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What changed in BXP, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of BXP, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+512 added−473 removedSource: 10-K (2024-02-27) vs 10-K (2023-02-27)

Top changes in BXP, Inc.'s 2023 10-K

512 paragraphs added · 473 removed · 341 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

198 edited+104 added−83 removed68 unchanged
Biggest changeCommon Shareholders $ 848,947 $ 496,223 $ 352,724 71.08 % Preferred stock redemption charge — 6,412 (6,412) (100.00) % Preferred dividends — 2,560 (2,560) (100.00) % Net Income Attributable to Boston Properties, Inc. 848,947 505,195 343,752 68.04 % Net Income Attributable to Noncontrolling Interests: Noncontrolling interest—common units of the Operating Partnership 96,780 55,931 40,849 73.03 % Noncontrolling interests in property partnerships 74,857 70,806 4,051 5.72 % Net Income 1,020,584 631,932 388,652 61.50 % Other Expenses: Add: Interest expense 437,139 423,346 13,793 3.26 % Losses from early extinguishment of debt — 45,182 (45,182) (100.00) % Unrealized loss on non-real estate investment 150 — 150 100.00 % Loss from unconsolidated joint ventures 59,840 2,570 57,270 2,228.40 % Other Income: Less: Gains (losses) from investments in securities (6,453) 5,626 (12,079) (214.70) % Other income - assignment fee 6,624 — 6,624 100.00 % Interest and other income (loss) 11,940 5,704 6,236 109.33 % Gain on sales-type lease 10,058 — 10,058 100.00 % Gains on sales of real estate 437,019 123,660 313,359 253.40 % Other Expenses: Add: Depreciation and amortization expense 749,775 717,336 32,439 4.52 % Transaction costs 2,905 5,036 (2,131) (42.32) % Payroll and related costs from management services contracts 15,450 12,487 2,963 23.73 % General and administrative expense 146,378 151,573 (5,195) (3.43) % Other Revenue: Less: Direct reimbursements of payroll and related costs from management services contracts 15,450 12,487 2,963 23.73 % Development and management services revenue 28,056 27,697 359 1.30 % Net Operating Income $ 1,929,527 $ 1,814,288 $ 115,239 6.35 % 68 Table of Contents BPLP Year ended December 31, 2022 2021 Increase/ (Decrease) % Change (in thousands) Net Income Attributable to Boston Properties Limited Partnership Common Unitholders $ 957,265 $ 561,993 $ 395,272 70.33 % Preferred unit redemption charge — 6,412 (6,412) (100.00) % Preferred distributions — 2,560 (2,560) (100.00) % Net Income Attributable to Boston Properties Limited Partnership 957,265 570,965 386,300 67.66 % Net Income Attributable to Noncontrolling Interests: Noncontrolling interests in property partnerships 74,857 70,806 4,051 5.72 % Net Income 1,032,122 641,771 390,351 60.82 % Other Expenses: Add: Interest expense 437,139 423,346 13,793 3.26 % Losses from early extinguishment of debt — 45,182 (45,182) (100.00) % Unrealized loss on non-real estate investment 150 — 150 100.00 % Loss from unconsolidated joint ventures 59,840 2,570 57,270 2,228.40 % Other Income: Less: Gains (losses) from investments in securities (6,453) 5,626 (12,079) (214.70) % Other income - assignment fee 6,624 — 6,624 100.00 % Interest and other income (loss) 11,940 5,704 6,236 109.33 % Gain on sales-type lease 10,058 — 10,058 100.00 % Gains on sales of real estate 441,075 125,198 315,877 252.30 % Other Expenses: Add: Depreciation and amortization expense 742,293 709,035 33,258 4.69 % Transaction costs 2,905 5,036 (2,131) (42.32) % Payroll and related costs from management services contracts 15,450 12,487 2,963 23.73 % General and administrative expense 146,378 151,573 (5,195) (3.43) % Other Revenue: Less: Direct reimbursements of payroll and related costs from management services contracts 15,450 12,487 2,963 23.73 % Development and management services revenue 28,056 27,697 359 1.30 % Net Operating Income $ 1,929,527 $ 1,814,288 $ 115,239 6.35 % At December 31, 2022 and 2021, we owned or had joint venture interests in a portfolio of 194 and 201 commercial real estate properties, respectively (in each case, the “Total Property Portfolio”).
Biggest changeFor a detailed discussion of Net Operating Income (“NOI”), including the reasons management believes NOI is useful to investors, see page 71 . 68 T able of Contents BXP Year ended December 31, 2023 2022 Increase/ (Decrease) % Change (in thousands) Net Income Attributable to Boston Properties, Inc. $ 190,215 $ 848,947 $ (658,732) (77.59) % Net Income Attributable to Noncontrolling Interests: Noncontrolling interest—common units of the Operating Partnership 22,548 96,780 (74,232) (76.70) % Noncontrolling interests in property partnerships 78,661 74,857 3,804 5.08 % Net Income 291,424 1,020,584 (729,160) (71.45) % Other Expenses: Add: Interest expense 579,572 437,139 142,433 32.58 % Losses from interest rate contracts 79 — 79 100.00 % Loss from unconsolidated joint ventures 239,543 59,840 179,703 300.31 % Other Income: Less: Unrealized gain (loss) on non-real estate investment 239 (150) 389 259.33 % Gains (losses) from investments in securities 5,556 (6,453) 12,009 186.10 % Other income - assignment fee — 6,624 (6,624) (100.00) % Interest and other income (loss) 69,964 11,940 58,024 485.96 % Gain on sales-type lease — 10,058 (10,058) (100.00) % Gains on sales of real estate 517 437,019 (436,502) (99.88) % Other Expenses: Add: Depreciation and amortization expense 830,813 749,775 81,038 10.81 % Transaction costs 4,313 2,905 1,408 48.47 % Payroll and related costs from management services contracts 17,771 15,450 2,321 15.02 % General and administrative expense 170,158 146,378 23,780 16.25 % Other Revenue: Less: Direct reimbursements of payroll and related costs from management services contracts 17,771 15,450 2,321 15.02 % Development and management services revenue 40,850 28,056 12,794 45.60 % Net Operating Income $ 1,998,776 $ 1,929,527 $ 69,249 3.59 % 69 T able of Contents BPLP Year ended December 31, 2023 2022 Increase/ (Decrease) % Change (in thousands) Net Income Attributable to Boston Properties Limited Partnership $ 219,771 $ 957,265 $ (737,494) (77.04) % Net Income Attributable to Noncontrolling Interests: Noncontrolling interests in property partnerships 78,661 74,857 3,804 5.08 % Net Income 298,432 1,032,122 (733,690) (71.09) % Other Expenses: Add: Interest expense 579,572 437,139 142,433 32.58 % Losses from interest rate contracts 79 — 79 100.00 % Loss from unconsolidated joint ventures 239,543 59,840 179,703 300.31 % Other Income: Less: Unrealized gain (loss) on non-real estate investment 239 (150) 389 259.33 % Gains (losses) from investments in securities 5,556 (6,453) 12,009 186.10 % Other income - assignment fee — 6,624 (6,624) (100.00) % Interest and other income (loss) 69,964 11,940 58,024 485.96 % Gain on sales-type lease — 10,058 (10,058) (100.00) % Gains on sales of real estate 517 441,075 (440,558) (99.88) % Other Expenses: Add: Depreciation and amortization expense 823,805 742,293 81,512 10.98 % Transaction costs 4,313 2,905 1,408 48.47 % Payroll and related costs from management services contracts 17,771 15,450 2,321 15.02 % General and administrative expense 170,158 146,378 23,780 16.25 % Other Revenue: Less: Direct reimbursements of payroll and related costs from management services contracts 17,771 15,450 2,321 15.02 % Development and management services revenue 40,850 28,056 12,794 45.60 % Net Operating Income $ 1,998,776 $ 1,929,527 $ 69,249 3.59 % At December 31, 2023 and 2022, we owned or had joint venture interests in a portfolio of 188 and 194 commercial real estate properties, respectively (in each case, the “Total Property Portfolio”).
This accounting resulted in a step-up of the real estate assets at BXP that was allocated to certain properties.
This accounting resulted in a step-up of the real estate assets at BXP that was allocated to certain properties.
Real Estate Purchase Price Allocations We assess the fair value of acquired tangible and intangible assets (including land, buildings, tenant improvements, “above-” and “below-market” leases, leasing and assumed financing origination costs, acquired in-place leases, other identified intangible assets and assumed liabilities) and allocate the purchase price to the acquired assets and assumed liabilities, including land and buildings as if vacant.
Real Estate Purchase Price Allocations We assess the fair value of acquired tangible and intangible assets (including land, buildings, tenant improvements, “above-” and “below-market” leases, leasing and assumed financing origination costs, acquired in-place leases, other identified intangible assets and assumed liabilities (including ground leases)) and allocate the purchase price to the acquired assets and assumed liabilities, including land and buildings as if vacant.
Virginia 95 Office Park consists of eleven office/flex properties aggregating approximately 733,000 net rentable square feet. On March 31, 2022, we completed the sale of 195 West Street located in Waltham, Massachusetts for a gross sale price of $37.7 million.
Virginia 95 Office Park consists of eleven Class A office/flex properties aggregating approximately 733,000 net rentable square feet. On March 31, 2022, we completed the sale of 195 West Street located in Waltham, Massachusetts for a gross sale price of $37.7 million.
(5) Capital contributions to unconsolidated joint ventures for the year ended December 31, 2022 consisted primarily of cash contributions of approximately $120.8 million, $56.9 million, $45.2 million and $24.7 million to our 200 Fifth Avenue, Gateway Commons, Platform 16 and 751 Gateway joint ventures, respectively.
Capital contributions to unconsolidated joint ventures for the year ended December 31, 2022 consisted primarily of cash contributions of approximately $120.8 million, $56.9 million, $45.2 million and $24.7 million to our 200 Fifth Avenue, Gateway Commons, Platform 16 and 751 Gateway joint ventures, respectively.
Net cash proceeds totaled approximately $512.3 million, resulting in a gain on sale of real estate of approximately $237.4 million for BXP and approximately $237.5 million for BPLP. 601 Massachusetts Avenue is an approximately 479,000 net rentable square foot premier workplace.
Net cash proceeds totaled approximately $512.3 million, resulting in a gain on sale of real estate totaling approximately $237.4 million for BXP and approximately $237.5 million for BPLP. 601 Massachusetts Avenue is an approximately 479,000 net rentable square foot premier workplace.
(2) Construction in progress for the year ended December 31, 2022 included ongoing expenditures associated with 2100 Pennsylvania Avenue, which was partially placed in-service, and 325 Main Street, 880 Winter Street and Reston Next, which were completed and fully placed in-service during the year ended December 31, 2022.
Construction in progress for the year ended December 31, 2022 included ongoing expenditures associated with 2100 Pennsylvania Avenue, which was partially placed in-service, and 325 Main Street, 880 Winter Street and Reston Next, which were completed and fully placed in-service during the year ended December 31, 2022.
Under the 2021 Credit Facility, BPLP may increase the total commitment by up to $500.0 million by increasing the amount of the Revolving Facility and/or by incurring one or more term loans, in each case, subject to syndication of the increase and other conditions.
Under the 2021 Credit Facility, BPLP may increase the total commitment by up to $500.0 million by increasing the amount of the Revolving Facility and/or by incurring one or more term loans, in each case, subject to syndication of the increase and other conditions (the “Accordion”).
Termination income for the year ended December 31, 2022 related to approximately 29 clients across the Same Property Portfolio and totaled approximately $6.7 million, which was primarily related to clients that terminated leases early in New York City. In addition, we received a distribution from our unsecured credit claim against Lehman Brothers, Inc. of approximately $0.6 million.
Termination income for the year ended December 31, 2022 related to 27 clients across the Same Property Portfolio and totaled approximately $6.7 million, which was primarily related to clients that terminated leases early in New York City. In addition, we received a distribution from our unsecured credit claim against Lehman Brothers, Inc. of approximately $0.6 million.
By comparison, our general and administrative expense increased (decreased) by approximately $(6.5) million and $5.6 million during the year ended December 31, 2022 and 2021, respectively, as a result of increases (decreases) in our liability under our deferred compensation plans that was associated with the performance of the specific investments selected by officers and former non-employee directors of BXP participating in the plans.
By comparison, our general and administrative expense increased (decreased) by approximately $5.6 million and $(6.5) million during the year ended December 31, 2023 and 2022, respectively, as a result of increases (decreases) in our liability under our deferred compensation plans that was associated with the performance of the specific investments selected by officers and former non-employee directors of BXP participating in the plans.
Unconsolidated Joint Venture s Impairment Our investments in unconsolidated joint ventures are reviewed for indicators of impairment on a quarterly basis and we record impairment charges when events or circumstances change indicating that a decline in the fair values below the carrying amounts has occurred and such decline is other-than-temporary.
Unconsolidated Joint Ventures Impairment Our investments in unconsolidated joint ventures are reviewed for indicators of impairment on a quarterly basis and we record impairment charges when events or circumstances change indicating that a decline in the fair values below the carrying amounts has occurred and such decline is other-than-temporary.
(2) Each of Investment to Date, Estimated Total Investment and Estimated Future Equity Requirement represent our share of acquisition expenses, as applicable, and reflect our share of the estimated net revenue/expenses that we expect to incur prior to stabilization of the project, including any amounts actually received or paid through December 31, 2022.
(2) Each of Investment to Date, Estimated Total Investment and Estimated Future Equity Requirement represent our share of acquisition expenses, as applicable, and reflect our share of the estimated net revenue/expenses that we expect to incur prior to stabilization of the project, including any amounts actually received or paid through December 31, 2023.
We use NOI internally as a performance measure and believe it provides useful information to investors regarding our results of operations and financial condition because, when compared across periods, it reflects the impact on operations from trends in occupancy rates, rental rates, operating costs and acquisition and development activity on an unleveraged basis, providing perspective not immediately apparent from net income attributable to Boston Properties, Inc. common shareholders and net income attributable to Boston Properties Limited Partnership common unitholders.
We use NOI internally as a performance measure and believe it provides useful information to investors regarding our results of operations and financial condition because, when compared across periods, it reflects the impact on operations from trends in occupancy rates, rental rates, operating costs and acquisition and development activity on an unleveraged basis, providing perspective not immediately apparent from net income attributable to Boston Properties, Inc. and net income attributable to Boston Properties Limited Partnership.
Management generally considers FFO to be useful measures for understanding and comparing our operating results 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 differ across owners of similar assets in similar condition based on historical cost accounting and useful life estimates), FFO can help investors compare the operating performance of a company’s real estate across reporting periods and to the operating performance of other companies.
Management generally considers FFO to be useful measures for understanding and comparing our operating results because, by excluding gains and losses related to sales or a change in control of previously depreciated operating real estate assets, impairment losses and real estate asset depreciation and amortization (which can differ across owners of similar assets in similar condition based on historical cost accounting and useful life estimates), FFO can help investors compare the operating performance of a company’s real estate across reporting periods and to the operating performance of other companies.
At BPLP’s option, the 2023 Unsecured Term Loan will bear interest at a rate per annum equal to (1) a base rate equal to the greatest of (a) the Federal Funds rate plus 1/2 of 1%, (b) the administrative agent’s prime rate, (c) Term SOFR for a one-month period plus 1.00%, and (d) 1.00%, in each case, plus a margin ranging from 0 to 60 basis points based on BPLP’s credit rating; or (2) a rate equal to adjusted Term SOFR with a one-month period plus a margin ranging from 75 to 160 basis points based on BPLP’s credit rating.
At BPLP’s option, loans under the 2023 Unsecured Term Loan will bear interest at a rate per annum equal to (1) a base rate equal to the greatest of (a) the Federal Funds rate plus 0.5%, (b) the administrative agent’s prime rate, (c) Term SOFR for a one-month period plus 1.00%, and (d) 1.00%, in each case, plus a margin ranging from 0 to 60 basis points based on BPLP’s credit rating; or (2) a rate equal to adjusted Term SOFR with a one-month period plus a margin ranging from 75 to 160 basis points based on BPLP’s credit rating.
In addition, we incurred costs associated with our continued development/redevelopment of 190 CityPoint (formerly 180 CityPoint), View Boston Observatory at The Prudential Center, 103 CityPoint, Reston Next Office Phase II, 140 Kendrick Street Building A, 760 Boylston Street and 105 Carnegie Center.
In addition, we incurred costs associated with our continued development/redevelopment of 180 CityPoint, View Boston observatory at The Prudential Center, 103 CityPoint, Reston Next Office Phase II, 140 Kendrick Street Building A, 760 Boylston Street and 105 Carnegie Center.
Item 1. Business—Transactions During 2022 .” Critical Accounting Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, or GAAP, requires management to use judgment in the application of accounting policies, including making estimates and assumptions.
Item 1. Business—Transactions During 2023 .” Critical Accounting Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, or GAAP, requires management to use judgment in the application of accounting policies, including making estimates and assumptions.
The joint venture entered into an interest rate cap agreement with a financial institution to limit its exposure to increases in the SOFR rate at a cap of 2.50% per annum on a notional amount of $250.0 million through September 1, 2023.
The joint venture entered into an interest rate cap agreement with a financial institution to limit its exposure to increases in the SOFR rate at a cap of 2.50% per annum on a notional amount of $250.0 million through September 1, 2024.
Gains (Losses) from Investments in Securities Gains (losses) from investments in securities for the year ended December 31, 2022 and 2021 related to investments that we have made to reduce our market risk relating to deferred compensation plans that we maintain for BXP’s officers and former non-employee directors.
Gains (Losses) from Investments in Securities Gains (losses) from investments in securities for the year ended December 31, 2023 and 2022 related to investments that we have made to reduce our market risk relating to deferred compensation plans that we maintain for BXP’s officers and former non-employee directors.
Factors to be considered include estimates of carrying costs during hypothetical expected lease-up periods considering current market conditions, and costs to execute similar leases. In estimating carrying costs, we include real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the 65 Table of Contents expected lease-up periods, depending on local market conditions.
Factors to be considered include estimates of carrying costs during hypothetical expected lease-up periods considering current market conditions, and costs to execute similar leases. In estimating carrying costs, we include real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up periods, depending on local market conditions.
Therefore, the comparison of operating results for the year ended December 31, 2022 and 2021 show separately the changes attributable to the properties that were owned by us and in-service throughout each period compared (the “Same Property Portfolio”) and the changes attributable to the properties included in the Acquired, Placed In-Service, Development or Redevelopment or Sold Portfolios.
Therefore, the comparison of operating results for the year ended December 31, 2023 and 2022 show separately the changes attributable to the properties that were owned by us and in-service throughout each period compared (the “Same Property Portfolio”) and the changes attributable to the properties included in the Acquired, Placed In-Service, In or Held for Development or Redevelopment or Sold Portfolios.
Under the deferred compensation plans, each officer or non-employee director who is eligible to participate is permitted to defer a portion of the officer’s current income or the non-employee director’s compensation on a pre-tax basis and receive a tax-deferred return on these deferrals 78 Table of Contents based on the performance of specific investments selected by the officer or non-employee director.
Under the deferred compensation plans, each officer or non-employee director who is eligible to participate is permitted to defer a portion of the officer’s current income or the non-employee director’s compensation on a pre-tax basis and receive a tax-deferred return on these deferrals based on the performance of specific investments selected by the officer or non-employee director.
For a discussion concerning our unconsolidated joint venture debt, see Note 6 to the Consolidated Financial Statements and “ Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources—Investment in Unconsolidated Joint Ventures - Secured Debt. ” 96 Table of Contents Funds from Operations 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,” for each of BXP and BPLP by adjusting net income (loss) attributable to Boston Properties, Inc. common shareholders and net income (loss) attributable to Boston Properties Limited Partnership common unitholders (computed in accordance with GAAP), respectively, for gains (or losses) from sales of properties, impairment losses on depreciable real estate consolidated on our balance sheet, impairment losses on our investments in unconsolidated joint ventures driven by a measurable decrease in the fair value of depreciable real estate held by the unconsolidated joint ventures and our share of real estate-related depreciation and amortization.
For a discussion concerning our unconsolidated joint venture debt, see Note 6 to the Consolidated Financial Statements and “ Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources—Investment in Unconsolidated Joint Ventures - Secured Debt. ” Funds from Operations 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,” for each of BXP and BPLP by adjusting net income attributable to Boston Properties, Inc. common shareholders and net income attributable to Boston Properties Limited Partnership common unitholders (computed in accordance with GAAP), respectively, for gains (or losses) from sales of properties, including a change in control, impairment losses on depreciable real estate consolidated on our balance sheet, impairment losses on our investments in unconsolidated joint ventures driven by a measurable decrease in the fair value of depreciable real estate held by the unconsolidated joint ventures and our share of real estate-related depreciation and amortization.
Discussions of 2020 items and year-to-year comparisons between 2021 and 2020 that are not included in this Form 10-K can be found in “ Management’s Discussion and Analysis of Financial Condition and Results of Operation s” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2021, which was filed with the SEC on February 25, 2022.
Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 that are not included in this Form 10-K can be found in “ Management’s Discussion and Analysis of Financial Condition and Results of Operation s” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the SEC on February 27, 2023.
For additional information see the Explanatory Note that follows the cover page of this Annual Report on Form 10-K. Comparison of the year ended December 31, 2022 to the year ended December 31, 2021 The table below shows selected operating information for the Same Property Portfolio and the Total Property Portfolio.
For additional information see the Explanatory Note that immediately follows the cover page of this Annual Report on Form 10-K. Comparison of the year ended December 31, 2023 to the year ended December 31, 2022 The table below shows selected operating information for the Same Property Portfolio and the Total Property Portfolio.
NOI should not be considered as a substitute for net income attributable to Boston Properties, Inc. common shareholders or net income attributable to Boston Properties Limited Partnership common unitholders (determined in accordance with GAAP) or any other GAAP financial measures and should only be considered together with and as a supplement to our financial information prepared in accordance with GAAP.
NOI should not be considered as a substitute for net income attributable to Boston Properties, Inc. or net income attributable to Boston Properties Limited Partnership (determined in accordance with GAAP) or any other GAAP financial measures and should only be considered together with and as a supplement to our financial information prepared in accordance with GAAP.
The Avant at Reston Town Center is a 15-story, 359-unit, luxury multifamily building 88 Table of Contents consisting of approximately 329,000 net rentable square feet, excluding retail space. We retained ownership of the approximately 26,000 square foot ground-level retail space.
The Avant at Reston Town Center is a 15-story, 359-unit, luxury multifamily building consisting of approximately 329,000 net rentable square feet, excluding retail space. We retained ownership of the approximately 26,000 square foot ground-level retail space.
The financing bore interest at a fixed rate of 8.00% per annum, compounded monthly, and was scheduled to mature on the fifth anniversary of the date on which the base 89 Table of Contents building of the affiliate of The Bernstein Companies’ hotel property was substantially completed.
The financing bore interest at a fixed rate of 8.00% per annum, compounded monthly, and was scheduled to mature on the fifth anniversary of the date on which the base building of the affiliate of The Bernstein Companies’ hotel property was substantially completed.
In our analysis of operating results, particularly to make comparisons of net operating income between periods more meaningful, it is important to provide information for properties that were in-service and owned by us throughout each period presented.
In our analysis of operating results, particularly to make comparisons of NOI between periods more meaningful, it is important to provide information for properties that were in-service and owned by us throughout each period presented.
During the year ended December 31, 2022 and 2021, we recognized gains (losses) of approximately $(6.5) million and $5.6 million, respectively, on these investments.
During the year ended December 31, 2023 and 2022, we recognized gains (losses) of approximately $5.6 million and $(6.5) million, respectively, on these investments.
We earn a fee from the joint venture for providing the guarantee and have an agreement with our partners to reimburse the joint venture for their share of any payments made under the guarantee (See Note 8 to the Consolidated Financial Statements). (5) This property is owned by a consolidated entity in which we have a 55% interest.
We earn a fee from the joint venture for providing the guarantee and have an agreement with our partners to reimburse the joint venture for their share of any payments made under the guarantee (See Note 9 to the Consolidated Financial Statements). (7) This property is owned by a consolidated entity in which we have a 55% interest.
We believe that in order to understand our operating results, NOI should be examined in conjunction with net income attributable to Boston Properties, Inc. common shareholders and net income attributable to Boston Properties Limited Partnership common unitholders as presented in our Consolidated Financial Statements.
