BXP Announces 2nd Quarter 2022 Results; Reports Q2 EPS of $1.42 and FFO Per Share of $1.94

Exceeded Q2 2022 Guidance for EPS and FFO; Increased Full Year 2022 Guidance for EPS and FFO; Executed 1.9 Million SF of Leases in Q2; and Expanded Presence in the Seattle Market

Boston Properties, Inc. (NYSE: BXP), the largest publicly traded developer, owner, and manager of Class A office properties in the United States, reported results today for the second quarter ended June 30, 2022.

Financial highlights for the second quarter include:

• Revenue grew more than 8% to $773.9 million for the quarter ended June 30, 2022, as compared to $713.8 million for the quarter ended June 30, 2021.
• Net income attributable to common shareholders of $223.0 million, or $1.42 per diluted share (EPS) for the quarter ended June 30, 2022, compared to $111.7 million, or $0.71 per diluted share, for the quarter ended June 30, 2021.
• Funds from Operations (FFO) of $304.6 million, or $1.94 per diluted share for the quarter ended June 30, 2022, compared to FFO of $268.6 million, or $1.72 per diluted share, for the quarter ended June 30, 2021.
• EPS and FFO per share exceeded the mid-points of BXP’s guidance by $0.62 and $0.09 per share, respectively. EPS included a gain on sale of $0.55 per share, and each of EPS and FFO included $0.09 per share of better-than-projected portfolio performance. The portfolio outperformance was partially due to lower-than-projected operating expenses of $0.05 per share resulting from the deferral of certain maintenance expenses. We expect to recognize a majority of those Q2 expense savings in the second half of 2022.

BXP provided guidance for (1) third quarter 2022 EPS of $0.74 - $0.76 and FFO of $1.86 - $1.88 per diluted share, and (2) full year 2022 EPS of $5.40 - $5.45 and FFO of $7.48 - $7.53 per diluted share. See “EPS and FFO per Share Guidance” below.

Second quarter and recent business highlights include:

• Executed approximately 1.9 million square feet of leases, the strongest leasing quarter since Q3 2019 and approximately 140% of our historical 10-year average for the quarter. Notable leases include:
  • A 570,000 square foot lease for the first phase of a future life sciences development at 290 Binney Street in Cambridge, MA. The lease and the commencement of development are subject to various conditions, some of which are not within BXP’s control
  • A 125,000 square foot lease at 767 Fifth Avenue (The GM Building) in New York City, New York
  • A 112,000 square foot lease with a life sciences client at 180 CityPoint in Waltham, Massachusetts
  • A 104,000 square foot lease at 140 Kendrick Street in Needham, Massachusetts
• Completed the acquisition of Madison Centre in Seattle, Washington, for a gross purchase price of approximately $730.0 million. Madison Centre is an approximately 755,000 square foot, 37-story, LEED-Platinum certified, Class A office property. Madison Centre was constructed in 2017, is approximately 93% leased, and is considered one of the highest quality buildings in Seattle. The acquisition was completed with a $730.0 million unsecured term loan that matures on May 16, 2023. As of June 30, 2022, the term loan bears interest at a variable rate equal to Term SOFR plus 0.95% per annum.
• Commenced two development projects within Reston Town Center in Reston, Virginia:
  • A residential property that is expected to consist of 508 units across a five-story low-rise building and an iconic 39-story tower, which will be one of the tallest buildings in Northern Virginia. The fifth floor of the tower will serve as a full-floor amenity level with a large co-working space, fitness center, sports bar/game area, communal kitchen, and numerous seating areas. A pool and a collection of fire pit areas will sit above a structured garage. The property is owned by a newly formed joint venture with an institutional partner in which BXP has a 20% interest. The joint venture obtained a $140.0 million construction loan that bears interest at a variable rate equal to SOFR plus 2.00% per annum and matures on May 13, 2026, with two, one-year extension options, subject to certain conditions.
  • Adjacent to the residential property, a Class A office and retail project that, when completed, will consist of approximately 90,000 square feet of boutique commercial space with highly efficient floor plates. Premium amenities will include a large rooftop terrace and indoor amenity space with a catering kitchen.
• In June 2022, completed and fully placed in-service 325 Main Street, a Class A office building with approximately 414,000 square feet of office and retail space located in Cambridge, Massachusetts. The office component, comprising approximately 380,000 square feet, is 100% leased.
• In June 2022, completed the sale of a portfolio of eleven suburban office properties aggregating approximately 733,000 net rentable square feet, located in Springfield, Virginia, for an aggregate gross sales price of $127.0 million. Net cash proceeds totaled approximately $121.9 million, and BXP recognized a gain on sale of real estate totaling approximately $96.2 million.
• In June 2022, refinanced the mortgage loan collateralized by Hub50House located in Boston, Massachusetts. The new mortgage loan has a principal balance of $185.0 million, bears interest at a variable rate equal to SOFR plus 1.35% per annum and matures on June 17, 2032. The property is owned by a joint venture in which BXP has a 50% interest. At closing, the joint venture entered into interest rate swap contracts with notional amounts aggregating $185.0 million effective through April 10, 2032, resulting in a fixed rate of approximately 4.432% per annum through the expiration of the interest rate swap contracts. The previous construction loan had an outstanding balance of approximately $176.7 million and matured in June 2022.
• Continued leadership and ongoing commitment to ESG and sustainability performance:
  • In April 2022, released BXP’s 2021 ESG Report, which highlights that BXP remains on track to achieve carbon-neutral operations by 2025. Following the report’s release, BXP hosted its first ESG Investor Webcast in June 2022.
  • In May 2022, received the 2022 ENERGY STAR^® Partner of the Year - Sustained Excellence Award from the U.S. Environmental Protection Agency and the U.S. Department of Energy for the second consecutive year.
  • In May 2022, BXP’s ESG rating was upgraded from ‘A’ to ‘AA’ by MSCI ESG Research. MSCI is a leading provider of in-depth research, ratings and analysis of environmental, social and governance-related business activities for the global investment community.
• In June 2022, celebrated the 25th Anniversary of BXP’s listing on the New York Stock Exchange. Representatives from BXP across the U.S. rang the closing bell on June 24th in recognition of this milestone.

