncontrolling interests in property partnerships 36,312
 31,634
 4,678
 14.79 % 19,486
 18,830
 656
 3.48 %
Net Income 334,620
 376,877
 (42,257) (11.21)% 577,146
 131,159
 445,987
 340.04 %
Other Expenses:                
Add:                
Interest expense 203,366
 182,424
 20,942
 11.48 % 101,591
 101,009
 582
 0.58 %
Impairment loss 24,038
 —
 24,038
 100.00 % —
 24,038
 (24,038) (100.00)%
Other Income:     

 
        
Less:                
Gains from investments in securities 4,134
 379
 3,755
 990.77 %
Gains (losses) from investments in securities (5,445) 2,969
 (8,414) (283.40)%
Interest and other income 7,368
 4,227
 3,141
 74.31 % 3,017
 3,753
 (736) (19.61)%
Gains on sales of real estate 781
 114,689
 (113,908) (99.32)%
Income from unconsolidated joint ventures 48,177
 1,230
 46,947
 3,816.83 %
Gains (losses) on sales of real estate 410,165
 (905) 411,070
 45,422.10 %
Income (loss) from unconsolidated joint ventures (369) 213
 (582) (273.24)%
Other Expenses:                
Add:                
Depreciation and amortization expense 342,005
 322,214
 19,791
 6.14 % 171,094
 164,594
 6,500
 3.95 %
Transaction costs 877
 495
 382
 77.17 % 615
 460
 155
 33.70 %
Payroll and related costs from management services contracts 5,798
 4,855
 943
 19.42 % 3,237
 3,395
 (158) (4.65)%
General and administrative expense 76,833
 64,362
 12,471
 19.38 % 36,454
 41,762
 (5,308) (12.71)%
Other Revenue:     

 

        
Less:                
Direct reimbursements of payroll and related costs from management services contracts 5,798
 4,855
 943
 19.42 % 3,237
 3,395
 (158) (4.65)%
Development and management services revenue 19,263
 17,710
 1,553
 8.77 % 7,879
 9,277
 (1,398) (15.07)%
Net Operating Income $902,016
 $808,137
 $93,879
 11.62 % $471,653
 $447,715
 $23,938
 5.35 %

Table of Content


Boston Properties Limited Partnership
 Six months ended June 30, Three months ended March 31,
 2019 2018 Increase/(Decrease) %
Change		 2020 2019 Increase/
(Decrease)		 %
Change
Net Income Attributable to Boston Properties Limited Partnership Common Unitholders $299,097
 $346,868
 $(47,771) (13.77)% $566,333
 $113,382
 $452,951
 399.49 %
Preferred distributions 5,250
 5,250
 —
 — % 2,625
 2,625
 —
 — %
Net Income Attributable to Boston Properties Limited Partnership 304,347
 352,118
 (47,771) (13.57)% 568,958
 116,007
 452,951
 390.45 %
Net Income Attributable to Noncontrolling Interests:                
Noncontrolling interests in property partnerships 36,312
 31,634
 4,678
 14.79 % 19,486
 18,830
 656
 3.48 %
Net Income 340,659
 383,752
 (43,093) (11.23)% 588,444
 134,837
 453,607
 336.41 %
Other Expenses:                
Add:                
Interest expense 203,366
 182,424
 20,942
 11.48 % 101,591
 101,009
 582
 0.58 %
Impairment loss 22,272
 —
 22,272
 100.00 % —
 22,272
 (22,272) (100.00)%
Other Income:                
Less:                
Gains from investments in securities 4,134
 379
 3,755
 990.77 %
Gains (losses) from investments in securities (5,445) 2,969
 (8,414) (283.40)%
Interest and other income 7,368
 4,227
 3,141
 74.31 % 3,017
 3,753
 (736) (19.61)%
Gains on sales of real estate 930
 117,677
 (116,747) (99.21)%
Income from unconsolidated joint ventures 48,177
 1,230
 46,947
 3,816.83 %
Gains (losses) on sales of real estate 419,654
 (905) 420,559
 46,470.61 %
Income (loss) from unconsolidated joint ventures (369) 213
 (582) (273.24)%
Other Expenses:                
Add:                
Depreciation and amortization expense 337,881
 318,327
 19,554
 6.14 % 169,285
 162,682
 6,603
 4.06 %
Transaction costs 877
 495
 382
 77.17 % 615
 460
 155
 33.70 %
Payroll and related costs from management services contracts 5,798
 4,855
 943
 19.42 % 3,237
 3,395
 (158) (4.65)%
General and administrative expense 76,833
 64,362
 12,471
 19.38 % 36,454
 41,762
 (5,308) (12.71)%
Other Revenue:                
Less:                
Direct reimbursements of payroll and related costs from management services contracts 5,798
 4,855
 943
 19.42 % 3,237
 3,395
 (158) (4.65)%
Development and management services revenue 19,263
 17,710
 1,553
 8.77 % 7,879
 9,277
 (1,398) (15.07)%
Net Operating Income $902,016
 $808,137
 $93,879
 11.62 % $471,653
 $447,715
 $23,938
 5.35 %


At June 30,March 31, 2020 and 2019, and June 30, 2018, we owned or had interests in a portfolio of 193 and 178196 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 picture of our performance.is meaningful. Therefore, the comparison of operating results for the three and six months ended June 30,March 31, 2020 and 2019 and 2018 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, Acquired, Development or Redevelopment or Sold Portfolios.
In our analysis of operating results, particularly to make comparisons of net operating income between periods meaningful, it is important to provide information for properties that were in-service and owned by us throughout each period presented. 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 acquired 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.
Table of Content


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 dividends/distributions, net income attributable to noncontrolling interests, interest expense, impairment loss, depreciation and amortization expense, transaction costs, payroll and related costs from management services contracts and corporate general and administrative expense less (2) gains (losses) from investments in securities, interest and other income, gains (losses) 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. 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 facilitate a clear understanding of 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. 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, depreciation expense and impairment losses 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. This accounting resulted in a step-up of the real estate assets at BXP that was allocated to certain properties. The difference between the real estate assets of BXP as compared to BPLP for certain properties having an allocation of the real estate step-up will result in a corresponding difference in impairment losses and in the gains on sales of real estate, and depreciation expense and impairment losses, when those properties are sold. For additional information see the Explanatory Note that follows the cover page of this Quarterly Report on Form 10-Q.
Comparison of the sixthree months ended June 30, 2019March 31, 2020 to the sixthree months ended June 30, 2018.March 31, 2019
The table below shows selected operating information for the Same Property Portfolio and the Total Property Portfolio. The Same Property Portfolio consists of 142140 properties totaling approximately 38.339.1 million net rentable square feet, of space, excluding unconsolidated joint ventures. The Same Property Portfolio includes properties acquired or fully placed in-service on or prior to January 1, 20182019 and owned and in-servicein service through June 30, 2019.March 31, 2020. The Total Property Portfolio includes the effects of the other properties either acquired, placed in-service, acquired or in development or redevelopment after January 1, 20182019 or disposed of on or prior to June 30, 2019.March 31, 2020. This table includes a reconciliation from the Same Property Portfolio to the Total Property Portfolio by also providing information for the sixthree months ended June 30,March 31, 2020 and 2019 and 2018 with respect to the properties that were acquired, placed in-service, acquired, in development or redevelopment or sold. There were no properties acquired between January 1, 2018 and June 30, 2019.

Table of Content


Same Property Portfolio 
Properties
Placed In-Service
Portfolio
 
Properties in
Development or
Redevelopment
Portfolio
 Properties Sold Portfolio Total Property PortfolioSame Property Portfolio Properties
Acquired Portfolio		 Properties
Placed In-Service
Portfolio		 
Properties in
Development or
Redevelopment
Portfolio
 Properties Sold Portfolio Total Property Portfolio
(dollars in thousands)2019 2018 
Increase/
(Decrease)
 
%
Change
 2019 2018 2019 2018 2019 2018 2019 2018 
Increase/
(Decrease)
 
%
Change
2020 2019 
Increase/
(Decrease)
 
%
Change
 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 Increase/
(Decrease)		 %
Change
(dollars in thousands)
Rental Revenue: (1)                                                          
Lease Revenue (Excluding Termination Income)$1,263,580
 $1,186,132
 $77,448
 6.53 % $64,011
 $10,822
 $997
 $4,704
 $2,438
 $13,908
 $1,331,026
 $1,215,566
 $115,460
 9.50 %$674,879
 $647,031
 $27,848
 4.30 % $3,553
 $—
 $12,843
 $—
 $2,148
 $4,331
 $4,496
 $13,371
 $697,919
 $664,733
 $33,186
 4.99 %
Termination Income12,041
 1,010
 11,031
 1,092.18 % —
 —
 —
 5
 (196) 1,065
 11,845
 2,080
 9,765
 469.47 %2,399
 6,956
 (4,557) (65.51)% —
 —
 —
 —
 —
 —
 —
 (20) 2,399
 6,936
 (4,537) (65.41)%
Lease Revenue1,275,621
 1,187,142
 88,479
 7.45 % 64,011
 10,822
 997
 4,709
 2,242
 14,973
 1,342,871
 1,217,646
 125,225
 10.28 %677,278

653,987

23,291
 3.56 % 3,553

—

12,843

—

2,148

4,331

4,496

13,351

700,318

671,669

28,649
 4.27 %
Parking and Other Income50,200
 51,964
 (1,764) (3.39)% 750
 255
 112
 37
 17
 501
 51,079
 52,757
 (1,678) (3.18)%
Parking and Other23,820
 24,757
 (937) (3.78)% —
 —
 514
 —
 6
 6
 1
 10
 24,341
 24,773
 (432) (1.74)%
Total Rental Revenue (1)1,325,821
 1,239,106
 86,715
 7.00 % 64,761
 11,077
 1,109
 4,746
 2,259
 15,474
 1,393,950
 1,270,403
 123,547
 9.73 %701,098
 678,744
 22,354
 3.29 % 3,553
 —
 13,357
 —
 2,154
 4,337
 4,497
 13,361
 724,659
 696,442
 28,217
 4.05 %
Real Estate Operating Expenses476,501
 456,566
 19,935
 4.37 % 26,745
 6,438
 1,994
 1,685
 2,351
 8,245
 507,591
 472,934
 34,657
 7.33 %252,219
 246,071
 6,148
 2.50 % 1,466
 —
 2,009
 —
 1,555
 2,360
 1,653
 5,312
 258,902
 253,743
 5,159
 2.03 %
Net Operating Income (Loss), excluding residential and hotel849,320
 782,540
 66,780
 8.53 % 38,016
 4,639
 (885)—
3,061
 (92) 7,229
 886,359
 797,469
 88,890
 11.15 %
Residential Net Operating Income (Loss) (2)4,816
 5,194
 (378) (7.28)% 4,002
 (1,421) —
 —
 —
 —
 8,818
 3,773
 5,045
 133.71 %
Net Operating Income, Excluding Residential and Hotel448,879
 432,673
 16,206
 3.75 % 2,087
 —
 11,348
 —
 599
 1,977
 2,844
 8,049
 465,757
 442,699
 23,058
 5.21 %
Residential Net Operating Income (2)5,892
 3,941
 1,951
 49.51 % —
 —
 —
 —
 —
 —
 —
 —
 5,892
 3,941
 1,951
 49.51 %
Hotel Net Operating Income (2)6,839
 6,895
 (56) (0.81)% —
 —
 —
 —
 —
 —
 6,839
 6,895
 (56) (0.81)%4
 1,075
 (1,071) (99.63)% —
 —
 —
 —
 —
 —
 —
 —
 4
 1,075
 (1,071) (99.63)%
Net Operating Income (Loss)$860,975
 $794,629
 $66,346
 8.35 % $42,018
 $3,218
 $(885) $3,061
 $(92) $7,229
 $902,016
 $808,137
 $93,879
 11.62 %
Net Operating Income$454,775
 $437,689
 $17,086
 3.90 % $2,087
 $—
 $11,348
 $—
 $599
 $1,977
 $2,844
 $8,049
 $471,653
 $447,715
 $23,938
 5.35 %
_______________
(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. Upon the adoption of ASU-2016-02 “Leases” on January 1, 2019, service income from tenants is included in Lease revenue. Prior to adoption, these amounts were included in the line item for Development and Management Services Revenue. 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 58.49. Residential Net Operating Income for the sixthree months ended June 30,March 31, 2020 and 2019 and 2018 is comprised of Residential Revenue of $16,714$9,956 and $8,958,$7,715 less Residential Expenses of $7,896$4,064 and $5,185,$3,774, respectively. Hotel Net Operating Income for the sixthree months ended June 30,March 31, 2020 and 2019 and 2018 is comprised of Hotel Revenue of $23,782$6,825 and $23,709$8,938 less Hotel Expenses of $16,943$6,821 and $16,814,$7,863, respectively, per the Consolidated Statements of Operations.
Table of Content


Same Property Portfolio
Lease Revenue (Excluding Termination Income)
Lease revenue from the Same Property Portfolio increased by approximately $77.4$27.8 million for the sixthree months ended June 30, 2019March 31, 2020 compared to 2018.2019. The increase was primarily the result of increases in revenue from our leases and the reclassification of service income from tenants and other income of approximately $67.9 million and $9.5 million, respectively. Lease revenue from our leases increased approximately $67.9 million as a result of our average revenue per square foot increasing by approximately $2.89, which contributed$2.32, contributing approximately $45.7$22.4 million, and an approximately $22.2$5.4 million increase due to our average occupancy increasing from 92.4%93.6% to 94.1%94.4%.
On January 1, 2019, we adopted ASU 2016-02. As a result ofUpon the adoption there were certain nonlease components (service income from tenants, overtime HVAC, late feesof Accounting Standards Codification (“ASC”) 842 - Leases, any write-off for bad debt, including accrued rent, will be shown as a reduction to lease revenue. However, the degree to which our tenants’ businesses are negatively impacted by COVID-19 could result in a reduction in our cash flows or require that we write-off a tenant’s accrued rent balance and other items) that were reclassifiedthis could have a material adverse effect on a prospective basis from the Development and Management Services revenue and Parking and Other Income line items of our Consolidated Statements of Operations. As a result, Lease revenue increased by approximately $9.5 million and Development and Management Services revenue and Parking and Other Income decreased by approximately $5.8 million and $3.7 million, respectively,lease revenue. See Item 1A: “Risk Factors” for the six months ended June 30, 2019 (See Note 4 to the Consolidated Financial Statements).additional details.
Termination Income
Termination income increaseddecreased by approximately $11.0$4.6 million for the sixthree months ended June 30, 2019March 31, 2020 compared to 2018.2019.
Termination income for the sixthree months ended June 30, 2019March 31, 2020 related to 2015 tenants across the Same Property Portfolio and totaled approximately $12.0$2.4 million, which was primarily related to tenants that terminated leases early in New York City and the Boston region.
Termination income for the three months ended March 31, 2019 related to 11 tenants across the Same Property Portfolio and totaled approximately $7.0 million, of which approximately $6.8$4.9 million is from two tenants that terminated leases early at 399 Park Avenue in New York City.
Termination income for the six months ended June 30, 2018 related to 16 tenants across the Same Property Portfolio and totaled approximately $1.0 million.
Parking and Other IncomeRevenue
Parking and other incomerevenue decreased by approximately $1.8$0.9 million for the sixthree months ended June 30, 2019March 31, 2020 compared to 2018, which was2019, primarily due to the reclassificationa decrease in transient parking. Due to COVID-19, we expect to see a decrease in parking revenue, for fiscal year 2020, as a result of mandatory business closures and “stay-at-home” orders. See Item 1A: “Risk Factors” for additional details.
Parking revenue generally consists of two primary components: revenue from monthly passes and hourly/daily parking revenue. During 2019, total parking revenue was approximately $3.7$100 million and our share of total parking revenue from unconsolidated joint ventures was approximately $13 million. Approximately $40 million of certain nonlease components resultingthis aggregate amount of consolidated and unconsolidated parking revenue was derived from the adoptionhourly/daily parking. In April, with stay-at-home orders and business closures, we generated minimal hourly/daily parking revenue and this trend may continue for as long as these stay-at-home orders and business closures continue. Some of ASU 2016-02, described above (See Note 4 to the Consolidated Financial Statements). Excluding this reclassification,our monthly parking revenues are contractual agreements embedded in our leases, and other income increased by approximately $1.9 million.some are at will individual agreements.
Real Estate Operating Expenses
Real estate operating expenses from the Same Property Portfolio increased by approximately $19.9$6.1 million, or 4.4%2.5%, for the sixthree months ended June 30, 2019March 31, 2020 compared to 20182019, due primarily to increases in (1) real estate taxes of approximately $14.1 million, or 6.3%, (2) repairs and maintenance of approximately $3.8 million, or 5.3%, and (3) other real estate operating expenses of approximately $2.0$5.3 million, or 1.3%.4.2%, and $0.8 million, or 0.7%, respectively. The increase in real estate taxes and repairs and maintenance werewas primarily experienced in the New York CBD properties.
Properties Placed In-ServiceAcquired Portfolio
The table below lists the properties placed in-service or partially placed in-service fromacquired between January 1, 2018 through June 30, 2019.2019 and March 31, 2020. Rental revenue and real estate operating expenses increased by approximately $61.6$3.6 million and $22.8$1.5 million, respectively, for the sixthree months ended June 30, 2019March 31, 2020 compared to 2018,2019, as detailed below.

Table of Content

  Quarter Initially Placed In-Service Quarter Fully Placed In-Service   Rental Revenue Real Estate Operating Expenses
Name   Square Feet 2019 2018 Change 2019 2018 Change
        (dollars in thousands)
Office                  
191 Spring Street Fourth Quarter, 2017 Fourth Quarter, 2018 170,997
 $3,761
 $1,850
 $1,911
 $975
 $852
 $123
Salesforce Tower Fourth Quarter, 2017 Fourth Quarter, 2018 1,420,682
 61,000
 9,227
 51,773
 25,770
 5,586
 20,184
Total Office     1,591,679
 64,761
 11,077
 53,684
 26,745
 6,438
 20,307
                   
Residential                  
Signature at Reston First Quarter, 2018 Second Quarter, 2018 517,783
 5,023
 567
 4,456
 3,120
 1,837
 1,283
Proto Kendall Square Second Quarter, 2018 Third Quarter, 2018 166,717
 3,521
 43
 3,478
 1,422
 194
 1,228
Total Residential     684,500
 8,544
 610
 7,934
 4,542
 2,031
 2,511
      2,276,179
 $73,305
 $11,687
 $61,618
 $31,287
 $8,469
 $22,818
    Square Feet Rental Revenue Real Estate Operating Expenses
Name Date acquired  2020 2019 Change 2020 2019 Change
      (dollars in thousands)
880 and 890 Winter Street August 27, 2019 392,568
 $3,553
 $—
 $3,553
 $1,466
 $—
 $1,466
    392,568
 $3,553
 $—
 $3,553
 $1,466
 $—
 $1,466

Properties Placed In-Service Portfolio
The table below lists the properties that were placed in-service or partially placed in-service between January 1, 2019 and March 31, 2020. Rental revenue and real estate operating expenses from our Properties Placed In-Service Portfolio increased by approximately $13.4 million and $2.0 million, respectively, for the three months ended March 31, 2020 compared to 2019, as detailed below.
  Quarter Initially Placed In-Service Quarter Fully Placed In-Service   Rental Revenue Real Estate Operating Expenses
Name   Square Feet 2020 2019 Change 2020 2019 Change
        (dollars in thousands)
20 CityPoint Second Quarter, 2019 N/A 211,000
 $1,849
 $—
 $1,849
 $588
 $—
 $588
145 Broadway Fourth Quarter, 2019 Fourth Quarter, 2019 488,862
 10,910
 —
 10,910
 1,188
 —
 1,188
17Fifty Presidents Street First Quarter, 2020 First Quarter, 2020 275,809
 598
 —
 598
 233
 —
 233
      975,671

$13,357

$—

$13,357

$2,009

$—

$2,009
Properties in Development or Redevelopment Portfolio
The table below lists the properties that were in development or redevelopment between January 1, 20182019 and June 30, 2019.March 31, 2020. Rental revenue decreased by approximately $3.6 million and real estate operating expenses increasedfrom our Properties in Development or Redevelopment Portfolio decreased by approximately $0.3$2.2 million and $0.8 million, respectively, for the sixthree months ended June 30, 2019March 31, 2020 compared to 2018, as detailed below.2019.
   Rental Revenue Real Estate Operating Expenses   Rental Revenue Real Estate Operating Expenses
Name Date commenced development / redevelopment Square Feet 2019 2018 Change 2019 2018 Change Date Commenced Development / Redevelopment Square Feet 2020 2019 Change 2020 2019 Change
   (dollars in thousands)   (dollars in thousands)
One Five Nine East 53rd Street August 19, 2016 220,000
 $1,862
 $1,715
 $147
 $954
 $782
 $172
 August 19, 2016 220,000
 $886
 $873
 $13
 $563
 $559
 $4
325 Main Street (1) May 9, 2019 115,000
 (753) 3,031
 (3,784) 1,040
 903
 137
 May 9, 2019 115,000
 —
 1,200
 (1,200) 149
 493
 (344)
200 West Street (2) September 30, 2019 261,000
 1,268
 2,264
 (996) 843
 1,308
 (465)
 335,000
 $1,109
 $4,746
 $(3,637) $1,994
 $1,685
 $309
 596,000
 $2,154
 $4,337
 $(2,183) $1,555
 $2,360
 $(805)
__________________________
(1)Rental revenue for the six months ended June 30, 2019 includes the acceleration and write-off of straight-line rent associated with the early termination of a lease at that building. Real estate operating expenses for the sixthree months ended June 30, 2019March 31, 2020 includes approximately $0.4$0.1 million of demolition costs.
(2)Rental revenue and real estate operating expenses for the three months ended March 31, 2019 are related to the entire building. The redevelopment is a conversion of a 126,000 square foot portion of the property to laboratory space.


Table of Content

Properties Sold Portfolio
The table below lists the properties we sold between January 1, 20182019 and June 30, 2019.March 31, 2020. Rental revenue and real estate operating expenses from our Properties Sold Portfolio decreased by approximately $13.2$8.9 million and $5.9$3.7 million, respectively, for the sixthree months ended June 30, 2019March 31, 2020 compared to 2018,2019, as detailed below.
        Rental Revenue Real Estate Operating Expenses
Name Date Sold Property Type Square Feet 2019 2018 Change 2019 2018 Change
        (dollars in thousands)
500 E Street, S.W. January 9, 2018 Office 262,000
 $—
 $270
 $(270) $—
 $129
 $(129)
91 Hartwell Avenue May 24, 2018 Office 119,000
 —
 1,224
 (1,224) —
 654
 (654)
Quorum Office Park September 27, 2018 Office 268,000
 —
 2,273
 (2,273) —
 1,226
 (1,226)
1333 New Hampshire Avenue (1) November 30, 2018 Office 315,000
 —
 7,941
 (7,941) —
 2,890
 (2,890)
Tower Oaks December 20, 2018 Land N/A
 —
 170
 (170) —
 108
 (108)
2600 Tower Oaks Boulevard January 24, 2019 Office 179,000
 159
 1,359
 (1,200) 189
 973
 (784)
One Tower Center June 3, 2019 Office 410,000
 2,100
 2,237
 (137) 2,080
 2,169
 (89)
164 Lexington Road June 28, 2019 Office 64,000
 —
 —
 —
 82
 96
 (14)
      1,617,000
 $2,259

$15,474

$(13,215) $2,351
 $8,245
 $(5,894)
        Rental Revenue Real Estate Operating Expenses
Name Date Sold Property Type Square Feet 2020 2019 Change 2020 2019 Change
        (dollars in thousands)
2600 Tower Oaks Boulevard January 24, 2019 Office 179,000
 $—
 $159
 $(159) $—
 $189
 $(189)
One Tower Center June 3, 2019 Office 410,000
 —
 1,205
 (1,205) —
 1,176
 (1,176)
164 Lexington Road June 28, 2019 Office 64,000
 —
 —
 —
 —
 43
 (43)
Washingtonian North December 20, 2019 Land N/A
 —
 —
 —
 —
 36
 (36)
601, 611 and 651 Gateway January 28, 2020 Office 768,000
 1,946
 7,135
 (5,189) 881
 2,464
 (1,583)
New Dominion Technology Park February 20, 2020 Office 493,000
 2,551
 4,862
 (2,311) 772
 1,404
 (632)
      1,914,000
 $4,497
 $13,361
 $(8,864) $1,653
 $5,312
 $(3,659)
___________For additional information on the sale of the above properties and land parcel refer to “Results of Operations—Other Income and Expense Items - Gains (Losses) on Sales of Real Estate” within “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
(1)Rental revenue includes approximately $1.1 million of termination income for the six months ended June 30, 2018.
Residential Net Operating Income
Net operating income for our residential same properties decreasedincreased by approximately $0.4$2.0 million for the sixthree months ended June 30, 2019March 31, 2020 compared to 2018.2019.
The following reflects our occupancy and rate information for The Lofts at Atlantic Wharf, and The Avant at Reston Town Center, Signature at Reston and Proto Kendall Square for the sixthree months ended June 30, 2019March 31, 2020 and 2018.