We believe that in order to understand our operating results, NOI should be examined in conjunction with net income attributable to Boston Properties, Inc. and net income attributable to Boston Properties Limited Partnership as presented in our Consolidated Financial Statements.
The calculation of consolidated market capitalization does not include LTIP Units issued in the form of MYLTIP Awards unless and until certain performance thresholds are achieved and they are earned. Because their three-year performance periods have not yet ended, 2020 - 2022 MYLTIP Units are not included in this calculation as of December 31, 2022.
The calculation of consolidated market capitalization does not include LTIP Units issued in the form of MYLTIP Awards unless and until certain performance thresholds are achieved and they are earned. Because their three-year performance periods have not yet ended, 2021 - 2023 MYLTIP Units are not included in this calculation as of December 31, 2023.
We refer to properties acquired or placed in-service prior to the beginning of the 69 Table of Contents earliest period presented and owned by us and in-service through the end of the latest period presented as our Same Property Portfolio.
We refer to properties acquired or placed in-service prior to the beginning of the earliest period presented and owned by us and in-service through the end of the latest period presented as our Same Property Portfolio.
Net cash proceeds totaled approximately $35.4 million, resulting in a gain on sale of real estate totaling approximately $22.7 million for BXP and approximately $23.4 million for BPLP. 195 West Street is an approximately 63,500 net rentable square foot office property.
Net cash proceeds totaled approximately $35.4 million, resulting in a gain on sale of real estate totaling approximately $22.7 million for BXP and approximately $23.4 million for BPLP. 195 West Street is an approximately 63,500 net rentable square foot premier workplace.
BXP The net difference between the tax basis and the reported amounts of BXP’s assets and liabilities was approximately $2.1 billion and $1.8 billion as of December 31, 2022 and 2021, respectively, which was primarily related to the difference in basis of contributed property and accrued rental income.
BXP The net difference between the tax basis and the reported amounts of BXP’s assets and liabilities was approximately $2.0 billion and $2.1 billion as of December 31, 2023 and 2022, respectively, which was primarily related to the difference in basis of contributed property and accrued rental income.
Consolidated market capitalization is the sum of: (1) our consolidated debt; plus (2) the product of (x) the closing price per share of BXP Common Stock on December 31, 2022, as reported by the New York Stock Exchange, multiplied by (y) the sum of: 90 Table of Contents (i) the number of outstanding shares of Common Stock of BXP, (ii) the number of outstanding OP Units in BPLP (excluding OP Units held by BXP), (iii) the number of OP Units issuable upon conversion of all outstanding LTIP Units, assuming all conditions have been met for the conversion of the LTIP Units, and (iv) the number of OP Units issuable upon conversion of 2012 OPP Units, and 2013 - 2019 MYLTIP Units that were issued in the form of LTIP Units.
Consolidated market capitalization is the sum of: (1) our consolidated debt; plus (2) the product of (x) the closing price per share of BXP common stock on December 29, 2023, as reported by the New York Stock Exchange, multiplied by (y) the sum of: (i) the number of outstanding shares of common stock of BXP, (ii) the number of outstanding OP Units in BPLP (excluding OP Units held by BXP), (iii) the number of OP Units issuable upon conversion of all outstanding LTIP Units, assuming all conditions have been met for the conversion of the LTIP Units, and (iv) the number of OP Units issuable upon conversion of 2012 OPP Units, and 2013 - 2020 MYLTIP Units that were issued in the form of LTIP Units.
In order to reduce our market risk relating to these plans, we typically acquire, in a separate account that is not restricted as to its use, similar or identical investments as those selected by each officer or non-employee director.
In order to 79 T able of Contents reduce our market risk relating to these plans, we typically acquire, in a separate account that is not restricted as to its use, similar or identical investments as those selected by each officer or non-employee director.
We draw on multiple financing sources to fund our long-term capital needs. We expect to fund our current development/redevelopment properties primarily with our available cash balances, construction loans, unsecured term loans, proceeds from asset sales and BPLP’s Revolving Facility.
We draw on multiple financing sources to fund our long-term capital needs. We expect to fund our current development/redevelopment properties primarily with our available cash balances, funding from institutional private equity partners, construction loans, unsecured term loans, proceeds from asset sales and BPLP’s Revolving Facility.
The Total Property Portfolio includes the effects of the other properties either acquired, placed in-service, in development or redevelopment after January 1, 2021 or disposed of on or prior to December 31, 2022.
The Total Property Portfolio includes the effects of the other properties either acquired, placed in-service, in or held for development or redevelopment after January 1, 2022 or disposed of on or prior to December 31, 2023.
Our primary objectives when undertaking hedging transactions and derivative positions is to reduce our floating rate exposure and to fix a portion of the interest rate for anticipated financing and refinancing transactions. This in turn, reduces the risks that the variability of cash flows imposes on variable rate debt. Our strategy mitigates against future increases in our interest rates.
Our primary objectives when undertaking hedging transactions and derivative positions is to reduce our floating rate exposure and to fix a portion of the interest rate for anticipated financing and refinancing transactions. This in turn, reduces the risks that the variability of cash flows imposes on variable rate debt.
If market interest rates on our variable rate debt had been 100 basis points greater, total interest expense would have increased approximately $7.3 million, on an annualized basis, for the year ended December 31, 2022. The information above does not include our unconsolidated joint venture debt.
If market interest rates on our variable rate debt had been 100 basis points greater, total interest expense would have increased approximately $21.0 million, on an annualized basis for the year ended December 31, 2023. The information above does not include our unconsolidated joint venture debt.
(2) Consists of the portion of income from unconsolidated joint ventures related to the gain on sale of real estate associated with the sale of our ownership interest in the joint venture that owned Annapolis Junction Buildings Six and Seven for the year ended December 31, 2021 and Annapolis Junction Building Eight and two land parcels for the year ended December 31, 2020.
(2) Consists of the portion of income from unconsolidated joint ventures related to the gain on sale of real estate associated with the sale of our ownership interest in the joint venture that owned Annapolis Junction Buildings Six and Seven for the year ended December 31, 2021.
(2) Consists of the portion of income from unconsolidated joint ventures related to the gain on sale of real estate associated with the sale of our ownership interest in the joint venture that owned Annapolis Junction Buildings Six and Seven for the year ended December 31, 2021 and Annapolis Junction Building Eight and two land parcels for the year ended December 31, 2020.
(2) Consists of the portion of income from unconsolidated joint ventures related to the gain on sale of real estate associated with the sale of our ownership interest in the joint venture that owned Annapolis Junction Buildings Six and Seven for the year ended December 31, 2021.
Seventeen of these ventures have mortgage indebtedness. We exercise significant influence over, but do not control, these entities. As a result, we account for them using the equity method of accounting. See also Note 6 to the Consolidated Financial Statements.
We exercise significant influence over, but do not control, these entities. As a result, we account for them using the equity method of accounting. See also Note 6 to the Consolidated Financial Statements.
Our liquidity and capital resources depend on a wide range of factors and we believe that our access to capital and our strong liquidity, including the approximately $1.5 billion available under the Revolving Facility and our available cash, as of February 21, 2023, are sufficient to fund our remaining capital requirements on existing development and redevelopment projects, fund acquisitions, repay our maturing indebtedness when due (if not refinanced), satisfy our REIT distribution requirements and still allow us to act opportunistically on attractive investment opportunities.
Our liquidity and capital resources depend on a wide range of factors, and we believe that our access to capital and our strong liquidity, including the approximately $1.8 billion available under BPLP’s Revolving Facility and our available cash, as of February 20, 2024, are sufficient to fund our remaining capital needs on existing development and redevelopment projects, fund acquisitions, repay our maturing indebtedness when due (if not refinanced or extended), satisfy our REIT distribution requirements and still allow us to act opportunistically on attractive investment opportunities.
If our hold strategy changes or market conditions otherwise dictate an earlier sale date, an impairment loss may be recognized and such loss could be material. If we determine that an impairment has occurred, the affected assets must be reduced to their fair value.
If our hold strategy changes or market conditions otherwise dictate a shorter hold period, an impairment loss may be recognized and such loss could be material. If we determine that an impairment has occurred, the affected assets must be reduced to their fair value.
For additional information on the sales of the above properties refer to “Results of Operations—Other Income and Expense Items—Gains on Sales of Real Estate” within “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Residential Net Operating Income Net operating income for our residential same properties increased by approximately $9.6 million for the years ended December 31, 2022 compared to 2021.
For additional information on the sales of the above properties refer to “Results of Operations—Other Income and Expense Items—Gains on Sales of Real Estate” within “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Residential Net Operating Income Net operating income for our residential same properties increased by approximately $3.0 million for the year ended December 31, 2023 compared to 2022.
We expect to satisfy these needs using one or more of the following: • cash flow from operations; 81 Table of Contents • distribution of cash flows from joint ventures; • cash and cash equivalent balances; • borrowings under BPLP’s Revolving Facility, unsecured term loans, short-term bridge facilities and construction loans; • long-term secured and unsecured indebtedness (including unsecured exchangeable indebtedness); • sales of real estate and interests in joint ventures owning real estate; • private equity sources, including through our Strategic Capital Program (“SCP”) with large institutional investors; and • issuances of BXP equity securities and/or preferred or common units of partnership interests in BPLP.
We expect to satisfy these needs using one or more of the following: • cash flow from operations; • distribution of cash flows from joint ventures; • cash and cash equivalent balances; • borrowings under BPLP’s Revolving Facility, unsecured term loans, short-term bridge facilities and construction loans; • long-term secured and unsecured indebtedness (including unsecured exchangeable indebtedness); • sales of real estate and interests in joint ventures owning real estate; • private equity sources, including institutional investors; and • issuances of BXP equity securities and/or preferred or common units of partnership interests in BPLP.
Our sources of revenue also include third-party fees generated by our property management, leasing, development and construction businesses, as well as the sale of assets from time to time. We believe these sources of capital will continue to provide the funds necessary for our short-term liquidity needs.
Our sources of revenue also include third-party fees generated by our property management, leasing, development and construction businesses, interest earned on cash deposits and, from time to time, the sale of assets. We believe these sources of capital will continue to provide the funds necessary for our short-term liquidity needs.
The timing and amount of these payments is subject to change. We invest in a non-real estate fund, which is primarily an environmentally focused investment fund, with an aggregate commitment to contribute $10.0 million. As of December 31, 2022, we have contributed $2.4 million, which includes required fees, with $7.8 million remaining to be contributed.
The timing and amount of these payments is subject to change. We invest in a non-real estate fund, which is primarily an environmentally focused investment fund, with an aggregate commitment to contribute $10.0 million. As of December 31, 2023, we have contributed approximately $4.6 million, which includes required fees, with $5.4 million remaining to be contributed.
The weighted-average term of our in-place leases, including leases signed by our unconsolidated joint ventures, excluding residential units, was approximately 7.9 years as of December 31, 2022, with occupancy rates historically in the range of 88% to 94%.
The weighted-average term of our in-place leases, including leases signed by our unconsolidated joint ventures, excluding residential units, was approximately 7.8 years as of December 31, 2023, with occupancy rates historically in the range of 88% to 92%.
Total possible revenue is determined by valuing average occupied units at contract rates and average vacant units at Market Rents. Vacancy loss is determined by valuing vacant units at current 74 Table of Contents Market Rents.
Total possible revenue is determined by valuing average occupied units at contract rates and average vacant units at Market Rents. Vacancy loss is determined by valuing vacant units at current Market Rents.
For a summary of our consolidated debt as of December 31, 2022 and 2021 refer to the heading “ Liquidity and Capital Resources—Debt Financing” within “ Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations. ” 80 Table of Contents Noncontrolling Interests in Property Partnerships Noncontrolling interests in property partnerships increased by approximately $4.1 million for the year ended December 31, 2022 compared to 2021, as detailed below.
For a summary of our consolidated debt as of December 31, 2023 refer to the heading “ Liquidity and Capital Resources—Debt Financing” within “ Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations. ” Noncontrolling Interests in Property Partnerships Noncontrolling interests in property partnerships increased by approximately $3.8 million for the year ended December 31, 2023 compared to 2022, as detailed below.
(4) In connection with the refinancing of the loan, we guaranteed the consolidated entity’s obligation to fund various reserves for tenant improvement costs and allowances, leasing commissions and free rent obligations in lieu of cash deposits. As of December 31, 2022, the maximum funding obligation under the guarantee was approximately $13.7 million.
(6) In connection with the refinancing of the loan, we guaranteed the consolidated entity’s obligation to fund various reserves for tenant improvement costs and allowances, leasing commissions and free rent obligations in lieu of cash deposits. As of December 31, 2023, the maximum funding obligation under the guarantee was approximately $8.5 million.
We have various service contracts with vendors related to our property management. In addition, we have certain other contracts we enter into in the ordinary course of business that may extend beyond one year. These contracts include terms that provide for cancellation with insignificant or no cancellation penalties. Contract terms are generally between three and five years.
In addition, we have certain other contracts we enter into in the ordinary course of business that may extend beyond one year. These contracts include terms that provide for cancellation with insignificant or no cancellation penalties. Contract terms are generally between three and five years.
At December 31, 2022, the aggregate carrying amount of debt, including both our and our partners’ share, incurred by these ventures was approximately $4.0 billion (of which our 94 Table of Contents proportionate share is approximately $1.6 billion). The table below summarizes the outstanding debt of these joint venture properties at December 31, 2022.
At December 31, 2023, the aggregate carrying amount of debt, including both our and our partners’ share, incurred by these ventures was approximately $3.4 billion (of which our proportionate share is approximately $1.4 billion). The table below summarizes the outstanding debt of these joint venture properties at December 31, 2023.
Name Date Sold Property Type Square Feet Sale Price Net Cash Proceeds Gain on Sale of Real Estate (dollars in millions) 2022 195 West Street March 31, 2022 Office 63,500 $ 37.7 $ 35.4 $ 23.4 Virginia 95 Office Park June 15, 2022 Office/Flex 733,421 127.5 121.9 99.5 601 Massachusetts Avenue August 30, 2022 Office 478,667 531.0 512.3 237.5 Broadrun Land Parcel September 15, 2022 Land N/A 27.0 25.6 24.4 The Avant at Reston Town Center November 8, 2022 Residential 329,195 141.0 139.6 55.6 $ 864.2 $ 834.8 $ 440.4 (1) 2021 6595 Springfield Center Drive December 13, 2018 Office 634,000 N/A N/A $ 8.1 (2) 181, 191 and 201 Spring Street October 25, 2021 Office 333,000 $ 191.5 $ 179.9 117.1 $ 191.5 $ 179.9 $ 125.2 _____________ (1) Excludes approximately $0.7 million of gains on sales of real estate recognized during the year ended December 31, 2022 related to gains on sales of real estate occurring in the prior year.
Name Date Sold Property Type Square Feet Sale Price Net Cash Proceeds Gain on Sale of Real Estate (dollars in millions) 2023 N/A $ — $ — $ — (1) 2022 195 West Street March 31, 2022 Office 63,500 $ 37.7 $ 35.4 $ 23.4 Virginia 95 Office Park June 15, 2022 Office/Flex 733,421 127.5 121.9 99.5 601 Massachusetts Avenue August 30, 2022 Office 478,667 531.0 512.3 237.5 Broadrun Land Parcel September 15, 2022 Land N/A 27.0 25.6 24.4 The Avant at Reston Town Center November 8, 2022 Residential 329,195 141.0 139.6 55.6 $ 864.2 $ 834.8 $ 440.4 (2) ___________ (1) Excludes approximately $0.5 million of gains on sales of real estate recognized during the year ended December 31, 2023 related to gain amounts from sales of real estate occurring in the prior year.
Rental revenue and real estate operating expenses from our Properties in Development or Redevelopment Portfolio decreased by approximately $3.3 million and $0.2 million, respectively, for the year ended December 31, 2022 compared to 2021, as detailed below.
Rental revenue and real estate operating expenses from our Properties in or Held for Development or Redevelopment Portfolio decreased by approximately $14.6 million and $2.6 million, respectively, for the year ended December 31, 2023 compared to 2022, as detailed below.
Year ended December 31, 2022 2021 2020 shares/units (in thousands) Basic Funds from Operations 174,360 173,150 172,643 Effect of Dilutive Securities: Stock based compensation 411 260 85 Diluted Funds from Operations 174,771 173,410 172,728 Material Cash Commitments As of December 31, 2022, we were subject to contractual payment obligations, excluding our unconsolidated joint ventures commitments.
Year ended December 31, 2023 2022 2021 shares/units (in thousands) Basic Funds from Operations 174,796 174,360 173,150 Effect of Dilutive Securities: Stock based compensation 338 411 260 Diluted Funds from Operations 175,134 174,771 173,410 Material Cash Commitments As of December 31, 2023, we were subject to contractual payment obligations, excluding our unconsolidated joint ventures commitments.
The increase was a result of our average revenue per square foot increasing by approximately $2.96, contributing approximately $99.3 million, partially offset by average occupancy decreasing from 91.7% to 91.1%, resulting in a decrease of approximately $17.2 million. Termination Income Termination income decreased by approximately $4.2 million for the year ended December 31, 2022 compared to 2021.
The increase was a result of our average revenue per square foot increasing by approximately $1.88, contributing approximately $70.3 million, partially offset by average occupancy decreasing from 91.2% to 90.2%, resulting in a decrease of approximately $31.2 million. Termination Income Termination income decreased by approximately $4.3 million for the year ended December 31, 2023 compared to 2022.
The Same Property Portfolio consists of 124 properties totaling approximately 37.8 million net rentable square feet, excluding unconsolidated joint ventures. The Same Property Portfolio includes properties acquired or placed in-service on or prior to January 1, 2021 and owned and in service through December 31, 2022.
The Same Property Portfolio consists of 125 properties totaling approximately 38.3 million net rentable square feet, excluding unconsolidated joint ventures. The Same Property Portfolio includes properties acquired or placed in-service on or prior to January 1, 2022 and owned and in service through December 31, 2023.
(2) Includes long-term incentive plan units (including 2012 OPP Units and 2013 - 2019 MYLTIP Units) but excludes the 2020 - 2022 MYLTIP Units because the three-year performance periods had not ended as of December 31, 2022. (3) See page 95 for additional information. (4) See page 94 for additional information.
(2) Includes long-term incentive plan units (including 2012 OPP Units and 2013 - 2020 MYLTIP Units) but excludes the 2021 - 2023 MYLTIP Units because the three-year performance periods had not ended as of December 31, 2023. (3) See page 97 for additional information.
For additional information, see the Explanatory Note that follows the cover page of this Annual Report on Form 10-K. BXP Gains on sales of real estate increased by approximately $313.4 million for the year ended December 31, 2022 compared to 2021, as detailed below.
For additional information, see the Explanatory Note that immediately follows the cover page of this Annual Report on Form 10-K. BXP Gains on sales of real estate decreased by approximately $436.5 million for the year ended December 31, 2023 compared to 2022, as detailed below.
Name Date Sold Property Type Square Feet Sale Price Net Cash Proceeds Gain on Sale of Real Estate (dollars in millions) 2022 195 West Street March 31, 2022 Office 63,500 $ 37.7 $ 35.4 $ 22.7 Virginia 95 Office Park June 15, 2022 Office/Flex 733,421 127.5 121.9 96.2 601 Massachusetts Avenue August 30, 2022 Office 478,667 531.0 512.3 237.4 Broadrun Land Parcel September 15, 2022 Land N/A 27.0 25.6 24.4 The Avant at Reston Town Center November 8, 2022 Residential 329,195 141.0 139.6 55.6 $ 864.2 $ 834.8 $ 436.3 (1) 2021 6595 Springfield Center Drive December 13, 2018 Office 634,000 N/A N/A $ 8.1 (2) 181, 191 and 201 Spring Street October 25, 2021 Office 333,000 $ 191.5 $ 179.9 115.6 $ 191.5 $ 179.9 $ 123.7 _____________ (1) Excludes approximately $0.7 million of gains on sales of real estate recognized during the year ended December 31, 2022 related to gains on sales of real estate occurring in the prior year.
Name Date Sold Property Type Square Feet Sale Price Net Cash Proceeds Gain on Sale of Real Estate (dollars in millions) 2023 N/A $ — $ — $ — (1) 2022 195 West Street March 31, 2022 Office 63,500 $ 37.7 $ 35.4 $ 22.7 Virginia 95 Office Park June 15, 2022 Office/Flex 733,421 127.5 121.9 96.2 601 Massachusetts Avenue August 30, 2022 Office 478,667 531.0 512.3 237.4 Broadrun Land Parcel September 15, 2022 Land N/A 27.0 25.6 24.4 The Avant at Reston Town Center November 8, 2022 Residential 329,195 141.0 139.6 55.6 $ 864.2 $ 834.8 $ 436.3 (2) ___________ (1) Excludes approximately $0.5 million of gains on sales of real estate recognized during the year ended December 31, 2023 related to gain amounts from sales of real estate occurring in the prior year. 78 T able of Contents (2) Excludes approximately $0.7 million of gains on sales of real estate recognized during the year ended December 31, 2022 related to gain amounts from sales of real estate occurring in the prior year.
As of December 31, 2022, the net carrying amounts of our investments in unconsolidated joint ventures was approximately $1.6 billion, which includes investments with deficit balances aggregating approximately $85.4 million included within Other Liabilities in our Consolidated Balance Sheets.
As of December 31, 2023, the net carrying amounts of our investments in unconsolidated joint ventures was approximately $1.3 billion, which includes investments with deficit balances aggregating approximately $39.9 million included within Other Liabilities in our Consolidated Balance Sheets.
Rental revenue and real estate operating expenses from our Properties Placed In-Service Portfolio increased by approximately $68.6 million and $15.4 million, respectively, for the year ended December 31, 2022 compared to 2021, as detailed below.
Rental revenue and real estate operating expenses from our Properties Placed In-Service Portfolio increased by approximately $82.2 million and $23.6 million, respectively, for the year ended December 31, 2023 compared to 2022, as detailed below.
On January 4, 2023, upon entry into the credit agreement, BPLP exercised its option to draw $1.2 billion under the 2023 Unsecured Term Loan, a portion of which was used to repay in full the 2022 Unsecured Term Loan, which was scheduled to mature on May 16, 2023.
Upon entry into the credit agreement, BPLP exercised its option to draw $1.2 billion under the 2023 Unsecured Term Loan, a portion of which was used to repay in full the 2022 Unsecured Term Loan, which was scheduled to mature on May 16, 2023. There was no prepayment penalty associated with the repayment of the 2022 Unsecured Term Loan.
(11) The loan bears interest at a variable rate equal to the greater of (x) 2.35% or (y) SOFR plus 2.32% per annum and matures on September 1, 2026.
(11) The loan bears interest at a variable rate equal to the greater of (x) 2.35% or (y) SOFR plus 2.32% per annum.
Our future earnings, cash flows and fair values relevant to financial instruments are dependent upon prevalent market interest rates. Our primary market risk results from our indebtedness, which bears interest at fixed and variable rates. The fair value of our debt obligations are affected by changes in the market interest rates.
Market Risk Market risk is the risk of loss from adverse changes in market prices and interest rates. Our future earnings, cash flows and fair values relevant to financial instruments are dependent upon prevalent market interest rates. Our primary market risk results from our indebtedness, which bears interest at fixed and variable rates.
In our unconsolidated joint venture portfolio, we have approximately $603.2 million (our share) of debt maturating in 2023 and 2024. We expect to fund 2023 and 2024 debt maturities using available cash balances, proceeds from asset sales, draws on BPLP’s Revolving Facility, and/or through refinancings.
In our unconsolidated joint venture portfolio, we have approximately $343.2 million (our share) of debt maturing in 2024. We expect to fund the foregoing debt maturities using available cash balances, proceeds from asset sales, draws on BPLP’s Revolving Facility, and/or through refinancings using secured debt or unsecured debt, or both.
During the year ended December 31, 2022, we paid approximately $302.7 million to fund client-related obligations, including tenant improvements and leasing commissions.
During the year ended December 31, 2023, we paid approximately $388.6 million to fund client-related obligations, including tenant improvements and leasing commissions.
Wages directly related to the development of rental properties are capitalized and included in real estate assets on our Consolidated Balance Sheets and amortized over the useful lives of the applicable asset or lease term. Capitalized wages for the year ended December 31, 2022 and 2021 were approximately $16.1 million and $13.7 million, respectively.
