Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this report.

This Quarterly Report on Form 10-Q, including the documents incorporated by reference, contain forward-looking statements within the meaning of the federal securities laws, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. 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. The forward-looking statements are contained principally, but not only, under the captions “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. When used, the words “anticipate,” “believe,” “budget,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “project,” “should,” “will” and similar expressions that do not relate solely to historical matters are intended to identify forward-looking statements. These statements are subject to risks, uncertainties and assumptions and are not guarantees of future performance or occurrences, which may be affected by known and unknown risks, trends, uncertainties and factors that are, in some cases, beyond our control. 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. We caution you that, while forward-looking statements reflect our good-faith beliefs when we make them, they are not guarantees of future performance or occurrences and are impacted by actual events when they occur after we make such statements. Accordingly, investors should use caution in relying on forward-looking statements, which are based on results and trends at the time they are made, to anticipate future results or trends.

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 described in (i) our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 including those described under the caption “Risk Factors,” (ii) our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2023, (iii) our subsequent filings under the Exchange Act and (iv) the risk factors set forth in this Form 10-Q in Part II, Item 1A, if any.

Some 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, dislocations in the credit markets and potential financial contagion from recent or future failures of banking institutions 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);
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 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 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 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.

The risks set forth above are not exhaustive. Other sections of this report may include additional factors that could adversely affect our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time and it is not possible for management to predict all risk factors, nor can we assess the impact of all risk factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. Investors should also refer to our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q for future periods and Current Reports on Form 8-K as we file them with the SEC, and to other materials we may furnish to the public from time to time through Current Reports on Form 8-K or otherwise, for a discussion of risks and uncertainties that may cause actual results, performance or achievements to differ materially from those expressed or implied by forward-looking statements. We expressly disclaim any responsibility to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events, or otherwise, and you should not rely upon these forward-looking statements after the date of this report.

Overview

BXP is one of the largest publicly traded office real estate investment trusts (REITs) (based on total market capitalization as of June 30, 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. 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. 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.

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. Our client base is diverse across market sectors. As of June 30, 2023, the weighted-average remaining lease term for our in-place leases based on square feet, including those signed by our unconsolidated joint ventures but excluding residential units, was approximately 7.6 years. The weighted-average remaining lease term for our 20 largest clients, based on leased square footage, was approximately 10.4 years as of June 30, 2023.

To be successful in any leasing environment, we believe we must consider all aspects of the client-landlord relationship. 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.

Outlook

The U.S.’s economic growth is challenging to forecast as there are currently two competing and viable theories predicting very different trajectories. The first theory is that inflation is increasingly under control due to pandemic economic anomalies wearing off and the Federal Reserve’s aggressive interest rate hikes. Notwithstanding tighter fiscal and monetary conditions, the economy has remained healthy with a strong labor market and continued GDP growth driven by consumption. The GDP, adjusted for inflation, rose 2.4% in the second quarter of 2023. Consumer spending fueled the solid quarter, accounting for 68% of all economic activity during the quarter. This first theory envisions a ‘soft landing’ for inflation with no recession.

The second theory is that inflation is already well under control and the Federal Reserve has been overly aggressive in the magnitude and timing of its interest rate increases, which will create dislocation in sectors of the economy, as has already started to occur with regional banks and commercial real estate. This scenario forecasts an upcoming recession, possibly as soon as later this year. While we would prefer the outcome of the first theory, BXP is prepared for the second theory by increasing liquidity, pursuing additional capital raising opportunities, and being measured in discretionary capital expenditures and new investment activity.

Whether or not the U.S. is in an economic recession, companies are experiencing a recession in earnings with S&P 500 companies reporting a 7.3% year-over-year drop in earnings per share in the second quarter of 2023. With lower earnings, companies are still focused on cost reductions, including expenditures on space. Some companies are taking more time to make leasing decisions, leasing less space, offering space they have for sublease or taking a combination of one or more of the foregoing actions. This has contributed to our slower leasing volume in the first half of 2023 compared to last year.

The return-to-office trend continues to improve in the markets in which we operate. Companies in a variety of industries, including major technology companies, are increasing the days that workers on hybrid schedules are required to come into the office and reinforcing the importance of in-person interactions as a key contributor to overall success. Companies are emboldened by the weaker economy to enforce firmer in-person work policies. Several large companies have notified their employees that their attendance in office will be included in performance reviews and that employees who already have received approval for remote work may now have that status reevaluated. We believe the sentiment surrounding return-to-office and the effects on office buildings is worse than the reality of what BXP is experiencing. Throughout our portfolio, there has been a slow but steady increase in the number of unique occupants that are in our offices each month.

A primary tool used by companies to increase attendance is to provide modern workspaces with amenities in an easily commutable location, the definition of a premier workplace. As a result, the premier workplace segment, which we operate in, continues to outperform the broader office market, in both vacancy and net absorption, as

companies see an opportunity to upgrade their workplaces as a method of attracting their workforces back to the office and recruiting new employees.

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, on the heels of recent bank failures, have driven 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 most 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 BXP for success, notwithstanding the uncertain trajectory of the U.S. and global economies, by managing our leverage while continuing to selectively invest (including through both acquisitions and developments) in premier workplace opportunities. We remain focused on the following strategies:

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. 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 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.

The following is an overview of leasing and investment activity in the second quarter of 2023 and recent business highlights.

Leasing Activity and Occupancy

In the second quarter of 2023, we signed a total of approximately 938,000 square feet of leases with a weighted-average lease term of approximately 8.0 years. The leasing volume increased from approximately 660,000 square feet of leases signed in the first quarter of 2023.

The overall occupancy of our in-service premier workplace and retail properties was 88.3% at June 30, 2023. 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 in accordance with GAAP, our in-service premier workplace and retail properties were approximately 90.4% leased at June 30, 2023.

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. Potential clients touring space acknowledge that economic uncertainty is impacting space decisions. We have factored in the impacts of a slower economy, softer business performance, and reduced demand for space into our leasing expectations for the remainder of 2023. We expect the bulk of our leasing in 2023 will continue to come from small- and medium-sized professional and financial services firms.

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. Additional new acquisition opportunities will likely increase in this environment, and we remain committed to developing and acquiring assets to enhance our long-term growth and to meet client demand solely focused on premier workplaces, life sciences, and residential development.

As of June 30, 2023, our development/redevelopment pipeline consisted of 13 properties that, when completed, we expect will total approximately 3.1 million net rentable square feet. Our share of the estimated total cost for these projects is approximately $2.6 billion, of which approximately $1.6 billion remains to be invested. The commercial space in the pipeline, which excludes Reston Next Residential, is 54% pre-leased.

In June 2023, View Boston Observatory, the highly anticipated experiential observation deck encompassing the top three floors of 800 Boylston Street - The Prudential Center in Boston, Massachusetts, opened. The approximately 63,000 square-foot experience provides a unique opportunity to enjoy 360-degree panoramic views of the city, food and beverage at the Stratus cocktail bar and The Beacon bistro, and interactive state-of-the-art immersive exhibits that showcase Boston's many neighborhoods and cultural landmarks.

In the second quarter of 2023, we completed and fully placed in-service 2100 Pennsylvania Avenue in Washington, D.C. 2100 Pennsylvania Avenue is an approximately 476,000 square foot premier workplace and was approximately 61.8% occupied and approximately 90.5% leased (including vacant space for which we have signed leases that have not yet commenced in accordance with GAAP) as of June 30, 2023.

On July 28, 2023, we entered into a joint venture agreement with an institutional investor for the future development of 343 Madison Avenue located on Madison Avenue between 44th and 45th Streets in New York City, New York adjacent to Grand Central Station. We own a 55% interest in the venture and our partner owns a 45% interest, and we will provide customary development, property management, and leasing services. The 343 Madison Avenue project contemplates the construction of (1) a direct entrance to the Long Island Railroad’s new east side access project (Grand Central Madison) (“Phase 1”) and (2) an approximately 900,000 square foot premier workplace building with ground floor retail (“Phase 2”). Subsequently, on August 1, 2023, the joint venture executed a 99-year ground lease with the Metropolitan Transportation Authority for the approximately 25,000 square foot site. The ground lease requires the joint venture to construct the direct access to Grand Central Madison as Phase 1 of the development project. The joint venture has the option until July 31, 2025 to terminate the ground lease prior to construction of the new building and receive reimbursement for the cost of the construction of access to Grand Central Station. There can be no assurance that Phase 1 will be completed on the terms currently contemplated or that Phase 2 of the development project will commence on the terms currently contemplated or at all.

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. However, the asset sale market for all real estate asset classes has slowed dramatically with the increase in interest rates and transaction volume for office assets continues to be minimal in the U.S.

A brief overview of each of our markets follows.

Boston

During the second quarter of 2023, we executed approximately 320,000 square feet of leases and approximately 291,000 square feet of leases commenced in the Boston region. Approximately 221,000 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 20% over the prior leases.

As of June 30, 2023, our Boston CBD in-service portfolio was approximately 95.1% occupied and approximately 96.9% leased (including vacant space for which we have signed leases that have not yet commenced in accordance with GAAP).

Our approximately 2.5 million square foot in-service premier workplace portfolio in Cambridge was approximately 97.2% occupied and leased (including vacant space for which we have signed leases that have not yet commenced in accordance with GAAP) as of June 30, 2023.

As of June 30, 2023, our Route 128-Mass Turnpike portfolio is comprised of approximately 4.8 million square feet and was approximately 79.6% occupied and approximately 80.9% leased (including vacant space for which we have signed leases that have not yet commenced in accordance with GAAP).

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%. As of June 30, 2023, our LA in-service properties were approximately 86.0% occupied and 86.2% leased (including vacant space for which we have signed leases that have not yet commenced in accordance with GAAP).

New York

During the second quarter of 2023, we executed approximately 280,000 square feet of leases in the New York region and approximately 323,000 square feet of leases commenced. Approximately 63,000 square feet of the leases that commenced had been vacant for less than one year and they represent an increase in net rental obligations of approximately 64% over the prior leases. As of June 30, 2023, our New York CBD in-service portfolio was approximately 90.3% occupied and approximately 92.7% leased (including vacant space for which we have signed leases that have not yet commenced in accordance with GAAP).

San Francisco

During the second quarter of 2023, we executed approximately 101,000 square feet of leases and approximately 76,000 square feet of leases commenced in the San Francisco region. Approximately 50,000 square feet of leases that commenced had been vacant for less than one year and represent an increase in net rental obligations of approximately 13% over the prior leases.

As of June 30, 2023, our San Francisco CBD in-service properties were approximately 89.1% occupied and approximately 90.3% leased (including vacant space for which we have signed leases that have not yet commenced in accordance with GAAP).

Client demand in the San Francisco CBD had increased more than 50% since the fourth quarter of 2022 with new technology demand responsible for much of the increase. There are a significant number of artificial intelligence (“AI”) companies actively considering space and the requirements will create net absorption. Given the potential growth of these organizations, we would expect this demand to center on the well-built technology sublet space that is readily available in the San Francisco market. Global investment in the AI industry is rapidly increasing and is likely to result in job growth. San Francisco is the leading labor market for AI jobs followed by New York and Seattle. New venture capital investment in AI is concentrated in San Francisco, New York and Boston with CBRE Insights Research reporting that San Francisco will be receiving more than 50% of the total invested during the third quarter. These are encouraging facts that could be constructive to the recovery of the San Francisco office market, if they come to fruition.

Seattle

Our Seattle in-service portfolio includes Safeco Plaza, an approximately 779,000 square foot property of which we own 33.67%, and Madison Centre, an approximately 755,000 square foot property. As of June 30, 2023, our Seattle in-service properties were approximately 87.9% occupied and approximately 90.5% leased (inclusive of vacant space with signed leases that have not yet commenced in accordance with GAAP).

Washington, DC

During the second quarter of 2023, we executed approximately 236,000 square feet of leases and approximately 351,000 square feet of leases commenced in the Washington, DC region. Approximately 220,000 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 8% over the prior leases. As of June 30, 2023, our Washington, DC CBD in-service properties were approximately 78.5% occupied and approximately 83.0% leased (inclusive of vacant space with signed leases that have not yet commenced 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. As of June 30, 2023, our Reston, Virginia properties were approximately 88.2%

occupied and approximately 93.4% leased (inclusive of vacant space with signed leases that have not yet commenced in accordance with GAAP).

Leasing Statistics

The table below details the leasing activity, including 100% of the unconsolidated joint ventures, that commenced during the three and six months ended June 30, 2023:


	Three months ended June 30, 2023		Six months ended June 30, 2023
	(Square Feet)
Vacant space available at the beginning of the period	5,569,935		5,610,777
Property dispositions/properties taken out of service (1)	—		(333,277)

Properties placed (and partially placed) in-service (2)	181,597		181,597
Leases expiring or terminated during the period	1,093,663		2,161,543
Total space available for lease	6,845,195		7,620,640
1st generation leases	151,087		151,087
2nd generation leases with new clients	556,310		988,313
2nd generation lease renewals	335,037		678,479
Total space leased (3)	1,042,434		1,817,879
Vacant space available for lease at the end of the period	5,802,761		5,802,761

Leases executed during the period, in square feet (4)	937,536		1,598,016

Second generation leasing information: (5)
Leases commencing during the period, in square feet	891,347		1,666,792
Weighted Average Lease Term	88 Months		89 Months
Weighted Average Free Rent Period	186 Days		181 Days
Total Transaction Costs Per Square Foot (6)	$60.70		$66.33
Increase in Gross Rents (7)	6.31	%	3.30	%
Increase in Net Rents (8)	10.02	%	5.28	%

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(1)Total vacant square feet of properties taken out of service during the six months ended June 30, 2023 consists of 195,191 square feet at 300 Binney Street, 55,852 square feet at 420 Bedford Street, 57,045 square feet at 430 Bedford Street and 25,189 square feet at 2098 Gaither Road.

(2)Total vacant square feet of properties placed in service during the three and six months ended June 30, 2023 consists of 181,597 square feet at 2100 Pennsylvania Avenue.

(3)Represents leases for which lease revenue recognition has commenced in accordance with GAAP during the three and six months ended June 30, 2023.

(4)Represents leases executed during the three and six months ended June 30, 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. The total square feet of leases executed and recognized during the three and six months ended June 30, 2023 are 116,230 and 303,128 square feet, respectively.

(5)Second generation leases are defined as leases for space that has previously been leased by us. Of the 891,347 and 1,666,792 square feet of second generation leases that commenced during the three and six months ended June 30, 2023, respectively, leases for 776,928 and 1,365,475 square feet, respectively, 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.

(7)Represents the increase in gross rent (base rent plus expense reimbursements) on the new versus expired leases on the 554,458 and 1,059,940 square feet of second generation leases that had been occupied within the prior 12 months for the three and six months ended June 30, 2023, respectively; excludes leases that

management considers temporary because the client is not expected to occupy the space on a long-term basis.

(8)Represents the increase in net rent (gross rent less operating expenses) on the new versus expired leases on the 554,458 and 1,059,940 square feet of second generation leases that had been occupied within the prior 12 months for the three and six months ended June 30, 2023, respectively.

Transactions during the three months ended June 30, 2023 included the following:

Development/Redevelopment activities

On April 29, 2023, we completed and fully placed in-service 2100 Pennsylvania Avenue, a premier workplace project with approximately 476,000 net rentable square feet located in Washington, DC. Including leases with future commencement dates, the property is 91% leased as of July 28, 2023.
On June 1, 2023, we completed and fully placed in-service our View Boston Observatory at The Prudential Center, a redevelopment of the top three floors of 800 Boylston Street - The Prudential Center, located in Boston, Massachusetts. View Boston Observatory at The Prudential Center consists of approximately 63,000 net rentable square feet of retail, including food and beverage, and observation space.

