Boston Properties Announces Second Quarter 2010 Results
5:32p ET July 27, 2010 (Business Wire)
--Reports diluted EPS of $0.44
Boston Properties, Inc. (NYSE: BXP), a real estate investment
trust, reported results today for the second quarter ended June 30, 2010.
Funds from Operations (FFO) for the quarter ended June 30, 2010 were
$156.9 million, or $1.13 per share basic and $1.12 per share diluted.
This compares to FFO for the quarter ended June 30, 2009 of $166.7
million, or $1.33 per share basic and $1.32 per share diluted. FFO for
the quarter ended June 30, 2010 includes $0.08 per share on a diluted
basis related to the recognition of non-cash deferred management fees
associated with the termination of a third-party property management and
leasing agreement at 280 Park Avenue in New York City. FFO for the
quarter ended June 30, 2009 includes (1) $0.10 per share on a diluted
basis related to lease termination income and (2) a non-cash impairment
charge of $0.05 per share on a diluted basis related to the Company's
investment in its Value-Added Fund, specifically its Mountain View, CA
and San Carlos, CA properties. The weighted average number of basic and
diluted shares outstanding totaled 139,112,505 and 141,286,371,
respectively, for the quarter ended June 30, 2010 and 125,266,846 and
127,080,589, respectively, for the quarter ended June 30, 2009.
Net income available to common shareholders was $61.4 million for the
quarter ended June 30, 2010, compared to $67.2 million for the quarter
ended June 30, 2009. Net income available to common shareholders per
share (EPS) for the quarter ended June 30, 2010 was $0.44 basic and
$0.44 on a diluted basis. This compares to EPS for the second quarter of
2009 of $0.54 basic and $0.53 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
ended June 30, 2010. In the opinion of management, all adjustments
considered necessary for a fair presentation of these reported results
have been made.
As of June 30, 2010, the Company's portfolio consisted of 144
properties, comprised primarily of Class A office space, one hotel, two
residential properties and three retail properties, aggregating
approximately 37.8 million square feet, including four properties under
construction totaling 1.6 million square feet. In addition, the Company
has structured parking for vehicles containing approximately 12.8
million square feet. The overall percentage of leased space for the 139
properties in service as of June 30, 2010 was 93.0%.
Significant events during the second quarter included:
--
On April 1, 2010, the Company acquired a 30% interest in a joint
venture entity that owns 500 North Capitol Street, NW located in
Washington, DC. 500 North Capitol Street is an approximately 176,000
net rentable square foot office property which is fully-leased to a
single tenant through March 2011. On April 1, 2010, the unconsolidated
joint venture entity refinanced at maturity the mortgage loan
collateralized by the property totaling approximately $26.8 million.
The new mortgage loan totaling $22.0 million bears interest at a
variable rate equal to the greater of (1) the prime rate, as defined
in the loan agreement, or (2) 5.75% per annum. The loan currently
bears interest at 5.75% per annum and matures on March 31, 2013. The
Company's investment in the unconsolidated joint venture totaling
approximately $1.9 million was financed with cash contributions to the
venture totaling approximately $1.4 million and the issuance to the
seller of 5,906 common units of limited partnership interest in the
Company's Operating Partnership. The unconsolidated joint venture
currently expects that it will remove the property from service and
redevelop the property following the expiration of the lease in March
2011.
--
On April 9, 2010, an unconsolidated joint venture in which the Company
has a 60% interest refinanced its mortgage loan collateralized by Two
Grand Central Tower located in New York City. The previous mortgage
loan totaling $190.0 million bore interest at a fixed rate of 5.10%
per annum and was scheduled to mature on July 11, 2010. The new
mortgage loan totaling $180.0 million bears interest at a fixed rate
of 6.00% per annum and matures on April 10, 2015. In connection with
the refinancing, the joint venture repaid $10.0 million of the
previous mortgage loan utilizing cash contributions from the joint
venture's partners on a pro rata basis.