Wages directly related to the development of rental properties are capitalized and included in real estate assets on our Consolidated Balance Sheets and amortized over the useful lives of the applicable asset or lease 76 T able of Contents term. Capitalized wages for each of the years ended December 31, 2023 and 2022 were approximately $16.1 million.
We record acquired “above-” and “below-market” leases at their fair values (using a discount rate which reflects the risks associated with the leases acquired) equal to the difference between (1) the contractual amounts to be paid pursuant to each in-place lease and (2) management’s estimate of fair market lease rates for each corresponding in-place lease, measured over a period equal to the remaining term of the lease for above-market leases and the initial term plus the term of any below-market fixed rate renewal options for below-market leases.
Based on our acquisitions to date, our allocation to customer relationship intangible assets has been immaterial. 65 T able of Contents We record acquired “above-” and “below-market” leases at their fair values (using a discount rate which reflects the risks associated with the leases acquired) equal to the difference between (1) the contractual amounts to be paid pursuant to each in-place lease and (2) management’s estimate of fair market lease rates for each corresponding in-place lease, measured over a period equal to the remaining term of the lease for above-market leases and the initial term plus the term of any below-market fixed rate renewal options for below-market leases.
(3) Our calculation includes OP Units and vested LTIP Units (including vested 2012 OPP Units and vested 2013 - 2019 MYLTIP Units).
(5) Our calculation includes OP Units and vested LTIP Units (including vested 2012 OPP Units and vested 2013 - 2020 MYLTIP Units).
(2) For a detailed discussion of NOI, including the reasons management believes NOI is useful to investors, see page 70. Residential Net Operating Income for the year ended December 31, 2022 and 2021 is comprised of Residential Revenue of $57,181 and $42,668 less Residential Expenses of $29,583 and $24,444, respectively.
(2) For a detailed discussion of NOI, including the reasons management believes NOI is useful to investors, see page 71. Residential Net Operating Income for the year ended December 31, 2023 and 2022 is comprised of Residential Revenue of $47,592 and $57,181 less Residential Expenses of $23,250 and $29,583, respectively.
At December 31, 2022 and February 21, 2023, BPLP had no borrowings under its Revolving Facility and outstanding letters of credit totaling approximately $6.4 million, with the ability to borrow approximately $1.5 billion. Unsecured Term Loans On May 17, 2022, BPLP entered into the 2022 Unsecured Term Loan, which provided for a single borrowing of up to $730.0 million.
At December 31, 2023 and February 20, 2024, BPLP had no borrowings under its Revolving Facility and outstanding letters of credit totaling approximately $6.7 million, with the ability to borrow approximately $1.8 billion. Unsecured Term Loan On January 4, 2023, BPLP entered into the 2023 Unsecured Term Loan, which provided for a single borrowing of up to $1.2 billion.
These transactions were accounted for as asset acquisitions, and the purchase price of each was allocated based on the relative fair values of the assets acquired and liabilities assumed (See Note 3 to the Consolidated Financial Statements).
This transaction was accounted for as an asset acquisition, and the purchase price was allocated based on the relative fair values of the assets acquired and liabilities assumed (See Note 3 to the Consolidated Financial Statements).
Consolidated Debt to Consolidated Market Capitalization Ratio is a measure of leverage commonly used by analysts in the REIT sector. We present this measure as a percentage and it is calculated by dividing (A) our consolidated debt by (B) our consolidated market capitalization, which is the market value of our outstanding equity securities plus our consolidated debt.
We present this measure as a percentage and it is calculated by dividing (A) our consolidated debt by (B) our consolidated market capitalization, which is the market value of our outstanding equity securities plus our consolidated debt.
Inflation We are exposed to inflation risk, as income from long-term leases is the primary source of our cash flows from operations. There are provisions in the majority of our client leases that protect us from, and mitigate the risk of, the impact of inflation.
We have not sold any shares under this ATM stock offering program. Inflation We are exposed to inflation risk, as income from long-term leases is the primary source of our cash flows from operations. There are provisions in the majority of our client leases that protect us from, and mitigate the risk of, the impact of inflation.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAny one or more of the foregoing could: • reduce our cash flows, • adversely impact our ability to finance, refinance or sell a property, • adversely impact our ability to continue paying distributions to our equityholders at current levels, or at all, and • result in additional legal and other costs to enforce our rights, collect rent and/or re-lease the space occupied by the distressed client; • the degree to which our clients’ businesses have been, and continue to be, negatively impacted has required, and may in the future require, us to write-off a client’s accrued rent balance and this could have a material adverse effect on our results of operations and liquidity; • new laws, governmental policies, and similar actions, including legal restrictions on prosecutions, could adversely impact public safety and thereby adversely affect (1) the desirability of clients to lease space in our properties or markets, and (2) businesses’ office re-population plans; • the impact of COVID-19 could result in an event or change in circumstances that results in an impairment in the value of our properties or our investments in unconsolidated joint ventures, and any such impairment could have a material adverse effect on our results of operations in the periods in which the charge is taken; • we may be unable to restructure or amend leases with certain of our clients on terms favorable to us or at all; • the impact and validity of interpretations of lease provisions and applicable laws related to claims by clients regarding their obligations to pay rent as a result of COVID-19, and any adverse court rulings or decisions interpreting these provisions and laws, could have a material adverse effect on our results of operations and liquidity; • the impact of governmental and business travel limitations and restrictions have had, and may in the future have, a material adverse effect on the operator of our hotel property, which negatively impacts our revenues, and may result in sustained decreased demand for hotel stays; • the extent of labor shortages, disruptions in the supply chains, inflation impacting costs of materials, delays in permitting or inspections, and other factors could result in our failure to meet the development milestones set forth in any applicable lease agreement, which could provide the client the right to terminate its lease or entitle the client to monetary damages, delay the commencement or completion of construction and our anticipated lease-up plans for a development/redevelopment project or our overall development pipeline, including recognizing revenue for new leases, that may cause returns on investment to be less than projected, and/or increase the costs of construction of new or existing projects, any of which could adversely affect our investment returns, profitability and/or our future growth; and • the potential that business interruption, loss of rental income and/or other associated expenses related to our operations will not be covered in whole or in part by our insurance policies, which may increase unreimbursed liabilities.
Biggest changeAny one or more of the foregoing could: • reduce our cash flows, • adversely impact our ability to finance, refinance or sell a property, • adversely impact our ability to continue paying distributions to our securityholders at current levels, or at all, and • result in additional legal and other costs to enforce our rights, collect rent and/or re-lease the space occupied by the distressed client; • the degree to which our clients’ businesses are negatively impacted could require us to write-off a client’s accrued rent balance and this could have a material adverse effect on our results of operations and liquidity; • new laws, governmental policies, and similar actions, including legal restrictions on prosecutions, could adversely impact public safety and thereby adversely affect (1) the desirability of clients to lease space in our properties or markets, and (2) businesses’ office re-population plans; • the impact of a pandemic could result in an event or change in circumstances that results in an impairment in the value of our properties or our investments in unconsolidated joint ventures, and any such impairment could have a material adverse effect on our results of operations in the periods in which the charge is taken; • we may be unable to restructure or amend leases with certain of our clients on terms favorable to us or at all; 36 T able of Contents • the impact and validity of interpretations of lease provisions and applicable laws related to claims by clients regarding their obligations to pay rent as a result of a pandemic, and any adverse court rulings or decisions interpreting these provisions and laws, could have a material adverse effect on our results of operations and liquidity; • the impact of governmental and business travel limitations and restrictions could result in temporary or sustained periods of decreased demand for hotel stays at our hotel property; • the extent of labor shortages, disruptions in the supply chains, inflation impacting costs of materials, delays in permitting or inspections, and other factors could result in our failure to meet the development milestones set forth in any applicable lease agreement, which could provide the client the right to terminate its lease or entitle the client to monetary damages, delay the commencement or completion of construction and our anticipated lease-up plans for a development/redevelopment project or our overall development pipeline, including recognizing revenue for new leases, that may cause returns on investment to be less than projected, and/or increase the costs of construction of new or existing projects, any of which could adversely affect our investment returns, profitability and/or our future growth; and • the potential that business interruption, loss of rental income and/or other associated expenses related to our operations will not be covered in whole or in part by our insurance policies, which may increase unreimbursed liabilities.
Such adverse economic and geopolitical conditions may be due to, among other issues, prolonged labor market challenges impacting the recruitment and retention of talent, continued inflation, high interest rates, and volatility in the public equity and debt markets, and international economic and other conditions, including pandemics, geopolitical instability and other conditions beyond our control.
Such adverse economic and geopolitical conditions may be due to, among other issues, prolonged labor market challenges impacting the recruitment and retention of talent, continued inflation, high interest rates, volatility in the public equity and debt markets, and international economic and other conditions, including pandemics, geopolitical instability and other conditions beyond our control.
These current conditions, or similar conditions existing in the future, may adversely affect our results of operations, financial condition and ability to pay dividends and/or distributions as a result of the following, among other potential consequences: • the financial condition of our clients may be adversely affected, which may result in client defaults under leases due to bankruptcy, lack of liquidity, lack of funding, operational failures or for other reasons; • significant job losses and/or a sustained shift away from collective in-person work environments or relocations away from the markets in which we operate may occur, which could decrease overall demand for workplaces in the regions in which we operate and cause market rental rates and property values to be negatively impacted; • tightening labor market conditions may adversely affect our ability to recruit and retain talent, which may result in lack of business continuity and increased costs to address the labor challenges; • our ability to borrow on terms and conditions that we find acceptable, or at all, may be limited, which could reduce our ability to pursue acquisition and development opportunities and refinance existing debt, reduce our returns from our acquisition and development activities and increase our future interest expense; • reduced values of our properties may limit our ability to dispose of assets at attractive prices or to obtain debt financing secured by our properties and may reduce the availability of unsecured loans; • the value and liquidity of our short-term investments and cash deposits could be reduced as a result of a deterioration of the financial condition of the institutions that hold our cash deposits or the institutions or assets in which we have made short-term investments, a dislocation of the markets for our short-term investments, increased volatility in market rates for such investments or other factors; • one or more lenders under our line of credit could refuse to fund their financing commitment to us or could fail and we may not be able to replace the financing commitment of any such lenders on favorable terms, or at all; and • to the extent we enter into derivative financial instruments, one or more counterparties to our derivative financial instruments could default on their obligations to us, or could fail, increasing the risk that we may not realize the benefits of these instruments.
These current conditions, or similar conditions existing in the future, may adversely affect our results of operations, financial condition and ability to pay dividends and/or distributions as a result of the following, among other potential consequences: • the financial condition of our clients may be adversely affected, which may result in client defaults under leases due to bankruptcy, lack of liquidity, lack of funding, operational failures or for other reasons; • significant job losses and/or a sustained shift away from collective in-person work environments or relocations away from the markets in which we operate may occur, which could decrease overall demand for workplaces in the regions in which we operate and cause market rental rates and property values to be negatively impacted; 26 T able of Contents • tightening labor market conditions may adversely affect our ability to recruit and retain talent, which may result in lack of business continuity and increased costs to address the labor challenges; • our ability to borrow on terms and conditions that we find acceptable, or at all, may be limited, which could reduce our ability to pursue acquisition and development opportunities and refinance existing debt, reduce our returns from our acquisition and development activities and increase our future interest expense; • reduced values of our properties may limit our ability to dispose of assets at attractive prices or to obtain debt financing secured by our properties and may reduce the availability of unsecured loans; • the value and liquidity of our short-term investments and cash deposits could be reduced as a result of a deterioration of the financial condition of the institutions that hold our cash deposits or the institutions or assets in which we have made short-term investments, a dislocation of the markets for our short-term investments, increased volatility in market rates for such investments or other factors; • one or more lenders under our line of credit could refuse to fund their financing commitment to us or could fail and we may not be able to replace the financing commitment of any such lenders on favorable terms, or at all; and • to the extent we enter into derivative financial instruments, one or more counterparties to our derivative financial instruments could default on their obligations to us, or could fail, increasing the risk that we may not realize the benefits of these instruments.
Our acquisition activities and their success are subject to the following risks: • even if we enter into an acquisition agreement for a property, we may be unable to complete that acquisition after making a non-refundable deposit and incurring certain other acquisition-related costs; • we may be unable to obtain or assume financing for acquisitions on favorable terms or at all; • acquired properties may fail to perform as expected; • the actual costs of repositioning, redeveloping or maintaining acquired properties may be greater than our estimates; • the acquisition agreement will likely contain conditions to closing, including completion of due diligence investigations to our satisfaction or other conditions that are not within our control, which may not be satisfied; • acquired properties may be located in new markets, either within or outside the United States, where we may face risks associated with a lack of market knowledge or understanding of the local economy, lack of business relationships in the area, costs associated with opening a new regional office and unfamiliarity with local governmental and permitting procedures; 33 Table of Contents • we may acquire real estate through the acquisition of the ownership entity subjecting us to the risks of that entity; and • we may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of properties, into our existing operations, and this could have an adverse effect on our results of operations and financial condition.
Our acquisition activities and their success are subject to the following risks: • even if we enter into an acquisition agreement for a property, we may be unable to complete that acquisition after making a non-refundable deposit and incurring certain other acquisition-related costs; • we may be unable to obtain or assume financing for acquisitions on favorable terms or at all; • acquired properties may fail to perform as expected; • the actual costs of repositioning, redeveloping or maintaining acquired properties may be greater than our estimates; • the acquisition agreement will likely contain conditions to closing, including completion of due diligence investigations to our satisfaction or other conditions that are not within our control, which may not be satisfied; • acquired properties may be located in new markets, either within or outside the United States, where we may face risks associated with a lack of market knowledge or understanding of the local economy, lack of business relationships in the area, costs associated with opening a new regional office and unfamiliarity with local governmental and permitting procedures; • we may acquire real estate through the acquisition of the ownership entity subjecting us to the risks of that entity; and • we may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of properties, into our existing operations, and this could have an adverse effect on our results of operations and financial condition.
Investments in international markets may also subject us to risks associated with funding increasing headcount, integrating new offices, and establishing effective controls and procedures to regulate the operations of new offices and to monitor compliance with U.S. laws and regulations such as the Foreign Corrupt Practices Act and similar foreign laws and regulations, such as the U.K.
Investments in international markets may also subject us to risks associated with funding increasing headcount, integrating new offices, and establishing effective controls and procedures to regulate the operations of new offices and to monitor compliance with U.S. laws and regulations such as the Foreign Corrupt Practices Act and similar foreign laws and regulations, such as the U.K. Bribery Act.
The following factors, among others, may adversely affect the income generated by our properties: • downturns in the national, regional and local economic conditions (particularly increases in unemployment); • changes in client preferences and space utilization from full-time, collective in-person work environments to hybrid or remote work models, which could decrease overall demand for workplaces and cause market rental rates and property values to be negatively impacted; • competition from other office, life sciences, hotel, retail and residential buildings; • local real estate market conditions, such as oversupply or reduction in demand for office, life sciences, hotel, retail or residential space; • changes in interest rates and availability of financing; • vacancies, changes in market rental rates and the need to periodically repair, renovate and re-let space; • delays in completion of development and redevelopment projects due to supply chain disruptions and labor shortages; • increased costs to maintain, renovate and develop our properties related to inflation; • changes in space utilization by our clients due to technology, economic conditions and business culture; • increased operating costs, including insurance expense, utilities, real estate taxes, state and local taxes and heightened security costs; • civil disturbances, earthquakes and other natural disasters or terrorist acts or acts of war which may result in uninsured or underinsured losses or decrease the desirability to our clients in impacted locations; • significant expenditures associated with each investment, such as debt service payments, real estate taxes (including reassessments and changes in tax laws), insurance and maintenance costs which are generally not reduced when circumstances cause a reduction in revenues from a property; • declines in the financial condition of our clients and our ability to collect rents from our clients; and • decreases in the underlying value of our real estate.
The following factors, among others, may adversely affect the income generated by our properties: • downturns in the national, regional and local economic conditions (particularly increases in unemployment); • changes in client preferences and space utilization from full-time, collective in-person work environments to hybrid or remote work models, which could decrease overall demand for workplaces and cause market rental rates and property values to be negatively impacted; • competition from other office, life sciences, hotel, retail and residential buildings; • local real estate market conditions, such as oversupply or reduction in demand for office, life sciences, hotel, retail or residential space; • changes in interest rates and availability of financing; • vacancies, changes in market rental rates and the need to periodically repair, renovate and re-let space; 27 T able of Contents • delays in completion of development and redevelopment projects due to supply chain disruptions and labor shortages; • increased costs to maintain, renovate and develop our properties related to inflation; • changes in space utilization by our clients due to technology, economic conditions and business culture; • increased operating costs, including insurance expense, utilities, real estate taxes, state and local taxes and heightened security costs; • civil disturbances, earthquakes and other natural disasters or terrorist acts or acts of war which may result in uninsured or underinsured losses or decrease the desirability to our clients in impacted locations; • significant expenditures associated with each investment, such as debt service payments, real estate taxes (including reassessments and changes in tax laws), insurance and maintenance costs which are generally not reduced when circumstances cause a reduction in revenues from a property; • declines in the financial condition of our clients and our ability to collect rents from our clients; and • decreases in the underlying value of our real estate.
Making these loans subjects us to the following risks, each of which could have a material adverse effect on our cash flow, results of operations and/or financial condition: • the third party may be unable to make full and timely payments of interest and principal on the loan when due; • if the third-party buyer to whom we provide seller financing does not manage the property well, or the property otherwise fails to meet financial projections, performs poorly or declines in value, then the buyer may not have the funds or ability to raise new debt with which to make required payments of interest and principal to us; • if we loan funds to a joint venture, and the joint venture is unable to make required payments of interest or principal, or both, or there are disagreements with respect to the repayment of the loan or other matters, then we could have a resulting dispute with our partner(s), and such a dispute could harm our relationship(s) with our partner(s) and cause delays in developing or selling the property or the failure to properly manage the property; and • if we loan funds to a joint venture and the joint venture is unable to make required payments of interest and principal, or both, then we may exercise remedies available to us in the joint venture agreement that could allow us to increase our ownership interest or our control over major decisions, or both, which could result in an unconsolidated joint venture becoming consolidated with our financial statement; doing so could require us to reallocate the purchase price among the various asset and liability components and this could result in material changes to our reported results of operations and financial condition.
Making these loans subjects us to the following risks, each of which could have a material adverse effect on our cash flow, results of operations and/or financial condition: • the third party may be unable to make full and timely payments of interest and principal on the loan when due; • if the third-party buyer to whom we provide seller financing does not manage the property well, or the property otherwise fails to meet financial projections, performs poorly or declines in value, then the buyer may not have the funds or ability to raise new debt with which to make required payments of interest and principal to us; • if we loan funds to a joint venture, and the joint venture is unable to make required payments of interest or principal, or both, or there are disagreements with respect to the repayment of the loan or other matters, then we could have a resulting dispute with our partner(s), and such a dispute could harm our relationship(s) with our partner(s) and cause delays in developing or selling the property or the failure to properly manage the property; and • if we loan funds to a joint venture and the joint venture is unable to make required payments of interest and principal, or both, then we may exercise remedies available to us in the joint venture agreement that could allow us to increase our ownership interest or our control over major decisions, or both, which could result in an unconsolidated joint venture becoming consolidated with our financial statement; doing so could 30 T able of Contents require us to reallocate the purchase price among the various asset and liability components and this could result in material changes to our reported results of operations and financial condition.
In addition, BXP has agreed in the limited partnership agreement of BPLP that it will not complete specified extraordinary transactions, including among others, business combinations, in which BXP receive the approval of its common stockholders unless (1) limited partners holding at least 75% of the common units of limited partnership interest, other than those held by BXP or its affiliates, consent to the transaction or (2) the limited partners of BPLP are also allowed to vote and the transaction would have been approved had these limited partners been able to vote as common stockholders on the transaction.
In addition, BXP has agreed in the limited partnership agreement of BPLP that it will not complete specified extraordinary transactions, including among others, business combinations, in which BXP receives the approval of its common stockholders unless (1) limited partners holding at least 75% of the common units of limited partnership interest, other than those held by BXP or its affiliates, consent to the transaction or (2) the limited partners of BPLP are also allowed to vote and the transaction would have been approved had these limited partners been able to vote as common stockholders on the transaction.
Our current and future development and construction activities may be exposed to the following risks: • we may be unable to proceed with the development of properties because we cannot obtain financing on favorable terms or at all; • we may incur construction costs for a development project that exceed our original estimates due to increased materials, labor, leasing or other costs, increases in interest rates, or supply chain disruptions, any of which could make completion of the project less profitable because market rents may not increase sufficiently to compensate for the increase in construction costs; • we may be unable to obtain, or face delays in obtaining, required zoning, land-use, building, occupancy, and other governmental permits and authorizations, which could result in increased costs and could require us to abandon our activities entirely with respect to a project; • we may abandon development opportunities after we begin to explore them and, as a result, we may lose deposits or fail to recover expenses already incurred; • we may expend funds on and devote management’s time to projects that we do not complete; • we may be unable to complete construction and/or leasing of a property on schedule or at all; and • we may suspend development projects after construction has begun due to changes in economic conditions or other factors, and this may result in the write-off of costs, payment of additional costs or increases in overall costs when the development project is restarted.
Our current and future development and construction activities may be exposed to the following risks: • we may be unable to proceed with the development of properties because we cannot obtain financing on favorable terms or at all; 28 T able of Contents • we may incur construction costs for a development project that exceed our original estimates due to increased materials, labor, leasing or other costs, increases in interest rates, or supply chain disruptions, any of which could make completion of the project less profitable because market rents may not increase sufficiently to compensate for the increase in construction costs; • we may be unable to obtain, or face delays in obtaining, required zoning, land-use, building, occupancy, and other governmental permits and authorizations, which could result in increased costs and could require us to abandon our activities entirely with respect to a project; • we may abandon development opportunities after we begin to explore them and, as a result, we may lose deposits or fail to recover expenses already incurred; • we may expend funds on and devote management’s time to projects that we do not complete; • we may be unable to complete construction and/or leasing of a property on schedule or at all; and • we may suspend development projects after construction has begun due to changes in economic conditions or other factors, and this may result in the write-off of costs, payment of additional costs or increases in overall costs when the development project is restarted.
The following factors, among others, are common to the hotel industry, and may reduce the receipts generated by our hotel property: • our hotel property competes for guests with other hotels, a number of which may have greater marketing and financial resources than our hotel-operating business partners; • if there is an increase in operating costs resulting from inflation and other factors, our hotel-operating business partners may not be able to offset such increase by increasing room rates; • our hotel property is subject to the fluctuating and seasonal demands of business travelers and tourism; and • our hotel property is subject to general and local economic and social conditions that may affect demand for travel in general, including war and terrorism.
The following factors, among others, are common to the hotel industry, and may reduce the receipts generated by our hotel property: • our hotel property competes for guests with other hotels, a number of which may have greater marketing and financial resources than our hotel-operating business partners; • if there is an increase in operating costs resulting from inflation and other factors, our hotel-operating business partners may not be able to offset such increase by increasing room rates; • our hotel property is subject to the fluctuating and seasonal demands of business travelers and tourism; and • our hotel property is subject to general and local economic and social conditions that may affect demand for travel in general, including public health concerns, war and terrorism.
If BXP or any of its subsidiaries that are REITs fails to qualify as a REIT then, unless certain relief provisions apply, it will face serious tax consequences that will substantially reduce the funds available for payment of dividends for each of the years involved because: • BXP would not be allowed a deduction for dividends paid to stockholders in computing its taxable income and would be subject to federal income tax at regular corporate rates; • BXP also could be subject to the federal alternative minimum tax for tax years ending before January 1, 2018 and possibly increased state and local taxes; and • unless BXP is entitled to relief under statutory provisions, BXP could not elect to be subject to tax as a REIT for four taxable years following the year during which it was disqualified.
If BXP or any of its subsidiaries that are REITs fails to qualify as a REIT then, unless certain relief provisions apply, it will face serious tax consequences that will substantially reduce the funds available for payment of dividends for each of the years involved because: • BXP would not be allowed a deduction for dividends paid to stockholders in computing its taxable income and would be subject to federal income tax at regular corporate rates; 43 T able of Contents • BXP also could be subject to the federal alternative minimum tax for tax years ending before January 1, 2018 and possibly increased state and local taxes; and • unless BXP is entitled to relief under statutory provisions, BXP could not elect to be subject to tax as a REIT for four taxable years following the year during which it was disqualified.