Unconsolidated joint venture activities

On April 21, 2023, a joint venture in which we own a 50% interest exercised an option to extend the maturity date of the construction loan collateralized by its 7750 Wisconsin Avenue property. Prior to the extension, the loan had a total commitment amount of approximately $252.6 million, bore interest at a variable rate equal to London interbank offered rate (“LIBOR”) plus 1.25% per annum and was scheduled to mature on April 26, 2023, with two, one-year extension options, subject to certain conditions. The extended loan continued to bear interest at LIBOR plus 1.25% per annum through June 1, 2023 after which, the interest rate was converted to a variable rate equal to Term Secured Overnight Finance Rate (“SOFR”) plus 1.35% per annum. The extended loan now matures on April 26, 2024, with a one-year extension option, subject to certain conditions. 7750 Wisconsin Avenue is a premier workplace with approximately 734,000 net rentable square feet located in Bethesda, Maryland.
On June 5, 2023, a joint venture in which we own a 30% interest repaid the existing construction loan collateralized by its 500 North Capitol Street, NW property and obtained new mortgage loans with related parties. At the time of the pay off, the outstanding balance of the loan totaled approximately $105.0 million and the loan was scheduled to mature on June 6, 2023. The new mortgage loans have an aggregate principal balance of $105.0 million, bear interest at a weighted average fixed rate of 6.83% per annum and mature on June 5, 2026. Our portion of the mortgage loans, $10.5 million, has been reflected as a Related Party Note Receivable on our Consolidated Balance Sheets. 500 North Capitol Street, NW is an approximately 231,000 net rentable square foot premier workplace in Washington, DC.
On June 28, 2023, a joint venture in which we own a 25% interest exercised an option to extend by 30 days the maturity date of the loan collateralized by its 3 Hudson Boulevard property. At the time of the modification, the outstanding balance of the loan totaled $80.0 million, bore interest at a variable rate equal to LIBOR plus 3.50% per annum and was scheduled to mature on July 13, 2023, with two extension options (30 days and 180 days, respectively), subject to certain conditions. The modified loan continued to bear interest at a variable rate equal to LIBOR plus 3.50% per annum for the period from June 28, 2023 through July 6, 2023. As of June 30, 2023, the loan had approximately $23.2 million of accrued interest due at the maturity date, August 13, 2023. For the period commencing on July 7, 2023 through the maturity date, the modified loan will bear interest at a variable rate equal to Term SOFR plus approximately 3.61% per annum. The modified loan now matures on August 13, 2023, with one 180 days extension option, subject to certain conditions. 3 Hudson Boulevard consists of land and improvements held for future development located in New York, New York.
During the three months ended June 30, 2023, a joint venture in which we have a 55% interest elected to pause vertical construction on Platform 16 in San Jose, California. Platform 16 was planned to be constructed in phases to best accommodate market demand. The first phase of the development project included the construction of an approximately 390,000 net rentable square foot premier

workplace building and below-grade parking garage. The joint venture intends to complete the construction of the below-grade parking garage and building foundation elements over the next several months to facilitate a restart of construction in the future as demand improves.

Debt activities

On May 15, 2023, BPLP completed a public offering of $750.0 million in aggregate principal amount of its 6.500% unsecured senior notes due 2034. The notes were priced at 99.697% of the principal amount to yield an effective rate (including financing fees) of approximately 6.619% per annum to maturity. The notes will mature on January 15, 2034, unless earlier redeemed. The aggregate net proceeds from the offering were approximately $741.3 million after deducting underwriting discounts and transaction expenses.
On June 1, 2023, BPLP amended its unsecured credit facility (as amended, the “2021 Credit Facility”) to replace the LIBOR-based daily floating rate option with a SOFR-based daily floating rate option and to add options for SOFR-based term floating rates and rates for alternative currency loans. In addition, the amendment added a SOFR credit spread adjustment of 0.10%. Other than the foregoing, the material terms of the 2021 Credit Facility remain unchanged (See Note 6 to the Consolidated Financial Statements).

Derivative instrument and hedging activity

On May 2, 2023, BPLP entered into four interest rate swap contracts with notional amounts aggregating $1.2 billion. BPLP entered into these interest rate swap contracts to reduce its exposure to the variability in future cash flows attributable to changes in the interest rate of BPLP’s $1.2 billion unsecured term loan facility (the “2023 Unsecured Term Loan”). These interest rate swaps were entered into to fix Term SOFR, the reference rate for BPLP’s 2023 Unsecured Term Loan, at a weighted-average rate of 4.6420% for the period commencing on May 4, 2023 and ending on May 16, 2024 (see Notes 6 and 7 to the Consolidated Financial Statements*)*.

Equity activity

On May 17, 2023, BXP renewed its “at the market” (“ATM”) stock offering program through which it may sell from time to time up to an aggregate of $600.0 million of its common stock through sales agents over a three-year period. Under the ATM stock offering program, BXP may also engage in forward sale transactions with affiliates of certain sales agents for the sale of its common stock on a forward basis. This program replaced BXP’s prior $600.0 million ATM stock offering program that was scheduled to expire on May 22, 2023. BXP intends to use the net proceeds from any offering for general business purposes, which may include investment opportunities and debt reduction. No shares of common stock have been issued under this ATM stock offering program.

Transactions completed subsequent to June 30, 2023 included the following:

On July 20, 2023, we completed and fully placed in-service 140 Kendrick Street - Building A, a premier workplace redevelopment project with approximately 104,000 net rentable square feet located in Needham, Massachusetts. The property is 100% leased and is the first Net Zero, Carbon Neutral office repositioning of this scale in Massachusetts.
On July 28, 2023, we entered into a joint venture agreement with an institutional investor for the future development of 343 Madison Avenue located on Madison Avenue between 44th and 45th Streets in New York City, New York adjacent to Grand Central Station. We own a 55% interest in the venture and our partner owns a 45% interest, and we will provide customary development, property management, and leasing services. The 343 Madison Avenue project contemplates the construction of (1) a direct entrance to the Long Island Railroad’s new east side access project (Grand Central Madison) (“Phase 1”) and (2) an approximately 900,000 square foot premier workplace building with ground floor retail (“Phase 2”). Subsequently, on August 1, 2023, the joint venture executed a 99-year ground lease with the Metropolitan Transportation Authority for the approximately 25,000 square foot site. The ground lease requires the joint venture to construct the direct access to Grand Central Madison as Phase 1 of the development project. The joint venture has the option until July 31, 2025 to terminate the ground lease prior to construction of the new building and receive reimbursement for the cost of the construction of access to Grand Central Station. There can be no assurance that Phase 1 will be

completed on the terms currently contemplated or that Phase 2 of the development project will commence on the terms currently contemplated or at all.

On July 28, 2023, a joint venture in which we have a 50% interest modified and exercised an option to extend by one year the maturity date of its loan collateralized by 100 Causeway Street. At the time of the modification and extension, the loan had an outstanding balance totaling approximately $340.6 million, bore interest at Term SOFR plus 1.60% per annum, and was scheduled to mature on September 5, 2023. The modified and extended loan has an outstanding balance of $336.6 million, which included an approximately $4.0 million principal repayment, bears interest at Term SOFR plus 1.48% per annum, and matures on September 5, 2024, with an additional one-year extension option, subject to certain conditions. 100 Causeway Street is an approximately 634,000 square foot premier workplace located in Boston, Massachusetts and is approximately 95% leased.
Effective July 28, 2023, BXP’s independent directors appointed Joel I. Klein to serve as the lead independent director, replacing Kelly A. Ayotte. Ms. Ayotte stepped down as the lead independent director due to the additional time commitment and responsibilities of that role, and the independent directors determined that it is in the best interests of BXP and its stockholders that Mr. Klein once again assume that role. Ms. Ayotte served as BXP’s lead independent director since May 2022 and will remain on BXP’s Board of Directors. Mr. Klein previously served as BXP’s lead independent director from May 2016 to May 2019 and as its independent Chairman from May 2019 to May 2022.

Critical Accounting Estimates

Management’s Discussion and Analysis of Financial Condition and Results of Operations discuss our Consolidated Financial Statements, which have been prepared in accordance with generally accepted accounting principles (“GAAP”). The preparation of these financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results may differ from those estimates and assumptions.

Our Annual Report on Form 10-K for the year ended December 31, 2022 contains a discussion of our critical accounting estimates. There have been no significant changes in our critical accounting estimates since the year ended December 31, 2022.

Results of Operations for the Six Months Ended June 30, 2023 and 2022

Net income attributable to Boston Properties, Inc. and net income attributable to Boston Properties Limited Partnership decreased by approximately $183.8 million and $208.7 million, respectively, for the six months ended June 30, 2023 compared to 2022, as set forth in the following tables and for the reasons discussed below under the heading “Comparison of the six months ended June 30, 2023 to the six months ended June 30, 2022” within “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

The following are reconciliations of Net Income Attributable to Boston Properties, Inc. to Net Operating Income and Net Income Attributable to Boston Properties Limited Partnership to Net Operating Income for the six months ended June 30, 2023 and 2022. For a detailed discussion of Net Operating Income (“NOI”), including the reasons management believes NOI is useful to investors, see page 56.

BXP


	Six months ended June 30,
	2023		2022		Increase/ (Decrease)		% Change
	(in thousands)
Net Income Attributable to Boston Properties, Inc.	$	182,215	$	366,044	$	(183,829)	(50.22)	%
Net Income Attributable to Noncontrolling Interests:
Noncontrolling interest—common units of the Operating Partnership	21,169		42,061		(20,892)		(49.67)	%
Noncontrolling interests in property partnerships	38,428		36,095		2,333		6.46	%
Net Income	241,812		444,200		(202,388)		(45.56)	%
Other Expenses:
Add:
Interest expense	276,680		205,370		71,310		34.72	%




Other Income:
Less:
Unrealized gain on non-real estate investment	383		—		383		100.00	%
Gains (losses) from investments in securities	3,236		(6,978)		10,214		146.37	%
Other income - assignment fee	—		6,624		(6,624)		(100.00)	%
Interest and other income (loss)	28,284		2,423		25,861		1,067.31	%

Gains on sales of real estate	—		118,948		(118,948)		(100.00)	%
Income (loss) from unconsolidated joint ventures	(14,237)		2,135		(16,372)		(766.84)	%
Other Expenses:
Add:
Depreciation and amortization expense	411,311		360,770		50,541		14.01	%
Transaction costs	1,219		496		723		145.77	%
Payroll and related costs from management services contracts	9,844		7,304		2,540		34.78	%
General and administrative expense	99,977		77,859		22,118		28.41	%
Other Revenue:
Less:
Direct reimbursements of payroll and related costs from management services contracts	9,844		7,304		2,540		34.78	%
Development and management services revenue	18,838		12,185		6,653		54.60	%
Net Operating Income	$	994,495	$	953,358	$	41,137	4.31	%

BPLP


	Six months ended June 30,
	2023		2022		Increase/ (Decrease)		% Change
	(in thousands)
Net Income Attributable to Boston Properties Limited Partnership	$	206,928	$	415,617	$	(208,689)	(50.21)	%
Net Income Attributable to Noncontrolling Interests:
Noncontrolling interests in property partnerships	38,428		36,095		2,333		6.46	%
Net Income	245,356		451,712		(206,356)		(45.68)	%
Other Expenses:
Add:
Interest expense	276,680		205,370		71,310		34.72	%




Other Income:
Less:
Unrealized gain on non-real estate investment	383		—		383		100.00	%
Gains (losses) from investments in securities	3,236		(6,978)		10,214		146.37	%
Other income - assignment fee	—		6,624		(6,624)		(100.00)	%
Interest and other income (loss)	28,284		2,423		25,861		1,067.31	%

Gains on sales of real estate	—		122,992		(122,992)		(100.00)	%
Income (loss) from unconsolidated joint ventures	(14,237)		2,135		(16,372)		(766.84)	%
Other Expenses:
Add:
Depreciation and amortization expense	407,767		357,302		50,465		14.12	%
Transaction costs	1,219		496		723		145.77	%
Payroll and related costs from management services contracts	9,844		7,304		2,540		34.78	%
General and administrative expense	99,977		77,859		22,118		28.41	%
Other Revenue:
Less:
Direct reimbursements of payroll and related costs from management services contracts	9,844		7,304		2,540		34.78	%
Development and management services revenue	18,838		12,185		6,653		54.60	%
Net Operating Income	$	994,495	$	953,358	$	41,137	4.31	%

At June 30, 2023 and 2022, we owned or had joint venture interests in a portfolio of 191 and 193 commercial real estate properties, respectively (in each case, the “Total Property Portfolio”). As a result of changes within our Total Property Portfolio, the financial data presented below shows significant changes in revenue and expenses from period-to-period. Accordingly, we do not believe that our period-to-period financial data with respect to the Total Property Portfolio provides a complete understanding of our operating results. Therefore, the comparison of operating results for the three and six months ended June 30, 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.

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. 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. The Same Property Portfolio therefore excludes properties acquired, placed in-service or in or held for development or redevelopment after the beginning of the earliest period presented or disposed of prior to the end of the latest period presented.

NOI is a non-GAAP financial measure equal to net income attributable to Boston Properties, Inc. and net income attributable to Boston Properties Limited Partnership, as applicable, the most directly comparable GAAP financial measures, plus (1) net income attributable to noncontrolling interests, interest expense, depreciation and amortization expense, transaction costs, payroll and related costs from management services contracts and corporate general and administrative expense less (2) unrealized gain on non-real estate investment, gains (losses) from investments in securities, other income - assignment fee, interest and other income (loss), gains on sales of real estate, income (loss) from unconsolidated joint ventures, direct reimbursements of payroll and related costs from management services contracts and development and management services revenue. 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. For example, interest expense is not necessarily linked to the operating performance of a real estate asset and is often incurred at the corporate level as opposed to the property level. Similarly, interest expense may be incurred at the property level even though the financing proceeds may be used at the corporate level (e.g., used for other investment activity). In addition, depreciation and amortization expense, because of historical cost accounting and useful life estimates, may distort operating performance measures at the property level. NOI presented by us may not be comparable to NOI reported by other REITs or real estate companies that define NOI differently.

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. 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 gains on sales of real estate and depreciation expense may differ between BXP and BPLP as a result of previously applied acquisition accounting by BXP for the issuance of common stock in connection with non-sponsor redemptions of common units of limited partnership interest of BPLP (“OP Units”). This accounting resulted in a step-up of the real estate assets at BXP that was allocated to certain properties. The difference between the real estate assets of BXP as compared to BPLP for certain properties having an allocation of the real estate step-up will result in a corresponding difference in gains on sales of real estate and depreciation expense when those properties are sold. For additional information see the Explanatory Note that immediately follows the cover page of this Quarterly Report on Form 10-Q.

Comparison of the six months ended June 30, 2023 to the six months ended June 30, 2022

The table below shows selected operating information for the Same Property Portfolio and the Total Property Portfolio. The Same Property Portfolio consists of 126 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 June 30, 2023. 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 June 30, 2023. This table includes a reconciliation from the Same Property Portfolio to the Total Property Portfolio by also providing information for the six months ended June 30, 2023 and 2022 with respect to the properties that were acquired, placed in-service, in or held for development or redevelopment or sold.


