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 (the “Exchange Act”). 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, high 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, 2023 including those described under the caption “Risk Factors,” (ii) our subsequent filings under the Exchange Act and (iii) 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 and dislocations in the credit markets could adversely affect economic conditions and/or restrict our access to cost-effective capital, which could have a material adverse effect on our business opportunities, results of operations and financial condition;
general risks affecting the real estate industry (including, without limitation, the inability to enter into or renew leases, changes in client preferences and space utilization, dependence on clients’ financial condition, and competition from other developers, owners and operators of real estate);
failure to manage effectively our growth and expansion into new markets and sub-markets or to integrate acquisitions and developments successfully;
the ability of our joint venture partners to satisfy their obligations;
risks and uncertainties affecting property development and construction (including, without limitation, continued inflation, supply chain disruptions, labor shortages, construction delays, increased construction costs, cost overruns, inability to obtain necessary permits, client accounting considerations that may result in negotiated lease provisions that limit a client’s liability during construction, and public opposition to such activities);
risks associated with the availability and terms of financing and the use of debt to fund acquisitions and developments or refinance existing indebtedness, including the impact of higher interest rates on the cost and/or availability of financing;
risks associated with forward interest rate contracts and derivatives and the effectiveness of such arrangements;
risks associated with actual or threatened terrorist attacks;
costs of compliance with the Americans with Disabilities Act and other similar laws;
potential liability for uninsured losses and environmental contamination;
risks associated with climate change and severe weather events, as well as the regulatory efforts intended to reduce the effects of climate change;
risks associated with security breaches, incidents, and compromises through cyber-attacks, cyber intrusions or otherwise, as well as other significant disruptions of our information technology (IT) networks and related systems, which support our operations and our buildings;
risks associated with legal proceedings and other claims that could result in substantial monetary damages and other costs;
risks associated with BXP’s potential failure to qualify as a REIT under the Internal Revenue Code of 1986, as amended;
possible adverse changes in tax and environmental laws;
the impact of newly adopted accounting principles on our accounting policies and on period-to-period comparisons of financial results;
risks associated with possible state and local tax audits; and
risks associated with our dependence on key personnel whose continued service is not guaranteed.

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, 2024) 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.

We believe our key competitive advantages are our commitment to the office asset class and to our clients as many competitors disinvest in the sector, a strong balance sheet with access to capital in the secured and unsecured debt and private equity markets, and one of the highest quality portfolios of premier workplaces in the U.S. assembled over several decades of intentional development, acquisitions and dispositions. Today, clients and

their advisors are more focused than ever on these attributes for their building owners, which distinguishes BXP among its competitors.

Our core strategy has always been to develop, acquire and manage premier workplaces in gateway markets with high barriers-to-entry and attractive demand drivers, and to focus on executing long-term leases with financially strong clients that are diverse across market sectors.

This strategy is more valuable than ever as our clients are interested in premier workplaces in vibrant, amenitized, accessible and high-demand workplaces to encourage more in-person work. This interest has resulted in the acceleration of flight to quality in the office industry. Over the past several years, BXP’s experience and performance has diverged from the larger market and media sentiment, as premier workplaces have outperformed the broader office market consistently and substantially. We believe this divergence validates our strategy and differentiates BXP from other office companies. Although overall leasing demand has still not returned to pre-pandemic levels, since the first quarter of 2021, premier workplaces in our five traditional central business district (“CBD”) markets (Boston, New York, San Francisco, Seattle and Washington, DC) have consistently outperformed the broader office market in those CBDs on several key metrics, including occupancy, net absorption levels and rental rates. This outperformance is evident in BXP’s portfolio where approximately 90% of our share of net operating income (“NOI”) comes from predominantly premier workplaces located in CBDs. As of June 30, 2024, these CBD assets are 90.4% occupied and 92.2% leased (including vacant space for which we have signed leases that have not yet commenced in accordance with generally accepted accounting principles (“GAAP”)). For a detailed discussion of our share of NOI, including the reasons management believes the metric is useful to investors and a reconciliation to the most comparable GAAP measure, see page 35.

As of June 30, 2024, the weighted-average remaining lease term (1) for our in-place leases, based on square feet, including those signed by our unconsolidated joint ventures but excluding residential units, was approximately 7.7 years, and (2) for our 20 largest clients, based on square feet, was approximately 10.3 years.