While these agreements are intended to lessen the impact of rising interest rates on us, they also expose us to the risk that the other parties to the agreements will not perform, we could incur significant costs associated with the settlement of the agreements, the agreements will be unenforceable and the underlying transactions will fail to qualify as highly-effective cash flow hedges under guidance included in ASC 815 “Derivatives and Hedging.” In addition, an increase in interest rates could decrease the amounts third-parties are willing to pay for our assets, thereby limiting our ability to change our portfolio promptly in response to changes in economic or other conditions.
While these agreements are intended to lessen the impact of rising interest rates on us, they also expose us to the risk that the other parties to the agreements will not perform, we could incur significant costs associated with the settlement of the agreements, the agreements will be unenforceable and the underlying transactions will fail to qualify as highly-effective cash flow hedges under guidance included in ASC 815 “Derivatives and Hedging.” In 39 T able of Contents addition, an increase in interest rates could decrease the amounts third-parties are willing to pay for our assets, thereby limiting our ability to change our portfolio promptly in response to changes in economic or other conditions.
These tax protection and debt allocation agreements may restrict our ability to repay or refinance debt. As of December 31, 2022, we had one tax protection agreement that could restrict our ability to repay or finance debt. Our degree of leverage could limit our ability to obtain additional financing or affect the market price of our equity and debt securities.
These tax protection and debt allocation agreements may restrict our ability to repay or refinance debt. As of December 31, 2023, we had one tax protection agreement that could restrict our ability to repay or finance debt. Our degree of leverage could limit our ability to obtain additional financing or affect the market price of our equity and debt securities.
We continue to monitor the state of the insurance market in general, and the scope and costs of coverage for acts of terrorism, earthquakes and pandemics, in particular, but we cannot anticipate what coverage will be available on commercially reasonable terms in future policy years.
We continue to monitor the state of the insurance market in general, and the scope and costs of coverage for acts of terrorism, earthquakes, pandemics and cybersecurity incidents, in particular, but we cannot anticipate what coverage will be available on commercially reasonable terms in future policy years.
The risk of a security breach or disruption, particularly through cyber attack or cyber intrusion, including by computer hackers, foreign governments and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased.
The risk of a security breach, incident, compromise, or disruption, particularly through cyber attack or cyber intrusion, including by computer hackers, foreign governments and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased.
This insurance is subject to a deductible in the amount of 3% of the value of the affected property. In addition, we currently carry earthquake insurance which covers our Seattle region with a $110 million per occurrence limit, and a $110 million annual aggregate limit.
This insurance is subject to a deductible in the amount of 5% of the value of the affected property. In addition, we currently carry earthquake insurance which covers our Seattle region with a $110 million per occurrence limit, and a $110 million annual aggregate limit.
If we are restricted from re-leasing apartment units due to the inability to evict 35 Table of Contents delinquent residents, our results of operations and property values for our residential properties may be adversely affected. We did not obtain new owner’s title insurance policies in connection with properties acquired during BXP’s initial public offering.
If we are restricted from re-leasing apartment units due to the inability to evict delinquent residents, our results of operations and property values for our residential properties may be adversely affected. We did not obtain new owner’s title insurance policies in connection with properties acquired during BXP’s initial public offering.
Therefore, if BXP’s common stockholders approve a specified extraordinary transaction, the partnership agreement requires the following before it can complete the transaction: 43 Table of Contents • holders of partnership interests in BPLP, including BXP, must vote on the matter; • BXP must vote its partnership interests in the same proportion as its stockholders voted on the transaction; and • the result of the vote of holders of partnership interests in BPLP must be such that had such vote been a vote of stockholders, the business combination would have been approved.
Therefore, if BXP’s common stockholders approve a specified extraordinary transaction, the partnership agreement requires the following before it can complete the transaction: • holders of partnership interests in BPLP, including BXP, must vote on the matter; • BXP must vote its partnership interests in the same proportion as its stockholders voted on the transaction; and • the result of the vote of holders of partnership interests in BPLP must be such that had such vote been a vote of stockholders, the business combination would have been approved.
BPLP’s Partnership Agreement BXP has agreed in the limited partnership agreement of BPLP not to engage in specified extraordinary transactions, including, among others, business combinations, unless limited partners of BPLP other than BXP receive, or have the opportunity to receive, either (1) the same consideration for their partnership interests as holders of BXP common stock in the transaction or (2) limited partnership units that, among other things, would entitle the holders, upon redemption of these units, to receive shares of common equity of a publicly traded company or the same consideration as holders of BXP common stock received in the transaction.
BPLP’s Partnership Agreement BXP has agreed in the limited partnership agreement of BPLP not to engage in specified extraordinary transactions, including, among others, business combinations, unless limited partners of BPLP other than BXP receive, or have the opportunity to receive, either (1) the same consideration for their partnership interests as 42 T able of Contents holders of BXP common stock in the transaction or (2) limited partnership units that, among other things, would entitle the holders, upon redemption of these units, to receive shares of common equity of a publicly traded company or the same consideration as holders of BXP common stock received in the transaction.
Although we make efforts to maintain the security and integrity of our IT networks and related systems, and we have implemented various measures to manage the risk of a security breach or disruption, there can be no assurance that our security efforts and measures will be effective or that attempted security breaches or disruptions would not be successful or damaging.
Although we make efforts to maintain the security and integrity of our IT networks and related systems, and we have implemented various measures designed to manage the risk of a security breach, incident, compromise or disruption, there can be no assurance that our security efforts and measures will be effective or that attempted security breaches, incident, compromise or disruptions would not be successful or damaging.
Our ability to dispose of some of our properties is constrained by their tax attributes. Properties that we developed and have owned for a significant period of time or that we acquired through tax deferred contribution 34 Table of Contents transactions in exchange for partnership interests in BPLP often have low tax bases.
Our ability to dispose of some of our properties is constrained by their tax attributes. Properties that we developed and have owned for a significant period of time or that we acquired through tax deferred contribution transactions in exchange for partnership interests in BPLP often have low tax bases.
Under TRIA, after the payment of the required deductible and coinsurance, the NBCR Coverage provided by IXP is backstopped by the Federal Government if the aggregate industry insured losses resulting from a certified act of terrorism exceed a “program trigger.” The program trigger is $200 million, the coinsurance is 20% and the deductible is 20% of the premiums earned by the insurer for the year prior to a claim.
Under TRIA, after the payment of the required deductible 33 T able of Contents and coinsurance, the NBCR Coverage provided by IXP is backstopped by the Federal Government if the aggregate industry insured losses resulting from a certified act of terrorism exceed a “program trigger.” The program trigger is $200 million, the coinsurance is 20% and the deductible is 20% of the premiums earned by the insurer for the year prior to a claim.
Where appropriate, on a property-by-property basis, our practice is to have these 38 Table of Contents consultants conduct additional testing, including sampling for asbestos, for lead and other contaminants in drinking water and, for soil and/or groundwater contamination where underground storage tanks are or were located or where other past site usage creates a potential environmental problem.
Where appropriate, on a property-by-property basis, our practice is to have these consultants conduct additional testing, including sampling for asbestos, for lead and other contaminants in drinking water and, for soil and/or groundwater contamination where underground storage tanks are or were located or where other past site usage creates a potential environmental problem.
If, under the Americans with Disabilities Act, we are required to make substantial alterations and capital expenditures in one or more of our properties, including the removal of access barriers, it could adversely affect our financial condition and results of operations, as well as the amount of cash available for distribution to our securityholders.
If, under the Americans 38 T able of Contents with Disabilities Act, we are required to make substantial alterations and capital expenditures in one or more of our properties, including the removal of access barriers, it could adversely affect our financial condition and results of operations, as well as the amount of cash available for distribution to our securityholders.
Unknown liabilities with respect to acquired properties might include: • liabilities for clean-up of undisclosed environmental contamination; • claims by clients, vendors or other persons against the former owners of the properties; • liabilities incurred in the ordinary course of business; and • claims for indemnification by general partners, directors, officers and others indemnified by the former owners of the properties.
Unknown liabilities with respect to acquired properties might include: • liabilities for clean-up of undisclosed environmental contamination; • claims by clients, vendors or other persons against the former owners of the properties; • liabilities incurred in the ordinary course of business; and 31 T able of Contents • claims for indemnification by general partners, directors, officers and others indemnified by the former owners of the properties.
The presence or migration of hazardous or toxic substances or petroleum products or the failure to properly remediate contamination may give rise to third-party claims for bodily injury, property damage and/or response costs and may materially and adversely affect our ability to borrow against, sell or rent an affected property.
The presence or migration of hazardous or toxic 37 T able of Contents substances or petroleum products or the failure to properly remediate contamination may give rise to third-party claims for bodily injury, property damage and/or response costs and may materially and adversely affect our ability to borrow against, sell or rent an affected property.
Risks Related to Our Indebtedness and Financing An increase in interest rates would increase our interest costs on variable rate debt and could adversely impact our ability to refinance existing debt or sell assets on favorable terms or at all.
Risks Related to Our Indebtedness and Financing A sustained increase in interest rates would increase our interest costs on variable rate debt and could adversely impact our ability to refinance existing debt or sell assets on favorable terms or at all.
An unfavorable resolution of any legal proceeding or other claim could have a material adverse effect on our financial condition or results from operations. Regardless of its outcome, legal proceedings and other claims may result in substantial costs and expenses and significantly divert the attention of our management.
An unfavorable resolution of any legal proceeding or other claim could have a material adverse effect on our financial condition or results from operations. Regardless of its outcome, legal proceedings and other claims may result in substantial costs and expenses and significantly divert 45 T able of Contents the attention of our management.
For additional discussion regarding our approach to climate resiliency and our continued commitment to transparent reporting of ESG performance indicators, see “ Item 1. Business—Business and Growth Strategies—Environmental, Social and Governance (ESG) ” and our annual ESG report available on our website at http://www.bxp.com under the heading “Commitment.” Potential liability for environmental contamination could result in substantial costs.
For additional discussion regarding our approach to climate resiliency and our continued commitment to transparent reporting of sustainability performance indicators, see “ Item 1. Business—Business and Growth Strategies—Sustainability ” and our annual Sustainability & Impact Report available on our website at http://www.bxp.com under the heading “Commitment.” Potential liability for environmental contamination could result in substantial costs.
These increased tax costs could adversely affect our financial condition and results of operations and the amount of cash available for the payment of dividends and distributions to our securityholders. General Risk Factors Changes in market conditions could adversely affect the market price of BXP’s common stock.
These increased tax costs could adversely affect our financial condition and results of operations and the amount of cash available for the payment of dividends and distributions to our securityholders. 44 T able of Contents General Risk Factors Changes in market conditions could adversely affect the market price of BXP’s common stock.
Among the market conditions that may affect the value of BXP’s common stock are the following: • the extent of investor interest in our securities; • the general reputation of REITs and the attractiveness of our equity securities in comparison to other equity securities, including securities issued by other real estate-based companies; • our underlying asset value; • investor confidence in the stock and bond markets, generally; • national economic conditions; 45 Table of Contents • changes in tax laws; • our financial performance; • changes in our credit ratings; • differences between the yields paid on other investments available in the market and BXP’s dividend yield; and • general stock and bond market conditions, including changes in interest rates.
Among the market conditions that may affect the value of BXP’s common stock are the following: • the extent of investor interest in our securities; • the general reputation of REITs and the sentiment towards the office sector and the attractiveness of our equity securities in comparison to other equity securities, including securities issued by other real estate-based companies; • our underlying asset value; • investor confidence in the stock and bond markets, generally; • national economic conditions; • changes in tax laws; • our financial performance; • changes in our credit ratings; • differences between the yields paid on other investments available in the market and BXP’s dividend yield; and • general stock and bond market conditions, including changes in interest rates.
In addition, we face transition risks related to federal, state and local legislation and regulations that are being implemented or are under consideration to mitigate the effects of climate change. The costs of complying with evolving regulatory requirements, including GHG emissions regulations and policies, could negatively impact our financial results.
In addition, we face transition risks related to federal, state and local legislation and regulations that are being implemented, are under consideration to mitigate the effects of climate change or that require increased environmental disclosures and reporting. The costs of complying with evolving regulatory requirements, including GHG emissions regulations and policies, could negatively impact our financial results.
In order to maintain BXP’s REIT status, we may need to borrow funds on a short-term basis to meet the REIT distribution requirements, even if the then-prevailing market conditions are not favorable for these borrowings.
In order to maintain BXP’s REIT status, we may be forced to borrow funds during unfavorable market conditions. In order to maintain BXP’s REIT status, we may need to borrow funds on a short-term basis to meet the REIT distribution requirements, even if the then-prevailing market conditions are not favorable for these borrowings.
Like other businesses, we have been, and expect to continue to be, subject to attempts at unauthorized access, mishandling or misuse, computer viruses or malware, cyber attacks and intrusions and other events of varying degrees. To date, these events have not adversely affected our operations or business and have not been material, either individually or in the aggregate.
Like other businesses, we have been, and expect to continue to be, subject to attempts at unauthorized access of our network, mishandling or misuse, computer viruses or malware, cyber attacks and intrusions and other events of varying degrees. To date, these events have not, individually or in the aggregate, materially affected our operations or business.
We face risks associated with security breaches, whether through cyber attacks or cyber intrusions over the internet, malware, computer viruses, attachments to e-mails, persons inside our organization or persons with access to systems inside our organization, and other significant disruptions of our IT networks and related systems.
We face risks associated with security breaches, incidents, and compromises, whether through cyber attacks or cyber intrusions over the internet, malware, computer viruses, attachments to e-mails, persons inside our organization or persons with access to systems inside our organization, social engineering tactics, and other significant disruptions of our IT networks and related systems.
(2) Includes LTIP Units (including 2012 OPP Units and earned MYLTIP Units that were granted between 2013 - 2020), but excludes MYLTIP Units granted between 2021 and 2023 because the performance period for those awards has not yet ended.
(2) Includes LTIP Units (including 2012 OPP Units and earned MYLTIP Units that were granted between 2013 - 2021), but excludes MYLTIP Units granted between 2022 and 2024 because the performance period for those awards has not yet ended.
Our participation in joint ventures subjects us to risks, including but not limited to, the following risks that: • our joint venture partners may have different objectives than we have regarding the appropriate timing and terms of any sale or refinancing of a property, its operation or, if applicable, the commencement of development activities, and a dispute with any of our joint venture partners could lead to the sale of a partner’s ownership interest in the venture or the property at a time or price that we do not find attractive; • some of our joint ventures are subject to debt and, depending on credit market conditions, the refinancing of such debt may require equity capital calls; • our joint venture partners may be structured differently than us for tax purposes and this could create conflicts of interest, including with respect to our compliance with the REIT requirements, and our REIT status could be jeopardized if any of our joint ventures do not operate in compliance with REIT requirements; • our joint venture partners may have competing interests in our markets that could create conflicts of interest; • our joint venture partners may default on their obligations, which could necessitate that we fulfill their obligations ourselves; • our joint ventures may be unable to repay any amounts that we may loan to them; • our joint venture agreements may contain provisions limiting the liquidity of our interest for sale or sale of the entire asset; • as the general partner or managing member of a joint venture, we could be generally liable under applicable law for the debts and obligations of the venture, and we may not be entitled to contribution or indemnification from our partners; 32 Table of Contents • our joint venture agreements may contain provisions that allow our partners to remove us as the general partner or managing member for cause, and this could result in liability for us to our partners under the governing agreement of the joint venture; • we may need our partner(s)’ approval to take certain actions and, therefore, we may be unable to cause a joint venture to implement decisions that we consider advisable; and • with respect to our participation in the co-investment program, we could lose opportunities to pursue properties that are within the program’s target investment criteria alone or with other partners with whom the terms of the joint venture and/or our returns could be more favorable to us.
Our participation in joint ventures subjects us to risks, including but not limited to, the following risks that: • our joint venture partners may have different objectives than we have regarding the appropriate timing and terms of any sale or refinancing of a property, its operation or, if applicable, the commencement of development activities, and a dispute with any of our joint venture partners could lead to the sale of a partner’s ownership interest in the venture or the property at a time or price that we do not find attractive; • some of our joint ventures are subject to debt and, depending on credit market conditions, the refinancing of such debt may require equity capital calls; • our joint venture partners may be structured differently than us for tax purposes and this could create conflicts of interest, including with respect to our compliance with the REIT requirements, and our REIT status could be jeopardized if any of our joint ventures do not operate in compliance with REIT requirements; • our joint venture partners may have competing interests in our markets that could create conflicts of interest; • our joint venture partners may default on their obligations, which could necessitate that we fulfill their obligations ourselves; • our joint ventures may be unable to repay any amounts that we may loan to them; • our joint venture agreements may contain provisions limiting the liquidity of our interest for sale or sale of the entire asset; • as the general partner or managing member of a joint venture, we could be generally liable under applicable law for the debts and obligations of the venture, and we may not be entitled to contribution or indemnification from our partners; • our joint venture agreements may contain provisions that allow our partners to remove us as the general partner or managing member for cause, and this could result in liability for us to our partners under the governing agreement of the joint venture; and • we may need our partner(s)’ approval to take certain actions and, therefore, we may be unable to cause a joint venture to implement decisions that we consider advisable.
Our use of joint ventures and participation in the Strategic Capital Program may limit our control over and flexibility with jointly owned investments and other assets we may wish to acquire. In appropriate circumstances, we intend to acquire and recapitalize or develop, as applicable, properties in joint ventures with other persons or entities.
Our use of joint ventures may limit our control over and flexibility with jointly owned investments and other assets we may wish to acquire. In appropriate circumstances, we intend to acquire and recapitalize or develop, as applicable, properties in joint ventures with other persons or entities.
Our developed properties may be exposed to the following risks: • we may lease developed properties at rental rates that are less than projected, or at a slower pace than projected, at the time we decide to undertake the development; • operating expenses and construction costs may be greater than projected at the time of development, resulting in our investment being less profitable than we expected; and • occupancy rates and rents at newly developed properties may fluctuate depending on a number of factors, including market and economic conditions, and may result in our investments being less profitable than we expected or not profitable at all. 31 Table of Contents We face risks associated with the development of mixed-use commercial properties.
Our developed properties may be exposed to the following risks: • we may lease developed properties at rental rates that are less than projected, or at a slower pace than projected, at the time we decide to undertake the development; • operating expenses and construction costs may be greater than projected at the time of development, resulting in our investment being less profitable than we expected; and • occupancy rates and rents at newly developed properties may fluctuate depending on a number of factors, including market and economic conditions, and may result in our investments being less profitable than we expected or not profitable at all.
Factors related to COVID-19 that have had, or could have, a material adverse effect on our results of operations and financial condition, include: • changes made by companies in response to the COVID-19 pandemic that could lead to a sustained shift away from collective in-person work environments or relocations away from the markets in which we operate, either of which could adversely affect the overall demand for workplaces in the regions in which we operate; 28 Table of Contents • reduced economic activity and/or supply chain disruptions or delays in delivery of products, services or other materials necessary for our clients that impact our clients’ businesses, financial condition or liquidity has caused, and may continue to cause, one or more of our clients to be unable to meet their obligations to us, including their ability to make timely rental payments, in full or at all, or to otherwise seek modifications of such obligations, including rent concessions, deferrals or abatements, or to declare bankruptcy.
We have previously experienced adverse impacts on our business from the COVID-19 pandemic, and factors related to any future public health crises that could have a material adverse effect on our results of operations and financial condition include: • changes made by companies in response to a pandemic that could lead to a sustained shift away from collective in-person work environments or relocations away from the markets in which we operate, either of which could adversely affect the overall demand for workplaces in the regions in which we operate; • reduced economic activity and/or supply chain disruptions or delays in delivery of products, services or other materials necessary for our clients that impact our clients’ businesses, financial condition or liquidity may cause, one or more of our clients to be unable to meet their obligations to us, including their ability to make timely rental payments, in full or at all, or to otherwise seek modifications of such obligations, including rent concessions, deferrals or abatements, or to declare bankruptcy.
We may invest cash balances in a variety of short-term investments that are intended to preserve principal value and maintain a high degree of liquidity while providing current income. From time to time, these investments may include (either directly or indirectly): • direct obligations issued by the U.S. Treasury; • obligations issued or guaranteed by the U.S.
We face risks associated with short-term liquid investments. We may invest cash balances in a variety of short-term investments that are intended to preserve principal value and maintain a high degree of liquidity while providing current income. From time to time, these investments may include (either directly or indirectly): • direct obligations issued by the U.S.
While the Board of Directors has a policy with respect to these matters directors and executive officers could exercise their influence in a manner inconsistent with the interests of some, or a majority, of BXP’s stockholders, including in a manner which could prevent completion of a sale of a property or the repayment of indebtedness. 42 Table of Contents Agreement not to sell some properties.
While the Board of Directors has a policy with respect to these matters, directors and executive officers could exercise their influence in a manner inconsistent with the interests of some, or a majority, of BXP’s stockholders, including in a manner which could prevent completion of a sale of a property or the repayment of indebtedness.
If we decide to not sell or participate in a joint venture and instead hire a third party manager, we would be dependent on them and their key personnel who provide services to us and we may not find a suitable replacement if the management agreement is terminated, or if key personnel leave or otherwise become unavailable to us.
If we hire a third party manager, we would be dependent on them and their key personnel who provide services to us and we may not find a suitable replacement if the management agreement is terminated, or if key personnel leave or otherwise become unavailable to us.
Bribery Act. 39 Table of Contents We may be subject to risks from potential fluctuations in exchange rates between the U.S. dollar and the currencies of the other countries in which we invest.
We may be subject to risks from potential fluctuations in exchange rates between the U.S. dollar and the currencies of the other countries in which we invest.
However, a security breach or other significant disruption involving our IT networks and related systems could: • disrupt the proper functioning of our networks and systems and therefore our operations and/or those of certain of our clients; • result in misstated financial reports, violations of loan covenants, missed reporting deadlines and/or missed permitting deadlines; • result in our inability to properly monitor our compliance with the rules and regulations regarding BXP’s qualification as a REIT; • result in the unauthorized access to, and destruction, loss, theft, misappropriation or release of, proprietary, confidential, sensitive or otherwise valuable information of ours or others, which others could use to compete against us or which could expose us to damage claims by third-parties for disruptive, destructive or otherwise harmful purposes and outcomes; • result in our inability to maintain the building systems relied upon by our clients for the efficient use of their leased space; • require significant management attention and resources to remedy any damages that result; • subject us to claims for breach of contract, damages, credits, penalties or termination of leases or other agreements; and • damage our reputation among our clients and investors generally.
However, a security breach, incident, compromise or other significant disruption involving our IT networks and related systems could: • disrupt the proper functioning of our networks and systems and therefore our operations and/or those of certain of our clients; • result in misstated financial reports, violations of loan covenants, missed reporting deadlines and/or missed permitting deadlines; • result in our inability to properly monitor our compliance with the rules and regulations regarding BXP’s qualification as a REIT; • result in the unauthorized access to, and destruction, loss, theft, misappropriation or release of, proprietary, confidential, sensitive or otherwise valuable information of ours or others, which others could use to compete against us or which could expose us to damage and claims or threats by third-parties for disruptive, destructive or otherwise harmful purposes and outcomes; • result in our inability to maintain the building systems relied upon by our clients for the efficient use of their leased space; • require significant management attention and resources to remedy any damages that result; • subject us to claims for breach of contract, damages, credits, penalties or termination of leases or other agreements or subject us to litigation and regulatory investigations and related fines and penalties; • be uninsured or exceed policy limits, increase operating costs, including insurance expenses, or make future cyber risk coverage unavailable on commercially reasonable terms ; and • damage our reputation among our clients and investors generally.
In addition, because our hotel property is located in Cambridge, Massachusetts, it is subject to the Cambridge market’s fluctuations in demand, increases in operating costs and increased competition from additions in supply. Failure to comply with Federal Government contractor requirements could result in substantial costs and loss of substantial revenue. As of December 31, 2022, the U.S.
In addition, because our hotel property is located in Cambridge, Massachusetts, it is subject to the Cambridge market’s fluctuations in demand, increases in operating costs and increased competition from additions in supply. 32 T able of Contents Failure to comply with Federal Government contractor requirements could result in substantial costs and loss of substantial revenue.