	Same Property Portfolio								Properties Acquired Portfolio				Properties Placed In-Service Portfolio				Properties in or Held for Development or Redevelopment Portfolio				Properties Sold Portfolio				Total Property Portfolio
	2023		2022		Increase/ (Decrease)		% Change		2023		2022		2023		2022		2023		2022		2023		2022		2023		2022		Increase/ (Decrease)		% Change
	(dollars in thousands)
Rental Revenue: (1)
Lease Revenue (Excluding Termination Income)	$	1,377,163	$	1,351,293	$	25,870	1.91	%	$	49,859	$	5,815	$	67,334	$	15,200	$	874	$	11,088	$	697	$	26,503	$	1,495,927	$	1,409,899	$	86,028	6.10	%
Termination Income	32		3,867		(3,835)		(99.17)	%	—		133		—		—		—		—		—		—		32		4,000		(3,968)		(99.20)	%
Lease Revenue	1,377,195		1,355,160		22,035		1.63	%	49,859		5,948		67,334		15,200		874		11,088		697		26,503		1,495,959		1,413,899		82,060		5.80	%
Parking and Other	46,948		42,263		4,685		11.09	%	2,114		524		603		—		(3)		4,928		1		607		49,663		48,322		1,341		2.78	%
Total Rental Revenue (1)	1,424,143		1,397,423		26,720		1.91	%	51,973		6,472		67,937		15,200		871		16,016		698		27,110		1,545,622		1,462,221		83,401		5.70	%
Real Estate Operating Expenses	540,020		508,208		31,812		6.26	%	8,053		1,680		18,379		5,058		4,478		4,639		168		8,268		571,098		527,853		43,245		8.19	%
Net Operating Income (Loss), Excluding Residential and Hotel	884,123		889,215		(5,092)		(0.57)	%	43,920		4,792		49,558		10,142		(3,607)		11,377		530		18,842		974,524		934,368		40,156		4.30	%
Residential Net Operating Income (2)	12,733		10,057		2,676		26.61	%	—		—		—		—		—		—		—		3,571		12,733		13,628		(895)		(6.57)	%
Hotel Net Operating Income (2)	7,238		5,362		1,876		34.99	%	—		—		—		—		—		—		—		—		7,238		5,362		1,876		34.99	%
Net Operating Income (Loss)	$	904,094	$	904,634	$	(540)	(0.06)	%	$	43,920	$	4,792	$	49,558	$	10,142	$	(3,607)	$	11,377	$	530	$	22,413	$	994,495	$	953,358	$	41,137	4.31	%

(1)Rental Revenue is equal to Revenue less Development and Management Services Revenue and Direct Reimbursements of Payroll and Related Costs from Management Services Revenue per the Consolidated Statements of Operations, excluding the residential and hotel revenue that is noted below. We use Rental Revenue internally as a performance measure and in calculating other non-GAAP financial measures (e.g., NOI), which provides investors with information regarding our performance that is not immediately apparent from the comparable non-GAAP measures and allows investors to compare operating performance between periods.

(2)For a detailed discussion of NOI, including the reasons management believes NOI is useful to investors, see page 56. Residential Net Operating Income for the six months ended June 30, 2023 and 2022 is comprised of Residential Revenue of $23,979 and $29,878 less Residential Expenses of $11,246 and $16,250, respectively. Hotel Net Operating Income for the six months ended June 30, 2023 and 2022 is comprised of Hotel Revenue of $22,070 and $16,646 less Hotel Expenses of $14,832 and $11,284, respectively, per the Consolidated Statements of Operations.

Same Property Portfolio

Lease Revenue (Excluding Termination Income)

Lease revenue (excluding termination income) from the Same Property Portfolio increased by approximately $25.9 million for the six months ended June 30, 2023 compared to 2022. The increase was a result of our average revenue per square foot increasing by approximately $2.42, contributing approximately $44.0 million, partially offset by average occupancy decreasing from 91.6% to 90.4%, resulting in a decrease of approximately $18.1 million.

Termination Income

Termination income decreased by approximately $3.8 million for the six months ended June 30, 2023 compared to 2022.

Termination income for the six months ended June 30, 2023 related to approximately 15 clients across the Same Property Portfolio and totaled approximately $32,000.

Termination income for the six months ended June 30, 2022 related to 15 clients across the Same Property Portfolio and totaled approximately $3.3 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.

Parking and Other Revenue

Parking and other revenue increased by approximately $4.7 million for the six months ended June 30, 2023 compared to 2022. Parking revenue increased by approximately $5.0 million and was partially offset by a decrease in other revenue of approximately $0.3 million. The increase in parking revenue was primarily due to an increase in transient and monthly parking.

Real Estate Operating Expenses

Real estate operating expenses from the Same Property Portfolio increased by approximately $31.8 million, or 6.3%, for the six months ended June 30, 2023 compared to 2022, due primarily to increases in real estate taxes of approximately $12.1 million, or 4.9%, and other real estate operating expenses of approximately $17.4 million, or 6.7%. The increase in real estate taxes was primarily in New York City. In addition, there was approximately $2.3 million related to the marketing and initial opening expenses associated with the View Boston Observatory which was completed and placed in-service on June 1, 2023.

Properties Acquired Portfolio

The table below lists the properties acquired between January 1, 2022 and June 30, 2023. Rental revenue and real estate operating expenses increased by approximately $45.5 million and $6.4 million, respectively, for the six months ended June 30, 2023 compared to 2022, as detailed below.


		Square Feet		Rental Revenue									Real Estate Operating Expenses
Name	Date acquired		2023			2022			Change			2023			2022			Change
				(dollars in thousands)
Madison Centre (1)	May 17, 2022	754,988		$	31,314		$	6,472		$	24,842		$	6,043		$	1,680		$	4,363
125 Broadway	September 16, 2022	271,000		20,659			—			20,659			2,010			—			2,010
		1,025,988		$	51,973		$	6,472		$	45,501		$	8,053		$	1,680		$	6,373

(1)Rental revenue for the six months ended June 30, 2022 includes approximately $0.1 million of termination income.

Properties Placed In-Service Portfolio

The table below lists the properties that were placed in-service or partially placed in-service between January 1, 2022 and June 30, 2023. Rental revenue and real estate operating expenses from our Properties Placed In-Service Portfolio increased by approximately $52.7 million and $13.3 million, respectively, for the six months ended June 30, 2023 compared to 2022, as detailed below.


	Quarter Initially Placed In-Service	Quarter Fully Placed In-Service		Rental Revenue						Real Estate Operating Expenses
Name		Square Feet	2023	2022		Change		2023		2022		Change
				(dollars in thousands)
Reston Next	Fourth Quarter, 2021	Fourth Quarter, 2022	1,063,236	$	22,747	$	14,978	$	7,769	$	7,756	$	5,031	$	2,725
325 Main Street	Second Quarter, 2022	Second Quarter, 2022	414,565	22,879		213		22,666		3,795		10		3,785
2100 Pennsylvania Avenue	Second Quarter, 2022	Second Quarter, 2023	475,849	10,581		9		10,572		4,160		17		4,143
880 Winter Street (1)	Third Quarter, 2022	Fourth Quarter, 2022	243,618	11,730		—		11,730		2,668		—		2,668
			2,197,268	$	67,937	$	15,200	$	52,737	$	18,379	$	5,058	$	13,321

(1)Conversion of a 224,000 square foot office property located in Waltham, Massachusetts to laboratory space.

Properties in or Held for Development or Redevelopment Portfolio

The table below lists the properties that were in or held for development or redevelopment between January 1, 2022 and June 30, 2023. Rental revenue and real estate operating expenses from our Properties in or Held for Development or Redevelopment Portfolio decreased by approximately $15.1 million and $0.2 million, respectively, for the six months ended June 30, 2023 compared to 2022, as detailed below.


			Rental Revenue						Real Estate Operating Expenses
Name	Date Commenced or Held for Development / Redevelopment	Square Feet	2023		2022		Change		2023		2022		Change
			(dollars in thousands)
140 Kendrick Street - Building A (1)	July 1, 2022	104,000	$	—	$	2,865	$	(2,865)	$	—	$	683	$	(683)
760 Boylston Street	September 12, 2022	118,000	—		—		—		—		428		(428)
105 Carnegie Center	November 30, 2022	73,000	—		633		(633)		—		462		(462)
2096 Gaither Road	December 1, 2022	50,000	—		111		(111)		58		168		(110)
RTC Next-Hotel (2)	December 19, 2022	N/A	455		—		455		2		—		2
Kendall Center Blue Parking Garage (3)	January 4, 2023	N/A	25		4,925		(4,900)		3,015		656		2,359
300 Binney Street	January 30, 2023	236,000	(900)		5,865		(6,765)		117		934		(817)
Lexington Office Park (4)	March 31, 2023	166,779	975		1,310		(335)		1,108		1,157		(49)
2098 Gaither Road (4)	March 31, 2023	50,000	316		307		9		178		151		27
		797,779	$	871	$	16,016	$	(15,145)	$	4,478	$	4,639	$	(161)

(1)On July 20, 2023, we completed and fully placed this property in-service.

(2)On December 19, 2022, in accordance with GAAP, the ground lease that encumbers this property was reclassified as a sales-type lease and the associated assets were derecognized.

(3)The Kendall Center Blue Parking Garage was taken out of service on January 4, 2023 to support the development of 290 Binney Street. Real estate operating expenses for the six months ended June 30, 2023 included approximately $3.0 million of demolition costs.

(4)Lexington Office Park and 2098 Gaither Road are no longer considered “in-service” as each property’s occupied percentage is below 50% and we are no longer actively leasing the properties in anticipation of a future development/redevelopment.

Properties Sold Portfolio

The table below lists the properties we sold between January 1, 2022 and June 30, 2023. Rental revenue and real estate operating expenses from our Properties Sold Portfolio decreased by approximately $32.4 million and $10.6 million, respectively, for the six months ended June 30, 2023 compared to 2022, as detailed below.


				Rental Revenue						Real Estate Operating Expenses
Name	Date Sold	Property Type	Square Feet	2023		2022		Change		2023		2022		Change
				(dollars in thousands)
Office
195 West Street	March 31, 2022	Office	63,500	$	—	$	749	$	(749)	$	—	$	242	$	(242)
Virginia 95 Office Park	June 15, 2022	Office/Flex	733,421	—		5,190		(5,190)		—		1,787		(1,787)
601 Massachusetts Avenue	August 30, 2022	Office	478,667	—		21,171		(21,171)		—		6,239		(6,239)
Total Office			1,275,588	—		27,110		(27,110)		—		8,268		(8,268)

Residential
The Avant at Reston Town Center (1)	November 8, 2022	Residential	329,195	698		6,027		(5,329)		168		2,456		(2,288)
Total Residential			329,195	698		6,027		(5,329)		168		2,456		(2,288)
			1,604,783	$	698	$	33,137	$	(32,439)	$	168	$	10,724	$	(10,556)

(1)We retained and continue to own approximately 26,000 square feet of ground-level retail space. Rental Revenue and Real Estate Operating Expenses for the six months ended June 30, 2023 represent the ground-level retail space. Rental Revenue and Real Estate Operating Expenses for the six months ended June 30, 2022 represent the entire property and not just the portion sold.

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 2—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 $2.7 million for the six months ended June 30, 2023 compared to 2022.

The following reflects our occupancy and rate information for our residential same properties for the six months ended June 30, 2023 and 2022.


	Average Monthly Rental Rate (1)						Average Rental Rate Per Occupied Square Foot						Average Physical Occupancy (2)						Average Economic Occupancy (3)
Name	2023		2022		Change (%)		2023		2022		Change (%)		2023		2022		Change (%)		2023		2022		Change (%)
Proto Kendall Square	$	3,034	$	2,759	10.0	%	$	5.57	$	5.07	9.9	%	95.6	%	94.4	%	1.3	%	95.3	%	93.7	%	1.7	%
The Lofts at Atlantic Wharf	$	4,434	$	4,015	10.4	%	$	4.91	$	4.47	9.8	%	95.9	%	96.9	%	(1.0)	%	96.4	%	96.4	%	—	%
Signature at Reston	$	2,670	$	2,631	1.5	%	$	2.77	$	2.71	2.2	%	94.2	%	94.7	%	(0.5)	%	93.4	%	94.1	%	(0.7)	%
The Skylyne	$	3,446	$	3,366	2.4	%	$	4.39	$	4.09	7.3	%	91.9	%	77.7	%	18.3	%	89.6	%	75.2	%	19.1	%

(1)Average Monthly Rental Rate is calculated as the average of the quotients obtained by dividing (A) rental revenue as determined in accordance with GAAP, by (B) the number of occupied units for each month within the applicable fiscal period.

(2)Average Physical Occupancy is defined as (1) the average number of occupied units divided by (2) the total number of units, expressed as a percentage.

fact that units of different sizes and locations within a residential property have different economic impacts on a residential property’s total possible gross revenue. Market Rents used by us in calculating Economic Occupancy are based on the current market rates set by the managers of our residential properties based on their experience in renting their residential property’s units and publicly available market data. Actual market rents and trends in such rents for a region as reported by others may vary materially from Market Rents used by us. Market Rents for a period are based on the average Market Rents during that period and do not reflect any impact for cash concessions.

Hotel Net Operating Income

The Boston Marriott Cambridge hotel had net operating income of approximately $7.2 million for the six months ended June 30, 2023, representing an increase of approximately $1.9 million compared to the six months ended June 30, 2022. As demand for travel has returned, the Boston Marriott Cambridge has seen an increase in occupancy and room rates, which has led to increased net operating income.

The following reflects our occupancy and rate information for the Boston Marriott Cambridge hotel for the six months ended June 30, 2023 and 2022.


	2023			2022			Change (%)
Occupancy	69.3		%	57.1		%	21.4	%
Average daily rate	$	323.14		$	306.36		5.5	%
REVPAR	$	223.95		$	208.11		7.6	%

Other Operating Revenue and Expense Items

Development and Management Services Revenue

Development and management services revenue increased by approximately $6.7 million for the six months ended June 30, 2023 compared to 2022. Development services revenue and management services revenue increased by approximately $2.2 million and $4.5 million, respectively. The increase in development services revenue was primarily related to an increase in development fees earned from unconsolidated joint venture properties in the San Francisco and Washington, DC regions. The increase in management services revenue was primarily related to an increase in property management fees from an unconsolidated joint venture in the New York region and asset management fees earned from an unconsolidated joint venture in the Los Angeles region.

General and Administrative Expense

General and administrative expense increased by approximately $22.1 million for the six months ended June 30, 2023 compared to 2022 primarily due to increases in compensation expense and other general and administrative expenses of approximately $20.3 million and $1.8 million, respectively. The increase in compensation expense related to (1) an approximately $10.2 million increase in the value of our deferred compensation plan and (2) an approximately $10.1 million increase in other compensation expenses, primarily due to age-based vesting and annual increases in employee compensation. The increase in other general and administrative expenses primarily related to an increase in professional fees.

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 six months ended June 30, 2023 and 2022 were approximately $9.1 million and $8.1 million, respectively. These costs are not included in the general and administrative expenses discussed above.

Transaction Costs

Transaction costs increased by approximately $0.7 million for the six months ended June 30, 2023 compared to 2022 due primarily to costs incurred in connection with the pursuit and formation of new joint ventures in 2023 that did not occur at the same levels in 2022. In general, transaction costs relating to the formation of new joint ventures and the pursuit of other transactions are expensed as incurred.

Depreciation and Amortization Expense

BPLP. This accounting resulted in a step-up of the real estate assets at BXP that was allocated to certain properties. The difference between the real estate assets of BXP as compared to BPLP for certain properties having an allocation of the real estate step-up will result in a corresponding difference in depreciation expense. For additional information see the Explanatory Note that immediately follows the cover page of this Quarterly Report on Form 10-Q.

BXP

Depreciation and amortization expense increased by approximately $50.5 million for the six months ended June 30, 2023 compared to 2022, as detailed below.


Portfolio	Depreciation and Amortization for the six months ended June 30,
2023	2022		Change
	(in thousands)
Same Property Portfolio	$	339,732	$	339,692	$	40
Properties Acquired Portfolio	35,080		4,174		30,906
Properties Placed In-Service Portfolio	23,188		6,709		16,479
Properties in or Held for Development or Redevelopment Portfolio (1)	13,088		4,005		9,083
Properties Sold Portfolio	223		6,190		(5,967)
	$	411,311	$	360,770	$	50,541

(1)During the six months ended June 30, 2023, the Kendall Center Blue Parking Garage was taken out of service and demolished to support the development of 290 Binney Street, an approximately 566,000 net rentable square foot laboratory/life sciences project in Cambridge, Massachusetts. As a result, during the six months ended June 30, 2023, we recorded approximately $0.8 million of accelerated depreciation expense for the demolition of the garage, of which approximately $0.2 million related to the step-up of real estate assets.

BPLP

Depreciation and amortization expense increased by approximately $50.5 million for the six months ended June 30, 2023 compared to 2022, as detailed below.


Portfolio	Depreciation and Amortization for the six months ended June 30,
2023	2022		Change
	(in thousands)
Same Property Portfolio	$	336,368	$	336,224	$	144
Properties Acquired Portfolio	35,080		4,174		30,906
Properties Placed In-Service Portfolio	23,188		6,709		16,479
Properties in or Held for Development or Redevelopment Portfolio (1)	12,908		4,005		8,903
Properties Sold Portfolio	223		6,190		(5,967)
	$	407,767	$	357,302	$	50,465

(1)During the six months ended June 30, 2023, the Kendall Center Blue Parking Garage was taken out of service and demolished to support the development of 290 Binney Street, an approximately 566,000 net rentable square foot laboratory/life sciences project in Cambridge, Massachusetts. As a result, during the six months ended June 30, 2023, we recorded approximately $0.6 million of accelerated depreciation expense for the demolition of the garage.

