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BXP Boston Properties

Filed: 6 Aug 21, 12:18pm
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, 2021
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) 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
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 share156,169,178
(Registrant)(Class)(Outstanding on August 2, 2021)


EXPLANATORY NOTE
This report combines the Quarterly Reports on Form 10-Q for the period ended June 30, 2021 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, 2021, BXP owned an approximate 89.9% ownership interest in BPLP. The remaining approximate 10.1% 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-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:
enhances investors’ understanding of BXP and BPLP by enabling them 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.
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 noncontrolling interests in


BPLP 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 of BXP at the time of such redemptions. This resulted in a difference between the net real estate of BXP as compared to BPLP of approximately $266.5 million, or 1.5% at June 30, 2021, and a corresponding difference in depreciation expense, impairment 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. Real Estate;
Note 11. Stockholders’ Equity / Partners’ Capital;
Note 12. Segment Information; and
Note 13. Earnings Per Share / Common Unit
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.




BOSTON PROPERTIES, INC. AND BOSTON PROPERTIES LIMITED PARTNERSHIP
FORM 10-Q
for the quarter ended June 30, 2021
TABLE OF CONTENTS
 Page
ITEM 1.
Boston Properties, Inc.
Boston Properties Limited Partnership
Boston Properties, Inc. and Boston Properties Limited Partnership
ITEM 2.
ITEM 3.
ITEM 4.
ITEM 1.
ITEM 1A.
ITEM 2.
ITEM 3.
ITEM 4.
ITEM 5.
ITEM 6.
 



PART I. FINANCIAL INFORMATION
ITEM 1—Financial Statements.


BOSTON PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited and in thousands, except for share and par value amounts)
June 30,
2021
December 31,
2020
ASSETS
Real estate, at cost (amounts related to variable interest entities (“VIEs”) of $6,664,480 and $6,592,019 at June 30, 2021 and December 31, 2020, respectively)$23,417,175 $22,969,110 
Right of use assets - finance leases (amounts related to VIEs of $21,000 and $21,000 at June 30, 2021 and December 31, 2020, respectively)237,765 237,393 
Right of use assets - operating leases170,331 146,406 
Less: accumulated depreciation (amounts related to VIEs of $(1,235,346) and $(1,158,548) at June 30, 2021 and December 31, 2020, respectively)(5,752,818)(5,534,102)
Total real estate18,072,453 17,818,807 
Cash and cash equivalents (amounts related to VIEs of $335,837 and $340,642 at June 30, 2021 and December 31, 2020, respectively)557,307 1,668,742 
Cash held in escrows79,973 50,587 
Investments in securities41,476 39,457 
Tenant and other receivables, net (amounts related to VIEs of $5,298 and $10,911 at June 30, 2021 and December 31, 2020, respectively)58,624 77,411 
Related party note receivable, net77,872 77,552 
Notes receivable, net19,087 18,729 
Accrued rental income, net (amounts related to VIEs of $346,443 and $336,594 at June 30, 2021 and December 31, 2020, respectively)1,172,411 1,122,502 
Deferred charges, net (amounts related to VIEs of $173,578 and $183,306 at June 30, 2021 and December 31, 2020, respectively)627,338 640,085 
Prepaid expenses and other assets (amounts related to VIEs of $12,441 and $13,137 at June 30, 2021 and December 31, 2020, respectively)46,946 33,840 
Investments in unconsolidated joint ventures1,305,589 1,310,478 
Total assets$22,059,076 $22,858,190 
LIABILITIES AND EQUITY
Liabilities:
Mortgage notes payable, net (amounts related to VIEs of $2,901,709 and $2,907,590 at June 30, 2021 and December 31, 2020, respectively)$2,901,709 $2,909,081 
Unsecured senior notes, net9,634,356 9,639,287 
Unsecured line of credit
Unsecured term loan, net499,390 
Lease liabilities - finance leases (amounts related to VIEs of $20,382 and $20,306 at June 30, 2021 and December 31, 2020, respectively)243,381 236,492 
Lease liabilities - operating leases226,594 201,713 
Accounts payable and accrued expenses (amounts related to VIEs of $40,100 and $23,128 at June 30, 2021 and December 31, 2020, respectively)305,969 336,264 
Dividends and distributions payable169,718 171,082 
Accrued interest payable107,386 106,288 
Other liabilities (amounts related to VIEs of $129,477 and $158,805 at June 30, 2021 and December 31, 2020, respectively)370,990 412,084 
Total liabilities13,960,103 14,511,681 
Commitments and contingencies (See Note 9)
Redeemable deferred stock units— 78,362 and 72,966 units outstanding at redemption value at June 30, 2021 and December 31, 2020, respectively8,980 6,897 
1

BOSTON PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited and in thousands, except for share and par value amounts)
June 30,
2021
December 31,
2020
Equity:
Stockholders’ equity attributable to Boston Properties, Inc.:
Excess stock, $0.01 par value, 150,000,000 shares authorized, NaN 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 December 31, 2020200,000 
Common stock, $0.01 par value, 250,000,000 shares authorized, 156,214,859 and 155,797,725 issued and 156,135,959 and 155,718,825 outstanding at June 30, 2021 and December 31, 2020, respectively1,561 1,557 
Additional paid-in capital6,405,916 6,356,791 
Dividends in excess of earnings(612,247)(509,653)
Treasury common stock at cost, 78,900 shares at June 30, 2021 and December 31, 2020(2,722)(2,722)
Accumulated other comprehensive loss(43,166)(49,890)
Total stockholders’ equity attributable to Boston Properties, Inc.5,749,342 5,996,083 
Noncontrolling interests:
Common units of Boston Properties Limited Partnership615,308 616,596 
Property partnerships1,725,343 1,726,933 
Total equity8,089,993 8,339,612 
Total liabilities and equity$22,059,076 $22,858,190 
















The accompanying notes are an integral part of these consolidated financial statements.
2

BOSTON PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited and in thousands, except for per share amounts)
Three months ended June 30,Six months ended June 30,
 2021202020212020
Revenue
Lease$684,025 $630,119 $1,369,842 $1,340,230 
Parking and other18,282 13,946 35,220 38,450 
Hotel1,561 99 2,193 6,924 
Development and management services7,284 8,125 14,087 16,004 
Direct reimbursements of payroll and related costs from management services contracts2,655 2,484 6,160 5,721 
Total revenue713,807 654,773 1,427,502 1,407,329 
Expenses
Operating
Rental248,703 239,787 506,092 502,753 
Hotel1,996 1,973 4,047 8,794 
General and administrative38,405 37,743 83,364 74,197 
Payroll and related costs from management services contracts2,655 2,484 6,160 5,721 
Transaction costs751 332 1,082 947 
Depreciation and amortization183,838 178,188 360,403 349,282 
Total expenses476,348 460,507 961,148 941,694 
Other income (expense)
Income (loss) from unconsolidated joint ventures(1,373)1,832 3,852 1,463 
Gains on sales of real estate7,756 203,767 7,756 613,932 
Interest and other income (loss)1,452 1,305 2,620 4,322 
Gains (losses) from investments in securities2,275 4,552 3,934 (893)
Losses from early extinguishment of debt(898)
Interest expense(106,319)(107,142)(214,221)(208,733)
Net income141,250 298,580 269,397 875,726 
Net income attributable to noncontrolling interests
Noncontrolling interests in property partnerships(17,164)767 (33,631)(18,719)
Noncontrolling interest—common units of the Operating Partnership(12,383)(30,197)(23,422)(87,525)
Net income attributable to Boston Properties, Inc.111,703 269,150 212,344 769,482 
Preferred dividends(2,625)(2,560)(5,250)
Preferred stock redemption charge(6,412)
Net income attributable to Boston Properties, Inc. common shareholders$111,703 $266,525 $203,372 $764,232 
Basic earnings per common share attributable to Boston Properties, Inc. common shareholders:
Net income$0.72 $1.71 $1.30 $4.92 
Weighted average number of common shares outstanding156,107 155,386 156,016 155,199 
Diluted earnings per common share attributable to Boston Properties, Inc. common shareholders:
Net income$0.71 $1.71 $1.30 $4.91 
Weighted average number of common and common equivalent shares outstanding156,519 155,407 156,307 155,333 

The accompanying notes are an integral part of these consolidated financial statements.
3

BOSTON PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited and in thousands)
 
Three months ended June 30,Six months ended June 30,
 2021202020212020
Net income$141,250 $298,580 $269,397 $875,726 
Other comprehensive income (loss):
Effective portion of interest rate contracts654 (659)4,394 (10,379)
Amortization of interest rate contracts (1)1,676 1,677 3,352 3,343 
Other comprehensive income (loss)2,330 1,018 7,746 (7,036)
Comprehensive income143,580 299,598 277,143 868,690 
Net income attributable to noncontrolling interests(29,547)(29,430)(57,053)(106,244)
Other comprehensive (income) loss attributable to noncontrolling interests(357)(239)(1,022)450 
Comprehensive income attributable to Boston Properties, Inc.$113,676 $269,929 $219,068 $762,896 
_______________
(1)Amounts reclassified from comprehensive income primarily to interest expense within Boston Properties, Inc.’s Consolidated Statements of Operations.
































The accompanying notes are an integral part of these consolidated financial statements.
4

BOSTON PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF EQUITY
 (unaudited and in thousands)
 Common StockPreferred StockAdditional Paid-in CapitalDividends in Excess of EarningsTreasury Stock,
at cost
Accumulated Other Comprehensive LossNoncontrolling Interests - Common UnitsNoncontrolling Interests - Property PartnershipsTotal
 SharesAmount
Equity, March 31, 2021156,074 $1,561 $$6,392,923 $(570,982)$(2,722)$(45,139)$620,106 $1,725,600 $8,121,347 
Redemption of operating partnership units to common stock59 — 2,087 — — — (2,087)— 
Allocated net income for the year— — — — 111,748 — — 12,338 17,164 141,250 
Dividends/distributions declared— — — — (153,013)— — (17,253)— (170,266)
Net activity from stock option and incentive plan— (294)— — — 13,191 — 12,897 
Contributions from noncontrolling interests in property partnerships— — — — — — — — 2,139 2,139 
Distributions to noncontrolling interests in property partnerships— — — — — — — — (19,704)(19,704)
Effective portion of interest rate contracts— — — — — — 593 61 654 
Amortization of interest rate contracts— — — — — — 1,380 152 144 1,676 
Reallocation of noncontrolling interest— — — 11,200 — — — (11,200)— 
Equity, June 30, 2021156,136 $1,561 $$6,405,916 $(612,247)$(2,722)$(43,166)$615,308 $1,725,343 $8,089,993 
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 
Redemption of operating partnership units to common stock303 — 10,846 — — — (10,849)— 
Allocated net income (loss) for the period— — — — 269,361 — — 29,986 (767)298,580 
Dividends/distributions declared— — — — (155,132)— — (17,194)— (172,326)
Net activity from stock option and incentive plan— — 873 — — — 9,352 — 10,225 
Contributions from noncontrolling interests in property partnerships— — — — — — — — 2,081 2,081 
Distributions to noncontrolling interests in property partnerships— — — — — — — — (13,315)(13,315)
Effective portion of interest rate contracts— — — — — — (601)(58)— (659)
Amortization of interest rate contracts— — — — — — 1,380 153 144 1,677 
Reallocation of noncontrolling interest— — — 7,471 — — — (7,471)— 
Equity, June 30, 2020155,622 $1,556 $200,000 $6,340,665 $(302,511)$(2,722)$(54,921)$640,491 $1,724,588 $8,547,146 
5

BOSTON PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF EQUITY
 (unaudited and in thousands)
 Common StockPreferred StockAdditional Paid-in CapitalDividends in Excess of EarningsTreasury Stock,
at cost
Accumulated Other Comprehensive LossNoncontrolling Interests - Common UnitsNoncontrolling Interests - Property PartnershipsTotal
 SharesAmount
Equity, December 31, 2020155,719 $1,557 $200,000 $6,356,791 $(509,653)$(2,722)$(49,890)$616,596 $1,726,933 $8,339,612 
Redemption of operating partnership units to common stock177 — 6,284 — — — (6,285)— 
Allocated net income for the period— — — — 212,344 — — 23,422 33,631 269,397 
Dividends/distributions declared— — — — (308,526)— — (34,540)— (343,066)
Shares issued pursuant to stock purchase plan— — 484 — — — — — 484 
Net activity from stock option and incentive plan235 — 19,708 — — — 31,653 — 51,364 
Preferred stock redemption— — (200,000)6,377 — — — — — (193,623)
Preferred stock redemption charge— — — — (6,412)— — — — (6,412)
Contributions from noncontrolling interests in property partnerships— — — — — — — — 2,420 2,420 
Distributions to noncontrolling interests in property partnerships— — — — — — — — (37,929)(37,929)
Effective portion of interest rate contracts— — — — — — 3,962 432 — 4,394 
Amortization of interest rate contracts— — — — — — 2,762 302 288 3,352 
Reallocation of noncontrolling interest— — — 16,272 — — — (16,272)— 
Equity, June 30, 2021156,136 $1,561 $$6,405,916 $(612,247)$(2,722)$(43,166)$615,308 $1,725,343 $8,089,993 
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 stock765 — 26,336 — — — (26,344)— 
Allocated net income for the period— — — — 769,482 — — 87,525 18,719 875,726 
Dividends/distributions declared— — — — (309,965)— — (34,638)— (344,603)
Shares issued pursuant to stock purchase plan— — 325 — — — — — 325 
Net activity from stock option and incentive plan65 — 8,256 — — — 25,029 — 33,285 
Contributions from noncontrolling interests in property partnerships— — — — — — — — 5,957 5,957 
Distributions to noncontrolling interests in property partnerships— — — — — — — — (29,065)(29,065)
Effective portion of interest rate contracts— — — — — — (9,333)(1,046)(10,379)
Amortization of interest rate contracts— — — — — — 2,747 308 288 3,343 
Reallocation of noncontrolling interest— — — 11,029 — — — (11,029)— 
Equity, June 30, 2020155,622 $1,556 $200,000 $6,340,665 $(302,511)$(2,722)$(54,921)$640,491 $1,724,588 $8,547,146 
The accompanying notes are an integral part of these consolidated financial statements.
6

BOSTON PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited and in thousands)
 Six months ended June 30,
 20212020
Cash flows from operating activities:
Net income$269,397 $875,726 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization360,403 349,282 
Amortization of right of use assets - operating leases2,963 1,128 
Non-cash compensation expense34,370 27,899 
Income from unconsolidated joint ventures(3,852)(1,463)
Distributions of net cash flow from operations of unconsolidated joint ventures14,387 13,382 
(Gains) losses from investments in securities(3,934)893 
Allowance for current expected credit losses(418)484 
Non-cash portion of interest expense11,784 11,483 
Settlement of accreted debt discount on redemption of unsecured senior notes(6,290)
Losses from early extinguishments of debt898 
Gains on sales of real estate(7,756)(613,932)
Change in assets and liabilities:
Tenant and other receivables, net17,110 18,516 
Notes receivable, net(277)(258)
Accrued rental income, net(39,434)(43,399)
Prepaid expenses and other assets(14,122)(12,057)
Lease liabilities - operating leases(1,566)799 
Accounts payable and accrued expenses6,100 (20,493)
Accrued interest payable1,741 5,262 
Other liabilities(53,919)(21,912)
Tenant leasing costs(27,109)(37,068)
Total adjustments291,079 (321,454)
Net cash provided by operating activities560,476 554,272 
Cash flows from investing activities:
Acquisitions of real estate(100,176)(133,406)
Construction in progress(235,577)(247,615)
Building and other capital improvements(66,033)(68,386)
Tenant improvements(161,619)(118,903)
Proceeds from sales of real estate506,337 
Capital contributions to unconsolidated joint ventures(20,032)(106,168)
Capital distributions from unconsolidated joint ventures122 54,413 
Issuance of notes receivable, net(9,800)
Proceeds from sale of investment in unconsolidated joint venture17,789 
Investments in securities, net1,915 3,006 
Net cash used in investing activities(563,611)(120,522)
Cash flows from financing activities:
Repayments of mortgage notes payable(9,294)(8,477)
Proceeds from unsecured senior notes846,345 1,248,125 
Redemption of unsecured senior notes(843,710)
Borrowings on unsecured line of credit265,000 
Repayments of unsecured line of credit(265,000)
7

BOSTON PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited and in thousands)
 Six months ended June 30,
 20212020
Repayment of unsecured term loan(500,000)
Redemption of preferred stock(200,000)
Payments on finance lease obligations618 
Deferred financing costs(13,642)(9,465)
Debt prepayment and extinguishment costs(185)
Net proceeds from equity transactions19,580 3,183 
Dividends and distributions(343,117)(344,239)
Contributions from noncontrolling interests in property partnerships2,420 5,957 
Distributions to noncontrolling interests in property partnerships(37,929)(29,065)
Net cash provided by (used in) financing activities(1,078,914)866,019 
Net increase (decrease) in cash and cash equivalents and cash held in escrows(1,082,049)1,299,769 
Cash and cash equivalents and cash held in escrows, beginning of period1,719,329 691,886 
Cash and cash equivalents and cash held in escrows, end of period$637,280 $1,991,655 
Reconciliation of cash and cash equivalents and cash held in escrows:
Cash and cash equivalents, beginning of period$1,668,742 $644,950 
Cash held in escrows, beginning of period50,587 46,936 
Cash and cash equivalents and cash held in escrows, beginning of period$1,719,329 $691,886 
Cash and cash equivalents, end of period$557,307 $1,691,047 
Cash held in escrows, end of period79,973 300,608 
Cash and cash equivalents and cash held in escrows, end of period$637,280 $1,991,655 
Supplemental disclosures:
Cash paid for interest$226,367 $213,754 
Interest capitalized$25,046 $27,866 
Non-cash investing and financing activities:
Write-off of fully depreciated real estate$(98,672)$(50,141)
Change in real estate included in accounts payable and accrued expenses$(22,822)$(25,461)
Right-of-use assets obtained in exchange for lease liabilities$26,887 $
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$169,718 $171,077 
Conversions of noncontrolling interests to stockholders’ equity$6,285 $26,344 
Issuance of restricted securities to employees and non-employee directors$42,515 $43,462 

The accompanying notes are an integral part of these consolidated financial statements.
8


