Reports Diluted FFO per Share of $1.00
BOSTON, Oct. 22 /PRNewswire-FirstCall/ -- Boston Properties, Inc.
(NYSE: BXP), a real estate investment trust, today reported results for the
third quarter ended September 30, 2002.
Funds from Operations (FFO) for the quarter ended September 30, 2002 were
$99.0 million, or $1.04 per share basic and $1.00 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 third quarter of 2002 compares to FFO of $86.6 million, or
$0.96 per share basic and $0.91 per share diluted for the quarter ended
September 30, 2001. This represents a 9.9% quarter to quarter increase in
diluted FFO per share. The weighted average number of basic and diluted
shares outstanding totaled 94,903,894 and 105,724,729, respectively, for the
quarter ended September 30, 2002 and 90,518,618 and 105,812,336, respectively,
for the same quarter last year.
Net income available to common shareholders per share (EPS) for the
quarter ended September 30, 2002 was $0.74 on a diluted basis reflecting a
32.1% increase in diluted EPS from the third quarter 2001 of $0.56.
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
September 30, 2002. In the opinion of management, all adjustments considered
necessary for a fair presentation of these reported results have been made.
As of September 30, 2002, the Company's portfolio consisted of 145
properties comprising more than 42.8 million square feet, including eight
properties under development totaling 3.1 million square feet. The overall
occupancy rate for the properties in service as of September 30, 2002 was
95.1%.
Significant events of the third quarter include:
-- The acquisition of 399 Park Avenue, a 1.68 million square foot
building in New York City for approximately $1.06 billion. The
acquisition was financed with an unsecured bridge loan totaling
$1.00 billion with interest rate terms and covenants similar to the
Company's unsecured line of credit and maturing in September 2003.
The building is fully leased, including approximately 40% that is
leased to Citigroup as its corporate headquarters. Third quarter
operating results reflect six days of property operations.
-- 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 Company completed the disposition of 7600 Boston Boulevard, 7700
Boston Boulevard and 7702 Boston Boulevard, office buildings in
Springfield, Virginia, recognizing a net gain of approximately
$13.5 million.
-- The Company completed the disposition of land parcels in Herndon,
Virginia and South San Francisco recognizing a net gain of
approximately $4.4 million.
-- The Company exercised a one-year extension on the 111 Huntington
Avenue $203.0 million construction loan. The Company has an
additional one-year option.
-- The Company recognized lease termination income totaling approximately
$1.8 million.
-- The Company completed its previously announced lease restructuring of
the Company's three hotel properties by forming a taxable REIT
subsidiary to operate the properties. Marriott will continue to
manage the properties under the terms of the existing management
agreements. In connection with the restructuring the revenue and
expenses of the hotel properties are being reflected in the Company's
Consolidated Statements of Operations.
-- The Company acquired a 1/2-acre site located in the Capital Hill
submarket of Washington, DC. The site is expected to support
development of 170,000 square feet of office space.
Transactions completed subsequent to September 30, 2002:
-- The Company refinanced its first mortgage totaling approximately
$146.9 million secured by 875 Third Avenue in New York City.
-- The Company repaid a $0.4 million mortgage secured by 201 Carnegie
Center in Princeton, New Jersey.
-- The Company exercised a one-year extension option on its 2600 Tower
Oaks $30 million construction loan facility. The Company has an
additional one-year option.
Boston Properties will host a conference call tomorrow, October 23, 2002
at 10:00 AM (Eastern Time), open to the general public, to discuss the results
of this year's third quarter. The number to call for this interactive
teleconference is (800) 374-1372. A replay of the conference call will be
available through October 31, 2002 by dialing (800) 642-1687 and entering the
passcode 5893201.
Additionally, a copy of Boston Properties' third quarter 2002
"Supplemental Operating and Financial Data" is 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 617-236-3322
or by written request to:
Investor Relations
Boston Properties, Inc.
111 Huntington Avenue, Suite 300
Boston, MA 02199-7610
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.