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, including our ability to fund our share of lease obligations and maintain premier building standards; and
our relationships with local brokers.

Outlook

We continue to experience market tailwinds from the two most important external forces impacting BXP’s performance: interest rates and corporate earnings growth. The U.S. inflation report released on July 11, 2024 reflected a 3% inflation rate for the 12 months ending in June 2024, which was lower than expected. This report sparked new forecasts of accelerated interest rate cuts by the Federal Reserve as well as lower market yields for the 10-year U.S. Treasury Note. Lower interest rates are favorable for real estate and BXP’s valuation, as well as broader corporate earnings growth, which is the second important external factor driving BXP’s performance. After remaining flat for all of 2023, S&P 500 earnings growth was 6.6% in the first quarter of 2024 and is expected to be approximately 9% for the second quarter. In our experience, companies with earnings growth are much more likely to invest, hire and lease additional space, which is consistent with our growing leasing volumes this year.

We are also experiencing moderate but steady increases in workers returning to the office based on the turnstile data we capture for roughly half of our portfolio. Corporations continue to push for increased office attendance, including a large technology company that recently announced its policy shift from primarily remote work to mandatory office attendance of three to five days per week depending on job function.

Although remote work continues to be a factor restraining demand for office space, we believe economic conditions are the primary driver of leasing activity. As overall earnings growth for our clients and potential clients improves, it should lead to employment growth and demand for office space over time. We expect our leasing,

construction and property management teams will continue to lean on our operating prowess to gain new clients and market share as clients choose premier workplaces that are in sound financial condition for their office space, which will increase our occupancy over time.

The evolving operating environment impacts various aspects of our operating activities as:

labor market conditions shift, which has gradually increased employer demand for mandatory in-person workdays;
volatility in the capital markets has led companies to be more reticent in their capital outlays, including capital required for leasing new space;
our capital costs have increased due to higher interest rates and credit spreads, and private market debt financing, both for construction and existing assets, is significantly more challenging to arrange; and
construction costs have increased and, although much of the cost for our active development pipeline is fixed, the cost of potential future construction activity continues to increase.

In light of the uncertain trajectory of the U.S. and global economies, we continue to position BXP for success by increasing liquidity, managing our leverage, pursuing additional capital raising opportunities and maintaining discipline in discretionary capital expenditures, while continuing to selectively invest (including through both acquisitions and developments) in premier workplace opportunities. 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;
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 we believe no longer fit within our portfolio strategy or could attract premium pricing in the current market;
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 2024 and recent business highlights.

Leasing Activity and Occupancy

We are experiencing an improving operating environment. Although all the markets we operate in still need consistent incremental absorption to constitute a macro recovery, we have started to see pockets of strength where low availability is driving constructive client behavior. As clients choose premier properties in sound financial condition, with building owners that are committed for the long term to their properties operated by the best property management teams, we expect to continue to be successful in gaining market share despite limited demand growth.

In the second quarter of 2024, we executed 73 leases totaling over 1.3 million square feet with a weighted-average lease term of approximately 9.0 years. The approximately 1.3 million square feet of leasing represents a 41% increase from the second quarter of 2023 and 93% of our 10-year leasing average for the second quarter.

BXP’s CBD portfolio of premier workplaces was 90.4% occupied and 92.2% leased (including vacant space for which we have signed leases that have not yet commenced in accordance with GAAP) at June 30, 2024. Approximately 90% of our share of NOI comes from assets located in our CBD portfolio, underscoring the strength of BXP’s strategy to invest in the highest quality buildings in dynamic urban gateway markets. For a detailed

discussion of our share of NOI, including the reasons management believes the metric is useful to investors and a reconciliation to the most comparable GAAP measure, see page 35.

The overall occupancy of our in-service office and retail properties was 87.1% at June 30, 2024, a decrease of 110 basis points from March 31, 2024. This is consistent with our previously communicated expectations and is primarily due to expected lease expirations. We define occupancy as space with signed leases for which revenue recognition has commenced in accordance with GAAP. Including vacant space for which we have signed leases that have not yet commenced revenue recognition in accordance with GAAP, our in-service office and retail properties were approximately 89.1% leased at June 30, 2024.

