Reports diluted FFO per share of
$1.26
Reports diluted EPS of $1.14
Boston Properties, Inc. (NYSE: BXP), a real estate
investment trust, reported results today for the fourth quarter
ended December 31, 2014.
Results for the quarter ended December 31, 2014
Funds from Operations (FFO) for the quarter ended December 31,
2014 were $193.2 million, or $1.26 per share basic and $1.26 per
share diluted. This compares to FFO for the quarter ended December
31, 2013 of $197.6 million, or $1.29 per share basic and $1.29 per
share diluted. The weighted average number of basic and diluted
shares outstanding totaled 153,127,815 and 153,550,375,
respectively, for the quarter ended December 31, 2014 and
152,798,258 and 153,900,104, respectively, for the quarter ended
December 31, 2013.
The Company’s reported FFO of $1.26 per share diluted was
greater than the guidance previously provided of $1.23-$1.25 per
share diluted primarily due to greater than projected
portfolio operations of $0.01 per share and fee income of $0.01 per
share.
Net income available to common shareholders was $174.5 million
for the quarter ended December 31, 2014, compared to $88.7 million
for the quarter ended December 31, 2013. Net income available to
common shareholders per share (EPS) for the quarter ended December
31, 2014 was $1.14 basic and $1.14 on a diluted basis. This
compares to EPS for the fourth quarter of 2013 of $0.58 basic and
$0.58 on a diluted basis. Net income available to common
shareholders for the quarter ended December 31, 2014, includes
gains on sales of real estate aggregating approximately $126.1
million, or $0.73 per share basic and $0.73 per share on a diluted
basis, compared to $26.4 million, or $0.15 per share basic and
$0.15 per share on a diluted basis, for the quarter ended December
31, 2013.
Results for the year ended December 31, 2014
FFO for the year ended December 31, 2014 was $807.5 million, or
$5.27 per share basic and $5.26 per share diluted. This compares to
FFO for the year ended December 31, 2013 of $751.5 million, or
$4.94 per share basic and $4.91 per share diluted. The weighted
average number of basic and diluted shares outstanding totaled
153,089,497 and 153,619,632, respectively, for the year ended
December 31, 2014 and 152,200,936 and 153,741,863, respectively,
for the year ended December 31, 2013.
Net income available to common shareholders was $433.1 million
for the year ended December 31, 2014, compared to $741.8 million
for the year ended December 31, 2013. Net income available to
common shareholders per share (EPS) for the year ended December 31,
2014 was $2.83 basic and $2.83 on a diluted basis. This compares to
EPS for the year ended December 31, 2013 of $4.87 basic and $4.86
on a diluted basis.
The reported results are unaudited and there can be no assurance
that the results will not vary from the final information for the
quarter and year ended December 31, 2014. In the opinion of
management, all adjustments considered necessary for a fair
presentation of these reported results have been made.
As of December 31, 2014, the Company’s portfolio consisted of
169 properties, comprised primarily of Class A office space, one
hotel, three residential properties and five retail properties,
aggregating approximately 45.8 million square feet, including ten
properties under construction totaling 3.3 million square feet. In
addition, the Company has structured parking for vehicles
containing approximately 15.0 million square feet. The overall
percentage of leased space for the 155 properties in service
(excluding the three in-service residential properties and the
hotel) as of December 31, 2014 was 91.7%.
Significant events during the fourth quarter included:
- On October 2, 2014, the Company
completed the sale of its Patriots Park properties, consisting of
three Class A office properties aggregating approximately 706,000
net rentable square feet located in Reston, Virginia, for a gross
sale price of $321.0 million. Net cash proceeds totaled
approximately $319.1 million, resulting in a gain on sale of real
estate totaling approximately $84.6 million. The Company has agreed
to provide rent support payments to the buyer with a maximum
obligation of up to approximately $12.3 million related to the
leasing of 17,762 net rentable square feet at the properties.
- On October 22, 2014, MIT exercised its
right to purchase the Company’s 415 Main Street property (formerly
Seven Cambridge Center) located in Cambridge, Massachusetts on
February 1, 2016 for approximately $106 million. As part of its
lease signed on July 14, 2004, MIT was granted a fixed price option
to purchase the building at the beginning of the 11th lease year.