2019.
 The Lofts at Atlantic Wharf The Avant at Reston Town Center The Lofts at Atlantic Wharf The Avant at Reston Town Center Signature at Reston Proto Kendall Square
 2019 2018 Percentage
Change		 2019 2018 Percentage
Change		 2020 2019 Change (%) 2020 2019 Change (%) 2020 2019 Change (%) 2020 2019 Change (%)
Average Monthly Rental Rate (1) $4,457
 $4,177
 6.7% $2,379
 $2,384
 (0.2)% $4,510
 $4,433
 1.7 % $2,419
 $2,352
 2.8% $2,342
 $2,260
 3.6% $3,027
 $2,705
 11.9%
Average Rental Rate Per Occupied Square Foot $4.89
 $4.65
 5.2% $2.60
 $2.63
 (1.1)% $5.04
 $4.86
 3.7 % $2.67
 $2.57
 3.9% $2.51
 $2.47
 1.6% $5.56
 $5.07
 9.7%
Average Physical Occupancy (2) 94.8% 92.3% 2.7% 92.3% 95.5% (3.4)% 95.0% 94.6% 0.4 % 91.5% 90.3% 1.3% 82.2% 53.3% 54.2% 95.5% 63.5% 50.4%
Average Economic Occupancy (3) 95.2% 91.5% 4.0% 91.5% 94.3% (3.0)% 94.3% 95.0% (0.7)% 90.3% 89.3% 1.1% 76.9% 46.4% 65.7% 95.2% 58.2% 63.6%
__________________________  
(1)
Average Monthly Rental Rates areRate is calculated by the Company 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. TrendsActual market rents and trends in marketsuch rents for a region as reported by others could vary.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.
Table of Content

Hotel Net Operating Income
Net operating income for the Boston Marriott Cambridge hotel property decreased by approximately $0.1$1.1 million for the sixthree months ended June 30, 2019March 31, 2020 compared to 2018.2019.
The following reflects our occupancy and rate information for the Boston Marriott Cambridge hotel for the sixthree months ended June 30, 2019March 31, 2020 and 2018.
2019.
 2019 2018 
Percentage
Change
 2020 2019 

Change (%)
Occupancy 84.7% 85.7% (1.2)% 59.6% 80.2% (25.7)%
Average daily rate $272.65
 $271.36
 0.5 % $211.35
 $221.39
 (4.5)%
Revenue per available room, REVPAR $230.97
 $232.57
 (0.7)%
REVPAR $126.00
 $177.63
 (29.1)%

As a result of COVID-19, the Boston Marriott Cambridge was closed in March 2020 and is running at a monthly deficit. We do not know when the hotel will re-open and its closure will have a material adverse effect on the hotel’s contribution to our results of operations during the closure. See Item 1A: "Risk Factors" for additional details.
Other Operating IncomeRevenue and Expense Items
Development and Management Services Revenue
Development and management services revenue increased by an aggregate of approximately $1.6 million for the six months ended June 30, 2019 compared to 2018. Development revenue increased by approximately $4.6 million while management services revenue decreased by approximately $3.0$1.4 million for the three months ended March 31, 2020 compared to 2019. Development services revenue decreased by approximately $1.5 million while management services revenue increased by approximately $0.1 million. The decrease in development services revenue was primarily related to a decrease of approximately $2.7 million in development fees and fees associated with tenant improvement projects earned in the Boston region offset by an increase of $0.6 million in development fees earned in the San Francisco region and an increase of $0.6 million in development fees associated with a tenant improvement project earned in the Washington, DC region. The increase in developmentmanagement services revenue iswas primarily related to an increase in developmentproperty management fees earned from our Washington, DC region and an increase in fees associated with tenant improvement projects in our Bostonthe Los Angeles region.
On January 1, 2019, we adopted ASU 2016-02. As a result of the adoption, there were certain nonlease components (service income from tenants) that were reclassified on a prospective basis from this line item of our Consolidated Statements of Operations to Lease revenue. For the six months ended June 30, 2018, management service revenue included $5.2 million of service income from tenants. Excluding this reclassification, management services revenue would have increased by approximately $2.2 million due primarily to property and asset management fees we earned from our Santa Monica Business Park unconsolidated joint venture, which we acquired on July 19, 2018.
General and Administrative Expense
General and administrative expense increaseddecreased by approximately $12.5$5.3 million for the sixthree months ended June 30, 2019March 31, 2020 compared to 20182019 primarily due to a decrease in compensation expense and other general and administrative expenses increasing by approximately $11.3 million and $1.2 million, respectively.expense. The increasedecrease in compensation expense was related to (1) an approximately $4.7$8.4 million increase related to a decrease in capitalized wages, which includes the effect of no longer being able to capitalize internal and external legal costs and internal leasing wages, (2) an approximately $3.7 million increase in the value of our deferred compensation plan and (3)partially offset by an approximately $2.9$3.1 million increase related to other compensation expenses. The decrease in capitalized wages is shown as an increase to general and administrative expense as some of these costs are capitalized and included in real estate assets on our Consolidated Balance Sheets (see below). The increase in other generalcompensation expense, which includes the expense associated with our equity compensation programs, which includes the acceleration of amortization that occurred for employees that reached a certain age and administrative expenses was primarily related to an increasenumber of years of service and therefore became vested in professional fees and taxes.these awards sooner.
Wages directly related to the development of rental properties are capitalized and included in real estate assets on our Consolidated Balance Sheets, and they are amortized over the useful lives of the applicable asset or lease term. On January 1, 2019, we adopted ASU 2016-02 and therefore, as a lessor, we can only capitalize incremental direct leasing costs. As a result, we are no longer able to capitalize internal and external legal costs and internal leasing wages; instead, we are required to expense these and other non-incremental costs as incurred (See Note 4 to the Consolidated Financial Statements).
Capitalized wages for the sixthree months ended June 30,March 31, 2020 and 2019 and 2018 were approximately $5.5$2.8 million and $9.3$2.9 million, respectively. These costs are not included in the general and administrative expenses discussed above.
Transaction Costs
Transaction costs increased by approximately $0.4$0.2 million for the sixthree months ended June 30, 2019March 31, 2020 compared to 2018. The increase was2019 due primarily related to the disposition of assets andtransaction costs related to the potentialpursuit and formation of new and pending joint ventures. In general, transaction costs relating to the formation of new and pending joint ventures and the pursuit of other transactions are expensed as incurred.
Table of Content

Depreciation and Amortization Expense
Depreciation expense may differ between BXP and BPLP as a result of previously applied acquisition accounting by BXP for the issuance of common stock in connection with non-sponsor OP Unit redemptions by BPLP.  This accounting resulted in a step-up of the real estate assets at BXP that was allocated to certain

properties.  The difference between the real estate assets of BXP as compared to BPLP for certain properties having an allocation of the real estate step-up will result in a corresponding difference in depreciation expense. For additional information see the Explanatory Note that follows the cover page of this Quarterly Report on Form 10-Q.
Boston Properties, Inc.
Depreciation and amortization expense increased by approximately $19.8$6.5 million for the sixthree months ended June 30, 2019March 31, 2020 compared to 2018,2019, as detailed below.
 Depreciation and Amortization Expense for the six months ended June 30,
2019 2018 Change
Portfolio Depreciation and Amortization for the three months ended March 31,
2020 2019 Change
 (in thousands) (in thousands)
Same Property Portfolio $308,333
 $312,760
 $(4,427) $164,216
 $160,407
 $3,809
Properties Acquired Portfolio 2,564
 —
 2,564
Properties Placed in-Service Portfolio 21,633
 4,609
 17,024
 2,959
 —
 2,959
Properties in Development or Redevelopment Portfolio (1) 10,963
 473
 10,490
Properties in Development or Redevelopment Portfolio 468
 673
 (205)
Properties Sold Portfolio 1,076
 4,372
 (3,296) 887
 3,514
 (2,627)
 $342,005
 $322,214
 $19,791
 $171,094
 $164,594
 $6,500
___________  
(1)
On May 9, 2019, we commenced development of 325 Main Street in Cambridge, Massachusetts (See Note 3 to the Consolidated Financial Statements). As a result, during the six months ended June 30, 2019, we recorded approximately $9.9 million of accelerated depreciation expense for the demolition of the building, of which approximately $0.4 million related to the step-up of real estate assets.
Boston Properties Limited Partnership
Depreciation and amortization expense increased by approximately $19.6$6.6 million for the sixthree months ended June 30, 2019March 31, 2020 compared to 2018,2019, as detailed below.
 Depreciation and Amortization Expense for the six months ended June 30,
2019 2018 Change
Portfolio Depreciation and Amortization for the three months ended March 31,
2020 2019 Change
 (in thousands) (in thousands)
Same Property Portfolio $304,588
 $308,873
 $(4,285) $162,407
 $158,495
 $3,912
Properties Acquired Portfolio 2,564
 —
 2,564
Properties Placed in-Service Portfolio 21,633
 4,609
 17,024
 2,959
 —
 2,959
Properties in Development or Redevelopment Portfolio (1) 10,584
 473
 10,111
Properties in Development or Redevelopment Portfolio 468
 673
 (205)
Properties Sold Portfolio 1,076
 4,372
 (3,296) 887
 3,514
 (2,627)
 $337,881
 $318,327
 $19,554
 $169,285
 $162,682
 $6,603
___________  
(1)
On May 9, 2019, we commenced development of 325 Main Street in Cambridge, Massachusetts (See Note 3 to the Consolidated Financial Statements). As a result, during the six months ended June 30, 2019, we recorded approximately $9.5 million of accelerated depreciation expense for the demolition of the building.

Direct Reimbursements of Payroll and Related Costs From Management Services Contracts and Payroll and Related Costs From Management Service Contracts
ASU 2016-08 “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations” updated the principal versus agent considerations and as a result weWe 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. It is anticipatedWe anticipate that these two financial statement line items will generally offset each other.
Table of Content

Other Income and Expense Items
Income (Loss) from Unconsolidated Joint Ventures
IncomeFor the three months ended March 31, 2020 compared to 2019, income (loss) from unconsolidated joint ventures increaseddecreased by approximately $46.9$0.6 million primarily due to the addition of our Gateway Commons joint venture and the partial placing in-service of the Hub50House joint venture in South San Francisco, CA and Boston, MA, respectively. These joint ventures reduced our net income by approximately $1.4 million for the sixthree months ended June 30, 2019 comparedMarch 31, 2020. At March 31, 2020, the Hub50House was only 28% leased and is not expected to 2018 duebe stabilized until the first quarter of 2022. The decrease in net income from the Gateway Commons joint venture was primarily related to depreciation and amortization. These decreases were offset by an approximately $0.8 million increase related to our share of the gain on sale of real estatenet income from the sale of 540 Madison Avenue.our other unconsolidated joint ventures.
On June 27, 2019, a joint venture in which we have a 60% interest completed the sale of its 540 Madison Avenue property located in New York City for a gross sale price of approximately $310.3 million, including the assumption by the buyer of the mortgage loan collateralized by the property totaling $120.0 million. Net cash proceeds totaled approximately $178.7 million, of which our share was approximately $107.1 million, after the payment of transaction costs. We recognized a gain on sale of real estate totaling approximately $47.8 million (See Note 5 to the Consolidated Financial Statements).
Gains (Losses) on Sales of Real Estate
The gainsGains on sales of real estate may differ between BXP and BPLP as a result of previously applied acquisition accounting by BXP for the issuance of common stock in connection with non-sponsor OP Unit redemptions by BPLP. This accounting resulted in a step-up of the real estate assets at BXP that was allocated to certain properties. The difference between the real estate assets of BXP as compared to BPLP for certain properties having an allocation of the real estate step-up will result in a corresponding difference in the gains on sales of real estate when those properties are sold. For additional information, see the Explanatory Note that follows the cover page of this Quarterly Report on Form 10-Q.
Boston Properties, Inc.
Gains (losses) on sales of real estate decreasedincreased by approximately $113.9$411.1 million for the sixthree months ended June 30, 2019March 31, 2020 compared to 2018,2019, as detailed below.
Name Date Sold Property Type Square Feet Sale Price Net Cash Proceeds Gain (Loss) on Sale of Real Estate 
        (dollars in millions) 
2020             
601, 611 and 651 Gateway January 28, 2020 Office 768,000
 $350.0
 $—
 $217.7
(1)
New Dominion Technology Park February 20, 2020 Office 493,000
 256.0
 254.0
 192.3
 
        $606.0
 $254.0
 $410.0
(2)
2019             
2600 Tower Oaks Boulevard January 24, 2019 Office 179,000
 $22.7
 $21.4
 $(0.6)(3)
Name Date Sold Property Type Square Feet Sale Price Cash Proceeds (Losses) Gains on Sale of Real Estate 
2019             
2600 Tower Oaks Boulevard January 24, 2019 Office 179,000 $22.7
 $21.4
 $(0.6) 
One Tower Center June 3, 2019 Office 410,000 38.0
 36.6
 (0.8) 
164 Lexington Road June 28, 2019 Office 64,000 4.0
 3.8
 2.5
 
        $64.7
 $61.8
 $1.1
(1)
2018             
500 E Street, S.W. January 9, 2018 Office 262,000 $118.6
 $116.1
 $96.4
 
91 Hartwell Avenue May 24, 2018 Office 119,000 22.2
 21.7
 15.5
 
        $140.8
 $137.8
 $111.9
(2)
___________
(1)
ExcludesOn January 28, 2020, we entered into a joint venture with a third party to own, operate and develop properties at our Gateway Commons complex located in South San Francisco. We contributed our 601, 611 and 651 Gateway properties and development rights with an agreed upon value aggregating approximately $0.3$350.0 million of losses on sales of real estate recognized duringfor our 50% interest in the joint venture (See Notes 3 and 5 to the Consolidated Financial Statements).six months ended June 30, 2019 related to loss amounts from sales of real estate occurring in prior years.
(2)Excludes approximately $2.8$0.1 million of gains on sales of real estate recognized during the sixthree months ended June 30, 2018March 31, 2020 related to gain amounts from sales of real estate occurring in the prior years.year.
Table of Content

Boston Properties Limited Partnership
Gains on sales of real estate decreased by approximately $116.7 million for the six months ended June 30, 2019 compared to 2018, as detailed below.
Name Date Sold Property Type Square Feet Sale Price Cash Proceeds (Losses) Gains on Sale of Real Estate 
2019             
2600 Tower Oaks Boulevard January 24, 2019 Office 179,000 $22.7
 $21.4
 $(0.6) 
One Tower Center June 3, 2019 Office 410,000 38.0
 36.6
 (0.8) 
164 Lexington Road June 28, 2019 Office 64,000 4.0
 3.8
 2.6
 
        $64.7
 $61.8
 $1.2
(1)
2018             
500 E Street, S.W. January 9, 2018 Office 262,000 $118.6
 $116.1
 $98.9
 
91 Hartwell Avenue May 24, 2018 Office 119,000 22.2
 21.7
 15.9
 
        $140.8
 $137.8
 $114.8
(2)
___________
(1)(3)Excludes approximately $0.3 million of losses on sales of real estate recognized during the sixthree months ended June 30,March 31, 2019 related to loss amounts from sales of real estate occurring in prior years.


Boston Properties Limited Partnership
Gains (losses) on sales of real estate increased by approximately $420.6 million for the three months ended March 31, 2020 compared to 2019, as detailed below.
Name Date Sold Property Type Square Feet Sale Price Net Cash Proceeds Gain (Loss) on Sale of Real Estate 
        (dollars in millions) 
2020             
601, 611 and 651 Gateway January 28, 2020 Office 768,000
 $350.0
 $—
 $222.4
(1)
New Dominion Technology Park February 20, 2020 Office 493,000
 256.0
 254.0
 197.1
 
        $606.0
 $254.0
 $419.5
(2)
2019             
2600 Tower Oaks Boulevard January 24, 2019 Office 179,000
 $22.7
 $21.4
 $(0.6)(3)
              
___________  
(1)
On January 28, 2020, we entered into a joint venture with a third party to own, operate and develop properties at our Gateway Commons complex located in South San Francisco. We contributed our 601, 611 and 651 Gateway properties and development rights with an agreed upon value aggregating approximately $350.0 million for our 50% interest in the joint venture (See Notes 3 and 5 to the Consolidated Financial Statements).
(2)Excludes approximately $2.8$0.1 million of gains on sales of real estate recognized during the sixthree months ended June 30, 2018March 31, 2020 related to gain amounts from sales of real estate occurring in the prior year.
(3)Excludes approximately $0.3 million of losses on sales of real estate recognized during the three months ended March 31, 2019 related to loss amounts from sales of real estate occurring in prior years.

Interest and Other Income
Interest and other income increaseddecreased by approximately $3.1$0.7 million for the sixthree months ended June 30, 2019March 31, 2020 compared to 20182019 due primarily to an increasea decrease in interest rates.
Gains (Losses) from Investments in Securities
Gains (losses) from investments in securities for the sixthree months ended June 30,March 31, 2020 and 2019 and 2018 related to investments that we have made to reduce our market risk relating to a deferred compensation planplans that we maintain for BXP’s officers.officers and non-employee directors. Under thisthe deferred compensation plan,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.officer or non-employee director. In order to reduce our market risk relating to this plan,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.officer or non-employee director. This enables us to generally match our liabilities to BXP’s officers or non-employee directors under our deferred compensation planplans with equivalent assets and thereby limit our market risk. The performance of these investments is recorded as gains (losses) from investments in securities. During the sixthree months ended June 30,March 31, 2020 and 2019, and 2018, we recognized gains (losses) of approximately $4.1$(5.4) million and $0.4$3.0 million, respectively, on these investments. By comparison, our general and administrative expense increased (decreased) by approximately $4.1$(5.4) million and $0.4$3.0 million during the sixthree months ended June 30,March 31, 2020 and 2019, and 2018, respectively, as a result of an increaseincreases (decreases) in our liability under our deferred compensation planplans that werewas associated with the performance of the specific investments selected by officers and non-employee directors of BXP participating in the plan.plans.
Impairment LossTermination Income
An impairmentTermination income decreased by approximately $4.6 million for the three months ended March 31, 2020 compared to 2019.
Termination income for the three months ended March 31, 2020 related to 15 tenants across the Same Property Portfolio and totaled approximately $2.4 million, which was primarily related to tenants that terminated leases early in New York City and the Boston region.
Termination income for the three months ended March 31, 2019 related to 11 tenants across the Same Property Portfolio and totaled approximately $7.0 million, of which approximately $4.9 million is from two tenants that terminated leases early at 399 Park Avenue in New York City.
Parking and Other Revenue
Parking and other revenue decreased by approximately $0.9 million for the three months ended March 31, 2020 compared to 2019, primarily due to a decrease in transient parking. Due to COVID-19, we expect to see a decrease in parking revenue, for fiscal year 2020, as a result of mandatory business closures and “stay-at-home” orders. See Item 1A: “Risk Factors” for additional details.
Parking revenue generally consists of two primary components: revenue from monthly passes and hourly/daily parking revenue. During 2019, total parking revenue was approximately $100 million and our share of total parking revenue from unconsolidated joint ventures was approximately $13 million. Approximately $40 million of this aggregate amount of consolidated and unconsolidated parking revenue was derived from hourly/daily parking. In April, with stay-at-home orders and business closures, we generated minimal hourly/daily parking revenue and this trend may continue for as long as these stay-at-home orders and business closures continue. Some of our monthly parking revenues are contractual agreements embedded in our leases, and some are at will individual agreements.
Real Estate Operating Expenses
Real estate operating expenses from the Same Property Portfolio increased by approximately $6.1 million, or 2.5%, for the three months ended March 31, 2020 compared to 2019, due primarily to increases in real estate taxes and other real estate operating expenses of approximately $5.3 million, or 4.2%, and $0.8 million, or 0.7%, respectively. The increase in real estate taxes was primarily experienced in the New York CBD properties.
Properties Acquired Portfolio
The table below lists the properties acquired between January 1, 2019 and March 31, 2020. Rental revenue and real estate operating expenses increased by approximately $3.6 million and $1.5 million, respectively, for the three months ended March 31, 2020 compared to 2019, as detailed below.
    Square Feet Rental Revenue Real Estate Operating Expenses
Name Date acquired  2020 2019 Change 2020 2019 Change
      (dollars in thousands)
880 and 890 Winter Street August 27, 2019 392,568
 $3,553
 $—
 $3,553
 $1,466
 $—
 $1,466
    392,568
 $3,553
 $—
 $3,553
 $1,466
 $—
 $1,466

Properties Placed In-Service Portfolio
The table below lists the properties that were placed in-service or partially placed in-service between January 1, 2019 and March 31, 2020. Rental revenue and real estate operating expenses from our Properties Placed In-Service Portfolio increased by approximately $13.4 million and $2.0 million, respectively, for the three months ended March 31, 2020 compared to 2019, as detailed below.
  Quarter Initially Placed In-Service Quarter Fully Placed In-Service   Rental Revenue Real Estate Operating Expenses
Name   Square Feet 2020 2019 Change 2020 2019 Change
        (dollars in thousands)
20 CityPoint Second Quarter, 2019 N/A 211,000
 $1,849
 $—
 $1,849
 $588
 $—
 $588
145 Broadway Fourth Quarter, 2019 Fourth Quarter, 2019 488,862
 10,910
 —
 10,910
 1,188
 —
 1,188
17Fifty Presidents Street First Quarter, 2020 First Quarter, 2020 275,809
 598
 —
 598
 233
 —
 233
      975,671

$13,357

$—

$13,357

$2,009

$—

$2,009
Properties in Development or Redevelopment Portfolio
The table below lists the properties that were in development or redevelopment between January 1, 2019 and March 31, 2020. Rental revenue and real estate operating expenses from our Properties in Development or Redevelopment Portfolio decreased by approximately $2.2 million and $0.8 million, respectively, for the three months ended March 31, 2020 compared to 2019.
      Rental Revenue Real Estate Operating Expenses
Name Date Commenced Development / Redevelopment Square Feet 2020 2019 Change 2020 2019 Change
      (dollars in thousands)
One Five Nine East 53rd Street August 19, 2016 220,000
 $886
 $873
 $13
 $563
 $559
 $4
325 Main Street (1) May 9, 2019 115,000
 —
 1,200
 (1,200) 149
 493
 (344)
200 West Street (2) September 30, 2019 261,000
 1,268
 2,264
 (996) 843
 1,308
 (465)
    596,000
 $2,154
 $4,337
 $(2,183) $1,555
 $2,360
 $(805)
_______________
(1)Real estate operating expenses for the three months ended March 31, 2020 includes approximately $0.1 million of demolition costs.
(2)Rental revenue and real estate operating expenses for the three months ended March 31, 2019 are related to the entire building. The redevelopment is a conversion of a 126,000 square foot portion of the property to laboratory space.