Investment Activity

We remain in active pursuit of opportunities in our core markets and asset types with primarily two types of counterparties: lenders to highly leveraged assets that require recapitalization and institutional owners seeking to diversify from the office asset class. To date, there has been limited market transaction activity for higher-quality office assets, though increasingly owners are testing the market to understand pricing. With lenders, there are fewer premier workplaces that are struggling with leverage, and in the few cases involving premier workplaces, lenders are generally electing to extend loans to borrowers who agree to invest modestly in their assets. Institutional owners are less interested in selling their higher quality assets, and there remains a material bid-ask spread given that, in most cases, assets have not been marked down to market-clearing levels. Notwithstanding these current challenges, we expect that transactions and our investment activity will increase in the coming quarters given the volume of maturing financings, continued mark downs in institutional portfolios and prolonged high interest rates. We also have interest from institutional investors in co-investing with us for select opportunities.

As of June 30, 2024, our development/redevelopment pipeline consisted of 10 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 $2.5 billion, of which approximately $1.3 billion remains to be invested. The commercial space in the pipeline, which excludes the residential projects, was 53% pre-leased as of July 31, 2024.

In the second quarter of 2024, we completed and fully placed in-service 760 Boylston Street, an approximately 118,000 net rentable square feet retail redevelopment located in Boston, Massachusetts. The property is 100% leased to DICK’S Sporting Goods’ Boston House of Sport.

In July 2024, BXP partially placed in-service Skymark, a luxury residential property in Reston, Virginia that consists of 508 residential units across a five-story low-rise building and an iconic 39-story tower, which is one of the tallest buildings in Northern Virginia. The residential property is owned by a joint venture in which BXP has a 20% interest.

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. We are currently in active negotiations for the disposition of four land positions which, if successful, would generate approximately $150 million of proceeds, half of which could be realized this year. However, there can be no assurance that we will complete any of these transactions on the terms currently contemplated or at all.

A brief overview of each of our markets follows.

Boston

During the second quarter of 2024, we executed approximately 344,000 square feet of leases and approximately 375,000 square feet of leases commenced in the Boston region. Approximately 171,000 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 10.8% over the prior leases.

As of June 30, 2024, our approximately 8.4 million square foot Boston CBD in-service portfolio was approximately 94.9% occupied and approximately 96.2% 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 CBD portfolio in Cambridge was approximately 96.7% occupied and 96.7% leased (including vacant space for which we have signed leases that have not yet commenced in accordance with GAAP) as of June 30, 2024.

As of June 30, 2024, our Route 128-Mass Turnpike in-service portfolio is comprised of approximately 4.7 million square feet and was approximately 76.8% occupied and approximately 79.4% 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. As of June 30, 2024, our LA in-service properties were approximately 85.0% occupied and 86.0% 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 2024, we executed approximately 447,000 square feet of leases in the New York region and approximately 86,000 square feet of leases commenced. Approximately 55,000 square feet of the leases that commenced had been vacant for less than one year and they represent a decrease in net rental obligations of approximately 7.3% over the prior leases. As of June 30, 2024, our New York CBD in-service portfolio was approximately 90.8% occupied and approximately 94.6% 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 2024, we executed approximately 147,000 square feet of leases and approximately 169,000 square feet of leases commenced in the San Francisco region. Approximately 115,000 square feet of leases that commenced had been vacant for less than one year and represent an increase in net rental obligations of approximately 15.5% over the prior leases.

As of June 30, 2024, our San Francisco CBD in-service properties were approximately 84.0% occupied and approximately 84.4% leased (including vacant space for which we have signed leases that have not yet commenced in accordance with GAAP).

Seattle

Our Seattle in-service portfolio includes Safeco Plaza, an approximately 762,000 square foot property of which we own 33.67%, and Madison Centre, an approximately 755,000 square foot property. As of June 30, 2024, these in-service properties were approximately 80.2% occupied and approximately 83.0% leased (inclusive of vacant space with signed leases that have not yet commenced in accordance with GAAP).

Washington, DC

During the second quarter of 2024, we executed approximately 363,000 square feet of leases and approximately 140,000 square feet of leases commenced in the Washington, DC region. Approximately 32,000 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 1.3% over the prior leases.