Some holders of interests in BPLP could incur adverse tax consequences upon the sale of certain of our properties and on the repayment of related debt which differ from the tax consequences to BXP and its stockholders.
Sales of properties and repayment of related indebtedness will have different effects on holders of interests in BPLP than on BXP’s stockholders. Some holders of interests in BPLP could incur adverse tax consequences upon the sale of certain of our properties and on the repayment of related debt which differ from the tax consequences to BXP and its stockholders.
We currently have joint ventures that are and are not consolidated within our financial statements.
We currently have joint ventures that are and are not consolidated 29 T able of Contents within our financial statements.
Any future impairment could have a material adverse effect on our results of operations in the period in which the charge is taken. 27 Table of Contents Enhanced market and economic volatility due to adverse economic and geopolitical conditions, health crises or dislocations in the credit markets could have a material adverse effect on our results of operations, financial condition and ability to pay dividends and/or distributions.
Market and economic volatility due to adverse economic and geopolitical conditions, health crises or dislocations in the credit markets could have a material adverse effect on our results of operations, financial condition and ability to pay dividends and/or distributions.
In addition, our unsecured debt agreements contain specific cross-default provisions with respect to specified other indebtedness, giving the unsecured lenders the right to declare a default if we are in default under other loans in some circumstances.
In addition, our unsecured debt agreements contain specific cross-default provisions with respect to specified other indebtedness, giving the unsecured lenders the right to declare a default if we are in default under other loans in some circumstances. Defaults under our debt agreements could materially and adversely affect our financial condition and results of operations.
Our degree of leverage could affect our ability to obtain additional financing for working capital, capital expenditures, acquisitions, development or other general corporate purposes. Our senior unsecured debt is currently rated investment grade by two major rating agencies.
Our degree of leverage could affect our ability to obtain additional financing for working capital, capital expenditures, acquisitions, development or other general corporate purposes. Our senior unsecured debt is currently rated investment grade by two major rating agencies. However, there can be no assurance that we will be able to maintain these ratings.
Thomas, Linde and Ritchey are important to our success is that each has a national reputation, which attracts business and investment opportunities and assists us in negotiations with lenders, joint venture partners and other investors.
Thomas, Linde and Ritchey are important to our success is that each has a national reputation, which attracts business and investment opportunities and assists us in negotiations with lenders, joint venture partners and other investors. If we lost their services, our relationships with lenders, potential clients and industry personnel could diminish.
Therefore, we are likely to need to refinance at least a portion of our outstanding debt as it matures. There is a risk that we may not be able to refinance existing debt or that the terms of any refinancing will not be as favorable as the terms of our existing debt.
There is a risk that we may not be able to refinance existing debt or that the terms of any refinancing will not be as favorable as the terms of our existing debt.
If BXP or any of its subsidiaries that are REITs fails to qualify as a REIT but is eligible for certain relief provisions, then it may retain its status as a REIT, but may be required to pay a penalty tax, which could be substantial. 44 Table of Contents In order to maintain BXP’s REIT status, we may be forced to borrow funds during unfavorable market conditions.
If BXP or any of its subsidiaries that are REITs fails to qualify as a REIT but is eligible for certain relief provisions, then it may retain its status as a REIT, but may be required to pay a penalty tax, which could be substantial.
Interest rates increased throughout 2022, and if interest rates continue to increase, then so would the interest costs on our unhedged variable rate debt, which could adversely affect our cash flow and our ability to pay principal and interest on our debt and our ability to make distributions to our securityholders.
As interest rates have increased, the interest costs on our unhedged variable rate debt have also increased, which, if sustained or continues to increase, could adversely affect our cash flow and our ability to pay principal and interest on our debt and our ability to make distributions to our securityholders.
There is a risk that changes in our debt to market capitalization ratio, which is in part a function of BXP’s stock price, or BPLP’s ratio of indebtedness to other measures of asset value used by financial analysts may have an adverse effect on the market price of our equity or debt securities. 41 Table of Contents The discontinuation of LIBOR and the replacement of LIBOR with an alternative reference rate may adversely affect our borrowing costs and could impact our business and results of operations.
There is a risk that changes in our debt to market capitalization ratio, which is in part a function of BXP’s stock price, or BPLP’s ratio of indebtedness to other measures of asset value used by financial analysts may have an adverse effect on the market price of our equity or debt securities.
We are subject to the risks normally associated with debt financing, including the risk that our cash flow will be insufficient to meet required payments of principal and interest. We anticipate that only a small portion of the principal of our debt will be repaid prior to maturity.
We face risks associated with the use of debt to fund acquisitions and developments, including refinancing risk. We are subject to the risks normally associated with debt financing, including the risk that our cash flow will be insufficient to meet required payments of principal and interest.
Our IT networks and related systems are essential to the operation of our business and our ability to perform day-to-day operations (including managing our building systems) and, in some cases, may be critical to the operations of certain of our clients. 46 Table of Contents The Audit Committee of BXP’s Board of Directors oversees our risk management processes related to cybersecurity.
Our IT networks and related systems are essential to the operation of our business and our ability to perform day-to-day operations (including managing our building systems and accounting for our business operations) and, in some cases, may be critical to the operations of certain of our clients.
If we lost their services, our relationships with lenders, potential clients and industry personnel could diminish. 29 Table of Contents Our Chief Financial Officer and Regional Managers also have strong reputations. Their reputations aid us in identifying opportunities, having opportunities brought to us, and negotiating with clients and build-to-suit prospects.
Our Chief Financial Officer and Regional Managers also have strong reputations. Their reputations aid us in identifying opportunities, having opportunities brought to us, and negotiating with clients and build-to-suit prospects.
We face risks associated with security breaches through cyber attacks, cyber intrusions or otherwise, as well as other significant disruptions of our information technology (IT) networks and related systems.
See also “ —Some potential losses are not covered by insurance. ” 34 T able of Contents We face risks associated with security breaches, incidents, and compromises through cyber-attacks, cyber intrusions or otherwise, as well as other significant disruptions of our information technology (IT) networks and related systems.
We operate, are currently developing, and may in the future develop, properties either alone or through joint ventures with other persons that are known as “mixed-use” developments. This means that in addition to the development of office space, the project may also include space for residential, retail, hotel or other commercial purposes.
We face risks associated with the development of mixed-use commercial properties. We operate, are currently developing, and may in the future develop, properties either alone or through joint ventures with other persons that are known as “mixed-use” developments.
An “other than temporary” impairment loss is recognized if the carrying amount of the asset (1) is not recoverable over its expected holding period and (2) exceeds its fair value. There can be no assurance that we will not take charges in the future related to the impairment of our assets or investments.
An “other than temporary” impairment loss is recognized if the carrying amount of the asset (1) is not recoverable over its expected holding period and (2) exceeds its fair value.
We may discontinue earthquake insurance or change the structure of our earthquake insurance program on some or all of our properties in the future if the premiums exceed our estimation of the value of the coverage. 36 Table of Contents IXP, a captive insurance company which is a wholly-owned subsidiary, acts as a direct insurer with respect to a portion of our earthquake insurance coverage for our Greater San Francisco and Los Angeles properties and our NBCR Coverage.
IXP, a captive insurance company which is a wholly-owned subsidiary, acts as a direct insurer with respect to a portion of our earthquake insurance coverage for our Greater San Francisco and Los Angeles properties and our NBCR Coverage.
As of February 21, 2023, we had $1.2 billion outstanding indebtedness, excluding our unconsolidated joint ventures, that bears interest at a variable rate, and we may incur more indebtedness in the future.
As of February 20, 2024, we had $2.1 billion outstanding indebtedness, excluding our unconsolidated joint ventures, that bears interest at a variable rate, and we may incur more indebtedness in the future. All of our variable rate debt has all been hedged with interest rates swaps to fix SOFR for all, or a portion of the applicable debt term.
Accounting policies and methods are fundamental to how we record and report our financial condition and results of operations.
Changes in accounting pronouncements could adversely affect our operating results, in addition to the reported financial performance of our clients. Accounting policies and methods are fundamental to how we record and report our financial condition and results of operations.
This shortfall could adversely affect our cash flow and results of operations. 30 Table of Contents Our properties face significant competition. We face significant competition from developers, owners and managers of office, life sciences and residential properties and other commercial real estate, including sublease space available from our clients.
We face significant competition from developers, owners and managers of office, life sciences and residential properties and other commercial real estate, including sublease space available from our clients. Substantially all of our properties face competition from similar properties in the same market.
If a client experiences a downturn in its business or other types of financial distress, it may be unable to make timely rental payments.
We face potential difficulties or delays renewing leases or re-leasing space. We derive most of our income from rent received from our clients. If a client experiences a downturn in its business or other types of financial distress, it may be unable to make timely rental payments.
The physical effects of climate change could have a material adverse effect on our properties, operations and business. For example, many of our properties are located along the East and West coasts, particularly those in the central business districts of Boston, Los Angeles, New York, San Francisco, Seattle and Washington, DC.
For example, many of our properties are located along the East and West coasts, particularly those in the central business districts of Boston, Los Angeles, New York, San Francisco, Seattle and Washington, DC. To the extent climate change causes changes in weather patterns, our markets could experience increases in storm intensity, extreme temperatures, rising sea-levels and/or drought.
Any one or more of the foregoing could have a material adverse effect on our results of operations, financial condition and cash flows. 47 Table of Contents Changes in accounting pronouncements could adversely affect our operating results, in addition to the reported financial performance of our clients.
Any one or more of the foregoing could have a material adverse effect on our results of operations, financial condition and cash flows. Refer to Part I, Item 1C.
Government was one of our largest clients by square feet. We are subject to compliance with a wide variety of complex legal requirements because we are a Federal Government contractor. These laws regulate how we conduct business, require us to administer various compliance programs and require us to impose compliance responsibilities on some of our contractors.
These laws regulate how we conduct business, require us to administer various compliance programs and require us to impose compliance responsibilities on some of our contractors.
The outbreak of highly infectious or contagious diseases, such as COVID-19, could adversely impact or cause disruption to our financial condition, results of operations, cash flows and liquidity and that of our clients. Public health crises such as pandemics or similar outbreaks could adversely impact our business.
Any such termination could result in a loss of revenue or a damage claim by the other party that the termination was wrongful. The outbreak of highly infectious or contagious diseases could adversely impact or cause disruption to our financial condition, results of operations, cash flows and liquidity and that of our clients.
In addition, there is no guarantee that our investments in these securities or funds will be redeemable at par value. A decline in the value of our investment or a delay or suspension of our right to redeem may have a material adverse effect on our results of operations or financial condition.
In addition, there is no guarantee that our investments in these securities or funds will be redeemable at par value.
These competing properties may have vacancy rates higher than our properties, which may result in their owners being willing to lease available space at lower rates than the space in our properties. We face potential difficulties or delays renewing leases or re-leasing space. We derive most of our income from rent received from our clients.
This competition may affect our ability to attract and retain clients and may reduce the rents we are able to charge. These competing properties may have vacancy rates higher than our properties, which may result in their owners being willing to lease available space at lower rates than the space in our properties.
To the extent climate change causes changes in weather patterns, our markets could experience increases in storm intensity, extreme temperatures, rising sea-levels and/or drought. Over time, these conditions could result in 37 Table of Contents declining demand for office space in our buildings or increased costs associated with infrastructure-related remediation projects.
Over time, these conditions could result in declining demand for office space in our buildings or increased costs associated with infrastructure-related remediation projects.
See also “ —Some potential losses are not covered by insurance. ” We face risks associated with our clients and contractual counterparties being designated “Prohibited Persons” by the Office of Foreign Assets Control.
Cybersecurity in this Form 10-K for more information. 35 T able of Contents We face risks associated with our clients and contractual counterparties being designated “Prohibited Persons” by the Office of Foreign Assets Control.
Any such termination could result in a loss of revenue or a damage claim by the other party that the termination was wrongful. We face risks associated with climate change and severe weather events, as well as the regulatory efforts intended to reduce the effects of climate change .
We face risks associated with climate change and severe weather events, as well as the regulatory efforts intended to reduce the effects of climate change . The physical effects of climate change could have a material adverse effect on our properties, operations and business.
We have less experience in developing and managing non-office and non-retail real estate than we do with office real estate.
This means that in addition to the development of office space, the project may also include space for residential, retail, hotel or other commercial purposes. We have less experience in developing and managing non-office and non-retail real estate than we do with office real estate.
The following table presents Consolidated Market Capitalization as well as the corresponding ratios of Consolidated Debt to Consolidated Market Capitalization (dollars and shares / units in thousands): February 21, 2023 Shares / Units Outstanding Common Stock Equivalent Equivalent Value (1) Common Stock 156,823 156,823 $ 10,732,966 Common Operating Partnership Units 18,663 18,663 1,277,296 (2) Total Equity (A) 175,486 $ 12,010,262 Consolidated Debt (B) $ 14,707,348 Consolidated Market Capitalization (A + B) $ 26,717,610 Consolidated Debt/Consolidated Market Capitalization [B / (A + B)] 55.05 % _______________ (1) Values are based on the closing price per share of BXP’s Common Stock on February 21, 2023 of $68.44.
As of February 20, 2024, our Consolidated Debt was approximately $15.4 billion (excluding unconsolidated joint venture debt). 40 T able of Contents The following table presents Consolidated Market Capitalization as well as the corresponding ratios of Consolidated Debt to Consolidated Market Capitalization (dollars and shares / units in thousands): February 20, 2024 Shares / Units Outstanding Common Stock Equivalent Equivalent Value (1) Common Stock 157,011 157,011 $ 10,367,436 Common Operating Partnership Units 19,196 19,196 1,267,512 (2) Total Equity (A) 176,207 $ 11,634,948 Consolidated Debt (B) $ 15,366,713 Consolidated Market Capitalization (A + B) $ 27,001,661 Consolidated Debt/Consolidated Market Capitalization [B / (A + B)] 56.91 % _______________ (1) Values are based on the closing price per share of BXP’s Common Stock on February 20, 2024 of $66.03.
For example, in our Washington, DC market, we focus on leasing our properties to governmental agencies and contractors, as well as legal firms. A reduction in spending by the Federal Government could result in reduced demand for office space and adversely affect our results of operations.
A reduction in spending by the Federal Government, sustained changes in space utilization due to remote work models, and/or a significant downturn in one or more of the foregoing sectors have resulted in, and could continue to result in, reduced demand for office space and adversely affect our results of operations.
However, there can be no assurance that we will be able to maintain this rating, and in the event our senior debt is downgraded from its current rating, we would likely incur higher borrowing costs and/or difficulty in obtaining additional financing. Our degree of leverage could also make us more vulnerable to a downturn in business or the economy generally.
In December 2023 and January 2024, our senior debt credit ratings were downgraded, although both remain investment grade. In the event our senior debt is further downgraded from its current ratings, we would likely incur higher borrowing costs and/or difficulty in obtaining additional financing.

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Item 2. Properties

Properties — owned and leased real estate

16 edited+10 added−6 removed2 unchanged
Biggest change(30% ownership) (2) Washington, DC 98.5 % 1 230,900 90 Broadway Cambridge, MA 98.1 % 1 223,771 255 Main Street Cambridge, MA 97.5 % 1 215,394 20 CityPoint Waltham, MA 98.9 % 1 211,476 77 CityPoint Waltham, MA 98.3 % 1 209,711 Sumner Square Washington, DC 98.1 % 1 209,556 University Place Cambridge, MA 100.0 % 1 195,282 300 Binney Street (4) Cambridge, MA 64.2 % 1 195,191 North First Business Park (5) San Jose, CA 87.6 % 5 190,636 Shady Grove Innovation District (6) Rockville, MD 75.1 % 3 182,290 890 Winter Street Waltham, MA 54.0 % 1 179,312 150 Broadway Cambridge, MA 100.0 % 1 177,226 Capital Gallery Washington, DC 97.1 % 1 176,809 Lexington Office Park (5) Lexington, MA 43.0 % 2 166,779 206 Carnegie Center Princeton, NJ 100.0 % 1 161,763 210 Carnegie Center Princeton, NJ 79.2 % 1 159,468 Kingstowne Two Alexandria, VA 83.7 % 1 156,005 Kingstowne One Alexandria, VA 36.9 % 1 153,401 105 Broadway Cambridge, MA 100.0 % 1 152,664 212 Carnegie Center Princeton, NJ 40.1 % 1 147,530 214 Carnegie Center Princeton, NJ 65.9 % 1 146,799 2440 West El Camino Real Mountain View, CA 100.0 % 1 142,789 506 Carnegie Center Princeton, NJ 68.2 % 1 139,050 153 & 211 Second Avenue Waltham, MA 100.0 % 2 136,882 Two Reston Overlook Reston, VA 100.0 % 1 134,615 508 Carnegie Center Princeton, NJ 100.0 % 1 134,433 202 Carnegie Center Princeton, NJ 87.0 % 1 134,068 804 Carnegie Center Princeton, NJ 100.0 % 1 130,000 504 Carnegie Center Princeton, NJ 100.0 % 1 121,990 101 Carnegie Center Princeton, NJ 95.3 % 1 121,619 502 Carnegie Center Princeton, NJ 96.2 % 1 121,460 1265 Main Street (50% ownership) (2) Waltham, MA 100.0 % 1 120,681 701 Carnegie Center Princeton, NJ 100.0 % 1 120,000 104 Carnegie Center Princeton, NJ 75.2 % 1 102,930 103 Carnegie Center Princeton, NJ 78.6 % 1 96,331 33 Hayden Avenue Lexington, MA 100.0 % 1 80,876 50 Table of Contents Properties Location % Leased as of December 31, 2022 (1) Number of Buildings Net Rentable Square Feet Reservoir Place North Waltham, MA 100.0 % 1 73,258 32 Hartwell Avenue Lexington, MA 100.0 % 1 69,154 250 Binney Street Cambridge, MA 100.0 % 1 67,362 302 Carnegie Center Princeton, NJ 100.0 % 1 64,926 100 Hayden Avenue Lexington, MA 100.0 % 1 55,924 211 Carnegie Center Princeton, NJ 100.0 % 1 47,025 92 Hayden Avenue Lexington, MA 100.0 % 1 31,100 17 Hartwell Avenue Lexington, MA 100.0 % 1 30,000 453 Ravendale Drive Mountain View, CA 75.0 % 1 29,620 690 Folsom Street San Francisco, CA 100.0 % 1 26,080 201 Carnegie Center Princeton, NJ 100.0 % — 6,500 Subtotal for Office and Life Sciences Properties 88.5 % 163 48,154,072 Retail Prudential Center (retail shops) (3) Boston, MA 95.9 % — 475,899 Fountain Square Retail Reston, VA 83.2 % 1 198,158 Kingstowne Retail Alexandria, VA 96.8 % 1 88,288 Santa Monica Business Park Retail (55% ownership) (2) Santa Monica, CA 90.1 % 7 74,404 Star Market at the Prudential Center Boston, MA 100.0 % 1 57,236 Avant Retail Reston, VA 100.0 % 1 26,179 The Point Waltham, MA 100.0 % 1 16,300 Subtotal for Retail Properties 93.3 % 12 936,464 Residential Signature at Reston (508 units) Reston, VA 93.7 % 1 517,783 The Skylyne (402 units) Oakland, CA 90.3 % 1 330,996 Hub50House (440 units) (50% ownership) (2) Boston, MA 94.6 % 1 320,444 Proto Kendall Square (280 units) Cambridge, MA 94.6 % 1 166,717 The Lofts at Atlantic Wharf (86 units) Boston, MA 97.7 % 1 87,096 Subtotal for Residential Properties 93.5 % (7) 5 1,423,036 (8) Hotel Boston Marriott Cambridge (437 rooms) Cambridge, MA 64.6 % (9) 1 334,260 (10) Subtotal for Hotel Property 64.6 % 1 334,260 Subtotal for In-Service Properties 88.6 % 181 50,847,832 Properties Under Construction/Redevelopment (11) Office 140 Kendrick Street - Building A Needham, MA 100.0 % 1 104,000 2100 Pennsylvania Avenue Washington, DC 84.0 % 1 480,000 (12) 360 Park Avenue South (redevelopment) (42.21% ownership) (2) New York, NY — % 1 450,000 Reston Next Office Phase II Reston, VA — % 1 90,000 Platform16 Building A (55% ownership) (2) San Jose, CA — % 1 389,500 51 Table of Contents Properties Location % Leased as of December 31, 2022 (1) Number of Buildings Net Rentable Square Feet Laboratory/Life Sciences 751 Gateway (49% ownership) (2) South San Francisco, CA 100.0 % 1 231,000 103 CityPoint Waltham, MA — % 1 113,000 190 CityPoint (formerly 180 CityPoint) Waltham, MA 43.0 % 1 329,000 105 Carnegie Center Princeton, NJ — % 1 73,000 651 Gateway (50% ownership) (Redevelopment) (2) South San Francisco, CA 7.0 % 1 327,000 Residential Reston Next Residential (508 units) (20% ownership) (2) Reston, VA — % 1 417,000 Retail 760 Boylston Street (Redevelopment) Boston, MA 100.0 % 1 118,000 Reston Next Retail Reston, VA — % 1 33,000 Other View Boston Observatory at The Prudential Center (Redevelopment) Boston, MA N/A — 59,000 Subtotal for Properties Under Construction/Redevelopment 37.0 % (13) 13 3,213,500 Total Portfolio 194 54,061,332 _______________ (1) Represents signed leases for in-service properties for which revenue recognition has commenced in accordance with accounting principles generally accepted in the United States (“GAAP”).