415 Main Street is an Office/Technical property with approximately
231,000 net rentable square feet occupied by the Broad Institute.
The sale is subject to the satisfaction of customary closing
conditions and there can be no assurance that the sale will be
consummated on the terms currently contemplated or at all.
- On October 24, 2014, the Company
completed the sale of a parcel of land at 130 Third Avenue in
Waltham, Massachusetts that is permitted for 129,000 square feet
for a sale price of approximately $14.3 million. Net cash proceeds
totaled approximately $13.6 million, resulting in a gain on sale of
real estate totaling approximately $8.3 million.
- On October 24, 2014, a joint venture in
which the Company has a 50% interest extended the loan
collateralized by its Annapolis Junction Building Six property. At
the time of the extension, the outstanding balance of the
construction loan totaled approximately $13.9 million and bore
interest at a variable rate equal to LIBOR plus 1.65% per annum and
was scheduled to mature on November 17, 2014. The extended loan
bears interest at a variable rate equal to LIBOR plus 2.25% per
annum and matures on November 17, 2015. Annapolis Junction Building
Six is a Class A office property with approximately 119,000 net
rentable square feet located in Annapolis, Maryland.
- On October 30, 2014, the Company
completed the sale of a 45% interest in each of 601 Lexington
Avenue in New York City and Atlantic Wharf Office Building and 100
Federal Street in Boston for an aggregate gross sale price of
approximately $1.827 billion in cash, less the partner’s pro rata
share of the indebtedness secured by 601 Lexington Avenue. Net cash
proceeds totaled approximately $1.497 billion, after the payment of
transaction costs. In connection with the sale, the Company formed
a joint venture for each property with the buyer and will provide
customary property management and leasing services to the joint
ventures. 601 Lexington Avenue is a 1,669,000 square foot Class A
office complex located in Midtown Manhattan. The property consists
of a 59-story tower as well as a six-story low-rise office and
retail building. The property is subject to existing mortgage
indebtedness of approximately $712.9 million. The Atlantic Wharf
Office Building is a 791,000 square foot Class A office tower
located on Boston's Waterfront. 100 Federal Street is a 1,323,000
square foot Class A office tower located in Boston's Financial
District. The transaction did not qualify as a sale of real estate
for financial reporting purposes as the Company continues to
control the joint ventures and will therefore continue to account
for the properties on a consolidated basis in its financial
statements. The Company has accounted for the transaction as an
equity transaction and has recognized noncontrolling interest in
its consolidated balance sheets equal to 45% of the aggregate
carrying value of the total equity of the properties immediately
prior to the transaction. The difference between the net cash
proceeds received and the noncontrolling interest recognized, which
difference totals approximately $648.4 million, has been reflected
as an increase to additional paid-in capital in the Company's
consolidated balance sheets. The change in additional paid-in
capital plus the partner’s proportionate share of the indebtedness
secured by 601 Lexington Avenue of approximately $320.8 million,
aggregating approximately $969.2 million, has not been reflected as
a gain on sale of real estate in the Company's consolidated
statements of operations.
- On November 1, 2014, the Company
partially placed in-service 535 Mission Street, a Class A office
project with approximately 307,000 net rentable square feet located
in San Francisco, California. The property is 66% leased.
- On November 5, 2014, the Company’s
Operating Partnership redeemed 27,773 Series Four Preferred Units
for cash totaling approximately $1.4 million. An aggregate of
12,667 Series Four Preferred Units remain outstanding and subject
to a security interest under a pledge agreement.
- On November 6, 2014, the Company
entered into an option agreement pursuant to which the Company has
been granted an option to purchase real property located at 425
Fourth Street in San Francisco, California. In connection with the
execution of the agreement, the Company paid a non-refundable
option payment to the current owner of $1.0 million. The Company
intends to pursue the entitlements necessary to develop the
property. The purchase price has not been determined and is
dependent on the entitlements obtained. There can be no assurance
that the Company will be successful in obtaining the desired
entitlements or that it will ultimately determine to exercise the
option.