As of June 30, 2024, our Washington, DC CBD in-service properties were approximately 87.5% occupied and approximately 88.1% 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, 2024, our Reston CBD portfolio was approximately 93.9% occupied and approximately 96.1% 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 revenue recognition during the three and six months ended June 30, 2024:


	Three months ended June 30, 2024		Six months ended June 30, 2024
	(Square Feet)
Vacant space available at the beginning of the period	5,758,606		5,696,007
Vacant space from property dispositions/properties taken out of service (1)	(30,000)		(263,694)

Vacant space from properties placed (and partially placed) in-service (2)	117,907		162,559
Leases expiring or terminated during the period	1,214,346		2,899,142
Total space available for lease	7,060,859		8,494,014
1st generation leases	168,600		340,591
2nd generation leases with new clients	329,238		743,970
2nd generation lease renewals	273,722		1,120,154
Total space leased (3)	771,560		2,204,715
Vacant space available for lease at the end of the period	6,289,299		6,289,299

Leases executed during the period (4)	1,322,664		2,216,605

Second generation leasing information: (5)
Leases commencing during the period, in square feet	602,960		1,864,124
Weighted Average Lease Term	69 Months		97 Months
Weighted Average Free Rent Period	147 Days		110 Days
Total Transaction Costs Per Square Foot (6)	$63.24		$74.12
Increase in Gross Rents (7)	4.16	%	6.27	%
Increase in Net Rents (8)	5.65	%	8.85	%

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(1)Total vacant square feet of properties taken out of service during the three months ended June 30, 2024 consists of 30,000 square feet at 17 Hartwell Avenue. Total vacant square feet of properties taken out of service during the six months ended June 30, 2024 consists 162,274 square feet at 1050 Winter Street, 71,420 square feet at 15825 Shady Grove Road and 30,000 square feet at 17 Hartwell Avenue.

(2)Total vacant square feet of properties placed in service during the three months ended June 30, 2024 consists of 117,907 square feet at 760 Boylston Street. Total vacant square feet of properties placed in service during the six months ended June 30, 2024 consists of 44,652 square feet at 651 Gateway and 117,907 square feet at 760 Boylston Street.

(3)Represents leases for which lease revenue recognition has commenced in accordance with GAAP during the three and six months ended June 30, 2024.

(4)Represents leases executed during the three and six months ended June 30, 2024 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, 2024 are 121,600 and 476,167 square feet, respectively.

(5)Second generation leases are defined as leases for space that we have previously leased. Of the 602,960 and 1,864,124 square feet of second generation leases that commenced during the three and six months ended June 30, 2024, respectively, leases for 489,691 and 1,396,288 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 (decrease) in gross rent (base rent plus expense reimbursements) on the new versus expired leases on the 373,884 and 1,427,275 square feet of second generation leases that had been occupied

within the prior 12 months for the three and six months ended June 30, 2024, 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 (decrease) in net rent (gross rent less operating expenses) on the new versus expired leases on the 373,884 and 1,427,275 square feet of second generation leases that had been occupied within the prior 12 months for the three and six months ended June 30, 2024, respectively.

Transactions during the three months ended June 30, 2024 included the following:

Pending disposition activity

On May 7, 2024, we entered into an agreement with a third-party developer for the sale of a portion of our Shady Grove property, consisting of 2 Choke Cherry Road, 2094 Gaither Road and a land parcel, located in Rockville, Maryland for an aggregate gross sale price of approximately $24.8 million (See Note 3). On July 22, 2024, we executed an amendment to the agreement for an aggregate gross sale price of approximately $24.7 million. Thereafter, the third-party developer completed their due diligence and their deposit of approximately $2.5 million became non-refundable. 2 Choke Cherry Road and 2094 Gaither Road are two vacant office properties aggregating approximately 143,000 net rentable square feet that were taken out of service and held for redevelopment. The disposition is subject to satisfaction of customary closing conditions and there can be no assurance that this transaction will be consummated on the terms currently contemplated or at all.

Development activity

On April 5, 2024, we completed and fully placed in-service 760 Boylston Street, an approximately 118,000 net rentable square foot retail redevelopment located in Boston, Massachusetts.