BOSTON PROPERTIES LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
(unaudited and in thousands, except for unit amounts)
June 30,
2021
December 31,
2020
ASSETS
Real estate, at cost (amounts related to variable interest entities (“VIEs”) of $6,664,480 and $6,592,019 at June 30, 2021 and December 31, 2020, respectively)$23,041,680 $22,592,301 
Right of use assets - finance leases (amounts related to VIEs of $21,000 and $21,000 at June 30, 2021 and December 31, 2020, respectively)237,765 237,393 
Right of use assets - operating leases170,331 146,406 
Less: accumulated depreciation (amounts related to VIEs of $(1,235,346) and $(1,158,548) at June 30, 2021 and December 31, 2020, respectively)(5,643,781)(5,428,576)
Total real estate17,805,995 17,547,524 
Cash and cash equivalents (amounts related to VIEs of $335,837 and $340,642 at June 30, 2021 and December 31, 2020, respectively)557,307 1,668,742 
Cash held in escrows79,973 50,587 
Investments in securities41,476 39,457 
Tenant and other receivables, net (amounts related to VIEs of $5,298 and $10,911 at June 30, 2021 and December 31, 2020, respectively)58,624 77,411 
Related party note receivable, net77,872 77,552 
Notes receivable, net19,087 18,729 
Accrued rental income, net (amounts related to VIEs of $346,443 and $336,594 at June 30, 2021 and December 31, 2020, respectively)1,172,411 1,122,502 
Deferred charges, net (amounts related to VIEs of $173,578 and $183,306 at June 30, 2021 and December 31, 2020, respectively)627,338 640,085 
Prepaid expenses and other assets (amounts related to VIEs of $12,441 and $13,137 at June 30, 2021 and December 31, 2020, respectively)46,946 33,840 
Investments in unconsolidated joint ventures1,305,589 1,310,478 
Total assets$21,792,618 $22,586,907 
LIABILITIES AND CAPITAL
Liabilities:
Mortgage notes payable, net (amounts related to VIEs of $2,901,709 and $2,907,590 at June 30, 2021 and December 31, 2020, respectively)$2,901,709 $2,909,081 
Unsecured senior notes, net9,634,356 9,639,287 
Unsecured line of credit
Unsecured term loan, net499,390 
Lease liabilities - finance leases (amounts related to VIEs of $20,382 and $20,306 at June 30, 2021 and December 31, 2020, respectively)243,381 236,492 
Lease liabilities - operating leases226,594 201,713 
Accounts payable and accrued expenses (amounts related to VIEs of $40,100 and $23,128 at June 30, 2021 and December 31, 2020, respectively)305,969 336,264 
Dividends and distributions payable169,718 171,082 
Accrued interest payable107,386 106,288 
Other liabilities (amounts related to VIEs of $129,477 and $158,805 at June 30, 2021 and December 31, 2020, respectively)370,990 412,084 
Total liabilities13,960,103 14,511,681 
Commitments and contingencies (See Note 9)
Redeemable deferred stock units— 78,362 and 72,966 units outstanding at redemption value at June 30, 2021 and December 31, 2020, respectively8,980 6,897 
9

BOSTON PROPERTIES LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
(unaudited and in thousands, except for unit amounts)
June 30,
2021
December 31,
2020
Noncontrolling interests:
Redeemable partnership units— 16,038,056 and 16,037,121 common units and 1,489,456 and 1,336,115 long term incentive units outstanding at redemption value at June 30, 2021 and December 31, 2020, respectively2,008,478 1,643,024 
Capital:
5.25% Series B cumulative redeemable preferred units, liquidation preference $2,500 per unit, 80,000 units issued and outstanding at December 31, 2020193,623 
Boston Properties Limited Partnership partners’ capital— 1,736,635 and 1,730,921 general partner units and 154,399,324 and 153,987,904 limited partner units outstanding at June 30, 2021 and December 31, 2020, respectively4,132,880 4,554,639 
Accumulated other comprehensive loss(43,166)(49,890)
Total partners’ capital4,089,714 4,698,372 
Noncontrolling interests in property partnerships1,725,343 1,726,933 
Total capital5,815,057 6,425,305 
Total liabilities and capital$21,792,618 $22,586,907 




























The accompanying notes are an integral part of these consolidated financial statements.
10

BOSTON PROPERTIES LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited and in thousands, except for per unit amounts)
 Three months ended June 30,Six months ended June 30,
 2021202020212020
Revenue
Lease$684,025 $630,119 $1,369,842 $1,340,230 
Parking and other18,282 13,946 35,220 38,450 
Hotel1,561 99 2,193 6,924 
Development and management services7,284 8,125 14,087 16,004 
Direct reimbursements of payroll and related costs from management services contracts2,655 2,484 6,160 5,721 
Total revenue713,807 654,773 1,427,502 1,407,329 
Expenses
Operating
Rental248,703 239,787 506,092 502,753 
Hotel1,996 1,973 4,047 8,794 
General and administrative38,405 37,743 83,364 74,197 
Payroll and related costs from management services contracts2,655 2,484 6,160 5,721 
Transaction costs751 332 1,082 947 
Depreciation and amortization182,078 176,409 355,578 345,694 
Total expenses474,588 458,728 956,323 938,106 
Other income (expense)
Income (loss) from unconsolidated joint ventures(1,373)1,832 3,852 1,463 
Gains on sales of real estate7,756 207,241 7,756 626,895 
Interest and other income (loss)1,452 1,305 2,620 4,322 
Gains (losses) from investments in securities2,275 4,552 3,934 (893)
Losses from early extinguishment of debt(898)
Interest expense(106,319)(107,142)(214,221)(208,733)
Net income143,010 303,833 274,222 892,277 
Net income attributable to noncontrolling interests
Noncontrolling interests in property partnerships(17,164)767 (33,631)(18,719)
Net income attributable to Boston Properties Limited Partnership125,846 304,600 240,591 873,558 
Preferred distributions(2,625)(2,560)(5,250)
Preferred unit redemption charge(6,412)
Net income attributable to Boston Properties Limited Partnership common unitholders$125,846 $301,975 $231,619 $868,308 
Basic earnings per common unit attributable to Boston Properties Limited Partnership
Net income$0.73 $1.75 $1.34 $5.02 
Weighted average number of common units outstanding173,150 172,659 173,034 172,604 
Diluted earnings per common unit attributable to Boston Properties Limited Partnership
Net income$0.73 $1.75 $1.34 $5.02 
Weighted average number of common and common equivalent units outstanding173,562 172,680 173,325 172,738 


The accompanying notes are an integral part of these consolidated financial statements.
11

BOSTON PROPERTIES LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited and in thousands)
 
 Three months ended June 30,Six months ended June 30,
 2021202020212020
Net income$143,010 $303,833 $274,222 $892,277 
Other comprehensive income (loss):
Effective portion of interest rate contracts654 (659)4,394 (10,379)
Amortization of interest rate contracts (1)1,676 1,677 3,352 3,343 
Other comprehensive income (loss)2,330 1,018 7,746 (7,036)
Comprehensive income145,340 304,851 281,968 885,241 
Comprehensive (income) loss attributable to noncontrolling interests(17,308)623 (33,919)(19,007)
Comprehensive income attributable to Boston Properties Limited Partnership$128,032 $305,474 $248,049 $866,234 
_______________
(1)Amounts reclassified from comprehensive income primarily to interest expense within Boston Properties Limited Partnership’s Consolidated Statements of Operations.





































The accompanying notes are an integral part of these consolidated financial statements.
12

BOSTON PROPERTIES LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CAPITAL AND NONCONTROLLING INTERESTS
(unaudited and in thousands)
UnitsCapital
 General PartnerLimited PartnerPartners’ Capital (General and Limited Partners)Preferred UnitsAccumulated
Other
Comprehensive Loss
Noncontrolling
Interests - Property Partnerships
Total CapitalNoncontrolling Interests - Redeemable Partnership Units
Equity, March 31, 20211,737 154,338 $4,392,624 $$(45,139)$1,725,600 $6,073,085 $1,780,044 
Net activity from contributions and unearned compensation— (294)— — — (294)13,191 
Allocated net income for the period— — 113,508 — — 17,164 130,672 12,338 
Distributions— — (153,013)— — — (153,013)(17,253)
Conversion of redeemable partnership units— 59 2,087 — — — 2,087 (2,087)
Adjustment to reflect redeemable partnership units at redemption value— — (222,032)— — — (222,032)222,032 
Effective portion of interest rate contracts— — — — 593 — 593 61 
Amortization of interest rate contracts— — — — 1,380 144 1,524 152 
Contributions from noncontrolling interests in property partnerships— — — — — 2,139 2,139 
Distributions to noncontrolling interests in property partnerships— — — — — (19,704)(19,704)
Equity, June 30, 20211,737 154,399 $4,132,880 $$(43,166)$1,725,343 $5,815,057 $2,008,478 
Equity, March 31, 20201,731 153,584 $4,626,627 $193,623 $(55,700)$1,736,445 $6,500,995 $1,639,855 
Net activity from contributions and unearned compensation— 873 — — — 873 9,352 
Allocated net income (loss) for the period— — 271,989 2,625 — (767)273,847 29,986 
Distributions— — (152,507)(2,625)— — (155,132)(17,194)
Conversion of redeemable partnership units— 302 10,849 — — — 10,849 (10,849)
Adjustment to reflect redeemable partnership units at redemption value— — 70,235 — — — 70,235 (70,235)
Effective portion of interest rate contracts— — — — (601)— (601)(58)
Amortization of interest rate contracts— — — — 1,380 144 1,524 153 
Contributions from noncontrolling interests in property partnerships— — — — — 2,081 2,081 
Distributions to noncontrolling interests in property partnerships— — — — — (13,315)(13,315)
Equity, June 30, 20201,731 153,891 $4,828,066 $193,623 $(54,921)$1,724,588 $6,691,356 $1,581,010 
13

BOSTON PROPERTIES LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CAPITAL AND NONCONTROLLING INTERESTS
(in thousands)
UnitsCapital
 General PartnerLimited PartnerPartners’ Capital (General and Limited Partners)Preferred UnitsAccumulated
Other
Comprehensive Loss
Noncontrolling
Interests - Property Partnerships
Total CapitalNoncontrolling Interests - Redeemable Partnership Units
Equity, December 31, 20201,731 153,988 $4,554,639 $193,623 $(49,890)$1,726,933 $6,425,305 1,643,024 
Net activity from contributions and unearned compensation235 20,195 — — — 20,195 31,653 
Allocated net income for the period— — 214,609 2,560 — 33,631 250,800 23,422 
Distributions— — (305,966)(2,560)— — (308,526)(34,540)
Preferred unit redemption— — — (193,623)— — (193,623)
Preferred unit redemption charge— — (6,412)— — — (6,412)
Conversion of redeemable partnership units176 6,285 — — — 6,285 (6,285)
Adjustment to reflect redeemable partnership units at redemption value— — (350,470)— — — (350,470)350,470 
Effective portion of interest rate contracts— — — — 3,962 — 3,962 432 
Amortization of interest rate contracts— — — — 2,762 288 3,050 302 
Contributions from noncontrolling interests in property partnerships— — — — — 2,420 2,420 
Distributions to noncontrolling interests in property partnerships— — — — — (37,929)(37,929)
Equity, June 30, 20211,737 154,399 $4,132,880 $$(43,166)$1,725,343 $5,815,057 $2,008,478 
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)
Net activity from contributions and unearned compensation68 8,581 — — — 8,581 25,029 
Allocated net income for the period— — 780,783 5,250 — 18,719 804,752 87,525 
Distributions— — (304,715)(5,250)— — (309,965)(34,638)
Conversion of redeemable partnership units760 26,344 — — — 26,344 (26,344)
Adjustment to reflect redeemable partnership units at redemption value— — 938,403 — — — 938,403 (938,403)
Effective portion of interest rate contracts— — — — (9,333)— (9,333)(1,046)
Amortization of interest rate contracts— — — — 2,747 288 3,035 308 
Contributions from noncontrolling interests in property partnerships— — — — — 5,957 5,957 
Distributions to noncontrolling interests in property partnerships— — — — — (29,065)(29,065)
Equity, June 30, 20201,731 153,891 $4,828,066 $193,623 $(54,921)$1,724,588 $6,691,356 $1,581,010 


The accompanying notes are an integral part of these consolidated financial statements.
14

BOSTON PROPERTIES LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited and in thousands)
 Six months ended June 30,
 20212020
Cash flows from operating activities:
Net income$274,222 $892,277 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization355,578 345,694 
Amortization of right of use assets - operating leases2,963 1,128 
Non-cash compensation expense34,370 27,899 
Income from unconsolidated joint ventures(3,852)(1,463)
Distributions of net cash flow from operations of unconsolidated joint ventures14,387 13,382 
(Gains) losses from investments in securities(3,934)893 
Allowance for current expected credit losses(418)484 
Non-cash portion of interest expense11,784 11,483 
Settlement of accreted debt discount on redemption of unsecured senior notes(6,290)
Losses from early extinguishments of debt898 
Gains on sales of real estate(7,756)(626,895)
Change in assets and liabilities:
Tenant and other receivables, net17,110 18,516 
Notes receivable, net(277)(258)
Accrued rental income, net(39,434)(43,399)
Prepaid expenses and other assets(14,122)(12,057)
Lease liabilities - operating leases(1,566)799 
Accounts payable and accrued expenses6,100 (20,493)
Accrued interest payable1,741 5,262 
Other liabilities(53,919)(21,912)
Tenant leasing costs(27,109)(37,068)
Total adjustments286,254 (338,005)
Net cash provided by operating activities560,476 554,272 
Cash flows from investing activities:
Acquisitions of real estate(100,176)(133,406)
Construction in progress(235,577)(247,615)
Building and other capital improvements(66,033)(68,386)
Tenant improvements(161,619)(118,903)
Proceeds from sales of real estate506,337 
Capital contributions to unconsolidated joint ventures(20,032)(106,168)
Capital distributions from unconsolidated joint ventures122 54,413 
Proceeds from sale of investment in unconsolidated joint venture17,789 
Issuance of notes receivable, net(9,800)
Investments in securities, net1,915 3,006 
Net cash used in investing activities(563,611)(120,522)
Cash flows from financing activities:
Repayments of mortgage notes payable(9,294)(8,477)
Proceeds from unsecured senior notes846,345 1,248,125 
Redemption of unsecured senior notes(843,710)
Borrowings on unsecured line of credit265,000 
Repayments of unsecured line of credit(265,000)
15

BOSTON PROPERTIES LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited and in thousands)
 Six months ended June 30,
 20212020
Repayment of unsecured term loan(500,000)
Redemption of preferred units(200,000)
Payments on finance lease obligations618 
Deferred financing costs(13,642)(9,465)
Debt prepayment and extinguishment costs(185)
Net proceeds from equity transactions19,580 3,183 
Distributions(343,117)(344,239)
Contributions from noncontrolling interests in property partnerships2,420 5,957 
Distributions to noncontrolling interests in property partnerships(37,929)(29,065)
Net cash provided by (used in) financing activities(1,078,914)866,019 
Net increase (decrease) in cash and cash equivalents and cash held in escrows(1,082,049)1,299,769 
Cash and cash equivalents and cash held in escrows, beginning of period1,719,329 691,886 
Cash and cash equivalents and cash held in escrows, end of period$637,280 $1,991,655 
Reconciliation of cash and cash equivalents and cash held in escrows:
Cash and cash equivalents, beginning of period$1,668,742 $644,950 
Cash held in escrows, beginning of period50,587 46,936 
Cash and cash equivalents and cash held in escrows, beginning of period$1,719,329 $691,886 
Cash and cash equivalents, end of period$557,307 $1,691,047 
Cash held in escrows, end of period79,973 300,608 
Cash and cash equivalents and cash held in escrows, end of period$637,280 $1,991,655 
Supplemental disclosures:
Cash paid for interest$226,367 $213,754 
Interest capitalized$25,046 $27,866 
Non-cash investing and financing activities:
Write-off of fully depreciated real estate$(97,358)$(50,141)
Change in real estate included in accounts payable and accrued expenses$(22,822)$(25,461)
Right-of-use assets obtained in exchange for lease liabilities$26,887 $
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$169,718 $171,077 
Conversions of redeemable partnership units to partners’ capital$6,285 $26,344 
Issuance of restricted securities to employees and non-employee directors$42,515 $43,462 


The accompanying notes are an integral part of these consolidated financial statements.
16

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, 2021 owned an approximate 89.9% (90.0% at December 31, 2020) 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 1 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 1 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, 1 share of Common Stock is generally the economic equivalent of 1 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 time-based, restricted equity compensation and as a form of performance-based equity compensation for employees, and has previously granted LTIP Units in the form of (1) 2012 outperformance plan awards (“2012 OPP Units”) and (2) 2013 - 2021 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 - 2018 MYLTIP Units 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 2019 - 2021 MYLTIP Units differ from other LTIP Units granted to employees (including the 2012 OPP Units and the 2013 - 2018 MYLTIP Units, which have been earned). Therefore, unless specifically noted otherwise, all references to LTIP Units exclude the 2019 - 2021 MYLTIP Units. LTIP Units (including the earned 2012 OPP Units and the earned 2013 - 2018 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 10 and 14).
At December 31, 2020, there was 1 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. On March 2, 2021, Boston Properties, Inc. issued a redemption notice for 80,000 shares of Series B Preferred Stock, which constituted all of the outstanding Series B Preferred Stock, and the corresponding depositary shares, each representing 1/100th of a share of Series B Preferred Stock (the “Depositary Shares”), and recorded it as a liability. On March 31, 2021, Boston Properties, Inc. transferred the full redemption price for all outstanding shares of Series B Preferred Stock of approximately $201.3 million, including approximately $1.3 million of accrued and unpaid dividends to, but not including, the redemption date, to the redemption agent. On April 1, 2021, Boston Properties, Inc. redeemed 80,000 shares of Series B Preferred Stock (including the corresponding 8,000,000 Depositary Shares), which represented all of the outstanding shares of Series B Preferred Stock and all of the outstanding Depositary Shares. In connection with the redemption of the Series B Preferred Stock, the Series B Preferred Units were also redeemed (See Note 11).
17