Direct Reimbursements of Payroll and Related Costs From Management Services Contracts and Payroll and Related Costs From Management Service Contracts

We have determined that amounts reimbursed for payroll and related costs received from third parties in connection with management services contracts should be reflected on a gross basis instead of on a net basis as we have determined that we are the principal under these arrangements. We anticipate that these two financial statement line items will generally offset each other.

Other Income and Expense Items

Income (loss) from Unconsolidated Joint Ventures

For the six months ended June 30, 2023 compared to 2022, income (loss) from unconsolidated joint ventures decreased by approximately $16.4 million primarily due to (1) an approximately $5.3 million decrease in net income due to the acquisition of our 200 Fifth Avenue joint venture, primarily related to depreciation and amortization and (2) an increase in interest expense due to increasing interest rates on variable rate debt.

Gains on Sales of Real Estate

Gains on sales of real estate may differ between BXP and BPLP as a result of previously applied acquisition accounting by BXP for the issuance of common stock in connection with non-sponsor OP Unit redemptions by BPLP. This accounting resulted in a step-up of the real estate assets at BXP that was allocated to certain properties. The difference between the real estate assets of BXP as compared to BPLP for certain properties having an allocation of the real estate step-up will result in a corresponding difference in the gains on sales of real estate when those properties are sold. For additional information, see the Explanatory Note that immediately follows the cover page of this Quarterly Report on Form 10-Q.

BXP

Gains on sales of real estate decreased by approximately $118.9 million for the six months ended June 30, 2023 compared to 2022. During the six months ended June 30, 2022, we recognized gains of approximately $22.7 million and $96.2 million related to the sales of 195 West Street in Waltham, Massachusetts and Virginia 95 Office Park in Springfield, Virginia, respectively.

BPLP

Gains on sales of real estate decreased by approximately $123.0 million for the six months ended June 30, 2023 compared to 2022. During the six months ended June 30, 2022, we recognized gains of approximately $23.4 million and $99.5 million related to the sales of 195 West Street in Waltham, Massachusetts and Virginia 95 Office Park in Springfield, Virginia, respectively.

Interest and Other Income (Loss)

Interest and other income (loss) increased by approximately $25.9 million for the six months ended June 30, 2023 compared to 2022, due primarily to an increase of approximately $26.8 million in interest income due to increased interest earned on our deposits partially offset by an increase in our allowance for current expected credit losses of approximately $0.8 million.

Other Income - Assignment Fee

On April 19, 2021, we entered into an agreement to acquire 11251 Roger Bacon Drive in Reston, Virginia for an aggregate purchase price of approximately $5.6 million. On April 7, 2022, we executed an agreement to assign the right to acquire 11251 Roger Bacon Drive to a third party for an assignment fee of approximately $6.9 million. Net cash proceeds totaled approximately $6.6 million. 11251 Roger Bacon Drive is an approximately 65,000 square foot office building situated on approximately 2.6 acres.

Gains (Losses) from Investments in Securities

Gains (losses) from investments in securities for the six months ended June 30, 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. 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. 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. This enables us to generally match our liabilities to BXP’s officers or former non-employee directors under our deferred compensation plans with equivalent assets and thereby limit our market risk. The performance of these investments is recorded as gains (losses) from investments in securities. During the six months ended June 30, 2023 and 2022, we recognized gains (losses) of approximately $3.2 million and $(7.0) million, respectively, on these

investments. By comparison, our general and administrative expense increased (decreased) by approximately $3.2 million and $(7.0) million during the six months ended June 30, 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.

Unrealized Gain on Non-Real Estate Investment

During the year ended December 31, 2022, we began investing in non-real estate investments, which are primarily environmentally focused investment funds. As a result, for the six months ended June 30, 2023, we recognized an unrealized gain of approximately $0.4 million due to the observable changes in the fair value of the investments.

Interest Expense

Interest expense increased by approximately $71.3 million for the six months ended June 30, 2023 compared to 2022, as detailed below.


Component	Change in interest expense for the six months ended June 30, 2023 compared to June 30, 2022
	(in thousands)
Increases to interest expense due to:
Increase in interest associated with unsecured term loans and the unsecured credit facility, net	$	29,889
Issuance of $750 million in aggregate principal of 6.750% senior notes due 2027 on November 17, 2022	25,350
Issuance of $750 million in aggregate principal of 6.500% senior notes due 2034 on May 15, 2023	6,113
Increase in interest due to finance lease for one in-service property	4,498
Amortization expense of financing fees primarily related to unsecured term loan	2,313
Decrease in capitalized interest related to development projects	2,271
Other interest expense (excluding senior notes)	876
Total increases to interest expense	$	71,310

Interest expense directly related to the development of rental properties is capitalized and included in real estate assets on our Consolidated Balance Sheets and amortized over the useful lives of the real estate or lease term. As portions of properties are placed in-service, we cease capitalizing interest on that portion and interest is then expensed. Interest capitalized for the six months ended June 30, 2023 and 2022 was approximately $21.2 million and $27.8 million, respectively. These costs are not included in the interest expense referenced above.

At June 30, 2023, our variable rate debt consisted of BPLP’s $1.5 billion unsecured credit facility (the “Revolving Facility”) and $1.2 billion 2023 Unsecured Term Loan. As of June 30, 2023, the Revolving Facility did not have a balance outstanding and the 2023 Unsecured Term Loan had $1.2 billion outstanding. On May 2, 2023, BPLP entered into four interest rate swap contracts with notional amounts aggregating $1.2 billion to effectively fix Term SOFR, the reference rate for the 2023 Unsecured Term Loan, at a weighted-average rate of 4.6420% for the period commencing on May 4, 2023 and ending on May 16, 2024. For a summary of our consolidated debt as of June 30, 2023 refer to the heading “Liquidity and Capital Resources—Debt Financing” within “Item 2—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 $2.3 million for the six months ended June 30, 2023 compared to 2022, as detailed below.


Property	Noncontrolling Interests in Property Partnerships for the six months ended June 30,
2023	2022		Change
	(in thousands)
767 Fifth Avenue (the General Motors Building)	$	6,181	$	6,049	$	132
Times Square Tower	11,098		10,483		615
601 Lexington Avenue (1)	7,253		5,651		1,602
100 Federal Street	6,057		6,421		(364)
Atlantic Wharf Office Building	7,839		7,491		348
	$	38,428	$	36,095	$	2,333

(1)The increase was primarily attributable to an increase in lease revenue from our clients.

Noncontrolling Interest—Common Units of the Operating Partnership

For BXP, noncontrolling interest—common units of the Operating Partnership decreased by approximately $20.9 million for the six months ended June 30, 2023 compared to 2022 due primarily to a decrease in allocable income, which was the result of recognizing a greater gain on sales of real estate amount during 2022. Due to our ownership structure, there is no corresponding line item on BPLP’s financial statements.

Results of Operations for the Three Months Ended June 30, 2023 and 2022

Net income attributable to Boston Properties, Inc. and net income attributable to Boston Properties Limited Partnership decreased approximately $118.7 million and $135.7 million, respectively, for the three months ended June 30, 2023 compared to 2022, as detailed in the following tables and for the reasons discussed below under the heading “Comparison of the three months ended June 30, 2023 to the three months ended June 30, 2022” within “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

The following are reconciliations of Net Income Attributable to Boston Properties, Inc. to Net Operating Income and Net Income Attributable to Boston Properties Limited Partnership to Net Operating Income for the three months ended June 30, 2023 and 2022. For a detailed discussion of NOI, including the reasons management believes NOI is useful to investors, see page 67.

BXP


	Three months ended June 30,
	2023		2022		Increase/ (Decrease)		% Change
	(in thousands)
Net Income Attributable to Boston Properties, Inc.	$	104,299	$	222,989	$	(118,690)	(53.23)	%
Net Income Attributable to Noncontrolling Interests:
Noncontrolling interest—common units of the Operating Partnership	12,117		25,708		(13,591)		(52.87)	%
Noncontrolling interests in property partnerships	19,768		18,546		1,222		6.59	%
Net Income	136,184		267,243		(131,059)		(49.04)	%
Other Expenses:
Add:
Interest expense	142,473		104,142		38,331		36.81	%



Loss from unconsolidated joint ventures	6,668		54		6,614		12,248.15	%
Other Income:
Less:

Unrealized gain on non-real estate investment	124		—		124		100.00	%
Gains (losses) from investments in securities	1,571		(4,716)		6,287		133.31	%
Other income - assignment fee	—		6,624		(6,624)		(100.00)	%
Interest and other income (loss)	17,343		1,195		16,148		1,351.30	%
Gains on sales of real estate	—		96,247		(96,247)		(100.00)	%

Other Expenses:
Add:
Depreciation and amortization expense	202,577		183,146		19,431		10.61	%
Transaction costs	308		496		(188)		(37.90)	%
Payroll and related costs from management services contracts	4,609		3,239		1,370		42.30	%
General and administrative expense	44,175		34,665		9,510		27.43	%
Other Revenue:
Less:
Direct reimbursements of payroll and related costs from management services contracts	4,609		3,239		1,370		42.30	%
Development and management services revenue	9,858		6,354		3,504		55.15	%
Net Operating Income	$	503,489	$	484,042	$	19,447	4.02	%

BPLP


	Three months ended June 30,
	2023		2022		Increase/ (Decrease)		% Change
	(in thousands)
Net Income Attributable to Boston Properties Limited Partnership	$	118,098	$	253,788	$	(135,690)	(53.47)	%
Net Income Attributable to Noncontrolling Interests:
Noncontrolling interests in property partnerships	19,768		18,546		1,222		6.59	%
Net Income	137,866		272,334		(134,468)		(49.38)	%
Other Expenses:
Add:
Interest expense	142,473		104,142		38,331		36.81	%



Loss from unconsolidated joint ventures	6,668		54		6,614		12,248.15	%
Other Income:
Less:

Unrealized gain on non-real estate investment	124		—		124		100.00	%
Gains (losses) from investments in securities	1,571		(4,716)		6,287		133.31	%
Other income - assignment fee	—		6,624		(6,624)		(100.00)	%
Interest and other income (loss)	17,343		1,195		16,148		1,351.30	%
Gains on sales of real estate	—		99,608		(99,608)		(100.00)	%

Other Expenses:
Add:
Depreciation and amortization expense	200,895		181,416		19,479		10.74	%
Transaction costs	308		496		(188)		(37.90)	%
Payroll and related costs from management services contracts	4,609		3,239		1,370		42.30	%
General and administrative expense	44,175		34,665		9,510		27.43	%
Other Revenue:
Less:
Direct reimbursements of payroll and related costs from management services contracts	4,609		3,239		1,370		42.30	%
Development and management services revenue	9,858		6,354		3,504		55.15	%
Net Operating Income	$	503,489	$	484,042	$	19,447	4.02	%

NOI is a non-GAAP financial measure equal to net income attributable to Boston Properties, Inc. and net income attributable to Boston Properties Limited Partnership, as applicable, the most directly comparable GAAP financial measures, plus (1) net income attributable to noncontrolling interests, interest expense, loss from unconsolidated joint ventures, depreciation and amortization expense, transaction costs, payroll and related costs from management services contracts and corporate general and administrative expense less (2) unrealized gain on non-real estate investment, gains (losses) from investments in securities, other income - assignment fee, interest and other income (loss), gains on sales of real estate, direct reimbursements of payroll and related costs from management services contracts and development and management services revenue. 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. For example, interest expense is not necessarily linked to the operating performance of a real estate asset and is often incurred at the corporate level as opposed to the property level. Similarly, interest expense may be incurred at the property level even though the financing proceeds may be used at the corporate level (e.g., used for other investment activity). In addition, depreciation and amortization expense, because of historical cost accounting and useful life estimates, may distort operating performance measures at the property level. NOI presented by us may not be comparable to NOI reported by other REITs or real estate companies that define NOI differently.

Comparison of the three months ended June 30, 2023 to the three months ended June 30, 2022

The table below shows selected operating information for the Same Property Portfolio and the Total Property Portfolio. The Same Property Portfolio consists of 126 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 April 1, 2022 and owned and in-service through June 30, 2023. The Total Property Portfolio includes the effects of the other properties either acquired, placed in-service, in or held for development or redevelopment after April 1, 2022 or disposed of on or prior to June 30, 2023. This table includes a reconciliation from the Same Property Portfolio to the Total Property Portfolio by also providing information for the three months ended June 30, 2023 and 2022 with respect to the properties that were acquired, placed in-service, in or held for development or redevelopment or sold.


	Same Property Portfolio								Properties Acquired Portfolio				Properties Placed In-Service Portfolio				Properties in or Held for Development or Redevelopment Portfolio				Properties Sold Portfolio				Total Property Portfolio
	2023		2022		Increase/ (Decrease)		% Change		2023		2022		2023		2022		2023		2022		2023		2022		2023		2022		Increase/ (Decrease)		% Change
	(dollars in thousands)
Rental Revenue: (1)
Lease Revenue (Excluding Termination Income)	$	689,485	$	673,769	$	15,716	2.33	%	$	26,433	$	5,815	$	33,404	$	8,310	$	751	$	5,870	$	355	$	12,761	$	750,428	$	706,525	$	43,903	6.21	%
Termination Income	(164)		1,789		(1,953)		(109.17)	%	—		133		—		—		—		—		—		—		(164)		1,922		(2,086)		(108.53)	%
Lease Revenue	689,321		675,558		13,763		2.04	%	26,433		5,948		33,404		8,310		751		5,870		355		12,761		750,264		708,447		41,817		5.90	%
Parking and Other Revenue	24,559		23,543		1,016		4.32	%	1,164		524		476		—		—		2,491		1		328		26,200		26,886		(686)		(2.55)	%
Total Rental Revenue (1)	713,880		699,101		14,779		2.11	%	27,597		6,472		33,880		8,310		751		8,361		356		13,089		776,464		735,333		41,131		5.59	%
Real Estate Operating Expenses	270,149		253,044		17,105		6.76	%	4,103		1,680		9,579		2,944		1,336		2,310		86		4,052		285,253		264,030		21,223		8.04	%
Net Operating Income (Loss), Excluding Residential and Hotel	443,731		446,057		(2,326)		(0.52)	%	23,494		4,792		24,301		5,366		(585)		6,051		270		9,037		491,211		471,303		19,908		4.22	%
Residential Net Operating Income (2)	6,470		5,214		1,256		24.09	%	—		—		—		—		—		—		—		1,880		6,470		7,094		(624)		(8.80)	%
Hotel Net Operating Income (2)	5,808		5,645		163		2.89	%	—		—		—		—		—		—		—		—		5,808		5,645		163		2.89	%
Net Operating Income (Loss)	$	456,009	$	456,916	$	(907)	(0.20)	%	$	23,494	$	4,792	$	24,301	$	5,366	$	(585)	$	6,051	$	270	$	10,917	$	503,489	$	484,042	$	19,447	4.02	%

(2)For a detailed discussion of NOI, including the reasons management believes NOI is useful to investors, see page 67. Residential Net Operating Income for the three months ended June 30, 2023 and 2022 is comprised of Residential Revenue of $12,253 and $16,912 less Residential Expenses of $5,783 and $9,818, respectively. Hotel Net Operating Income for the three months ended June 30, 2023 and 2022 is comprised of Hotel Revenue of $13,969 and $12,089 less Hotel Expenses of $8,161 and $6,444, respectively, per the Consolidated Statements of Operations.

Same Property Portfolio

Lease Revenue (Excluding Termination Income)

Lease revenue (excluding termination income) from the Same Property Portfolio increased by approximately $15.7 million for the three months ended June 30, 2023 compared to 2022. The increase was a result of our average revenue per square foot increasing by approximately $2.75, contributing approximately $25.1 million, partially offset by an approximately $9.4 million decrease due to our average occupancy decreasing from 91.6% to 90.3%.