Lease activity

We have a ground lease for the land underlying our residential property, The Skylyne, in Oakland, California. The Skylyne is a residential property consisting of 402 residential units and supporting retail space totaling approximately 331,000 net rentable square feet. The ground lease has approximately 92-years remaining (including extension options) and provides us with the right to purchase the land subject to certain conditions. When the lease was executed in 2017, the purchase option was considered a bargain purchase option and, as a result, we classified it as a finance lease and we assumed the lessor would exercise its right to require us to purchase the land in May 2024 for approximately $38.7 million. In May 2024 and as of the date of this report, the lessor has not exercised this option and we reassessed the accounting for the ground lease and determined that the purchase option continues to be considered a bargain purchase option and the ground lease will continue to be accounted for as a finance lease. The lease requires monthly base rental payments of a nominal amount until the purchase occurs, which we now estimate will be in 2030. As a result of the reassessment, the lease liability was remeasured and reduced to approximately $0.1 million. In conjunction with the reduction in the lease liability, the right of use asset was reduced to $0 and the difference between the lease liability and right of use asset of approximately $9.5 million was recorded as a decrease to interest expense for the three and six months ended June 30, 2024. There can be no assurance that this transaction will be consummated on the terms currently contemplated or at all.

Unconsolidated joint ventures activity

On May 8, 2024, a joint venture in which we own a 25% interest extended by 30 days the maturity date of the loan collateralized by its 3 Hudson Boulevard property. At the time of the extension, the loan had an outstanding principal balance totaling $80.0 million and was scheduled to mature on May 9, 2024. On June 7, 2024, the loan was extended an additional 60 days. The extended loan continues to bear interest at a variable rate equal to Term SOFR plus approximately 3.61% per annum and is scheduled to mature on August 7, 2024. As of June 30, 2024, the loan had an outstanding balance, including accrued interest, of approximately $112.8 million. We are the lender of the loan and the loan is reflected as related party note receivables, net on our Consolidated Balance Sheets. 3 Hudson Boulevard consists of land and improvements held for future development located in New York, New York.

Debt activities

On April 17, 2024, BPLP established an unsecured commercial paper program. Under the terms of the program, BPLP may issue, from time to time, unsecured commercial paper notes up to a maximum aggregate amount outstanding at any one time of $500.0 million with varying maturities of up to one year. Amounts available under the unsecured commercial paper program may be borrowed, repaid, and re-borrowed from time to time. The notes are sold in private placements and rank pari passu with all of BPLP’s other unsecured senior indebtedness, including its outstanding senior notes. The commercial paper program is backstopped by available capacity under BPLP's unsecured revolving credit facility (the “2021 Credit Facility”). As of June 30, 2024, BPLP had an aggregate of $500.0 million of unsecured commercial paper notes outstanding that bore interest at a weighted-average rate of approximately 5.60% per annum and had a weighted-average maturity of 49 days, from the issuance date.
On April 29, 2024, BPLP repaid $500.0 million of the outstanding balance of its $1.2 billion unsecured term loan facility (the “2023 Unsecured Term Loan”) from the proceeds of its unsecured commercial paper program. On May 16, 2024, BPLP exercised its option to extend the maturity date of the 2023 Unsecured Term Loan to May 16, 2025. All other terms of the 2023 Unsecured Term Loan remain unchanged.
On April 29, 2024, BPLP increased the maximum borrowing amount under the 2021 Credit Facility from $1.815 billion to $2.0 billion. All other terms of the 2021 Credit Facility, including its maturity date of June 15, 2026, remain unchanged.

Transactions completed subsequent to June 30, 2024 included the following:

On July 12, 2024, a joint venture in which we have a 20% ownership interest partially placed in-service Skymark, a luxury residential property located in Reston, Virginia, that consists of 508 residential units aggregating approximately 417,000 net rentable square feet across a five-story low-rise building and an iconic 39-story tower, which is one of the tallest buildings in Northern Virginia.
On July 18, 2024, a joint venture in which we have a 50% ownership interest extended by one year the maturity date of its loan collateralized by 100 Causeway Street. At the time of the extension, the loan had an outstanding balance totaling approximately $333.6 million, bore interest at Term SOFR plus 1.48% per annum, and was scheduled to mature on September 5, 2024. Following the extension, the loan will continue to bear interest at Term SOFR plus 1.48% per annum, and is scheduled to mature on September 5, 2025. 100 Causeway Street is an approximately 634,000 net rentable square foot premier workplace located in Boston, Massachusetts.

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, 2023 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, 2023.

Results of Operations for the Six Months Ended June 30, 2024 and 2023

Net income attributable to BXP, Inc. and net income attributable to Boston Properties Limited Partnership decreased by approximately $22.7 million and $25.0 million, respectively, for the six months ended June 30, 2024 compared to 2023, as set forth in the following tables and for the reasons discussed below under the heading “Comparison of the six months ended June 30, 2024 to the six months ended June 30, 2023” within “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

The following are reconciliations of Net Income Attributable to BXP, 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, 2024 and 2023. For a detailed discussion of Net Operating Income (“NOI”), including the reasons management believes NOI is useful to investors, see page 58.