Properties
At June 30, 2021, the Company owned or had joint venture interests in a portfolio of 197 commercial real estate properties (the “Properties”) aggregating approximately 51.5 million net rentable square feet of primarily Class A office properties, including 9 properties under construction/redevelopment totaling approximately 4.3 million net rentable square feet. At June 30, 2021, the Properties consisted of:
178 office properties (including 9 properties under construction/redevelopment);
12 retail properties;
6 residential properties; and
1 hotel.
The Company considers Class A office properties to be well-located buildings that are modern structures or have been modernized to compete with newer buildings and professionally managed and maintained. As such, these properties attract high-quality tenants and command upper-tier rental rates.
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, 2020.
The Company bases its estimates on historical experience and on various other assumptions that it considers to be reasonable under the circumstances, including the impact of extraordinary events such as the coronavirus (“COVID-19”) pandemic, the results of which form the basis for making significant judgments about the carrying values of assets and liabilities, assessments of future collectability, and other areas of the financial statements that are impacted by the use of estimates. Actual results may differ from these estimates under different assumptions or 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 6 of the 7 entities that are VIEs.
Consolidated Variable Interest Entities
As of June 30, 2021, Boston Properties, Inc. has identified 6 consolidated VIEs, including Boston Properties Limited Partnership. Excluding Boston Properties Limited Partnership, the VIEs consisted of the following 5 in-service properties: 767 Fifth Avenue (the General Motors Building), Times Square Tower, 601 Lexington Avenue, Atlantic Wharf Office Building and 100 Federal Street.
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The Company consolidates these VIEs because it is the primary beneficiary.  The third parties’ interests in these consolidated entities (excluding Boston Properties Limited Partnership’s interest) are reflected as noncontrolling interests in property partnerships in the accompanying consolidated financial statements (See Note 10). 
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 the Platform 16 Holdings LP joint venture is a VIE. The Company does not consolidate this 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.
Fair Value of Financial Instruments
The Company follows the authoritative 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 at which they are categorized (as defined in Accounting Standards Codification (“ASC”) 820 “Fair Value Measurements and Disclosures” (“ASC 820”)).
Financial InstrumentLevel
Unsecured senior notes (1)Level 1
Related party note receivableLevel 3
Notes receivableLevel 3
Mortgage notes payableLevel 3
Unsecured line of credit (2)Level 3
_______________
(1)If trading value for the period is low, the valuation could be categorized as Level 2.
(2)As of June 30, 2021, there were no amounts outstanding under the unsecured line of credit.
Because the Company’s valuations of its financial instruments are based on the above Levels and involve the use of estimates, the actual fair values of its financial instruments may differ materially from those estimates.
The following table identifies the range and weighted average of significant unobservable inputs for the Company’s Level 3 fair value measured instruments.
Financial InstrumentLevelRangeWeighted Average
Related party note receivableLevel 33.60%3.60%
Notes receivableLevel 33.60% - 8.00%5.83%
Mortgage notes payableLevel 32.40% - 4.75%2.88%
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, estimated or actual fair values in future reporting periods.
The following table presents the aggregate carrying value of the Company’s related party note receivable, net, notes 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 as of June 30, 2021 and December 31, 2020 (in thousands):
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 June 30, 2021December 31, 2020
 Carrying
Amount
Estimated
Fair Value
Carrying
Amount
Estimated
Fair Value
Related party note receivable, net$77,872 $83,779 $77,552 $84,579 
Notes receivable, net19,087 19,709 18,729 19,372 
Total$96,959 $103,488 $96,281 $103,951 
Mortgage notes payable, net$2,901,709 $3,053,824 $2,909,081 $3,144,150 
Unsecured senior notes, net9,634,356 10,385,016 9,639,287 10,620,527 
Unsecured line of credit
Unsecured term loan, net499,390 500,326 
Total$12,536,065 $13,438,840 $13,047,758 $14,265,003 
3. Real Estate
Boston Properties, Inc.
Real estate consisted of the following at June 30, 2021 and December 31, 2020 (in thousands):
June 30, 2021December 31, 2020
Land$5,038,870 $5,069,206 
Right of use assets - finance leases237,765 237,393 
Right of use assets - operating leases (1)170,331 146,406 
Land held for future development (2)497,019 450,954 
Buildings and improvements14,082,350 13,777,691 
Tenant improvements2,839,358 2,752,880 
Furniture, fixtures and equipment51,517 49,606 
Construction in progress908,061 868,773 
Total23,825,271 23,352,909 
Less: Accumulated depreciation(5,752,818)(5,534,102)
$18,072,453 $17,818,807 
_______________
(1)See Note 4.
(2)Includes pre-development costs.
Boston Properties Limited Partnership
Real estate consisted of the following at June 30, 2021 and December 31, 2020 (in thousands):
June 30, 2021December 31, 2020
Land$4,942,017 $4,971,990 
Right of use assets - finance leases237,765 237,393 
Right of use assets - operating leases (1)170,331 146,406 
Land held for future development (2)497,019 450,954 
Buildings and improvements13,803,708 13,498,098 
Tenant improvements2,839,358 2,752,880 
Furniture, fixtures and equipment51,517 49,606 
Construction in progress908,061 868,773 
Total23,449,776 22,976,100 
Less: Accumulated depreciation(5,643,781)(5,428,576)
$17,805,995 $17,547,524 
_______________
(1)See Note 4.
(2)Includes pre-development costs.
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Acquisitions / Pending Acquisitions
On April 19, 2021, the Company entered into an agreement to acquire 11251 Roger Bacon Drive, in Reston, Virginia, for an aggregate purchase price of approximately $5.6 million. The closing is scheduled to occur in the first quarter of 2022. 11251 Roger Bacon Drive is an approximately 65,000 square foot office building situated on approximately 2.6 acres. The property is 100% leased to a single tenant with a lease expiration prior to the planned closing. There can be no assurance that the acquisition will be consummated on the terms currently contemplated or at all.
On June 2, 2021, the Company acquired 153 & 211 Second Avenue located in Waltham, Massachusetts for an aggregate purchase price of approximately $100.2 million in cash. 153 & 211 Second Avenue consists of 2 life sciences lab buildings totaling approximately 137,000 net rentable square feet. The properties are 100% leased. The following table summarizes the allocation of the purchase price, including transaction costs, of 153 & 211 Second Avenue at the date of acquisition (in thousands):
Land$33,233 
Building and improvements53,309 
Tenant improvements2,631 
In-place lease intangibles13,415 
Below-market lease intangibles(2,412)
Net assets acquired$100,176 
The following table summarizes the estimated annual amortization of the acquired in-place lease intangibles
and the acquired below-market lease intangibles for 153 & 211 Second Avenue for the remainder of 2021 through the last lease expiration (in thousands):

Acquired In-Place Lease IntangiblesAcquired Below-Market Lease Intangibles
Period from June 2, 2021 through December 31, 2021$5,202 $935 
20228,213 1,477 
153 & 211 Second Avenue contributed approximately $0.8 million of revenue and approximately ($0.3) million of earnings to the Company for the period from June 2, 2021 through June 30, 2021.
On June 7, 2021, the Company entered into an agreement to acquire Shady Grove Bio+Tech Campus in Rockville, Maryland, for an aggregate purchase price of approximately $116.5 million. The closing is scheduled to occur in the third quarter of 2021. The Company’s refundable deposit of $10.0 million is reflected as Cash and Cash Equivalents in the Company’s Consolidated Balance Sheets. Shady Grove Bio+Tech Campus is an approximately 435,000 net rentable square foot, 7-building office park situated on an approximately 31-acre site. The Company intends to reposition three of the buildings, which are currently vacant, to support life sciences uses (See Note 15).
On June 25, 2021, the Company entered into an agreement to acquire 360 Park Avenue South in New York City, New York for an aggregate purchase price of approximately $300.0 million, including (1) the assumption of the mortgage loan collateralized by the property totaling approximately $202.0 million and (2) the issuance of approximately $98.0 million of OP Units, with a floor price of $111.00 per OP Unit. The closing is scheduled to occur in the fourth quarter of 2021. The Company’s deposit of $30.0 million is reflected as Cash Held in Escrows in the Company’s Consolidated Balance Sheets. 360 Park Avenue South is an approximately 450,000 square foot Class A office building. Upon acquisition, the building will be vacant and the Company intends to redevelop or reposition the building. There can be no assurance that the acquisition will be consummated on the terms currently contemplated or at all.
On June 29, 2021, the Company entered into an escrow agreement in connection with an option granted to the Company to purchase Safeco Plaza in Seattle, Washington. The Company’s refundable deposit of $46.5 million is reflected as Cash and Cash Equivalents in the Company’s Consolidated Balance Sheets. Safeco Plaza is an approximately 800,000 square foot Class A office building. There can be no assurance that the acquisition will be consummated on the terms currently contemplated or at all (See Note 15).
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Developments
On February 1, 2021, the consolidated entity in which the Company has a 55% interest completed and fully placed in-service One Five Nine East 53rd Street, a Class A office and retail redevelopment of the low-rise portion of its 601 Lexington Avenue property with approximately 220,000 net rentable square feet located in New York City.
On February 25, 2021, the Company commenced the development of 180 CityPoint, located in Waltham, Massachusetts. When completed, the building will consist of approximately 329,000 net rentable square feet of laboratory space.
On February 25, 2021, the Company commenced the redevelopment of 880 Winter Street, located in Waltham, Massachusetts. When completed, the building will consist of approximately 224,000 net rentable square feet of laboratory space.
On February 25, 2021, the Company commenced the redevelopment of The Prudential Center Observatory, a 59,000 net rentable square foot redevelopment of the top three floors of 800 Boylston Street - The Prudential Center, located in Boston, Massachusetts.
On April 16, 2021, the Company removed 3625-3635 Peterson Way from its in-service portfolio following the lease expiration of the last tenant on April 15, 2021. The Company intends to demolish the building and redevelop the site at a future date. 3625-3635 Peterson Way is an approximately 218,000 net rentable square foot Class A office building located in Santa Clara, California.
Disposition
On December 13, 2018, the Company sold its 6595 Springfield Center Drive development project located in Springfield, Virginia. Concurrently with the sale, the Company agreed to act as development manager and guaranteed the completion of the project (See Note 9). The development project was completed during the second quarter of 2021 and, upon completion of the project, the total cost of development was determined to be below the estimated total investment at the time of sale. As a result, the Company recognized a gain on sale of real estate of approximately $7.8 million during the three months ended June 30, 2021.
4. Leases
The Company must make estimates as to the collectability of its accrued rent and accounts receivable related to lease revenue. When evaluating the collectability of tenants’ accrued rent and accounts receivable balances, management considers tenant creditworthiness, current economic trends, including the impact of COVID-19 on tenants’ businesses, and changes in tenants’ payment patterns, on a lease-by-lease basis. As a result, the Company wrote off approximately $0.6 million and $1.2 million, respectively, during the three and six months ended June 30, 2021 and $35.9 million and $37.4 million, respectively, during the three and six months ended June 30, 2020, related to accrued rent, net balances. Additionally, the Company wrote off approximately $0.3 million and $0.1 million, respectively, during the three and six months ended June 30, 2021 and $18.0 million and $18.9 million, respectively, during the three and six months ended June 30, 2020, related to accounts receivable, net balances. The write-offs were for tenants, primarily in the retail sector, that either terminated their leases or for which the Company considered their accrued rent and/or accounts receivable balances were no longer probable of collection.
Lessee
On May 19, 2021, the Company amended its ground lease at Sumner Square in Washington, DC. The amendment extends the ground lease for an additional 15 years. Prior to the amendment, the ground lease was scheduled to expire on August 10, 2066. The ground lease will now expire on August 9, 2081. The lease requires the Company to pay $23.0 million in 2021 and requires the Company’s remaining obligation of approximately $4.0 million be used to fund certain operation and maintenance costs for the next five years, with no payments thereafter. The Company’s incremental borrowing rate is 3.95% per annum. The net present value of the ground lease payments is approximately $26.7 million. The Company continues to classify this ground lease as an operating lease. As a result, the Company recorded a Right-of-Use Assets - Operating Leases and Lease Liabilities - Operating Leases of approximately $27.1 million and $26.7 million, respectively, on its Consolidated Balance Sheet. The Sumner Square ground lease had operating lease costs of approximately $0.2 million and $0.3 million for the three months ended June 30, 2021 and 2020, respectively, and approximately $0.5 million and $0.7 million for the six months ended June 30, 2021 and 2020, respectively. Sumner Square is an approximately 210,000 net rentable square foot Class A office building.
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The following table provides a maturity analysis for the Company’s lease liabilities related to its Sumner Square operating lease as of May 19, 2021 (in thousands):
Operating
Period from May 19, 2021 through December 31, 2021$23,599 
2022761 
2023784 
2024808 
2025832 
2026422 
Thereafter
Total lease payments27,206 
Less: Interest portion(536)
Present value of lease payments$26,670 
Lessor
The following table summarizes the components of lease revenue recognized during the three and six months ended June 30, 2021 and 2020 included within the Company's Consolidated Statements of Operations (in thousands):
Three months ended June 30,Six months ended June 30,
Lease Revenue2021202020212020
Fixed contractual payments$576,184 $529,514 $1,151,537 $1,116,471 
Variable lease payments107,841 100,605 218,305 223,759 
$684,025 $630,119 $1,369,842 $1,340,230 
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5. Investments in Unconsolidated Joint Ventures
The investments in unconsolidated joint ventures consist of the following at June 30, 2021 and December 31, 2020:
 Carrying Value of Investment (1)
EntityPropertiesNominal %
Ownership
June 30,
2021
December 31,
2020
(in thousands)
Square 407 Limited PartnershipMarket Square North50.0 %$(2,606)$(3,766)
BP/CRF Metropolitan Square LLCMetropolitan Square20.0 %(13,223)(13,584)
901 New York, LLC901 New York Avenue25.0 %(2) (12,191)(12,264)
WP Project Developer LLCWisconsin Place Land and Infrastructure33.3 %(3) 34,505 35,297 
Annapolis Junction NFM LLCAnnapolis Junction50.0 %(4) N/A13,463 
540 Madison Venture LLC540 Madison Avenue60.0 %(5) — 122 
500 North Capitol Venture LLC500 North Capitol Street, NW30.0 %(7,467)(6,945)
501 K Street LLC1001 6th Street50.0 %(6) 42,495 42,499 
Podium Developer LLCThe Hub on Causeway - Podium50.0 %49,006 48,818 
Residential Tower Developer LLCHub50House50.0 %48,520 50,943 
Hotel Tower Developer LLCThe Hub on Causeway - Hotel Air Rights50.0 %11,316 10,754 
Office Tower Developer LLC100 Causeway Street50.0 %56,589 56,312 
1265 Main Office JV LLC1265 Main Street50.0 %3,757 3,787 
BNY Tower Holdings LLCDock 7250.0 %28,116 29,536 
BNYTA Amenity Operator LLCDock 7250.0 %1,297 1,846 
CA-Colorado Center Limited PartnershipColorado Center50.0 %229,564 227,671 
7750 Wisconsin Avenue LLC7750 Wisconsin Avenue50.0 %59,208 58,112 
BP-M 3HB Venture LLC3 Hudson Boulevard25.0 %116,848 113,774 
SMBP Venture LPSanta Monica Business Park55.0 %157,593 145,761 
Platform 16 Holdings LPPlatform 1655.0 %(7)108,241 108,393 
Gateway Portfolio Holdings LLCGateway Commons50.0 %(8)331,389 336,206 
Rosecrans-Sepulveda Partners 4, LLCBeach Cities Media Campus50.0 %27,145 27,184 
$1,270,102 $1,273,919 
 _______________
(1)Investments with deficit balances aggregating approximately $35.5 million and $36.6 million at June 30, 2021 and December 31, 2020, respectively, are 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 June 30, 2021 and December 31, 2020, 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)On March 30, 2021, the Company sold its interest in the joint venture to the partner. See below for additional details.
(5)The property was sold on June 27, 2019. As of December 31, 2020, the investment consisted of undistributed cash. All remaining cash has been distributed as of June 30, 2021.
(6)Under the joint venture agreement for this land parcel, the partner will be entitled to up to 2 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).
(8)As a result of the partner’s deferred contribution, the Company owned an approximately 53% and 55% interest in the joint venture at June 30, 2021 and December 31, 2020, respectively. Future development projects will be owned 49% by the Company and 51% by its partner.
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Certain of the Company’s unconsolidated 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 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 combined summarized balance sheets of the Company’s unconsolidated joint ventures are as follows: 
June 30,
2021
December 31,
2020
 (in thousands)
ASSETS
Real estate and development in process, net (1)$4,751,881 $4,708,571 
Other assets521,766 531,071 
Total assets$5,273,647 $5,239,642 
LIABILITIES AND MEMBERS’/PARTNERS’ EQUITY
Mortgage and notes payable, net$2,715,677 $2,637,911 
Other liabilities (2)600,402 650,433 
Members’/Partners’ equity1,957,568 1,951,298 
Total liabilities and members’/partners’ equity$5,273,647 $5,239,642 
Company’s share of equity$929,421 $936,087 
Basis differentials (3)340,681 337,832 
Carrying value of the Company’s investments in unconsolidated joint ventures (4)$1,270,102 $1,273,919 
_______________
(1)At June 30, 2021 and December 31, 2020, this amount included right of use assets - finance leases totaling approximately $248.9 million and $248.9 million, respectively, and right of use assets - operating leases totaling approximately $22.0 million and $22.5 million, respectively.
(2)At June 30, 2021 and December 31, 2020, this amount included lease liabilities - finance leases totaling approximately $387.1 million and $388.7 million, respectively, and lease liabilities - operating leases totaling approximately $29.4 million and $29.0 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. The majority of the Company’s basis differences are as follows:
June 30,
2021
December 31,
2020
Property(in thousands)
Colorado Center$305,902 $307,328 
Gateway Commons52,104 51,875 
Dock 72(51,137)(52,243)
These basis differentials (excluding land) will be amortized over the remaining lives of the related assets and liabilities.
(4)Investments with deficit balances aggregating approximately $35.5 million and $36.6 million at June 30, 2021 and December 31, 2020, respectively, are reflected within Other Liabilities in the Company’s Consolidated Balance Sheets.
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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,
 2021202020212020
 (in thousands)
Total revenue (1)$91,226 $89,563 $178,492 $182,766 
Expenses
Operating36,787 33,704 73,921 69,105 
Transaction costs
Depreciation and amortization33,627 37,390 67,730 69,425 
Total expenses70,414 71,094 141,658 138,530 
Other income (expense)
Interest expense(25,636)(23,306)(51,192)(45,889)
Gains on sales of real estate— 11,720 11,720 
Net income (loss)$(4,824)$6,883 $(14,358)$10,067 
Company’s share of net income (loss)$(2,137)$4,024 $(5,777)$5,276 
Gain on sale of investment (2)10,257 
Basis differential (3)764 (2,192)(628)(3,813)
Income (loss) from unconsolidated joint ventures$(1,373)$1,832 $3,852 $1,463 
_______________ 
(1)Includes straight-line rent adjustments of approximately $5.0 million and $8.5 million for the three months ended June 30, 2021 and 2020, respectively, and approximately $6.1 million and $18.2 million for the six months ended June 30, 2021 and 2020, respectively.
(2)During the six months ended June 30, 2021, the Company completed the sale of its 50% ownership interest in Annapolis Junction NFM LLC. The Company recognized a gain on sale of investment of approximately $10.3 million.
(3)Includes straight-line rent adjustments of approximately $0.1 million and $0.4 million for the three months ended June 30, 2021 and 2020, respectively, and approximately $0.6 million and $0.9 million for the six months ended June 30, 2021 and 2020, respectively. Also includes net above-/below-market rent adjustments of approximately $0.1 million and $0.2 million for the three months ended June 30, 2021 and 2020, respectively, and approximately $0.2 million and $0.5 million for the six months ended June 30, 2021 and 2020, respectively.
On February 25, 2021, a joint venture in which the Company had a 54% interest, commenced the development of 751 Gateway, a speculative laboratory building located in South San Francisco, California, that is expected to be approximately 229,000 net rentable square feet upon completion. 751 Gateway is the first phase of a multi-phase development plan at Gateway Commons. Upon the formation of the joint venture in 2020, the Company had an approximately 55% ownership interest in the joint venture as a result of the partner’s deferred contribution and the partner is obligated to fund all required capital until such time as the Company owns a 50% interest. On June 30, 2021, the Company had a 53% interest in the joint venture. The Company will own a 49% interest in any development project, including 751 Gateway.
On March 30, 2021, the Company completed the sale of its 50% ownership interest in Annapolis Junction NFM LLC (the “Annapolis Junction Joint Venture”) to the joint venture partner for a gross sales price of $65.9 million. Net cash proceeds to the Company totaled approximately $17.8 million after repayment of the Company's share of debt totaling approximately $15.1 million. The Company recognized a gain on sale of investment totaling approximately $10.3 million, which is included in Income (Loss) from Unconsolidated Joint Ventures in the accompanying Consolidated Statements of Operations. In addition to net cash proceeds from the sale, the Company received a distribution of approximately $5.8 million of available cash. Annapolis Junction Buildings Six and Seven are Class A office properties totaling approximately 247,000 net rentable square feet. With the sale of the Company’s ownership interest in the Annapolis Junction Joint Venture, the Company no longer has any assets in Annapolis, Maryland.
On June 11, 2021, a joint venture in which the Company has a 50% interest partially placed in-service 100 Causeway Street, a Class A office project with approximately 632,000 net rentable square feet located in Boston, Massachusetts.
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On June 29, 2021, the Company enhanced its investment capacity through the creation of a co-investment program with two partners, which will target an aggregate equity investment of $1.0 billion. The program expects to employ leverage allowing for an initial investment capacity of approximately $2.0 billion. Under the two-year agreement, the Company will provide its partners first offers to form joint ventures with it to invest in acquisition opportunities that meet the program’s target investment criteria. Each investment opportunity is discretionary.
6. Mortgage Notes Payable
On March 26, 2021, the Company used available cash to repay the mortgage loan collateralized by its University Place property located in Cambridge, Massachusetts totaling approximately $0.9 million. The mortgage loan bore interest at a fixed rate of 6.94% per annum and was scheduled to mature on August 1, 2021. There was no prepayment penalty.
7. Unsecured Senior Notes
The following summarizes the unsecured senior notes outstanding as of June 30, 2021 (dollars in thousands): 
Coupon/Stated RateEffective Rate(1)Principal AmountMaturity Date(2)
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
10.75 Year Unsecured Senior Notes3.250 %3.343 %1,250,000 January 30, 2031
11 Year Unsecured Senior Notes2.550 %2.671 %850,000 April 1, 2032
Total principal9,700,000 
Less:
Net unamortized discount17,988 
Deferred financing costs, net47,656 
Total$9,634,356 
_______________
(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 February 14, 2021, Boston Properties Limited Partnership completed the redemption of $850.0 million in aggregate principal amount of its 4.125% senior notes due May 15, 2021. The redemption price was approximately $858.7 million, which was equal to the stated principal plus approximately $8.7 million of accrued and unpaid interest to, but not including, the redemption date. Excluding the accrued and unpaid interest, the redemption price was equal to the principal amount being redeemed. The Company recognized a loss from early extinguishment of debt totaling approximately $0.4 million related to unamortized origination costs.
On March 16, 2021, Boston Properties Limited Partnership completed a public offering of $850.0 million in aggregate principal amount of its 2.550% unsecured senior notes due 2032. The notes were priced at 99.570% of the principal amount to yield an effective rate (including financing fees) of approximately 2.671% per annum to maturity. The notes will mature on April 1, 2032, unless earlier redeemed. The aggregate net proceeds from the offering were approximately $839.2 million after deducting underwriting discounts and transaction expenses.
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
27