- On November 12, 2014, the Company
completed the acquisition of a parcel of land at 804 Carnegie
Center in Princeton, New Jersey for a purchase price of
approximately $3.7 million. 804 Carnegie Center is a build-to-suit
project with approximately 130,000 net rentable square feet of
Class A office space which is currently under construction. The
Company expects that the building will be complete and available
for occupancy during the first quarter of 2016.
- On December 2, 2014, the Company
partially placed in-service 690 Folsom Street, a mixed-use project
with approximately 25,000 net rentable square feet located in San
Francisco, California.
- On December 8, 2014, the Company
announced that its Board of Directors declared a regular quarterly
cash dividend of $0.65 per share of common stock for the period
from October 1, 2014 to December 31, 2014 payable on January 28,
2015 to shareholders of record as of the close of business on
December 31, 2014. In addition, the Company announced that its
Board of Directors declared a special cash dividend of $4.50 per
common share payable on January 28, 2015 to shareholders of record
as of the close of business on December 31, 2014. The decision to
declare a special dividend was primarily a result of the sale of
approximately $2.3 billion of assets in 2014. The Board of
Directors did not make any change in the Company's policy with
respect to regular quarterly dividends. The payment of the regular
quarterly dividend of $0.65 per share and the special dividend of
$4.50 per share will result in a total payment of $5.15 per share
payable on January 28, 2015. Holders of common units of limited
partnership interest in Boston Properties Limited Partnership, the
Company's Operating Partnership, as of the close of business on
December 31, 2014 will receive the same total distribution, payable
on January 28, 2015.
- On December 15, 2014, the Company’s
Operating Partnership used available cash to redeem $300.0 million
in aggregate principal amount of its 5.625% senior notes due April
15, 2015 (the “5.625% Notes”) and $250.0 million in aggregate
principal amount of its 5.000% senior notes due June 1, 2015 (the
“5.000% Notes”). The redemption price for the 5.625% Notes was
determined in accordance with the applicable indenture and totaled
approximately $308.0 million. The redemption price included
approximately $2.8 million of accrued and unpaid interest to, but
not including, the redemption date. Excluding such accrued and
unpaid interest, the redemption price was approximately 101.73% of
the principal amount being redeemed. The redemption price for the
5.000% Notes was determined in accordance with the applicable
indenture and totaled approximately $255.8 million. The redemption
price included approximately $0.5 million of accrued and unpaid
interest to, but not including, the redemption date. Excluding such
accrued and unpaid interest, the redemption price was approximately
102.13% of the principal amount being redeemed. The Company
recognized a loss on early extinguishment of debt totaling
approximately $10.6 million, which amount included the payment of
the redemption premium totaling approximately $10.5 million.
- On December 17, 2014, a joint venture
in which the Company has a 25% nominal ownership interest
refinanced with a new lender its mortgage loan collateralized by
901 New York Avenue located in Washington, DC. The mortgage loan
totaling approximately $150.4 million bore interest at a fixed rate
of 5.19% per annum and was scheduled to mature on January 1, 2015.
The new mortgage loan totaling $225.0 million bears interest at a
fixed rate of 3.61% per annum and matures on January 5, 2025.
- On December 19, 2014, the Company
entered into a joint venture with an unrelated third party to
acquire the air rights for the future development of the first
phase at North Station, consisting of an atrium hall and podium
building containing up to 377,000 net rentable square feet of
retail and office space located in Boston, Massachusetts. The joint
venture partner contributed air rights parcels and improvements,
with a fair value of approximately $13.0 million, for its initial
50% interest in the joint venture. The Company contributed
improvements totaling approximately $4.2 million and will
contribute cash totaling approximately $8.8 million for its initial
50% interest. In addition, the Company entered into an option and
development rights agreement with its partner pursuant to which the
Company has the right to develop residential, hotel and office
space in future phases, subject to certain terms and conditions
including the partner's right to participate as a venture partner
in each phase of the project.