Biggest change(30% ownership) (2) Washington, DC 98.5 % 1 230,900 751 Gateway (49% ownership) (2) South San Francisco, CA 100.0 % 1 230,592 90 Broadway Cambridge, MA 98.1 % 1 223,771 Sumner Square Washington, DC 90.7 % 1 219,412 255 Main Street Cambridge, MA 87.9 % 1 215,394 20 CityPoint Waltham, MA 98.1 % 1 211,476 77 CityPoint Waltham, MA 97.8 % 1 209,711 49 T able of Contents Properties Location % Occupied as of December 31, 2023 (1) Number of Buildings Net Rentable Square Feet University Place Cambridge, MA 100.0 % 1 195,282 North First Business Park (5) San Jose, CA 87.6 % 5 190,636 890 Winter Street Waltham, MA 56.6 % 1 179,312 150 Broadway Cambridge, MA 100.0 % 1 177,226 Capital Gallery Washington, DC 80.8 % 1 176,809 206 Carnegie Center Princeton, NJ 100.0 % 1 161,763 210 Carnegie Center Princeton, NJ 79.2 % 1 159,468 Kingstowne Two Alexandria, VA 77.4 % 1 156,005 Kingstowne One Alexandria, VA 34.2 % 1 153,601 105 Broadway Cambridge, MA 100.0 % 1 152,664 212 Carnegie Center Princeton, NJ 69.2 % 1 148,942 214 Carnegie Center Princeton, NJ 65.9 % 1 146,799 2440 West El Camino Real Mountain View, CA 71.5 % 1 142,789 506 Carnegie Center Princeton, NJ 82.1 % 1 139,050 153 & 211 Second Avenue Waltham, MA — % 2 136,882 Two Reston Overlook Reston, VA 100.0 % 1 134,615 508 Carnegie Center Princeton, NJ 100.0 % 1 134,433 202 Carnegie Center Princeton, NJ 84.9 % 1 134,068 804 Carnegie Center Princeton, NJ 100.0 % 1 130,000 504 Carnegie Center Princeton, NJ 100.0 % 1 121,990 101 Carnegie Center Princeton, NJ 100.0 % 1 121,619 502 Carnegie Center Princeton, NJ 94.4 % 1 121,460 1265 Main Street (50% ownership) (2) Waltham, MA 100.0 % 1 120,681 701 Carnegie Center Princeton, NJ 100.0 % 1 120,000 104 Carnegie Center Princeton, NJ 63.8 % 1 102,930 103 Carnegie Center Princeton, NJ 73.5 % 1 96,331 33 Hayden Avenue Lexington, MA 100.0 % 1 80,876 Shady Grove Innovation District (6) Rockville, MD 75.9 % 1 78,915 Reservoir Place North Waltham, MA 100.0 % 1 73,258 32 Hartwell Avenue Lexington, MA 100.0 % 1 69,154 250 Binney Street Cambridge, MA 100.0 % 1 67,362 302 Carnegie Center Princeton, NJ 100.0 % 1 64,926 100 Hayden Avenue Lexington, MA 100.0 % 1 55,924 211 Carnegie Center Princeton, NJ 100.0 % 1 47,025 92 Hayden Avenue Lexington, MA 100.0 % 1 31,100 17 Hartwell Avenue Lexington, MA 100.0 % 1 30,000 453 Ravendale Drive Mountain View, CA 100.0 % 1 29,620 690 Folsom Street San Francisco, CA 100.0 % 1 26,080 201 Carnegie Center Princeton, NJ 100.0 % — 6,500 Subtotal for Office and Life Sciences Properties 88.3 % 160 47,935,650 Retail The Prudential Center (retail shops) (7) Boston, MA 95.5 % — 485,211 Fountain Square Retail Reston, VA 87.6 % 1 198,225 Kingstowne Retail Alexandria, VA 100.0 % 1 88,288 50 T able of Contents Properties Location % Occupied as of December 31, 2023 (1) Number of Buildings Net Rentable Square Feet Santa Monica Business Park Retail Santa Monica, CA 88.4 % 7 74,404 Star Market at the Prudential Center Boston, MA 100.0 % 1 57,236 Avant Retail Reston, VA 100.0 % 1 26,179 The Point Waltham, MA 100.0 % 1 16,300 Subtotal for Retail Properties 94.2 % 12 945,843 Residential Signature at Reston (508 units) Reston, VA 96.5 % 1 517,783 The Skylyne (402 units) Oakland, CA 86.1 % 1 330,996 Hub50House (440 units) (50% ownership) (2) Boston, MA 95.0 % 1 320,444 Proto Kendall Square (280 units) Cambridge, MA 96.1 % 1 166,717 The Lofts at Atlantic Wharf (86 units) Boston, MA 93.0 % 1 87,096 Subtotal for Residential Properties 93.4 % (8) 5 1,423,036 (9) Hotel Boston Marriott Cambridge (437 rooms) Cambridge, MA 72.8 % (10) 1 334,260 (11) Subtotal for Hotel Property 72.8 % 1 334,260 Subtotal for In-Service Properties 88.4 % 178 50,638,789 Properties Under Construction/Redevelopment (12) Office 360 Park Avenue South (redevelopment) (71% ownership) (2) (13) New York, NY 18.0 % 1 450,000 Reston Next Office Phase II Reston, VA 4.3 % 1 90,000 Laboratory/Life Sciences 103 CityPoint Waltham, MA — % 1 113,000 (14) 180 CityPoint Waltham, MA 43.0 % 1 329,000 (15) 300 Binney Street (redevelopment) (55% ownership) Cambridge, MA 100.0 % 1 236,000 651 Gateway (redevelopment) (50% ownership) (2) South San Francisco, CA 21.0 % 1 327,000 290 Binney Street Cambridge, MA 100.0 % 1 566,000 Residential Skymark - Reston Next Residential (508 units) (20% ownership) (2) Reston, VA — % 1 417,000 Retail 760 Boylston Street (redevelopment) Boston, MA 100.0 % 1 118,000 Reston Next Retail Reston, VA — % 1 33,000 Subtotal for Properties Under Construction/Redevelopment 53.5 % (16) 10 2,679,000 Total Portfolio 188 53,317,789 _______________ (1) Represents signed leases for in-service properties for which revenue recognition has commenced in accordance with accounting principles generally accepted in the United States (“GAAP”).
(4) Represents the monthly contractual base rent under expiring leases with future contractual increases upon expiration and recoveries from clients under existing leases as of December 31, 2022 multiplied by twelve. This amount reflects total rent before any rent abatements and includes expense reimbursements, which may be estimates as of such date.
(4) Represents the monthly contractual base rent under expiring leases with future contractual increases upon expiration and recoveries from clients under existing leases as of December 31, 2023 multiplied by twelve. This amount reflects total rent before any rent abatements and includes expense reimbursements, which may be estimates as of such date.
(2) Represents the monthly contractual base rents and recoveries from clients under existing leases as of December 31, 2022, 2021, 2020, 2019 and 2018 multiplied by twelve. These annualized amounts are before rent abatements and include expense reimbursements, which may be estimates as of such date.
(2) Represents the monthly contractual base rents and recoveries from clients under existing leases as of December 31, 2023, 2022, 2021, 2020 and 2019 multiplied by twelve. These annualized amounts are before rent abatements and include expense reimbursements, which may be estimates as of such date.
(3) Represents the monthly contractual base rent and recoveries from clients under existing leases as of December 31, 2022 multiplied by twelve. This amount reflects total rent before any rent abatements and includes expense reimbursements, which may be estimates as of such date.
(3) Represents the monthly contractual base rent and recoveries from clients under existing leases as of December 31, 2023 multiplied by twelve. This amount reflects total rent before any rent abatements and includes expense reimbursements, which may be estimates as of such date.
The table set forth below shows information relating to the properties we owned, or in which we had an ownership interest, at December 31, 2022, and it includes properties held by both consolidated and unconsolidated joint ventures.
The table set forth below shows information relating to the properties we owned, or in which we had an ownership interest, at December 31, 2023, and it includes properties held by both consolidated and unconsolidated joint ventures.
Mass Financial Services 313,584 0.76 % __________________ (1) Amounts are calculated based on our consolidated portfolio square feet, plus our share of the square feet from the unconsolidated joint ventures properties (calculated based on our ownership percentage), minus our partners’ share of square feet from our consolidated joint venture properties (calculated based upon the partners’ percentage ownership interests). 53 Table of Contents Client Diversification Our client diversification by square feet as of December 31, 2022 was as follows: Sector % of In-Service Portfolio Technology & Media 22.3% Legal Services 17.2% Financial Services - all other 13.3% Real Estate & Insurance 9.6% Life Sciences 8.6% Other Professional Services 7.9% Financial Services - commercial & investment banking 5.8% Retail 5.5% Manufacturing 4.2% Government / Public Administration 2.9% Other 2.7% Lease Expirations (1)(2) Year of Lease Expiration Rentable Square Feet Subject to Expiring Leases Current Annualized Contractual Rent Under Expiring Leases Without Future Step-Ups (3) Current Annualized Contractual Rent Under Expiring Leases Without Future Step-Ups p.s.f.
Client Diversification Our client diversification by square feet as of December 31, 2023 was as follows: Sector % of In-Service Portfolio (1) Technology & Media 21.3% Legal Services 17.5% Financial Services - all other 13.5% Real Estate & Insurance 9.0% Life Sciences 9.1% Other Professional Services 7.8% Financial Services - commercial & investment banking 5.8% Retail 5.8% Manufacturing 4.6% Government / Public Administration 3.0% Other 2.6% __________________ (1) Amounts are calculated based on our consolidated portfolio square feet, plus our share of the square feet from the unconsolidated joint ventures properties (calculated based on our ownership percentage), minus our partners’ share of square feet from our consolidated joint venture properties (calculated based upon the partners’ percentage ownership interests). 53 T able of Contents Lease Expirations (1)(2) Year of Lease Expiration Rentable Square Feet Subject to Expiring Leases Current Annualized Contractual Rent Under Expiring Leases Without Future Step-Ups (3) Current Annualized Contractual Rent Under Expiring Leases Without Future Step-Ups p.s.f.
Our properties consisted of (1) 173 office and life sciences properties (including 10 properties under construction/redevelopment), (2) 14 retail properties (including two properties under construction/redevelopment), (3) six residential properties (including one property under construction) and (4) one hotel.
Our properties consisted of (1) 167 office and life sciences properties (including seven properties under construction/redevelopment), (2) 14 retail properties (including two properties under construction/redevelopment), (3) six residential properties (including one property under construction) and (4) one hotel.
December 31, 2022 2021 2020 2019 2018 Percentage leased (1) 88.6 % 88.8 % 90.1 % 93.0 % 91.4 % Average annualized revenue per square foot (2) $75.99 $73.76 $72.67 $69.72 $66.63 _______________ (1) Represents signed leases, excluding hotel and residential properties, for which revenue recognition has commenced in accordance with GAAP.
December 31, 2023 2022 2021 2020 2019 Percentage occupied (1) 88.4 % 88.6 % 88.8 % 90.1 % 93.0 % Average annualized revenue per square foot (2) $78.81 $75.99 $73.76 $72.67 $69.72 _______________ (1) Represents signed leases, excluding hotel and residential properties, for which revenue recognition has commenced in accordance with GAAP.
(5) Represents leases that expired on December 31, 2022.
(5) Represents leases that expired on December 31, 2023.
Item 2. Properties. At December 31, 2022, we owned or had joint venture interests in 194 commercial real estate properties, aggregating approximately 54.1 million net rentable square feet of primarily premier workplaces, including 13 properties under construction/redevelopment totaling approximately 3.2 million net rentable square feet.
Item 2. Properties. At December 31, 2023, we owned or had joint venture interests in 188 commercial real estate properties, aggregating approximately 53.3 million net rentable square feet of primarily premier workplaces, including 10 properties under construction/redevelopment totaling approximately 2.7 million net rentable square feet.
Properties Location % Leased as of December 31, 2022 (1) Number of Buildings Net Rentable Square Feet Office and Life Sciences 767 Fifth Avenue (The GM Building) (60% ownership) New York, NY 86.6 % 1 1,965,003 200 Clarendon Street Boston, MA 95.0 % 1 1,769,077 601 Lexington Avenue (55% ownership) New York, NY 98.9 % 1 1,670,790 399 Park Avenue New York, NY 99.2 % 1 1,577,544 Salesforce Tower San Francisco, CA 100.0 % 1 1,420,682 100 Federal Street (55% ownership) Boston, MA 89.8 % 1 1,238,821 Times Square Tower (55% ownership) New York, NY 84.8 % 1 1,225,472 800 Boylston Street - The Prudential Center Boston, MA 91.7 % 1 1,197,798 Colorado Center (50% ownership) (2) Santa Monica, CA 89.5 % 6 1,131,511 Santa Monica Business Park (55% ownership) (2) Santa Monica, CA 87.1 % 14 1,106,399 599 Lexington Avenue New York, NY 85.4 % 1 1,106,351 Reston Next Reston, VA 69.4 % 2 1,063,236 Bay Colony Corporate Center Waltham, MA 62.8 % 4 989,548 250 West 55th Street New York, NY 99.4 % 1 966,979 Embarcadero Center Four San Francisco, CA 93.7 % 1 941,205 48 Table of Contents Properties Location % Leased as of December 31, 2022 (1) Number of Buildings Net Rentable Square Feet 111 Huntington Avenue - The Prudential Center Boston, MA 95.2 % 1 860,446 200 Fifth Avenue (26.69% ownership) (2) New York, NY 92.5 % 1 854,737 Embarcadero Center One San Francisco, CA 68.4 % 1 837,309 Embarcadero Center Two San Francisco, CA 86.3 % 1 802,472 Atlantic Wharf Office (55% ownership) Boston, MA 99.8 % 1 793,769 Gateway Commons (50% Ownership) (2) South San Francisco, CA 89.7 % 5 787,846 Embarcadero Center Three San Francisco, CA 82.5 % 1 787,377 Safeco Plaza (33.67% ownership) (2) Seattle, WA 83.6 % 1 778,116 Madison Centre Seattle, WA 93.1 % 1 754,988 7750 Wisconsin Avenue (50% ownership) (2) Bethesda, MD 100.0 % 1 735,573 Dock 72 (50% ownership) (2) Brooklyn, NY 25.5 % 1 668,625 Metropolitan Square (20% ownership) (2) Washington, DC 85.7 % 1 657,580 100 Causeway Street (50% ownership) (2) Boston, MA 94.6 % 1 633,819 South of Market Reston, VA 99.6 % 3 623,250 901 New York Avenue (25% ownership) (2) Washington, DC 83.1 % 1 544,256 Mountain View Research Park Mountain View, CA 79.2 % 15 542,264 Reservoir Place Waltham, MA 58.0 % 1 527,029 680 Folsom Street San Francisco, CA 98.7 % 2 524,793 Fountain Square Reston, VA 89.7 % 2 524,785 101 Huntington Avenue - The Prudential Center Boston, MA 99.2 % 1 506,476 145 Broadway Cambridge, MA 99.6 % 1 490,086 2200 Pennsylvania Avenue Washington, DC 93.6 % 1 459,745 One Freedom Square Reston, VA 85.0 % 1 427,956 Two Freedom Square Reston, VA 100.0 % 1 423,222 Market Square North (50% ownership) (2) Washington, DC 75.3 % 1 418,539 325 Main Street Cambridge, MA 91.6 % 1 414,008 The Hub on Causeway - Podium (50% ownership) (2) Boston, MA 75.3 % 1 382,497 One and Two Discovery Square Reston, VA 99.0 % 2 366,989 888 Boylston Street - The Prudential Center Boston, MA 100.0 % 1 363,320 Weston Corporate Center Weston, MA 100.0 % 1 356,995 510 Madison Avenue New York, NY 97.1 % 1 355,089 One Reston Overlook Reston, VA 89.0 % 1 319,519 535 Mission Street San Francisco, CA 87.6 % 1 307,235 140 Kendrick Street (3) Needham, MA 85.9 % 2 306,323 Waltham Weston Corporate Center Waltham, MA 97.1 % 1 301,611 Wisconsin Place Office Chevy Chase, MD 88.9 % 1 299,428 230 CityPoint Waltham, MA 97.4 % 1 296,720 17Fifty Presidents Street Reston, VA 100.0 % 1 275,809 49 Table of Contents Properties Location % Leased as of December 31, 2022 (1) Number of Buildings Net Rentable Square Feet 200 West Street Waltham, MA 83.9 % 1 273,365 125 Broadway Cambridge, MA 100.0 % 1 271,000 Reston Corporate Center Reston, VA 100.0 % 2 261,046 355 Main Street Cambridge, MA 99.3 % 1 259,640 Democracy Tower Reston, VA 99.3 % 1 259,441 1330 Connecticut Avenue Washington, DC 94.6 % 1 253,579 880 Winter Street Waltham, MA 85.4 % 1 243,618 10 CityPoint Waltham, MA 95.8 % 1 236,570 510 Carnegie Center Princeton, NJ 33.5 % 1 234,160 500 North Capitol Street, N.W.
Properties Location % Occupied as of December 31, 2023 (1) Number of Buildings Net Rentable Square Feet Office and Life Sciences 767 Fifth Avenue (The GM Building) (60% ownership) New York, NY 91.6 % 1 1,966,490 200 Clarendon Street Boston, MA 96.8 % 1 1,734,949 601 Lexington Avenue (55% ownership) New York, NY 95.9 % 1 1,670,790 399 Park Avenue New York, NY 98.4 % 1 1,577,544 Salesforce Tower San Francisco, CA 99.0 % 1 1,420,682 800 Boylston Street - The Prudential Center Boston, MA 91.2 % 1 1,275,253 Times Square Tower (55% ownership) New York, NY 95.6 % 1 1,238,461 100 Federal Street (55% ownership) Boston, MA 90.6 % 1 1,233,537 Colorado Center (50% ownership) (2) Santa Monica, CA 87.8 % 6 1,131,511 Santa Monica Business Park Santa Monica, CA 83.8 % 14 1,108,201 599 Lexington Avenue New York, NY 92.4 % 1 1,106,313 Reston Next Reston, VA 88.4 % 2 1,063,296 Bay Colony Corporate Center Waltham, MA 53.6 % 4 1,001,068 250 West 55th Street New York, NY 100.0 % 1 966,976 Embarcadero Center Four San Francisco, CA 93.9 % 1 942,084 111 Huntington Avenue - The Prudential Center Boston, MA 100.0 % 1 860,446 200 Fifth Avenue (26.69% ownership) (2) New York, NY 92.5 % 1 855,059 Embarcadero Center One San Francisco, CA 72.8 % 1 837,386 Embarcadero Center Two San Francisco, CA 84.5 % 1 801,840 Atlantic Wharf Office (55% ownership) Boston, MA 99.8 % 1 790,165 Gateway Commons (50% Ownership) (2) South San Francisco, CA 79.7 % 5 788,148 Embarcadero Center Three San Francisco, CA 77.1 % 1 787,642 Safeco Plaza (33.67% ownership) (2) Seattle, WA 85.3 % 1 779,776 Madison Centre Seattle, WA 78.2 % 1 754,988 7750 Wisconsin Avenue (50% ownership) (2) Bethesda, MD 100.0 % 1 735,573 Dock 72 (50% ownership) (2) Brooklyn, NY 42.4 % 1 668,521 100 Causeway Street (50% ownership) (2) Boston, MA 94.5 % 1 634,535 South of Market Reston, VA 98.7 % 3 623,250 48 T able of Contents Properties Location % Occupied as of December 31, 2023 (1) Number of Buildings Net Rentable Square Feet 901 New York Avenue (25% ownership) (2) (3) Washington, DC 83.2 % 1 548,425 Mountain View Research Park Mountain View, CA 60.7 % 15 542,264 Reservoir Place Waltham, MA 43.8 % 1 527,029 680 Folsom Street San Francisco, CA 98.7 % 2 524,793 Fountain Square Reston, VA 87.0 % 2 524,638 101 Huntington Avenue - The Prudential Center Boston, MA 98.7 % 1 506,476 145 Broadway Cambridge, MA 99.6 % 1 490,086 2100 Pennsylvania Avenue Washington, DC 65.3 % 1 475,849 2200 Pennsylvania Avenue Washington, DC 94.9 % 1 459,811 One Freedom Square Reston, VA 82.8 % 1 427,956 Two Freedom Square Reston, VA 100.0 % 1 423,222 140 Kendrick Street (4) Needham, MA 84.4 % 3 418,600 Market Square North (50% ownership) (2) Washington, DC 77.0 % 1 418,549 325 Main Street Cambridge, MA 91.4 % 1 414,565 The Hub on Causeway - Podium (50% ownership) (2) Boston, MA 93.8 % 1 382,988 One and Two Discovery Square Reston, VA 89.7 % 2 366,989 888 Boylston Street - The Prudential Center Boston, MA 100.0 % 1 363,320 Weston Corporate Center Weston, MA 100.0 % 1 356,995 510 Madison Avenue New York, NY 98.7 % 1 355,089 One Reston Overlook Reston, VA 89.7 % 1 319,519 535 Mission Street San Francisco, CA 67.9 % 1 307,235 Wisconsin Place Office Chevy Chase, MD 64.2 % 1 302,858 Waltham Weston Corporate Center Waltham, MA 82.4 % 1 301,611 230 CityPoint Waltham, MA 94.6 % 1 296,720 17Fifty Presidents Street Reston, VA 100.0 % 1 275,809 200 West Street Waltham, MA 94.5 % 1 273,365 125 Broadway Cambridge, MA 100.0 % 1 271,000 Reston Corporate Center Reston, VA 100.0 % 2 261,046 355 Main Street Cambridge, MA 99.3 % 1 259,640 Democracy Tower Reston, VA 99.3 % 1 259,441 1330 Connecticut Avenue Washington, DC 87.4 % 1 253,579 880 Winter Street Waltham, MA 98.5 % 1 243,618 10 CityPoint Waltham, MA 100.0 % 1 236,570 510 Carnegie Center Princeton, NJ 33.5 % 1 234,160 500 North Capitol Street, N.W.
(10) Includes 4,260 square feet of retail space that is 100% leased as of December 31, 2022. This amount is not included in the calculation of the Total Portfolio occupancy rate for In-Service Properties as of December 31, 2022. (11) Represents percentage leased as of February 21, 2023, including leases with future commencement dates.
This amount is not included in the calculation of the Total Portfolio occupancy rate for In-Service Properties as of December 31, 2023. (11) Includes 4,260 square feet of retail space that is 100% leased as of December 31, 2023.
This amount is not included in the calculation of the Total Portfolio occupancy rate for In-Service Properties as of December 31, 2022. (9) Represents the weighted-average room occupancy for the year ended December 31, 2022. This amount is not included in the calculation of the Total Portfolio occupancy rate for In-Service Properties as of December 31, 2022.
(9) Includes 61,511 square feet of retail space that is approximately 79.2% leased as of December 31, 2023. This amount is not included in the calculation of the Total Portfolio occupancy rate for In-Service Properties as of December 31, 2023. (10) Represents the weighted-average room occupancy for the year ended December 31, 2023.
(12) The property was 64% placed in-service as of December 31, 2022. (13) Total percentage leased excludes Residential and Other. 52 Table of Contents Percentage Leased and Average Annualized Revenue per Square Foot for In-Service Properties The following table sets forth our percentage leased and average annualized revenue per square foot on a historical basis for our In-Service Properties.
(16) Total percentage leased excludes Residential. Percentage Occupied and Average Annualized Revenue per Square Foot for In-Service Properties The following table sets forth our percentage leased and average annualized revenue per square foot on a historical basis for our In-Service Properties.
The aggregate amounts of rent abatements per square foot under existing leases as of December 31, 2022, 2021, 2020, 2019 and 2018 for the succeeding twelve-month period were $1.56, $2.15, $1.73, $1.70 and $0.97, respectively.
The aggregate amounts of rent abatements per square foot under existing leases as of December 31, 2023, 2022, 2021, 2020 and 2019 for the succeeding twelve-month period were $2.47, $1.56, $2.15, $1.73 and $1.70, respectively. 52 T able of Contents Top 20 Clients by Square Feet Our 20 largest clients by square feet as of December 31, 2023 were as follows: Client Square Feet (1) % of In-Service Portfolio (1) 1. salesforce.com 891,231 2.10 % 2.
The property is held for future redevelopment. (7) Percentage leased is not included in the calculation of the Total Portfolio occupancy rate for In-Service Properties as of December 31, 2022. (8) Includes 61,511 square feet of retail space that is approximately 46.7% leased as of December 31, 2022.
(7) Excludes 760 Boylston Street, the stand-alone building consisting of approximately 118,000 square feet at The Prudential Center (retail shops) that was placed in redevelopment during the year ended December 31, 2022. (8) Percentage leased is not included in the calculation of the Total Portfolio occupancy rate for In-Service Properties as of December 31, 2023.
Removed
(2) Property is an unconsolidated joint venture. (3) Excludes a portion of the property that was placed in redevelopment during the year for 760 Boylston Street, the stand-alone building consisting of approximately 118,000 square feet at the Prudential Center (retail shops), and for 140 Kendrick Street one building consisting of approximately 90,000 square feet.
Added
(2) Property is an unconsolidated joint venture. (3) Our economic ownership has increased based on the achievement of certain return thresholds. At December 31, 2023, our economic ownership was approximately 50%.
Removed
(4) This property is held for redevelopment (see Note 16 to the Consolidated Financial Statements). (5) Property is held for redevelopment. (6) Excludes 2096 Gaither Road, which was taken out of service following the expiration of the last leases on November 30, 2022. 2096 Gaither Road consisted of approximately 50,000 net rentable square feet of office space.
Added
On January 8, 2024, our joint venture partner in 901 New York 51 T able of Contents Avenue transferred all of its ownership interest in the joint venture to us for a gross purchase price of $10.0 million (See Note 17 to the Consolidated Financial Statements).
Removed
Top 20 Clients by Square Feet Our 20 largest clients by square feet as of December 31, 2022 were as follows: Client Square Feet (1) % of In-Service Portfolio (1) 1. salesforce.com 905,742 2.18 % 2. Biogen 848,021 2.04 % 3. Google 836,110 2.02 % 4. Fannie Mae 706,196 1.70 % 5. Microsoft 676,013 1.63 % 6.
Added
(4) On July 20, 2023, we completed and fully placed in-service 140 Kendrick Street - Building A, a redevelopment project with approximately 104,000 net rentable square feet in Needham, Massachusetts. (5) Property is held for redevelopment. (6) Property is held for redevelopment.
Removed
Akamai Technologies 658,578 1.59 % 7. Ropes & Gray 539,467 1.30 % 8. WeWork 499,584 1.20 % 9. Kirkland & Ellis 409,828 0.99 % 10. Shearman & Sterling 384,813 0.93 % 11. Integrated Holding Group 373,007 0.90 % 12. Arnold & Porter Kaye Scholer 367,878 0.89 % 13. Marriott 367,787 0.89 % 14. Leidos 352,394 0.85 % 15.
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Shady Grove Innovation District consists of 15825 Shady Grove Road. 2092 Gaither Road and 2098 Gaither Road were removed from in-service portfolio during 2023 and aggregated approximately 103,375 square feet.