unsecured debt. At June 30, 2021, Boston Properties Limited Partnership was in compliance with each of these financial restrictions and requirements.
8. Unsecured Credit Facility
On March 16, 2021, Boston Properties Limited Partnership repaid $500.0 million, representing all amounts outstanding on its delayed draw term loan facility under its unsecured revolving credit agreement (the “2017 Credit Facility”). The Company recognized a loss from early extinguishment of debt totaling approximately $0.5 million related to unamortized financing costs.
On June 15, 2021, Boston Properties Limited Partnership amended and restated the 2017 Credit Facility (as amended and restated, the “2021 Credit Facility”). The 2021 Credit Facility provides for borrowings of up to $1.5 billion (the “Revolving Facility”), subject to customary conditions. Among other things, the amendment and restatement (1) extended the maturity date to June 15, 2026, (2) eliminated the $500.0 million delayed draw term loan facility provided under the 2017 Credit Facility, (3) reduced the per annum variable interest rates on borrowings and (4) added a sustainability-linked pricing component. Under the 2021 Credit Facility, the Company may increase the total commitment by up to $500.0 million by increasing the amount of the Revolving Facility and/or by incurring one or more term loans, in each case, subject to syndication of the increase and other conditions.
The 2021 Credit Facility replaces the 2017 Credit Facility, which was scheduled to expire on April 24, 2022.
At Boston Properties Limited Partnership’s option, loans under the 2021 Credit Facility will bear interest at a rate per annum equal to (1) (a) in the case of loans denominated in Dollars, LIBOR, (b) in the case of loans denominated in Euro, EURIBOR, (c) in the case of loans denominated in Canadian Dollars, CDOR, and (d) in the case of loans denominated in Sterling, SONIA, in each case, plus a margin ranging from 70.0 to 140.0 basis points based on Boston Properties Limited Partnership’s credit rating or (2) an alternate base rate equal to the greatest of (a) the Federal Funds rate plus 0.5%, (b) the Administrative Agent’s prime rate, (c) LIBOR for a one-month period plus 1.00%, and (d) 1.00%, in each case, plus a margin ranging from 0 to 40 basis points based on Boston Properties Limited Partnership’s credit rating.
The 2021 Credit Facility also features a sustainability-linked pricing component such that if Boston Properties Limited Partnership meets certain sustainability performance targets, the applicable per annum interest rate will be reduced by one basis point. The LIBOR replacement provisions in the 2021 Credit Facility permit the use of rates based on the secured overnight financing rate (“SOFR”) administered by the Federal Reserve Bank of New York plus an applicable spread adjustment. In addition, the 2021 Credit Facility contains a competitive bid option for up to 65% of the Revolving Facility that allows banks that are part of the lender consortium to bid to make loan advances to Boston Properties Limited Partnership at a reduced interest rate.
Pursuant to the 2021 Credit Facility, Boston Properties Limited Partnership is obligated to pay (1) in quarterly installments a facility fee on the total commitment under the Revolving Facility at a rate per annum ranging from 0.10% to 0.30% based on Boston Properties Limited Partnership’s credit rating and (2) an annual fee on the undrawn amount of each letter of credit ranging from 0.70% to 1.40% based on Boston Properties Limited Partnership’s credit rating.
Based on Boston Properties Limited Partnership’s current credit rating, (1) the applicable Eurocurrency and LIBOR Daily Floating Rate margins are 0.775%, (2) the alternate base rate margin is 0 basis points and (3) the facility fee is 0.15% per annum.
The 2021 Credit Facility contains customary representations and warranties, affirmative and negative covenants, and events of default provisions, including the failure to pay indebtedness, breaches of covenants and bankruptcy and other insolvency events, which could result in the acceleration of the obligation to repay all outstanding amounts and the cancellation of all commitments outstanding under the 2021 Credit Facility. Among other covenants, the 2021 Credit Facility requires that Boston Properties Limited Partnership maintain on an ongoing basis: (1) a leverage ratio not to exceed 60%, however, the leverage ratio may increase to no greater than 65% provided that it is reduced back to 60% within one year, (2) a secured debt leverage ratio not to exceed 55%, (3) a fixed charge coverage ratio of at least 1.40, (4) an unsecured debt leverage ratio not to exceed 60%, however, the unsecured debt leverage ratio may increase to no greater than 65% provided that it is reduced to 60% within one year, (5) an unsecured debt interest coverage ratio of at least 1.75 and (6) limitations on permitted investments. At June 30, 2021, Boston Properties Limited Partnership was in compliance with each of these financial and other covenant requirements.
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At June 30, 2021, Boston Properties Limited Partnership had 0 amounts outstanding under the 2021 Credit Facility.
9. 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 $28.4 million at June 30, 2021.
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 may be entitled to an additional promoted interest or 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, 2021, the maximum funding obligation under the guarantee was approximately $21.5 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, 2021, 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 provided a financing guaranty as 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 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 exercised its option to borrow $10.0 million from the Company under such agreements, which financing was provided by the Company on June 1, 2020. The financing bears interest at a fixed rate of 8.00% per annum, compounded monthly, and matures on the fifth anniversary of the date on which the base building of the affiliate of The Bernstein Companies’ hotel property is substantially completed. The financing is collateralized by a pledge of the partner’s equity interest in the joint venture that owns and is developing 7750 Wisconsin Avenue. 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, 2021, 0 amounts related to the contingent aspect of any of the guarantees are recorded as liabilities in the Company’s consolidated financial statements.
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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 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, 2021, 0 amounts related to the contingent aspect of the guarantee are recorded as a liability in the Company’s consolidated financial statements (See Note 3).
In connection with the redevelopment of the Company’s 325 Main Street property located in Cambridge, Massachusetts, the Company was required, pursuant to the local zoning ordinance and urban renewal plan, 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, which is expected to occur during the third quarter of 2022. The zoning ordinance and urban renewal plan were each amended to decouple the residential requirement from the occupancy of the 325 Main Street property. The amendment to the urban renewal plan is subject to final approvals and completion of administrative processes. 325 Main Street consisted of an approximately 115,000 net rentable square foot Class A office property that was 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.
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 billion of 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.” The program trigger is $200 million, the coinsurance is 20% and the deductible is 20% of the premiums earned by the insurer for the year prior to a claim. If the Federal Government pays out for a loss under TRIA, it is mandatory that the Federal Government recoup the full amount of the loss from insurers offering TRIA coverage after the payment of the loss pursuant to a formula in TRIA. 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, 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.
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.
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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.
Due 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 operations across its portfolio. Because this is an ongoing situation it is not yet possible to quantify the Company’s losses and expenses, which continue to develop. Because of the complexity of the Company’s insurance policies 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 has provided notice to the applicable insurers of potential for claims in order to protect the Company’s rights under 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, 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, pandemics 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.
10. 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, 2021, the noncontrolling interests in Boston Properties Limited Partnership consisted of 16,038,056 OP Units, 1,489,456 LTIP Units (including 419,423 LTIP Units earned by employees under the Company’s multi-year long-term incentive awards granted between 2012-2018 (i.e., 2012 OPP and 2013-2018 MYLTIP awards)), 219,916 2019 MYLTIP Units, 203,278 2020 MYLTIP Units and 352,021 2021 MYLTIP Units held by parties other than Boston Properties, Inc.
Noncontrolling Interest—Common Units
During the six months ended June 30, 2021, 177,434 OP Units were presented by the holders for redemption (including 122,443 OP Units issued upon conversion of LTIP Units, 2012 OPP Units and MYLTIP Units) and were redeemed by Boston Properties, Inc. in exchange for an equal number of shares of Common Stock.
At June 30, 2021, Boston Properties Limited Partnership had outstanding 219,916 2019 MYLTIP Units, 203,278 2020 MYLTIP Units and 352,021 2021 MYLTIP Units. Prior to the end of the respective three-year performance period for each plan, holders of MYLTIP Units are 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 5, 2021, the measurement period for the Company’s 2018 MYLTIP awards ended and, based on Boston Properties, Inc.’s relative TSR performance, the final awards were determined to be 29.2% of target, or an
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aggregate of approximately $4.6 million (after giving effect to employee separations). As a result, an aggregate of 285,925 2018 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 - 2017 MYLTIP Units and, after the February 5, 2021 measurement date, the 2018 MYLTIP Units) and its distributions on the 2018 MYLTIP Units (prior to the February 5, 2021 measurement date) and 2019 - 2021 MYLTIP Units (after the February 2, 2021 issuance date of the 2021 MYLTIP Units) that occurred during the six months ended June 30, 2021:
Record DatePayment DateDistributions per OP Unit and LTIP UnitDistributions per MYLTIP Unit
June 30, 2021July 30, 2021$0.98 $0.098 
March 31, 2021April 30, 2021$0.98 $0.098 
December 31, 2020January 28, 2021$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 - 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) and 2018 - 2020 MYLTIP Units (after the February 4, 2020 issuance date of the 2020 MYLTIP Units) that occurred during the six months ended June 30, 2020:
Record DatePayment DateDistributions per OP Unit and LTIP UnitDistributions per MYLTIP Unit
June 30, 2020July 31, 2020$0.98 $0.098 
March 31, 2020April 30, 2020$0.98 $0.098 
December 31, 2019January 30, 2020$0.98 $0.098 
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 1 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 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 1 share of Common Stock. The value of the OP Units (not owned by Boston Properties, Inc. and LTIP Units (including the 2012 OPP Units and 2013 - 2018 MYLTIP Units) assuming that all conditions had been met for the conversion thereof) had all of such units been redeemed at June 30, 2021 was approximately $2.0 billion based on the last reported price of a share of Common Stock on the New York Stock Exchange of $114.59 per share on June 30, 2021.
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, 2021 and December 31, 2020, are included in Noncontrolling Interests—Property Partnerships on the accompanying Consolidated Balance Sheets.
11. Stockholders’ Equity / Partners’ Capital
Boston Properties, Inc.
As of June 30, 2021, Boston Properties, Inc. had 156,135,959 shares of Common Stock outstanding.
As of June 30, 2021, Boston Properties, Inc. owned 1,736,635 general partnership units and 154,399,324 limited partnership units in Boston Properties Limited Partnership.
On May 22, 2020, 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 3-year period. Under the ATM stock offering program, Boston Properties, Inc. may also engage in
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forward sale transactions with affiliates of certain sales agents for the sale of its Common Stock on a forward basis. This program replaced Boston Properties, Inc.’s prior $600.0 million ATM stock offering program that was scheduled to expire on June 2, 2020. Boston Properties, Inc. 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 six months ended June 30, 2021, Boston Properties, Inc. issued 206,377 shares of Common Stock upon the exercise of options to purchase Common Stock.
During the six months ended June 30, 2021, Boston Properties, Inc. issued 177,434 shares of Common Stock in connection with the redemption of an equal number of redeemable OP Units from limited partners.
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 2021 and during the six months ended June 30, 2020:
Record DatePayment DateDividend (Per Share)Distribution (Per Unit)
June 30, 2021July 30, 2021$0.98 $0.98 
March 31, 2021April 30, 2021$0.98 $0.98 
December 31, 2020January 28, 2021$0.98 $0.98 
June 30, 2020July 31, 2020$0.98 $0.98 
March 31, 2020April 30, 2020$0.98 $0.98 
December 31, 2019January 30, 2020$0.98 $0.98 
Preferred Stock
On March 2, 2021, Boston Properties, Inc. issued a redemption notice for 80,000 shares of its Series B Preferred Stock, which constituted all of the outstanding Series B Preferred Stock, and the corresponding Depositary Shares, each representing 1/100th of a share of Series B Preferred Stock. The redemption price per share of Series B Preferred Stock was equal to $2,500 plus all accrued and unpaid dividend to, but not including, the redemption date, totaling $2,516.41 per share. On March 31, 2021, the Company transferred the full redemption price for all outstanding shares of Series B Preferred Stock of approximately $201.3 million including approximately $1.3 million of accrued and unpaid dividends to, but not including, the redemption date, to the redemption agent. The excess of the redemption price over the carrying value of the Series B Preferred Stock and Series B Preferred Units of approximately $6.4 million relates to the original issuance costs and is reflected as a reduction to Net Income Attributable to Boston Properties, Inc. common shareholders and Net Income Attributable to Boston Properties Limited Partnership common unitholders on the Consolidated Income Statement.
On April 1, 2021, Boston Properties, Inc. redeemed 80,000 shares of Series B Preferred Stock (including the corresponding 8,000,000 Depositary Shares), which represented all of the outstanding shares of Series B Preferred Stock and all of the outstanding Depositary Shares. In connection with the redemption of the Series B Preferred Stock, all of the Series B Preferred Units, which had terms and preferences generally mirroring those of the Series B Preferred Stock, were redeemed by Boston Properties Limited Partnership.
The following table presents Boston Properties, Inc.’s dividends per share on its Series B Preferred Stock paid or declared during 2021 and during the six months ended June 30, 2020:
Record DatePayment DateDividend (Per Share)
February 5, 2021February 16, 2021$32.8125 
August 3, 2020August 17, 2020$32.8125 
May 1, 2020May 15, 2020$32.8125 
February 4, 2020February 18, 2020$32.8125 
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12. 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, 2021 and 2020.
Boston Properties, Inc.
 Three months ended June 30,Six months ended June 30,
2021202020212020
(in thousands)
Net income attributable to Boston Properties, Inc. common shareholders$111,703 $266,525 $203,372 $764,232 
Add:
Preferred stock redemption charge6,412 
Preferred dividends2,625 2,560 5,250 
Noncontrolling interest—common units of the Operating Partnership12,383 30,197 23,422 87,525 
Noncontrolling interests in property partnerships17,164 (767)33,631 18,719 
Interest expense106,319 107,142 214,221 208,733 
Losses from early extinguishment of debt898 
Net operating income from unconsolidated joint ventures25,417 27,911 50,212 56,669 
Depreciation and amortization expense183,838 178,188 360,403 349,282 
Transaction costs751 332 1,082 947 
Payroll and related costs from management services contracts2,655 2,484 6,160 5,721 
General and administrative expense38,405 37,743 83,364 74,197 
Less:
Net operating income attributable to noncontrolling interests in property partnerships46,287 32,427 90,663 80,088 
Gains (losses) from investments in securities2,275 4,552 3,934 (893)
Interest and other income (loss)1,452 1,305 2,620 4,322 
Gains on sales of real estate7,756 203,767 7,756 613,932 
Income (loss) from unconsolidated joint ventures(1,373)1,832 3,852 1,463 
Direct reimbursements of payroll and related costs from management services contracts2,655 2,484 6,160 5,721 
Development and management services revenue7,284 8,125 14,087 16,004 
Company’s share of Net Operating Income$432,299 $397,888 $856,665 $850,638 