BOSTON PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended Nine months ended
September 30, September 30,
2002 2001 2002 2001
(unaudited and in thousands, except for
per share amounts)
Revenue
Rental:
Base rent $241,495 $231,295 $714,187 $623,157
Recoveries from tenants 29,256 27,277 87,367 80,226
Parking and other 13,056 12,965 38,910 40,244
Total rental revenue 283,807 271,537 840,464 743,627
Hotel revenue 20,007 - 20,007 -
Development and management
services 3,017 2,805 9,440 9,312
Interest and other 1,222 1,616 4,804 10,349
Total revenue 308,053 275,958 874,715 763,288
Expenses
Operating
Rental 93,741 81,259 265,942 227,968
Hotel 13,524 - 13,524 -
General and administrative 9,956 9,819 34,589 29,649
Interest 68,425 59,936 199,539 163,659
Depreciation and amortization 45,534 38,314 132,274 109,329
Loss on investments in
securities - - 4,297 6,500
Total expenses 231,180 189,328 650,165 537,105
Income before net derivative
losses, minority interests,
income from unconsolidated joint
ventures, minority interest in
Operating Partnership, gain on
sales of real estate and land
held for development,
discontinued operations,
cumulative effect of a change in
accounting principle and
preferred dividend 76,873 86,630 224,550 226,183
Net derivative losses (5,284) (16,620) (10,413) (24,408)
Minority interests in property
partnerships 720 374 1,902 629
Income from unconsolidated joint
ventures 2,530 997 5,871 2,841
Income before minority interest in
Operating Partnership, gain on
sales of real estate and land
held for development,
discontinued operations,
cumulative effect of a change in
accounting principle and
preferred dividend 74,839 71,381 221,910 205,245
Minority interest in Operating
Partnership (18,726) (18,851) (56,701) (55,727)
Income before gain on sale of
real estate and land held for
development, discontinued
operations, cumulative effect of
a change in accounting principle
and preferred dividend 56,113 52,530 165,209 149,518
Gain on sale of real estate, net
of minority interest - - - 6,505
Gain on sales of land held for
development, net of minority
interest 3,644 - 3,644 -
Income before discontinued
operations, cumulative effect of
a change in accounting principle
and preferred dividend 59,757 52,530 168,853 156,023
Discontinued Operations:
Income from discontinued
operations, net of minority
interest - 638 570 1,848
Gain on sales of real estate from
discontinued operations, net of
minority interest 11,910 - 17,750 -
Income before cumulative effect
of a change in accounting
principle and preferred dividend 71,667 53,168 187,173 157,871
Cumulative effect of a change in
accounting principle, net of
minority interest - - - (6,767)
Net income before preferred
dividend 71,667 53,168 187,173 151,104
Preferred dividend (126) (1,653) (3,412) (4,944)
Net income available to common
shareholders $71,541 $51,515 $183,761 $146,160
Basic earnings per share:
Income before discontinued
operations and cumulative
effect of a change in
accounting principle $0.63 $0.56 $1.79 $1.68
Discontinued operations - 0.01 0.01 0.02
Gain on sales from discontinued
operations 0.12 - 0.19 -
Cumulative effect of a change in
accounting principle - - - (0.07)
Net income available to common
shareholders $0.75 $0.57 $1.99 $1.63
Weighted average number of
common shares outstanding 94,904 90,519 92,413 89,753
Diluted earnings per share:
Income before discontinued
operations and cumulative
effect of a change in
accounting principle $0.62 $0.55 $1.76 $1.64
Discontinued operations - 0.01 0.01 0.02
Gain on sale from discontinued
operations 0.12 - 0.19 -
Cumulative effect of a change in
accounting principle - - - (0.07)
Net income available to common
shareholders $0.74 $0.56 $1.96 $1.59
Weighted average number of common
and common equivalent shares
outstanding 96,181 92,828 94,026 92,004
BOSTON PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
2002 2001
(in thousands, except for share amounts)
(unaudited)
ASSETS
Real estate $8,139,450 $6,167,399
Development in progress 416,839 1,107,835
Land held for future development 209,911 182,672
Less: accumulated depreciation (836,418) (719,854)
Total real estate 7,929,782 6,738,052
Cash and cash equivalents 28,793 98,067
Escrows 28,200 23,000
Investments in securities - 4,297
Tenant and other receivables, net 48,716 43,546
Accrued rental income, net 156,818 119,494
Deferred charges, net 148,435 107,573
Prepaid expenses and other assets 38,752 20,996
Investments in unconsolidated joint
ventures 101,819 98,485
Total assets $8,481,315 $7,253,510
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Mortgage notes and bonds payable $4,422,692 $4,314,942
Unsecured bridge loan 1,000,000 -
Unsecured line of credit 44,000 -
Accounts payable and accrued
expenses 69,097 81,108
Dividends and distributions payable 81,329 79,561
Interest rate contracts 15,115 11,147
Accrued interest payable 18,265 9,080
Other liabilities 70,292 58,859
Total liabilities 5,720,790 4,554,697
Commitments and contingencies - -
Minority interests 804,229 844,740
Series A Convertible Redeemable
Preferred Stock, liquidation preference
$50.00 per share, 0 and 2,000,000
shares issued and outstanding in 2002
and 2001, respectively - 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,
95,273,202 and 90,780,591 issued and
outstanding in 2002 and 2001,
respectively 953 908
Additional paid-in capital 1,977,560 1,789,521
Dividends in excess of earnings (2,532) (17,669)
Treasury common stock, at cost (2,722) (2,722)
Unearned compensation (3,355) (2,097)
Accumulated other comprehensive
loss (13,608) (13,868)
Total stockholders' equity 1,956,296 1,754,073
Total liabilities and
stockholders' equity $8,481,315 $7,253,510
BOSTON PROPERTIES, INC.