- On December 30, 2014, the Company
completed the conveyance to an unrelated third party of a
condominium interest in its 75 Ames Street property located in
Cambridge Massachusetts. On May 23, 2011, the Company had entered
into a ground lease for the vacant land parcel at 75 Ames Street
and had also entered into a development agreement to serve as
project manager for a 250,000 square foot research laboratory
building to be developed on the site at the ground lessee’s expense
and to also serve, upon completion of development, as property
manager. Gross proceeds to the Company were approximately $56.8
million, including $11.4 million in development fees for the
Company’s services, and were received beginning in May 2011. The
cash received under the ground lease was initially recognized as
unearned revenue and recognized over the 99-year term of the ground
lease as ground lease revenue totaling approximately $459,000 per
year prior to the conveyance of the condominium interest. As a
result of the conveyance and the transfer of title, the Company
recognized a gain on sale of real estate totaling approximately
$33.8 million during the three months ended December 31, 2014.
Transactions completed subsequent to December 31, 2014:
- On January 15, 2015, the Company
entered into a contract for the sale of its Residences on The
Avenue property located in Washington, DC for a gross sale price of
$196.0 million. The Company has agreed to provide net operating
income support of up to $6.0 million should the property’s net
operating income fail to achieve certain thresholds. The Residences
on The Avenue is comprised of 335 apartment units and approximately
50,000 net rentable square feet of retail space, subject to a
ground lease that expires on February 1, 2068. The sale is subject
to the satisfaction of customary closing conditions and there can
be no assurance that the sale will be consummated on the terms
currently contemplated or at all.
- On January 21, 2015, the Company’s
Compensation Committee approved the 2015 Multi-Year, Long-Term
Incentive Program (the “2015 MYLTIP”) as a performance-based
component of the Company’s overall compensation program. The
Company currently expects that under the Financial Accounting
Standards Board’s Accounting Standards Codification (“ASC”) 718
“Compensation – Stock Compensation,” the 2015 MYLTIP will have an
aggregate value of approximately $15.7 million, which amount will
generally be amortized into earnings over the four-year plan period
under the graded vesting method and has been reflected in the 2015
guidance below.
EPS and FFO per Share Guidance:
The Company’s guidance for the first quarter and full year 2015
for EPS (diluted) and FFO per share (diluted) is set forth and
reconciled below. Except as described below, the estimates reflect
management’s view of current and future market conditions,
including assumptions with respect to rental rates, occupancy
levels and the earnings impact of the events referenced in this
release and otherwise referenced during the conference call
referred to below. The estimates do not include possible future
gains or losses or the impact on operating results from other
possible future property acquisitions or dispositions, other
possible capital markets activity or possible future impairment
charges. EPS estimates may be subject to fluctuations as a result
of several factors, including changes in the recognition of
depreciation and amortization expense and any gains or losses
associated with disposition activity. The Company is not able to
assess at this time the potential impact of these factors on
projected EPS. By definition, FFO does not include real
estate-related depreciation and amortization, impairment losses or
gains or losses associated with disposition activities. There can
be no assurance that the Company’s actual results will not differ
materially from the estimates set forth below.
As shown below, the Company has updated its guidance for FFO per
share (diluted) for full year 2015 to $5.28 - $5.43 per share from
$5.22 - $5.42 per share. The updated guidance reflects, when
compared to the Company’s prior guidance, an increase in revenue
from development projects of $0.02 per share, an increase in
development and management services income of $0.01 per share, a
decrease in general and administrative expenses of $0.02 per share
and a decrease in FFO of $0.03 per share due to the expected sale
in the first quarter of 2015 of the Company’s Residences on The
Avenue property. In addition, the Company’s projected gains on
sales of real estate include approximately $0.56 per share from the
expected sale in the first quarter of 2015 of the Company’s
Residences on The Avenue property.