Properties Sold Portfolio
The table below lists the properties we sold between January 1, 2019 and March 31, 2020. Rental revenue and real estate operating expenses from our Properties Sold Portfolio decreased by approximately $8.9 million and $3.7 million, respectively, for the three months ended March 31, 2020 compared to 2019, as detailed below.
        Rental Revenue Real Estate Operating Expenses
Name Date Sold Property Type Square Feet 2020 2019 Change 2020 2019 Change
        (dollars in thousands)
2600 Tower Oaks Boulevard January 24, 2019 Office 179,000
 $—
 $159
 $(159) $—
 $189
 $(189)
One Tower Center June 3, 2019 Office 410,000
 —
 1,205
 (1,205) —
 1,176
 (1,176)
164 Lexington Road June 28, 2019 Office 64,000
 —
 —
 —
 —
 43
 (43)
Washingtonian North December 20, 2019 Land N/A
 —
 —
 —
 —
 36
 (36)
601, 611 and 651 Gateway January 28, 2020 Office 768,000
 1,946
 7,135
 (5,189) 881
 2,464
 (1,583)
New Dominion Technology Park February 20, 2020 Office 493,000
 2,551
 4,862
 (2,311) 772
 1,404
 (632)
      1,914,000
 $4,497
 $13,361
 $(8,864) $1,653
 $5,312
 $(3,659)
For additional information on the sale of the above properties and land parcel refer to “Results of Operations—Other Income and Expense Items - Gains (Losses) on Sales of Real Estate” within “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Residential Net Operating Income
Net operating income for our residential same properties increased by approximately $2.0 million for the three months ended March 31, 2020 compared to 2019.
The following reflects our occupancy and rate information for The Lofts at Atlantic Wharf, The Avant at Reston Town Center, Signature at Reston and Proto Kendall Square for the three months ended March 31, 2020 and 2019.
  The Lofts at Atlantic Wharf The Avant at Reston Town Center Signature at Reston Proto Kendall Square
  2020 2019 Change (%) 2020 2019 Change (%) 2020 2019 Change (%) 2020 2019 Change (%)
Average Monthly Rental Rate (1) $4,510
 $4,433
 1.7 % $2,419
 $2,352
 2.8% $2,342
 $2,260
 3.6% $3,027
 $2,705
 11.9%
Average Rental Rate Per Occupied Square Foot $5.04
 $4.86
 3.7 % $2.67
 $2.57
 3.9% $2.51
 $2.47
 1.6% $5.56
 $5.07
 9.7%
Average Physical Occupancy (2) 95.0% 94.6% 0.4 % 91.5% 90.3% 1.3% 82.2% 53.3% 54.2% 95.5% 63.5% 50.4%
Average Economic Occupancy (3) 94.3% 95.0% (0.7)% 90.3% 89.3% 1.1% 76.9% 46.4% 65.7% 95.2% 58.2% 63.6%
_______________  
(1)Average Monthly Rental Rate is calculated as the average of the quotients obtained by dividing (A) rental revenue as determined in accordance with GAAP, by (B) the number of occupied units for each month within the applicable fiscal period.
(2)Average Physical Occupancy is defined as (1) the average number of occupied units divided by (2) the total number of units, expressed as a percentage.
(3)Average Economic Occupancy is defined as (1) total possible revenue less vacancy loss divided by (2) total possible revenue, expressed as a percentage. Total possible revenue is determined by valuing average occupied units at contract rates and average vacant units at Market Rents. Vacancy loss is determined by valuing vacant units at current Market Rents. By measuring vacant units at their Market Rents, Average Economic Occupancy takes into account the fact that units of different sizes and locations within a residential property have different economic impacts on a residential property’s total possible gross revenue. Market Rents used by us in calculating Economic Occupancy are based on the current market rates set by the managers of our residential properties based on their experience in renting their residential property’s units and publicly available market data. Actual market rents and trends in such rents for a region as reported by others may vary materially from Market Rents used by us. Market Rents for a period are based on the average Market Rents during that period and do not reflect any impact for cash concessions.

Hotel Net Operating Income
Net operating income for the Boston Marriott Cambridge hotel property decreased by approximately $1.1 million for the three months ended March 31, 2020 compared to 2019.
The following reflects our occupancy and rate information for the Boston Marriott Cambridge hotel for the three months ended March 31, 2020 and 2019.
  2020 2019 

Change (%)
Occupancy 59.6% 80.2% (25.7)%
Average daily rate $211.35
 $221.39
 (4.5)%
REVPAR $126.00
 $177.63
 (29.1)%

As a result of COVID-19, the Boston Marriott Cambridge was closed in March 2020 and is running at a monthly deficit. We do not know when the hotel will re-open and its closure will have a material adverse effect on the hotel’s contribution to our results of operations during the closure. See Item 1A: "Risk Factors" for additional details.
Other Operating Revenue and Expense Items
Development and Management Services Revenue
Development and management services revenue decreased by approximately $1.4 million for the three months ended March 31, 2020 compared to 2019. Development services revenue decreased by approximately $1.5 million while management services revenue increased by approximately $0.1 million. The decrease in development services revenue was primarily related to a decrease of approximately $2.7 million in development fees and fees associated with tenant improvement projects earned in the Boston region offset by an increase of $0.6 million in development fees earned in the San Francisco region and an increase of $0.6 million in development fees associated with a tenant improvement project earned in the Washington, DC region. The increase in management services revenue was primarily related to an increase in property management fees earned from the Los Angeles region.
General and Administrative Expense
General and administrative expense decreased by approximately $5.3 million for the three months ended March 31, 2020 compared to 2019 primarily due to a decrease in compensation expense. The decrease in compensation expense was related to an approximately $8.4 million decrease in the value of our deferred compensation plan partially offset by an approximately $3.1 million increase in other compensation expense, which includes the expense associated with our equity compensation programs, which includes the acceleration of amortization that occurred for employees that reached a certain age and number of years of service and therefore became vested in these awards sooner.
Wages directly related to the development of rental properties are capitalized and included in real estate assets on our Consolidated Balance Sheets, and amortized over the useful lives of the applicable asset or lease term. Capitalized wages for the three months ended March 31, 2020 and 2019 were approximately $2.8 million and $2.9 million, respectively. These costs are not included in the general and administrative expenses discussed above.
Transaction Costs
Transaction costs increased by approximately $0.2 million for the three months ended March 31, 2020 compared to 2019 due primarily to transaction costs related to the pursuit and formation of new joint ventures. In general, transaction costs relating to the formation of new and pending joint ventures and the pursuit of other transactions are expensed as incurred.
Depreciation and Amortization Expense
Depreciation expense may differ between BXP and BPLP as a result of previously applied acquisition accounting by BXP for the issuance of common stock in connection with non-sponsor OP Unit redemptions by BPLP.  This accounting resulted in a step-up of the real estate assets at BXP that was allocated to certain

properties.  The difference between the real estate assets of BXP as compared to BPLP for certain properties having an allocation of the real estate step-up will result in a corresponding difference in depreciation expense. For additional information see the Explanatory Note that follows the cover page of this Quarterly Report on Form 10-Q.
Boston Properties, Inc.
Depreciation and amortization expense increased by approximately $6.5 million for the three months ended March 31, 2020 compared to 2019, as detailed below.
Portfolio Depreciation and Amortization for the three months ended March 31,
2020 2019 Change
  (in thousands)
Same Property Portfolio $164,216
 $160,407
 $3,809
Properties Acquired Portfolio 2,564
 —
 2,564
Properties Placed in-Service Portfolio 2,959
 —
 2,959
Properties in Development or Redevelopment Portfolio 468
 673
 (205)
Properties Sold Portfolio 887
 3,514
 (2,627)
  $171,094
 $164,594
 $6,500
Boston Properties Limited Partnership
Depreciation and amortization expense increased by approximately $6.6 million for the three months ended March 31, 2020 compared to 2019, as detailed below.
Portfolio Depreciation and Amortization for the three months ended March 31,
2020 2019 Change
  (in thousands)
Same Property Portfolio $162,407
 $158,495
 $3,912
Properties Acquired Portfolio 2,564
 —
 2,564
Properties Placed in-Service Portfolio 2,959
 —
 2,959
Properties in Development or Redevelopment Portfolio 468
 673
 (205)
Properties Sold Portfolio 887
 3,514
 (2,627)
  $169,285
 $162,682
 $6,603

Direct Reimbursements of Payroll and Related Costs From Management Services Contracts and Payroll and Related Costs From Management Service Contracts
We have determined that amounts reimbursed for payroll and related costs received from third parties in connection with management services contracts should be reflected on a gross basis instead of on a net basis as we have determined that we are the principal under these arrangements. We anticipate that these two financial statement line items will generally offset each other.
Other Income and Expense Items
Income (Loss) from Unconsolidated Joint Ventures
For the three months ended March 31, 2020 compared to 2019, income (loss) from unconsolidated joint ventures decreased by approximately $0.6 million primarily due to the addition of our Gateway Commons joint venture and the partial placing in-service of the Hub50House joint venture in South San Francisco, CA and Boston, MA, respectively. These joint ventures reduced our net income by approximately $1.4 million for the three months ended March 31, 2020. At March 31, 2020, the Hub50House was only 28% leased and is not expected to be stabilized until the first quarter of 2022. The decrease in net income from the Gateway Commons joint venture was primarily related to depreciation and amortization. These decreases were offset by an approximately $0.8 million increase related to our share of net income from our other unconsolidated joint ventures.

Gains (Losses) on Sales of Real Estate
Gains on sales of real estate may differ between BXP and BPLP as a result of previously applied acquisition accounting by BXP for the issuance of common stock in connection with non-sponsor OP Unit redemptions by BPLP. This accounting resulted in a step-up of the real estate assets at BXP that was allocated to certain properties. The difference between the real estate assets of BXP as compared to BPLP for certain properties having an allocation of the real estate step-up will result in a corresponding difference in the gains on sales of real estate when those properties are sold. For additional information, see the Explanatory Note that follows the cover page of this Quarterly Report on Form 10-Q.
Boston Properties, Inc.
TableGains (losses) on sales of Content

At March 31, 2019, we evaluated the expected hold period of our One Tower Center property and, based on a shorter-than-expected hold period, we reduced the carrying value of the property to our estimated fair value at March 31, 2019 and recognized an impairment loss totaling approximately $24.0 million for BXP and approximately $22.3 million for BPLP. Our estimated fair value was based on a pending offer from a third party to acquire the property and the subsequent execution of a purchase and sale agreement on April 18, 2019 for a gross sale price of approximately $38.0 million (See Note 3 to the Consolidated Financial Statements). On June 3, 2019, we completed the sale of the property. One Tower Center is an approximately 410,000 net rentable square foot Class A office property located in East Brunswick, New Jersey.
Interest Expense
Interest expensereal estate increased by approximately $20.9$411.1 million for the sixthree months ended June 30, 2019March 31, 2020 compared to 2018,2019, as detailed below.
Name Date Sold Property Type Square Feet Sale Price Net Cash Proceeds Gain (Loss) on Sale of Real Estate 
        (dollars in millions) 
2020             
601, 611 and 651 Gateway January 28, 2020 Office 768,000
 $350.0
 $—
 $217.7
(1)
New Dominion Technology Park February 20, 2020 Office 493,000
 256.0
 254.0
 192.3
 
        $606.0
 $254.0
 $410.0
(2)
2019             
2600 Tower Oaks Boulevard January 24, 2019 Office 179,000
 $22.7
 $21.4
 $(0.6)(3)
Component Change in interest
expense for the six months ended
June 30, 2019 compared to June 30, 2018
  (in thousands)
Increases to interest expense due to:  
Issuance of $1 billion in aggregate principal of 4.500% senior notes due 2028 on November 28, 2018 $22,643
Decrease in capitalized interest related to development projects 11,967
Utilization of the 2017 Credit Facility 6,471
Increase in interest due to finance leases 2,037
Issuance of $850 million in aggregate principal of 3.400% senior notes due 2029 on June 21, 2019 804
Total increases to interest expense 43,922
Decreases to interest expense due to:  
Redemption of $700 million in aggregate principal of 5.875% senior notes due 2019 on December 13, 2018 (20,591)
Increase in capitalized interest related to development projects that had finance leases (2,037)
Other interest expense (excluding senior notes) (352)
Total decreases to interest expense (22,980)
Total change in interest expense $20,942

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___________  six months ended June 30, 2019 and 2018 was approximately $25.1 million and $35.0 million, respectively. These costs are not included in the interest expense referenced above.
At June 30, 2019, our outstanding variable rate debt consisted of BPLP’s $2.0 billion unsecured revolving credit facility (the “2017 Credit Facility”), which consists of the $500.0 million delayed draw term loan facility (the “Delayed Draw Facility”) and the $1.5 billion revolving line of credit (the “Revolving Facility”). The Delayed Draw Facility had $500.0 million outstanding at June 30, 2019. At June 30, 2019, the Revolving Facility did not have any borrowings outstanding. For a summary of our consolidated debt as of June 30, 2019 and June 30, 2018 refer to the heading “Liquidity and Capital Resources—Capitalization—Debt Financing” within “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Table of Content

Noncontrolling interests in property partnerships
Noncontrolling interests in property partnerships increased by approximately $4.7 million for the six months ended June 30, 2019 compared to 2018, as detailed below.
Property Noncontrolling Interests in Property Partnerships for the six months ended June 30,
2019 2018 Change
  (in thousands)
Salesforce Tower (1) $116
 $(306) $422
767 Fifth Avenue (the General Motors Building) 2,371
 446
 1,925
Times Square Tower 13,920
 13,626
 294
601 Lexington Avenue 9,535
 10,187
 (652)
100 Federal Street (2) 5,684
 3,025
 2,659
Atlantic Wharf Office 4,686
 4,656
 30
  $36,312
 $31,634
 $4,678
___________
(1)
On April 1, 2019,January 28, 2020, we acquiredentered into a joint venture with a third party to own, operate and develop properties at our partner’s 5% interest. See Note 8Gateway Commons complex located in South San Francisco. We contributed our 601, 611 and 651 Gateway properties and development rights with an agreed upon value aggregating approximately $350.0 million for our 50% interest in the joint venture (See Notes 3 and 5 to the Consolidated Financial Statements.Statements).
(2)The increase was primarily dueExcludes approximately $0.1 million of gains on sales of real estate recognized during the three months ended March 31, 2020 related to an increasegain amounts from sales of real estate occurring in lease revenuethe prior year.
(3)Excludes approximately $0.3 million of losses on sales of real estate recognized during the three months ended March 31, 2019 related to loss amounts from our tenants.sales of real estate occurring in prior years.
Noncontrolling interest - Common Units of the Operating

Boston Properties Limited Partnership
For BXP, noncontrolling interest–common units of the Operating Partnership decreased by approximately $4.7 million for the six months ended June 30, 2019 compared to 2018 due primarily to a decrease in allocable income, which was the result of recognizing a greater gainGains (losses) on sales of real estate amount during 2018, partially offsetincreased by an increase in the noncontrolling interest’s ownership percentage. Due to our UPREIT ownership structure, there is no corresponding line item on BPLP’s financial statements.
Results of Operations for the Three Months Ended June 30, 2019 and 2018
Net income attributable to Boston Properties, Inc. common shareholders and net income attributable to Boston Properties Limited Partnership common unitholders increased approximately $35.6 million and $39.8$420.6 million for the three months ended June 30, 2019March 31, 2020 compared to 2018, respectively,2019, as detailed in the following tables and for the reasons discussed below under the heading “Comparison of the three months ended June 30, 2019 to the three months ended June 30, 2018” within “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Below are reconciliations of net income attributable to Boston Properties, Inc. common shareholders to NOI and net income attributable to Boston Properties Limited Partnership common unitholders to NOI for the three months ended June 30, 2019 and 2018. For a detailed discussion of NOI, including the reasons management believes NOI is useful to investors, see page 58.


Table of Content

Boston Properties, Inc.below.
  Three months ended June 30,
  2019 2018 Increase/
(Decrease)		 %
Change
  (in thousands)
Net Income Attributable to Boston Properties, Inc. Common Shareholders $164,318
 $128,681
 $35,637
 27.69 %
Preferred dividends 2,625
 2,625
 —
 — %
Net Income Attributable to Boston Properties, Inc. 166,943
 131,306
 35,637
 27.14 %
Net Income Attributable to Noncontrolling Interests:        
Noncontrolling interest—common units of Boston Properties Limited Partnership 19,036
 14,859
 4,177
 28.11 %
Noncontrolling interests in property partnerships 17,482
 14,400
 3,082
 21.40 %
Net Income 203,461
 160,565
 42,896
 26.72 %
Other Expenses:        
Add:        
Interest expense 102,357
 92,204
 10,153
 11.01 %
Other Income:        
Less:        
Gains from investments in securities 1,165
 505
 660
 130.69 %
Interest and other income 3,615
 2,579
 1,036
 40.17 %
Gains on sales of real estate 1,686
 18,292
 (16,606) (90.78)%
Income from unconsolidated joint ventures 47,964
 769
 47,195
 6,137.19 %
Other Expenses:        
Add:        
Depreciation and amortization expense 177,411
 156,417
 20,994
 13.42 %
Transaction costs 417
 474
 (57) (12.03)%
Payroll and related costs from management services contracts 2,403
 1,970
 433
 21.98 %
General and administrative expense 35,071
 28,468
 6,603
 23.19 %
Other Revenue:        
Less:        
Direct reimbursements of payroll and related costs from management services contracts 2,403
 1,970
 433
 21.98 %
Development and management services revenue 9,986
 9,305
 681
 7.32 %
Net Operating Income $454,301
 $406,678
 $47,623
 11.71 %
Name Date Sold Property Type Square Feet Sale Price Net Cash Proceeds Gain (Loss) on Sale of Real Estate 
        (dollars in millions) 
2020             
601, 611 and 651 Gateway January 28, 2020 Office 768,000
 $350.0
 $—
 $222.4
(1)
New Dominion Technology Park February 20, 2020 Office 493,000
 256.0
 254.0
 197.1
 
        $606.0
 $254.0
 $419.5
(2)
2019             
2600 Tower Oaks Boulevard January 24, 2019 Office 179,000
 $22.7
 $21.4
 $(0.6)(3)
              



Table of Content

Boston Properties Limited Partnership
  Three months ended June 30,
  2019 2018 Increase/
(Decrease)		 %
Change
  (in thousands)
Net Income Attributable to Boston Properties Limited Partnership Common Unitholders $185,715
 $145,961
 $39,754
 27.24 %
Preferred distributions 2,625
 2,625
 —
 — %
Net Income Attributable to Boston Properties Limited Partnership 188,340
 148,586
 39,754
 26.75 %
Net Income Attributable to Noncontrolling Interests:        
Noncontrolling interests in property partnerships 17,482
 14,400
 3,082
 21.40 %
Net Income 205,822
 162,986
 42,836
 26.28 %
Other Expenses:        
Add:        
Interest expense 102,357
 92,204
 10,153
 11.01 %
Less:        
Gains from investments in securities 1,165
 505
 660
 130.69 %
Interest and other income 3,615
 2,579
 1,036
 40.17 %
Gains on sales of real estate 1,835
 18,770
 (16,935) (90.22)%
Income from unconsolidated joint ventures 47,964
 769
 47,195
 6,137.19 %
Other Expenses:        
Add:        
Depreciation and amortization expense 175,199
 154,474
 20,725
 13.42 %
Transaction costs 417
 474
 (57) (12.03)%
Payroll and related costs from management services contracts 2,403
 1,970
 433
 21.98 %
General and administrative expense 35,071
 28,468
 6,603
 23.19 %
Other Revenue:        
Less:        
Direct reimbursements of payroll and related costs from management services contracts 2,403
 1,970
 433
 21.98 %
Development and management services revenue 9,986
 9,305
 681
 7.32 %
Net Operating Income $454,301

$406,678

$47,623
 11.71 %

Comparison of the three months ended June 30, 2019 to the three months ended June 30, 2018.
The table below shows selected operating information for the Same Property Portfolio and the Total Property Portfolio. The Same Property Portfolio consists of 142 properties totaling approximately 38.3 million net rentable square feet of space, excluding unconsolidated joint ventures. The Same Property Portfolio includes properties acquired or fully placed in-service on or prior to April 1, 2018 and owned and in-service through June 30, 2019. The Total Property Portfolio includes the effects of the other properties either placed in-service, acquired or in development or redevelopment after April 1, 2018 or disposed of on or prior to June 30, 2019. This table includes a reconciliation from the Same Property Portfolio to the Total Property Portfolio by also providing information for the three months ended June 30, 2019 and 2018 with respect to the properties that were placed in-service, acquired, in development or redevelopment or sold. There were no properties acquired between April 1, 2018 and June 30, 2019.

Table of Content

 Same Property Portfolio 
Properties
Placed In-Service
Portfolio
 Properties in
Development or
Redevelopment
Portfolio		 Properties Sold Portfolio Total Property Portfolio
(dollars in thousands)2019 2018 Increase/(Decrease) 
%
Change
 2019 2018 2019 2018 2019 2018 2019 2018 Increase/(Decrease) %
Change
Rental Revenue: (1)                           
Lease Revenue (Excluding Termination Income)$632,037
 $590,190
 $41,847
 7.09 % $34,492
 $7,134
 $(1,070) $2,331
 $886
 $6,668
 $666,345
 $606,323
 $60,022
 9.90 %
Termination Income4,910
 186
 4,724
 2,539.78 % —
 —
 —
 —
 —
 532
 4,910
 718
 4,192
 583.84 %
Lease Revenue636,947
 590,376
 46,571
 7.89 % 34,492
 7,134
 (1,070) 2,331
 886
 7,200
 671,255
 607,041
 64,214
 10.58 %
Parking and Other Income25,670
 26,304
 (634) (2.41)% 469
 210
 106
 19
 9
 229
 26,254
 26,762
 (508) (1.90)%
Total Rental Revenue (1)662,617
 616,680
 45,937
 7.45 % 34,961
 7,344
 (964) 2,350
 895
 7,429
 697,509
 633,803
 63,706
 10.05 %
Real Estate Operating Expenses238,262
 226,141
 12,121
 5.36 % 13,702
 3,875
 942
 830
 943
 4,031
 253,849
 234,877
 18,972
 8.08 %
Net Operating Income (Loss), excluding residential and hotel424,355
 390,539
 33,816
 8.66 % 21,259
 3,469
 (1,906) 1,520
 (48) 3,398
 443,660
 398,926
 44,734
 11.21 %
Residential Net Operating Income (Loss) (2)2,466
 2,702
 (236) (8.73)% 2,411
 (816) —
 —
 —
 —
 4,877
 1,886
 2,991
 158.59 %
Hotel Net Operating Income (2)5,764
 5,866
 (102) (1.74)% —
 —
 —
 —
 —
 —
 5,764
 5,866
 (102) (1.74)%
Net Operating Income (Loss)$432,585
 $399,107
 $33,478
 8.39 % $23,670
 $2,653
 $(1,906) $1,520
 $(48) $3,398
 $454,301
 $406,678
 $47,623
 11.71 %
__________________________  
(1)Rental Revenue is equal
On January 28, 2020, we entered into a joint venture with a third party to Revenue less Developmentown, operate and Management Services Revenuedevelop properties at our Gateway Commons complex located in South San Francisco. We contributed our 601, 611 and Direct Reimbursements of Payroll651 Gateway properties and Related Costs from Management Services Revenue perdevelopment rights with an agreed upon value aggregating approximately $350.0 million for our 50% interest in the joint venture (See Notes 3 and 5 to the Consolidated Statements of Operations excluding the residential and hotel revenue that is noted below. Upon the adoption of ASU-2016-02 “Leases” on January 1, 2019, service income from tenants is included in Lease revenue. Prior to adoption, these amounts were included in the line item for Development and Management Services Revenue. 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.Financial Statements).
(2)For a detailed discussionExcludes approximately $0.1 million of NOI, including the reasons management believes NOI is useful to investors, see page 58. Residential Net Operating Income forgains on sales of real estate recognized during the three months ended June 30, 2019 and 2018 is comprisedMarch 31, 2020 related to gain amounts from sales of Residential Revenuereal estate occurring in the prior year.
(3)Excludes approximately $0.3 million of $8,999 and $4,799, less Residential Expenseslosses on sales of $4,122 and $2,913, respectively. Hotel Net Operating Income forreal estate recognized during the three months ended June 30,March 31, 2019 and 2018 is comprisedrelated to loss amounts from sales of Hotel Revenue of $14,844 and $14,607 less Hotel Expenses of $9,080 and $8,741, respectively, per the Consolidated Statements of Operations.real estate occurring in prior years.