--
On April 16, 2010, an unconsolidated joint venture in which the
Company has a 51% interest refinanced its mortgage loan collateralized
by Metropolitan Square located in Washington, DC. The previous
mortgage loan totaling approximately $123.6 million bore interest at a
fixed rate of 8.23% per annum and was scheduled to mature on May 1,
2010. The new mortgage loan totaling $175.0 million bears interest at
a fixed rate of 5.75% per annum and matures on May 5, 2020.
--
On April 19, 2010, the Company's Operating Partnership completed a
public offering of $700.0 million in aggregate principal amount of its
5.625% senior notes due 2020. The notes were priced at 99.891% of the
principal amount to yield 5.708% to maturity. The aggregate net
proceeds to the Operating Partnership, after deducting underwriter
discounts and offering expenses, were approximately $693.5 million.
The notes mature on November 15, 2020, unless earlier redeemed. On
April 7, 2010, in connection with the offering, the Company entered
into two treasury lock agreements to fix the 10-year treasury rate at
3.873% per annum on notional amounts aggregating $350.0 million. The
Company subsequently cash-settled the treasury lock agreements and
received approximately $0.4 million, which amount will be recognized
as a reduction to the Company's interest expense over the term of the
notes.
--
On April 21, 2010, the Company announced that it had established an
"at the market" (ATM) stock offering program through which it may sell
from time to time up to an aggregate of $400 million of its common
stock through sales agents over a three-year period.
--
On May 5, 2010, the Company satisfied the requirements of its master
lease agreement related to the 2006 sale of 280 Park Avenue in New
York City, resulting in the recognition of the remaining deferred gain
on sale of real estate totaling approximately $1.0 million. Following
the satisfaction of the master lease agreement, the property
management and leasing agreement entered into with the buyer at the
time of the sale was terminated, resulting in the recognition of
deferred management fees totaling approximately $12.2 million.
--
On May 11, 2010, the Company's Operating Partnership exercised its
option to extend the maturity date under its $1.0 billion unsecured
revolving credit facility to August 3, 2011. The extension will become
effective on August 3, 2010 provided that the Company's Operating
Partnership is not then in default under the facility.
--
On June 1, 2010, the Company placed in-service Weston Corporate
Center, an approximately 356,000 net rentable square foot Class A
office property located in Weston, Massachusetts. The property is 100%
leased.
--
On June 15, 2010, the Company used available cash to repay the
mortgage loan collateralized by its Eight Cambridge Center property
located in Cambridge, Massachusetts totaling approximately $22.6
million. The mortgage loan bore interest at a fixed rate of 7.73% per
annum and was scheduled to mature on July 15, 2010. There was no
prepayment penalty.
--
On June 15, 2010, an unconsolidated joint venture in which the Company
has a 50% interest repaid the mortgage loan collateralized by land
parcels at its site at Eighth Avenue and 46th Street in New York City
utilizing cash contributions from the joint venture's partners on a
pro rata basis. In addition, the unconsolidated joint venture
completed an exchange of land parcels with a third party and received
land parcels and development rights valued at approximately $7.0
million in exchange for a land parcel valued at approximately $5.4
million and cash of approximately $1.6 million.
--
During the second quarter of 2010, the Company's Operating Partnership
repurchased approximately $132.8 million aggregate principal amount of
its 2.875% exchangeable senior notes due 2037, which the holders may
require the Operating Partnership to repurchase in February 2012, for
approximately $132.5 million. The repurchased notes had an aggregate
carrying value of approximately $126.4 million, resulting in the
recognition of a non-cash loss on extinguishment of approximately
$6.1 million.
Transactions completed subsequent to June 30, 2010:
--
On July 1, 2010, the Company used available cash to repay the mortgage
loan collateralized by its 202, 206 & 214 Carnegie Center properties
located in Princeton, New Jersey totaling approximately $55.8 million.
The mortgage loan bore interest at a fixed rate of 8.13% per annum and
was scheduled to mature on October 1, 2010. There was no prepayment
penalty.
--
On July 1, 2010, the Company acquired the mortgage loan collateralized
by a land parcel located in Reston, Virginia for approximately $20.3
million. In connection with the acquisition of the loan, the Company
entered into a forbearance agreement pursuant to which it obtained the
fee interest in the land by deed in lieu of foreclosure.