BXP


	Six months ended June 30,
	2024		2023		Increase/ (Decrease)		% Change
	(in thousands)
Net Income Attributable to BXP, Inc.	$	159,498	$	182,215	$	(22,717)	(12.47)	%
Net Income Attributable to Noncontrolling Interests:
Noncontrolling interest—common units of the Operating Partnership	19,009		21,169		(2,160)		(10.20)	%
Noncontrolling interests in property partnerships	35,046		38,428		(3,382)		(8.80)	%
Net Income	213,553		241,812		(28,259)		(11.69)	%
Other Expenses:
Add:
Interest expense	311,533		276,680		34,853		12.60	%
Impairment loss	13,615		—		13,615		100.00	%
Other Income:
Less:
Unrealized gain on non-real estate investment	454		383		71		18.54	%
Gains from investments in securities	2,587		3,236		(649)		(20.06)	%
Interest and other income (loss)	25,317		28,284		(2,967)		(10.49)	%
Income (loss) from unconsolidated joint ventures	13,387		(14,237)		27,624		194.03	%
Other Expenses:
Add:
Depreciation and amortization expense	438,258		411,311		26,947		6.55	%
Transaction costs	702		1,219		(517)		(42.41)	%
Payroll and related costs from management services contracts	8,441		9,844		(1,403)		(14.25)	%
General and administrative expense	94,127		99,977		(5,850)		(5.85)	%
Other Revenue:
Less:
Direct reimbursements of payroll and related costs from management services contracts	8,441		9,844		(1,403)		(14.25)	%
Development and management services revenue	12,506		18,838		(6,332)		(33.61)	%
Net Operating Income	$	1,017,537	$	994,495	$	23,042	2.32	%

BPLP


	Six months ended June 30,
	2024		2023		Increase/ (Decrease)		% Change
	(in thousands)
Net Income Attributable to Boston Properties Limited Partnership	$	181,907	$	206,928	$	(25,021)	(12.09)	%
Net Income Attributable to Noncontrolling Interests:
Noncontrolling interests in property partnerships	35,046		38,428		(3,382)		(8.80)	%
Net Income	216,953		245,356		(28,403)		(11.58)	%
Other Expenses:
Add:
Interest expense	311,533		276,680		34,853		12.60	%
Impairment loss	13,615		—		13,615		100.00	%
Other Income:
Less:
Unrealized gain on non-real estate investment	454		383		71		18.54	%
Gains from investments in securities	2,587		3,236		(649)		(20.06)	%
Interest and other income (loss)	25,317		28,284		(2,967)		(10.49)	%
Income (loss) from unconsolidated joint ventures	13,387		(14,237)		27,624		194.03	%
Other Expenses:
Add:
Depreciation and amortization expense	434,858		407,767		27,091		6.64	%
Transaction costs	702		1,219		(517)		(42.41)	%
Payroll and related costs from management services contracts	8,441		9,844		(1,403)		(14.25)	%
General and administrative expense	94,127		99,977		(5,850)		(5.85)	%
Other Revenue:
Less:
Direct reimbursements of payroll and related costs from management services contracts	8,441		9,844		(1,403)		(14.25)	%
Development and management services revenue	12,506		18,838		(6,332)		(33.61)	%
Net Operating Income	$	1,017,537	$	994,495	$	23,042	2.32	%

At June 30, 2024 and 2023, we owned or had joint venture interests in a portfolio of 186 and 191 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 six months ended June 30, 2024 and 2023 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 BXP, 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, impairment loss, 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 from investments in securities, interest and other income (loss), 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 BXP, 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 BXP, 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 BXP, 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.

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 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, 2024 to the six months ended June 30, 2023

The table below shows selected operating information for the Same Property Portfolio and the Total Property Portfolio. The Same Property Portfolio consists of 129 properties totaling approximately 40.7 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, 2023 and owned and in service through June 30, 2024. 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, 2023 or disposed of on or prior to June 30, 2024. 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, 2024 and 2023 with respect to the properties that were acquired, placed in-service, in or held for development or redevelopment or sold. We did not sell any properties during the six months ended June 30, 2024 and 2023.