Interest and Other Income
Table of Content

Same Property Portfolio
Lease Revenue (Excluding Termination Income)
Lease revenue from the Same Property Portfolio increasedInterest and other income decreased by approximately $41.8$0.7 million for the three months ended June 30, 2019March 31, 2020 compared to 2018. The increase was2019 due primarily the result of increasesto a decrease in revenueinterest rates.
Gains (Losses) from our leases and the reclassification of service incomeInvestments in Securities
Gains (losses) from tenants and other income of approximately $37.2 million and $4.6 million, respectively. Lease revenue from our leases increased approximately $37.2 million as a result of our average revenue per square foot increasing by approximately $2.92, which contributed approximately $23.6 million, and an approximately $13.6 million increase due to our average occupancy increasing from 92.3% to 94.5%.
On January 1, 2019, we adopted ASU 2016-02. As a result of the adoption, there were certain nonlease components (service income from tenants, overtime HVAC, late fees and other items) that were reclassified on a prospective basis from the Development and Management Services revenue and Parking and Other Income line items of our Consolidated Statements of Operations. As a result, Lease revenue increased by approximately $4.6 million and Development and Management Services revenue and Parking and Other Income decreased by approximately $2.8 million and $1.8 million, respectively,investments in securities for the three months ended June 30,March 31, 2020 and 2019 (See Note 4related to investments that we have made to reduce our market risk relating to deferred compensation plans that we maintain for BXP’s officers and non-employee directors. Under the Consolidated Financial Statements).deferred compensation plans, each officer or non-employee director who is eligible to participate is permitted to defer a portion of the officer’s current income or the non-employee director’s compensation on a pre-tax basis and receive a tax-deferred return on these deferrals based on the performance of specific investments selected by the officer or non-employee director. In order to reduce our market risk relating to these plans, we typically acquire, in a separate account that is not restricted as to its use, similar or identical investments as those selected by each officer or non-employee director. This enables us to generally match our liabilities to BXP’s officers or non-employee directors under our deferred compensation plans with equivalent assets and thereby limit our market risk. The performance of these investments is recorded as gains (losses) from investments in securities. During the three months ended March 31, 2020 and 2019, we recognized gains (losses) of approximately $(5.4) million and $3.0 million, respectively, on these investments. By comparison, our general and administrative expense increased (decreased) by approximately $(5.4) million and $3.0 million during the three months ended March 31, 2020 and 2019, 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 non-employee directors of BXP participating in the plans.
Termination Income
Termination income increaseddecreased by approximately $4.7$4.6 million for the three months ended June 30, 2019March 31, 2020 compared to 2018.2019.
Termination income for the three months ended June 30,March 31, 2020 related to 15 tenants across the Same Property Portfolio and totaled approximately $2.4 million, which was primarily related to tenants that terminated leases early in New York City and the Boston region.
Termination income for the three months ended March 31, 2019 related to 11 tenants across the Same Property Portfolio and totaled approximately $4.9$7.0 million, of which approximately $2.0$4.9 million is from a tenanttwo tenants that terminated a leaseleases early at 399 Park Avenue in New York City.
Termination income for the three months ended June 30, 2018 related to four tenants across the Same Property PortfolioParking and totaled approximately $0.2 million.Other Revenue
Parking and Other Income
Parking and other incomerevenue decreased by approximately $0.6$0.9 million for the three months ended June 30, 2019March 31, 2020 compared to 2018, which was2019, primarily due to the reclassificationa decrease in transient parking. Due to COVID-19, we expect to see a decrease in parking revenue, for fiscal year 2020, as a result of mandatory business closures and “stay-at-home” orders. See Item 1A: “Risk Factors” for additional details.
Parking revenue generally consists of two primary components: revenue from monthly passes and hourly/daily parking revenue. During 2019, total parking revenue was approximately $1.8$100 million and our share of total parking revenue from unconsolidated joint ventures was approximately $13 million. Approximately $40 million of certain nonlease components resultingthis aggregate amount of consolidated and unconsolidated parking revenue was derived from the adoptionhourly/daily parking. In April, with stay-at-home orders and business closures, we generated minimal hourly/daily parking revenue and this trend may continue for as long as these stay-at-home orders and business closures continue. Some of ASU 2016-02, described above (See Note 4 to the Consolidated Financial Statements). Excluding this reclassification,our monthly parking revenues are contractual agreements embedded in our leases, and other income increased by approximately $1.2 million.some are at will individual agreements.
Real Estate Operating Expenses
Real estate operating expenses from the Same Property Portfolio increased by approximately $12.1$6.1 million, or 5.4%2.5%, for the three months ended June 30, 2019March 31, 2020 compared to 20182019, due primarily to increases in (1) real estate taxes of approximately $7.9 million, or 7.1%, (2) repairs and maintenance of approximately $2.1 million, or 5.6% and (3) other real estate operating expenses of approximately $2.1$5.3 million, or 2.7%.4.2%, and $0.8 million, or 0.7%, respectively. The increase in real estate taxes and repairs and maintenance werewas primarily experienced in the New York CBD properties.
Properties Placed In-ServiceAcquired Portfolio
The table below lists the properties placed in-service or partially placed in-service from Aprilacquired between January 1, 2018 through June 30, 2019.2019 and March 31, 2020. Rental revenue and real estate operating expenses increased by approximately $31.9$3.6 million and $10.9$1.5 million, respectively, for the three months ended June 30, 2019March 31, 2020 compared to 2018,2019, as detailed below.

Table of Content

  Quarter Initially Placed In-Service Quarter Fully Placed In-Service   Rental Revenue Real Estate Operating Expenses
Name   Square Feet 2019 2018 Change 2019 2018 Change
        (dollars in thousands)
Office                  
191 Spring Street Fourth Quarter, 2017 Fourth Quarter, 2018 170,997
 $1,938
 $923
 $1,015
 $384
 $464
 $(80)
Salesforce Tower Fourth Quarter, 2017 Fourth Quarter, 2018 1,420,682
 33,023
 6,421
 26,602
 13,318
 3,411
 9,907
Total Office     1,591,679
 34,961

7,344

27,617

13,702

3,875

9,827
                   
Residential                  
Signature at Reston First Quarter, 2018 Second Quarter, 2018 517,783
 2,805
 486
 2,319
 1,643
 1,151
 492
Proto Kendall Square Second Quarter, 2018 Third Quarter, 2018 166,717
 2,011
 43
 1,968
 762
 194
 568
Total Residential     684,500
 4,816
 529
 4,287
 2,405
 1,345
 1,060
      2,276,179
 $39,777
 $7,873
 $31,904
 $16,107
 $5,220
 $10,887
    Square Feet Rental Revenue Real Estate Operating Expenses
Name Date acquired  2020 2019 Change 2020 2019 Change
      (dollars in thousands)
880 and 890 Winter Street August 27, 2019 392,568
 $3,553
 $—
 $3,553
 $1,466
 $—
 $1,466
    392,568
 $3,553
 $—
 $3,553
 $1,466
 $—
 $1,466

Properties Placed In-Service Portfolio
The table below lists the properties that were placed in-service or partially placed in-service between January 1, 2019 and March 31, 2020. Rental revenue and real estate operating expenses from our Properties Placed In-Service Portfolio increased by approximately $13.4 million and $2.0 million, respectively, for the three months ended March 31, 2020 compared to 2019, as detailed below.
  Quarter Initially Placed In-Service Quarter Fully Placed In-Service   Rental Revenue Real Estate Operating Expenses
Name   Square Feet 2020 2019 Change 2020 2019 Change
        (dollars in thousands)
20 CityPoint Second Quarter, 2019 N/A 211,000
 $1,849
 $—
 $1,849
 $588
 $—
 $588
145 Broadway Fourth Quarter, 2019 Fourth Quarter, 2019 488,862
 10,910
 —
 10,910
 1,188
 —
 1,188
17Fifty Presidents Street First Quarter, 2020 First Quarter, 2020 275,809
 598
 —
 598
 233
 —
 233
      975,671

$13,357

$—

$13,357

$2,009

$—

$2,009
Properties in Development or Redevelopment Portfolio
The table below lists the properties that were in development or redevelopment between AprilJanuary 1, 20182019 and June 30, 2019.March 31, 2020. Rental revenue decreased by approximately $3.3 million and real estate operating expenses increasedfrom our Properties in Development or Redevelopment Portfolio decreased by approximately $0.1$2.2 million and $0.8 million, respectively, for the three months ended June 30, 2019March 31, 2020 compared to 2018, as detailed below.2019.
   Rental Revenue Real Estate Operating Expenses   Rental Revenue Real Estate Operating Expenses
Name Date commenced development / redevelopment Square Feet 2019 2018 Change 2019 2018 Change Date Commenced Development / Redevelopment Square Feet 2020 2019 Change 2020 2019 Change
   (dollars in thousands)   (dollars in thousands)
One Five Nine East 53rd Street August 19, 2016 220,000
 $989
 $852
 $137
 $395
 $388
 $7
 August 19, 2016 220,000
 $886
 $873
 $13
 $563
 $559
 $4
325 Main Street (1) May 9, 2019 115,000
 (1,953) 1,498
 (3,451) 547
 442
 105
 May 9, 2019 115,000
 —
 1,200
 (1,200) 149
 493
 (344)
200 West Street (2) September 30, 2019 261,000
 1,268
 2,264
 (996) 843
 1,308
 (465)
 335,000
 $(964) $2,350
 $(3,314) $942
 $830
 $112
 596,000
 $2,154
 $4,337
 $(2,183) $1,555
 $2,360
 $(805)
__________________________
(1)Rental revenue for the three months ended June 30, 2019 includes the acceleration and write-off of straight-line rent associated with the early termination of a lease at that building. Real estate operating expenses for the three months ended June 30, 2019March 31, 2020 includes approximately $0.4$0.1 million of demolition costs.
(2)Rental revenue and real estate operating expenses for the three months ended March 31, 2019 are related to the entire building. The redevelopment is a conversion of a 126,000 square foot portion of the property to laboratory space.

Properties Sold Portfolio
The table below lists the properties we sold between AprilJanuary 1, 20182019 and June 30, 2019.March 31, 2020. Rental revenue and real estate operating expenses from our Properties Sold Portfolio decreased by approximately $6.5$8.9 million and $3.1$3.7 million, respectively, for the three months ended June 30, 2019March 31, 2020 compared to 2018,2019, as detailed below.
Table of Content

   Rental Revenue Real Estate Operating Expenses   Rental Revenue Real Estate Operating Expenses
Name Date Sold Property Type Square Feet 2019 2018 Change 2019 2018 Change Date Sold Property Type Square Feet 2020 2019 Change 2020 2019 Change
   (dollars in thousands)   (dollars in thousands)
91 Hartwell Avenue May 24, 2018 Office 119,000
 $—
 $461
 $(461) $—
 $271
 $(271)
Quorum Office Park September 27, 2018 Office 268,000
 —
 1,176
 (1,176) —
 669
 (669)
1333 New Hampshire Avenue (1) November 30, 2018 Office 315,000
 —
 3,932
 (3,932) —
 1,429
 (1,429)
Tower Oaks December 20, 2018 Land N/A
 —
 64
 (64) —
 54
 (54)
2600 Tower Oaks Boulevard January 24, 2019 Office 179,000
 —
 681
 (681) —
 472
 (472) January 24, 2019 Office 179,000
 $—
 $159
 $(159) $—
 $189
 $(189)
One Tower Center June 3, 2019 Office 410,000
 895
 1,115
 (220) 904
 1,092
 (188) June 3, 2019 Office 410,000
 —
 1,205
 (1,205) —
 1,176
 (1,176)
164 Lexington Road June 28, 2019 Office 64,000
 —
 —
 —
 39
 44
 (5) June 28, 2019 Office 64,000
 —
 —
 —
 —
 43
 (43)
Washingtonian North December 20, 2019 Land N/A
 —
 —
 —
 —
 36
 (36)
601, 611 and 651 Gateway January 28, 2020 Office 768,000
 1,946
 7,135
 (5,189) 881
 2,464
 (1,583)
New Dominion Technology Park February 20, 2020 Office 493,000
 2,551
 4,862
 (2,311) 772
 1,404
 (632)
 1,355,000
 $895

$7,429

$(6,534)
$943

$4,031

$(3,088) 1,914,000
 $4,497
 $13,361
 $(8,864) $1,653
 $5,312
 $(3,659)
___________
(1)Rental revenue includes approximately $0.5 million of termination income for the three months ended June 30, 2018.


For additional information on the sale of the above properties and land parcel refer to “Results of Operations—Other Income and Expense Items - Gains (Losses) on Sales of Real Estate” within “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Residential Net Operating Income
Net operating income for our residential same properties decreasedincreased by approximately $0.2$2.0 million for the three months ended June 30, 2019March 31, 2020 compared to 2018.2019.
The following reflects our occupancy and rate information for The Lofts at Atlantic Wharf, and The Avant at Reston Town Center, Signature at Reston and Proto Kendall Square for the three months ended June 30, 2019March 31, 2020 and 2018.2019.
 The Lofts at Atlantic Wharf The Avant at Reston Town Center The Lofts at Atlantic Wharf The Avant at Reston Town Center Signature at Reston Proto Kendall Square
 2019 2018 Percentage
Change		 2019 2018 Percentage
Change		 2020 2019 Change (%) 2020 2019 Change (%) 2020 2019 Change (%) 2020 2019 Change (%)
Average Monthly Rental Rate (1) $4,481
 $4,237
 5.8% $2,405
 $2,421
 (0.7)% $4,510
 $4,433
 1.7 % $2,419
 $2,352
 2.8% $2,342
 $2,260
 3.6% $3,027
 $2,705
 11.9%
Average Rental Rate Per Occupied Square Foot $4.92
 $4.69
 4.9% $2.63
 $2.68
 (1.9)% $5.04
 $4.86
 3.7 % $2.67
 $2.57
 3.9% $2.51
 $2.47
 1.6% $5.56
 $5.07
 9.7%
Average Physical Occupancy (2) 95.0% 92.3% 2.9% 94.2% 97.0% (2.9)% 95.0% 94.6% 0.4 % 91.5% 90.3% 1.3% 82.2% 53.3% 54.2% 95.5% 63.5% 50.4%
Average Economic Occupancy (3) 95.4% 91.9% 3.8% 93.8% 95.6% (1.9)% 94.3% 95.0% (0.7)% 90.3% 89.3% 1.1% 76.9% 46.4% 65.7% 95.2% 58.2% 63.6%
__________________________  
(1)Average Monthly Rental Rates areRate is calculated by us 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 Average 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. TrendsActual market rents and trends in marketsuch rents for a region as reported by others could vary.may vary materially from Market Rents used by us. Market Rents for a period are based on the average Market Rents during that period and do not reflect any impact for cash concessions.


Hotel Net Operating Income
Net operating income for the Boston Marriott Cambridge hotel property decreased by approximately $0.1$1.1 million for the three months ended June 30, 2019March 31, 2020 compared to 2018.
Table of Content

2019.
The following reflects our occupancy and rate information for the Boston Marriott Cambridge hotel for the three months ended June 30, 2019March 31, 2020 and 2018.2019.
 2019 2018 
Percentage
Change
 2020 2019 

Change (%)
Occupancy 89.1% 90.3% (1.3)% 59.6% 80.2% (25.7)%
Average daily rate $318.28
 $317.95
 0.1 % $211.35
 $221.39
 (4.5)%
Revenue per available room, REVPAR $283.73
 $287.20
 (1.2)%
REVPAR $126.00
 $177.63
 (29.1)%

As a result of COVID-19, the Boston Marriott Cambridge was closed in March 2020 and is running at a monthly deficit. We do not know when the hotel will re-open and its closure will have a material adverse effect on the hotel’s contribution to our results of operations during the closure. See Item 1A: "Risk Factors" for additional details.
Other Operating Revenue and Expense Items
Development and Management Services Revenue
Development and management services revenue increaseddecreased by an aggregate of approximately $0.7$1.4 million for the three months ended June 30, 2019March 31, 2020 compared to 2018.2019. Development services revenue increaseddecreased by approximately $2.7$1.5 million while management services revenue decreasedincreased by approximately $2.0$0.1 million. The decrease in development services revenue was primarily related to a decrease of approximately $2.7 million in development fees and fees associated with tenant improvement projects earned in the Boston region offset by an increase of $0.6 million in development fees earned in the San Francisco region and an increase of $0.6 million in development fees associated with a tenant improvement project earned in the Washington, DC region. The increase in developmentmanagement services revenue iswas primarily related to an increase in developmentproperty management fees earned from our Washington, DC and New York regions.
On January 1, 2019, we adopted ASU 2016-02. As a result of the adoption, there were certain nonlease components (service income from tenants) that were reclassified on a prospective basis from this line item of our Consolidated Statements of Operations to Lease revenue. For the three months ended June 30, 2018, management service revenue included $2.6 million of service income from tenants. Excluding this reclassification, management services revenue would have increased by approximately $0.6 million due primarily to property and asset management fees we earned from our Santa Monica Business Park unconsolidated joint venture, which we acquired on July 19, 2018.Los Angeles region.
General and Administrative Expense
General and administrative expense increaseddecreased by approximately $6.6$5.3 million for the three months ended June 30, 2019March 31, 2020 compared to 20182019 primarily due to a decrease in compensation expense and other general and administrative expenses increasing by approximately $5.9 million and $0.7 million, respectively.expense. The increasedecrease in compensation expense was related to (1) an approximately $2.6$8.4 million increase related to a decrease in capitalized wages, which includes the effect of no longer being able to capitalize internal and external legal costs and internal leasing wages, (2) an approximately $1.2 million difference between the unrecognized expense remaining from the 2015-2018 MYLTIP Units compared to the expense that was recognized for the newly issued 2019 MYLTIP Units, (3) an approximately $0.7 million increase in the value of theour deferred compensation plan and (4)partially offset by an approximately $1.4$3.1 million increase related to other compensation expenses. The decrease in capitalized wages is shown as an increase to general and administrative expense as some of these costs are capitalized and included in real estate assets on our Consolidated Balance Sheets (see below). The increase in other generalcompensation expense, which includes the expense associated with our equity compensation programs, which includes the acceleration of amortization that occurred for employees that reached a certain age and administrative expenses was primarily related to an increasenumber of years of service and therefore became vested in professional fees and taxes.these awards sooner.
Wages directly related to the development of rental properties are capitalized and included in real estate assets on our Consolidated Balance Sheets, and they are amortized over the useful lives of the applicable asset or lease term. On January 1, 2019, we adopted ASU 2016-02 and therefore, as a lessor, we can only capitalize incremental direct leasing costs. As a result, we are no longer able to capitalize internal and external legal costs and internal leasing wages; instead, we are required to expense these and other non-incremental costs as incurred (See Note 4 to the Consolidated Financial Statements).
Capitalized wages for the three months ended June 30,March 31, 2020 and 2019 and 2018 were approximately $2.6$2.8 million and $4.8$2.9 million, respectively. These costs are not included in the general and administrative expenses discussed above.
Transaction Costs
Transaction costs increased by approximately $0.2 million for the three months ended March 31, 2020 compared to 2019 due primarily to transaction costs related to the pursuit and formation of new joint ventures. In general, transaction costs relating to the formation of new and pending joint ventures and the pursuit of other transactions are expensed as incurred.
Depreciation and Amortization Expense
Depreciation expense may differ between BXP and BPLP as a result of previously applied acquisition accounting by BXP for the issuance of common stock in connection with non-sponsor OP Unit redemptions by BPLP.  This accounting resulted in a step-up of the real estate assets at BXP that was allocated to certain

properties.  The difference between the real estate assets of BXP as compared to BPLP for certain properties having an allocation of the real estate step-up will result in a corresponding difference in depreciation expense. For additional information see the Explanatory Note that follows the cover page of this Quarterly Report on Form 10-Q.
Table of Content

Boston Properties, Inc.
Depreciation and amortization expense increased by approximately $21.0$6.5 million for the three months ended June 30, 2019March 31, 2020 compared to 2018,2019, as detailed below.
 Depreciation and Amortization Expense for the three months ended June 30,
2019 2018 Change
Portfolio Depreciation and Amortization for the three months ended March 31,
2020 2019 Change
 (in thousands) (in thousands)
Same Property Portfolio $155,531
 $150,913
 $4,618
 $164,216
 $160,407
 $3,809
Properties Acquired Portfolio 2,564
 —
 2,564
Properties Placed in-Service Portfolio 11,006
 2,137
 8,869
 2,959
 —
 2,959
Properties in Development or Redevelopment Portfolio (1) 10,726
 236
 10,490
Properties in Development or Redevelopment Portfolio 468
 673
 (205)
Properties Sold Portfolio 148
 3,131
 (2,983) 887
 3,514
 (2,627)
 $177,411
 $156,417
 $20,994
 $171,094
 $164,594
 $6,500
___________  
(1)
On May 9, 2019, we commenced development of 325 Main Street in Cambridge, Massachusetts (See Note 3 to the Consolidated Financial Statements). As a result, during the three months ended June 30, 2019, we recorded approximately $9.9 million of accelerated depreciation expense for the demolition of the building, of which approximately $0.4 million related to the step-up of real estate assets.
Boston Properties Limited Partnership
Depreciation and amortization expense increased by approximately $20.7$6.6 million for the three months ended June 30, 2019March 31, 2020 compared to 2018,2019, as detailed below.
 Depreciation and Amortization Expense for the three months ended June 30,
2019 2018 Change
Portfolio Depreciation and Amortization for the three months ended March 31,
2020 2019 Change
 (in thousands) (in thousands)
Same Property Portfolio $153,698
 $148,970
 $4,728
 $162,407
 $158,495
 $3,912
Properties Acquired Portfolio 2,564
 —
 2,564
Properties Placed in-Service Portfolio 11,006
 2,137
 8,869
 2,959
 —
 2,959
Properties in Development or Redevelopment Portfolio (1) 10,347
 236
 10,111
Properties in Development or Redevelopment Portfolio 468
 673
 (205)
Properties Sold Portfolio 148
 3,131
 (2,983) 887
 3,514
 (2,627)
 $175,199
 $154,474
 $20,725
 $169,285
 $162,682
 $6,603
___________  
(1)
On May 9, 2019, we commenced development of 325 Main Street in Cambridge, Massachusetts (See Note 3 to the Consolidated Financial Statements). As a result, during the three months ended June 30, 2019, we recorded approximately $9.5 million of accelerated depreciation expense for the demolition of the building.