First Quarter 2015 Full Year 2015 Low
- High Low - High Projected EPS
(diluted) $ 0.90 - $ 0.92 $ 2.34 - $
2.49 Add: Projected Company Share of Real Estate
Depreciation and Amortization
0.88
-
0.88
3.50
-
3.50
Less: Projected Company Share of Gains on Sales of Real Estate
0.56
-
0.56
0.56
-
0.56
Projected FFO per Share (diluted)
$
1.22
-
$
1.24
$
5.28
-
$
5.43
Boston Properties will host a conference call on Friday, January
30, 2015 at 9:00 AM Eastern Time, open to the general public, to
discuss the fourth quarter and full year 2014 results, the 2015
projections and related assumptions, and other related matters that
may be of interest to investors. The number to call for this
interactive teleconference is (877) 706-4503 (Domestic) or (281)
913-8731 (International) and entering the passcode 57045455. A
replay of the conference call will be available through February
13, 2015, by dialing (855) 859-2056 (Domestic) or (404) 537-3406
(International) and entering the passcode 57045455. There will also
be a live audio webcast of the call which may be accessed on the
Company’s website at www.bostonproperties.com in the Investor
Relations section. Shortly after the call a replay of the webcast
will be available in the Investor Relations section of the
Company’s website and archived for up to twelve months following
the call.
Additionally, a copy of Boston Properties’ fourth quarter 2014
“Supplemental Operating and Financial Data” and this press release
are available in the Investor Relations section of the Company’s
website at www.bostonproperties.com.
Boston Properties is a fully integrated, self-administered and
self-managed real estate investment trust that develops,
redevelops, acquires, manages, operates and owns a diverse
portfolio of Class A office space, one hotel, three residential
properties and five retail properties. The Company is one of the
largest owners and developers of Class A office properties in the
United States, concentrated in four markets – Boston, New York, San
Francisco and Washington, DC.
This press release contains forward-looking statements within
the meaning of the Federal securities laws. You can identify these
statements by our use of the words “assumes,” “believes,”
“estimates,” “expects,” “guidance,” “intends,” “plans,” “projects”
and similar expressions that do not relate to historical matters.
You should exercise caution in interpreting and relying on
forward-looking statements because they involve known and unknown
risks, uncertainties and other factors which are, in some cases,
beyond Boston Properties’ control and could materially affect
actual results, performance or achievements. These factors include,
without limitation, the Company’s ability to satisfy the closing
conditions to the pending transactions described above, the ability
to enter into new leases or renew leases on favorable terms,
dependence on tenants’ financial condition, the uncertainties of
real estate development, acquisition and disposition activity, the
ability to effectively integrate acquisitions, the uncertainties of
investing in new markets, the costs and availability of financing,
the effectiveness of our interest rate hedging contracts, the
ability of our joint venture partners to satisfy their obligations,
the effects of local, national and international economic and
market conditions (including the impact of the European sovereign
debt issues), the effects of acquisitions, dispositions and
possible impairment charges on our operating results, the impact of
newly adopted accounting principles on the Company’s accounting
policies and on period-to-period comparisons of financial results,
regulatory changes and other risks and uncertainties detailed from
time to time in the Company’s filings with the Securities and
Exchange Commission. Boston Properties does not undertake a duty to
update or revise any forward-looking statement, including its
guidance for the first quarter and full fiscal year 2015, whether
as a result of new information, future events or otherwise.
Financial tables follow.
BOSTON PROPERTIES, INC. CONSOLIDATED BALANCE SHEETS
December 31, December 31,
2014 2013 (in thousands, except for share
amounts) (unaudited)
ASSETS
Real estate $ 18,231,978 $ 17,158,210 Construction in
progress 736,311 1,523,179 Land held for future development 268,114