Termination Income

Termination income decreased by approximately $2.0 million for the three months ended June 30, 2023 compared to 2022.

Termination income for the three months ended June 30, 2023 related to 10 clients across the Same Property Portfolio and totaled approximately $(164,000).

Termination income for the three months ended June 30, 2022 related to six clients across the Same Property Portfolio and totaled approximately $1.8 million, which was primarily related to clients that terminated leases early in New York City.

Parking and Other Revenue

Parking and other revenue increased by approximately $1.0 million for the three months ended June 30, 2023 compared to 2022. Parking revenue increased by approximately $1.2 million and was partially offset by a decrease in other revenue of approximately $0.2 million. The increase in parking revenue was primarily due to an increase in transient and monthly parking.

Real Estate Operating Expenses

Real estate operating expenses from the Same Property Portfolio increased by approximately $17.1 million, or 6.8%, for the three months ended June 30, 2023 compared to 2022, due primarily to increases in real estate taxes of approximately $5.0 million, or 4.0%, and other real estate operating expenses of approximately $9.8 million, or 7.7%. The increase in real estate taxes was primarily in New York City. In addition, there was approximately $2.3 million related to the marketing and initial opening expenses associated with the View Boston Observatory which was completed and placed in-service on June 1, 2023.

Properties Acquired Portfolio

The table below lists the properties acquired between April 1, 2022 and June 30, 2023. Rental revenue and real estate operating expenses increased by approximately $21.1 million and $2.4 million, respectively, for the three months ended June 30, 2023 compared to 2022, as detailed below.


		Square Feet		Rental Revenue									Real Estate Operating Expenses
Name	Date acquired		2023			2022			Change			2023			2022			Change
				(dollars in thousands)
Madison Centre (1)	May 17, 2022	754,988		$	17,056		$	6,472		$	10,584		$	3,083		$	1,680		$	1,403
125 Broadway	September 16, 2022	271,000		10,541			—			10,541			1,020			—			1,020
		1,025,988		$	27,597		$	6,472		$	21,125		$	4,103		$	1,680		$	2,423

(1)Rental revenue for the three months ended June 30, 2022 includes approximately $0.1 million of termination income.

Properties Placed In-Service Portfolio

The table below lists the properties that were placed in-service or partially placed in-service between April 1, 2022 and June 30, 2023. Rental revenue and real estate operating expenses from our Properties Placed In-Service Portfolio increased by approximately $25.6 million and $6.6 million, respectively, for the three months ended June 30, 2023 compared to 2022, as detailed below.


	Quarter Initially Placed In-Service	Quarter Fully Placed In-Service		Rental Revenue						Real Estate Operating Expenses
Name		Square Feet	2023	2022		Change		2023		2022		Change
				(dollars in thousands)
Reston Next	Fourth Quarter, 2021	Fourth Quarter, 2022	1,063,236	$	11,412	$	8,088	$	3,324	$	3,876	$	2,917	$	959
325 Main Street	Second Quarter, 2022	Second Quarter, 2022	414,565	11,353		213		11,140		1,937		10		1,927
2100 Pennsylvania Avenue	Second Quarter, 2022	Second Quarter, 2023	475,849	5,440		9		5,431		2,433		17		2,416
880 Winter Street (1)	Third Quarter, 2022	Fourth Quarter, 2022	243,618	5,675		—		5,675		1,333		—		1,333
			2,197,268	$	33,880	$	8,310	$	25,570	$	9,579	$	2,944	$	6,635

(1)Conversion of a 224,000 square foot office property located in Waltham, Massachusetts to laboratory space.

Properties in or Held for Development or Redevelopment Portfolio

The table below lists the properties that were in or held for development or redevelopment between April 1, 2022 and June 30, 2023. Rental revenue and real estate operating expenses from our Properties in or Held for Development or Redevelopment Portfolio decreased by approximately $7.6 million and $1.0 million, respectively, for the three months ended June 30, 2023 compared to 2022, as detailed below.


			Rental Revenue						Real Estate Operating Expenses
Name	Date Commenced or Held for Development / Redevelopment	Square Feet	2023		2022		Change		2023		2022		Change
			(dollars in thousands)
140 Kendrick Street - Building A (1)	July 1, 2022	104,000	$	—	$	1,762	$	(1,762)	$	—	$	346	$	(346)
760 Boylston Street	September 12, 2022	118,000	—		—		—		—		207		(207)
105 Carnegie Center	November 30, 2022	73,000	—		329		(329)		—		228		(228)
2096 Gaither Road	December 1, 2022	50,000	—		58		(58)		24		75		(51)
RTC Next-Hotel (2)	December 19, 2022	N/A	254		—		254		—		—		—
Kendall Center Blue Parking Garage (3)	January 4, 2023	N/A	—		2,486		(2,486)		—		332		(332)
300 Binney Street	January 30, 2023	236,000	—		2,938		(2,938)		738		472		266
Lexington Office Park (4)	March 31, 2023	166,779	346		626		(280)		497		565		(68)
2098 Gaither Road (4)	March 31, 2023	50,000	151		162		(11)		77		85		(8)
		797,779	$	751	$	8,361	$	(7,610)	$	1,336	$	2,310	$	(974)

(1)On July 20, 2023, we completed and fully placed this property in-service.

(2)On December 19, 2022, in accordance with GAAP, the ground lease that encumbers this property was reclassified as a sales-type lease and the associated assets were derecognized.

(3)The Kendall Center Blue Parking Garage was taken out of service on January 4, 2023 to support the development of 290 Binney Street. Real estate operating expenses for the three months ended June 30, 2023 included approximately $0.7 million of demolition costs

Properties Sold Portfolio

The table below lists the properties we sold between April 1, 2022 and June 30, 2023. Rental revenue and real estate operating expenses from our Properties Sold Portfolio decreased by approximately $15.8 million and $5.2 million, respectively, for the three months ended June 30, 2023 compared to 2022, as detailed below.


				Rental Revenue						Real Estate Operating Expenses
Name	Date Sold	Property Type	Square Feet	2023		2022		Change		2023		2022		Change
				(dollars in thousands)
Office
Virginia 95 Office Park	June 15, 2022	Office/Flex	733,421	$	—	$	2,354	$	(2,354)	$	—	$	825	$	(825)
601 Massachusetts Avenue	August 30, 2022	Office	478,667	—		10,735		(10,735)		—		3,227		(3,227)
			1,212,088	—		13,089		(13,089)		—		4,052		(4,052)
Residential
The Avant at Reston Town Center (1)	November 8, 2022	Residential	329,195	356		3,089		(2,733)		86		1,209		(1,123)
Total Residential			329,195	356		3,089		(2,733)		86		1,209		(1,123)
			1,541,283	$	356	$	16,178	$	(15,822)	$	86	$	5,261	$	(5,175)

(1)We retained and continue to own approximately 26,000 square feet of ground-level retail space. Rental Revenue and Real Estate Operating Expenses for the three months ended June 30, 2023 represent the ground-level retail space. Rental Revenue and Real Estate Operating Expenses for the three months ended June 30, 2022 represent the entire property and not just the portion sold.

Residential Net Operating Income

Net operating income for our residential same properties increased by approximately $1.3 million for the three months ended June 30, 2023 compared to 2022.

The following reflects our occupancy and rate information for our residential same properties for the three months ended June 30, 2023 and 2022.


	Average Monthly Rental Rate (1)						Average Rental Rate Per Occupied Square Foot						Average Physical Occupancy (2)						Average Economic Occupancy (3)
Name	2023		2022		Change (%)		2023		2022		Change (%)		2023		2022		Change (%)		2023		2022		Change (%)
Proto Kendall Square	$	3,065	$	2,774	10.5	%	$	5.62	$	5.11	10.0	%	95.8	%	95.2	%	0.6	%	95.8	%	94.3	%	1.6	%
The Lofts at Atlantic Wharf	$	4,440	$	4,097	8.4	%	$	4.91	$	4.57	7.4	%	96.5	%	97.7	%	(1.2)	%	97.5	%	97.1	%	0.4	%
Signature at Reston	$	2,663	$	2,683	(0.7)	%	$	2.77	$	2.77	—	%	94.6	%	95.1	%	(0.5)	%	93.6	%	94.8	%	(1.3)	%
The Skylyne	$	3,447	$	3,391	1.7	%	$	4.39	$	4.15	5.8	%	92.4	%	83.8	%	10.3	%	89.9	%	81.7	%	10.0	%

(2)Average Physical Occupancy is defined as (1) the average number of occupied units divided by (2) the total number of units, expressed as a percentage.

(3)Average Economic Occupancy is defined as (1) total possible revenue less vacancy loss divided by (2) total possible revenue, expressed as a percentage. 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. By measuring vacant units at their Market Rents, Average Economic Occupancy takes into account the fact that units of different sizes and locations within a residential property have different economic impacts on a residential property’s total possible gross revenue. Market Rents used by us in calculating Economic Occupancy are based on the current market rates set by the managers of our residential properties based on their experience in renting their residential property’s units and publicly available market data. Actual market rents and trends in such rents for a region as reported by others may vary materially from Market Rents used by us. Market Rents for a period are based on the average Market Rents during that period and do not reflect any impact for cash concessions.

Hotel Net Operating Income

The Boston Marriott Cambridge hotel had net operating income of approximately $5.8 million for the three months ended June 30, 2023, representing an increase of approximately $0.2 million compared to the three months ended June 30, 2022.

The following reflects our occupancy and rate information for the Boston Marriott Cambridge hotel for the three months ended June 30, 2023 and 2022.


	2023			2022			Change (%)
Occupancy	77.2		%	73.5		%	5.0	%
Average daily rate	$	371.58		$	349.99		6.2	%
REVPAR	$	286.79		$	257.32		11.5	%

Other Operating Revenue and Expense Items

Development and Management Services Revenue

Development and management services revenue increased by approximately $3.5 million for the three months ended June 30, 2023 compared to 2022. Development services revenue and management services revenue increased by approximately $1.3 million and $2.2 million, respectively. The increase in development management services revenue was primarily related to an increase in development fees from unconsolidated joint ventures in the Washington, DC region. The increase in management services revenue was primarily related to an increase in property management fees earned from an unconsolidated joint venture in New York City and a third-party owned building in the Washington, DC region and asset management fees earned from an unconsolidated joint venture in the Los Angeles region.

General and Administrative Expense

General and administrative expense increased by approximately $9.5 million for the three months ended June 30, 2023 compared to 2022 primarily due to increases in compensation expense and other general and administrative expenses of approximately $8.8 million and $0.7 million, respectively. The increase in compensation expense was related to (1) an approximately $6.3 million increase in the value of our deferred compensation plan and (2) an approximately $2.5 million increase in other compensation expenses, primarily due to age-based vesting and annual increases in employee compensation. The increase in other general and administrative expenses primarily related to an increase in professional fees.

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 three months ended June 30, 2023 and 2022 were approximately $4.6 million and $4.1 million, respectively. These costs are not included in the general and administrative expenses discussed above.

Transaction Costs

Transaction costs decreased by approximately $0.2 million for the three months ended June 30, 2023 compared to 2022 due primarily to costs incurred in connection with the pursuit and formation of new joint ventures. In general, transaction costs relating to the formation of new joint ventures and the pursuit of other transactions are expensed as incurred.

Depreciation and Amortization Expense

Depreciation expense may differ between BXP and BPLP as a result of previously applied acquisition accounting by BXP for the issuance of common stock in connection with non-sponsor OP Unit redemptions by BPLP. This accounting resulted in a step-up of the real estate assets at BXP that was allocated to certain properties. The difference between the real estate assets of BXP as compared to BPLP for certain properties having an allocation of the real estate step-up will result in a corresponding difference in depreciation expense. For additional information see the Explanatory Note that immediately follows the cover page of this Quarterly Report on Form 10-Q.

BXP

Depreciation and amortization expense increased by approximately $19.4 million for the three months ended June 30, 2023 compared to 2022, as detailed below.


Portfolio	Depreciation and Amortization for the three months ended June 30,
2023	2022		Change
	(in thousands)
Same Property Portfolio	$	170,684	$	170,690	$	(6)
Properties Acquired Portfolio	19,224		4,174		15,050
Properties Placed In-Service Portfolio	12,213		3,698		8,515
Properties in or Held for Development or Redevelopment Portfolio	344		1,631		(1,287)
Properties Sold Portfolio	112		2,953		(2,841)
	$	202,577	$	183,146	$	19,431

BPLP

Depreciation and amortization expense increased by approximately $19.5 million for the three months ended June 30, 2023 compared to 2022, as detailed below.


Portfolio	Depreciation and Amortization for the three months ended June 30,
2023	2022		Change
	(in thousands)
Same Property Portfolio	$	169,002	$	168,960	$	42
Properties Acquired Portfolio	19,224		4,174		15,050
Properties Placed In-Service Portfolio	12,213		3,698		8,515
Properties in or Held for Development or Redevelopment Portfolio	344		1,631		(1,287)
Properties Sold Portfolio	112		2,953		(2,841)
	$	200,895	$	181,416	$	19,479

Direct Reimbursements of Payroll and Related Costs From Management Services Contracts and Payroll and Related Costs From Management Service Contracts

Other Income and Expense Items

Loss from Unconsolidated Joint Ventures

For the three months ended June 30, 2023 compared to 2022, loss from unconsolidated joint ventures increased by approximately $6.6 million due primarily to an increase in interest expense due to increasing interest rates on variable rate debt.

Gains on Sales of Real Estate

BXP

Gains on sales of real estate decreased by approximately $96.2 million for the three months ended June 30, 2023 compared to 2022. During the three months ended June 30, 2022, we recognized a gain of approximately $96.2 million related to the sale of Virginia 95 Office Park in Springfield, Virginia.

BPLP

Gains on sales of real estate decreased by approximately $99.6 million for the three months ended June 30, 2023 compared to 2022. During the three months ended June 30, 2022, we recognized a gain of approximately $99.5 million related to the sale of Virginia 95 Office Park in Springfield, Virginia.

Interest and Other Income (Loss)

Interest and other income (loss) increased by approximately $16.1 million for the three months ended June 30, 2023 compared to 2022, due primarily to an increase of approximately $16.7 million in interest income from increased interest earned on our deposits partially offset by an increase in our allowance for current expected credit losses of approximately $0.4 million.

Other Income - Assignment Fee

Gains (Losses) from Investments in Securities

Gains (losses) from investments in securities for the three months ended June 30, 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. 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. 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. This enables us to generally match our liabilities to BXP’s officers or former non-employee directors under our deferred compensation plans with equivalent assets and thereby limit our market risk. The performance of these investments is recorded as gains (losses) from investments in securities. During the three months ended June 30, 2023 and 2022, we recognized gains (losses) of approximately $1.6 million and $(4.7) million, respectively, on these investments. By comparison, our general and administrative expense increased (decreased) by approximately $1.6 million and $(4.7) million during the three months ended June 30, 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.

Unrealized Gain on Non-Real Estate Investment

During the year ended December 31, 2022, we began investing in non-real estate investments, which are primarily environmentally-focused investment funds. As a result, for the three months ended June 30, 2023, we recognized an unrealized gain of approximately $0.1 million due to the observable changes in the fair value of the investments.

Interest Expense

Interest expense increased by approximately $38.3 million for the three months ended June 30, 2023 compared to 2022, as detailed below.


Component	Change in interest expense for the three months ended June 30, 2023 compared to June 30, 2022
	(in thousands)
Increases to interest expense due to:
Increase in interest associated with unsecured term loans and unsecured credit facility, net	$	14,217
Issuance of $750 million in aggregate principal of 6.750% senior notes due 2027 on November 17, 2022	12,675
Issuance of $750 million in aggregate principal of 6.500% senior notes due 2034 on May 15, 2023	6,113
Increase in interest due to finance lease for one in-service property	2,604
Decrease in capitalized interest related to development projects	963
Amortization expense of financing fees primarily related to unsecured term loan	927
Other interest expense (excluding senior notes)	832
Total increases to interest expense	$	38,331

Interest expense directly related to the development of rental properties is capitalized and included in real estate assets on our Consolidated Balance Sheets and amortized over the useful lives of the real estate or lease term. As portions of properties are placed in-service, we cease capitalizing interest on that portion and interest is then expensed. Interest capitalized for the three months ended June 30, 2023 and 2022 was approximately $10.6 million and $14.1 million, respectively. These costs are not included in the interest expense referenced above.