	Same Property Portfolio								Properties Acquired Portfolio				Properties Placed In-Service Portfolio				Properties in or Held for Development or Redevelopment Portfolio				Total Property Portfolio
	2024		2023		Increase/ (Decrease)		% Change		2024		2023		2024		2023		2024		2023			2024		2023		Increase/ (Decrease)		% Change
	(dollars in thousands)
Rental Revenue: (1)
Lease Revenue (Excluding Termination Income)	$	1,471,480	$	1,483,533	$	(12,053)	(0.81)	%	$	50,501	$	—	$	29,199	$	10,043	$	1,288	$	2,351		$	1,552,468	$	1,495,927	$	56,541	3.78	%
Termination Income	2,651		32		2,619		8,184.38	%	189		—		—		—		—		—			2,840		32		2,808		8,775.00	%
Lease Revenue	1,474,131		1,483,565		(9,434)		(0.64)	%	50,690		—		29,199		10,043		1,288		2,351			1,555,308		1,495,959		59,349		3.97	%
Parking and Other	60,375		49,128		11,247		22.89	%	4,415		—		938		538		30		(3)			65,758		49,663		16,095		32.41	%
Total Rental Revenue (1)	1,534,506		1,532,693		1,813		0.12	%	55,105		—		30,137		10,581		1,318		2,348			1,621,066		1,545,622		75,444		4.88	%
Real Estate Operating Expenses	591,822		560,731		31,091		5.54	%	19,452		—		10,241		4,160		2,643		6,207			624,158		571,098		53,060		9.29	%
Net Operating Income (Loss), Excluding Residential and Hotel	942,684		971,962		(29,278)		(3.01)	%	35,653		—		19,896		6,421		(1,325)		(3,859)			996,908		974,524		22,384		2.30	%
Residential Net Operating Income (2)	13,485		12,733		752		5.91	%	—		—		—		—		—		—			13,485		12,733		752		5.91	%
Hotel Net Operating Income (2)	7,144		7,238		(94)		(1.30)	%	—		—		—		—		—		—			7,144		7,238		(94)		(1.30)	%
Net Operating Income (Loss)	$	963,313	$	991,933	$	(28,620)	(2.89)	%	$	35,653	$	—	$	19,896	$	6,421	$	(1,325)	$	(3,859)		$	1,017,537	$	994,495	$	23,042	2.32	%

(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 58. Residential Net Operating Income for the six months ended June 30, 2024 and 2023 is comprised of Residential Revenue of $24,910 and $23,979 less Residential Expenses of $11,425 and $11,246, respectively. Hotel Net Operating Income for the six months ended June 30, 2024 and 2023 is comprised of Hotel Revenue of $22,998 and $22,070 less Hotel Expenses of $15,854 and $14,832, 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 decreased by approximately $12.1 million for the six months ended June 30, 2024 compared to 2023. The decrease was a result of our average occupancy decreasing from 90.2% to 88.8%, resulting in a decrease of approximately $23.3 million, partially offset by revenue per square foot increasing by approximately $0.59, contributing approximately $11.2 million.

Termination Income

Termination income increased by approximately $2.6 million for the six months ended June 30, 2024 compared to 2023.

Termination income for the six months ended June 30, 2024 related to 17 clients across the Same Property Portfolio and totaled approximately $2.7 million, which was primarily related to clients that terminated leases early in San Francisco, California.

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

Parking and Other Revenue

Parking and other revenue increased by approximately $11.2 million for the six months ended June 30, 2024 compared to 2023. Parking and other revenue increased by approximately $1.0 million and $10.2 million, respectively. The increase in other revenue was primarily related to the View Boston observatory.

Real Estate Operating Expenses

Real estate operating expenses from the Same Property Portfolio increased by approximately $31.1 million, or 5.5%, for the six months ended June 30, 2024 compared to 2023, due primarily to increases in repairs and maintenance of approximately $10.9 million, or 12.0%, and other real estate operating expenses of approximately $13.9 million, or 3.0%. The increase in repairs and maintenance was primarily in Boston. In addition, there was an approximately $6.3 million increase related to the marketing and operating expenses associated with the View Boston observatory.

Properties Acquired Portfolio

The table below lists the properties acquired between January 1, 2023 and June 30, 2024. Rental revenue and real estate operating expenses increased by approximately $55.1 million and $19.5 million, respectively, for the six months ended June 30, 2024 compared to 2023, as detailed below.