297,376 Less: accumulated depreciation (3,547,659 )
(3,161,571 ) Total real estate 15,688,744 15,817,194 Cash
and cash equivalents 1,763,079 2,365,137 Cash held in escrows
487,321 57,201 Investments in securities 19,459 16,641 Tenant and
other receivables, net of allowance for doubtful accounts of $1,142
and $1,636, respectively 46,595 59,464 Accrued rental income, net
of allowance of $1,499 and $3,636, respectively 691,999 651,603
Deferred charges, net 831,744 884,450 Prepaid expenses and other
assets 164,432 184,477 Investments in unconsolidated joint ventures
193,394 140,097 Total assets $
19,886,767 $ 20,176,264
LIABILITIES AND
EQUITY
Liabilities: Mortgage notes payable $ 4,309,484 $ 4,449,734
Unsecured senior notes, net of discount 5,287,704 5,835,854
Unsecured exchangeable senior notes, net of discount - 744,880
Unsecured line of credit - - Mezzanine notes payable 309,796
311,040 Outside members' notes payable 180,000 180,000 Accounts
payable and accrued expenses 243,263 202,470 Dividends and
distributions payable 882,472 497,242 Accrued interest payable
163,532 167,523 Other liabilities 502,255
592,982 Total liabilities 11,878,506
12,981,725 Commitments and contingencies -
- Noncontrolling interest: Redeemable
preferred units of the Operating Partnership 633
51,312 Redeemable interest in property
partnership 104,692 99,609
Equity: Stockholders' equity attributable to Boston Properties,
Inc. Excess stock, $0.01 par value, 150,000,000 shares authorized,
none issued or outstanding - - Preferred stock, $0.01 par value,
50,000,000 shares authorized; 5.25% Series B cumulative redeemable
preferred stock, $0.01 par value, liquidation preference $2,500 per
share, 92,000 shares authorized, 80,000 shares issued and
outstanding at December 31, 2014 and December 31, 2013,
respectively 200,000 200,000 Common stock, $0.01 par value,
250,000,000 shares authorized, 153,192,845 and 153,062,001 shares
issued and 153,113,945 and 152,983,101 shares outstanding at
December 31, 2014 and December 31, 2013, respectively 1,531 1,530
Additional paid-in capital 6,270,257 5,662,453 Dividends in excess
of earnings (762,464 ) (108,552 ) Treasury common stock, at cost
(2,722 ) (2,722 ) Accumulated other comprehensive loss
(9,304 ) (11,556 ) Total stockholders' equity attributable
to Boston Properties, Inc. 5,697,298 5,741,153
Noncontrolling interests: Common units of the Operating Partnership
603,171 576,333 Property partnerships 1,602,467 726,132
Total equity 7,902,936 7,043,618
Total liabilities and equity $ 19,886,767 $
20,176,264
BOSTON PROPERTIES, INC. CONSOLIDATED
STATEMENTS OF OPERATIONS (Unaudited) Three
months ended Year ended December 31, December
31, 2014 2013 2014 2013
(in thousands, except for per share amounts) Revenue Rental
Base rent $ 484,011 $ 453,538 $ 1,886,339 $ 1,675,412 Recoveries
from tenants 85,946 79,586 339,365 292,944 Parking and other
25,724 25,174 102,593
97,158 Total rental revenue 595,681 558,298 2,328,297
2,065,514 Hotel revenue 10,907 10,269 43,385 40,330 Development and
management services 7,119 7,632
25,316 29,695 Total revenue 613,707
576,199 2,396,998
2,135,539 Expenses Operating Rental 211,077 198,588
835,290 742,956 Hotel 7,539 7,488 29,236 28,447 General and
administrative 23,172 20,656 98,937 115,329 Transaction costs 640 -
3,140 1,744 Impairment loss - - - 8,306 Depreciation and
amortization 162,430 154,475
628,573 560,637 Total expenses 404,858
381,207 1,595,176
1,457,419 Operating income 208,849 194,992 801,822
678,120 Other income (expense) Income from unconsolidated joint
ventures 2,700 2,834 12,769 75,074 Gains on consolidation of joint
ventures - - - 385,991 Interest and other income 1,924 1,664 8,765
8,310 Gains (losses) from investments in securities 387 1,039 1,038
2,911 Gains (losses) from early extinguishments of debt (10,633 ) -
(10,633 ) 122 Interest expense (117,904 ) (121,134 )
(455,743 ) (446,880 ) Income from continuing
operations 85,323 79,395 358,018 703,648 Discontinued operations
Income from discontinued operations - 536 - 8,022 Gain on sale of
real estate from discontinued operations - 26,381 - 112,829 Gain on
forgiveness of debt from discontinued operations - - - 20,182
Impairment loss from discontinued operations -
- - (3,241 ) Income before gains on