At June 30, 2023, our variable rate debt consisted of BPLP’s $1.5 billion Revolving Facility and $1.2 billion 2023 Unsecured Term Loan. As of June 30, 2023, the Revolving Facility did not have a balance outstanding and the 2023 Unsecured Term Loan had $1.2 billion outstanding. On May 2, 2023, BPLP entered into four interest rate swap contracts with notional amounts aggregating $1.2 billion to effectively fix Term SOFR, the reference rate for the 2023 Unsecured Term Loan, at a weighted-average rate of 4.6420% for the period commencing on May 4, 2023 and ending on May 16, 2024. For a summary of our consolidated debt as of June 30, 2023 refer to the heading “Liquidity and Capital Resources—Debt Financing” within “Item 2—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 $1.2 million for the three months ended June 30, 2023 compared to 2022, as detailed below.


Property	Noncontrolling Interests in Property Partnerships for the three months ended June 30,
2023	2022		Change
	(in thousands)
767 Fifth Avenue (the General Motors Building) (1)	$	3,778	$	3,012	$	766
Times Square Tower	5,415		5,183		232
601 Lexington Avenue	3,242		3,372		(130)
100 Federal Street	3,245		3,258		(13)
Atlantic Wharf Office Building	4,088		3,721		367
	$	19,768	$	18,546	$	1,222

(1)The increase was primarily attributable to an increase in lease revenue from our clients.

Noncontrolling Interest—Common Units of the Operating Partnership

For BXP, noncontrolling interest—common units of the Operating Partnership decreased by approximately $13.6 million for the three months ended June 30, 2023 compared to 2022 due primarily to a decrease in allocable

income, which included recognizing a greater gain on sales of real estate during 2022. Due to our ownership structure, there is no corresponding line item on BPLP’s financial statements.

Liquidity and Capital Resources

General

Our principal liquidity needs for the next twelve months and beyond are to:

fund normal recurring expenses;
meet debt service and principal repayment obligations and balloon payments on maturing debt, including $500 million of 3.125% unsecured senior notes due September 1, 2023 and $700 million of 3.800% unsecured senior notes due February 1, 2024;
fund development and redevelopment costs;
fund capital expenditures, including major renovations, tenant improvements and leasing costs;
fund pending and possible acquisitions of properties, either directly or indirectly through the acquisition of equity interests therein; and
make the minimum distribution required to enable BXP to maintain its REIT qualification under the Internal Revenue Code of 1986, as amended.

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 with large institutional investors; and
issuances of BXP equity securities and/or preferred or common units of partnership interests in BPLP.

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 use BPLP’s Revolving Facility primarily as a bridge facility to fund acquisition opportunities, refinance outstanding indebtedness and meet short-term development and working capital needs. Although we may seek to fund our development projects with construction loans, which may require guarantees by BPLP, the financing for each particular project ultimately depends on several factors, including, among others, the project’s size and duration, the extent of pre-leasing, our available cash and access to cost effective capital at the given time.

The following table presents information on properties under construction/redevelopment as of June 30, 2023 (dollars in thousands):


									Financings
Construction/Redevelopment Properties	Estimated Stabilization Date	Location	# of Buildings	Estimated Square Feet	Investment to Date (1)(2)(3)		Estimated Total Investment (1)(2)		Total Available (1)		Outstanding at June 30, 2023 (1)		Estimated Future Equity Requirement (1)(2)(4)		Percentage Leased (5)
Office
140 Kendrick - Building A (Redevelopment)	Third Quarter, 2023	Needham, MA	1	104,000	$	21,392	$	26,600	$	—	$	—	$	5,208	100	%	(6)
360 Park Avenue South (42% ownership)	Fourth Quarter, 2025	New York, NY	1	450,000	204,056		248,000		92,774		91,371		42,541		2	%	(7)
Reston Next Office Phase II	Second Quarter, 2025	Reston, VA	1	90,000	35,535		61,000		—		—		25,465		—	%
Total Office Properties under Construction/Redevelopment			3	644,000	260,983		335,600		92,774		91,371		73,214		18	%

Laboratory/Life Sciences
751 Gateway (49% ownership)	Fourth Quarter, 2023	South San Francisco, CA	1	231,000	103,738		127,600		—		—		23,862		100	%
103 CityPoint	Third Quarter, 2024	Waltham, MA	1	113,000	75,251		115,100		—		—		39,849		—	%
180 CityPoint	Fourth Quarter, 2024	Waltham, MA	1	329,000	191,337		274,700		—		—		83,363		43	%
300 Binney Street (Redevelopment)	First Quarter, 2025	Cambridge, MA	1	236,000	22,359		210,200		—		—		187,841		100	%
105 Carnegie Center (Redevelopment)	Second Quarter, 2025	Princeton, NJ	1	73,000	1,868		40,600		—		—		38,732		—	%
651 Gateway (50% ownership) (Redevelopment)	Fourth Quarter, 2025	South San Francisco, CA	1	327,000	76,106		146,500		—		—		70,394		14	%
290 Binney Street	Second Quarter, 2026	Cambridge, MA	1	566,000	152,817		1,185,200		—		—		1,032,383		100	%
Total Laboratory/Life Sciences Properties under Construction/Redevelopment			7	1,875,000	623,476		2,099,900		—		—		1,476,424		65	%

Residential
Reston Next Residential (508 units) (20% ownership)	Second Quarter, 2026	Reston, VA	1	417,000	23,324		47,700		28,000		7,913		4,289		—	%
Total Residential Property under Construction			1	417,000	23,324		47,700		28,000		7,913		4,289		—

Retail
760 Boylston Street (Redevelopment)	Second Quarter, 2024	Boston, MA	1	118,000	9,643		43,800		—		—		34,157		100	%
Reston Next Retail	Fourth Quarter, 2025	Reston, VA	1	33,000	20,610		26,600		—		—		5,990		—	%
Total Retail Properties under Construction/Redevelopment			2	151,000	30,253		70,400		—		—		40,147		78	%

Total Properties under Construction/Redevelopment			13	3,087,000	$	938,036	$	2,553,600	$	120,774	$	99,284	$	1,594,074	54	%	(8)

(1)Represents our share.

(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 June 30, 2023.

(3)Includes approximately $167.1 million of unpaid but accrued construction costs and leasing commissions.

(4)Excludes approximately $167.1 million of unpaid but accrued construction costs and leasing commissions.

(5)Represents percentage leased as of July 28, 2023, including leases with future commencement dates.

(6)The redevelopment project was completed and fully placed in-service on July 20, 2023.

(7)Investment to Date includes all related costs incurred prior to the contribution of the property by us to the joint venture on December 15, 2021 totaling approximately $107 million and our proportionate share of the loan. Our joint venture partners will fund required capital until their aggregate investment is approximately 58% of all capital contributions; thereafter, the joint venture partners will fund required capital according to their percentage interests.

(8)Percentage leased excludes the residential property.

Lease revenue (which includes reimbursement of operating expenses from clients, if any), other income from operations, available cash balances, proceeds from mortgage financings and offerings of unsecured indebtedness, draws on BPLP’s Revolving Facility, and funding from institutional private equity partners are the principal sources of capital that we use to fund operating expenses, debt service, maintenance and repositioning capital expenditures, tenant improvements and the minimum distribution required to enable BXP to maintain its REIT qualification. We seek to maximize income from our existing properties by maintaining quality standards for our properties that promote high occupancy rates and permit increases in rental rates while reducing client turnover and controlling operating expenses. 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. Material adverse changes in one or more sources of capital may adversely affect our net cash flows.

We expect our primary uses of capital over the next twelve months will be to fund our current and committed development and redevelopment projects, repay debt maturities (as discussed below), service the interest payments on our outstanding indebtedness, and satisfy our REIT distribution requirements.

As of June 30, 2023, we had 13 properties under development or redevelopment. Our share of the estimated total investment for these projects is approximately $2.6 billion, of which approximately $1.6 billion remains to be funded primarily with equity through 2026. In the second quarter of 2023, we completed the development/redevelopment of:

2100 Pennsylvania Avenue, an approximately 476,000 square foot premier workplace located in Washington, DC, for an estimated total investment of $375.9 million. The property was 91% leased, including leases with future commencement dates, as of July 28, 2023.
View Boston Observatory, an observatory encompassing the top three floors of 800 Boylston Street - The Prudential Center in Boston, Massachusetts, for an estimated total investment of $182.3 million.

On July 20, 2023, we completed the redevelopment of and fully placed in-service 140 Kendrick Street - Building A, a premier workplace redevelopment project with approximately 104,000 net rentable square feet located in Needham, Massachusetts. The property is 100% leased and is the first Net Zero, Carbon Neutral office repositioning of this scale in Massachusetts.

During the second quarter of 2023, a joint venture in which we have a 55% interest elected to pause vertical construction on Platform 16 in San Jose, California. Our share of the estimated total investment to complete Phase 1 of the project was approximately $231.9 million. As of June 30, 2023, we had invested approximately $100.5 million in this phase of the development project, and we expect to invest an estimated additional $45.8 million to complete the underground parking garage and building foundation elements to facilitate a restart of construction in the future as demand improves.

During the second quarter of 2023, BPLP completed a public offering of $750.0 million aggregate principal amount of 6.500% unsecured senior notes due 2034. The net proceeds from the offering were approximately $741.3 million, which will be used to repay at maturity $500.0 million aggregate principal amount of BPLP’s 3.125% senior unsecured notes, which mature on September 1, 2023, and for general corporate purposes.

On May 2, 2023, we entered into four interest rate swap contracts with notional amounts aggregating $1.2 billion. We entered into these interest rate swap contracts to reduce our exposure to the variability in future cash flows attributable to changes in the interest rates on our 2023 Unsecured Term Loan. These interest rate swaps fixed Term SOFR, the reference rate for the 2023 Unsecured Term Loan, at a weighted average rate of 4.6420% for the period commencing on May 4, 2023 and ending on May 16, 2024.

On July 28, 2023, a joint venture in which we have a 50% interest modified and exercised an option to extend by one year the maturity date of its loan collateralized by 100 Causeway Street. At the time of the modification and extension, the loan had an outstanding balance totaling approximately $340.6 million, bore interest at Term SOFR plus 1.60% per annum, and was scheduled to mature on September 5, 2023. The modified and extended loan has an outstanding balance of $336.6 million, which included an approximately $4.0 million principal repayment, bears interest at Term SOFR plus 1.48% per annum, and matures on September 5, 2024, with an additional one-year extension option, subject to certain conditions. 100 Causeway Street is an approximately 634,000 square foot premier workplace located in Boston, Massachusetts and is approximately 95% leased.

Our 2024 debt maturities include $700.0 million aggregate principal amount of BPLP’s 3.800% senior unsecured notes, which mature on February 1, 2024 and the $1.2 billion 2023 Unsecured Term Loan (unless we exercise the one-year extension option within the loan agreement, subject to certain conditions). In our unconsolidated joint venture portfolio, after refinancing the mortgage debt at 500 North Capitol Street, NW, in Washington, DC, we have approximately $577.2 million (our share) of debt maturing through the end of 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, unsecured debt or both. We expect our quarterly net interest expense will increase moderately for the remainder of 2023 and into 2024 compared to the first half of 2023 primarily due to the cessation of capitalized interest on our 2023 development deliveries, higher interest rates on maturing debt, and lower interest income as we use cash balances to repay debt and fund our development pipeline.

As of July 28, 2023, we had available cash of approximately $1.4 billion (of which approximately $81.7 million is attributable to our consolidated joint venture partners). 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 BPLP’s Revolving Facility and our available cash, as of July 28, 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.

We may seek to enhance our liquidity to fund our current and future development activity, pursue additional attractive investment opportunities and refinance or repay indebtedness. Depending on interest rates, the overall conditions in the debt and public and private equity markets, and our leverage at the time, we may decide to access one or more of these capital sources. Doing so may result in us carrying additional cash and cash equivalents pending our use of the proceeds, which would increase our net interest expense.

On May 17, 2023, BXP renewed its ATM stock offering program through which it may sell from time to time up to an aggregate of $600.0 million of its Common Stock through sales agents over a three-year period. Under the ATM stock offering program, BXP may also engage in forward sale transactions with affiliates of certain sales agents for the sale of its Common Stock on a forward basis. This program replaced BXP’s prior $600.0 million ATM stock offering program that was scheduled to expire on May 22, 2023. BXP intends to use the net proceeds from any offering for general business purposes, which may include investment opportunities and debt reduction. We have not sold any shares under this ATM stock offering program.

REIT Tax Distribution Considerations

Dividend

BXP as a REIT is subject to a number of organizational and operational requirements, including a requirement that BXP currently distribute at least 90% of its annual taxable income (excluding capital gains and with certain other adjustments). Our policy is for BXP to distribute at least 100% of its taxable income, including capital gains, to avoid paying federal tax. Common and LTIP unitholders (other than unearned MYLTIP units) of limited partnership interest in BPLP receive the same distribution per unit that is paid per share of BXP common stock.

BXP’s Board of Directors will continue to evaluate BXP’s dividend rate in light of our actual and projected taxable income (including gains on sales), liquidity requirements and other circumstances, and there can be no assurance that the future dividends declared by BXP’s Board of Directors will not differ materially from the current quarterly dividend amount.

Sales

To the extent that we sell assets at a gain and cannot efficiently use the proceeds in a tax deferred manner for either our development activities or attractive acquisitions, BXP would, at the appropriate time, decide whether it is better to declare a special dividend, adopt a stock repurchase program, reduce indebtedness or retain the cash for future investment opportunities. Such a decision will depend on many factors including, among others, the timing, availability and terms of development and acquisition opportunities, our then-current and anticipated leverage, the cost and availability of capital from other sources, the price of BXP’s common stock and REIT distribution requirements. At a minimum, we expect that BXP would distribute at least that amount of proceeds necessary for BXP to avoid paying corporate level tax on the applicable gains realized from any asset sales.

From time to time in select cases, whether due to a change in use, structuring issues to comply with applicable REIT regulations or other reasons, we may sell an asset that is held by a taxable REIT subsidiary (“TRS”). Such a sale by a TRS would be subject to federal and local taxes.

Cash Flow Summary

The following summary discussion of our cash flows is based on the Consolidated Statements of Cash Flows and is not meant to be an all-inclusive discussion of the changes in our cash flows for the periods presented below.

Cash and cash equivalents and cash held in escrows aggregated approximately $1.6 billion and $502.9 million at June 30, 2023 and 2022, respectively, representing an increase of approximately $1.1 billion. The following table sets forth changes in cash flows:


	Six months ended June 30,
2023			2022			Change
(in thousands)
Net cash provided by operating activities	$	613,183		$	616,639		$	(3,456)
Net cash used in investing activities	(554,864)			(980,170)			425,306
Net cash provided by financing activities	833,359			365,223			468,136

Our principal source of cash flow is related to the operation of our properties. The weighted-average term of our in-place leases, including leases signed by our unconsolidated joint ventures, excluding residential units, was approximately 7.6 years as of June 30, 2023, with occupancy rates historically in the range of 88% to 94%. Generally, our properties generate a relatively consistent stream of cash flow that provides us with resources to pay operating expenses, debt service and fund regular quarterly dividend and distribution payment requirements. In addition, over the past several years, we have raised capital through the sale of some of our properties and through secured and unsecured borrowings.