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Boston Properties Limited Partnership
 Three months ended June 30,Six months ended June 30,
 2021202020212020
(in thousands)
Net income attributable to Boston Properties Limited Partnership common unitholders$125,846 $301,975 $231,619 $868,308 
Add:
Preferred unit redemption charge6,412 
Preferred distributions2,625 2,560 5,250 
Noncontrolling interests in property partnerships17,164 (767)33,631 18,719 
Interest expense106,319 107,142 214,221 208,733 
Losses from early extinguishment of debt898 
Net operating income from unconsolidated joint ventures25,417 27,911 50,212 56,669 
Depreciation and amortization expense182,078 176,409 355,578 345,694 
Transaction costs751 332 1,082 947 
Payroll and related costs from management services contracts2,655 2,484 6,160 5,721 
General and administrative expense38,405 37,743 83,364 74,197 
Less:
Net operating income attributable to noncontrolling interests in property partnerships46,287 32,427 90,663 80,088 
Gains (losses) from investments in securities2,275 4,552 3,934 (893)
Interest and other income (loss)1,452 1,305 2,620 4,322 
Gains on sales of real estate7,756 207,241 7,756 626,895 
Income (loss) from unconsolidated joint ventures(1,373)1,832 3,852 1,463 
Direct reimbursements of payroll and related costs from management services contracts2,655 2,484 6,160 5,721 
Development and management services revenue7,284 8,125 14,087 16,004 
Company’s share of Net Operating Income$432,299 $397,888 $856,665 $850,638 
Net operating income (“NOI”) is a non-GAAP financial measure equal to net income attributable to Boston Properties, Inc. common shareholders and net income attributable to Boston Properties Limited Partnership common unitholders, as applicable, the most directly comparable GAAP financial measures, plus (1) preferred stock/unit redemption charge, preferred dividends/distributions, net income attributable to noncontrolling interests, interest expense, losses from early extinguishment of debt, depreciation and amortization expense, transaction costs, payroll and related costs from management services contracts and corporate general and administrative expense less (2) gains (losses) from investments in securities, interest and other income (loss), gains on sales of real estate, income (loss) from unconsolidated joint ventures, direct reimbursements of payroll and related costs from management services contracts and development and management services revenue. The Company believes NOI is useful to investors as a performance measure and believes it provides useful information to investors regarding 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.
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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 sales of real estate from unconsolidated joint ventures, both of which are included within Income 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 stock/unit redemption charge, preferred dividends/distributions, interest expense, losses from early extinguishment of debt, 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 (loss), gains on sales of real estate, income (loss) from unconsolidated joint ventures, direct reimbursements of payroll and related costs from management services contracts and development and management services revenue 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.
Included within the Office property type are commercial office and retail leases, as well as parking revenue.  Upon the adoption of ASC 842, any write-off for bad debt, including accrued rent, will be recorded as a reduction to lease revenue. As a result of COVID-19, during the three and six months ended June 30, 2021, the Company wrote off approximately $0.6 million and $1.2 million, respectively, related to accrued rent, net balances and approximately $0.3 million and $0.1 million, respectively, related to accounts receivable, net balances. During the three and six months ended June 30, 2020, the Company wrote off approximately $35.9 million and $37.4 million, respectively, related to accrued rent, net balances and approximately $18.0 million and $18.9 million related to accounts receivable, net balances. The write-offs were for tenants, primarily in the retail sector, that either terminated their leases or for which the Company considered their accrued rent and/or accounts receivable balances were no longer probable of collection.
In addition, parking and other revenue for the three months ended June 30, 2021 increased by approximately $4.3 million compared to the three months ended June 30, 2020. Parking and other revenue for the six months ended June 30, 2021 decreased by approximately $3.2 million compared to 2020.
The Boston Marriott Cambridge closed in March 2020 due to COVID-19. The hotel re-opened on October 2, 2020 but has operated at a reduced occupancy due to the continued impact of COVID-19 on business and leisure travel. The closing of the hotel for more than two fiscal quarters, and the weak demand and low occupancy since its re-opening, have had, and are expected to continue to have, a material adverse effect on the hotel’s operations and thus the results of the Company’s Hotel property type.
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Information by geographic area and property type (dollars in thousands):
For the three months ended June 30, 2021:
BostonLos AngelesNew YorkSan FranciscoWashington, DCTotal
Rental Revenue: (1)
Office$229,571 $$252,182 $126,181 $84,610 $692,544 
Residential3,131 690 5,942 9,763 
Hotel1,561 1,561 
Total234,263 252,182 126,871 90,552 703,868 
% of Grand Totals33.28 %%35.84 %18.02 %12.86 %100.00 %
Rental Expenses:
Office78,165 92,662 40,954 30,994 242,775 
Residential1,435 1,544 2,949 5,928 
Hotel1,996 1,996 
Total81,596 92,662 42,498 33,943 250,699 
% of Grand Totals32.55 %%36.96 %16.95 %13.54 %100.00 %
Net operating income$152,667 $$159,520 $84,373 $56,609 $453,169 
% of Grand Totals33.69 %%35.20 %18.62 %12.49 %100.00 %
Less: Net operating income attributable to noncontrolling interests in property partnerships(10,576)(35,711)(46,287)
Add: Company’s share of net operating income from unconsolidated joint ventures3,624 12,265 172 3,580 5,776 25,417 
Company’s share of net operating income$145,715 $12,265 $123,981 $87,953 $62,385 $432,299 
% of Grand Totals33.70 %2.84 %28.68 %20.35 %14.43 %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.
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For the three months ended June 30, 2020:
BostonLos AngelesNew YorkSan FranciscoWashington, DCTotal
Rental Revenue: (1)
Office$218,351 $$204,242 $128,233 $83,837 $634,663 
Residential3,401 6,001 9,402 
Hotel99 99 
Total221,851 204,242 128,233 89,838 644,164 
% of Grand Totals34.43 %%31.71 %19.91 %13.95 %100.00 %
Rental Expenses:
Office75,694 88,367 39,081 32,680 235,822 
Residential1,235 2,730 3,965 
Hotel1,973 1,973 
Total78,902 88,367 39,081 35,410 241,760 
% of Grand Totals32.64 %%36.54 %16.17 %14.65 %100.00 %
Net operating income$142,949 $$115,875 $89,152 $54,428 $402,404 
% of Grand Totals35.52 %%28.80 %22.15 %13.53 %100.00 %
Less: Net operating income attributable to noncontrolling interests in property partnerships(10,576)(21,851)(32,427)
Add: Company’s share of net operating income from unconsolidated joint ventures2,627 15,026 815 4,127 5,316 27,911 
Company’s share of net operating income$135,000 $15,026 $94,839 $93,279 $59,744 $397,888 
% of Grand Totals33.92 %3.78 %23.84 %23.44 %15.02 %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.

38

For the six months ended June 30, 2021:
BostonLos AngelesNew YorkSan FranciscoWashington, DCTotal
Rental Revenue: (1)
Office$459,974 $$502,346 $256,779 $167,025 $1,386,124 
Residential6,176 1,011 11,751 18,938 
Hotel2,193 2,193 
Total468,343 502,346 257,790 178,776 1,407,255 
% of Grand Totals33.28 %%35.70 %18.32 %12.70 %100.00 %
Rental Expenses:
Office158,046 192,047 81,203 62,741 494,037 
Residential2,890 3,230 5,935 12,055 
Hotel4,047 4,047 
Total164,983 192,047 84,433 68,676 510,139 
% of Grand Totals32.34 %%37.65 %16.55 %13.46 %100.00 %
Net operating income$303,360 $$310,299 $173,357 $110,100 $897,116 
% of Grand Totals33.82 %%34.59 %19.32 %12.27 %100.00 %
Less: Net operating income attributable to noncontrolling interests in property partnerships(20,800)(69,863)(90,663)
Add: Company’s share of net operating income from unconsolidated joint ventures5,905 26,457 (621)7,060 11,411 50,212 
Company’s share of net operating income$288,465 $26,457 $239,815 $180,417 $121,511 $856,665 
% of Grand Totals33.68 %3.09 %27.99 %21.06 %14.18 %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.

39

For the six months ended June 30, 2020:
BostonLos AngelesNew YorkSan FranciscoWashington, DCTotal
Rental Revenue: (1)
Office$457,849 $$459,528 $264,972 $176,973 $1,359,322 
Residential7,469 11,889 19,358 
Hotel6,924 6,924 
Total472,242 459,528 264,972 188,862 1,385,604 
% of Grand Totals34.09 %%33.16 %19.12 %13.63 %100.00 %
Rental Expenses:
Office158,239 187,507 81,650 67,328 494,724 
Residential2,575 5,454 8,029 
Hotel8,794 8,794 
Total169,608 187,507 81,650 72,782 511,547 
% of Grand Totals33.16 %%36.65 %15.96 %14.23 %100.00 %
Net operating income$302,634 $$272,021 $183,322 $116,080 $874,057 
% of Grand Totals34.63 %%31.12 %20.97 %13.28 %100.00 %
Less: Net operating income attributable to noncontrolling interests in property partnerships(21,239)(58,849)(80,088)
Add: Company’s share of net operating income from unconsolidated joint ventures5,726 30,956 1,571 7,286 11,130 56,669 
Company’s share of net operating income$287,121 $30,956 $214,743 $190,608 $127,210 $850,638 
% of Grand Totals33.76 %3.64 %25.24 %22.41 %14.95 %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. 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 - 2018 MYLTIP Units required, and the 2019 - 2021 MYLTIP Units require, Boston Properties, Inc. to outperform absolute and/or 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 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.
40

Three months ended June 30, 2021
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$111,703 156,107 $0.72 
Effect of Dilutive Securities:
Stock Based Compensation412 (0.01)
Diluted Earnings:
Net income attributable to Boston Properties, Inc. common shareholders$111,703 156,519 $0.71 
Three months ended June 30, 2020
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$266,525 155,386 $1.72 
Allocation of undistributed earnings to participating securities(336)(0.01)
Net income attributable to Boston Properties, Inc. common shareholders$266,189 155,386 $1.71 
Effect of Dilutive Securities:
Stock Based Compensation21 
Diluted Earnings:
Net income attributable to Boston Properties, Inc. common shareholders$266,189 155,407 $1.71 
 Six months ended June 30, 2021
 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$203,372 156,016 $1.30 
Allocation of undistributed earnings to participating securities
Net income attributable to Boston Properties, Inc. common shareholders$203,372 156,016 $1.30 
Effect of Dilutive Securities:
Stock Based Compensation291 
Diluted Earnings:
Net income attributable to Boston Properties, Inc. common shareholders$203,372 156,307 $1.30 
41

 Six months ended June 30, 2020
 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$764,232 155,199 $4.92 
Allocation of undistributed earnings to participating securities(1,344)
Net income attributable to Boston Properties, Inc. common shareholders$762,888 155,199 $4.92 
Effect of Dilutive Securities:
Stock Based Compensation134 (0.01)
Diluted Earnings:
Net income attributable to Boston Properties, Inc. common shareholders$762,888 155,333 $4.91 
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 - 2018 MYLTIP Units required, and the 2019 - 2021 MYLTIP Units require, Boston Properties, Inc. to outperform absolute and/or 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 17,043,000 and 17,273,000 redeemable common units for the three months ended June 30, 2021 and 2020, respectively, and 17,018,000 and 17,405,000 redeemable common units for the six months ended June 30, 2021, and 2020, respectively.
 Three months ended June 30, 2021
 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$125,846 173,150 $0.73 
Effect of Dilutive Securities:
Stock Based Compensation412 
Diluted Earnings:
Net income attributable to Boston Properties Limited Partnership common unitholders$125,846 173,562 $0.73 
42

Three months ended June 30, 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$301,975 172,659 $1.75 
Allocation of undistributed earnings to participating securities(374)
Net income attributable to Boston Properties Limited Partnership common unitholders$301,601 172,659 $1.75 
Effect of Dilutive Securities:
Stock Based Compensation21 
Diluted Earnings:
Net income attributable to Boston Properties Limited Partnership common unitholders$301,601 172,680 $1.75 
Six months ended June 30, 2021
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$231,619 173,034 $1.34 
Effect of Dilutive Securities:
Stock Based Compensation291 
Diluted Earnings:
Net income attributable to Boston Properties Limited Partnership common unitholders$231,619 173,325 $1.34 
 Six months ended June 30, 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$868,308 172,604 $5.03 
Allocation of undistributed earnings to participating securities(1,495)(0.01)
Net income attributable to Boston Properties Limited Partnership common unitholders$866,813 172,604 $5.02 
Effect of Dilutive Securities:
Stock Based Compensation134 
Diluted Earnings:
Net income attributable to Boston Properties Limited Partnership common unitholders$866,813 172,738 $5.02 
14. Stock Option and Incentive Plan
On February 2, 2021, Boston Properties, Inc.’s Compensation Committee approved the 2021 MYLTIP awards under the Boston Properties, Inc. 2012 Stock Option and Incentive Plan (the “2012 Plan”) to certain officers and employees of Boston Properties, Inc. The 2021 MYLTIP awards consist of two, equally-weighted (50% each)
43

components that utilize Boston Properties, Inc.’s TSR over a three-year measurement period as the performance metric.
The first component of the 2021 MYLTIP, which represents one-half (50%) of the target grant-date value, retains the basic general structure of the 2020 MYLTIP awards with certain changes, including a change to the custom index against which Boston Properties, Inc.’s TSR is compared. The number of LTIP Units that can be earned under this component ranges from zero to 200% of the target number of LTIP Units, based on Boston Properties, Inc.’s annualized relative TSR performance compared to a custom index. Under this component, 100% of the target number of LTIP Units will be earned if Boston Properties, Inc.’s TSR equals the custom index TSR; for relative TSR performance between -1,000 basis points and +1,000 basis points, the number of LTIP Units earned will be determined using linear interpolation.
The second component represents the remaining one-half (50%) of the target grant-date value of the 2021 MYLTIP. The number of LTIP Units that can be earned under this component ranges from zero to 200% of the target number of LTIP Units, based on Boston Properties, Inc.’s cumulative absolute TSR during the performance period. Under this component, 100% of the target number of LTIP Units will be earned if Boston Properties, Inc.’s achieves an absolute TSR equal to +1,000 basis points; if Boston Properties, Inc.’s absolute TSR is greater than -4,000 basis points but less than +6,000 basis points, then the number of LTIP Units earned will be determined using linear interpolation.
Total earned awards under the 2021 MYLTIP, if any, is the sum of the number of LTIP Units earned under the first and second components and will range from 0 to a maximum of 352,021 LTIP Units with a target of approximately 176,009 LTIP Units and linear interpolation between zero and maximum. Earned awards (if any) will vest 100% on February 1, 2024, but may not be converted, redeemed, sold or otherwise transferred for one additional year thereafter. 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 1, 2024, earned awards will be calculated based on TSR performance up to the date of the change of control. The 2021 MYLTIP awards are in the form of LTIP Units issued on the grant date, and they are subject to forfeiture to the extent awards are not earned. Prior to the performance measurement date holders of the 2021 MYLTIP Units are only entitled to one-tenth (10%) of the regular quarterly distributions payable on common partnership units. Following the completion of the three-year performance period, Boston Properties, Inc. will also make a “catch-up” cash payment on the 2021 MYLTIP Units that are ultimately earned in an amount equal to the regular and special distributions, if any, declared during the performance period on Boston Properties, Inc.’s common stock, less the distributions actually paid to holders of 2021 MYLTIP Units during the performance period on all of the awarded 2021 MYLTIP Units. Under ASC 718 “Compensation - Stock Compensation,” the 2021 MYLTIP awards have an aggregate value of approximately $15.3 million, which amount will generally be amortized into earnings under the graded vesting method.
On February 5, 2021, the measurement period for the Company’s 2018 MYLTIP awards ended and, based on Boston Properties, Inc.’s relative TSR performance, the final awards were determined to be 29.2% of target, or an aggregate of approximately $4.6 million (after giving effect to employee separations). As a result, an aggregate of 285,925 2018 MYLTIP Units that had been previously granted were automatically forfeited.
At Boston Properties, Inc.’s 2021 annual meeting of stockholders held on May 20, 2021, its stockholders approved the Boston Properties, Inc. 2021 Stock Incentive Plan (the “2021 Plan”). The 2021 Plan replaces the 2012 Plan and no further awards will be granted under the 2012 Plan. The material features of the 2021 Plan include, among other things: (i) the maximum number of shares of Common Stock reserved and available for issuance under the 2021 Plan is 5,400,000 shares less one share for every one share that was granted between March 4, 2021 and May 19, 2021 under the 2012 Plan, (ii) shares of Common Stock underlying awards granted under the 2021 Plan or the 2012 Plan that are forfeited, canceled or otherwise terminated (other than by exercise) will be added back to the shares of Common Stock available for issuance under the 2021 Plan and, with respect to “full-value” awards under the 2021 Plan or the 2012 Plan, shares tendered or held back for taxes and shares previously reserved for issuance pursuant to such an award to the extent that such shares are not issued and are no longer issuable pursuant to such an award (e.g., in the event that a full-value award that may be settled in cash or by issuance of shares of Common Stock is settled in cash) will be added back to the shares available for issuance under the 2021 Plan, (iii) the award of stock options (both incentive and non-qualified options), stock appreciation rights, restricted stock units, restricted stock, unrestricted stock, dividend equivalent rights, cash-based awards and other equity-based awards (including LTIP Units) is permitted, (iv) stock options may not be repriced and “underwater” stock options may not be exchanged for another award or cash without stockholder approval; and (v)
44