sales of real estate 85,323 106,312 358,018 841,440 Gains on sales
of real estate 126,102 - 168,039
- Net income 211,425 106,312 526,057 841,440
Net income attributable to noncontrolling interests Noncontrolling
interests in property partnerships (13,088 ) (2,271 ) (30,561 )
(1,347 ) Noncontrolling interest - redeemable preferred units of
the Operating Partnership (9 ) (2,661 ) (1,023 ) (6,046 )
Noncontrolling interest - common units of the Operating Partnership
(21,172 ) (7,302 ) (50,862 ) (70,085 )
Noncontrolling interest in discontinued
operations - common units of the Operating Partnership
- (2,713 ) - (14,151 )
Net income attributable to Boston Properties, Inc. 177,156 91,365
443,611 749,811 Preferred dividends (2,646 ) (2,646 )
(10,500 ) (8,057 ) Net income attributable to Boston
Properties, Inc. common shareholders $ 174,510 $ 88,719
$ 433,111 $ 741,754
Basic earnings per common share
attributable to Boston Properties, Inc. common shareholders:
Income from continuing operations $ 1.14 $ 0.42 $ 2.83 $ 4.06
Discontinued operations - 0.16 -
0.81 Net income $ 1.14 $ 0.58 $
2.83 $ 4.87 Weighted average number of common
shares outstanding 153,128 152,798
153,089 152,201
Diluted earnings per common share
attributable to Boston Properties, Inc. common shareholders:
Income from continuing operations $ 1.14 $ 0.42 $ 2.83 $ 4.05
Discontinued operations - 0.16 -
0.81 Net income $ 1.14 $ 0.58 $
2.83 $ 4.86 Weighted average number of common
and common equivalent shares outstanding 153,550
152,932 153,308 152,521
BOSTON PROPERTIES, INC. FUNDS FROM OPERATIONS (1)
(Unaudited) Three months ended Year
ended December 31, December 31, 2014
2013 2014 2013 (in thousands, except
for per share amounts) Net income attributable to Boston
Properties, Inc. common shareholders $ 174,510 $ 88,719 $ 433,111 $
741,754 Add: Preferred dividends 2,646 2,646 10,500 8,057
Noncontrolling interest in discontinued
operations - common units of the Operating Partnership
- 2,713 - 14,151 Noncontrolling interest - common units of the
Operating Partnership 21,172 7,302 50,862 70,085
Noncontrolling interest - redeemable
preferred units of the Operating Partnership
9 2,661 1,023 6,046 Noncontrolling interests in property
partnerships 13,088 2,271 30,561 1,347 Impairment loss from
discontinued operations - - - 3,241 Less: Gains on sales of real
estate 126,102 - 168,039 - Income from discontinued operations -
536 - 8,022 Gain on sale of real estate from discontinued
operations - 26,381 - 112,829 Gain on forgiveness of debt from
discontinued operations - - -
20,182 Income from continuing
operations 85,323 79,395 358,018 703,648 Add: Real estate
depreciation and amortization (2) 166,665 159,706 646,463 610,352
Income from discontinued operations - 536 - 8,022 Less:
Gains on sales of real estate included
within income from unconsolidated joint ventures (3)
- - - 54,501 Gains on consolidation of joint ventures (4) - - -
385,991
Noncontrolling interests in property
partnerships' share of funds from operations
33,866 16,994 93,864 33,930
Noncontrolling interest - redeemable
preferred units of the Operating Partnership (5)
9 694 1,023 4,079 Preferred dividends 2,646
2,646 10,500 8,057 Funds
from operations (FFO) attributable to the Operating Partnership
215,467 219,303 899,094 835,464 Less:
Noncontrolling interest - common units of
the Operating Partnerships' share of funds from operations
22,281 21,698 91,588
84,000 Funds from operations attributable to
Boston Properties, Inc. $ 193,186 $ 197,605 $ 807,506
$ 751,464 Boston Properties, Inc.'s percentage
share of funds from operations - basic 89.66 % 90.11
% 89.81 % 89.99 % Weighted average shares
outstanding - basic 153,128 152,798
153,089 152,201 FFO per share
basic $ 1.26 $ 1.29 $ 5.27 $ 4.94
Weighted average shares outstanding - diluted 153,550
153,900 153,620 153,742
FFO per share diluted $ 1.26 $ 1.29 $
5.26 $ 4.91
(1) Pursuant to the revised definition of Funds from Operations
adopted by the Board of Governors of the National Association of
Real Estate Investment Trusts (“NAREIT”), we calculate Funds from
Operations, or “FFO,” by adjusting net income (loss) attributable
to Boston Properties, Inc. (computed in accordance with GAAP,
including non-recurring items) for gains (or losses) from sales of
properties, impairment losses on depreciable real estate of