Cash is used in investing activities to fund acquisitions, development, net investments in unconsolidated joint ventures and maintenance and repositioning capital expenditures. We selectively invest in new projects that enable us to take advantage of our development, leasing, financing and property management skills and invest in existing buildings to enhance or maintain our market position. Cash used in investing activities for the six months ended June 30, 2023 and June 30, 2022 is detailed below:


	Six months ended June 30,
	2023		2022
	(in thousands)
Acquisitions of real estate (1)	$	—	$	(727,835)
Construction in progress (2)	(235,331)		(237,182)
Building and other capital improvements	(78,344)		(63,278)
Tenant improvements	(135,743)		(97,844)
Proceeds from sales of real estate (3)	—		157,345
Proceeds from assignment fee (4)	—		6,624
Capital contributions to unconsolidated joint ventures (5)	(103,595)		(69,819)
Capital distributions from unconsolidated joint ventures (6)	7,350		36,622

Investment in non-real estate investments	(733)		—
Issuance of related party note receivable (7)	(10,500)		—
Proceeds from note receivable (8)	—		10,000
Investments in securities, net	2,032		5,197
Net cash used in investing activities	$	(554,864)	$	(980,170)

Cash used in investing activities changed primarily due to the following:

(1)On May 17, 2022, we completed the acquisition of Madison Centre in Seattle, Washington, for an aggregate purchase price, including transaction costs, of approximately $724.3 million. Madison Centre is an approximately 755,000 net rentable square foot, 37-story, LEED-Platinum certified, premier workplace.

(2)Construction in progress for the six months ended June 30, 2023 included ongoing expenditures associated with 2100 Pennsylvania Avenue and the View Boston Observatory at The Prudential Center, which were both fully placed in-service during the six months ended June 30, 2023. In addition, we incurred costs associated with our continued development/redevelopment of 180 CityPoint, 103 CityPoint, Reston Next Office Phase II, 140 Kendrick Street Building A, 760 Boylston Street, 105 Carnegie Center, 290 Binney Street and 300 Binney Street.

Construction in progress for the six months ended June 30, 2022 included ongoing expenditures associated with Reston Next and 2100 Pennsylvania Avenue, which are partially placed in-service, and 325 Main Street, which was completed and fully placed in-service during the six months ended June 30, 2022. In addition, we incurred costs associated with our continued development/redevelopment of 180 CityPoint, View Boston Observatory at The Prudential Center, 880 Winter Street, 103 CityPoint and Reston Next Office Phase II.

(3)On June 15, 2022, we completed the sale of our Virginia 95 Office Park properties located in Springfield, Virginia for an aggregate gross sale price of $127.5 million. Net cash proceeds totaled approximately $121.9 million, resulting in a gain on sale of real estate totaling approximately $96.2 million for BXP and approximately $99.5 million for BPLP. 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. 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.

(4)On April 19, 2021, we entered into an agreement to acquire 11251 Roger Bacon Drive in Reston, Virginia for an aggregate purchase price of approximately $5.6 million. On April 7, 2022, we executed an agreement to assign the right to acquire 11251 Roger Bacon Drive to a third party for an assignment fee of approximately $6.9 million. Net cash proceeds totaled approximately $6.6 million. 11251 Roger Bacon Drive is an approximately 65,000 square foot office building situated on approximately 2.6 acres. The property was 100% leased.

(5)Capital contributions to unconsolidated joint ventures for the six months ended June 30, 2023 consisted primarily of cash contributions of approximately $30.2 million, $26.5 million, $17.5 million, $10.9 million and $8.3 million to our Gateway Commons, Platform 16, Worldgate Drive, Dock 72 and 751 Gateway joint ventures, respectively. On January 31, 2023, we entered into a new joint venture for 13100 and 13150 Worldgate Drive located in Herndon, Virginia.

Capital contributions to unconsolidated joint ventures for the six months ended June 30, 2022 consisted primarily of cash contributions of approximately $32.6 million and $22.0 million to our Gateway Commons and Platform 16 joint ventures, respectively.

(6)Capital distributions from unconsolidated joint ventures for the six months ended June 30, 2023 consisted primarily of a cash distribution totaling approximately $7.4 million from our 360 Park Avenue South joint venture.

Capital distributions from unconsolidated joint ventures for the six months ended June 30, 2022 consisted primarily of a cash distribution totaling approximately $21.6 million and $11.6 million from our Metropolitan Square and 7750 Wisconsin Avenue joint ventures, respectively.

(7)On June 5, 2023, a joint venture in which we own a 30% interest repaid the existing construction loan collateralized by its 500 North Capitol Street, NW property and obtained new mortgage loans with related parties. At the time of the pay off, the outstanding balance of the loan totaled approximately $105.0 million and was scheduled to mature on June 6, 2023. The new mortgage loans have an aggregate principal balance of $105.0 million, bear interest at a weighted average fixed rate of 6.83% per annum and mature on June 5, 2026. Our portion of the mortgage loans, $10.5 million, has been reflected as a Related Party Note Receivable on our Consolidated Balance Sheets. 500 North Capitol Street, NW is a 231,000 square foot premier workplace in Washington, DC.

(8)An affiliate of The Bernstein Companies exercised its option to borrow $10.0 million from us, and we provided the financing on June 1, 2020. 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. On June 27, 2022, the borrower repaid the loan in full, including approximately $1.6 million of accrued interest.

Cash provided by financing activities for the six months ended June 30, 2023 totaled approximately $833.4 million. This amount consisted primarily of borrowings under the 2023 Unsecured Term Loan and the proceeds from the issuance by BPLP of $750 million in aggregate principal amount of its 6.500% unsecured senior notes due 2034, partially offset by the repayment of BPLP’s $730 million unsecured credit agreement (the “2022 Unsecured Term Loan”) and payment of our regular dividends and distributions to our shareholders and unitholders and distributions to noncontrolling interests in property partnerships. Future debt payments are discussed below under the heading “Debt Financing.”

Capitalization

The following table presents Consolidated Market Capitalization and BXP’s Share of Market Capitalization, as well as the corresponding ratios of Consolidated Debt to Consolidated Market Capitalization and BXP’s Share of Debt to BXP’s Share of Market Capitalization (in thousands except for percentages):


	June 30, 2023
	Shares / Units Outstanding	Common Stock Equivalent	Equivalent Value (1)
Common Stock	156,853	156,853	$	9,033,164
Common Operating Partnership Units	18,658	18,658	1,074,514			(2)
Total Equity		175,511	$	10,107,678

Consolidated Debt			$	15,456,205
Add:
BXP’s share of unconsolidated joint venture debt (3)			1,609,671
Subtract:
Partners’ share of Consolidated Debt (4)			(1,359,380)
BXP’s Share of Debt			$	15,706,496

Consolidated Market Capitalization			$	25,563,883
BXP’s Share of Market Capitalization			$	25,814,174
Consolidated Debt/Consolidated Market Capitalization			60.46		%
BXP’s Share of Debt/BXP’s Share of Market Capitalization			60.84		%

(1)Values are based on the closing price per share of BXP’s Common Stock on the New York Stock Exchange on June 30, 2023 of $57.59.

(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 June 30, 2023.

(3)See page 90 for additional information.

(4)See page 89 for additional information.

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. 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 June 30, 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.

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 June 30, 2023.

We also present BXP’s Share of Market Capitalization and BXP’s Share of Debt/BXP’s Share of Market Capitalization, which are calculated in the same manner, except that BXP’s Share of Debt is utilized instead of our consolidated debt in both the numerator and the denominator. BXP’s Share of Debt is defined as our consolidated debt plus our share of debt from our unconsolidated joint ventures (calculated based upon our ownership percentage), minus our partners’ share of debt from our consolidated joint ventures (calculated based upon the

partners’ percentage ownership interests adjusted for basis differentials). Management believes that BXP’s Share of Debt provides useful information to investors regarding our financial condition because it includes our share of debt from unconsolidated joint ventures and excludes our partners’ share of debt from consolidated joint ventures, in each case presented on the same basis. We have several significant joint ventures and presenting various measures of financial condition in this manner can help investors better understand our financial condition and/or results of operations after taking into account our economic interest in these joint ventures. We caution investors that the ownership percentages used in calculating BXP’s Share of Debt may not completely and accurately depict all of the legal and economic implications of holding an interest in a consolidated or unconsolidated joint venture. For example, in addition to partners’ interests in profits and capital, venture agreements vary in the allocation of rights regarding decision making (both for routine and major decisions), distributions, transferability of interests, financing and guarantees, liquidations and other matters. Moreover, in some cases we exercise significant influence over, but do not control, the joint venture in which case GAAP requires that we account for the joint venture entity using the equity method of accounting and we do not consolidate it for financial reporting purposes. In other cases, GAAP requires that we consolidate the venture even though our partner(s) own(s) a significant percentage interest. As a result, management believes that the presentation of BXP’s Share of a financial measure should not be considered a substitute for, and should only be considered with and as a supplement to our financial information presented in accordance with GAAP.

We present these supplemental ratios because our degree of leverage could affect our ability to obtain additional financing for working capital, capital expenditures, acquisitions, development or other general corporate purposes and because different investors and lenders consider one or both of these ratios. Investors should understand that these ratios are, in part, a function of the market price of the common stock of BXP and as such will fluctuate with changes in such price, and they do not necessarily reflect our capacity to incur additional debt to finance our activities or our ability to manage our existing debt obligations. However, for a company like BXP, whose assets are primarily income-producing real estate, these ratios may provide investors with an alternate indication of leverage, so long as they are evaluated along with the ratio of indebtedness to other measures of asset value used by financial analysts and other financial ratios, as well as the various components of our outstanding indebtedness.

For a discussion of our unconsolidated joint venture indebtedness, see “Liquidity and Capital Resources—Investment in Unconsolidated Joint Ventures - Secured Debt” within “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations” and for a discussion of our consolidated joint venture indebtedness see “Liquidity and Capital Resources—Mortgage Notes Payable” within “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Debt Financing

As of June 30, 2023, we had approximately $15.5 billion of outstanding consolidated indebtedness, representing approximately 60.46% of our Consolidated Market Capitalization as calculated above consisting of approximately (1) $11.0 billion (net of discount and deferred financing fees) in publicly traded unsecured senior notes having a GAAP weighted-average interest rate of 3.88% per annum and maturities in 2023 through 2034, (2) $3.3 billion (net of deferred financing fees) of property-specific mortgage debt having a GAAP weighted-average interest rate of 3.42% per annum and a weighted-average term of 5.3 years and (3) $1.2 billion outstanding under BPLP’s 2023 Unsecured Term Loan that matures on May 16, 2024.

The table below summarizes the aggregate carrying value of our mortgage notes payable and BPLP’s unsecured senior notes, unsecured line of credit, and unsecured term loan, as well as Consolidated Debt Financing Statistics at June 30, 2023 and June 30, 2022.


	June 30,
	2023			2022
	(dollars in thousands)
Debt Summary:
Balance
Fixed rate mortgage notes payable, net	$	3,274,764		$	3,269,948
Unsecured senior notes, net	10,985,395			9,489,030
Unsecured line of credit	—			165,000
Unsecured term loan, net	1,196,046			728,795
Consolidated Debt	15,456,205			13,652,773
Add:
BXP’s share of unconsolidated joint venture debt, net (1)	1,609,671			1,446,617
Subtract:
Partners’ share of consolidated mortgage notes payable, net (2)	(1,359,380)			(1,357,399)
BXP’s Share of Debt	$	15,706,496		$	13,741,991

	June 30,
	2023			2022
Consolidated Debt Financing Statistics:
Percent of total debt:
Fixed rate (3)	100.00		%	93.45		%
Variable rate	—		%	6.55		%
Total	100.00		%	100.00		%
GAAP Weighted-average interest rate at end of period:
Fixed rate (3)	3.95		%	3.43		%
Variable rate	—		%	2.53		%
Total	3.95		%	3.37		%
Coupon/Stated Weighted-average interest rate at end of period:
Fixed rate (3)	3.82		%	3.32		%
Variable rate	—		%	1.96		%
Total	3.82		%	3.23		%
Weighted-average maturity at end of period (in years):
Fixed rate (3)	5.0			6.1
Variable rate	—			1.4
Total	5.0			5.8

(1)See page 90 for additional information.

(2)See page 89 for additional information.

(3)The 2023 Unsecured Term Loan bears interest at a variable rate of adjusted Term SOFR plus a margin ranging from 75 to 160 basis points based on BPLP’s credit rating. On May 2, 2023, BPLP executed interest rate swaps that effectively fixed Term SOFR for the $1.2 billion outstanding under the 2023 Unsecured Term Loan (see Notes 6 and 7 to the Consolidated Financial Statements). As such, the 2023 Unsecured Term Loan is reflected within Fixed rate statistics.

Unsecured Credit Facility

On June 1, 2023, BPLP amended its 2021 Credit Facility that replaced the LIBOR-based daily floating rate option with a SOFR-based daily floating rate option and to add options for SOFR-based term floating rates and rates for alternative currency loans. In addition, the amendment added a SOFR credit spread adjustment of 0.10%. Other than the foregoing, the material terms of the 2021 Credit Facility remain unchanged.

The 2021 Credit Facility provides for borrowings of up to $1.5 billion through the Revolving Facility, subject to customary conditions. The 2021 Credit Facility matures on June 15, 2026 and includes a sustainability-linked pricing component. 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. Based on BPLP’s June 30, 2023 credit rating, (1) the applicable Daily SOFR, Term SOFR, alternative currency daily rate, and alternative currency term rate margins are 0.775%, (2) the alternate base rate margin is zero basis points and (3) the facility fee is 0.15% per annum.

At June 30, 2023 and July 28, 2023, BPLP had no borrowings under its Revolving Facility and outstanding letters of credit totaling approximately $6.7 million, with the ability to borrow approximately $1.5 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. Under the credit agreement, BPLP may, at any time prior to the maturity date, increase total commitments by up to an additional $300.0 million in aggregate principal amount by increasing the existing 2023 Unsecured Term Loan or incurring one or more additional term loans, in each case, subject to syndication of the increase and other conditions. The 2023 Unsecured Term Loan matures on May 16, 2024, with one 12-month extension option, subject to customary conditions.

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.

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. There was no prepayment penalty associated with the repayment of the 2022 Unsecured Term Loan.

As of June 30, 2023, the 2023 Unsecured Term Loan bears interest at a rate equal to adjusted Term SOFR plus 0.85% per annum based on BPLP’s current credit rating at June 30, 2023 (See Note 7 to the Consolidated Financial Statements). At June 30, 2023, BPLP had $1.2 billion outstanding under the 2023 Unsecured Term Loan.

Derivative Instruments and Hedging Activities

On May 2, 2023, BPLP executed interest rate swaps in notional amounts aggregating $1.2 billion. These interest rate swaps were entered into to fix Term SOFR, the reference rate for BPLP’s 2023 Unsecured Term Loan, at a weighted-average rate of 4.6420% for the period commencing on May 4, 2023 and ending on May 16, 2024. Based on BPLP’s credit rating as of June 30, 2023, the interest rate for the 2023 Unsecured Term Loan would be 6.09% (See Note 7 to the Consolidated Financial Statements).

Unsecured Senior Notes

For a description of BPLP’s outstanding unsecured senior notes as of June 30, 2023, see Note 6 to the Consolidated Financial Statements.

On May 15, 2023, BPLP completed a public offering of $750.0 million in aggregate principal amount of its 6.500% unsecured senior notes due 2034. The notes were priced at 99.697% of the principal amount to yield an effective rate (including financing fees) of approximately 6.619% per annum to maturity. The notes will mature on January 15, 2034, unless earlier redeemed. The aggregate net proceeds from the offering were approximately $741.3 million after deducting underwriting discounts and transaction expenses.

The indenture relating to the unsecured senior notes contains certain financial restrictions and requirements, including (1) a leverage ratio not to exceed 60%, (2) a secured debt leverage ratio not to exceed 50%, (3) an interest coverage ratio of greater than 1.50, and (4) an unencumbered asset value of not less than 150% of unsecured debt. At June 30, 2023, BPLP was in compliance with each of these financial restrictions and requirements.

Mortgage Notes Payable

The following represents the outstanding principal balances due under the mortgage notes payable at June 30, 2023:


Properties	Stated Interest Rate		GAAP Interest Rate (1)		Stated Principal Amount		Deferred Financing Costs, Net		Carrying Amount		Carrying Amount (Partners’ Share)			Maturity Date
	(dollars in thousands)



Consolidated Joint Ventures
767 Fifth Avenue (the General Motors Building)	3.43	%	3.64	%	$	2,300,000	$	(13,743)	$	2,286,257	$	914,552	(2)(3)(4)	June 9, 2027
601 Lexington Avenue	2.79	%	2.93	%	1,000,000		(11,493)		988,507		444,828		(2)(5)	January 9, 2032

Total					$	3,300,000	$	(25,236)	$	3,274,764	$	1,359,380

(1)GAAP interest rate differs from the stated interest rate due to the inclusion of the amortization of financing charges and the effects of hedging transactions (if any).