--
On July 23, 2010, an unconsolidated joint venture in which the Company
has a 60% interest modified its mortgage loan collateralized by 125
West 55th Street located in New York City. The mortgage loan totaling
$207.0 million bears interest at a fixed rate of 6.09% per annum and
was scheduled to mature on March 10, 2015. The modification extended
the maturity date of the loan to March 10, 2020. All other terms of
the mortgage loan remain unchanged.
EPS and FFO per Share Guidance:
The Company's guidance for the third quarter and full year 2010 for EPS
(diluted) and FFO per share (diluted) is set forth and reconciled below.
 | Third Quarter 2010 Full Year 2010
Low - High Low - High
------ - --------- ------------ ---- ------
Projected EPS (diluted) $ 0.33 - $ 0.35 $ 1.51 - $ 1.56
Add:
0.68 - 0.68 2.75 - 2.75
Projected Company Share of Real Estate
Depreciation and
Amortization
Less:
0.00 - 0.00 0.02 - 0.02
Projected Company Share of Gains on
Sales of Real Estate
------ - --------- ------------ ---- ------
Projected FFO per Share (diluted) $ 1.01 - $ 1.03 $ 4.24 - $ 4.29
------ - --------- ------------ ---- ------
| |
Except as described below, the foregoing 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 previously disclosed. In addition,
the estimates do not include possible future gains or losses or the
impact on operating results from other possible future property
acquisitions or dispositions, 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 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
above.
Boston Properties will host a conference call on Wednesday, July 28,
2010 at 10:00 AM Eastern Time, open to the general public, to discuss
the second quarter 2010 results, the 2010 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 87005850. A replay of the conference call will be available
through August 11, 2010, by dialing (800) 642-1687 (Domestic) or (706)
645-9291 (International) and entering the passcode 87005850. 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' second quarter 2010
"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, two residential properties and three retail
properties. The Company is one of the largest owners and developers of
Class A office properties in the United States, concentrated in five
markets -- Boston, Midtown Manhattan, Washington, DC, San Francisco and
Princeton, NJ.
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
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 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 economic and market conditions, 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 third quarter and full fiscal year 2010, whether as a
result of new information, future events or otherwise.
Financial tables follow.
| BOSTON PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended Six months ended
June 30, June 30,
----------------------------- -----------------------------
2010 2009 2010 2009
-------------- -------------- -------------- --------------
(in thousands, except for per share amounts)
(unaudited)
Revenue
Rental:
Base rent $ 305,823 $ 304,864 $ 608,206 $ 598,381
Recoveries from tenants 44,340 49,821 89,884 102,229
Parking and other 16,423 18,416 31,720 35,357
------- ------- ------- -------
Total rental revenue 366,586 373,101 729,810 735,967
Hotel revenue 8,371 7,396 14,274 13,458
Development and management services 18,884 8,551 27,828 16,847
Interest and other 2,117 442 3,827 762
------- ------- ------- -------
Total revenue 395,958 389,490 775,739 767,034
------- ------- ------- -------
Expenses
Operating:
Rental 123,284 124,730 248,269 248,591
Hotel 6,089 5,359 11,357 10,831
General and administrative 17,648 18,532 44,470 35,952
Interest 96,755 78,633 188,784 157,563
Depreciation and amortization 81,400 87,005 164,475 164,375
Loss (gain) from suspension of development - - (7,200 ) 27,766
Losses from early extinguishments of debt 6,051 494 8,221 494
Losses (gains) from investments in securities 678 (1,194 ) 478 (607 )
------- ------- -- ------- ------- --
Total expenses 331,905 313,559 658,854 644,965
------- ------- ------- -------
Income before income (loss) from unconsolidated joint ventures, 64,053 75,931 116,885 122,069
gains on
sales of real estate and net income attributable to
noncontrolling interests