Removed
Blue Cross Blue Shield 347,618 0.84 % 16. Snap 334,008 0.81 % 17. Wellington Management 329,284 0.79 % 18. Bank of America 327,965 0.79 % 19. US Government 319,359 0.77 % 20.
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This amount is not included in the calculation of the Total Portfolio occupancy rate for In-Service Properties as of December 31, 2023. (12) Represents percentage leased as of February 20, 2024, including leases with future commencement dates.
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(4) Percentage of Total Square Feet 2022 (5) 142,247 $8,743,332 $61.47 $8,743,332 $61.47 0.29 % 2023 2,365,271 152,468,240 64.46 154,165,416 65.18 4.81 % 2024 3,484,836 226,746,710 65.07 229,909,224 65.97 7.09 % 2025 3,153,702 223,623,625 70.91 229,978,559 72.92 6.42 % 2026 3,426,819 282,354,792 82.40 300,195,296 87.60 6.97 % 2027 2,536,189 189,932,694 74.89 206,165,952 81.29 5.16 % 2028 3,613,441 284,362,730 78.70 313,274,083 86.70 7.35 % 2029 3,277,617 244,843,567 74.70 280,496,001 85.58 6.67 % 2030 2,942,040 221,302,292 75.22 244,517,304 83.11 5.99 % 2031 2,050,808 162,883,453 79.42 183,351,730 89.40 4.17 % Thereafter 16,199,507 1,311,792,619 80.98 1,606,093,642 99.14 32.96 % _______________ (1) Includes 100% of unconsolidated joint venture properties.
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(13) On December 14, 2023, we acquired an additional 29% ownership interest in the property, which has increased our total ownership to approximately 71% (See Note 6 to the Consolidated Financial Statements). (14) The property was 4% placed in-service as of December 31, 2023. (15) The property was 46% placed in-service as of December 31, 2023.
Added
Biogen 848,021 2.00 % 3. Google 836,110 1.97 % 4. Fannie Mae 710,121 1.68 % 5. Akamai Technologies 658,578 1.55 % 6. Snap 607,287 1.43 % 7. Microsoft 599,200 1.41 % 8. Ropes & Gray 539,467 1.27 % 9. Kirkland & Ellis 428,187 1.01 % 10. Wellington Management 401,665 0.95 % 11. Shearman & Sterling 384,813 0.91 % 12.
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Integrated Holding Group (aka Millennium Management) 373,007 0.88 % 13. Arnold & Porter Kaye Scholer 367,878 0.87 % 14. Marriott 367,787 0.87 % 15. WeWork 367,338 0.87 % 16. Leidos 352,394 0.83 % 17. Blue Cross Blue Shield 347,618 0.82 % 18. Bank of America 330,350 0.78 % 19. US Government 319,359 0.75 % 20.
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Bain Capital 315,833 0.75 % __________________ (1) Amounts are calculated based on our consolidated portfolio square feet, plus our share of the square feet from the unconsolidated joint ventures properties (calculated based on our ownership percentage), minus our partners’ share of square feet from our consolidated joint venture properties (calculated based upon the partners’ percentage ownership interests).
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(4) Percentage of Total Square Feet 2023 (5) 160,589 $9,802,660 $61.04 $9,802,660 $61.04 0.33 % 2024 2,676,191 175,925,225 65.74 177,083,389 66.17 5.47 % 2025 3,150,406 240,715,108 76.41 244,631,629 77.65 6.44 % 2026 2,682,236 231,970,206 86.48 236,502,157 88.17 5.48 % 2027 2,445,283 193,144,607 78.99 205,179,627 83.91 5.00 % 2028 3,417,177 279,177,909 81.70 301,397,445 88.20 6.98 % 2029 3,818,976 282,099,562 83.87 318,387,006 83.37 7.80 % 2030 2,925,267 227,515,075 77.78 249,994,406 85.46 5.98 % 2031 2,313,899 194,176,879 83.92 216,462,874 93.55 4.73 % 2032 2,290,559 179,323,608 78.29 209,859,249 91.62 4.68 % Thereafter 16,898,552 1,387,847,687 82.13 1,714,163,976 101.44 34.52 % _______________ (1) Includes 100% of unconsolidated joint venture properties.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePeriod (a) Total Number of Units Purchased (b) Average Price Paid per Unit (c) Total Number of Units Purchased as Part of Publicly Announced Plans or Programs (d) Maximum Number (or Approximate Dollar Value) of Units that May Yet be Purchased October 1, 2022 – October 31, 2022 — $ — N/A N/A November 1, 2022 – November 30, 2022 — — N/A N/A December 1, 2022 – December 31, 2022 2,196 (1) 0.16 N/A N/A Total 2,196 $ 0.16 N/A N/A ____________________ (1) Includes 845 common units previously held by BXP that were redeemed in connection with the repurchase of shares of restricted common stock of BXP in connection with the termination of an employee’s employment with BXP and 948 LTIP units, 229 2021 MYLTIP Units and 174 2022 MYLTIP Units that were repurchased by BPLP in connection with the termination of certain employees’ employment with BXP.
Biggest change(c) Issuer Purchases of Equity Securities. 56 T able of Contents Period (a) Total Number of Units Purchased (b) Average Price Paid per Unit (c) Total Number of Units Purchased as Part of Publicly Announced Plans or Programs (d) Maximum Number (or Approximate Dollar Value) of Units that May Yet be Purchased October 1, 2023 – October 31, 2023 — $ — N/A N/A November 1, 2023 – November 30, 2023 5,914 (1) 0.25 N/A N/A December 1, 2023 – December 31, 2023 939 (2) 0.01 N/A N/A Total 6,853 $ 0.22 N/A N/A ____________________ (1) Represents LTIP units that were repurchased by BPLP in connection with the termination of a certain employee’s employment with BXP.
Stock Performance Graph The following graph provides a comparison of cumulative total stockholder return for the period from December 31, 2017 through December 31, 2022, among BXP, Standard & Poor’s (“S&P”) 500 Index, FTSE Nareit Equity REIT Total Return Index (the “Equity REIT Index”) and the FTSE Nareit Office REIT Index (the “Office REIT Index”).
Stock Performance Graph The following graph provides a comparison of cumulative total stockholder return for the period from December 31, 2018 through December 31, 2023, among BXP, Standard & Poor’s (“S&P”) 500 Index, FTSE Nareit Equity REIT Total Return Index (the “Equity REIT Index”) and the FTSE Nareit Office REIT Index (the “Office REIT Index”).
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. The common stock of Boston Properties, Inc. is listed on the New York Stock Exchange under the symbol “BXP.” At February 21, 2023, BXP had approximately 1,055 stockholders of record. There is no established public trading market for BPLP’s common units.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. The common stock of Boston Properties, Inc. is listed on the New York Stock Exchange under the symbol “BXP.” At February 20, 2024, BXP had approximately 1,047 stockholders of record. There is no established public trading market for BPLP’s common units.
Period (a) Total Number of Shares of Common Stock Purchased (b) Average Price Paid per Common Share (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (d) Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased October 1, 2022 – October 31, 2022 — $ — N/A N/A November 1, 2022 – November 30, 2022 — — N/A N/A December 1, 2022 – December 31, 2022 845 (1) 0.01 N/A N/A Total 845 $ 0.01 N/A N/A ____________________ (1) Includes 845 shares of restricted common stock of BXP repurchased in connection with the termination of an employee’s employment with BXP.
Period (a) Total Number of Shares of Common Stock Purchased (b) Average Price Paid per Common Share (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (d) Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased under the Plans or Programs October 1, 2023 – October 31, 2023 — $ — N/A N/A November 1, 2023 – November 30, 2023 — — N/A N/A December 1, 2023 – December 31, 2023 939 (1) 0.01 N/A N/A Total 939 $ 0.01 N/A N/A ____________________ (1) Includes 939 shares of restricted common stock of BXP repurchased in connection with the termination of certain employees’ employment with BXP.
Under the terms of the applicable restricted stock award agreements, the shares were repurchased by BXP at a price of $0.01 per share, which was the amount originally paid by such employee for such shares. BPLP (a) None. (b) Not Applicable. (c) Issuer Purchases of Equity Securities.
Under the terms of the applicable restricted stock award agreements, the shares were repurchased by BXP at a price of $0.01 per share, which was the amount originally paid by such employees for such shares.
Under the terms of the applicable restricted stock award agreements, LTIP unit vesting agreements, 2021 MYLTIP award agreement and 2022 MYLTIP award agreement, the shares were repurchased at a price of $0.01 per share and the LTIP units, 2021 MYLTIP units and 2022 MYLTIP units were repurchased at a price of $0.25 per unit, which were the amounts originally paid by such employee for such shares and units. 56 Table of Contents
Under the terms of the applicable restricted stock award agreements, such shares were repurchased at a price of $0.01 per share, which were the amounts originally paid by such employees for such shares.
In order to enable BXP to maintain its qualification as a REIT, it must make annual distributions to its stockholders of at least 90% of its taxable income (not including net capital gains and with certain other adjustments).
On February 20, 2024, there were approximately 332 holders of record and 176,206,655 common units outstanding, 157,010,980 of which were held by BXP. To maintain its qualification as a REIT, BXP must make annual distributions to its stockholders of at least 90% of its taxable income (not including net capital gains and with certain other adjustments).
Removed
On February 21, 2023, there were approximately 329 holders of record and 175,485,410 common units outstanding, 156,822,702 of which were held by BXP.
Added
The data shown is based on the share prices or index values, as applicable, at the end of each month shown. 55 T able of Contents As of the year ended December 31, 2018 2019 2020 2021 2022 2023 Boston Properties, Inc. $ 100.00 $ 126.08 $ 90.33 $ 114.01 $ 70.02 $ 77.60 S&P 500 Index $ 100.00 $ 131.49 $ 155.68 $ 200.37 $ 164.08 $ 207.21 Equity REIT Index $ 100.00 $ 126.00 $ 115.92 $ 166.04 $ 125.58 $ 142.83 Office REIT Index $ 100.00 $ 131.42 $ 107.19 $ 130.77 $ 81.58 $ 83.23 BXP (a) During the three months ended December 31, 2023, BXP issued an aggregate of 2,277 shares of common stock in exchange for 2,277 common units of limited partnership held by certain limited partners of BPLP.
Removed
The data shown is based on the share prices or index values, as applicable, at the end of each month shown. 55 Table of Contents As of the year ended December 31, 2017 2018 2019 2020 2021 2022 Boston Properties, Inc. $ 100.00 $ 89.12 $ 112.36 $ 80.50 $ 101.60 $ 62.40 S&P 500 Index $ 100.00 $ 95.62 $ 125.72 $ 148.85 $ 191.58 $ 156.88 Equity REIT Index $ 100.00 $ 95.38 $ 120.17 $ 110.56 $ 158.36 $ 119.78 Office REIT Index $ 100.00 $ 85.50 $ 112.36 $ 91.65 $ 111.81 $ 69.75 BXP (a) None.
Added
Of these shares, 1,000 shares were issued in reliance on an exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended. We relied on the exemption under Section 4(a)(2) based upon factual representations received from the limited partner who received the common shares. (b) Not Applicable. (c) Issuer Purchases of Equity Securities.
Removed
(b) Not Applicable. (c) Issuer Purchases of Equity Securities.
Added
BPLP (a) Each time BXP issues shares of common stock (other than in exchange for common units when such common units are presented for redemption), it contributes the proceeds of such issuance to BPLP in return for an equivalent number of partnership units with rights and preferences analogous to the shares issued.
Added
During the three months ended December 31, 2023, in connection with issuances of common stock by BXP pursuant to the Boston Properties, Inc. 2021 Stock Incentive Plan, BPLP issued an aggregate of 348 common units to BXP in exchange for approximately $3.48, the aggregate proceeds of such common stock issuances to BXP.
Added
Such units were issued in reliance on an exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended. (b) Not Applicable.
Added
Under the terms of the applicable LTIP unit vesting agreements, such LTIP units were repurchased at a price of $0.25 per unit, which were the amounts originally paid by such employees for such units.
Added
(2) Represents common units previously held by BXP that were redeemed in connection with the repurchase of shares of restricted common stock of BXP in connection with the termination of certain employees’ employment with BXP.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

39 edited+38 added−24 removed12 unchanged
Biggest changeSome of the risks and uncertainties that may cause our actual results, performance or achievements to differ materially from those expressed or implied by forward-looking statements include, among others, the following: • volatile or adverse global economic and geopolitical conditions, health crises and dislocations in the credit markets could adversely affect our access to cost-effective capital and have a resulting material adverse effect on our business opportunities, results of operations and financial condition; • risks associated with downturns in the national and local economies, continued inflation, increasing interest rates, and volatility in the securities markets; • general risks affecting the real estate industry (including, without limitation, the inability to enter into or renew leases, changes in client preferences and space utilization, dependence on clients’ financial condition, and competition from other developers, owners and operators of real estate); • the impact of geopolitical conflicts, including the ongoing war in Ukraine; • the immediate and long-term impact of the outbreak of a highly infectious or contagious disease, such as COVID-19, on our and our clients’ financial condition, results of operations and cash flows (including the impact of actions taken to contain the outbreak or mitigate its impact, the direct and indirect economic effects of the outbreak and containment measures on our clients, and the ability of our clients to successfully operate their businesses); • failure to manage effectively our growth and expansion into new markets and sub-markets or to integrate acquisitions and developments successfully; • the ability of our joint venture partners to satisfy their obligations; • risks and uncertainties affecting property development and construction (including, without limitation, continued inflation, supply chain disruptions, labor shortages, construction delays, increased construction costs, cost overruns, inability to obtain necessary permits, client accounting 58 Table of Contents considerations that may result in negotiated lease provisions that limit a client’s liability during construction, and public opposition to such activities); • risks associated with the availability and terms of financing and the use of debt to fund acquisitions and developments or refinance existing indebtedness, including the impact of higher interest rates on the cost and/or availability of financing; • risks associated with forward interest rate contracts and the effectiveness of such arrangements; • risks associated with actual or threatened terrorist attacks; • costs of compliance with the Americans with Disabilities Act and other similar laws; • potential liability for uninsured losses and environmental contamination; • risks associated with climate change and severe weather events, as well as the regulatory efforts intended to reduce the effects of climate change; • risks associated with security breaches through cyber attacks, cyber intrusions or otherwise, as well as other significant disruptions of our information technology (IT) networks and related systems, which support our operations and our buildings; • risks associated with BXP’s potential failure to qualify as a REIT under the Internal Revenue Code of 1986, as amended; • possible adverse changes in tax and environmental laws; • the impact of newly adopted accounting principles on our accounting policies and on period-to-period comparisons of financial results; • risks associated with possible state and local tax audits; and • risks associated with our dependence on key personnel whose continued service is not guaranteed.
Biggest changeSome of the risks and uncertainties that may cause our actual results, performance or achievements to differ materially from those expressed or implied by forward-looking statements include, among others, the following: • volatile or adverse global economic and geopolitical conditions, health crises and dislocations in the credit markets could adversely affect economic conditions and/or restrict our access to cost-effective capital, which could have a material adverse effect on our business opportunities, results of operations and financial condition; • general risks affecting the real estate industry (including, without limitation, the inability to enter into or renew leases, changes in client preferences and space utilization, dependence on clients’ financial condition, and competition from other developers, owners and operators of real estate); • failure to manage effectively our growth and expansion into new markets and sub-markets or to integrate acquisitions and developments successfully; • the ability of our joint venture partners to satisfy their obligations; • risks and uncertainties affecting property development and construction (including, without limitation, continued inflation, supply chain disruptions, labor shortages, construction delays, increased construction costs, cost overruns, inability to obtain necessary permits, client accounting considerations that may result in negotiated lease provisions that limit a client’s liability during construction, and public opposition to such activities); • risks associated with the availability and terms of financing and the use of debt to fund acquisitions and developments or refinance existing indebtedness, including the impact of higher interest rates on the cost and/or availability of financing; 58 T able of Contents • risks associated with forward interest rate contracts and derivatives and the effectiveness of such arrangements; • risks associated with actual or threatened terrorist attacks; • costs of compliance with the Americans with Disabilities Act and other similar laws; • potential liability for uninsured losses and environmental contamination; • risks associated with climate change and severe weather events, as well as the regulatory efforts intended to reduce the effects of climate change; • risks associated with security breaches, incidents, and compromises through cyber-attacks, cyber intrusions or otherwise, as well as other significant disruptions of our information technology (IT) networks and related systems, which support our operations and our buildings; • risks associated with legal proceedings and other claims that could result in substantial monetary and other costs; • risks associated with BXP’s potential failure to qualify as a REIT under the Internal Revenue Code of 1986, as amended; • possible adverse changes in tax and environmental laws; • the impact of newly adopted accounting principles on our accounting policies and on period-to-period comparisons of financial results; • risks associated with possible state and local tax audits; and • risks associated with our dependence on key personnel whose continued service is not guaranteed.
We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and are including this statement for purposes of complying with those safe harbor provisions, in each case, to the extent applicable.
We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and we are including this statement for purposes of complying with those safe harbor provisions, in each case, to the extent applicable.
Los Angeles Our Los Angeles (“LA”) in-service portfolio of approximately 2.3 million square feet is currently focused in West LA and includes Colorado Center, an approximately 1.1 million square foot property of which we own 50%, and Santa Monica Business Park, a 21-building, approximately 1.2 million square foot property of which we own 55%.
Los Angeles Our Los Angeles (“LA”) in-service portfolio of approximately 2.3 million square feet is currently focused in West LA and includes Colorado Center, an approximately 1.1 million square foot property of which we own 50%, and Santa Monica Business Park, a 21-building, approximately 1.2 million square foot property.
The forward-looking statements are contained principally, but not only, under the captions “Business—Business and Growth Strategies,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” We caution investors that forward-looking statements are based on current beliefs, expectations of future events and assumptions made by, and information currently available to, our management.
The forward-looking statements are contained principally, but not only, under the captions “Business—Business and Growth Strategies,” “ Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” We caution investors that forward-looking statements are based on current beliefs, expectations of future events and assumptions made by, and information currently available to, our management.
The most significant factors that may cause actual results to differ materially from those expressed or implied by the forward-looking statements include the risks and uncertainties related to the impact of changes in general economic and capital market conditions, including continued inflation, increasing interest rates, supply chain disruptions, labor market disruptions, dislocation and volatility in capital markets, and potential longer-term changes in consumer and client behavior resulting from the severity and duration of any downturn in the U.S. or global economy, as well as the other important factors below and the risks set forth in this Form 10-K in Part I, Item 1A.
The most significant factors that may cause actual results to differ materially from those expressed or implied by the forward-looking statements include the risks and uncertainties related to the impact of changes in general economic and capital market conditions, including continued inflation, increasing interest rates, supply chain disruptions, labor market disruptions, dislocation and volatility in capital markets, and potential longer-term changes in consumer and client behavior resulting from the severity and duration of any downturn in the U.S. or global economy, sustained changes in client preferences and space utilization, as well as the other important factors below and the risks set forth in this Form 10-K in Part I, Item 1A.
We continually evaluate current and prospective markets for possible acquisitions of “value-add” assets that require lease-up or repositioning, and acquisitions that are otherwise consistent with our long-term strategy of owning, managing, developing, and improving premier workplaces in each of our chosen markets.
Investment Activity We continually evaluate current and prospective markets for possible acquisitions of “value-add” assets that require lease-up or repositioning, and acquisitions that are otherwise consistent with our long-term strategy of owning, managing, developing, and improving premier workplaces in each of our chosen markets.
Should one or more of these known or unknown risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those expressed or implied by the forward-looking statements.
If one or more of these known or unknown risks or uncertainties materialize, or if underlying assumptions prove incorrect, actual results may vary materially from those expressed or implied by the forward-looking statements.
Premier workplaces, the preferred choice for our current and prospective clients, are gaining market share compared to general office space and demonstrating the highest occupancy, net absorption levels and rental rates in the central business district (“CBD”) markets where we operate; • leasing available space in our in-service and development properties, as well as proactively focusing on future lease expirations; • completing the construction and leasing of our development properties; • pursuing attractive asset class adjacencies where we have a track record of success, such as life sciences and residential development; 60 Table of Contents • continuing to raise the bar in the quality of our portfolio and actively recycling capital by selling assets, subject to market conditions, which may be negatively impacted by a slowdown in the capital markets and the limited availability of private market debt financing; • actively managing our operations in a sustainable and responsible manner; and • prioritizing risk management by actively managing liquidity, investing more extensively with joint venture partners to manage our debt levels, and being highly selective in new investment commitments.
Premier workplaces, the preferred choice for our current and prospective clients, are gaining market share compared to general office space and continue to demonstrate the highest occupancy, net absorption levels and rental rates in the central business districts (“CBDs”) in markets where we operate; • leasing available space in our in-service and development properties, as well as proactively focusing on future lease expirations; • completing the construction and leasing of our development properties; • pursuing attractive asset class adjacencies where we have a track record of success, such as life sciences and residential development; • continuing to raise the bar in the quality of our portfolio and actively recycling capital by selling assets, subject to market conditions, which have been, and may continue to be, negatively impacted by a slowdown in the capital markets and the limited availability of private market debt financing; • actively managing our operations in a sustainable and responsible manner; and • prioritizing risk management by actively managing liquidity, investing more extensively with joint venture partners to manage our debt levels, and being highly selective in new investment commitments.
(5) Represents leases executed during the year ended December 31, 2022 for which we either (1) commenced lease revenue recognition in such period or (2) will commence lease revenue recognition in subsequent periods, in accordance with GAAP, and includes leases at properties currently under development.
(4) Represents leases executed during the year ended December 31, 2023 for which we either (1) commenced lease revenue recognition in such period or (2) will commence lease revenue recognition in subsequent periods, in accordance with GAAP, and includes leases at properties currently under development.
As of December 31, 2022, our development/redevelopment pipeline consisted of 13 properties that, when completed, we expect will total approximately 3.2 million net rentable square feet. Our share of the estimated total cost for these projects is approximately $1.9 billion, of which approximately $729.1 million remains to be invested.
As of December 31, 2023, our development/redevelopment pipeline consisted of 10 properties that, when completed, we expect will total approximately 2.7 million net rentable square feet. Our share of the estimated total cost for these projects is approximately $2.4 billion, of which approximately $1.3 billion remains to be invested.
(4) Represents leases for which lease revenue recognition has commenced in accordance with GAAP during the year ended December 31, 2022 .
(3) Represents leases for which lease revenue recognition has commenced in accordance with GAAP during the year ended December 31, 2023 .
In this regard, we believe that our competitive leasing advantage is based on the following attributes: • our understanding of our client’s short- and long-term space utilization and amenity needs in the local markets; • our track record of developing and operating premier workplaces in a sustainable and responsible manner; • our reputation as a high quality developer, owner and manager of premier workplaces in our markets; • our financial strength and our ability to maintain high building standards; and • our relationships with local brokers.
In this regard, we believe we have a competitive leasing advantage that results from: • our understanding of our client’s short- and long-term space utilization and amenity needs in the local markets; • our track record of developing and operating premier workplaces in a sustainable and responsible manner; • our reputation as a high-quality developer, owner and manager of premier workplaces in our markets; • our financial strength, including our ability to fund our share of lease obligations and maintain premier building standards; and • our relationships with local brokers.
We remain focused on the following priorities: • continuing to embrace our leadership position in the premier workplace industry and leveraging our strength in portfolio quality, client relationships, development skills, market penetration and sustainability to profitably build market share.
We remain focused on the following strategies: 60 T able of Contents • continuing to embrace our leadership position in the premier workplace segment and leveraging our strength in portfolio quality, client relationships, development skills, market penetration and sustainability to profitably build market share.
(8) Represents the increase in gross rent (base rent plus expense reimbursements) on the new versus expired leases on the 4,209,361 square feet of second generation leases that had been occupied within the prior 12 months for the year ended December 31, 2022; excludes leases that management considers temporary because the client is not expected to occupy the space on a long-term basis. 64 Table of Contents (9) Represents the increase in net rent (gross rent less operating expenses) on the new versus expired leases on the 4,209,361 square feet of second generation leases that had been occupied within the prior 12 months for the year ended December 31, 2022.
(7) Represents the increase in gross rent (base rent plus expense reimbursements) on the new versus expired leases on the 2,442,828 square feet of second generation leases that had been occupied within the prior 12 months for the year ended December 31, 2023; excludes leases that management considers temporary because the client is not expected to occupy the space on a long-term basis.