Direct Reimbursements of Payroll and Related Costs From Management Services Contracts and Payroll and Related Costs From Management Service Contracts
ASU 2016-08 “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations” updated the principal versus agent considerations and as a result weWe 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. It is anticipatedWe anticipate that these two financial statement line items will generally offset each other.
Other Income and Expense Items
Income (Loss) from Unconsolidated Joint Ventures
IncomeFor the three months ended March 31, 2020 compared to 2019, income (loss) from unconsolidated joint ventures increaseddecreased by approximately $47.2$0.6 million primarily due to the addition of our Gateway Commons joint venture and the partial placing in-service of the Hub50House joint venture in South San Francisco, CA and Boston, MA, respectively. These joint ventures reduced our net income by approximately $1.4 million for the three months ended June 30, 2019 comparedMarch 31, 2020. At March 31, 2020, the Hub50House was only 28% leased and is not expected to 2018 duebe stabilized until the first quarter of 2022. The decrease in net income from the Gateway Commons joint venture was primarily related to depreciation and amortization. These decreases were offset by an approximately $0.8 million increase related to our share of the gain on sale of real estatenet income from the sale of 540 Madison Avenue.our other unconsolidated joint ventures.
Table of Content

On June 27, 2019, a joint venture in which we have a 60% interest completed the sale of its 540 Madison Avenue property located in New York City for a gross sale price of approximately $310.3 million, including the assumption by the buyer of the mortgage loan collateralized by the property totaling $120.0 million. Net cash proceeds totaled approximately $178.7 million, of which our share was approximately $107.1 million, after the payment of transaction costs. We recognized a gain on sale of real estate totaling approximately $47.8 million (See Note 5 to the Consolidated Financial Statements).
Gains (Losses) on Sales of Real Estate
The gainsGains on sales of real estate may differ between BXP and BPLP as a result of previously applied acquisition accounting by BXP for the issuance of common stock in connection with non-sponsor OP Unit redemptions by BPLP. This accounting resulted in a step-up of the real estate assets at BXP that was allocated to certain properties. The difference between the real estate assets of BXP as compared to BPLP for certain properties having an allocation of the real estate step-up will result in a corresponding difference in the gains on sales of real estate when those properties are sold. For additional information, see the Explanatory Note that follows the cover page of this Quarterly Report on Form 10-Q.
Boston Properties, Inc.
Gains (losses) on sales of real estate decreasedincreased by approximately $16.6$411.1 million for the three months ended June 30, 2019March 31, 2020 compared to 2018,2019, as detailed below (dollars in millions).below.
Name Date Sold Property Type Square Feet Sale Price Net Cash Proceeds Gain (Loss) on Sale of Real Estate 
        (dollars in millions) 
2020             
601, 611 and 651 Gateway January 28, 2020 Office 768,000
 $350.0
 $—
 $217.7
(1)
New Dominion Technology Park February 20, 2020 Office 493,000
 256.0
 254.0
 192.3
 
        $606.0
 $254.0
 $410.0
(2)
2019             
2600 Tower Oaks Boulevard January 24, 2019 Office 179,000
 $22.7
 $21.4
 $(0.6)(3)
Name Date Sold Property Type Square Feet Sale Price Cash Proceeds Gains (Losses) on Sale of Real Estate 
2019             
One Tower Center June 3, 2019 Office 410,000 $38.0
 $36.6
 $(0.8) 
164 Lexington Road June 28, 2019 Office 64,000 4.0
 3.8
 2.5
 
        $42.0
 $40.4
 $1.7
 
2018             
91 Hartwell Avenue May 24, 2018 Office 119,000 $22.2
 $21.7
 $15.5
(1)
___________
(1)
On January 28, 2020, we entered into a joint venture with a third party to own, operate and develop properties at our Gateway Commons complex located in South San Francisco. We contributed our 601, 611 and 651 Gateway properties and development rights with an agreed upon value aggregating approximately $350.0 million for our 50% interest in the joint venture (See Notes 3 and 5 to the Consolidated Financial Statements).
(2)Excludes approximately $2.8$0.1 million of gains on sales of real estate recognized during the three months ended June 30, 2018March 31, 2020 related to gain amounts from sales of real estate occurring in the prior year.
(3)Excludes approximately $0.3 million of losses on sales of real estate recognized during the three months ended March 31, 2019 related to loss amounts from sales of real estate occurring in prior years.


Boston Properties Limited Partnership
Gains (losses) on sales of real estate decreasedincreased by approximately $16.9$420.6 million for the three months ended June 30, 2019March 31, 2020 compared to 2018,2019, as detailed below (dollars in millions).below.
Name Date Sold Property Type Square Feet Sale Price Cash Proceeds Gains (Losses) on Sale of Real Estate 
2019             
One Tower Center June 3, 2019 Office 410,000
 $38.0
 $36.6
 $(0.8) 
164 Lexington Road June 28, 2019 Office 64,000
 4.0
 3.8
 2.6
 
        $42.0
 $40.4
 $1.8
 
2018             
91 Hartwell Avenue May 24, 2018 Office 119,000
 $22.2
 $21.7
 $15.9
(1)
Name Date Sold Property Type Square Feet Sale Price Net Cash Proceeds Gain (Loss) on Sale of Real Estate 
        (dollars in millions) 
2020             
601, 611 and 651 Gateway January 28, 2020 Office 768,000
 $350.0
 $—
 $222.4
(1)
New Dominion Technology Park February 20, 2020 Office 493,000
 256.0
 254.0
 197.1
 
        $606.0
 $254.0
 $419.5
(2)
2019             
2600 Tower Oaks Boulevard January 24, 2019 Office 179,000
 $22.7
 $21.4
 $(0.6)(3)
              
___________
(1)
On January 28, 2020, we entered into a joint venture with a third party to own, operate and develop properties at our Gateway Commons complex located in South San Francisco. We contributed our 601, 611 and 651 Gateway properties and development rights with an agreed upon value aggregating approximately $350.0 million for our 50% interest in the joint venture (See Notes 3 and 5 to the Consolidated Financial Statements).
(2)Excludes approximately $2.8$0.1 million of gains on sales of real estate recognized during the three months ended June 30, 2018March 31, 2020 related to gain amounts from sales of real estate occurring in the prior year.
(3)Excludes approximately $0.3 million of losses on sales of real estate recognized during the three months ended March 31, 2019 related to loss amounts from sales of real estate occurring in prior years.
Interest and Other Income
Interest and other income increaseddecreased by approximately $1.0$0.7 million for the three months ended June 30, 2019March 31, 2020 compared to 20182019 due primarily to an increasea decrease in interest rates.
Table of Content

Gains (Losses) from Investments in Securities
Gains (losses) from investments in securities for the three months ended June 30,March 31, 2020 and 2019 and 2018 related to investments that we have made to reduce our market risk relating to a deferred compensation planplans that we maintain for BXP’s officers.officers and non-employee directors. Under thisthe deferred compensation plan,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.officer or non-employee director. In order to reduce our market risk relating to this plan,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.officer or non-employee director. This enables us to generally match our liabilities to BXP’s officers or non-employee directors under our deferred compensation planplans with equivalent assets and thereby limit our market risk. The performance of these investments is recorded as gains (losses) from investments in securities. During the three months ended June 30,March 31, 2020 and 2019, and 2018, we recognized gains (losses) of approximately $1.2$(5.4) million and $0.5$3.0 million, respectively, on these investments. By comparison, our general and administrative expense increased (decreased) by approximately $1.2$(5.4) million and $0.5$3.0 million during the three months ended June 30,March 31, 2020 and 2019, and 2018, respectively, as a result of increases (decreases) in our liability under our deferred compensation planplans that werewas associated with the performance of the specific investments selected by officers and non-employee directors of BXP participating in the plan.plans.
Impairment Loss
Impairment loss may differ between BXP and BPLP as a result of previously applied acquisition accounting by BXP for the issuance of common stock in connection with non-sponsor OP Unit redemptions by BPLP.  This accounting resulted in a step-up of the real estate assets at BXP that was allocated to certain properties.  The difference between the real estate assets of BXP as compared to BPLP for certain properties having an allocation

of the real estate step-up will result in a corresponding difference in depreciation expense. For additional information see the Explanatory Note that follows the cover page of this Quarterly Report on Form 10-Q.
At March 31, 2019, we evaluated the expected hold period of our One Tower Center property located in East Brunswick, New Jersey and, based on a shorter-than-expected hold period, we reduced the carrying value of the property to its estimated fair value at March 31, 2019 and recognized an impairment loss totaling approximately $24.0 million for BXP and approximately $22.3 million for BPLP. Our estimated fair value was based on a pending offer from a third party to acquire the property and the subsequent execution of a purchase and sale agreement on April 18, 2019 for a gross sale price of approximately $38.0 million. On June 3, 2019, we completed the sale of the property. One Tower Center is an approximately 410,000 net rentable square foot Class A office property.
Interest Expense
Interest expense increased by approximately $10.2$0.6 million for the three months ended June 30, 2019March 31, 2020 compared to 2018,2019, as detailed below.
Component Change in interest expense for the three months ended June 30, 2019 compared to
June 30, 2018		 Change in interest expense for the three months ended March 31, 2020
compared to
March 31, 2019
 (in thousands) (in thousands)
Increases to interest expense due to:    
Issuance of $1 billion in aggregate principal of 4.500% senior notes due 2028 on November 28, 2018 $11,322
Decrease in capitalized interest related to development projects 5,485
Utilization of the 2017 Credit Facility 3,013
Issuance of $850 million in aggregate principal of 3.400% senior notes due 2029 on June 21, 2019 $7,259
Issuance of $700 million in aggregate principal of 2.900% senior notes due 2030 on September 3, 2019 5,082
Increase in interest due to finance leases 1,120
 1,781
Issuance of $850 million in aggregate principal of 3.400% senior notes due 2029 on June 21, 2019 804
Other interest expense (excluding senior notes) 198
Total increases to interest expense 21,744
 14,320
Decreases to interest expense due to:    
Redemption of $700 million in aggregate principal of 5.875% senior notes due 2019 on December 13, 2018 (10,296)
Redemption of $700 million in aggregate principal of 5.625% senior notes due 2020 on September 18, 2019 (9,865)
Increase in capitalized interest related to development projects that had finance leases (1,120) (1,781)
Other interest expense (excluding senior notes) (175)
Decrease in interest rates for the 2017 Credit Facility (972)
Repayment of a bond financing collateralized by New Dominion Technology Building One (565)
Increase in capitalized interest related to development projects (555)
Total decreases to interest expense (11,591) (13,738)
Total change in interest expense $10,153
 $582
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 these portionsthat portion and interest is then expensed. Interest capitalized for the three months ended June 30,March 31, 2020 and 2019 and 2018 was approximately $13.3$14.1 million and $17.6$11.8 million, respectively. These costs are not included in the interest expense referenced above.
At June 30, 2019,March 31, 2020, our outstanding variable rate debt consisted of BPLP’s $2.0 billion 2017unsecured revolving credit facility (the “2017 Credit FacilityFacility”), which consists ofincludes the $500.0 million delayed draw term loan facility (the “Delayed Draw Facility”) and the $1.5 billion revolving line of credit (the “Revolving Facility”). The Delayed Draw Facility and the $1.5 billion Revolving Facility. The Delayed Draw Facility had $500.0 million and $250.0 million outstanding at June 30, 2019. At June 30, 2019, the Revolving Facility did not have any borrowings outstanding.as of March 31, 2020, respectively. For a summary of our consolidated debt as of June 30,March 31, 2020 and March 31, 2019 and June 30, 2018 refer to
Table of Content

the heading “Liquidity and Capital Resources—Capitalization—Debt Financing” within “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of OperationsOperations..”

On May 5, 2020, BPLP completed a public offering of $1.25 billion in aggregate principal amount of its 3.250% unsecured senior notes due 2031 (See Note 12 to the Consolidated Financial Statements). We used a portion of the net proceeds from this offering for the repayment of borrowings outstanding under the Revolving Facility.
Noncontrolling interestsInterests in property partnershipsProperty Partnerships
Noncontrolling interests in property partnerships increased by approximately $3.1$0.7 million for the three months ended June 30, 2019March 31, 2020 compared to 2018,2019, as detailed below.
Property Noncontrolling Interests in Property Partnerships for the three months ended June 30, Noncontrolling Interests in Property Partnerships for the three months ended March 31,
2019 2018 Change2020 2019 Change
 (in thousands) (in thousands)
Salesforce Tower (1) $—
 $(142) $142
 $—
 $116
 $(116)
767 Fifth Avenue (the General Motors Building)(2) 73
 (16) 89
 1,660
 2,298
 (638)
Times Square Tower 7,028
 6,725
 303
 6,869
 6,892
 (23)
601 Lexington Avenue 4,871
 3,860
 1,011
 4,850
 4,664
 186
100 Federal Street (2)(3) 3,129
 1,627
 1,502
 3,661
 2,555
 1,106
Atlantic Wharf Office 2,381
 2,346
 35
Atlantic Wharf Office Building 2,446
 2,305
 141
 $17,482
 $14,400
 $3,082
 $19,486
 $18,830
 $656
__________________________
(1)
On April 1, 2019, we acquired our partner’s 5% interest. See Note 8 to the Consolidated Financial Statements.
interest and subsequently own 100%.
(2)ThisThe decrease was primarily due to a decrease in lease revenue from our tenants.
(3)The increase was primarily due to an increase in lease revenue from our tenants.
Noncontrolling Interest—Common Units of Boston Properties Limitedthe Operating Partnership
For BXP, noncontrolling interest–interest—common units of Boston Properties Limitedthe Operating Partnership increased by approximately $4.2$45.9 million for the three months ended June 30, 2019March 31, 2020 compared to 20182019 due primarily to increasesan increase in allocable income, andwhich was the result of recognizing a greater gain on sales of real estate amount during 2020 partially offset by a decrease in the noncontrolling interest’s ownership percentage. Due to our UPREIT ownership structure, there is no corresponding line item on BPLP’s financial statements.
Liquidity and Capital Resources
General
Our principal liquidity needs for the next twelve months and beyond are to:
fund normal recurring expenses;
meet debt service and principal repayment obligations, including balloon payments on maturing debt;obligations;
fund development/redevelopment costs;
fund capital expenditures, including major renovations, tenant improvements and leasing costs;
fund planned and possible acquisitions of properties, either directly or indirectly through the acquisition of equity interests therein,therein;
fund dividend requirements on BXP’s Series B Preferred Stock; and
make the minimum distribution required to enable BXP to maintain its REIT qualification under the Internal Revenue Code of 1986, as amended.
We expect to satisfy these needs using one or more of the following:
cash flow from operations;
distribution of cash flows from joint ventures;
cash and cash equivalent balances;
BPLP’s 2017 Credit Facility and other short-term bridge facilities;
construction loans;
long-term secured and unsecured indebtedness (including unsecured exchangeable indebtedness);
sales of real estate; and
issuances of BXP equity securities and/or additional preferred or common units of partnership interest in BPLP.
Table of Content


We draw on multiple financing sources to fund our long-term capital needs. Our current consolidated development properties are expected to be primarily funded with our available cash balances, construction loans and BPLP’s Revolving Facility, while our unconsolidated development projects are expected to be primarily funded with construction loans.Facility. We use BPLP’s Revolving Facility primarily as a bridge facility to fund acquisition opportunities, refinance outstanding indebtedness and meet short-term development and working capital needs. Although we may seek to fund our development projects with construction loans, which may require guarantees by BPLP, the financing for each particular project ultimately depends on several factors, including, among others, the project’s size and duration, the extent of pre-leasing and our available cash and access to cost effective capital at the given time.


Table of Content


The following table presents information on properties under construction and redevelopment as of June 30, 2019March 31, 2020 (dollars in thousands):

         Financings              Financings     
Construction Properties Estimated Stabilization Date Location # of Buildings Estimated Square Feet Investment to Date (1)(2)(3) Estimated Total Investment (1)(2) Total Available (1) Outstanding at 6/30/2019 (1) Estimated Future Equity Requirement (1)(2)(4) Percentage Leased (5)  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 3/31/2020 (1) Estimated Future Equity Requirement (1)(2)(4) Percentage Leased (5) 
Office                                  
The Hub on Causeway - Podium (50% ownership) Q4 2019 Boston, MA 1
 385,000
 $140,749
 $141,870
 $102,300
 $77,980
 $—
 89%(6)
145 Broadway Q4 2019 Cambridge, MA 1
 485,000
 279,624
 366,400
 —
 —
 86,776
 98% 
17Fifty Presidents Street Q3 2020 Reston, VA 1
 276,000
 77,338
 142,900
 —
 —
 65,562
 100% 
20 CityPoint Q1 2021 Waltham, MA 1
 211,000
 76,112
 97,000
 —
 —
 20,888
 63%(7) First Quarter, 2021 Waltham, MA 1
 211,000
 $77,622
 $97,000
 $—
 $—
 $19,378
 63%(6)
Dock 72 (50% ownership) Q3 2021 Brooklyn, NY 1
 670,000
 178,592
 243,150
 125,000
 71,746
 11,304
 33%  Third Quarter, 2021 Brooklyn, NY 1
 670,000
 201,569
 243,150
 125,000
 90,578
 7,159
 33%(7)
325 Main Street Q3 2022 Cambridge, MA 1
 420,000
 59,548
 418,400
 —
 —
 358,852
 90%  Third Quarter, 2022 Cambridge, MA 1
 420,000
 110,493
 418,400
 —
 —
 307,907
 90% 
100 Causeway Street (50% ownership) Q3 2022 Boston, MA 1
 627,000
 91,697
 267,300
 —
 —
 175,603
 81%  Third Quarter, 2022 Boston, MA 1
 632,000
 136,514
 267,300
 200,000
 61,218
 —
 95% 
7750 Wisconsin Avenue (Marriott International Headquarters) (50% ownership) Q3 2022 Bethesda, MD 1
 734,000
 75,181
 198,900
 127,500
 —
 —
 100%  Third Quarter, 2022 Bethesda, MD 1
 734,000
 103,848
 198,900
 127,500
 40,768
 8,320
 100% 
Reston Gateway Q4 2023 Reston, VA 2
 1,062,000
 73,532
 715,300
 —
 —
 641,768
 80%  Fourth Quarter, 2023 Reston, VA 2
 1,062,000
 207,516
 715,300
 —
 —
 507,784
 72% 
2100 Pennsylvania Avenue Third Quarter, 2024 Washington, DC 1
 469,000
 76,983
 356,100
 —
 —
 279,117
 61% 
Total Office Properties under ConstructionTotal Office Properties under Construction 10
 4,870,000
 1,052,373
 2,591,220
 354,800
 149,726
 1,360,753
 80%  8
 4,198,000
 914,545
 2,296,150
 452,500
 192,564
 1,129,665
 74% 
Residential                                  
The Hub on Causeway - Residential (440 units) (50% ownership) Q4 2021 Boston, MA 1
 320,000
 118,237
 153,500
 90,000
 41,778
 —
 18% 
The Skylyne (MacArthur Station Residences) (402 units) Q4 2021 Oakland, CA 1
 324,000
 127,135
 263,600
 —
 —
 136,465
  N/A
(8)
Hub50House (440 units) (50% ownership) First Quarter, 2022 Boston, MA 1
 320,000
 139,938
 153,500
 90,000
 77,685
 1,247
 41%(8)
The Skylyne (402 units) First Quarter, 2022 Oakland, CA 1
 324,000
 221,806
 263,600
 —
 —
 41,794
 —
(9)
Total Residential Properties under ConstructionTotal Residential Properties under Construction 2
 644,000
 245,372
 417,100
 90,000
 41,778
 136,465
 18% Total Residential Properties under Construction 2
 644,000
 361,744
 417,100
 90,000
 77,685
 43,041
 41% 
Redevelopment PropertiesRedevelopment Properties                 Redevelopment Properties                 
One Five Nine East 53rd Street (55% ownership) Q3 2020 New York, NY —
 220,000
 114,866
 150,000
 —
 —
 35,134
 96%(9) Fourth Quarter, 2020 New York, NY —
 220,000
 131,712
 150,000
 —
 —
 18,288
 96%(10)
Total Properties under Redevelopment —
 220,000
 114,866
 150,000
 —
 —
 35,134
 96% 
200 West Street Fourth Quarter, 2021 Waltham, MA —
 126,000
 5,120
 47,800
 —
 —
 42,680
 —%(11)
Total Redevelopment Properties under ConstructionTotal Redevelopment Properties under Construction —
 346,000
 136,832
 197,800
 —
 —
 60,968
 61% 
Total Properties under Construction and RedevelopmentTotal Properties under Construction and Redevelopment 12
 5,734,000
 $1,412,611
 $3,158,320
 $444,800
 $191,504
 $1,532,352
 81%(10)Total Properties under Construction and Redevelopment 10
 5,188,000
 $1,413,121
 $2,911,050
 $542,500
 $270,249
 $1,233,674
 73%(12)

___________  
(1)Represents our share.
(2)Investment to Date, Estimated Total Investment and Estimated Future Equity Requirement all include our share of acquisition expenses, as applicable, and reflect our share of the estimated net revenue/expenses that we expect to incur prior to stabilization of the project, including any amounts actually received or paid through June 30, 2019.March 31, 2020.
(3)Includes approximately $162.2$91.6 million of unpaid but accrued construction costs and leasing commissions.
(4)Excludes approximately $162.2$91.6 million of unpaid but accrued construction costs and leasing commissions.
(5)Represents percentage leased as of August 2, 2019,May 5, 2020, including leases with future commencement dates.
(6)This property is 39%65% placed in-service as of June 30, 2019.March 31, 2020.
(7)This property is 2%34% placed in-service as of June 30, 2019.March 31, 2020.
(8)This property is 81% placed in-service as of March 31, 2020.
(9)This development is subject to a 99-year ground lease (including extension options) with an option to purchase in the future.
(9)(10)TheRepresents the low-rise portion of 601 Lexington Avenue.
(10)(11)Represents a portion of the property under redevelopment for conversion to laboratory space.
(12)Percentage leased excludes residential units.