Income (loss) from unconsolidated joint ventures 7,465 (351 ) 15,375 4,746
Gains on sales of real estate 969 4,493 2,734 7,288
------- ------- ------- -------
Net income 72,487 80,073 134,994 134,103
Net income attributable to noncontrolling interests:
Noncontrolling interests in property partnerships (864 ) (691 ) (1,668 ) (1,201 )
Noncontrolling interest - common units of the Operating Partnership (9,250 ) (10,629 ) (17,114 ) (18,091 )
(125 ) (629 ) (352 ) (1,032 )
Noncontrolling interest in gains on sales of real estate - common
units
of the Operating Partnership
(836 ) (972 ) (1,728 ) (1,962 )
Noncontrolling interest - redeemable preferred units of the
Operating Partnership
Net income attributable to Boston Properties, Inc. $ 61,412 $ 67,152 $ 114,132 $ 111,817
== ======= == ======= == ======= == =======
Basic earnings per common share attributable to Boston Properties,
Inc.:
Net income $ 0.44 $ 0.54 $ 0.82 $ 0.91
-- ------- -- ------- -- ------- -- -------
Weighted average number of common shares outstanding 139,113 125,267 139,022 123,272
------- ------- ------- -------
Diluted earnings per common share attributable to Boston
Properties, Inc.:
Net income $ 0.44 $ 0.53 $ 0.82 $ 0.91
-- ------- -- ------- -- ------- -- -------
139,826 125,620 139,712 123,554
Weighted average number of common and common equivalent shares
outstanding
| |
| BOSTON PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
2010 2009
------------------- ---------------------
(in thousands, except for share amounts)
(unaudited)
ASSETS
----------------------------------------------------------------------
Real estate $ 9,984,329 $ 9,817,388
Construction in progress 632,731 563,645
Land held for future development 732,006 718,525
Less: accumulated depreciation (2,173,300 ) (2,033,677 )
---------- - ---------- ---
Total real estate 9,175,766 9,065,881
Cash and cash equivalents 1,703,448 1,448,933
Cash held in escrows 25,382 21,867
Investments in securities 7,026 9,946
Tenant and other receivables, net of allowance for doubtful accounts 98,602 93,240
of $2,097 and $4,125, respectively
Related party note receivable 270,000 270,000
Accrued rental income, net of allowance of $1,983 and $2,645, 401,054 363,121
respectively
Deferred charges, net 289,388 294,395
Prepaid expenses and other assets 22,385 17,684
Investments in unconsolidated joint ventures 794,650 763,636
---------- ----------
Total assets $ 12,787,701 $ 12,348,703
===== ========== ===== ==========
LIABILITIES AND EQUITY
----------------------------------------------------------------------
Liabilities:
Mortgage notes payable $ 2,608,577 $ 2,643,301
Unsecured senior notes, net of discount 2,871,909 2,172,389
Unsecured exchangeable senior notes, net of discount 1,748,814 1,904,081
Unsecured line of credit - -
Accounts payable and accrued expenses 177,000 220,089
Dividends and distributions payable 80,865 80,536
Accrued interest payable 80,521 76,058
Other liabilities 95,423 127,538
---------- ----------
Total liabilities 7,663,109 7,223,992
---------- ----------
Commitments and contingencies - -
---------- ----------
Noncontrolling interest:
Redeemable preferred units of the Operating Partnership 55,652 55,652
---------- ----------
Equity:
Stockholders' equity attributable to Boston Properties, Inc.
Excess stock, $.01 par value, 150,000,000 shares authorized, none - -
issued or outstanding
Preferred stock, $.01 par value, 50,000,000 shares authorized, none - -
issued or outstanding
Common stock, $.01 par value, 250,000,000 shares authorized, 1,393 1,389
139,352,299 and 138,958,910 shares
issued and 139,273,399 and
138,880,010 shares outstanding in 2010 and 2009, respectively
Additional paid-in capital 4,394,435 4,373,679
Earnings in excess of dividends 70,426 95,433
Treasury common stock, at cost (2,722 ) (2,722 )
Accumulated other comprehensive loss (20,155 ) (21,777 )
---------- - ---------- ---
Total stockholders' equity attributable to Boston Properties, Inc. 4,443,377 4,446,002
Noncontrolling interests:
Common units of the Operating Partnership 619,224 617,386
Property partnerships 6,339 5,671
Total equity 5,068,940 5,069,059
---------- ----------
Total liabilities and equity $ 12,787,701 $ 12,348,703
===== ========== ===== ==========
| |
| BOSTON PROPERTIES, INC.