Of the 5,707,946 square feet of second generation leases that commenced during the year ended December 31, 2022, leases for 4,717,398 square feet were signed in prior periods. (7) Total transaction costs include tenant improvements and leasing commissions but exclude free rent concessions and other inducements in accordance with GAAP.
Of the 3,674,417 square feet of second generation leases that commenced during the year ended December 31, 2023, leases for 3,117,737 square feet were signed in prior periods. (6) Total transaction costs include tenant improvements and leasing commissions but exclude free rent concessions and other inducements in accordance with GAAP.
A significant component of our Washington, DC regional portfolio is in Reston Town Center, an award-winning mixed-use development in Northern Virginia. Reston is a hub for technology, cloud services, cybersecurity and defense intelligence companies. Our Reston, Virginia properties were approximately 89% leased as of December 31, 2022.
A significant component of our Washington, DC regional portfolio is in Reston Town Center, an award-winning mixed-use development in Northern Virginia comprised of approximately 4.9 million square feet. Reston is a hub for technology, cloud services, cybersecurity and defense intelligence companies.
As we continue to focus on new investments to drive future growth, we regularly review our portfolio to identify properties as potential sales candidates that either no longer fit within our portfolio strategy or could attract premium pricing in the current market.
As we continue to focus on new investments to drive future growth, we regularly review our portfolio to identify properties as potential sales candidates that either no longer fit within our portfolio strategy or could attract premium pricing in the current market, as evidenced by the partial interest sale of 300 Binney Street during the fourth quarter of 2023 and anticipated partial interest sale of 290 Binney Street.
Washington, DC During the fourth quarter of 2022, we executed approximately 321,000 square feet of leases and approximately 648,000 square feet of leases commenced in the Washington, DC region.
Washington, DC During the fourth quarter of 2023, we executed approximately 141,000 square feet of leases and approximately 344,000 square feet of leases commenced revenue recognition in the Washington, DC region.
This evolving operating environment impacts various aspects of our operating activities as: • business leaders may generally become more reticent to make large capital allocation decisions, such as entry into a new lease; • labor market conditions shift resulting in increasing employer demands for mandatory in-person workdays and gradual increases in space utilization by our clients; • our capital costs have increased due to higher interest rates and credit spreads, and private market debt financing, both for construction and existing assets, is significantly more challenging to arrange; and • construction costs have increased for new development and, although the costs for our active development pipeline are, at this stage, relatively fixed, the cost of potential future developments continues to increase.
The evolving operating environment impacts various aspects of our operating activities as: • labor market conditions shift, resulting in increasing employer demands for mandatory in-person workdays; • volatility in the capital markets has led companies to be more reticent in capital outlays, including capital required for leasing new space; • our capital costs have increased due to higher interest rates and credit spreads, and private market debt financing, both for construction and existing assets, is significantly more challenging to arrange; and • construction costs have increased and, although much of the cost for our active development pipeline is fixed, the cost of potential future construction activity continues to increase.
In light of the foregoing, we believe we are positioning ourselves for success, notwithstanding the uncertain trajectory of the U.S. and global economies, by managing our leverage while continuing to selectively invest (including both acquisitions and developments) in premier workplace opportunities.
In light of the uncertain trajectory of the U.S. and global economies, we believe we continue to position BXP for success by increasing liquidity, managing our leverage, pursuing additional capital raising opportunities and maintaining discipline in discretionary capital expenditures, while continuing to selectively invest (including through both acquisitions and developments) in premier workplace opportunities.
When making leasing decisions, we consider, among other things, the creditworthiness of the client and the industry in which it conducts business, the length of the lease, the rental rate to be paid at inception and throughout the lease term, the costs of tenant improvements, free rent periods and other landlord concessions, anticipated operating expenses and real estate taxes, current and anticipated vacancy in our properties and the market overall (including sublease space), current and expected future demand for the space, the impact of other client’s expansion rights and general economic factors. 59 Table of Contents Our core strategy has always been to develop, acquire and manage premier workplaces in gateway markets with high barriers-to-entry and attractive demand drivers, and to focus on executing long-term leases with financially strong clients.
When making leasing decisions, we consider, among other things, the creditworthiness of the client and the industry in which it conducts business, the length of the lease, the rental rate to be paid at inception and throughout the lease term, the amount of any security deposit or letter of credit posted by the client, the costs of tenant improvements, free rent periods and other landlord concessions, anticipated operating expenses and real estate taxes, current and anticipated vacancy in our properties and the market overall (including sublease space), current and expected future demand for the space, the impact of other clients’ expansion rights, and general economic factors.
Boston During the fourth quarter of 2022, we executed approximately 287,000 square feet of leases and approximately 476,000 square feet of leases commenced in the Boston region. Approximately 245,000 square feet of the leases that commenced had been vacant for less than one year and represent an increase in net rental obligations of approximately 22% over the prior leases.
Approximately 159,000 square feet of the leases that commenced revenue recognition had been vacant for less than one year and represent an increase in net rental obligations of approximately 30.4% over the prior leases.
Our client base is diverse across market sectors and the weighted-average lease term for our in-place leases, excluding residential units, was approximately 7.9 years, as of December 31, 2022, including leases signed by our unconsolidated joint ventures. The weighted-average lease term for our 20 largest clients, based on leased square footage, was approximately 10.7 years as of December 31, 2022.
As of December 31, 2023, the weighted-average remaining lease term based on square feet (1) for our in-place leases, including those signed by our unconsolidated joint 59 T able of Contents ventures but excluding residential units, was approximately 7.8 years, and (2) for our 20 largest clients was approximately 10.7 years.
The total square feet of leases e xecuted and recognized during the year ended December 31, 2022 is 1,002,153 square feet. (6) Second generation leases are defined as leases for space that had previously been leased by us.
The total square feet of leases e xecuted and recognized during the year ended December 31, 2023 is 600,807 square feet. 64 T able of Contents (5) Second generation leases are defined as leases for space that we have previously leased.
Approximately 79,000 square feet of the leases that commenced had been vacant for less than one year and represent a decrease in net rental obligations of approximately 11% over the prior leases. Our Washington, DC CBD in-service properties were approximately 88% leased as of December 31, 2022.
Approximately 98,000 square feet of leases that commenced revenue recognition had been vacant for less than one year and represent a decrease in net rental obligations of approximately 3.5% over the prior leases.
Overview BXP is one of the largest publicly traded office real estate investment trusts (REITs) (based on total market capitalization as of December 31, 2022) in the United States that develops, owns, and manages primarily premier workplaces.
Overview BXP is one of the largest publicly traded office real estate investment trusts (REITs) (based on total market capitalization as of December 31, 2023) in the U.S. that develops, owns, and manages primarily premier workplaces. Our properties are concentrated in six dynamic gateway markets in the U.S. - Boston, Los Angeles, New York, San Francisco, Seattle, and Washington, DC.
Approximately 107,000 square feet of the leases that commenced in the fourth quarter had been vacant for less than one year and they represent a decrease in net rental obligations of approximately 17% over the prior leases. As of December 31, 2022, our New York CBD in-service portfolio was approximately 88% leased.
Approximately 130,000 square feet of the leases that commenced revenue recognition had been vacant for less than one year and they represent a decrease in net rental obligations of approximately 15.4% over the prior leases.
Seattle Our Seattle in-service portfolio includes Safeco Plaza, an approximately 778,000 square foot property of which we own 33.67%, and Madison Centre, an approximately 755,000 square foot property. As of December 31, 2022, our Seattle in-service properties were approximately 88% leased.
Seattle Our Seattle in-service portfolio includes Safeco Plaza, an approximately 780,000 square foot property of which we own 33.67%, and Madison Centre, an approximately 755,000 square foot property. During the fourth quarter of 2023, approximately 123,000 square feet of leases commenced revenue recognition in the Seattle region.
Approximately 92,000 square feet of leases that commenced had been vacant for less than one year and represent an increase in net rental obligations of approximately 28% over the prior leases. Our San Francisco CBD in-service properties were approximately 89% leased as of December 31, 2022.
Approximately 99,000 square feet of the leases that commenced revenue recognition had been vacant for less than one year and represent a decrease in net rental obligations of approximately 13.1% over the prior leases.
Excluding the impact of placing these two properties in-service, occupancy would have increased in the fourth quarter of 2022 by 20 basis points to 89.1%. The macroeconomic environment has resulted in softening demand in all of our markets. While property tours continue and leases under negotiation move forward, there is less urgency from clients to make new commitments.
The following is an overview of leasing and investment activity in the fourth quarter of 2023 and recent business highlights. Leasing Activity and Occupancy The macroeconomic environment has resulted in softening demand in all of our markets. While property tours continue and lease negotiations move forward, there is less urgency from clients to make new commitments.
As of December 31, 2022, our LA in-service properties were approximately 88% leased. New York During the fourth quarter of 2022, we executed approximately 304,000 square feet of leases in the New York region and approximately 148,000 square feet of leases commenced.
New York During the fourth quarter of 2023, we executed approximately 567,000 square feet of leases in the New York region and approximately 143,000 square feet of leases commenced revenue recognition.
Life science clients have already been reviewing the opportunity. 62 Table of Contents San Francisco During the fourth quarter of 2022, we executed approximately 213,000 square feet of leases and approximately 225,000 square feet of leases commenced in the San Francisco region.
San Francisco During the fourth quarter of 2023, we executed approximately 199,000 square feet of leases and approximately 171,000 square feet of leases commenced revenue recognition in the San Francisco region.
Including leases that have not yet commenced, this project is 90% leased as of February 21, 2023. 63 Table of Contents Leasing Statistics The table below details the leasing activity, including 100% of the unconsolidated joint ventures, that commenced during the year ended December 31, 2022: Year ended December 31, 2022 (Square Feet) Vacant space available at the beginning of the period 5,340,029 Property dispositions/properties taken out of service (1) (530,107) Vacant space in properties acquired (2) 142,018 Properties placed (and partially placed) in-service (3) 1,713,366 Leases expiring or terminated during the period 6,158,731 Total space available for lease 12,824,037 1 st generation leases 1,505,314 2 nd generation leases with new clients 2,965,270 2 nd generation lease renewals 2,742,676 Total space leased (4) 7,213,260 Vacant space available for lease at the end of the period 5,610,777 Leases executed during the period, in square feet (5) 5,696,677 Second generation leasing information : (6) Leases commencing during the period, in square feet 5,707,946 Weighted Average Lease Term 99 Months Weighted Average Free Rent Period 121 Days Total Transaction Costs Per Square Foot (7) $83.70 Increase in Gross Rents (8) 3.98 % Increase in Net Rents (9) 5.29 % __________________ (1) Total vacant square feet of properties taken out of service and property dispositions during the year ended December 31, 2022 consists of 117,907 square feet at 760 Boylston Street, 95,180 square feet at 651 Gateway, 185,298 square feet at Virginia 95 Office Park, 5,270 square feet at 601 Massachusetts Avenue, 69,995 square feet at 105 Carnegie Center and 56,457 square feet at 2096 Gaither Road.
Leasing Statistics The table below details the leasing activity, including 100% of the unconsolidated joint ventures, that commenced revenue recognition during the year ended December 31, 2023: Year ended December 31, 2023 (Square Feet) Vacant space available at the beginning of the period 5,610,777 Property dispositions/properties taken out of service (1) (645,154) Properties placed (and partially placed) in-service (2) 668,672 Leases expiring or terminated during the period 4,620,806 Total space available for lease 10,255,101 1 st generation leases 884,677 2 nd generation leases with new clients 2,106,810 2 nd generation lease renewals 1,567,607 Total space leased (3) 4,559,094 Vacant space available for lease at the end of the period 5,696,007 Leases executed during the period, in square feet (4) 4,181,399 Second generation leasing information : (5) Leases commencing during the period, in square feet 3,674,417 Weighted Average Lease Term 89 Months Weighted Average Free Rent Period 182 Days Total Transaction Costs Per Square Foot (6) $77.72 Increase in Gross Rents (7) 0.46 % Increase in Net Rents (8) 0.48 % __________________ (1) Total vacant square feet of properties taken out of service and property dispositions during the year ended December 31, 2023 consists of 289,204 square feet at Metropolitan Square (See Note 6 to the Consolidated Financial Statements), 195,191 square feet at 300 Binney Street, 55,852 square feet at 420 Bedford Street, 57,045 square feet at 430 Bedford Street, 25,189 square feet at 2098 Gaither Road and 22,673 square feet at 2092 Gaither Road.
(3) Total square feet of properties placed (and partially placed) in-service during the year ended December 31, 2022 consists of 243,614 square feet at 880 Winter Street, 761,492 square feet at Reston Next, 294,252 square feet at 2100 Pennsylvania Avenue and 414,008 square feet at 325 Main Street.
(2) Total vacant square feet of properties placed (and partially placed) in-service during the year ended December 31, 2023 consists of 230,592 square feet at 751 Gateway, 181,597 square feet at 2100 Pennsylvania Avenue, 104,166 square feet at 140 Kendrick Street - Building A, 142,147 square feet at 180 CityPoint and 10,170 square feet at Reston Next.
We generate revenue and cash primarily by leasing premier workplaces to our clients.
BPLP is the entity through which BXP conducts substantially all of its business and owns (either directly or through subsidiaries) substantially all of its assets. We generate revenue and cash primarily by leasing premier workplaces to our clients.
The overall occupancy of our in-service office and retail properties was 88.6% at December 31, 2022, a decrease of 30 basis points from September 30, 2022. The decrease in occupancy is primarily due to fully placing in-service Reston Next and 880 Winter Street, which have leases for which revenue recognition has not commenced in accordance with GAAP.
This is the third consecutive quarter that leasing has increased, underscoring the demand for premier workplaces despite the challenging market. The overall occupancy of our in-service premier workplace and retail properties was 88.4% at December 31, 2023, a decrease of 40 basis points from September 30, 2023.
Investment Activity Although the real estate capital markets for office assets has slowed substantially with U.S. transaction volume down 40% in the fourth quarter of 2022 from the third quarter of 2022, we remain committed to developing and acquiring assets to enhance our long-term growth and to meet client demand for premier workplaces, life sciences, retail and residential space.
We expect to see more opportunities to make investments in this environment, and we remain committed to developing and acquiring assets to enhance our long-term growth and to meet current and future client demand for premier workplaces, life sciences, and residential development.
Leasing Activity and Occupancy In the fourth quarter of 2022, we signed approximately 1.1 million square feet of new leases and renewals, for a total of approximately 5.7 million square feet leased in 2022, which is 95% of our average annual leasing volume over the last ten years.
Potential clients touring space acknowledge that economic uncertainty is impacting space decisions. In the fourth quarter of 2023, we signed more than 1.5 million square feet of leases with a weighted-average lease term of approximately 8.4 years, for a total of approximately 4.2 million square feet leased in 2023 with a weighted-average lease term of 8.2 years.
Our Route 128-Mass Turnpike portfolio is comprised of approximately 4.9 million square feet and was approximately 81% leased as of December 31, 2022. On December 23, 2022, we fully placed in-service 880 Winter Street, an approximately 244,000 square foot laboratory/life sciences project located in Waltham, Massachusetts.
Our Route 128-Mass Turnpike in-service portfolio is comprised of approximately 4.9 million square feet and, as of December 31, 2023, was approximately 76.6% occupied and approximately 76.7% leased (including vacant space for which we have signed leases that have not yet commenced revenue recognition in accordance with GAAP).
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Our properties are concentrated in six dynamic gateway markets in the United States - Boston, Los Angeles, New York, San Francisco, Seattle, and Washington, DC. BPLP is the entity through which BXP conducts substantially all of its business and owns (either directly or through subsidiaries) substantially all of its assets.
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Our core strategy has always been to develop, acquire and manage premier workplaces in gateway markets with high barriers-to-entry and attractive demand drivers, and to focus on executing long-term leases with financially strong clients that are diverse across market sectors.
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Outlook The inflation experienced in 2022 has slowly decreased but remains high. The Federal Reserve is expected to continue to increase interest rates, although likely at a more moderate pace, in an effort to bring prices under control. This, coupled with the discussion surrounding raising the U.S. debt ceiling could cause further turmoil in the financial markets.
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Outlook The U.S. economy continued to grow during the fourth quarter of 2023, with the Gross Domestic Product growing at a 3.3% annual rate in the fourth quarter.
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There have already been signs of this strain with announcements of staff reductions from large- and medium-sized employers. While the initial announcements were largely concentrated in the technology sectors, companies in the finance industry, the legal industry and broader corporate America are now announcing similar layoffs.
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While the year also ended with continued low unemployment and cooling inflation, the economic statistics may not accurately reflect the market sentiment and operating environment facing many of our clients, as well as BXP, as we look ahead to 2024 and beyond.
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The following is an overview of leasing and investment activity in the fourth quarter of 2022.
Added
In 2023, the U.S. office markets experienced overall negative leasing absorption, including in all of our coastal markets, as well as the major Sunbelt and Midwest markets.
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The leases executed in the fourth quarter and full year 2022 have a weighted-average lease term of approximately 7.8 years and 9.2 years, respectively, indicating that many new and existing clients continue to commit to the long-term use of space and view our properties as their preferred choice for a premier workplace environment.
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According to recent labor statistics, the U.S. added 333,000 jobs in December, however, only approximately 8% of those jobs were categorized as professional and business services, which are drivers of demand for premier workplace space.
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Potential clients touring space acknowledge that economic uncertainty is impacting space decisions. As we consider our expectations for leasing in 2023, we have factored in the impacts of a slower economy, softer business performance, and reduced demand for space.
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Despite the slowed pace of job reductions from this time last year, we continue to see employee layoff announcements across a wide variety of industries, particularly technology.
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We expect the bulk of our leasing in 2023 will continue to come from small- and medium-sized professional and financial services firms.
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As a result, although the U.S. economy may not enter a technical recession, we do not expect that a soft landing will stimulate an increase in office-using employment or in leasing absorption in 2024.
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Consistent with this strategy, in 2022, we purchased an aggregate of approximately $1.6 billion (our share) of premier workplaces, including life sciences, and an interest in an unconsolidated joint venture that owns a premier workplace.
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Remote work continues to be a factor restraining demand for office space, though we believe macroeconomic conditions are the primary driver of leasing activity and that our leasing, in particular, is driven by corporate earnings growth.
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In the fourth quarter of 2022, we acquired a 26.69% interest in the joint venture that owns 200 Fifth Avenue, a 14-story, approximately 855,000 square-foot, LEED Gold certified, premier workplace located in New York City that is approximately 93% leased as of December 31, 2022.
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The S&P 500’s trailing 10-year average annual earnings growth rate from 2013-2022 was 8.4%, as compared to 2023 where, earnings growth is projected to be less than 1%. S&P 500 companies are expected to increase earnings by over 9% in 2024.
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The acquisition of the joint venture interest is our second investment in the vibrant Midtown South neighborhood. We serve as the managing member and provide customary leasing and property management services for the joint venture.
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As overall earnings growth for our clients and potential clients improves, it should lead to employment growth and demand for office space over time. However, we are not counting on a near-term market recovery to maintain our occupancy.
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We closed on the interest in the joint venture for a gross purchase price of approximately $280.2 million, which includes $120.1 million of cash and our pro rata share of the outstanding loan secured by the property of $160.1 million.
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Our leasing, construction and property management teams will lean on our operating prowess to gain new clients and market share as clients choose premier workplaces that are in sound financial condition for their office space.
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The mortgage loan bears interest at a variable rate equal to LIBOR plus 1.30% per annum and matures on November 24, 2028. The joint venture has interest rate swap contracts through June 2028, resulting in a fixed rate of approximately 4.34% per annum through the expiration of the interest rate swap contracts.
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We define occupancy as space with signed leases for which revenue recognition has commenced in accordance with GAAP. Including vacant space for which we have signed leases that have not yet commenced revenue recognition in accordance with GAAP, our in-service premier workplace and retail properties were approximately 89.9% leased at December 31, 2023.
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In January 2023, BXP commenced the development of 290 Binney Street and the redevelopment of 300 Binney Street at Kendall Center in Cambridge, Massachusetts.
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Consistent with this strategy, we purchased our partners’ interests in three assets from two different joint venture partners, one of which closed in early January 2024. • We completed the acquisition of our joint venture partner’s 45% ownership interest in Santa Monica Business Park located in Santa Monica, California.
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Including projects that commenced in January 2023, we had 15 properties under development or redevelopment which, excluding View Boston at The Prudential Center and 61 Table of Contents Reston Next Residential, are 52% pre-leased as of February 21, 2023. Our share of the estimated total cost for these projects is approximately $3.3 billion.
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The acquisition was completed for a gross purchase price of $38.0 million, and we acquired net working capital, including cash and cash equivalents of approximately $20 million, as well as the partner’s share of the outstanding $300.0 million mortgage debt. Subsequent to closing, we extended an approximately 467,000 square foot lease with anchor client, Snap Inc. through 2036.
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In the fourth quarter of 2022, we completed the disposition of The Avant at Reston Town Center for a gross sale price of $141.0 million. The Avant at Reston Town Center a is a 15-story, approximately 329,000 square foot, excluding retail space, 359-unit, luxury residential building located in Reston, Virginia.
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Santa Monica Business Park is a 47-acre office park consisting of 21 buildings and totaling approximately 1.2 million net rentable square feet. Approximately 70% of the square footage is subject to a ground lease having a remaining term of approximately 75 years, inclusive of renewal options 61 T able of Contents that are subject to certain conditions.
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BXP retained ownership of the approximately 26,000 square foot ground-level retail space. Including the sale of the residential component of The Avant at Reston Town Center, BXP completed the disposition of 14 properties and two land parcels, for an aggregate gross sale price of approximately $864.2 million, in 2022. A brief overview of each of our markets follows.
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Under the ground lease, we have a purchase option at fair market value in 2028 (See Notes 3, 4, and 7 to the Consolidated Financial Statements). • We completed the acquisition of one of our joint venture partner’s approximate 29% ownership interest in 360 Park Avenue South located in New York City, New York for a purchase price of $1.
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Our Boston CBD in-service portfolio was approximately 94% leased as of December 31, 2022. Our approximately 2.7 million square foot in-service office portfolio in Cambridge was approximately 96% leased as of December 31, 2022.
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We now own approximately 71% of the joint venture.
Removed
In January 2023, BXP commenced the development of 290 Binney Street and the redevelopment of 300 Binney Street at Kendall Center in Cambridge, Massachusetts for an estimated total investment of approximately $1.4 billion. 290 Binney Street is an approximately 566,000 net rentable square foot laboratory/life sciences project that is 100% pre-leased to AstraZeneca.
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We also assumed the partner’s share of the joint venture’s cash and working capital aggregating approximately $25.4 million, as well as the partner’s share of the outstanding $220.0 million mortgage debt. 360 Park Avenue South is a 20-story, approximately 450,000 square foot premier workplace that is currently under redevelopment (See Note 6 to the Consolidated Financial Statements). • On January 8, 2024, we completed the acquisition of our joint venture partner’s 50% economic ownership interest in 901 New York Avenue located in Washington, DC for a purchase price of $10.0 million.
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Concurrent with the commencement of this project, BXP removed from service and began demolition of the existing Kendall Center Blue Parking Garage to support the development of this project. 300 Binney Street is a conversion of an approximately 195,000 net rentable square foot property into an approximately 240,000 net rentable square foot laboratory/life sciences property. 300 Binney Street is 100% pre-leased to a life sciences organization.
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We also assumed the partner’s share of the outstanding approximately $207.1 million mortgage debt, which bears interest at 3.61% per annum and matures on January 5, 2025. On January 11, 2024, we modified the mortgage loan to provide for two loan extension options totaling five years of additional term, each subject to certain conditions.
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Including leases that have not yet commenced, 880 Winter Street is 97% pre-leased as of February 21, 2023.
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The first loan extension option is four years at a fixed interest rate of 5.0% per annum. Also, we extended an approximately 200,000 square foot lease with anchor client, Finnegan Henderson Farabow Garrett & Dunner, L.L.P. through 2042. 901 New York Avenue is a premier workplace consisting of approximately 548,000 net rentable square feet.
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On November 30, 2022, we commenced the redevelopment of 105 Carnegie Center, located in Princeton, New Jersey. 105 Carnegie Center is an approximately 70,000 square foot property that will be redeveloped into an approximately 73,000 square foot laboratory/life sciences space.

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