Table of Content


Lease revenue (which includes recoveries from tenants), other income from operations, available cash balances, mortgage financings 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. 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 tenant turnover and controlling operating expenses. Our sources of revenue also include third-party fees generated by our property management, leasing and development and construction businesses, as well as the sale of assets from time to time. We believe our revenue, together with our cash balances and proceeds from financing activities,these sources of capital will continue to provide the funds necessary for our short-term liquidity needs, including our properties under development and redevelopment.
Material adverse changes in one or more sources of capital, including from the impacts of COVID-19, may adversely affect our net cash flows. For example, we may experience a decrease in cash rent collections resulting from restrictions implemented to limit the spread of COVID-19, including delays in tenant improvements and decreases in parking and hotel revenue. In turn, these changes could adversely affect our ability to fund operating expenses, dividends and distributions, debt service payments, maintenance and repositioning capital expenditures and tenant improvements. In addition, a material adverse change in the cash provided by our operations may affect our ability to comply with the financial covenants under BPLP’s 2017 Credit Facility and unsecured senior notes.
Our primary uses of capital will be the completion of our current and committed development and redevelopment projects. As of June 30, 2019,March 31, 2020, our share of the remaining development and redevelopment costs that we expect to fund through 20232024 is approximately $1.5$1.2 billion. In addition, in the third quarter of 2019, we executed a 75-year ground lease for land parcels at 2100 Pennsylvania Avenue located in Washington, DC and, as we had previously secured an anchor tenant, we commenced development of an approximately 480,000 net rentable square foot project with an estimated total investment of approximately $360 million.
As of August 2, 2019,May 5, 2020, we have approximately $825 million$1.6 billion of cash and cash equivalents, of which approximately $93$124 million is attributable to our consolidated joint venture partners, as well as approximately $151 million held in escrow for 1031 exchanges. Our cash and cash equivalents balance includes the proceeds from BPLP’s issuance of $1.25 billion of 3.250% unsecured senior notes due 2031, which generated net proceeds of approximately $1.5 billion available$1.24 billion. We used $250.0 million of the net proceeds from this offering for the repayment of borrowings outstanding under BPLP’sthe Revolving Facility. WeIn addition, during the first quarter of 2020, we enhanced our liquidity with the sale of our New Dominion Technology Park property located in Herndon, Virginia, which generated net cash proceeds of approximately $254 million.
Although the full extent to which COVID-19 impacts our liquidity and capital resources will depend on future developments, which are highly uncertain and cannot be predicted with confidence at this time, we believe that our strong liquidity, including, as of May 5, 2020, the availabilityapproximately $1.5 billion available under BPLP’sthe Revolving Facility, and proceeds from debt financings and asset sales will provide sufficient liquidity to fund our remaining capital requirements on existing development and redevelopment projects, fund pending new developments and still be able to act opportunistically on attractive investment opportunities. During the second quarter of 2019, we enhanced our liquidity by (1) issuing $850 million of 3.400% unsecured senior notes due in 2029, generating approximately $841.3 million of net proceeds after issuance costs, (2) selling three assets, generating net proceeds to us of approximately $147.5 million and (3) a joint venture, in which we have a 50% interest, obtaining construction financing with a total commitment of $255.0 million collateralized by its 7750 Wisconsin Avenue development project located in Bethesda, Maryland. Excluding our unconsolidated joint venture assets, we have no debt maturing in 2019.
We have not sold any shares under BXP’s $600.0 million at the market (ATM) program.program and intend to renew the program prior to its expiration in June 2020.
We may seek to enhance our liquidity to provide sufficient capacity to meet our debt obligations and to fund our remaining capital requirements on existing development/redevelopment projects, fund our foreseeable potential development activity, and pursue additional attractive investment opportunities.opportunities and refinance or repay indebtedness. Our unconsolidated joint ventures have approximately $498.8 million of debt maturing in 2020, of which our share is approximately $202.5 million. We have no debt maturing until BPLP’s $850 million of 4.125% senior unsecured notes mature in May 2021, and we intend to continue to evaluate the costs associated with an early refinancing or redemption of all or a portion of this maturity. Depending on interest rates and overall conditions in the debt and equity markets, we may decide to access the debteither or both of these markets in advance of the need for the funds. Doing so may result in us carrying additional cash and cash equivalents pending BPLP’s use of the proceeds, which would increase our net interest expense and be dilutive to our earnings.
REIT Tax Distribution Considerations
Dividend
BXP as a REIT is subject to a number of organizational and operational requirements, including a requirement that BXP currently distribute at least 90% of its annual taxable income (excluding capital gains and with certain other adjustments). Our policy is for BXP to distribute at least 100% of its taxable income, including capital gains, to avoid paying federal tax. On September 18, 2018,December 17, 2019, the Board of Directors of BXP increased our regular quarterly

dividend from $0.80$0.95 per common share to $0.95$0.98 per common share, or 18.75%3%, beginning with the thirdfourth quarter of 2018.2019. Common and LTIP unitholders of limited partnership interest in BPLP, received the same total distribution per unit.
BXP’s Board of Directors will continue to evaluate BXP’s dividend rate in light of our actual and projected taxable income, liquidity requirements and other circumstances, including the impact of COVID-19, and there can be no assurance that the future dividends declared by BXP’s or our Board of Directors will not differ materially.
Table of Content

materially from the current quarterly dividend amount.
Sales
To the extent that we sell assets at a gain and cannot efficiently use the proceeds in a tax deferred manner for either our development activities or attractive acquisitions, BXP would, at the appropriate time, decide whether it is better to declare a special dividend, adopt a stock repurchase program, reduce indebtedness or retain the cash for future investment opportunities. Such a decision will depend on many factors including, among others, the timing, availability and terms of development and acquisition opportunities, our then-current and anticipated leverage, the cost and availability of capital from other sources, the price of BXP’s common stock and REIT distribution requirements. At a minimum, we expect that BXP would distribute at least that amount of proceeds necessary for BXP to avoid paying corporate level tax on the applicable gains realized from any asset sales.
From time to time in selected cases, whether due to a change in use, structuring issues to comply with applicable REIT regulations or other reasons, we may sell an asset that is held by a taxable REIT subsidiary (“TRS”). Such a sale by a TRS would be subject to federal and local taxes.
Cash Flow Summary
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 $1.2 billion$858.6 million and $727.1$432.3 million at June 30,March 31, 2020 and 2019, and 2018, respectively, representing an increase of approximately $435.9$426.3 million. The following table sets forth changes in cash flows:
Six months ended June 30,Three months ended March 31,
2019 2018 Increase
(Decrease)		2020 2019 Increase
(Decrease)
(in thousands)
Net cash provided by operating activities$565,604
 $560,846
 $4,758
$175,197
 $207,234
 $(32,037)
Net cash used in investing activities(327,952) (485,801) 157,849
(73,793) (223,515) 149,722
Net cash provided by financing activities286,081
 146,646
 139,435
Net cash provided by (used in) financing activities65,288
 (190,612) 255,900
Our principal source of cash flow is related to the operation of our properties. The averageweighted-average term of our in-place tenant leases, including our unconsolidated joint ventures, is approximately 7.98.3 years with occupancy rates historically in the range of 90% to 94%. OurGenerally, 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. In addition, over the past several years, we have raised capital through the sale of some of our properties and through secured and unsecured borrowings,borrowings.
The full extent of the impact of COVID-19 on our business, operations and equity offerings of BXP.financial results will depend on numerous evolving factors that we may not be able to accurately predict. In addition, we cannot predict the impact that COVID-19 will have on our tenants, employees, contractors, lenders, suppliers, vendors and joint venture partners; any material effect on these parties could also have a material adverse effect on us. See Item 1A: “Risk Factors” for additional details.
Cash is used in investing activities to fund acquisitions, development, net investments in unconsolidated joint ventures and maintenance and repositioning capital expenditures. We selectively invest in new projects that enable us to take advantage of our development, leasing, financing and property management skills and invest in existing buildings to enhance or maintain their market position. Cash used in investing activities for the sixthree months ended June 30,March 31, 2020 consisted primarily of development projects, building and tenant improvements and capital contributions to unconsolidated joint ventures, partially offset by the proceeds from the sales of real estate. Cash

used in investing activities for the three months ended March 31, 2019 consisted primarily of the acquisition of real estate, development projects, building and tenant improvements and capital contributions to unconsolidated joint ventures, partially offset by the proceeds from the sales ofsale or real estate, and capital distributions from unconsolidated joint ventures. as detailed below:
 Three months ended March 31,
 2020 2019
 (in thousands)
Acquisition of real estate (1)$—
 $(43,061)
Construction in progress (2)(143,160) (85,632)
Building and other capital improvements(39,154) (32,719)
Tenant improvements(64,172) (54,242)
Proceeds from sales of real estate (3)259,489
 20,019
Capital contributions to unconsolidated joint ventures (4)(89,997) (26,995)
Investments in securities, net3,201
 (885)
Net cash used in investing activities$(73,793) $(223,515)
Cash used in investing activities forchanged primarily due to the six months ended June 30, 2018 consisted primarily of development projects, building and tenant improvements and capital contributions to unconsolidated joint ventures, partially offset by the proceeds from sales of real estate, as detailed below:
Table of Content
following:

 Six months ended June 30,
 2019 2018
 (in thousands)
Acquisition of real estate (1)$(43,061) $—
Construction in progress (2)(203,259) (380,565)
Building and other capital improvements(79,943) (96,730)
Tenant improvements(115,940) (83,982)
Proceeds from sales of real estate (3)60,398
 141,249
Capital contributions to unconsolidated joint ventures (4)(50,068) (65,250)
Capital distributions from unconsolidated joint ventures (5)105,000
 —
Investments in securities, net(1,079) (523)
Net cash used in investing activities$(327,952) $(485,801)
___________  
(1)On January 10, 2019, we acquired land parcels at our Carnegie Center property located in Princeton, New Jersey for a gross purchase price of approximately $51.5 million, which includes an aggregate of approximately $8.6 million of additional amounts that are payable in the future to the seller upon the development or sale of each of the parcels. The land parcels will support approximately 1.7 million square feet of development.
(2)Construction in progress for the sixthree months ended June 30,March 31, 2020 includes ongoing expenditures associated with 17Fifty Presidents Street, which was completed and placed in-service during the three months ended March 31, 2020 and 20 CityPoint, which was partially placed in-service during the year ended December 31, 2019. In addition, we incurred costs associated with our continued development/redevelopment of One Five Nine East 53rd Street, Reston Gateway, 2100 Pennsylvania Avenue, 200 West Street, The Skylyne and 325 Main Street.
Construction in progress for the three months ended March 31, 2019 includes ongoing expenditures associated with Salesforce Tower, which was placed in-service during the year ended December 31, 2018. In addition, we incurred costs associated with our continued development/redevelopment of One Five Nine East 53rd Street, 145 Broadway, 20 CityPoint, 17Fifty Presidents Street, Reston Gateway, The Skylyne (MacArthur Station Residences) and 325 Main Street.
Construction in progress for the six months ended June 30, 2018 includes ongoing expenditures associated with 191 Spring Street, Salesforce Tower, Signature at Reston and Proto Kendall Square, which were partially or fully placed in-service during the six months ended June 30, 2018. In addition, we incurred costs associated with our continued development/redevelopment of One Five Nine East 53rd Street, 145 Broadway, 20 CityPoint, 17Fifty Presidents Street, 6595 Springfield Center DriveReston Gateway and The Skylyne (MacArthur Station Residences) projects.Skylyne.
(3)On February 20, 2020, we completed the sale of New Dominion Technology Park located in Herndon, Virginia for a gross sale price of $256.0 million. Net cash proceeds totaled approximately $254.0 million, resulting in a gain on sale of real estate totaling approximately $192.3 million for BXP and approximately $197.1 million for BPLP. New Dominion Technology Park is comprised of two Class A office properties aggregating approximately 493,000 net rentable square feet.
On January 24, 2019, we completed the sale of our 2600 Tower Oaks Boulevard property located in Rockville, Maryland for a gross sale price of approximately $22.7 million. Net cash proceeds totaled approximately $21.4 million, resulting in a loss on sale of real estate totaling approximately $0.6 million. 2600 Tower Oaks Boulevard is an approximately 179,000 net rentable square foot Class A office property.
On June 3, 2019, we completed the sale of our One Tower Center property located in East Brunswick, New Jersey for a gross sale price of $38.0 million. Net cash proceeds totaled approximately $36.6 million, resulting in a loss on sale of real estate totaling approximately $0.8 million. One Tower Center is an approximately 410,000 net rentable Class A office property.
On June 28, 2019, we completed the sale of our 164 Lexington Road property located in Billerica, Massachusetts for a gross sale price of $4.0 million. Net cash proceeds totaled approximately $3.8 million, resulting in a gain on sale of real estate totaling approximately $2.5 million for BXP and approximately $2.6 million for BPLP. 164 Lexington Road is an approximately 64,000 net rentable square foot Class A office property.
On January 9, 2018, we completed the sale of our 500 E Street, S.W. property located in Washington, DC for a net contract sale price of approximately $118.6 million. Net cash proceeds totaled approximately $116.1 million, resulting in a gain on sale of real estate totaling approximately $96.4 million for BXP and approximately $98.9 million for BPLP. 500 E Street, S.W. is an approximately 262,000 net rentable square foot Class A office property.
On May 24, 2018, we completed the sale of our 91 Hartwell Avenue property located in Lexington, Massachusetts for a gross sale price of approximately $22.2 million. Net cash proceeds totaled approximately $21.7 million, resulting in a gain on sale of real estate totaling approximately $15.5 million for
Table of Content

BXP and approximately $15.9 million for BPLP. 91 Hartwell Avenue is an approximately 119,000 net rentable square foot Class A office property.
(4)
Capital contributions to unconsolidated joint ventures for the sixthree months ended June 30, 2019March 31, 2020 consisted primarily of cash contributions of approximately $36.2$64.5 million, $16.8 million and $8.6$4.0 million to our Hub on CausewayPlatform 16, 3 Hudson Boulevard and Dock 72Metropolitan Square joint ventures, respectively.
Capital contributions to unconsolidated joint ventures for the sixthree months ended June 30, 2018March 31, 2019 consisted primarily of cash contributions of approximately $46.5 million and $17.2$23.3 million to our 7750 Wisconsin Avenue and Hub on100 Causeway Street joint ventures, respectively.venture.
(5)Capital distributions from unconsolidated joint ventures for the six months ended June 30, 2019 consisted of a cash distribution totaling approximately $105.0 million from our 540 Madison Avenue joint venture resulting from the net proceeds from the sale of the property.
Cash provided by financing activities for the sixthree months ended June 30, 2019March 31, 2020 totaled approximately $286.1$65.3 million. This consisted primarily of the proceeds from borrowing under the issuance by BPLP of $850.0 million in aggregate principal amount of its 3.400% senior unsecured notes due 2029,Revolving Facility, partially offset by the payment of our regular dividends and distributions to our shareholders and unitholders and the acquisition of our partner's 5% ownership interest and promoted profits interest in the consolidated entity that owns Salesforce Tower located in San Francisco, California.unitholders. Future debt payments are discussed below under the heading “Capitalization—Debt Financing.”

Capitalization
The following table presents Consolidated Market Capitalization and BXP’s Share of Market Capitalization, as well as the corresponding ratios of Consolidated Debt to Consolidated Market Capitalization and BXP’s Share of Debt to BXP’s Share of Market Capitalization (in thousands except for percentages):
 June 30, 2019  March 31, 2020 
 Shares / Units Outstanding Common Stock Equivalent Equivalent Value (1)  Shares / Units Outstanding Common Stock Equivalent Equivalent Value (1) 
Common Stock 154,563
 154,563
 $19,938,627
  155,315
 155,315
 $14,324,702
 
Common Operating Partnership Units 18,017
 18,017
 2,324,193
(2) 17,765
 17,765
 1,638,466
(2)
5.25% Series B Cumulative Redeemable Preferred Stock (callable on and after March 27, 2018) 80
 —
 200,000
 
5.25% Series B Cumulative Redeemable Preferred Stock 80
 —
 200,000
 
Total Equity   172,580
 $22,462,820
    173,080
 $16,163,168
 
              
Consolidated Debt   

 $11,846,241
      $12,061,224
 
Add: 
            
BXP’s share of unconsolidated joint venture debt (3)     865,894
      1,027,547
 
Subtract:              
Partners’ share of Consolidated Debt (4)     (1,202,353)      (1,198,575) 
BXP’s Share of Debt     $11,509,782
      $11,890,196
 
              
Consolidated Market Capitalization     $34,309,061
      $28,224,392
 
BXP’s Share of Market Capitalization     $33,972,602
      $28,053,364
 
Consolidated Debt/Consolidated Market Capitalization     34.53%      42.73% 
BXP’s Share of Debt/BXP’s Share of Market CapitalizationBXP’s Share of Debt/BXP’s Share of Market Capitalization   33.88% BXP’s Share of Debt/BXP’s Share of Market Capitalization   42.38% 
_______________  
(1)Except for the Series B Cumulative Redeemable Preferred Stock, which is valued at the liquidation preference of $2,500.00$2,500 per share, values are based on the closing price per share of BXP’s Common Stock on June 28, 2019the New York Stock Exchange on March 31, 2020 of $129.00.$92.23.
(2)Includes long-term incentive plan units (including 2012 OPP Units and 2013 MYLTIP Units, 2014 MYLTIP Units, 2015 MYLTIP Units and 2016- 2017 MYLTIP Units), but excludes MYLTIP Units granted between 20172018 and 2019.2020.
(3)See page 9070 for additional information.
(4)See page 8969 for additional information.
Table of Content


Consolidated Debt to Consolidated Market Capitalization Ratio is a measure of leverage commonly used by analysts in the REIT sector. We present this measure as a percentage and it is calculated by dividing (A) our consolidated debt by (B) our consolidated market capitalization, which is the market value of our outstanding equity securities plus our consolidated debt. Consolidated market capitalization is the sum of:
(1)     our consolidated debt; plus
(2)     the product of (x) the closing price per share of BXP common stock on June 28, 2019,March 31, 2020, 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,
(ii)the number of outstanding OP Units in BPLP (excluding OP Units held by BXP),
(iii)the number of OP Units issuable upon conversion of all outstanding LTIP Units, assuming all conditions have been met for the conversion of the LTIP Units, and
(iv)the number of OP Units issuable upon conversion of 2012 OPP Units, 2013 MYLTIP Units, 2014 MYLTIP Units, 2015 MYLTIP Units and 2016- 2017 MYLTIP Units that were issued in the form of LTIP Units; plus
(3)     the aggregate liquidation preference ($2,500 per share) of the outstanding shares of BXP’s 5.25% Series B Cumulative Redeemable Preferred Stock.

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, 2017, 2018 and 2019- 2020 MYLTIP Units are not included in this calculation as of June 30, 2019.March 31, 2020.
We also present BXP’s Share of Market Capitalization and BXP’s Share of Debt/BXP’s Share of Market Capitalization, which isare calculated in the same manner, except that BXP’s Share of Debt is utilized instead of our consolidated debt in both the numerator and the denominator. BXP’s Share of Debt is defined as our consolidated debt plus our share of debt from our unconsolidated joint ventures (calculated based upon our ownership percentage), minus our partners’ share of debt from our consolidated joint ventures (calculated based upon the partners’ percentage ownership interests adjusted for basis differentials). Management believes that BXP’s Share of Debt provides useful information to investors regarding our financial condition because it includes our share of debt from unconsolidated joint ventures and excludes our partners’ share of debt from consolidated joint ventures, in each case presented on the same basis. We have several significant joint ventures and presenting various measures of financial condition in this manner can help investors better understand our financial condition and/or results of operations after taking into account our economic interest in these joint ventures.  We caution investors that the ownership percentages used in calculating BXP’s Share of Debt may not completely and accurately depict all of the legal and economic implications of holding an interest in a consolidated or unconsolidated joint venture. For example, in addition to partners’ interests in profits and capital, venture agreements vary in the allocation of rights regarding decision making (both for routine and major decisions), distributions, transferability of interests, financing and guarantees, liquidations and other matters.  Moreover, in some cases we exercise significant influence over, but do not control, the joint venture in which case GAAP requires that we account for the joint venture entity using the equity method of accounting and we do not consolidate it for financial reporting purposes. In other cases, GAAP requires that we consolidate the venture even though our partner(s) ownsown(s) a significant percentage interest.  As a result, management believes that the presentation of BXP’s Share of a financial measure should not be considered a substitute for, and should only be considered with and as a supplement to our financial information presented in accordance with GAAP.
We present these supplemental ratios because our degree of leverage could affect our ability to obtain additional financing for working capital, capital expenditures, acquisitions, development or other general corporate purposes and because different investors and lenders consider one or both of these ratios. Investors should understand that these ratios are, in part, a function of the market price of the common stock of BXP and as such will fluctuate with changes in such price, and they do not necessarily reflect our capacity to incur additional debt to finance our activities or our ability to manage our existing debt obligations. However, for a company like BXP, whose assets are primarily income-producing real estate, these ratios may provide investors with an alternate indication of
Table of Content

leverage, so long as they are evaluated along with the ratio of indebtedness to other measures of asset value used by financial analysts and other financial ratios, as well as the various components of our outstanding indebtedness.
For a discussion of our unconsolidated joint venture indebtedness, see “Liquidity and Capital Resources—Capitalization—Off-Balance Sheet Arrangements—Joint Venture Indebtedness” within “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations” and for a discussion of our consolidated joint venture indebtedness see “Liquidity and Capital Resources—Capitalization—Mortgage Notes Payable, Net” within “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Debt Financing
As of June 30, 2019,March 31, 2020, we had approximately $11.8$12.1 billion of outstanding consolidated indebtedness, representing approximately 34.53%42.73% of our Consolidated Market Capitalization as calculated above consisting of approximately (1) $8.4 billion (net of discount and deferred financing fees) in publicly traded unsecured senior notes having a GAAP weighted-average interest rate of 3.99%3.76% per annum and maturities in 20202021 through 2029;2030 (See Note 12 to the Consolidated Financial Statements), (2) $3.0$2.9 billion (net of deferred financing fees) of property-specific mortgage debt having a GAAP weighted-average interest rate of 3.94%3.90% per annum and weighted-average term of 6.76.1 years and (3) $498.7$749.1 million (net of deferred financing fees) outstanding under BPLP’s 2017 Credit Facility that matures on April 24, 2022.

The table below summarizes the aggregate carrying value of our mortgage notes payable and BPLP’s unsecured senior notes, line of credit and term loan, as well as Consolidated Debt Financing Statistics at June 30, 2019March 31, 2020 and June 30, 2018.March 31, 2019.
Table of Content

June 30,March 31,
2019 20182020 2019
(dollars in thousands)(dollars in thousands)
Debt Summary:      
Balance      
Fixed rate mortgage notes payable, net$2,956,833
 $2,972,052
$2,919,157
 $2,959,908
Unsecured senior notes, net of discount8,390,708
 7,251,578
Unsecured senior notes, net8,393,009
 7,547,043
Unsecured line of credit—
 —
250,000
 —
Unsecured term loan, net498,700
 498,248
499,058
 498,607
Consolidated Debt11,846,241
 10,721,878
12,061,224
 11,005,558
Add:      
BXP’s share of unconsolidated joint venture debt, net (1)865,894
 648,935
1,027,547
 919,217
Subtract:      
Partners’ share of consolidated mortgage notes payable, net (2)(1,202,353) (1,207,123)(1,198,575) (1,203,572)
BXP’s Share of Debt$11,509,782
 $10,163,690
$11,890,196
 $10,721,203

      
June 30,March 31,
2019 20182020 2019
Consolidated Debt Financing Statistics:      
Percent of total debt:      
Fixed rate95.79% 95.35%93.79% 95.47%
Variable rate4.21% 4.65%6.21% 4.53%
Total100.00% 100.00%100.00% 100.00%
GAAP Weighted-average interest rate at end of period:      
Fixed rate3.98% 4.09%3.80% 4.01%
Variable rate3.43% 2.98%2.16% 3.49%
Total3.95% 4.04%3.70% 3.99%
Coupon/Stated Weighted-average interest rate at end of period:      
Fixed rate3.87% 3.98%3.69% 3.91%
Variable rate3.34% 2.88%2.07% 3.40%
Total3.85% 3.93%3.59% 3.88%
Weighted-average maturity at end of period (in years):      
Fixed rate5.9
 5.9
5.8
 5.9
Variable rate2.8
 3.8
2.1
 3.1
Total5.8
 5.8
5.6
 5.7
_______________
(1)See page 9070 for additional information.
(2)See page 8969 for additional information.
Unsecured Credit Facility
On April 24, 2017, BPLP entered into the 2017 Credit Facility. Among other things, the 2017 Credit Facility (1) increased the total commitment of the Revolving Facility from $1.0 billion to $1.5 billion, (2) extended the maturity date from July 26, 2018 to April 24, 2022, (3) reduced the per annum variable interest rates, and (4) added a $500.0 million Delayed Draw Facility that permitspermitted BPLP to draw until the first anniversary of the closing date. Based on BPLP’s June 30, 2019current credit rating, (1) the applicable Eurocurrency margins for the Revolving Facility and Delayed Draw Facility are 82.5 basis points and 90 basis points, respectively, and (2) the facility fee on the Revolving Facility commitment is 0.125% per annum.

On April 24, 2018, BPLP exercised its option to draw $500.0 million on its Delayed Draw Facility. The Delayed Draw Facility bears interest at a variable rate equal to LIBOR plus 0.90% per annum based on BPLP’s June 30, 2019March 31, 2020 credit rating and matures on April 24, 2022.
Table of Content

As of June 30, 2019,March 31, 2020, BPLP had $500.0 million of borrowings outstanding under its Delayed Draw Facility, $250.0 million borrowings under its Revolving Facility and letters of credit totaling approximately $2.5 million outstanding with the ability to borrow approximately $1.2 billion under the Revolving Facility. As of May 5, 2020, BPLP had $500.0 million of borrowings outstanding under its Delayed Draw Facility, no borrowings under its Revolving Facility and outstanding letters of credit totaling approximately $0.2 million outstanding with the ability to borrow approximately $1.5 billion under the Revolving Facility. As off August 2, 2019, BPLP had $500.0 million of borrowings outstanding under its Delayed Draw Facility, no borrowings under its Revolving Facility and outstanding letters of credit totaling approximately $3.2$2.5 million outstanding with the ability to borrow approximately $1.5 billion under the Revolving Facility.
Unsecured Senior Notes, Net
For a description ofThe following summarizes BPLP’s outstanding unsecured senior notes as of June 30, 2019, SeeMarch 31, 2020 (dollars in thousands) (See Note 612 to the Consolidated Financial Statements.Statements):
On June 21, 2019, BPLP completed a public offering of $850.0 million in aggregate principal amount of its 3.400% unsecured senior notes due 2029. The notes were priced at 99.815% of the principal amount to yield an effective rate (including financing fees) of approximately 3.505% per annum to maturity. The notes will mature on June 21, 2029, unless earlier redeemed. The aggregate net proceeds from the offering were approximately $841.3 million after deducting underwriting discounts and transaction expenses.
 
