Reports Diluted FFO Per Share of $1.02
BOSTON, July 23 /PRNewswire-FirstCall/ --
Boston Properties, Inc. (NYSE: BXP) today reported results for the second
quarter ended June 30, 2002.
Funds from Operations (FFO) for the quarter ended June 30, 2002, including
a $2.8 million write-off of unrecoverable leasing commissions related to the
previously reported termination of the Arthur Andersen lease at Times Square
Tower, were $98.2 million, or $1.07 per share basic and $1.02 per share
diluted before an accounting charge related to the application of SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities" and after
an adjustment for early surrender lease payments received.
FFO for the second quarter of 2002 compares to FFO of $81.4 million, or
$0.90 per share basic and $0.86 per share diluted for the quarter ended June
30, 2001. This represents an 18.6% quarter to quarter increase in diluted FFO
per share. The weighted average number of basic and diluted shares
outstanding totaled 91,357,121 and 105,982,092, respectively, for the quarter
ended June 30, 2002 and 89,989,616 and 105,259,081, respectively, for the same
quarter last year.
Net income available to common shareholders per share (EPS) for the
quarter ended June 30, 2002 was $0.59 on a diluted basis reflecting an 11.3%
increase in diluted EPS from the second quarter 2001 of $0.53.
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, 2002. In the opinion of management, all adjustments considered necessary
for a fair presentation of these reported results have been made.
As of June 30, 2002, the Company's portfolio consisted of 144 properties
comprising more than 41.2 million square feet, including nine properties under
development totaling 3.3 million square feet. The overall occupancy rate for
the properties in service as of June 30, 2002 was 95.3%.
Significant events of the second quarter include:
-- The increase in the quarterly dividend paid to holders of the Company's
Common Stock from $0.58 per share to $0.61 per share. This represents
a 5.2% increase.
-- Lease termination income totaling approximately $1.2 million.
-- A one-time refund of approximately $1.3 million received pursuant to
resolution of a prior-year tax matter.
-- The termination of the lease with Arthur Andersen LLP for 620,947
square feet at Times Square Tower. Upon signing the lease on
December 1, 2000, Boston Properties paid $5.64 million of the
$17.3 million leasing commission associated with the transaction, which
the Company capitalized pending occupancy by the tenant. In connection
with the lease termination, Insignia-ESG agreed to return half of such
amount paid, leaving a balance of $2.82 million which was written-off
and included in general and administrative expenses. Times Square Tower
is a 1.2 million square foot office property that is on schedule to be
completed during 2004.
-- The completion of the 111 Huntington Avenue development project, a
953,336 square foot office/retail building at the Prudential Center in
Boston, Massachusetts. This project is 98% leased.
Transactions completed subsequent to June 30, 2002:
-- The conversion of the Company's Series A Preferred Stock and certain of
the Series Two and Three Preferred Units of the Company's Operating
Partnership, with an aggregate liquidation preference of approximately
$140.6 million, into approximately 3.7 million shares of Common Stock.
-- The disposition of the following land parcels: an 8.9 acre site in
Herndon, Virginia for approximately $5.2 million and a 3.0 acre site in
South San Francisco, California for $8.0 million.
Boston Properties will conduct a conference call tomorrow, July 24, 2002
at 10 AM (Eastern Time) to discuss the results of this year's second quarter.
The number to call for this interactive teleconference is (800) 218-0204. A
replay of the conference call will be available through July 31, 2002 by
dialing (800) 405-2236 and entering the passcode 482556.
Additionally, a copy of Boston Properties' second quarter 2002
"Supplemental Operating and Financial Data" will be available on the Investor
section of the Company's website at http://www.bostonproperties.com . These
materials are also available by contacting Investor Relations at 617-236-3300
or by written request to:
Investor Relations
Boston Properties, Inc.
111 Huntington Avenue
Boston, MA 02199
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, industrial
and hotel properties. The Company is one of the largest owners and developers
of Class A office properties in the United States, concentrated in four core
markets -- Boston, Midtown Manhattan, Washington, DC and San Francisco.
This press release contains forward-looking statements within the meaning
of the Federal securities laws. 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 and acquisition activity, the ability to effectively integrate
acquisitions, the costs and availability of financing, the effects of local
economic and market conditions, regulatory changes and other risks and
uncertainties detailed from time to time in the Company's filings with the
Securities and Exchange Commission.
Financial tables follow.