FUNDS FROM OPERATIONS (1)
Three months ended Six months ended
June 30, June 30,
------------------------------------- -------------------------------------
2010 2009 2010 2009
------------------ ------------------ ------------------ ------------------
(in thousands, except for per share amounts)
(unaudited)
Net income attributable to Boston Properties, Inc. $ 61,412 $ 67,152 $ 114,132 $ 111,817
Add:
Noncontrolling interest - redeemable preferred units of 836 972 1,728 1,962
the
Operating Partnership
Noncontrolling interest in gains on sales of real estate - 125 629 352 1,032
common
units of the Operating Partnership
Noncontrolling interest - common units of the Operating
Partnership 9,250 10,629 17,114 18,091
Noncontrolling interests in property partnerships 864 691 1,668 1,201
Less:
Gains on sales of real estate 969 4,493 2,734 7,288
Income (loss) from unconsolidated joint ventures 7,465 (351 ) 15,375 4,746
------- ------- ---- ------- -------
Income before income (loss) from unconsolidated joint 64,053 75,931 116,885 122,069
ventures,
gains on sales of real estate and net income
attributable to
noncontrolling interests
Add:
Real estate depreciation and amortization (2) 111,055 120,359 224,673 228,590
Income (loss) from unconsolidated joint ventures 7,465 (351 ) 15,375 4,746
Less:
Noncontrolling interests in property partnerships' share of 1,697 1,199 3,452 2,259
funds
from operations
Noncontrolling interest - redeemable preferred units of the 836 972 1,728 1,962
Operating
Partnership
Funds from operations (FFO) attributable to the Operating 180,040 193,768 351,753 351,184
Partnership
Less:
Noncontrolling interest - common units of the Operating 23,170 27,100 45,288 49,722
Partnership's
share of funds from operations
Funds from operations attributable to Boston Properties, Inc. $ 156,870 $ 166,668 $ 306,465 $ 301,462
==== ======= ==== ======= ==== ======= ==== =======
Our percentage share of funds from operations - basic 87.13 % 86.01 % 87.13 % 85.84 %
======= ==== ======= ==== ======= ==== ======= ====
Weighted average shares outstanding - basic 139,113 125,267 139,022 123,272
======= ======= ======= =======
FFO per share basic $ 1.13 $ 1.33 $ 2.20 $ 2.45
==== ======= ==== ======= ==== ======= ==== =======
Weighted average shares outstanding - diluted 141,287 127,081 141,173 125,016
======= ======= ======= =======
FFO per share diluted $ 1.12 $ 1.32 $ 2.19 $ 2.43
==== ======= ==== ======= ==== ======= ==== =======
(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, 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 and excluding 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 $81,400, $87,005, $164,475 and $164,375, our share of
unconsolidated joint venture real estate depreciation and
amortization of $30,124, $33,798, $61,137 and $65,174, less
corporate-related depreciation and amortization of $469, $444, $939
and $959 for the three months and six months ended June 30, 2010 and
2009, respectively.
| |
| BOSTON PROPERTIES, INC.
PORTFOLIO LEASING PERCENTAGES
% Leased by Location
---------------------------------
June 30, 2010 December 31, 2009
-------------- ------------------
Greater Boston 88.4 % 89.6 %
Greater Washington, DC 97.2 % 95.5 %
Midtown Manhattan 97.1 % 95.4 %
Princeton/East Brunswick, NJ 81.8 % 81.7 %
Greater San Francisco 91.3 % 91.1 %
------ ------ -------- --------
Total Portfolio 93.0 % 92.4 %
====== ====== ======== ========
% Leased by Type
---------------------------------
June 30, 2010 December 31, 2009
-------------- ------------------
Class A Office Portfolio 93.4 % 92.8 %
Office/Technical Portfolio 84.6 % 83.4 %
------ ------ -------- --------
Total Portfolio 93.0 % 92.4 %
====== ====== ======== ========
| |
SOURCE: Boston Properties, Inc.
|
Boston Properties, Inc.
Michael Walsh, 617-236-3410
Senior Vice President, Finance
or
Arista Joyner, 617-236-3343
Investor Relations Manager
| |
|
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