Coupon/
Stated Rate
 
Effective
Rate(1)
 
Principal
Amount
 Maturity Date(2)
10 Year Unsecured Senior Notes4.125% 4.289% $850,000
 May 15, 2021
11 Year Unsecured Senior Notes3.850% 3.954% 1,000,000
 February 1, 2023
10.5 Year Unsecured Senior Notes3.125% 3.279% 500,000
 September 1, 2023
10.5 Year Unsecured Senior Notes3.800% 3.916% 700,000
 February 1, 2024
7 Year Unsecured Senior Notes3.200% 3.350% 850,000
 January 15, 2025
10 Year Unsecured Senior Notes3.650% 3.766% 1,000,000
 February 1, 2026
10 Year Unsecured Senior Notes2.750% 3.495% 1,000,000
 October 1, 2026
10 Year Unsecured Senior Notes4.500% 4.628% 1,000,000
 December 1, 2028
10 Year Unsecured Senior Notes3.400% 3.505% 850,000
 June 21, 2029
10.5 Year Unsecured Senior Notes2.900% 2.984% 700,000
 March 15, 2030
Total principal    8,450,000
  
Net unamortized discount    (16,663)  
Deferred financing costs, net    (40,328)  
Total    $8,393,009
  
_______________
(1)Yield on issuance date including the effects of discounts on the notes, settlements of interest rate contracts and the amortization of financing costs.
(2)No principal amounts are due prior to maturity.
The indenture relating to the unsecured senior notes contains certain financial restrictions and requirements, including (1) a leverage ratio not to exceed 60%, (2) a secured debt leverage ratio not to exceed 50%, (3) an interest coverage ratio of greater than 1.50, and (4) an unencumbered asset value of not less than 150% of unsecured debt. At June 30, 2019,March 31, 2020, BPLP was in compliance with each of these financial restrictions and requirements.

Mortgage Notes Payable, Net
The following represents the outstanding principal balances due under the mortgage notes payable at June 30, 2019:March 31, 2020:
Properties Stated Interest Rate GAAP Interest Rate (1) Stated Principal Amount Deferred Financing Costs, Net Carrying Amount 
Carrying Amount (partners’ share)
   Maturity Date 
Stated
Interest Rate
 
GAAP
Interest Rate (1)
 
Stated
Principal Amount
 Deferred Financing Costs, Net Carrying Amount 
Carrying Amount (Partners’ Share)
 Maturity Date
 (dollars in thousands) (dollars in thousands)
Wholly-ownedWholly-owned                      
New Dominion Tech Park, Bldg. One 7.69% 7.84% $28,205
 $(127) $28,078
 N/A
    January 15, 2021
University Place 6.94% 6.99% 4,630
 (26) 4,604
 N/A
    August 1, 2021 6.94% 6.99% $3,106
 $(17) $3,089
 N/A
 August 1, 2021
     32,835
 (153) 32,682
 N/A
      

 

 

   
Consolidated Joint VenturesConsolidated Joint Ventures         Consolidated Joint Ventures           
767 Fifth Avenue (the General Motors Building) 3.43% 3.64% 2,300,000
 (27,719) 2,272,281
 $909,011
 (2)(3)(4) June 9, 2027 3.43% 3.64% 2,300,000
 (25,099) 2,274,901
 $910,050
 (2)(3)(4) June 9, 2027
601 Lexington Avenue 4.75% 4.79% 652,790
 (920) 651,870
 293,342
 (5) April 10, 2022 4.75% 4.79% 641,836
 (669) 641,167
 288,525
 (5) April 10, 2022
     2,952,790
 (28,639) 2,924,151
 1,202,353
      2,941,836
 (25,768) 2,916,068
 1,198,575
 
Total     $2,985,625
 $(28,792) $2,956,833
 $1,202,353
         $2,944,942
 $(25,785) $2,919,157
 $1,198,575
 
_______________ 
(1)GAAP interest rate differs from the stated interest rate due to the inclusion of the amortization of financing charges and the effects of hedging transactions (if any).
(2)The mortgage loan requires interest only payments with a balloon payment due at maturity.
(3)This property is owned by a consolidated entity in which we have a 60% interest. The partners’ share of the carrying amount has been adjusted for basis differentials.
(4)In connection with the refinancing of the loan, we guaranteed the consolidated entity’s obligation to fund various reserves for tenant improvement costs and allowances, leasing commissions and free rent obligations in lieu of cash deposits. As of June 30, 2019,March 31, 2020, the maximum funding obligation under the guarantee was approximately $79.8$57.1 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 76 to the Consolidated Financial Statements).
(5)This property is owned by a consolidated entity in which we have a 55% interest.
Off-Balance Sheet Arrangements—Joint Venture Indebtedness
We have investments in unconsolidated joint ventures with our effective ownership interests ranging from 20% to 55%60%. ThirteenFourteen of these ventures have mortgage indebtedness. We exercise significant influence over, but do not
Table of Content

control, these entities and therefore they are presently accountedentities. As a result, we account for them using the equity method of accounting. See also Note 5 to the Consolidated Financial Statements. At June 30, 2019,March 31, 2020, the aggregate carrying amount of debt, including both our and our partners’ share, incurred by these ventures was approximately $2.0$2.3 billion (of which our proportionate share is approximately $865.9 million)$1.0 billion). The table below summarizes the outstanding debt of these joint venture properties at June 30, 2019.March 31, 2020. 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.

Properties Venture Ownership % Stated Interest Rate GAAP Interest Rate (1) Stated Principal Amount Deferred Financing Costs, Net Carrying Amount Carrying Amount (Our Share)   Maturity Date Nominal % Ownership Stated Interest Rate GAAP Interest Rate (1) Stated Principal Amount Deferred Financing Costs, Net Carrying Amount Carrying Amount (Our share)   Maturity Date
 (dollars in thousands) (dollars in thousands)
Santa Monica Business Park 55% 4.06% 4.24% $300,000
 $(3,179) $296,821
 $163,252
 (2)(3) July 19, 2025 55% 4.06% 4.24% $300,000
 $(2,786) $297,214
 $163,468
 (2)(3) July 19, 2025
Market Square North 50% 4.85% 4.91% 117,461
 (105) 117,356
 58,678
    October 1, 2020 50% 4.85% 4.91% 115,529
 (42) 115,487
 57,743
    October 1, 2020
Annapolis Junction Building Six 50% 4.44% 4.67% 12,806
 (40) 12,766
 6,383
 (4) November 17, 2020 50% 3.41% 3.56% 12,401
 (14) 12,387
 6,193
 (4) November 17, 2020
Annapolis Junction Building Seven and Eight 50% 4.83% 5.11% 35,119
 (43) 35,076
 17,538
 (5) December 7, 2019 50% 4.02% 4.17% 34,630
 (26) 34,604
 17,302
 (5) June 30, 2020
1265 Main Street 50% 3.77% 3.84% 38,562
 (348) 38,214
 19,107
 January 1, 2032 50% 3.77% 3.84% 37,957
 (327) 37,630
 18,815
 January 1, 2032
Colorado Center 50% 3.56% 3.58% 550,000
 (834) 549,166
 274,583
 (2) August 9, 2027 50% 3.56% 3.58% 550,000
 (757) 549,243
 274,622
 (2) August 9, 2027
Dock 72 50% 4.69% 5.83% 143,491
 (5,093) 138,398
 69,198
 (2)(6) December 18, 2020 50% 3.65% 4.79% 181,156
 (2,576) 178,580
 89,290
 (2)(6) December 18, 2020
The Hub on Causeway - Podium 50% 4.69% 5.16% 155,959
 (2,101) 153,858
 76,929
 (2)(7) September 6, 2021 50% 3.59% 4.08% 173,408
 (1,460) 171,948
 85,974
 (2)(7) September 6, 2021
The Hub on Causeway - Residential 50% 4.44% 4.72% 83,557
 (1,445) 82,112
 41,056
 (2)(8) April 19, 2022
7750 Wisconsin Avenue 50% N/A
 N/A
 —
 —
 —
 —
 (2)(9) April 26, 2023
Hub50House 50% 3.35% 3.63% 155,370
 (1,062) 154,308
 77,154
 (2)(8) April 19, 2022
100 Causeway Street 50% 3.15% 3.36% 122,435
 (2,894) 119,541
 59,770
 (2)(9) September 5, 2023
7750 Wisconsin Avenue (Marriott International Headquarters) 50% 2.69% 3.24% 81,535
 (4,293) 77,242
 38,621
 (2)(10) April 26, 2023
500 North Capitol Street, NW 30% 4.15% 4.20% 105,000
 (231) 104,769
 31,431
 (2) June 6, 2023 30% 4.15% 4.20% 105,000
 (187) 104,813
 31,444
 (2) June 6, 2023
901 New York Avenue 25% 3.61% 3.69% 225,000
 (983) 224,017
 56,004
    January 5, 2025 25% 3.61% 3.69% 224,304
 (849) 223,455
 55,864
    January 5, 2025
3 Hudson Boulevard 25% 5.95% 6.03% 80,000
 (257) 79,743
 19,936
 (2)(10) July 13, 2023 25% 4.97% 5.05% 80,000
 (209) 79,791
 19,948
 (2)(11) July 13, 2023
Metropolitan Square 20% 5.75% 5.81% 159,077
 (83) 158,994
 31,799
    May 5, 2020 20% 5.75% 5.81% 156,701
 (6) 156,695
 31,339
 (12) May 5, 2020
Total       $2,006,032
 $(14,742) $1,991,290
 $865,894
           $2,330,426
 $(17,488) $2,312,938
 $1,027,547
    
_______________
(1)GAAP interest rate differs from the stated interest rate due to the inclusion of the amortization of financing charges, which includes mortgage recording fees.
(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. 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 4.063% per annum through the expiration of the interest rate swap contracts.
(4)The loan bears interest at a variable rate equal to LIBOR plus 2.00% per annum and matures on November 17, 2020.
(5)The loan bears interest at a variable rate equal to LIBOR plus 2.35% per annum and matures on December 7, 2019, with three, one-year extension options, subject to certain conditions.June 30, 2020.
(6)The construction financing has a borrowing capacity of $250.0 million. The construction financing bears interest at a variable rate equal to LIBOR plus 2.25% per annum and matures on December 18, 2020, with two, one-year extension option,options, subject to certain conditions.
(7)The construction financing hashad 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, 2021, with two, one-one-year extension options, subject to certain conditions.
Table of Content

year extension options, subject to certain conditions. In connection with the construction financing, we obtained the right to complete the construction of the garage underneath the project being developed by an affiliate of our joint venture partner and obtain funding from the garage construction lender.  We agreed to guarantee completion of the garage to the construction lender and an affiliate of our partner agreed to reimburse us for our partner’s share of any payments under the guarantee.
(8)The construction financing has a borrowing capacity of $180.0 million. The construction financing bears interest at a variable rate equal to LIBOR plus 2.00% per annum and matures on April 19, 2022, with two, one-year extension options, subject to certain conditions.
(9)No amounts have been drawn underThe 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.

(10)The construction financing has a borrowing capacity of $255.0 million construction facility.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)(11)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 has been reflected as Related Party Note Receivable, Net on our Consolidated Balance Sheets.
(12)On April 22, 2020, the maturity date was extended to August 5, 2020.
State and Local Tax Matters
Because BXP is organized and qualifies as a REIT, it is generally not subject to federal income taxes, but it is subject to certain state and local taxes. In the normal course of business, BXP, BPLP and certain entities through which we own real estate either have undergone, or are currently undergoing, tax audits or other inquiries. Although we believe that we have substantial arguments in favor of our positionsposition in the ongoing audits, in some instances there is no controlling precedent or interpretive guidance on the specific point at issue. Collectively, tax deficiency notices received to date from the jurisdictions conducting the ongoing audits have not been material. However, there can be no assurance that future audits will not occur with increased frequency or that the ultimate result of such audits will not have a material adverse effect on our results of operations.
Insurance
For information concerning our insurance program, see Note 76 to the Consolidated Financial Statements.
Funds from Operations
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. common shareholders and net income (loss) attributable to Boston Properties Limited Partnership common unitholders (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, but wemeasure. We believe the presentation of FFO, combined with the presentation of required GAAP financial measures, has improved the understanding of operating results of REITs among the investing public and has helped make comparisons of REIT operating results more meaningful. Management generally considers FFO to be useful measures for understanding and comparing our operating results because, by excluding gains and losses related to sales of previously depreciated operating real estate assets, impairment losses and real estate asset depreciation and amortization (which can differ across owners of similar assets in similar condition based on historical cost accounting and useful life estimates), FFO can help investors compare the operating performance of a company’s real estate across reporting periods and to the operating performance of other companies.
Our computation of FFO may not be comparable to FFO reported by other REITs or real estate companies that do not define the term in accordance with the current Nareit definition or that interpret the current Nareit definition differently. We believe that in order to facilitate a clear understanding of our operating results, FFO should be examined in conjunction with net income attributable to Boston Properties, Inc. common shareholders and net income attributable to Boston Properties Limited Partnership as presented in our Consolidated Financial Statements. FFO 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.
Table of Content


Boston Properties, Inc.
The following table presents a reconciliation of net income attributable to Boston Properties, Inc. common shareholders to FFO attributable to Boston Properties, Inc. common shareholders for the three months ended June 30, 2019March 31, 2020 and 2018:2019:
Three months ended June 30, Three months ended March 31,
2019 2018 2020 2019
(in thousands) (in thousands)
Net income attributable to Boston Properties, Inc. common shareholders$164,318
 $128,681
 $497,496
 $98,105
Add:       
Preferred dividends2,625
 2,625
 2,625
 2,625
Noncontrolling interest—common units of Boston Properties Limited Partnership19,036
 14,859
Noncontrolling interest—common units of the Operating Partnership 57,539
 11,599
Noncontrolling interests in property partnerships17,482
 14,400
 19,486
 18,830
Net Income203,461
 160,565
Net income 577,146
 131,159
Add:       
Depreciation and amortization expense177,411
 156,417
Depreciation and amortization 171,094
 164,594
Noncontrolling interests in property partnerships’ share of depreciation and amortization(17,869) (18,426) (17,627) (18,002)
BXP’s share of depreciation and amortization from unconsolidated joint ventures14,778
 9,312
 18,332
 15,470
Corporate-related depreciation and amortization(412) (406) (469) (395)
Impairment loss —
 24,038
Less:       
Gain on sale of real estate included within income from unconsolidated joint ventures47,757
 —
Gains on sales of real estate1,686
 18,292
Gains (losses) on sales of real estate 410,165
 (905)
Noncontrolling interests in property partnerships17,482
 14,400
 19,486
 18,830
Preferred dividends2,625
 2,625
 2,625
 2,625
Funds from Operations (FFO) attributable to Boston Properties Limited Partnership common unitholders (including Boston Properties, Inc.) (“Basic FFO”)
307,819
 272,145
Funds from Operations (FFO) attributable to the Operating Partnership common unitholders (including Boston Properties, Inc.) 316,200
 296,314
Less:       
Noncontrolling interest—common units of Boston Properties Limited Partnership’s share of funds from operations31,544
 27,704
FFO attributable to Boston Properties, Inc. common shareholders$276,275
 $244,441
Boston Properties, Inc.’s percentage share of Funds from Operations—basic89.75% 89.82%
Weighted-average shares outstanding—basic154,555
 154,415
Noncontrolling interest—common units of the Operating Partnership’s share of funds from operations 32,138
 30,307
Funds from Operations attributable to Boston Properties, Inc. common shareholdersFunds from Operations attributable to Boston Properties, Inc. common shareholders$284,062
 $266,007
Our percentage share of Funds from Operations—basic 89.84% 89.77%
Weighted average shares outstanding—basic 155,011
 154,525


Reconciliation to Diluted Funds from Operations:
 Three months ended June 30, 2019 Three months ended June 30, 2018
Income
(Numerator)
 
Shares
(Denominator)
 
Income
(Numerator)
 
Shares
(Denominator)
 (in thousands)
Basic FFO$307,819
 172,202
 $272,145
 171,916
Effect of Dilutive Securities       
Stock Based Compensation—
 319
 —
 156
Diluted FFO307,819
 172,521
 272,145
 172,072
Less:       
Noncontrolling interest—common units of Boston Properties Limited Partnership’s share of diluted FFO31,486
 17,647
 27,678
 17,501
Boston Properties, Inc.’s share of Diluted FFO (1)$276,333
 154,874
 $244,467
 154,571
  Three months ended March 31,
  2020 2019
  Income
(Numerator)		 Shares/Units
(Denominator)		 Income
(Numerator)		 Shares/Units
(Denominator)
  (in thousands)
Basic Funds from Operations $316,200
 172,549
 $296,314
 172,131
Effect of Dilutive Securities:        
Stock based compensation —
 247
 —
 319
Diluted Funds from Operations $316,200
 172,796
 $296,314
 172,450
Less: Noncontrolling interest—common units of the Operating Partnership’s share of diluted Funds from Operations 32,092
 17,538
 30,251
 17,606
Diluted Funds from Operations attributable to Boston Properties, Inc. (1) $284,108
 155,258
 $266,063
 154,844
 _______________
(1)BXP’s share of diluted FFOFunds from Operations was 89.77%89.85% and 89.83%89.79% for the three months ended June 30,March 31, 2020 and 2019, and 2018, respectively.
Table of Content



Boston Properties Limited Partnership
The following table presents a reconciliation of net income attributable to Boston Properties Limited Partnership common unitholders to FFO attributable to Boston Properties Limited Partnership common unitholders for the three months ended June 30, 2019March 31, 2020 and 2018:2019:
Three months ended June 30, Three months ended March 31,
2019 2018 2020 2019
(in thousands) (in thousands)
Net income attributable to Boston Properties Limited Partnership common unitholders$185,715
 $145,961
 $566,333
 $113,382
Add:       
Preferred distributions2,625
 2,625
 2,625
 2,625
Noncontrolling interests in property partnerships17,482
 14,400
 19,486
 18,830
Net Income205,822
 162,986
Net income 588,444
 134,837
Add:       
Depreciation and amortization expense175,199
 154,474
Depreciation and amortization 169,285
 162,682
Noncontrolling interests in property partnerships’ share of depreciation and amortization(17,869) (18,426) (17,627) (18,002)
BPLP’s share of depreciation and amortization from unconsolidated joint ventures
14,778
 9,312
BPLP’s share of depreciation and amortization from unconsolidated joint ventures 18,332
 15,470
Corporate-related depreciation and amortization(412) (406) (469) (395)
Impairment loss —
 22,272
Less:       
Gain on sale of real estate included within income from unconsolidated joint ventures47,757
 —
Gains on sales of real estate1,835
 18,770
Gains (losses) on sales of real estate 419,654
 (905)
Noncontrolling interests in property partnerships17,482
 14,400
 19,486
 18,830
Preferred distributions2,625
 2,625
 2,625
 2,625
Funds from Operations (FFO) attributable to Boston Properties Limited Partnership common unitholders (“Basic FFO”) (1)$307,819
 $272,145
Weighted-average units outstanding—basic172,202
 171,916
Funds from operations attributable to Boston Properties Limited Partnership common unitholders (1) $316,200
 $296,314
Weighted average units outstanding—basic 172,549
 172,131
_______________  
(1)Our calculation includes OP Units and vested LTIP Units (including vested 2012 OPP Units and vested 2013 MYLTIP Units, vested 2014 MYLTIP Units, vested 2015 MYLTIP Units and vested 2016- 2017 MYLTIP Units).

Reconciliation to Diluted Funds from Operations:
 Three months ended June 30, 2019 Three months ended June 30, 2018
Income
(Numerator)
 
Units
(Denominator)
 
Income
(Numerator)
 
Units
(Denominator)
 (in thousands)
Basic FFO$307,819
 172,202
 $272,145
 171,916
Effect of Dilutive Securities       
Stock Based Compensation—
 319
 —
 156
Diluted FFO$307,819
 172,521
 $272,145
 172,072
  Three months ended March 31,
  2020 2019
  
Income
(Numerator)
 
Shares/Units
(Denominator)
 
Income
(Numerator)
 
Shares/Units
(Denominator)
  (in thousands)
Basic Funds from Operations $316,200
 172,549
 $296,314
 172,131
Effect of Dilutive Securities:        
Stock based compensation —
 247
 —
 319
Diluted Funds from Operations $316,200
 172,796
 $296,314
 172,450

Contractual Obligations
We have various service contracts with vendors related to our property management. In addition, we have certain other contracts we enter into in the ordinary course of business that may extend beyond one year. These contracts include terms that provide for cancellation with insignificant or no cancellation penalties. Contract terms are generally between three and five years.

During the second quarter of 2019,three months ended March 31, 2020, we paid approximately $95.8$81.9 million to fund tenant-related obligations, including tenant improvements and leasing commissions.
Table of Content

In addition, during the three months ended March 31, 2020, we and our unconsolidated joint venture partners incurred approximately $165$36 million of new tenant-related obligations associated with approximately 2.0 million702,000 square feet of second generation leases, or approximately $82$52 per square foot. In addition, we signed leases for approximately 415,000 square feet at our development properties.We did not sign any first generation leases. The tenant-related obligations for the development properties are included within the projects’ “Estimated Total Investment” referred to in ““Item 2—Management’s Discussion and Analysis of Financial Condition” Condition and “Results Results of Operations—Liquidity and Capital Resources.” In aggregate during the second quarter of 2019, we signed leases for approximately 2.4 million square feet of space and incurred aggregate tenant-related obligations of approximately $223 million, or approximately $92 per square foot.
ITEM 3—Quantitative and Qualitative Disclosures about Market Risk.
The following table presents the aggregate carrying value of our mortgage notes payable, net, unsecured senior notes, net, unsecured line of credit, unsecured term loan, net and our corresponding estimate of fair value as of June 30, 2019. ApproximatelyMarch 31, 2020. As of March 31, 2020, approximately $11.3 billion of these borrowings bore interest at fixed
rates and therefore the fair value of these instruments is affected by changes in the market interest rates. As of June 30, 2019,March 31, 2020, the weighted-average interest rate on our variable rate debt was LIBOR plus 0.90%, or 3.34%0.85% (2.07%) per annum. The following table presents our aggregate fixed rate debt obligations with corresponding weighted-average interest rates sorted by maturity date and our aggregate variable rate debt obligations sorted by maturity date.
The table below does not include our unconsolidated joint venture debt. For a discussion concerning our unconsolidated joint venture debt, see Note 5 to the Consolidated Financial Statements and “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Capitalization—Off-Balance Sheet Arrangements—Joint Venture Indebtedness.”