BOSTON PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended Six months ended
June 30, June 30,
2002 2001 2002 2001
(unaudited and in thousands, except for
per share amounts)
Revenue
Rental:
Base rent $242,846 $207,094 $471,952 $391,862
Recoveries from tenants 30,112 27,058 57,824 52,949
Parking and other 12,458 13,533 24,554 27,279
Total rental revenue 285,416 247,685 554,330 472,090
Development and management
services 2,289 3,110 6,423 6,507
Interest and other 2,310 4,289 3,582 8,733
Total revenue 290,015 255,084 564,335 487,330
Expenses
Operating 86,866 76,639 171,955 146,709
General and administrative 13,564 9,880 24,633 19,830
Interest 67,327 55,870 131,114 103,723
Depreciation and amortization 43,796 36,474 86,740 71,015
Loss on investments in
securities - 6,500 4,297 6,500
Total expenses 211,553 185,363 418,739 347,777
Income before net derivative
losses, minority interests,
income from unconsolidated joint
ventures, minority interest in
Operating Partnership, gain on
sale of real estate, discontinued
operations, cumulative effect
of a change in accounting principle
and preferred dividend 78,462 69,721 145,596 139,553
Net derivative losses (4,826) (4,733) (5,129) (7,788)
Minority interests in property
partnerships 712 510 1,183 255
Income from unconsolidated joint
ventures 1,659 717 3,341 1,844
Income before minority interest
in Operating Partnership, gain
on sale of real estate,
discontinued operations,
cumulative effect of a change in
accounting principle and preferred
dividend 76,007 66,215 144,991 133,864
Minority interest in Operating
Partnership (19,589) (17,998) (37,975) (36,876)
Income before gain on sale of
real estate, discontinued
operations, cumulative effect of
a change in accounting principle
and preferred dividend 56,418 48,217 107,016 96,988
Gain on sale of real estate, net
of minority interest - 1,851 - 6,505
Income before discontinued
operations, cumulative effect of
a change in accounting principle
and preferred dividend 56,418 50,068 107,016 103,493
Discontinued Operations:
Income from discontinued
operations, net of minority
interest - 618 570 1,210
Gain on sales of real estate from
discontinued operations, net of
minority interest - - 5,840 -
Income before cumulative effect
of a change in accounting
principle and preferred dividend 56,418 50,686 113,426 104,703
Cumulative effect of a change in
accounting principle, net of
minority interest - - - (6,767)
Net income before preferred
dividend 56,418 50,686 113,426 97,936
Preferred dividend (1,643) (1,648) (3,286) (3,291)
Net income available to common
shareholders $54,775 $49,038 $110,140 $94,645
Basic earnings per share:
Income before discontinued
operations and cumulative
effect of a change in
accounting principle $0.60 $0.54 $1.14 $1.12
Discontinued operations - - 0.07 0.01
Cumulative effect of a change in
accounting principle - - - (0.07)
Net income available to common
shareholders $0.60 $0.54 $1.21 $1.06
Weighted average number of
common shares outstanding 91,357 89,990 91,146 89,365
Diluted earnings per share:
Income before discontinued
operations and cumulative
effect of a change in
accounting principle $0.59 $0.53 $1.12 $1.09
Discontinued operations - - 0.07 0.01
Cumulative effect of a change in
accounting principle - - - (0.07)
Net income available to common
shareholders $0.59 $0.53 $1.19 $1.03
Weighted average number of
common and common equivalent
shares outstanding 93,016 92,274 92,897 91,739
BOSTON PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
2002 2001
(in thousands, except for share amounts)
(unaudited)
ASSETS
Real estate $6,972,779 $6,167,399
Development in progress 435,125 1,107,835
Land held for future development 199,681 182,672
Less: accumulated depreciation (795,852) (719,854)
Total real estate 6,811,733 6,738,052
Cash and cash equivalents 59,616 98,067
Escrows 44,800 23,000
Investments in securities - 4,297
Tenant and other receivables 31,298 43,546
Accrued rental income 146,100 119,494
Deferred charges, net 148,239 107,573
Prepaid expenses and other assets 16,081 20,996
Investments in unconsolidated joint ventures 100,804 98,485
Total assets $7,358,671 $7,253,510
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Mortgage notes and bonds payable $4,415,724 $4,314,942
Accounts payable and accrued expenses 52,655 81,108
Dividends and distributions payable 83,707 79,561
Interest rate contracts 11,568 11,147
Accrued interest payable 17,635 9,080
Other liabilities 65,142 58,859
Total liabilities 4,646,431 4,554,697
Commitments and contingencies - -
Minority interests 825,730 844,740
Series A Convertible Redeemable Preferred
Stock, liquidation preference $50.00 per
share, 2,000,000 shares issued and
outstanding 100,000 100,000
Stockholders' equity:
Excess stock, $.01 par value, 150,000,000
shares authorized, none issued or
outstanding - -
Common stock, $.01 par value, 250,000,000
shares authorized, 91,545,294 and
90,780,591 issued and outstanding in
2002 and 2001, respectively 915 908
Additional paid-in capital 1,821,762 1,789,521
Dividends in excess of earnings (16,152) (17,669)
Treasury common stock, at cost (2,722) (2,722)
Unearned compensation (3,598) (2,097)
Accumulated other comprehensive loss (13,695) (13,868)
Total stockholders' equity 1,786,510 1,754,073
Total liabilities and
stockholders' equity $7,358,671 $7,253,510
BOSTON PROPERTIES, INC.