FUNDS FROM OPERATIONS
Three months ended Nine months ended
September 30, September 30,
2002 2001 2002 2001
(in thousands, except per share amounts)
(unaudited)
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 and land held for
development, discontinued
operations, cumulative effect of
a change in accounting principle
and preferred dividend $76,873 $86,630 $224,550 $226,183
Add:
Real estate depreciation and
amortization 46,971 39,360 136,502 112,516
Income from discontinued
operations - 781 697 2,277
Income from unconsolidated joint
ventures 2,530 997 5,871 2,841
Less:
Net derivative losses (SFAS No.
133) (5,284) (16,620) (10,413) (24,408)
Minority property partnerships'
share of funds from operations (521) (832) (1,833) (1,546)
Preferred dividends and
distributions (6,162) (8,383) (22,785) (24,864)
Funds from operations 114,407 101,933 332,589 292,999
Add (subtract):
Net derivative losses (SFAS No.
133) 5,284 16,620 10,413 24,408
Early surrender lease adjustment (A) 667 (12,445) 8,520 (12,445)
Funds from operations before net
derivative losses (SFAS No. 133)
and after early surrender lease
adjustment $120,358 $106,108 $351,522 $304,962
Funds from operations available to
common shareholders before net
derivative losses (SFAS No. 133)
and after early surrender lease
adjustment 98,980 $86,627 $287,784 $247,210
Weighted average shares
outstanding - basic 94,904 90,519 92,413 89,753
FFO per share basic before net
derivative losses (SFAS No.
133) and after early
surrender adjustment $1.04 $0.96 $3.11 $2.76
FFO per share basic after net
derivative losses (SFAS No.
133) and before early
surrender lease adjustment $0.99 $0.91 $2.95 $2.65
Weighted average shares
outstanding - diluted 105,725 105,812 105,870 104,991
FFO per share diluted before net
derivative losses (SFAS No.
133) and after early surrender
lease adjustment $1.00 $0.91 $2.96 $2.62
FFO per share diluted after net
derivative losses (SFAS No.
133) and before early
surrender lease adjustment $0.95 $0.87 $2.81 $2.53
(A) Represents cash received under contractual obligations.
BOSTON PROPERTIES, INC.
PORTFOLIO OCCUPANCY
Occupancy by Location
September 30, 2002 December 31, 2001
Greater Boston 94.0% 92.3%
Greater Washington, D.C. 98.1% 97.8%
Midtown Manhattan 98.2% 99.8%
Baltimore, MD 97.2% 99.2%
Richmond, VA 92.0% 98.4%
Princeton/East Brunswick, NJ 93.0% 88.6%
Greater San Francisco 88.6% 93.5%
Bucks County, PA 100.0% 100.0%
Total Portfolio 95.1% 95.3%
Occupancy by Type
September 30, 2002 December 31, 2001
Class A Office Portfolio 95.0% 95.4%
Office/Technical Portfolio 95.0% 97.9%
Industrial Portfolio 100.0% 87.3%
Total Portfolio 95.1% 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, +1-617-236-3300, or General, Marilynn Meek,
+1-212-445-8431, Media, Suzie Pileggi, +1-212-445-8170, both of
FRB Weber Shandwick
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