the term of the 2021 Plan is for ten years from the date of stockholder approval.
During the six months ended June 30, 2021, Boston Properties, Inc. issued 38,499 shares of restricted common stock and Boston Properties Limited Partnership issued 281,640 LTIP Units and 352,021 2021 MYLTIP Units to employees and non-employee director advisors under the 2012 Plan and the 2021 Plan. Employees paid $0.01 per share of restricted common stock and $0.25 per LTIP Unit and 2021 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 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 six months ended June 30, 2021 were valued at approximately $3.6 million ($94.17 per share weighted-average). The LTIP Units granted were valued at approximately $23.8 million (approximately $84.43 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 0.65% and an expected price volatility of 30.0%. Because the 2012 OPP Units and 2013 - 2021 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, LTIP Units and MYLTIP Units was approximately $14.0 million and $10.1 million for the three months ended June 30, 2021 and 2020, respectively, and $33.8 million and $27.3 million for the six months ended June 30, 2021 and 2020, respectively. At June 30, 2021, there was (1) an aggregate of approximately $32.3 million of unrecognized compensation expense related to unvested restricted stock, LTIP Units and 2018 MYLTIP Units and (2) an aggregate of approximately $12.0 million of unrecognized compensation expense related to unvested 2019 - 2021 MYLTIP Units that is expected to be recognized over a weighted-average period of approximately 2.2 years.
15. Subsequent Events
On July 13, 2021, the Company entered into an agreement to sell its 181,191 and 201 Spring Street properties located in Lexington, Massachusetts for an aggregate gross sale price of $191.5 million. 181,191 and 201 Spring Street are three Class A office properties aggregating approximately 333,000 net rentable square feet and are 100% leased.
On July 20, 2021, the Company agreed to acquire Safeco Plaza in Seattle, Washington for an aggregate cash purchase price of approximately $465.0 million. The Company and its prospective partner have funded a deposit of $51.5 million of which the Company’s share is $26.3 million. Safeco Plaza is an approximately 800,000 square foot Class A office building. The acquisition is subject to customary closing conditions for a transaction of this type, and there can be no assurance that the acquisition will be consummated on the terms currently contemplated or at all (See Note 3).
On August 2, 2021, the Company acquired Shady Grove Bio+Tech Campus in Rockville, Maryland for an aggregate purchase price of approximately $116.5 million. Shady Grove Bio+Tech Campus is an approximately 435,000 net rentable square foot, 7-building office park situated on an approximately 31-acre site. The Company intends to reposition three of the buildings, which are currently vacant, to support life sciences uses (See Note 3).
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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.
This Quarterly Report on Form 10-Q, including the documents incorporated by reference, contain forward-looking statements within the meaning of the federal securities laws, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and are including this statement for purposes of complying with those safe harbor provisions, in each case, to the extent applicable. 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,” “could”, “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “project,” “should,” “will” and similar expressions that 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 expressed or implied by the forward-looking statements. We caution you that, while forward-looking statements reflect our good-faith beliefs when we make them, they are not guarantees of future performance or occurrences and are impacted by actual events when they occur after we make such statements. Accordingly, investors should use caution in relying on forward-looking statements, which are based on results and trends at the time they are made, to anticipate future results or trends.
One of the most significant factors that may cause actual results to differ materially from those expressed or implied by the forward-looking statements is the ongoing impact of the global COVID-19 pandemic on the U.S. and global economies, which has impacted, and is likely to continue to impact, us and, directly or indirectly, many of the other important factors below and the risks described in (i) our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 including those described under the caption “Risk Factors,” (ii) our subsequent filings under the Exchange Act and (iii) the risk factors set forth in this Form 10-Q in Part II, Item 1A.
Some of the risks and uncertainties that may cause our actual results, performance or achievements to differ materially from those expressed or implied by forward-looking statements include, among others, the following:
the risks and uncertainties related to the impact of the COVID-19 global pandemic, including the duration, scope and severity of the pandemic domestically and internationally; federal, state and local government actions or restrictive measures implemented in response to COVID-19, the effectiveness of such measures, as well as the effect of any relaxation of current restrictions, and the direct and indirect impact of such measures on our and our tenants’ businesses, financial condition, results of operations, cash flows, liquidity, performance and demand for office space, and the U.S. and international economy and economic activity generally; the emergence and characteristics of new variants, the speed, effectiveness and distribution of vaccines (including effectiveness against COVID-19 variant strains), whether new or existing actions and measures continue to impact the ability of our residential tenants to generate sufficient income to pay, or make them unwilling to pay rent in a timely manner, in full or at all; the health, continued service and availability of our personnel, including our key personnel and property management teams; and the effectiveness or lack of effectiveness of governmental relief in providing assistance to individuals and large and small businesses, including our tenants, that 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);
failure to manage effectively our growth and expansion into new markets and sub-markets or to integrate acquisitions and developments successfully;
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the ability of our joint venture partners to satisfy their obligations;
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;
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 Report on Form 10-K for the fiscal year ended December 31, 2020 or described herein, including those 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, particularly in light of the 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 Report on Form 10-K and 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 trusts (REITs) (based on total market capitalization as of June 30, 2021) in the United States that develops, owns and manages primarily Class A office properties. Our properties are concentrated in five markets in the United States - Boston, Los Angeles, New York, San Francisco and Washington, DC - with the expected addition of Seattle as a sixth market in the third quarter of 2021. BPLP is the entity through which BXP conducts substantially all of its business and owns (either directly or through subsidiaries) substantially all of its assets. We generate revenue and cash primarily by leasing Class A
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office space to our tenants. When making leasing decisions, we consider, among other things, the creditworthiness of the tenant and the industry in which it conducts business, the length of the lease, the rental rate to be paid at inception and throughout the lease term, the costs of tenant improvements, free rent periods and other landlord concessions, anticipated operating expenses and real estate taxes, current and anticipated vacancy in our properties and the market overall (including sublease space), current and expected future demand for the space, the impact of any expansion rights and general economic factors.
Our core strategy has always been to develop, acquire and manage high-quality properties in supply-constrained markets with high barriers-to-entry and to focus on executing long-term leases with financially strong tenants. Historically, these factors have minimized our exposure in weaker economic cycles and enhanced revenues as market conditions improve. Our tenant base is diverse across market sectors and the weighted-average lease term for our in-place leases, excluding residential units, was approximately 7.6 years, as of June 30, 2021, including leases signed by our unconsolidated joint ventures. The weighted-average lease term for our top 20 office tenants was approximately 11 years as of June 30, 2021.
To be successful in any leasing environment, we believe we must consider all aspects of the tenant-landlord relationship. In this regard, we believe that our competitive leasing advantage is based on the following attributes:
our understanding of tenants’ short- and long-term space utilization and amenity needs in the local markets;
our track record of developing and operating Class A office properties in a sustainable and responsible manner;
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; and
our relationships with local brokers.
Outlook
Employment growth, economic growth and low interest rates typically create a positive environment for real estate performance, particularly for companies in the office sector. Following a significant drop in U.S. GDP in 2020 due to the COVID-19 pandemic, overall economic conditions began to improve in the first half of 2021 as millions of Americans began receiving COVID-19 vaccines. The second quarter of 2021 marked ongoing economic improvement both year-over-year compared to the second quarter of 2020 and sequentially as compared to the first quarter of 2021. In the second quarter of 2021, GDP growth was 6.5%, an increase as compared to the first quarter of 2021, and the unemployment rate was approximately 5.9%, only 2.4% greater than the pre-pandemic rate in February 2020.
As the economic recovery continues, many companies are evaluating their space requirements based on their current and projected headcounts and employees’ desire for more work-location flexibility. We believe as the number of vaccinations increases and employees return to their offices in greater numbers, our strategically located, high-quality office properties will remain a vital component of the strategies of today’s forward-thinking organizations that prioritize fostering collaboration, innovation, productivity and culture, and we expect tenants will take advantage of the availability of Class A space and upgrade. We believe these factors combined to result in improved leasing activity during the second quarter of 2021, with signed leases having terms consistent with our historical averages.
BXP Priorities
Despite the concerns surrounding the COVID-19 pandemic and the lingering impact on economic conditions in our markets, we remain optimistic for our industry generally and our company in particular, given low interest rates, the demand for workers across sectors, the high quality of our properties, the supply and demand characteristics of our markets and the success of our development efforts.
As a leading developer, owner and manager of marquee Class A office properties in the United States, our priorities remain focused on the following:
ensuring tenant health, safety and satisfaction;
leasing available space in our in-service and development properties, as well as proactively focusing on future lease expirations;
completing the construction of our development properties;
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continuing and completing the redevelopment and repositioning of several key properties to increase future revenue and asset values over the long-term;
maintaining discipline in our underwriting of investment opportunities;
managing our near-term debt maturities and maintaining our conservative balance sheet; and
actively managing our operations in a sustainable and responsible manner.
The following is an overview of portfolio activity, leasing activity and capital markets activity in the second quarter of 2021.
Leasing Activity and Occupancy
When compared to periods prior to the pandemic, our second quarter 2021 revenue continued to be adversely affected due to (1) declines in revenue from our retail tenants, parking and our hotel, and (2) a decline in occupancy in our in-service office and retail properties due to a slowdown in new leasing activity for vacant and expiring space. However, in the second quarter of 2021, as vaccination rates in our markets increased and economic conditions began to improve, we began to see meaningful growth in tour and leasing activity across the portfolio and increases in revenue from our retail tenants, parking and our hotel as compared to the second quarter of 2020 and the first quarter of 2021, indicating that these revenue streams are slowly beginning to recover.
Lease revenue from our retail leases was approximately $42.3 million in the second quarter of 2021, a decrease of $3.4 million from the first quarter of 2021. However, lease revenue in the first quarter of 2021 included approximately $4.5 million of lease termination income, compared to termination income of approximately $0.8 million in the second quarter of 2021. Excluding termination income in both quarters, our revenue from retail leases increased approximately $0.3 million from the first quarter of 2021. These amount represents our consolidated lease revenue plus our share of the lease revenue from the unconsolidated joint ventures (calculated based on our ownership percentage) minus our partners’ share of lease revenue from our consolidated joint ventures (calculated based upon the partners’ percentage ownership interests).
Our parking and other revenue was approximately $17.9 million in the second quarter of 2021, an increase of approximately $3.9 million from the second quarter of 2020 and an increase of approximately $3.4 million from the first quarter of 2021. The increase was primarily due to improved transient parking. We do not expect to return to pre-pandemic levels of parking revenue until the COVID-19 pandemic is sufficiently contained and monthly parking permits increase.
Our hotel property, the Boston Marriott Cambridge, is currently operating at diminished occupancy. The hotel generated only approximately $1.6 million in revenue in the second quarter of 2021, an increase of approximately $1.5 million compared to the second quarter of 2020 and an increase of approximately $0.9 million compared to the first quarter of 2021. While this increase marks an improvement, we expect hotel occupancy and REVPAR to remain below pre-pandemic levels until business and leisure travel return to historical levels.
The overall occupancy of our in-service office and retail properties was 88.6% at June 30, 2021, a decrease of 0.1% compared to 88.7% at March 31, 2021.
In the second quarter of 2021, we signed approximately 1.2 million square feet of new leases and renewals with a weighted-average lease term of approximately 7.5 years, indicating that many prospective and existing tenants continue to commit to the long-term use of space and view our properties as their preferred choice for a premium Class A office environment. The volume of leasing in the second quarter of 2021 was more than double the volume achieved in the first quarter of 2021 and only 10% below our long-term second quarter average. We expect leasing volume in 2021 to remain below pre-pandemic levels as many existing and prospective tenants defer decisions on their office space needs as they focus on workforce management strategies, safely returning their employees to an in-person work environment and managing their businesses through the economic recovery.
We anticipate occupancy for the remainder of 2021 will be relatively steady with occupancy for the second quarter of 2021, as our remaining 2021 lease expirations are backfilled by signed leases that have not yet commenced and we are actively pursuing new leases and lease renewals.
Investment Activity
We remain committed to developing and acquiring assets to enhance our long-term growth and to meet tenant demand for high-quality office and lab space. We continually evaluate current and prospective markets for possible
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acquisitions of “value-add” assets that require lease-up or repositioning, and acquisitions that are otherwise consistent with our long-term strategy of owning, managing, developing and improving, premier Class A properties in each of our chosen markets.
Since the beginning of the second quarter of 2021, we have entered into agreements to acquire four properties. We believe these investments align with several elements of our growth strategy, including entering new markets or submarkets that exhibit strong demand and limitations on supply, uncovering opportunities that utilize our leasing and redevelopment skills to increase value, broadening our portfolio to meet the current and anticipated future demand of tenants in the life sciences sector and utilizing private equity to increase our returns and enhance our investment capacity. The four recent acquisitions and pending acquisitions include:
Safeco Plaza, an approximately 800,000 square-foot Class A office building in Seattle, Washington. The property is approximately 90% leased. This potential acquisition marks our initial entry into the Seattle market, one of the most vibrant markets in the U.S. for companies in the technology, life sciences, manufacturing and financial services sectors. We expect to close the acquisition in the third quarter of 2021 for a purchase price of approximately $465 million. We expect to purchase this in a joint venture and to hold up to a 51% ownership in the property.
360 Park Avenue South, an approximately 450,000 square-foot, 20-story Class A office property located in the Midtown South submarket of Manhattan, New York. The property is fully leased to a single tenant who will be vacating in late 2021, providing us with the opportunity to complete extensive upgrades and transform the property into a premier modern building that will attract Class A clients. We expect to close the acquisition in the fourth quarter of 2021 for a purchase price of approximately $300 million, including the assumption of approximately $202 million of debt and the issuance of approximately $98 million of operating partnership units.
Shady Grove Bio+Tech Campus, consisting of seven buildings totaling approximately 435,000 square-feet in the Shady Grove area of Rockville, Maryland, a region that is home to more than 400 companies in the biotechnology and life sciences sector. We plan to convert the office buildings on the campus to lab space to meet current and growing demand in the region from biotechnology companies for new, Class A lab space. We expect to begin reconstruction on three of the buildings, which are currently vacant, promptly after closing. On August 2, 2021, we closed on this acquisition for a purchase price of approximately $116.5 million.
153 & 211 Second Avenue, two lab properties comprising approximately 137,000 square-feet in Waltham, Massachusetts, a highly desirable location for leading and emerging companies in the life sciences and biotechnology sector. We acquired the two lab buildings in June 2021 for a gross purchase price of approximately $100.2 million in cash. The properties were 100% leased as of June 30, 2021.
These strategic value-add acquisitions and pending acquisitions complement our focus on development and redevelopment, which also continues to be a cornerstone of our long-term growth strategy, specifically focused on properties in supply-constrained markets with the strongest economic growth over time. In the second quarter of 2021, we continued the construction of our developments and redevelopment projects in our pipeline, which consists of nine properties that, when completed, we expect will total approximately 4.3 million net rentable square feet. As of June 30, 2021, our share of the estimated total cost for these projects is approximately $2.7 billion, of which approximately $1.2 billion of equity remained to be invested. The total development pipeline, inclusive of both office and lab/life sciences developments, but excluding The Prudential Center Observatory, is 71% pre-leased as of August 3, 2021. The office development projects in our current pipeline, which total approximately 3.3 million square feet, are 87% pre-leased, as of August 2, 2021, to predominately credit-strong tenants with long-lease terms.
In early 2021 we added several new development and redevelopment projects to our development pipeline focused on the specific needs of tenants in the life sciences sector.
Our lab/life sciences developments in our pipeline total 920,000 square feet and include properties in Waltham, Massachusetts and South San Francisco, California, which have been, and continue to be, two of the largest life sciences clusters in the United States, with strong demand from tenants because of the close proximity to universities, research institutions and related businesses and concentrations of labor with specialized skills and knowledge.
We expect all active developments and redevelopments in our pipeline to be delivered on time and budget.
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As we continue to focus on new investments to drive future growth, we also continually review our portfolio to identify properties as potential sales candidates because they may either no longer fit within our portfolio strategy or they could attract premium pricing in the current market environment. In July 2021, we entered into an agreement to sell 181,191 and 201 Spring Street, a three-building complex aggregating approximately 333,000 square feet in Lexington, Massachusetts, for an aggregate gross sales price of $191.5 million. The three-buildings are 100% leased. We anticipate closing on the sale in the third quarter of 2021. We will continue to evaluate the sale of similar properties.
There can be no assurance that the acquisitions and disposition outlined above will be consummated on the terms currently contemplated or at all.
A brief overview of each of our markets follows.
Boston
The Boston region is home to the largest cluster of life sciences companies in the world, and these companies are growing and increasing demand and rents in the region.
Our Boston central business district (“CBD”) in-service portfolio was approximately 96% leased as of June 30, 2021. During the second quarter of 2021, we executed approximately 194,000 square feet of leases and approximately 420,000 square feet of leases commenced in the Boston region. Approximately 273,000 square feet of the leases that commenced had been vacant for less than one year and represent an increase in net rental obligations of approximately 56% over the prior leases.
Our approximately 2.0 million square foot in-service office portfolio in Cambridge was approximately 99% leased as of June 30, 2021. During the second quarter of 2021, we continued our development of 325 Main Street at Kendall Center in Cambridge, Massachusetts, which is 90% pre-leased to an office tenant for a term of 15 years and we expect to deliver into service in 2022. In early 2021, we received approximately one million square feet of new entitlements at Kendall Center in Cambridge, Massachusetts for potential future development.
Waltham and the area surrounding the Route 128-Mass Turnpike interchange continue to comprise a popular submarket of Boston for leading and emerging companies in the life sciences, biotechnology and technology sectors. In the second quarter of 2021, we continued the redevelopment of 880 Winter Street, an approximately 224,000 square foot office property in Waltham, Massachusetts that will be converted into lab space. We also continued the conversion of 200 West Street in Waltham, Massachusetts, into life sciences/lab space, and we continued the development of 180 CityPoint, an approximately 329,000 square foot lab development in Waltham, Massachusetts, which is expected to be delivered in 2024. To further enable us to meet current and future demand from tenants in the life sciences sector in this region, in the second quarter of 2021, we acquired 153 & 211 Second Avenue in Waltham, Massachusetts, two life sciences lab buildings aggregating approximately 137,000 square feet that are adjacent to our 200 West Street redevelopment. The Second Avenue properties consist primarily of lab space, are 100% leased to a pharmaceutical company and have 120,000 square feet of additional development rights, which may be increased when combined with excess development capacity of our adjacent 200 West Street site. We own or control a significant amount of land in the Boston region that we expect will enable us to aggressively compete for and meet the demand from the emerging and growing tenants in these industries.
Los Angeles
Our Los Angeles (“LA”) in-service portfolio of approximately 2.3 million square feet is currently focused on West LA and includes Colorado Center, a 1.1 million square foot property of which we own 50%, and Santa Monica Business Park, a 21-building, approximately 1.2 million square foot property of which we own 55%. As of June 30, 2021, our LA in-service properties were approximately 84% leased. In the second quarter of 2021, we signed a 351,000 square-foot, seven-year renewal and expansion lease with a leading entertainment company at Colorado Center and a 140,000 square-foot expansion lease with a technology company at Santa Monica Business Park in Santa Monica, California. We expect our occupancy to increase later this year upon commencement of this 140,000 square foot lease expansion. In total, we executed approximately 491,000 square feet of leases and approximately 204,000 square feet of leases commenced in the Los Angeles region. Approximately 184,000 square feet of the leases that commenced had been vacant for less than one year and represent a decrease in net rental obligations of approximately 5% over the prior leases.
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New York
As of June 30, 2021, our New York CBD in-service portfolio was approximately 90% leased. During the second quarter of 2021, (1) we signed leases covering approximately 152,000 square feet, including a 25,000 square foot, 11-year expansion with a financial services company at 399 Park Avenue in New York City, and (2) approximately 194,000 square feet of leases commenced. Approximately 71,000 square feet of the leases that commenced had been vacant for less than one year and represent a decrease in net rental obligations of approximately 44% over the prior leases. Excluding 33,289 square feet of retail leases that commenced, however, net rental obligations increased approximately 8% over the prior leases.
In the second quarter of 2021, overall leasing activity increased from the first quarter of 2021 as we conducted more physical tours in New York City than we had in the comparable quarter in either 2019 or 2020. We are actively negotiating approximately 400,000 square feet of leases, of which approximately 250,000 square feet is at Dock 72, our joint venture property in Brooklyn, New York. We are also seeing a significant reduction in the amount of sublease space available in New York due to a combination of tenants taking back sublease space and market absorption of sublease space.
San Francisco
In the second quarter of 2021, governmental authorities in San Francisco lifted all remaining travel quarantines, stay-at-home orders and restrictions on the types of businesses that could continue to operate, including offices. California was the last state among our regions to lift these restrictions. As these restrictions were lifted, the pace of new leasing activity began to increase, although activity remains well below pre-pandemic levels due to the lagging impact of these restrictions and the increase in sublease space in the market that occurred during the pandemic.
Our San Francisco CBD in-service properties were approximately 93% leased as of June 30, 2021. During the second quarter of 2021, we executed approximately 120,000 square feet of leases and we commenced approximately 220,000 square feet of leases in the San Francisco region. Of these leases, approximately 194,000 square feet had been vacant for less than one year and represent an increase in net rental obligations of approximately 47% over the prior leases. We are actively negotiating leases for over 140,000 square feet in the San Francisco CBD.
Washington, DC
During the second quarter of 2021, we executed approximately 283,000 square feet of leases and we commenced approximately 317,000 square feet of leases in the Washington, DC region, including over 170,000 square feet in Reston, Virginia. Of these leases, approximately 254,000 square feet had been vacant for less than one year and represent a decrease in net rental obligations of approximately 8% over the prior leases.
Our Washington, DC CBD in-service properties were approximately 84% leased, as of June 30, 2021, with modest near-term exposure, and we have reduced our exposure in the Washington, DC CBD market significantly over the past few years through the dispositions of assets.
Our Washington, DC suburban properties include our significant presence in Reston, Virginia, where demand from technology and cybersecurity tenants remains strong. Our Washington, DC suburban properties were approximately 86% leased as of June 30, 2021.