The reported results are unaudited and there can be no assurance that these reported results will not vary from the final information for the quarter ended June 30, 2022. In the opinion of management, BXP has made all adjustments considered necessary for a fair statement of these reported results.

EPS and FFO per Share Guidance:

BXP’s guidance for the third quarter and full year 2022 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, the timing of the lease-up of available space, and the earnings impact of the events referenced in this release and those referenced during the related conference call. Except as otherwise publicly disclosed, the estimates do not include the impacts of any potential (1) capital markets activity, (2) future write-offs or reinstatements of accounts receivable and accrued rent balances, or (3) 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, impairment losses on depreciable real estate, and any gains or losses associated with disposition activity. BXP 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 on depreciable real estate, or gains or losses associated with disposition activities. There can be no assurance that BXP’s actual results will not differ materially from the estimates set forth below.

BXP will host a conference call on Wednesday, July 27, 2022 at 10:00 AM Eastern Time, open to the general public, to discuss the second quarter 2022 results, provide a business update, and discuss other business matters that may be of interest to investors. Participants who would like to join the call and ask a question may register here to receive the dial-in numbers and unique PIN to access the call. There will also be a live audio, listen-only webcast of the call, which may be accessed in the Investors section of BXP’s website. Shortly after the call, a replay of the call will be available on BXP’s website for up to twelve months following the call.

Additionally, a copy of BXP’s second quarter 2022 “Supplemental Operating and Financial Data” and this press release are available in the Investors section of BXP’s website at investors.bxp.com.

Boston Properties (NYSE: BXP) is the largest publicly traded developer, owner, and manager of Class A office properties in the United States, concentrated in six markets - Boston, Los Angeles, New York, San Francisco, Seattle, and Washington, DC. BXP is a fully integrated real estate company, organized as a real estate investment trust (REIT), that develops, manages, operates, acquires, and owns a diverse portfolio of primarily Class A office space. Including properties owned by unconsolidated joint ventures, BXP’s portfolio totals 53.7 million square feet and 193 properties, including twelve properties under construction/redevelopment. For more information about BXP, please visit our website at www.bxp.com or follow us on LinkedIn or Instagram.

This press release contains “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. You can identify these statements by our use of the words “anticipates,” “believes,” “budgeted,” “could,” “estimates,” “expects,” “guidance,” “intends,” “may,” “might,” “plans,” “projects,” “should,” “will,” and similar expressions that do not relate to historical matters. These statements are based on our current plans, expectations, projections and assumptions about future events. 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 BXP’s control. If our underlying assumptions prove inaccurate, or known or unknown risks or uncertainties materialize, actual results could differ materially from those expressed or implied by the forward-looking statement. These factors include, without limitation, the risks and uncertainties related to the impact of the COVID-19 global pandemic, including the emergence of additional variants, the effectiveness, availability and distribution of vaccines, including their efficacy against new variant strains and the willingness of individuals to be vaccinated, the impact of geopolitical conflicts, including the ongoing war in Ukraine, and the severity and duration of the indirect economic impacts of the foregoing, such as recession, supply chain disruptions, labor market disruptions, rising inflation, increasing interest rates, dislocation and volatility in capital markets, job losses, potential longer-term changes in consumer and client behavior, as well as possible future governmental responses, risks related to volatile or adverse global economic and geopolitical conditions, health crises and dislocations in the credit markets, risks associated with downturns in the national and local economies, increasing interest rates, and volatility in the securities markets, BXP’s ability to enter into new leases or renew leases on favorable terms, dependence on clients’ 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, the effects of acquisitions, dispositions and possible impairment charges on our operating results, the impact of newly adopted accounting principles on BXP’s accounting policies and on period-to-period comparisons of financial results, the uncertainties of costs to comply with regulatory changes (including potential costs to comply with the Securities and Exchange Commission’s proposed rules to standardize climate-related disclosures) and other risks and uncertainties detailed from time to time in BXP’s filings with the SEC. These forward-looking statements speak only as of the date of issuance of this report and are not guarantees of future results, performance, or achievements. BXP does not undertake a duty to update or revise any forward-looking statement whether as a result of new information, future events or otherwise, except as may be required by law.

Financial tables follow.

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