consolidated real estate, impairment losses on investments in
unconsolidated joint ventures driven by a measurable decrease in
the fair value of depreciable real estate held by the
unconsolidated joint ventures, real estate related depreciation and
amortization, and after adjustment for unconsolidated partnerships
and joint ventures. FFO is a non-GAAP financial measure. The use of
FFO, combined with the required primary GAAP presentations, has
been fundamentally beneficial in improving the understanding of
operating results of REITs among the investing public and making
comparisons of REIT operating results more meaningful. Management
generally considers FFO to be a useful measure for reviewing our
comparative operating and financial performance because, by
excluding gains and losses related to sales of previously
depreciated operating real estate assets, impairment losses and
real estate asset depreciation and amortization (which can vary
among owners of identical assets in similar condition based on
historical cost accounting and useful life estimates), FFO can help
one compare the operating performance of a company's real estate
between periods or as compared to different companies.
Our computation of FFO may not be comparable to FFO reported by
other REITs or real estate companies that do not define the term in
accordance with the current NAREIT definition or that interpret the
current NAREIT definition differently.
FFO should not be considered as an alternative to net income
attributable to Boston Properties, Inc. (determined in accordance
with GAAP) as an indication of our performance. FFO does not
represent cash generated from operating activities determined in
accordance with GAAP, and is not a measure of liquidity or an
indicator of our ability to make cash distributions. We believe
that to further understand our performance, FFO should be compared
with our reported net income attributable to Boston Properties,
Inc. and considered in addition to cash flows in accordance with
GAAP, as presented in our consolidated financial statements.
(2) Real estate depreciation and amortization consists of
depreciation and amortization from the Consolidated Statements of
Operations of $162,430, $154,475, $628,573 and $560,637, our share
of unconsolidated joint venture real estate depreciation and
amortization of $4,582, $4,633, $19,251 and $46,214 and
depreciation and amortization from discontinued operations of $0,
$934, $0 and $4,760, less corporate-related depreciation and
amortization of $347, $336, $1,361 and $1,259 for the three months
and years ended December 31, 2014 and 2013, respectively.
(3) Consists of the portion of income from unconsolidated joint
ventures related to (1) the gain on sale of Eighth Avenue and 46th
Street totaling approximately $11.3 million and (2) the gain on
sale of 125 West 55th Street totaling approximately $43.2 million
during the year ended December 31, 2013.
(4) The gains on consolidation of joint ventures consisted of
(1) 767 Fifth Avenue (The General Motors Building) totaling
approximately $359.5 million and (2) the Company's Value-Added
Fund's Mountain View properties totaling approximately $26.5
million during the year ended December 31, 2013.
(5) Excludes approximately $2.0 million for the three months and
year ended December 31, 2013 of income allocated to the holders of
Series Two Preferred Units to account for their right to
participate on an as-converted basis in the special dividend that
was primarily the result of the sale of a 45% interest in the
Company's Times Square Tower property.
BOSTON PROPERTIES, INC.
PORTFOLIO LEASING PERCENTAGES %
Leased by Location December 31, 2014 December 31,
2013 Boston 91.4% 93.9% New York (1) 90.9% 93.0% San Francisco
88.3% 89.9% Washington, DC 94.8% 95.0% Total Portfolio 91.7% 93.4%
% Leased by Type December 31,
2014 December 31, 2013 Class A Office Portfolio 91.8%
93.8% Office/Technical Portfolio 87.7% 85.4% Total Portfolio 91.7%
93.4%
(1) Beginning in 2014, the Company has reflected its Princeton
portfolio as the suburban component of its New York region.
Boston Properties, Inc.Michael Walsh, 617-236-3410Senior Vice
President, FinanceorArista Joyner, 617-236-3343Investor Relations
Manager
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