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Leasing Statistics
The table below details the leasing activity, including 100% of the unconsolidated joint ventures, that commenced during the three and six months ended June 30, 2021:
Three months ended June 30, 2021Six months ended June 30, 2021
Total Square FeetTotal Square Feet
Vacant space available at the beginning of the period5,131,799 4,517,385 
Property dispositions/properties taken out of service (1)— (104,613)
Properties placed (and partially placed) in-service (2)2,154 229,430 
Leases expiring or terminated during the period1,410,005 3,198,671 
Total space available for lease6,543,958 7,840,873 
1st generation leases
2,154 203,556 
2nd generation leases with new tenants
814,522 1,417,019 
2nd generation lease renewals
540,464 1,033,480 
Total space leased (3)1,357,140 2,654,055 
Vacant space available for lease at the end of the period5,186,818 5,186,818 
Leases executed during the period, in square feet (4)1,239,218 1,831,033 
Second generation leasing information: (5)
Leases commencing during the period, in square feet1,354,986 2,450,499 
Weighted Average Lease Term90 Months87 Months
Weighted Average Free Rent Period194 Days168 Days
Total Transaction Costs Per Square Foot (6)$74.26 $77.92 
Increase (Decrease) in Gross Rents (7)(0.13)%3.42 %
Increase (Decrease) in Net Rents (8)(0.28)%4.89 %
 __________________
(1)Total square feet of property dispositions during the six months ended June 30, 2021 consists of 29,595 square feet due to the sale of Annapolis Junction Building Six. Total square feet of properties taken out of service during the six months ended June 30, 2021 consists of 34,290 square feet at 880 Winter Street and 40,728 square feet at 800 Boylston Street - The Prudential Center, both due to redevelopment.
(2)Total square feet of properties placed (and partially placed) in-service during the three months ended June 30, 2021 consists of 2,154 square feet at 100 Causeway Street. Total square feet of properties placed (and partially placed) in-service during the six months ended June 30, 2021 consists of 195,326 square feet of office and 31,950 square feet of retail at One Five Nine East 53rd Street and 2,154 square feet at 100 Causeway Street.
(3)Represents leases for which lease revenue recognition has commenced in accordance with GAAP during the three and six months ended June 30, 2021.
(4)Represents leases executed during the three and six months ended June 30, 2021 for which we either (1) commenced lease revenue recognition in such period or (2) will commence lease revenue recognition in subsequent periods, in accordance with GAAP, and includes leases at properties currently under development. The total square feet of leases executed and recognized in the three and six months ended June 30, 2021 is 327,426 and 414,078, respectively. Amounts for the three and six months ended June 30, 2021 exclude lease modifications related to COVID-19 to provide cash rent deferrals and/or abatements.
(5)Second generation leases are defined as leases for space that had previously been leased by us. Of the 1,354,986 and 2,450,499 square feet of second generation leases that commenced during the three and six months ended June 30, 2021, respectively, leases for 1,029,714 and 2,041,549 square feet, respectively, were signed in prior periods.
(6)Total transaction costs include tenant improvements and leasing commissions but exclude free rent concessions and other inducements in accordance with GAAP.
(7)Represents the increase in gross rent (base rent plus expense reimbursements) on the new versus expired leases on the 975,749 and 1,711,181 square feet of second generation leases that had been occupied within the prior 12 months for the three and six months ended June 30, 2021, respectively; excludes leases that management considers temporary because the tenant is not expected to occupy the space on a long-term basis. Excluding retail leases, gross rent increased 14.14% on the new versus expired leases on the 928,977
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square feet of second generation leases that had been occupied within the prior 12 months for the three months ended June 30, 2021.
(8)Represents the increase in net rent (gross rent less operating expenses) on the new versus expired leases on the 975,749 and 1,711,181 square feet of second generation leases that had been occupied within the prior 12 months for the three and six months ended June 30, 2021, respectively; excludes leases that management considers temporary because the tenant is not expected to occupy the space on a long-term basis. Excluding retail leases, net rent increased 21.03% on the new versus expired leases on the 928,977 square feet of second generation leases that had been occupied within the prior 12 months for the three months ended June 30, 2021.
Transactions during the three months ended June 30, 2021 included the following:
Acquisitions/pending acquisitions activities
On April 19, 2021, we entered into an agreement to acquire 11251 Roger Bacon Drive, in Reston, Virginia, for an aggregate purchase price of approximately $5.6 million. The closing is scheduled to occur in the first quarter of 2022. 11251 Roger Bacon Drive is an approximately 65,000 square foot office building situated on approximately 2.6 acres. The property is 100% leased to a single tenant with a lease expiration prior to the planned closing. There can be no assurance that the acquisition will be consummated on the terms currently contemplated or at all.
On June 2, 2021, we acquired 153 & 211 Second Avenue located in Waltham, Massachusetts for an aggregate purchase price of approximately $100.2 million in cash. 153 & 211 Second Avenue consists of two life sciences lab buildings totaling approximately 137,000 net rentable square feet. The properties are 100% leased.
On June 7, 2021, we entered into an agreement to acquire Shady Grove Bio+Tech Campus in Rockville, Maryland, for an aggregate purchase price of approximately $116.5 million. The closing is scheduled to occur in the third quarter of 2021. Our refundable deposit of $10.0 million is reflected as Cash and Cash Equivalents in our Consolidated Balance Sheets. Shady Grove Bio+Tech Campus is an approximately 435,000 net rentable square foot, seven-building office park situated on an approximately 31-acre site. We intend to reposition three of the buildings, which are currently vacant, to support life sciences uses (See Note 15 to the Consolidated Financial Statements).
On June 25, 2021, we entered into an agreement to acquire 360 Park Avenue South in New York City, New York for an aggregate purchase price of approximately $300.0 million, including (1) the assumption of the mortgage loan collateralized by the property totaling approximately $202.0 million and (2) BPLP’s issuance of approximately $98.0 million of OP Units, with a floor price of $111.00 per OP Unit. The closing is scheduled to occur in the fourth quarter of 2021. Our deposit of $30.0 million is reflected as Cash Held in Escrows in our Consolidated Balance Sheets. 360 Park Avenue South is an approximately 450,000 square foot Class A office building. Upon acquisition, the building will be vacant and we intend to redevelop or reposition the building. There can be no assurance that the acquisition will be consummated on the terms currently contemplated or at all.
On June 29, 2021, we entered into an escrow agreement in connection with an option granted to us to purchase Safeco Plaza in Seattle, Washington. Our refundable deposit of $46.5 million is reflected as Cash and Cash Equivalents in our Consolidated Balance Sheets. Safeco Plaza is an approximately 800,000 square foot Class A office building. There can be no assurance that the acquisition will be consummated on the terms currently contemplated or at all (See Note 15 to the Consolidated Financial Statements).
Developments/redevelopments activities
On April 16, 2021, we removed 3625-3635 Peterson Way from our in-service portfolio following the lease expiration of the last tenant on April 15, 2021. We intend to demolish the building and redevelop the site at a future date. 3625-3635 Peterson Way is an approximately 218,000 net rentable square foot Class A office building located in Santa Clara, California.
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Unconsolidated joint venture activities
On June 11, 2021, a joint venture in which we have a 50% interest partially placed in-service 100 Causeway Street, a Class A office project with approximately 632,000 net rentable square feet located in Boston, Massachusetts.
On June 29, 2021, we enhanced our investment capacity through the creation of a co-investment program with two partners, which will target an aggregate equity investment of $1.0 billion. The program expects to employ leverage allowing for an initial investment capacity of approximately $2.0 billion. Under the two-year agreement, we will provide our partners first offers to form joint ventures with us to invest in acquisition opportunities that meet the program’s target investment criteria. Each investment opportunity is discretionary.
Leases
On May 19, 2021, we amended the ground lease at Sumner Square in Washington, DC. The amendment extends the ground lease for an additional 15 years. Prior to the amendment, the ground lease was scheduled to expire on August 10, 2066. The ground lease will now expire on August 9, 2081. Sumner Square is an approximately 210,000 net rentable square foot Class A office building.
Equity Transaction
On April 1, 2021, BXP redeemed 80,000 shares of Series B Preferred Stock (including the corresponding 8,000,000 Depositary Shares), which represented all of the outstanding shares of Series B Preferred Stock and all of the outstanding Depositary Shares. The redemption price for all outstanding shares of Series B Preferred Stock was approximately $201.3 million, including approximately $1.3 million of accrued and unpaid dividends to, but not including, the redemption date.
Capital markets activities
On June 15, 2021, BPLP amended and restated its unsecured revolving credit agreement (as amended and restated, the “2021 Credit Facility”). The 2021 Credit Facility provides for borrowings of up to $1.5 billion (the “Revolving Facility”), subject to customary conditions. Among other things, the amendment and restatement (1) extended the maturity date to June 15, 2026, (2) eliminated the $500.0 million delayed draw term loan facility (“Delayed Draw Facility”) provided under the previous credit agreement (the “2017 Credit Facility”), (3) reduced the per annum variable interest rates on borrowings and (4) added a sustainability-linked pricing component. Under the 2021 Credit Facility, BPLP may increase the total commitment by up to $500.0 million by increasing the amount of the Revolving Facility and/or by incurring one or more term loans, in each case, subject to syndication of the increase and other conditions. The 2021 Credit Facility replaced the 2017 Credit Facility, which was scheduled to expire on April 24, 2022.
Transactions completed subsequent to June 30, 2021 included the following:
On July 13, 2021, we entered into an agreement to sell our 181,191 and 201 Spring Street properties located in Lexington, Massachusetts for an aggregate gross sale price of $191.5 million. 181,191 and 201 Spring Street are three Class A office properties aggregating approximately 333,000 net rentable square feet and are 100% leased.
On July 20, 2021, we agreed to acquire Safeco Plaza in Seattle, Washington for an aggregate cash purchase price of approximately $465.0 million. We and our prospective partner have funded a deposit of $51.5 million of which our share of the deposit is $26.3 million. Safeco Plaza is an approximately 800,000 square foot Class A office building. The acquisition is subject to customary closing conditions for a transaction of this type, and there can be no assurance that the acquisition will be consummated on the terms currently contemplated or at all (See Note 3 to the Consolidated Financial Statements).
On August 2, 2021, we acquired Shady Grove Bio+Tech Campus in Rockville, Maryland for an aggregate purchase price of approximately $116.5 million. Shady Grove Bio+Tech Campus is an approximately 435,000 net rentable square foot, seven-building office park situated on an approximately 31-acre site. We intend to reposition three of the buildings, which are currently vacant, to support life sciences uses (See Note 3 to the Consolidated Financial Statements).
55

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, 2020 contains a discussion of our critical accounting policies. Management discusses and reviews our critical accounting policies and management’s judgments and estimates with BXP’s Audit Committee.
Results of Operations for the Six Months Ended June 30, 2021 and 2020
Net income attributable to Boston Properties, Inc. common shareholders and net income attributable to Boston Properties Limited Partnership common unitholders decreased approximately $560.9 million and $636.7 million for the six months ended June 30, 2021 compared to 2020, respectively, as set forth in the following tables and for the reasons discussed below under the heading “Comparison of the six months ended June 30, 2021 to the six months ended June 30, 2020” within “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
The following are reconciliations of Net Income Attributable to Boston Properties, Inc. Common Shareholders to Net Operating Income and Net Income Attributable to Boston Properties Limited Partnership Common Unitholders to Net Operating Income for the six months ended June 30, 2021 and 2020 (in thousands):
56

Boston Properties, Inc.
Six months ended June 30,
20212020Increase/
(Decrease)
%
Change
Net Income Attributable to Boston Properties, Inc. Common Shareholders$203,372 $764,232 $(560,860)(73.39)%
Preferred stock redemption charge6,412 — 6,412 100.00 %
Preferred dividends2,560 5,250 (2,690)(51.24)%
Net Income Attributable to Boston Properties, Inc.212,344 769,482 (557,138)(72.40)%
Net Income Attributable to Noncontrolling Interests:
Noncontrolling interest—common units of the Operating Partnership23,422 87,525 (64,103)(73.24)%
Noncontrolling interests in property partnerships33,631 18,719 14,912 79.66 %
Net Income269,397 875,726 (606,329)(69.24)%
Other Expenses:
Add:
Interest expense214,221 208,733 5,488 2.63 %
Losses from early extinguishment of debt898 — 898 100.00 %
Other Income:
Less:
Gains (losses) from investments in securities3,934 (893)4,827 540.54 %
Interest and other income (loss)2,620 4,322 (1,702)(39.38)%
Gains on sales of real estate7,756 613,932 (606,176)(98.74)%
Income from unconsolidated joint ventures3,852 1,463 2,389 163.29 %
Other Expenses:
Add:
Depreciation and amortization expense360,403 349,282 11,121 3.18 %
Transaction costs1,082 947 135 14.26 %
Payroll and related costs from management services contracts6,160 5,721 439 7.67 %
General and administrative expense83,364 74,197 9,167 12.35 %
Other Revenue:
Less:
Direct reimbursements of payroll and related costs from management services contracts6,160 5,721 439 7.67 %
Development and management services revenue14,087 16,004 (1,917)(11.98)%
Net Operating Income$897,116 $874,057 $23,059 2.64 %
57

Boston Properties Limited Partnership
Six months ended June 30,
20212020Increase/
(Decrease)
%
Change
Net Income Attributable to Boston Properties Limited Partnership Common Unitholders$231,619 $868,308 $(636,689)(73.33)%
Preferred unit redemption charge6,412 — 6,412 100.00 %
Preferred distributions2,560 5,250 (2,690)(51.24)%
Net Income Attributable to Boston Properties Limited Partnership240,591 873,558 (632,967)(72.46)%
Net Income Attributable to Noncontrolling Interests:
Noncontrolling interests in property partnerships33,631 18,719 14,912 79.66 %
Net Income274,222 892,277 (618,055)(69.27)%
Other Expenses:
Add:
Interest expense214,221 208,733 5,488 2.63 %
Losses from early extinguishment of debt898 — 898 100.00 %
Other Income:
Less:
Gains (losses) from investments in securities3,934 (893)4,827 540.54 %
Interest and other income (loss)2,620 4,322 (1,702)(39.38)%
Gains on sales of real estate7,756 626,895 (619,139)(98.76)%
Income from unconsolidated joint ventures3,852 1,463 2,389 163.29 %
Other Expenses:
Add:
Depreciation and amortization expense355,578 345,694 9,884 2.86 %
Transaction costs1,082 947 135 14.26 %
Payroll and related costs from management services contracts6,160 5,721 439 7.67 %
General and administrative expense83,364 74,197 9,167 12.35 %
Other Revenue:
Less:
Direct reimbursements of payroll and related costs from management services contracts6,160 5,721 439 7.67 %
Development and management services revenue14,087 16,004 (1,917)(11.98)%
Net Operating Income$897,116 $874,057 $23,059 2.64 %
At June 30, 2021 and 2020, we owned or had joint venture interests in a portfolio of 197 and 195 commercial real estate properties, respectively (in each case, the “Total Property Portfolio”). As a result of changes within our Total Property Portfolio, the financial data presented below shows significant changes in revenue and expenses from period-to-period. Accordingly, we do not believe that our period-to-period financial data with respect to the Total Property Portfolio is meaningful. Therefore, the comparison of operating results for the three and six months ended June 30, 2021 and 2020 show separately the changes attributable to the properties that were owned by us and in-service throughout each period compared (the “Same Property Portfolio”) and the changes attributable to the properties included in the Acquired, Placed In-Service, Development or Redevelopment or Sold Portfolios.
In our analysis of operating results, particularly to make comparisons of net operating income between periods meaningful, it is important to provide information for properties that were in-service and owned by us throughout each period presented. We refer to properties acquired or placed in-service prior to the beginning of the earliest period presented and owned by us and in-service through the end of the latest period presented as our Same Property Portfolio. The Same Property Portfolio therefore excludes properties acquired, placed in-service or in development or redevelopment after the beginning of the earliest period presented or disposed of prior to the end of the latest period presented.
58

Net operating income (“NOI”) is a non-GAAP financial measure equal to net income attributable to Boston Properties, Inc. common shareholders and net income attributable to Boston Properties Limited Partnership common unitholders, as applicable, the most directly comparable GAAP financial measures, plus (1) preferred stock/unit redemption charge, preferred dividends/distributions, net income attributable to noncontrolling interests, interest expense, losses from early extinguishment of debt, depreciation and amortization expense, transaction costs, payroll and related costs from management services contracts and corporate general and administrative expense less (2) gains (losses) from investments in securities, interest and other income (loss), gains on sales of real estate, income (loss) from unconsolidated joint ventures, direct reimbursements of payroll and related costs from management services contracts and development and management services revenue. 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 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 gains on sales of real estate, 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 six months ended June 30, 2021 to the six months ended June 30, 2020
The table below shows selected operating information for the Same Property Portfolio and the Total Property Portfolio. The Same Property Portfolio consists of 140 properties totaling approximately 39.0 million net rentable square feet, excluding unconsolidated joint ventures. The Same Property Portfolio includes properties acquired or placed in-service on or prior to January 1, 2020 and owned and in service through June 30, 2021. The Total Property Portfolio includes the effects of the other properties either acquired, placed in-service, in development or redevelopment after January 1, 2020 or disposed of on or prior to June 30, 2021. This table includes a reconciliation from the Same Property Portfolio to the Total Property Portfolio by also providing information for the six months ended June 30, 2021 and 2020 with respect to the properties that were acquired, placed in-service, in development or redevelopment or sold.

59

 Same Property PortfolioProperties Acquired PortfolioProperties
Placed In-Service
Portfolio
Properties in Development or Redevelopment PortfolioProperties Sold PortfolioTotal Property Portfolio
20212020Increase/
(Decrease)
%
Change
2021202020212020202120202021202020212020Increase/
(Decrease)
%
Change
(dollars in thousands)
Rental Revenue: (1)
Lease Revenue (Excluding Termination Income)$1,308,237 $1,277,590 $30,647 2.40 %$1,351 $16 $20,189 $6,162 $7,176 $10,018 $4,696 $21,698 $1,341,649 $1,315,484 $26,165 1.99 %
Termination Income9,625 5,648 3,977 70.41 %— — — — — — — 59 9,625 5,707 3,918 68.65 %
Lease Revenue1,317,862 1,283,238 34,624 2.70 %1,351 16 20,189 6,162 7,176 10,018 4,696 21,757 1,351,274 1,321,191 30,083 2.28 %
Parking and Other33,873 37,187 (3,314)(8.91)%213 — 12 201 — 554 932 34,850 38,131 (3,281)(8.60)%
Total Rental Revenue (1)1,351,735 1,320,425 31,310 2.37 %1,564 16 20,198 6,174 7,377 10,018 5,250 22,689 1,386,124 1,359,322 26,802 1.97 %
Real Estate Operating Expenses482,026 478,972 3,054 0.64 %1,130 5,814 3,440 3,252 4,176 1,815 8,135 494,037 494,724 (687)(0.14)%
Net Operating Income, Excluding Residential and Hotel869,709 841,453 28,256 3.36 %434 15 14,384 2,734 4,125 5,842 3,435 14,554 892,087 864,598 27,489 3.18 %
Residential Net Operating Income (Loss) (2)9,102 11,329 (2,227)(19.66)%— — (2,219)— — — — — 6,883 11,329 (4,446)(39.24)%
Hotel Net Operating Loss (2)(1,854)(1,870)16 0.86 %— — — — — — — — (1,854)(1,870)16 0.86 %
Net Operating Income$876,957 $850,912 $26,045 3.06 %$434 $15 $12,165 $2,734 $4,125 $5,842 $3,435 $14,554 $897,116 $874,057 $23,059 2.64 %
_______________
(1)Rental Revenue is equal to Revenue less Development and Management Services Revenue and Direct Reimbursements of Payroll and Related Costs from Management Services Revenue per the Consolidated Statements of Operations, excluding the residential and hotel revenue that is noted below. We use Rental Revenue internally as a performance measure and in calculating other non-GAAP financial measures (e.g., NOI), which provides investors with information regarding our performance that is not immediately apparent from the comparable non-GAAP measures and allows investors to compare operating performance between periods.
(2)For a detailed discussion of NOI, including the reasons management believes NOI is useful to investors, see page 59. Residential Net Operating Income for the six months ended June 30, 2021 and 2020 is comprised of Residential Revenue of $18,938 and $19,358 less Residential Expenses of $12,055 and $8,029, respectively. Hotel Net Operating Income for the six months ended June 30, 2021 and 2020 is comprised of Hotel Revenue of $2,193 and $6,924 less Hotel Expenses of $4,047 and $8,794, respectively, per the Consolidated Statements of Operations.
60