2019 2020 2021 2022 2023 2024+ Total 
Estimated
Fair Value
2020 2021 2022 2023 2024 2025+ Total 
Estimated
Fair Value
(dollars in thousands)
Mortgage debt, net
(dollars in thousands)
Mortgage debt, net
Fixed Rate$8,005
 $16,841
 $36,346
 $611,132
 $(3,494) $2,288,003
 $2,956,833
 $3,013,338
$10,076
 $13,440
 $611,132
 $(3,494) $(3,494) $2,291,497
 $2,919,157
 $3,054,533
Average Interest Rate5.53% 5.55% 6.61% 4.79% —
 3.64% 3.94%  
GAAP Average Interest Rate5.07% 4.98% 4.79% —% —% 3.64% 3.90%  
Variable Rate—
 —
 —
 —
 —
 —
 —
 —
—
 —
 —
 —
 —
 —
 —
 —
Unsecured debt, netUnsecured debt, net
Fixed Rate$(5,136) $689,748
 $841,048
 $(8,491) $1,492,592
 $5,380,947
 $8,390,708
 $8,745,888
$(7,720) $840,465
 $(9,074) $1,492,008
 $693,286
 $5,384,044
 $8,393,009
 $8,449,511
Average Interest Rate—
 5.71% 4.29% —
 3.73% 3.79% 3.99%  
GAAP Average Interest Rate—% 4.29% —% 3.73% 3.92% 3.67% 3.76%  
Variable Rate$(239) $(460) $(451) $499,850
 $—
 —
 $498,700
 $500,673
(341) (451) 749,850
 —
 —
 —
 749,058
 750,379
$2,630
 $706,129

$876,943

$1,102,491

$1,489,098

$7,668,950

$11,846,241
 $12,259,899
Total Debt$2,015
 $853,454
—
$1,351,908
 $1,488,514
 $689,792
 $7,675,541
 $12,061,224
 $12,254,423

At June 30, 2019,March 31, 2020, the weighted-average coupon/stated rates on the fixed rate debt stated above was 3.87%3.69% per annum. At June 30, 2019,March 31, 2020, our outstanding variable rate debt based on LIBOR totaled approximately $500.0$750.0 million. At June 30, 2019,March 31, 2020, the coupon/stated rate on our variable rate debt was approximately 3.34%.2.07% per annum. If market interest rates on our variable rate debt had been 100 basis points greater, total interest expense would have increased approximately $1.3 million and $2.5$1.9 million for the three and six months ended June 30, 2019, respectively.March 31, 2020.
The fair value amounts were determined solely by considering the impact of hypothetical interest rates on our financial instruments.
Due to the uncertainty of specific actions we may undertake to minimize possible effects of market interest rate increases, this analysis assumes no changes in our financial structure. In the event that LIBOR is discontinued, the interest rate for our variable rate debt and our unconsolidated joint ventures’ variable rate debt and the swap rate for our unconsolidated joint ventures’ interest rate swaps following such event will be based on an alternative variable rate as specified in the applicable documentation governing such debt or swaps or as otherwise agreed upon. Such an event would not affect our ability to borrow or maintain already outstanding borrowings or our unconsolidated joint ventures’ ability to maintain its outstanding swaps, but the alternative variable rate could be higher and more volatile than LIBOR prior to its discontinuance. We understand that LIBOR is expected to remain available through the end of 2021, but may be discontinued or otherwise become unavailable thereafter.


ITEM 4—Controls and Procedures.
Boston Properties, Inc.
(a) Evaluation of Disclosure Controls and Procedures. As of the end of the period covered by this report, our management, with the participation of Boston Properties, Inc.’s Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934)1934, as amended). Based upon that evaluation, Boston Properties, Inc.’s Chief Executive Officer and Chief Financial Officer concluded that these disclosure controls and procedures were effective as of the end of the period covered by this report.
Table of Content

(b) Changes in Internal Control Over Financial Reporting. No change in Boston Properties, Inc.’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934)1934, as amended) occurred during the secondfirst quarter of our fiscal year ending December 31, 20192020 that has materially affected, or is reasonably likely to materially affect, Boston Properties, Inc.’s internal control over financial reporting.
Boston Properties Limited Partnership
(a) Evaluation of Disclosure Controls and Procedures. As of the end of the period covered by this report, the management of Boston Properties, Inc., the sole general partner of Boston Properties Limited Partnership, with the participation of its Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934)1934, as amended). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer of Boston Properties, Inc. concluded that these disclosure controls and procedures were effective as of the end of the period covered by this report.
(b) Changes in Internal Control Over Financial Reporting. No change in its internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934)1934, as amended) occurred during the secondfirst quarter of our fiscal year ending December 31, 20192020 that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.

Table of Content


PART II. OTHER INFORMATION
ITEM 1—Legal Proceedings.
We are subject to legal proceedings and claims that arise in the ordinary course of business. These matters are generally covered by insurance. Management believes that the final outcome of such matters will not have a material adverse effect on our financial position, results of operations or liquidity.
ITEM 1A—Risk Factors.
Except to the extent updated below or previously updated or to the extent additional factual information disclosed elsewhere in these Quarterly Reports on Form 10-Q relates to such risk factors (including, without limitation, the matters discussed in Part I, “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations”), there were no material changes toWe are supplementing the risk factors disclosed in Part I,described under “Item 1A. Risk Factors” ofin our Annual Report on Form 10-K for the year ended December 31, 2018.2019 (“Form 10-K”) with the additional risk factor set forth below. This supplemental risk factor should be read in conjunction with the other risk factors described in the Form 10-K.

The COVID-19 pandemic has caused severe disruptions in the United States and global economies and we expect it will continue to materially and adversely affect our financial condition, results of operations, cash flows, liquidity and performance and that of our tenants.
Since being reported in December 2019, COVID-19 has spread globally, including to every state in the United States. On March 11, 2020, the World Health Organization declared COVID-19 a global pandemic, and on March 13, 2020, the United States declared a national emergency with respect to COVID-19.
The global impact of the COVID-19 pandemic is continually evolving and public health officials and governmental authorities, including those in all of the markets in which we operate, have reacted by taking measures such as prohibiting people from congregating in heavily populated areas, instituting quarantines, restricting travel, issuing “stay-at-home” orders, restricting the types of businesses that may continue to operate (including the types of construction projects that may proceed) and closing schools, among many others. Most of these restrictions began in earnest in March 2020 and they quickly had a material adverse impact on economic and market conditions around the world, including the United States and the markets in which our properties are located, and on us. It is possible that public health officials and governmental authorities in the markets in which we operate may impose additional restrictions in an effort to slow the spread of COVID-19 or may relax or revoke existing restrictions too quickly, which could, in either case, exacerbate the severity of these adverse impacts on the economy. There is great uncertainty regarding the duration and breadth of the COVID-19 pandemic, as well as possible future responses, which makes it impossible for us to predict with certainty the impact that COVID-19 will have on us and our tenants at this time. Factors related to COVID-19 that have had, or could have, a material adverse effect on our results of operations and financial condition, include:
•
a complete or partial closure of, or other operational issues at, one or more of our properties resulting from government or tenant action, which could adversely affect our operations and those of our tenants;
•
reduced economic activity impacting the businesses, financial condition and liquidity of our tenants has caused, and is expected to continue to cause, one or more of our tenants to be unable to meet their obligations to us, including their ability to make 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;
the failure of our tenants to properly implement or deploy their business continuity plans, or if those plans are ineffective, it could have a material adverse effect on our tenants’ businesses and their ability to pay rent;
•
the impact of new or continued complete or partial shutdowns of the operations of one or more of our tenants’ businesses, including office, hotel and retail tenants, and parking operators, temporary or long-term disruptions in our tenants’ supply chains from local, national and international suppliers or delays in the delivery of products, services or other materials necessary for our tenants’ operations, could force our tenants to reduce, delay or eliminate offerings of their products and services, which could result in less revenue, income and cash flow, and possibly their bankruptcy or insolvency, which in turn could:
•
reduce our cash flows,
adversely impact our ability to finance, refinance or sell a property,

adversely impact our ability to continue paying dividends to our stockholders at current levels, or at all, and
•
result in additional legal and other costs to enforce our rights, collect rent and/or re-lease the space occupied by the distressed tenant;
•
the duration and scope of the mandatory business closures and “stay-at-home” orders have had, and are expected to continue to have, a severe negative impact on our retail tenants that depend on in-person interactions with their customers to generate revenues and have resulted, and are expected to continue to result, in most retail tenants being unable to make timely rental payments in full or at all;
the extent to which COVID-19 decreases customers’ willingness to frequent or prevents customers from frequenting, our tenants’ businesses in the future, may result in our retail tenants’ continued inability to make timely rental payments to us under their leases;
many of our retail and some of our office tenants have approached us seeking either rent concessions, deferrals or abatements, and the extent to which we grant these requests or instead seek to enforce our legal remedies could have a material adverse effect on our results of operations, liquidity and cash flows;
the degree to which our tenants’ businesses have been and continue to be negatively impacted may require us to write-off a tenant’s accrued rent balance and this could have a material adverse effect on our results of operations and liquidity;
if new or existing actions or measures implemented to prevent the spread of COVID-19 continue to result in increasing unemployment, it may negatively affect the ability of our residential tenants to generate sufficient income to pay, or make them unwilling to pay rent, in full or at all, in a timely manner;
•
the impact of prolonged restrictions on freedom of movement and business operations, such as travel bans, business closures and “stay-at-home” orders have had, and are expected to continue to have, a material adverse effect on the operators of our parking garages and our hotel property, which negatively impacts our revenues and may also result in a decrease in demand for hotel stays even after the travel bans and other restrictions are lifted;
•
our failure, or that of any of our joint venture partners’, to meet our or their, as applicable, responsibilities or obligations to the other or to third parties, such as lenders, including a failure to contribute additional capital needed by the ventures or a default by a party under a joint venture agreement or other agreement relating to a joint venture, each of which, in our case, could result in dilution of our interest or a loss of our management and other rights relating to our joint ventures, and in the case of a joint venture partner, could result in our payment of the partner’s share of the additional capital;
•
the impact of COVID-19 could result in an event or change in circumstances that results in an impairment in the value of our properties or our investments in unconsolidated joint ventures, and any such impairment could have a material adverse effect on our results of operations in the periods in which the charge is taken;
we may be unable to restructure or amend leases with certain of our tenants on terms favorable to us or at all;
the impact and validity of interpretations of lease provisions and related claims by tenants regarding their obligations to pay rent as a result of COVID-19, and any court rulings or decisions interpreting these provisions, could have a material adverse effect on our results of operations and liquidity;
•
restrictions intended to prevent the spread of COVID-19 have limited, and are expected to continue to limit, our leasing activities, such as property tours, and may have a material adverse effect on our ability to renew leases, lease vacant space or re-lease available space as leases expire in our properties on favorable terms, or at all;

•
COVID-19 has caused a material decline in general business activity and demand for real estate transactions, and if this persists, it would adversely affect our ability or desire to make strategic acquisitions or dispositions;
•
the impact of recent and future efforts by state, local, federal and industry groups to enact laws and regulations have restricted, and may further restrict, the ability of landlords, such as us, to collect rent, enforce remedies for the failure to pay rent, or otherwise enforce the terms of the lease agreements, such as a rent freeze for tenants or a suspension of a landlord’s ability to enforce evictions;
the extent of construction delays on our development/redevelopment projects due to work-stoppage orders, disruptions in the supply of materials, delays in permitting or inspections, or other factors could result in our failure to meet the development milestones set forth in any applicable lease agreement, which could provide the tenant the right to terminate its lease or entitle the tenant to monetary damages, delay the commencement or completion of construction and our anticipated lease-up plans for a development/redevelopment project or our overall development pipeline, including recognizing revenue for new leases, that may cause returns on investment to be less than projected, and/or increase the costs of construction of new or existing projects, any of which could adversely affect our investment returns, profitability and/or our future growth;
we may be unable to access debt and equity capital on attractive terms, or at all, and a further disruption and instability in the global financial markets or deteriorations in credit and financing conditions may affect our tenants’ and our access to capital and other sources of funding necessary to fund our respective operations or address maturing liabilities on a timely basis;
the financial effects of the COVID-19 pandemic on our future financial results, cash flows and financial condition could adversely impact our compliance with the financial covenants of our credit facility and other debt agreements and could result in an event of default and the acceleration of indebtedness, which could negatively impact our financial condition, results of operations and our ability to make additional borrowings and pay dividends;
adaptions made by companies in response to “stay-at-home” orders and future limitations on in-person work environments could lead to a sustained shift away from collective in-person work environments and adversely affect the overall demand for office space across our portfolio over the long term;
the effectiveness or lack of effectiveness of governmental relief in providing assistance to large and small businesses, including some of our tenants, that have suffered significant declines in revenues as a result of mandatory business shut-downs, “stay-at-home” orders and social distancing practices, and the potential for a prolonged, severe recession, could have a material adverse impact on our financial condition and results of operations;
increased vulnerability to cyber-security threats and potential breaches, including phishing attacks, malware and impersonation tactics, resulting from the increase in numbers of individuals working from home;
the potential that business interruption, loss of rental income and/or other associated expenses related to our operations will not be covered in whole or in part by our insurance policies, which may increase unreimbursed liabilities;
if the health of our employees, particularly our key personnel and property management teams, are negatively impacted, we may be unable to ensure business continuity and be exposed to lawsuits from tenants;
if we choose to pay dividends in our stock instead of cash, our stockholders may have to pay income taxes on the dividends without receiving a corresponding amount of cash;
•
uncertainty as to what conditions must be satisfied before government authorities lift “stay-at-home” orders and public health officials begin the process of gradually returning Americans to work and whether government authorities will impose (or suggest) requirements on landlords, such as us, to protect the health and safety of tenants and visitors to our buildings could result in increased

operating costs and demands on our property management teams to ensure compliance with any such requirements, as well as increased costs associated with protecting against potential liability arising from these measures, such as claims by tenants that the measures violate their leases and claims by visitors that the measures caused them damages; and
limited access to our facilities, management, tenants, support staff and professional advisors could decrease the effectiveness of our disclosure controls and procedures, internal controls over financial reporting and other risk mitigation strategies, increase our susceptibility to security breaches, hamper our ability to comply with regulatory obligations and prevent us from conducting our business as efficiently and effectively as we otherwise would have.
The full extent to which the COVID-19 pandemic impacts our operations and those of our tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence at this time. The fluidity of the situation presents material uncertainty and risk with respect to our financial condition, results of operations, cash flows, liquidity and overall performance. Moreover, many risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2019 are heightened risks as a result of the impact of the COVID-19 pandemic.
ITEM 2—Unregistered Sales of Equity Securities and Use of Proceeds
Boston Properties, Inc.
(a)During the three months ended June 30, 2019, Boston Properties, Inc.March 31, 2020, BXP issued an aggregate of 20,838461,856 shares of common stock in exchange for 20,838461,856 common units of limited partnership held by certain limited partners of Boston Properties Limited Partnership.BPLP. Of these shares, 2,716376,104 shares were issued in reliance on an exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended. We relied on the exemption under Section 4(a)(2) based upon factual representations received from the limited partner who received the common shares.
(b)Not applicable.
(c)Issuer Purchases of Equity Securities.

Period
(a)
Total Number of Shares of Common Stock Purchased
 
(b)
Average Price Paid per Common Share
(c)
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
(d)
Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased
April 1, 2019 - April 30, 2019134
(1)$135.94
N/AN/A
May 1, 2019 - May 31, 201945
(2)$0.01
N/AN/A
June 1, 2019 - June 30, 2019—
 $—
N/AN/A
Total179
 $101.77
N/AN/A
Period
(a)
Total Number of Shares of Common Stock Purchased
 
(b)
Average Price Paid per Common Share
(c)
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
(d)
Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased
January 1, 2020 - January 31, 20207,149
(1)$138.12
N/AN/A
February 1, 2020 - February 29, 2020228
(1)$144.56
N/AN/A
March 1, 2020 - March 31, 2020915
(2)$0.01
N/AN/A
Total8,292
 $123.06
N/AN/A
___________
(1)Represents shares of common stock of Boston Properties, Inc.BXP surrendered by an employeeemployees to Boston Properties, Inc.BXP to satisfy such employee’semployees’ tax withholding obligationobligations in connection with the vesting of restricted common stock.
(2)Represents shares of restricted common stock of Boston Properties, Inc.BXP repurchased in connection with the termination of ana certain employee’s employment with Boston Properties, Inc.BXP. Under the terms of the applicable restricted stock award agreement,agreements, the shares were repurchased by Boston Properties, Inc.BXP at a price of $0.01 per share, which was the amount originally paid by such employee for such shares.

Table of Content


Boston Properties Limited Partnership
(a)Each time Boston Properties, Inc.BXP issues shares of stock (other than in exchange for common units of BPLP when such common units are presented for redemption), it contributes the proceeds of such issuance to Boston Properties Limited PartnershipBPLP in return for an equivalent number of partnership units with rights and preferences analogous to the shares issued. During the three months ended June 30, 2019,March 31, 2020, in connection with issuances of common stock by Boston Properties, Inc.BXP pursuant to issuances to employees of restricted common stock to non-employee directors of Boston Properties, Inc.,and exercises of non-qualified stock options and the settlement of deferred stock awards under the Boston Properties, Inc. 2012 Stock Option and Incentive Plan weand pursuant to issuances under the Boston Properties, Inc. 1999 Non-Qualified Employee Stock Purchase Plan, BPLP issued an aggregate of 26,985approximately 70,694 common units to Boston Properties, Inc.BXP in exchange for approximately $0.5$4.29 million, the aggregate proceeds of such common stock issuances to Boston Properties, Inc.BXP. Such units were issued in reliance on an exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended.
(b)Not Applicable.
(c)Issuer Purchases of Equity Securities.
Period
(a)
Total Number of Units
Purchased
 
(b)
Average Price Paid per Unit
(c)
Total Number of Units Purchased as Part of Publicly Announced Plans or Programs
(d)
Maximum Number (or Approximate Dollar Value) of Units that May Yet be Purchased
April 1, 2019 - April 30, 20193,158
(1)(3)$6.01
N/AN/A
May 1, 2019 - May 31, 20191,455
(2)(3)$0.24
N/AN/A
June 1, 2019 - June 30, 2019—
 $—
N/AN/A
Total4,613
 $4.19
N/AN/A
Period
(a)
Total Number of Units
Purchased
 
(b)
Average Price Paid per Unit
(c)
Total Number of Units Purchased as Part of Publicly Announced Plans or Programs
(d)
Maximum Number (or Approximate Dollar Value) of Units that May Yet be Purchased
January 1, 2020 - January 31, 20208,693
(1)$113.63
N/AN/A
February 1, 2020 - February 29, 2020271,170
(2)$0.37
N/AN/A
March 1, 2020 - March 31, 2020915
(3)$0.01
N/AN/A
Total280,778
 $3.88
N/AN/A
___________
(1)Includes 1341,482 LTIP units and 62 2016 MYLTIP units that were repurchased in connection with the termination of an employee’s employment with BXP. Under the terms of the applicable LTIP unit vesting agreements and 2016 MYLTIP award agreement, such LTIP units and 2016 MYLTIP units were repurchased at a price $0.25 per unit, which was the amount originally paid by such employee for such units. Also includes 7,149 common units previously held by Boston Properties, Inc.BXP that were redeemed in connection with the surrender of shares of restricted common stock of Boston Properties, Inc.BXP by an employeeemployees to Boston Properties, Inc.BXP to satisfy such employee’semployees’ tax withholding obligationobligations in connection with the vesting of restricted common stockstock.
(2)Includes 270,942 2017 MYLTIP units. The measurement period for such 2017 MYLTIP units ended on February 6, 2020 and 3,024 LTIPBXP’s total return to stockholders was sufficient for employees to earn and therefore become eligible to vest in a portion of the 2017 MYLTIP units. Under the terms of the applicable 2017 MYLTIP award agreements, the 270,942 unearned 2017 MYLTIP units were repurchased at a price of $0.25 per 2017 MYLTIP unit, which was the amount originally paid by each employee for the units. Also includes 228 common units previously held by BXP that were repurchasedredeemed in connection with the surrender of shares of restricted common stock of BXP by Boston Properties Limited Partnershipemployees to BXP to satisfy such employees’ tax withholding obligations in connection with the vesting of restricted common stock.
(3)Includes 915 common units of BPLP previously held by BXP that were redeemed in connection with the repurchase of restricted shares of common stock of BXP in connection with the termination of an employee’s employment with Boston Properties, Inc.
(2)Includes 45 common units previously held by Boston Properties, Inc. that were redeemed in connection with the repurchase of shares of restricted common stock of Boston Properties, Inc. in connection with the termination of an employee’s employment with Boston Properties, Inc. and 1,410 LTIP units that were repurchased by Boston Properties Limited Partnership in connection with the termination of certain employees’ employment with Boston Properties, Inc.
(3)BXP. Under the terms of the applicable restricted stock award agreements, and LTIP unit vesting agreements, suchthe shares were repurchased by BXP at a price of $0.01 per share, and such LTIP units were repurchased at a price $0.25 per unit, which werewas the amountsamount originally paid by such employeesemployee for such shares and units.shares.

ITEM 3—Defaults Upon Senior Securities.
None.
ITEM 4—Mine Safety Disclosures.
None.
ITEM 5—Other Information.
(a)None.
(b)None.
Table of Content


ITEM 6—Exhibits.
(a)Exhibits
 
3.1
—
Third Amended and Restated By-laws of Boston Properties, Inc. (Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K of Boston Properties, Inc. filed on May 19, 2016.)
3.2
—
Amendment No. 1 to Third Amended and Restated By-laws of Boston Properties, Inc., effective as of March 20, 2020. (Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K of Boston Properties, Inc. and Boston Properties Limited Partnership filed on March 24, 2020.)
4.1
—
Supplemental Indenture No. 19,21, dated as of June 21, 2019,May 5, 2020, between Boston Properties Limited Partnership and The Bank of New York Mellon Trust Company, N.A., as Trustee; including a form of the 3.400%3.250% Senior NotesNote due 2029.2031. (Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K of Boston Properties, Inc. and Boston Properties Limited Partnership filed on June 21, 2019.)
10.1
—
Boston Properties, Inc. Non-Employee Director Compensation Plan (Incorporated by reference to Appendix B to Boston Properties, Inc.’s Proxy Statement on Schedule 14A filed on AprilMay 5, 2019.2020.)
   
31.1
—
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Boston Properties, Inc. (Filed herewith.)
   
31.2
—
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Boston Properties, Inc. (Filed herewith.)
   
31.3
—
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Boston Properties Limited Partnership. (Filed herewith.)
   
31.4
—
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Boston Properties Limited Partnership. (Filed herewith.)
   
32.1
—
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes Oxley Act of 2002 for Boston Properties, Inc. (Furnished herewith.)
   
32.2
—
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes Oxley Act of 2002 for Boston Properties, Inc. (Furnished herewith.)
   
32.3
—
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes Oxley Act of 2002 for Boston Properties Limited Partnership. (Furnished herewith.)
   
32.4
—
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes Oxley Act of 2002 for Boston Properties Limited Partnership. (Furnished herewith.)
   
101.SCH
—Inline XBRL Taxonomy Extension Schema Document. (Filed herewith.)
   
101.CAL
—Inline XBRL Taxonomy Extension Calculation Linkbase Document. (Filed herewith.)
   
101.LAB
—Inline XBRL Taxonomy Extension Label Linkbase Document. (Filed herewith.)
   
101.PRE
—Inline XBRL Taxonomy Extension Presentation Linkbase Document. (Filed herewith.)
   
101.DEF
—Inline XBRL Taxonomy Extension Definition Linkbase Document. (Filed herewith.)
   
104
—Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101.*). (Filed herewith.)

Table of Content


SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



 BOSTON PROPERTIES, INC.
   
August 7, 2019May 8, 2020 
/s/    MICHAEL R. WALSH        
  Michael R. Walsh
  
Chief Accounting Officer
(duly authorized officer and principal accounting officer)

Table of Content


SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



 BOSTON PROPERTIES LIMITED PARTNERSHIP
 By: Boston Properties, Inc., its General Partner
   
August 7, 2019May 8, 2020  
/s/    MICHAEL R. WALSH        
   Michael R. Walsh
   
Chief Accounting Officer
(duly authorized officer and principal accounting officer)


10083