FUNDS FROM OPERATIONS
(unaudited and in thousands)
Three months ended Six months ended
June 30, June 30,
2002 2001 2002 2001
Income before net derivative losses
(SFAS No. 133), minority interests,
income from unconsolidated joint
ventures, minority interests in
Operating Partnership, gain on sales
of real estate, discontinued
operations, cumulative effect of a
change in accounting principle and
preferred dividend $78,462 $69,721 $145,596 $139,553
Add:
Real estate depreciation and
amortization 45,032 37,599 89,531 73,156
Income from discontinued
operations - 758 697 1,496
Income from unconsolidated joint
ventures 1,659 717 3,341 1,844
Less:
Net derivative losses (SFAS
No. 133) (4,826) (4,733) (5,129) (7,788)
Minority property partnerships'
share of funds from operations (593) (411) (1,312) (714)
Preferred dividends and
distributions (8,223) (8,260) (16,623) (16,481)
Funds from operations $111,511 $95,391 $216,101 $191,066
Add (subtract):
Net derivative losses (SFAS
No. 133) 4,826 4,733 5,129 7,788
Early surrender lease adjustment
(A) 3,926 - 7,853 -
Funds from operations before net
derivative losses (SFAS No. 133)
and after early surrender lease
adjustment $120,263 $100,124 $229,083 $198,854
Funds from operations available to
common shareholders before net
derivative losses (SFAS No. 133)
and after early surrender lease
adjustment $98,165 $81,410 $187,094 $160,583
Weighted average shares
outstanding - basic 91,357 89,990 91,146 89,365
FFO per share basic before net
derivative losses (SFAS No.
133) and after early surrender
adjustment $1.07 $0.90 $2.05 $1.80
FFO per share basic after net
derivative losses (SFAS No.
133) and before early surrender
lease adjustment $1.00 $0.86 $1.94 $1.73
Weighted average shares
outstanding - diluted 105,982 105,259 105,870 104,726
FFO per share diluted before net
derivative losses (SFAS No.
133) and after early surrender
lease adjustment $1.02 $0.86 $1.95 $1.71
FFO per share diluted after net
derivative losses (SFAS No.
133) and before early surrender
lease adjustment $0.95 $0.82 $1.84 $1.65
(A) Represents cash received under contractual obligations.
BOSTON PROPERTIES, INC.
PORTFOLIO OCCUPANCY
Occupancy by Location
June 30, 2002 December 31, 2001
Greater Boston 93.2% 92.3%
Greater Washington, D.C. 97.5% 97.8%
Midtown Manhattan 98.4% 99.8%
Baltimore, MD 97.8% 99.2%
Richmond, VA 93.1% 98.4%
Princeton/East Brunswick, NJ 90.8% 88.6%
Greater San Francisco 93.6% 93.5%
Bucks County, PA 100.0% 100.0%
Total Portfolio 95.3% 95.3%
Occupancy by Type
June 30, 2002 December 31, 2001
Class A Office Portfolio 95.3% 95.4%
Office/Technical Portfolio 94.1% 97.9%
Industrial Portfolio 100.0% 87.3%
Total Portfolio 95.3% 95.3%
SOURCE Boston Properties, Inc.
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Related links:
http://www.bostonproperties.com
CONTACT:
Douglas T. Linde, Chief Financial Officer of
Boston Properties, Inc., +1-617-236-3300, General Info., Marilynn
Meek, +1-212-445-8431, Analysts, Claire Koeneman,
+1-617-520-7004, or Media, Judith Sylk-Siegel, +1-212-445-8431,
all of FRB Weber Shandwick
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