(2)The mortgage loan requires interest only payments with a balloon payment due at maturity.

(3)This property is owned by a consolidated entity in which we have a 60% interest. The partners’ share of the carrying amount has been adjusted for basis differentials.

(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 June 30, 2023, the maximum funding obligation under the guarantee was approximately $11.2 million. 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.

Investment in Unconsolidated Joint Ventures - Secured Debt

We have investments in unconsolidated joint ventures with our effective ownership interests ranging from 20% to 55%. 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 5 to the Consolidated Financial Statements. At June 30, 2023, the aggregate carrying amount of debt, including both our and our partners’ share, incurred by these ventures was approximately $4.1 billion (of which our proportionate share is approximately $1.6 billion). The table below summarizes the outstanding debt of these joint venture properties at June 30, 2023. In addition to other guarantees specifically noted in the table, we have agreed to customary environmental indemnifications and nonrecourse carve-outs (e.g., guarantees against fraud, misrepresentation and bankruptcy) as well as the completion of development projects on certain of the loans.


Properties	Nominal % Ownership		Stated Interest Rate		GAAP Interest Rate (1)		Stated Principal Amount		Deferred Financing Costs, Net		Carrying Amount		Carrying Amount (Our share)			Maturity Date
	(dollars in thousands)
Santa Monica Business Park	55.00	%	4.06	%	4.23	%	$	300,000	$	(1,090)	$	298,910	$	164,400	(2)(4)	July 19, 2025
Market Square North	50.00	%	7.56	%	7.74	%	125,000		(539)		124,461		62,230		(2)(3) (5)	November 10, 2025
1265 Main Street	50.00	%	3.77	%	3.84	%	35,127		(236)		34,891		17,446			January 1, 2032
Colorado Center	50.00	%	3.56	%	3.59	%	550,000		(737)		549,263		274,632		(2)	August 9, 2027
Dock 72	50.00	%	7.59	%	7.85	%	198,383		(1,142)		197,241		98,621		(2)(6)	December 18, 2025
The Hub on Causeway - Podium	50.00	%	7.51	%	7.68	%	174,329		(57)		174,272		87,136		(2)(7)	September 6, 2023
Hub50House	50.00	%	4.43	%	4.51	%	185,000		(1,223)		183,777		91,889		(2)(8)	June 17, 2032
100 Causeway Street	50.00	%	6.76	%	6.97	%	337,604		(145)		337,459		168,729		(2)(3) (9)	September 5, 2023
7750 Wisconsin Avenue (Marriott International Headquarters)	50.00	%	6.51	%	6.66	%	251,542		(317)		251,225		125,613		(2)(3) (10)	April 26, 2024
360 Park Avenue South	42.21	%	7.65	%	8.10	%	216,686		(1,456)		215,230		90,849		(2)(3) (11)	December 14, 2024
Safeco Plaza	33.67	%	4.82	%	4.96	%	250,000		(1,077)		248,923		83,812		(2)(12)	September 1, 2026
500 North Capitol Street, NW	30.00	%	6.83	%	7.16	%	105,000		(825)		104,175		31,069		(2)(13)	June 5, 2026
200 Fifth Avenue	26.69	%	4.34	%	5.60	%	600,000		(9,000)		591,000		149,694		(2)(14)	November 24, 2028
901 New York Avenue	25.00	%	3.61	%	3.69	%	209,868		(268)		209,600		52,400			January 5, 2025
3 Hudson Boulevard	25.00	%	8.68	%	8.68	%	80,000		—		80,000		20,000		(2)(3) (15)	August 13, 2023
Metropolitan Square	20.00	%	7.25	%	8.03	%	420,000		(2,527)		417,473		83,495		(2)(3) (16)	April 9, 2024
Reston Next Residential	20.00	%	7.15	%	7.47	%	39,565		(1,284)		38,281		7,656		(2)(3) (17)	May 13, 2026
Total							$	4,078,104	$	(21,923)	$	4,056,181	$	1,609,671

(1)GAAP interest rate differs from the stated interest rate due to the inclusion of the amortization of financing charges, which includes mortgage recording fees.

(2)The loan requires interest only payments with a balloon payment due at maturity.

(3)The loan includes certain extension options, subject to certain conditions.

(4)The loan bears interest at a variable rate equal to SOFR plus 1.38% per annum. A subsidiary of the joint venture entered into interest rate swap contracts with notional amounts aggregating $300.0 million through April 1, 2025, resulting in a fixed rate of approximately 4.059% per annum through the expiration of the interest rate swap contracts.

(5)The loan bears interest at a variable rate equal to the greater of (1) the sum of (x) SOFR and (y) 2.41% or (2) 2.80% per annum.

(6)The construction financing bears interest at a variable rate equal to (1) the greater of (x) SOFR or (y) 0.25%, plus (2) 2.50% per annum.

(7)The construction financing bears interest at a variable rate equal to SOFR plus 2.35% per annum.

(8)The loan bears interest at a variable rate equal to SOFR plus 1.35% per annum. The joint venture entered into interest rate swap contracts with notional amounts aggregating $185.0 million through April 10, 2032, resulting in a fixed rate of approximately 4.432% per annum through the expiration of the interest rate swap contracts.

(9)The loan bears interest at a variable rate equal to SOFR plus 1.60% per annum. On July 28, 2023 the joint venture extended the loan maturity to September 5, 2024. The loan extension required an approximately $4.0 million principal repayment and the interest rate was reduced from Term SOFR plus 1.60% to Term SOFR plus 1.48% per annum (See Note 14 to the Consolidated Financial Statements).

(10)The construction financing bears interest at a variable rate equal to SOFR plus 1.35% per annum.

(11)The loan bears interest at a variable rate equal to Adjusted Term SOFR plus 2.40% per annum. The spread on the variable rate may be reduced, subject to certain conditions.

(12)The loan bears interest at a variable rate equal to the greater of (x) 2.35% or (y) SOFR plus 2.32% per annum. 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.

(13)The indebtedness consists of (x) a $70.0 million mortgage loan payable (Note A) which bears interest at a fixed rate of 6.23% per annum, and (y) a $35.0 million mortgage loan payable (Note B) which bears interest at a fixed rate of 8.03% per annum. We provided $10.5 million of the Note B mortgage financing to the joint venture. Our portion of the loan has been reflected as Related Party Note Receivable, Net on our Consolidated Balance Sheets.

(14)The loan bears interest at a variable rate equal to LIBOR plus 1.30% per annum through July 9, 2023. For the period commencing on July 10, 2023 the loan will bear interest at a variable rate equal to Term SOFR plus approximately 1.41% per annum. The joint venture entered into interest rate swap contracts with notional amounts aggregating $600.0 million through June 2028, resulting in a fixed rate of approximately 4.34% per annum through the expiration of the interest rate swap contracts. In addition to items noted in footnote one above, the GAAP interest rate includes the adjustment required to reflect the loan at fair value upon acquisition.

(15)We provided $80.0 million of mortgage financing to the joint venture. The loan bears interest at a variable rate equal to LIBOR plus 3.50% per annum through July 6, 2023. For the period commencing on July 7, 2023, the loan will bear interest at a variable rate equal to Term SOFR plus 3.61% per annum. The loan has been reflected as Related Party Note Receivable, Net on our Consolidated Balance Sheets. As of June 30, 2023, the loan has approximately $23.2 million of accrued interest due at the maturity date.

(16)The indebtedness consists of (x) a $305.0 million mortgage loan payable which bears interest at a variable rate equal to SOFR plus approximately 1.81%, and (y) a $115.0 million mezzanine note payable which bears interest at a variable rate equal to SOFR plus 5.25%. 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 4.50% per annum on a notional amount of $420.0 million through April 15, 2024.

(17)The construction financing has a borrowing capacity of $140.0 million. The construction financing bears interest at a variable rate equal to SOFR plus 2.00% per annum.

State and Local Tax Matters

Because BXP is organized and qualifies as a REIT, it is generally not subject to federal income taxes, but is subject to certain state and local taxes. In the normal course of business, certain entities through which we own real estate either have undergone, or are currently undergoing, tax audits or other inquiries. Although we believe that we have substantial arguments in favor of our position in the ongoing audits, in some instances there is no controlling precedent or interpretive guidance on the specific point at issue. Collectively, tax deficiency notices received to date from the jurisdictions conducting the ongoing audits have not been material. However, there can be no assurance that future audits will not occur with increased frequency or that the ultimate result of such audits will not have a material adverse effect on our results of operations.

Insurance

For information concerning our insurance program, see Note 8 to the Consolidated Financial Statements.

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. and net income (loss) attributable to Boston Properties Limited Partnership (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. FFO is a non-GAAP financial measure. We believe the presentation of FFO, combined with the presentation of required GAAP financial measures, improves the understanding of operating results of REITs among the investing public and helps make comparisons of REIT operating results more meaningful. 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.

Our computation of FFO may not be comparable to FFO reported by other REITs or real estate companies that do not define the term in accordance with the current Nareit definition or that interpret the current Nareit

definition differently. We believe that in order to facilitate a clear understanding of our operating results, FFO 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. FFO 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.

BXP

The following table presents a reconciliation of net income attributable to Boston Properties, Inc. to FFO attributable to Boston Properties, Inc. for the three months ended June 30, 2023 and 2022:


	Three months ended June 30,
	2023			2022
	(in thousands)
Net income attributable to Boston Properties, Inc.	$	104,299		$	222,989
Add:


Noncontrolling interest—common units of the Operating Partnership	12,117			25,708
Noncontrolling interests in property partnerships	19,768			18,546
Net income	136,184			267,243
Add:
Depreciation and amortization	202,577			183,146
Noncontrolling interests in property partnerships’ share of depreciation and amortization	(17,858)			(17,414)
BXP’s share of depreciation and amortization from unconsolidated joint ventures	25,756			21,120
Corporate-related depreciation and amortization	(442)			(413)


Less:

Gains on sales of real estate	—			96,247

Unrealized gain on non-real estate investment	124			—
Noncontrolling interests in property partnerships	19,768			18,546


Funds from Operations (FFO) attributable to the Operating Partnership	326,325			338,889
Less:
Noncontrolling interest—common units of the Operating Partnership’s share of funds from operations	33,481			34,329
Funds from Operations attributable to Boston Properties, Inc.	$	292,844		$	304,560
Our percentage share of Funds from Operations—basic	89.74		%	89.87		%
Weighted average shares outstanding—basic	156,826			156,720

The following tables presents a reconciliation of net income attributable to Boston Properties, Inc. to Diluted FFO attributable to Boston Properties, Inc. for income (numerator) and shares/units (denominator) for the three months ended June 30, 2023 and 2022:


	Three months ended June 30,
	2023		2022
	(in thousands)
Net income attributable to Boston Properties, Inc.	$	104,299	$	222,989
Add:


Noncontrolling interest—common units of the Operating Partnership	12,117		25,708
Noncontrolling interests in property partnerships	19,768		18,546
Net income	136,184		267,243
Add:
Depreciation and amortization	202,577		183,146
Noncontrolling interests in property partnerships’ share of depreciation and amortization	(17,858)		(17,414)
BXP’s share of depreciation and amortization from unconsolidated joint ventures	25,756		21,120
Corporate-related depreciation and amortization	(442)		(413)


Less:

Gains on sales of real estate	—		96,247

Unrealized gain on non-real estate investment	124		—
Noncontrolling interests in property partnerships	19,768		18,546


Funds from Operations (FFO) attributable to the Operating Partnership	326,325		338,889
Effect of Dilutive Securities:
Stock based compensation	—		—
Diluted FFO	326,325		338,889
Less:
Noncontrolling interest—common units of the Operating Partnership’s share of diluted FFO	33,383		34,262
Diluted FFO attributable to Boston Properties, Inc. (1)	$	292,942	$	304,627

(1)BXP’s share of diluted Funds from Operations was 89.77% and 89.89% for the three months ended June 30, 2023 and 2022, respectively.


	Three months ended June 30,
	2023	2022
	shares/units (in thousands)

Basic Funds from Operations	174,748	174,392
Effect of Dilutive Securities:
Stock based compensation	392	472
Diluted Funds from Operations	175,140	174,864
Less:
Noncontrolling interest—common units of the Operating Partnership’s share of diluted Funds from Operations	17,922	17,672
Diluted Funds from Operations attributable to Boston Properties, Inc. (1)	157,218	157,192

(1)BXP’s share of diluted Funds from Operations was 89.77% and 89.89% for the three months ended June 30, 2023 and 2022, respectively.

BPLP

The following table presents a reconciliation of net income attributable to Boston Properties Limited Partnership to FFO attributable to Boston Properties Limited Partnership for the three months ended June 30, 2023 and 2022:


	Three months ended June 30,
		2023		2022
		(in thousands)
Net income attributable to Boston Properties Limited Partnership		$	118,098	$	253,788
Add:


Noncontrolling interests in property partnerships		19,768		18,546
Net income		137,866		272,334
Add:
Depreciation and amortization		200,895		181,416
Noncontrolling interests in property partnerships’ share of depreciation and amortization		(17,858)		(17,414)
BXP’s share of depreciation and amortization from unconsolidated joint ventures		25,756		21,120
Corporate-related depreciation and amortization		(442)		(413)


Less:

Gains on sales of real estate		—		99,608

Unrealized gain on non-real estate investment		124		—
Noncontrolling interests in property partnerships		19,768		18,546


Funds from Operations attributable to Boston Properties Limited Partnership (1)		$	326,325	$	338,889
Weighted average shares outstanding—basic		174,748		174,392

(1)Our calculation includes OP Units and vested LTIP Units (including vested 2012 OPP Units and vested 2013 - 2020 MYLTIP Units).

The following tables presents a reconciliation of net income attributable to Boston Properties Limited Partnership to Diluted FFO attributable to Boston Properties Limited Partnership for income (numerator) and shares/units (denominator) for the three months ended June 30, 2023 and 2022:


	Three months ended June 30,
		2023		2022
		(in thousands)
Net income attributable to Boston Properties Limited Partnership		$	118,098	$	253,788
Add:


Noncontrolling interests in property partnerships		19,768		18,546
Net income		137,866		272,334
Add:
Depreciation and amortization		200,895		181,416
Noncontrolling interests in property partnerships’ share of depreciation and amortization		(17,858)		(17,414)
BXP’s share of depreciation and amortization from unconsolidated joint ventures		25,756		21,120
Corporate-related depreciation and amortization		(442)		(413)


Less:

Gains on sales of real estate		—		99,608

Unrealized gain on non-real estate investment		124		—
Noncontrolling interests in property partnerships		19,768		18,546


Funds from Operations attributable to Boston Properties Limited Partnership (1)		326,325		338,889
Effect of Dilutive Securities:
Stock based compensation		—		—
Diluted Funds from Operations attributable to Boston Properties Limited Partnership		$	326,325	$	338,889

(1)Our calculation includes OP Units and vested LTIP Units (including vested 2012 OPP Units and vested 2013 - 2020 MYLTIP Units).


	Three months ended June 30,
	2023	2022

	shares/units (in thousands)
Basic Funds from Operations	174,748	174,392
Effect of Dilutive Securities:
Stock based compensation	392	472
Diluted Funds from Operations	175,140	174,864

Material Cash Commitments

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.

During the three months ended June 30, 2023, we paid approximately $80.3 million to fund tenant-related obligations, including tenant improvements and leasing commissions.

In addition, during the three months ended June 30, 2023, we and our unconsolidated joint venture partners incurred approximately $82.8 million of new client-related obligations associated with approximately 890,000 square feet of second generation leases, or approximately $93 per square foot. We signed approximately 47,500 square feet of first generation leases. The client-related obligations for the development properties are included within the projects’ “Estimated Total Investment” referred to in “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.” In aggregate during the second quarter of

2023, we signed leases for approximately 937,500 square feet of space and incurred aggregate client-related obligations of approximately $90.2 million, or approximately $96 per square foot.

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