Same Property Portfolio
Lease Revenue (Excluding Termination Income)
Lease revenue (excluding termination income) from the Same Property Portfolio increased by approximately $30.6 million for the six months ended June 30, 2021 compared to 2020. The increase was primarily due to approximately $52.1 million of write-offs, which are discussed below. The increase was partially offset by an approximately $35.2 million decrease due to our average occupancy decreasing from 93.9% to 91.4%, which was partially offset by our average revenue per square foot increasing by approximately $0.81, contributing approximately $13.7 million.
Under Accounting Standards Codification (“ASC”) 842, any write-off for bad debt, including accrued rent, is recorded as a reduction to lease revenue. As a result, during the six months ended June 30, 2021, for our Same Property Portfolio, we wrote off approximately $1.1 million and $0.1 million of accrued rent and accounts receivable balances, respectively. During the six months ended June 30, 2020, for our Same Property Portfolio, we wrote off approximately $35.1 million and $18.2 million of accrued rent and accounts receivable balances, respectively. These write-offs were for tenants, primarily in the retail sector, that either terminated their leases or we determined that their accrued rent and/or accounts receivable balances were no longer probable of collection.
Each quarter since the second quarter of 2020, the number of executed COVID-19 lease modifications has decreased. We expect the volume of lease modifications to further decrease as the economy recovers. However, the degree to which our tenants’ businesses have been negatively impacted by COVID-19 and any resulting downturn in their business may leave some tenants still unable to meet their rental payment obligations and result in a reduction in our cash flows.
Termination Income
Termination income increased by approximately $4.0 million for the six months ended June 30, 2021 compared to 2020.
Termination income for the six months ended June 30, 2021 related to 19 tenants across the Same Property Portfolio and totaled approximately $9.6 million, which was primarily related to tenants that terminated leases early in New York City and the Boston region.
Termination income for the six months ended June 30, 2020 related to 28 tenants across the Same Property Portfolio and totaled approximately $5.6 million, which was primarily related to tenants that terminated leases early in New York City and the Boston region.
Parking and Other Revenue
Parking and other revenue decreased by approximately $3.3 million for the six months ended June 30, 2021 compared to 2020. Parking revenue decreased by approximately $5.0 million while other revenue increased by approximately $1.7 million. The decrease in parking revenue was primarily due to a decrease in monthly parking. The increase in other revenue was primarily due to insurance proceeds related to damage at one of our properties in the New York region due to a water main break, offset by a decrease in other revenue. Expenses of $2.8 million related to this insurance claim are included within real estate operating expenses.
We expect to see an increase in parking revenue as the return to office work grows. For the six months ended June 30, 2021, monthly parking decreased by approximately $4.6 million, offset by an increase in transient parking of approximately $0.7 million, compared to the six months ended June 30, 2020. Some of our monthly parking revenues are contractual agreements embedded in our leases, and some are at will individual agreements.
Real Estate Operating Expenses
Real estate operating expenses from the Same Property Portfolio increased by approximately $3.1 million, or 0.6%, for the six months ended June 30, 2021 compared to 2020, due primarily to an increase in utility expense and expenses related to the insurance claim mentioned above, partially offset by a decrease in cleaning expense. The increase in utility expense was experienced across the portfolio and was primarily driven by an increase in physical tenant occupancy, which led to higher demand for electricity and HVAC.
61

Properties Acquired Portfolio
The table below lists the properties acquired between January 1, 2020 and June 30, 2021. Rental revenue and real estate operating expenses increased by approximately $1.5 million and $1.1 million, respectively, for the six months ended June 30, 2021 compared to 2020, as detailed below.
Square FeetRental RevenueReal Estate Operating Expenses
NameDate acquired20212020Change20212020Change
(dollars in thousands)
777 Harrison Street (1)June 26, 2020N/A$808 $16 $792 $1,059 $$1,058 
153 & 211 Second AvenueJune 4, 2021136,882 756 — 756 71 — 71 
136,882 $1,564 $16 $1,548 $1,130 $$1,129 
_______________
(1)Formerly known as Fourth + Harrison and 425 Fourth Street and includes operating results for 759 Harrison Street, which was fully acquired on December 16, 2020.
Properties Placed In-Service Portfolio
The table below lists the properties that were placed in-service or partially placed in-service between January 1, 2020 and June 30, 2021. Rental revenue and real estate operating expenses from our Properties Placed In-Service Portfolio increased by approximately $15.0 million and $5.6 million, respectively, for the six months ended June 30, 2021 compared to 2020, as detailed below.
Quarter Initially Placed In-ServiceQuarter Fully Placed In-ServiceRental RevenueReal Estate Operating Expenses
NameSquare Feet20212020Change20212020Change
(dollars in thousands)
Office
20 CityPointSecond Quarter, 2019Second Quarter, 2020211,476 $3,531 $3,624 $(93)$1,489 $1,322 $167 
17Fifty Presidents StreetFirst Quarter, 2020First Quarter, 2020275,809 9,976 3,943 6,033 2,927 1,276 1,651 
One Five Nine East 53rd Street (1)First Quarter, 2021First Quarter, 2021220,000 6,691 (1,393)8,084 1,398 842 556 
Total Office707,285 20,198 6,174 14,024 5,814 3,440 2,374 
Residential
The SkylyneThird Quarter, 2020Third Quarter, 2020330,996 1,011 — 1,011 3,230 — 3,230 
Total Residential330,996 1,011 — 1,011 3,230 — 3,230 
1,038,281 $21,209 $6,174 $15,035 $9,044 $3,440 $5,604 
_____________
(1)This is the low-rise portion of 601 Lexington Avenue, which was in development for the six months ended June 30, 2020. Rental revenue for the six months ended June 30, 2020 includes an approximately $2.9 million write-off of accrued rent and accounts receivable balances for a terminated tenant.
62

Properties in Development or Redevelopment Portfolio
The table below lists the properties that were in development or redevelopment between January 1, 2020 and June 30, 2021. Rental revenue and real estate operating expenses from our Properties in Development or Redevelopment Portfolio decreased by approximately $2.6 million and $0.9 million, respectively, for the six months ended June 30, 2021 compared to 2020, as detailed below.
Rental RevenueReal Estate Operating Expenses
NameDate Commenced Development / RedevelopmentSquare Feet20212020Change20212020Change
(dollars in thousands)
325 Main Street (1)May 9, 2019115,000 $— $36 $(36)$109 $74 $35 
200 West Street (2)September 30, 2019261,000 3,148 2,593 555 1,236 1,781 (545)
880 Winter Street (3)February 25, 2021224,000 2,476 4,313 (1,837)1,448 1,632 (184)
3625-3635 Peterson Way (4)April 16, 2021218,000 1,753 3,076 (1,323)459 689 (230)
818,000 $7,377 $10,018 $(2,641)$3,252 $4,176 $(924)
_______________
(1)Real estate operating expenses for the six months ended June 30, 2021 and 2020 were related to demolition costs.
(2)Conversion of a 126,000 square foot portion of the property to life sciences space from office space.
(3)On February 25, 2021, we commenced the redevelopment and conversion of 880 Winter Street, a 224,000 square foot office property located in Waltham, Massachusetts, to laboratory space.
(4)On April 16, 2021, we removed 3625-3635 Peterson Way, located in Santa Clara, California, from our in-service portfolio. We intend to demolish the building and redevelop the site at a future date.
Properties Sold Portfolio
The table below lists the properties we sold between January 1, 2020 and June 30, 2021. Rental revenue and real estate operating expenses from our Properties Sold Portfolio decreased by approximately $17.4 million and $6.3 million, respectively, for the six months ended June 30, 2021 compared to 2020, as detailed below.
Rental RevenueReal Estate Operating Expenses
NameDate SoldProperty TypeSquare Feet20212020Change20212020Change
(dollars in thousands)
601, 611 and 651 GatewayJanuary 28, 2020Office768,000 $— $1,946 $(1,946)$— $881 $(881)
New Dominion Technology ParkFebruary 20, 2020Office493,000 — 2,551 (2,551)— 772 (772)
Capital Gallery (1)June 25, 2020Office631,000 5,250 18,192 (12,942)1,815 6,482 (4,667)
1,892,000 $5,250 $22,689 $(17,439)$1,815 $8,135 $(6,320)
______________
(1)We completed the sale of a portion of our Capital Gallery property located in Washington, DC. Capital Gallery is an approximately 631,000 net rentable square foot Class A office property. The portion sold was comprised of approximately 455,000 net rentable square feet of commercial office space. We continue to own the land, underground parking garage and remaining commercial office and retail space. The amounts shown represent the entire property and not just the portion sold.
For additional information on the sales of the above properties and land parcel refer to “Results of Operations—Other Income and Expense Items—Gains on Sales of Real Estate” within “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Residential Net Operating Income
Net operating income for our residential same properties decreased by approximately $2.2 million for the six months ended June 30, 2021 compared to 2020.
The following reflects our occupancy and rate information for The Lofts at Atlantic Wharf, The Avant at Reston Town Center, Signature at Reston and Proto Kendall Square for the six months ended June 30, 2021 and 2020.
63

The Lofts at Atlantic WharfThe Avant at Reston Town CenterSignature at RestonProto Kendall Square
20212020Change (%)20212020Change (%)20212020Change (%)20212020Change (%)
Average Monthly Rental Rate (1)$3,315 $4,520 (26.7)%$2,233 $2,395 (6.8)%$2,204 $2,331 (5.4)%$2,544 $2,959 (14.0)%
Average Rental Rate Per Occupied Square Foot$3.75 $5.02 (25.3)%$2.45 $2.63 (6.8)%$2.29 $2.48 (7.7)%$4.69 $5.44 (13.8)%
Average Physical Occupancy (2)91.9 %93.4 %(1.6)%93.2 %90.5 %3.0 %83.6 %81.9 %2.1 %91.0 %94.0 %(3.2)%
Average Economic Occupancy (3)88.8 %93.0 %(4.5)%92.2 %89.3 %3.2 %79.4 %76.8 %3.4 %89.5 %93.5 %(4.3)%
_______________  
(1)Average Monthly Rental Rate is calculated as the average of the quotients obtained by dividing (A) rental revenue as determined in accordance with GAAP, by (B) the number of occupied units for each month within the applicable fiscal period.
(2)Average Physical Occupancy is defined as (1) the average number of occupied units divided by (2) the total number of units, expressed as a percentage.
(3)Average Economic Occupancy is defined as (1) total possible revenue less vacancy loss divided by (2) total possible revenue, expressed as a percentage. Total possible revenue is determined by valuing average occupied units at contract rates and average vacant units at Market Rents. Vacancy loss is determined by valuing vacant units at current Market Rents. By measuring vacant units at their Market Rents, Average Economic Occupancy takes into account the fact that units of different sizes and locations within a residential property have different economic impacts on a residential property’s total possible gross revenue. Market Rents used by us in calculating Economic Occupancy are based on the current market rates set by the managers of our residential properties based on their experience in renting their residential property’s units and publicly available market data. Actual market rents and trends in such rents for a region as reported by others may vary materially from Market Rents used by us. Market Rents for a period are based on the average Market Rents during that period and do not reflect any impact for cash concessions.
Hotel Net Operating Loss
The Boston Marriott Cambridge hotel property continues to operate at a loss, however, the net operating loss has decreased approximately $16,000 for the six months ended June 30, 2021 compared to 2020.
The Boston Marriott Cambridge closed in March 2020 due to COVID-19. The hotel re-opened on October 2, 2020 but has operated at a reduced occupancy due to the continued impact of COVID-19 on business and leisure travel. The closing of the hotel for more than two fiscal quarters, and the weak demand and low occupancy since its re-opening, have had, and are expected to continue to have, a material adverse effect on the hotel’s operations. We expect hotel occupancy to remain low until the demand for business and leisure travel returns to historical levels.
The following reflects our occupancy and rate information for the Boston Marriott Cambridge hotel for the six months ended June 30, 2021 and 2020.
20212020
Change (%)
Occupancy16.5 %29.8 %(44.6)%
Average daily rate$147.66 $211.29 (30.1)%
REVPAR$24.36 $62.98 (61.3)%
Other Operating Revenue and Expense Items
Development and Management Services Revenue
Development and management services revenue decreased by approximately $1.9 million for the six months ended June 30, 2021 compared to 2020. Development services revenue decreased by approximately $2.8 million while management services revenue increased by approximately $0.9 million. The decrease in development services revenue was primarily related to a decrease in development fees earned from a third-party owned building in the Washington, DC region. The increase in management services revenue was primarily related to an increase in leasing commissions earned in the Washington, DC region and from an unconsolidated joint venture in the Los Angeles region.
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General and Administrative Expense
General and administrative expense increased by approximately $9.2 million for the six months ended June 30, 2021 compared to 2020 primarily due to an increase in compensation expense of approximately $11.1 million, partially offset by an approximately $1.9 million decrease in other general and administrative expenses. The increase in compensation expense was related to (1) an approximately $4.8 million increase in the value of our deferred compensation plan and (2) an approximately $6.3 million increase in other compensation expenses, primarily due to age-based vesting. The decrease in other general and administrative expenses was primarily related to a decrease in professional fees.
Wages directly related to the development of rental properties are capitalized and included in real estate assets on our Consolidated Balance Sheets and amortized over the useful lives of the applicable asset or lease term. Capitalized wages for the six months ended June 30, 2021 and 2020 were approximately $6.8 million and $6.2 million, respectively. These costs are not included in the general and administrative expenses discussed above.
Transaction Costs
Transaction costs increased by approximately $0.1 million for the six months ended June 30, 2021 compared to 2020 due primarily to costs incurred in connection with the pursuit and formation of new joint ventures. In general, transaction costs relating to the formation of new and pending joint ventures and the pursuit of other transactions are expensed as incurred.
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 $11.1 million for the six months ended June 30, 2021 compared to 2020, as detailed below.
PortfolioDepreciation and Amortization for the six months ended June 30,
20212020Change
(in thousands)
Same Property Portfolio (1)$328,597 $337,703 $(9,106)
Properties Acquired Portfolio979 — 979 
Properties Placed In-Service Portfolio9,641 2,544 7,097 
Properties in Development or Redevelopment Portfolio (2)20,522 5,750 14,772 
Properties Sold Portfolio664 3,285 (2,621)
$360,403 $349,282 $11,121 
_______________
(1)During the six months ended June 30, 2021, we commenced redevelopment of The Prudential Center Observatory, a 59,000 net rentable square foot redevelopment of the top three floors of 800 Boylston Street - The Prudential Center, located in Boston, Massachusetts. As a result, during the six months ended June 30, 2021, we recorded approximately $2.6 million of accelerated depreciation expense for the demolition of the space, of which approximately $0.8 million related to the step-up of real estate assets.
(2)On February 25, 2021, we commenced redevelopment of 880 Winter Street in Waltham, Massachusetts. As a result, during the six months ended June 30, 2021, we recorded approximately $13.7 million of accelerated depreciation expense for the demolition of a portion of the building.
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Boston Properties Limited Partnership
Depreciation and amortization expense increased by approximately $9.9 million for the six months ended June 30, 2021 compared to 2020, as detailed below.
PortfolioDepreciation and Amortization for the six months ended June 30,
20212020Change
(in thousands)
Same Property Portfolio (1)$323,772 $334,115 $(10,343)
Properties Acquired Portfolio979 — 979 
Properties Placed In-Service Portfolio9,641 2,544 7,097 
Properties in Development or Redevelopment Portfolio (2)20,522 5,750 14,772 
Properties Sold Portfolio664 3,285 (2,621)
$355,578 $345,694 $9,884 
_______________
(1)During the six months ended June 30, 2021, we commenced redevelopment of The Prudential Center Observatory, a 59,000 net rentable square foot redevelopment of the top three floors of 800 Boylston Street - The Prudential Center, located in Boston, Massachusetts. As a result, during the six months ended June 30, 2021, we recorded approximately $1.8 million of accelerated depreciation expense for the demolition of the space.
(2)On February 25, 2021, we commenced redevelopment of 880 Winter Street in Waltham, Massachusetts. As a result, during the six months ended June 30, 2021, we recorded approximately $13.7 million of accelerated depreciation expense for the demolition of a portion of the building.
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 from Unconsolidated Joint Ventures
For the six months ended June 30, 2021 compared to 2020, income from unconsolidated joint ventures increased by approximately $2.4 million primarily due to an approximately $10.3 million gain on sale of investment from the sale of our Annapolis Junction joint venture interest during the six months ended June 30, 2021 (See Note 5 to the Consolidated Financial Statements), partially offset by an approximately (1) $5.8 million gain on sale of real estate from the sale of Annapolis Junction Building Eight and two undeveloped land parcels during the six months ended June 30, 2020 and (2) $3.3 million decrease in net income from our Dock 72 joint venture, primarily related to depreciation and amortization.
Gains on Sales of Real Estate
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.
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Boston Properties, Inc.
Gains on sales of real estate decreased by approximately $606.2 million for the six months ended June 30, 2021 compared to 2020, as detailed below.
NameDate SoldProperty TypeSquare FeetSale PriceNet Cash ProceedsGain (Loss) on Sale of Real Estate
(dollars in millions)
2021
6595 Springfield Center DriveDecember 13, 2018Office634,000 N/AN/A$7.8 (1)
N/AN/A$7.8 
2020
601, 611 and 651 GatewayJanuary 28, 2020Office768,000 $350.0 $— $217.7 
New Dominion Technology ParkFebruary 20, 2020Office493,000 256.0 254.0 192.3 
Capital GalleryJune 25, 2020Office455,000 253.7 246.9 203.8 
$859.7 $500.9 $613.8 (2)
___________
(1)On December 13, 2018, we sold our 6595 Springfield Center Drive development project located in Springfield, Virginia. Concurrently with the sale, we agreed to act as development manager and guaranteed the completion of the project (See Note 9 to the Consolidated Financial Statements). The development project was completed during the second quarter of 2021 and, upon completion of the project, the total cost of development was determined to be below the estimated total investment at the time of sale. As a result, upon completion, we recognized a gain of approximately $7.8 million.
(2)Excludes approximately $0.2 million of gains on sales of real estate recognized during the six months ended June 30, 2020 related to gain amounts from sales of real estate occurring in the prior year.
Boston Properties Limited Partnership
Gains on sales of real estate decreased by approximately $619.1 million for the six months ended June 30, 2021 compared to 2020, as detailed below.
NameDate SoldProperty TypeSquare FeetSale PriceNet Cash ProceedsGain (Loss) on Sale of Real Estate
(dollars in millions)
2021
6595 Springfield Center DriveDecember 13, 2018Office634,000 N/AN/A$7.8 (1)
N/AN/A$7.8 
2020
601, 611 and 651 GatewayJanuary 28, 2020Office768,000 $350.0 $— $222.4 
New Dominion Technology ParkFebruary 20, 2020Office493,000 256.0 254.0 197.1 
Capital GalleryJune 25, 2020Office455,000 253.7 246.9 207.2 
$859.7 $500.9 $626.7 (2)
___________
(1)On December 13, 2018, we sold our 6595 Springfield Center Drive development project located in Springfield, Virginia. Concurrently with the sale, we agreed to act as development manager and guaranteed the completion of the project (See Note 9 to the Consolidated Financial Statements). The development project was completed during the second quarter of 2021 and, upon completion of the project, the total cost of development was determined to be below the estimated total investment at the time of sale. As a result, upon completion, we recognized a gain of approximately $7.8 million.
(2)Excludes approximately $0.2 million of gains on sales