		Square Feet		Rental Revenue									Real Estate Operating Expenses
Name	Date acquired		2024			2023			Change			2024			2023			Change
				(dollars in thousands)
Santa Monica Business Park (1)	December 14, 2023	1,182,696		$	38,873		$	—		$	38,873		$	13,338		$	—		$	13,338
901 New York Avenue	January 8, 2024	523,939		16,232			—			16,232			6,114			—			6,114
		1,706,635		$	55,105		$	—		$	55,105		$	19,452		$	—		$	19,452

(1)Rental revenue for the six months ended June 30, 2024 includes approximately $0.2 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, 2023 and June 30, 2024. Rental revenue and real estate operating expenses from our Properties Placed In-Service Portfolio increased by approximately $19.6 million and $6.1 million, respectively, for the six months ended June 30, 2024 compared to 2023, as detailed below.


	Quarter Initially Placed In-Service	Quarter Fully Placed In-Service		Rental Revenue						Real Estate Operating Expenses
Name		Square Feet	2024	2023		Change		2024		2023		Change
				(dollars in thousands)
2100 Pennsylvania Avenue	Second Quarter, 2022	Second Quarter, 2023	475,849	$	17,154	$	10,581	$	6,573	$	5,642	$	4,160	$	1,482
140 Kendrick Street - Building A	Third Quarter, 2023	Third Quarter, 2023	104,166	3,811		—		3,811		1,149		—		1,149
180 CityPoint	Third Quarter, 2023	N/A	329,000	6,848		—		6,848		2,788		—		2,788
103 CityPoint	Fourth Quarter, 2023	N/A	113,000	1		—		1		376		—		376
760 Boylston Street	Second Quarter, 2024	Second Quarter, 2024	118,000	2,323		—		2,323		286		—		286
			1,140,015	$	30,137	$	10,581	$	19,556	$	10,241	$	4,160	$	6,081

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, 2023 and June 30, 2024. Rental revenue and real estate operating expenses from our Properties in or Held for Development or Redevelopment Portfolio decreased by approximately $1.0 million and $3.6 million, respectively, for the six months ended June 30, 2024 compared to 2023, as detailed below.


			Rental Revenue						Real Estate Operating Expenses
Name	Date Commenced Held for Development / Redevelopment	Square Feet	2024		2023		Change		2024		2023		Change
			(dollars in thousands)
105 Carnegie Center (1)	November 30, 2022	73,000	$	—	$	—	$	—	$	291	$	—	$	291
Kendall Center Blue Parking Garage (2)	January 4, 2023	N/A	—		25		(25)		—		3,015		(3,015)
300 Binney Street	January 30, 2023	236,000	—		(900)		900		—		117		(117)
Shady Grove Innovation District (3)	March 31, 2023	184,000	25		1,243		(1,218)		479		728		(249)
Lexington Office Park (3)	March 31, 2023	167,000	509		975		(466)		778		1,108		(330)
171 Dartmouth Street	March 28, 2024	N/A	—		—		—		87		—		87
1050 Winter Street (3)	March 31, 2024	162,000	170		65		105		787		988		(201)
17 Hartwell Avenue (3)	June 30, 2024	30,000	614		940		(326)		221		251		(30)
		852,000	$	1,318	$	2,348	$	(1,030)	$	2,643	$	6,207	$	(3,564)

(1)On November 30, 2023, we elected to suspend redevelopment. Although no longer in redevelopment, this property is not considered “in-service” as we are not actively leasing this property in anticipation of restarting redevelopment in the future.

(2)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.

(3)Lexington Office Park, 1050 Winter Street, 17 Hartwell Avenue and a portion of Shady Grove Innovation District, are no longer considered “in-service” because each property’s occupied percentage is less than 50% and we are no longer actively leasing the properties in anticipation of a future development/redevelopment. The properties will be considered held for development or redevelopment until the last client has vacated the property and the property is no longer revenue producing. This portion of Shady Grove Innovation District is comprised of three buildings, 2092 and 2098 Gaither Road and 15825 Shady Grove Road that were taken out of service between January 1, 2023 and June 30, 2024.

Residential Net Operating Income

Net operating income for our residential same properties increased by approximately $0.8 million for the six months ended June 30, 2024 compared to 2023.

The following reflects our occupancy and rate information for our residential same properties for the six months ended June 30, 2024 and 2023.


	Average Monthly Rental Rate (1)						Average Rental Rate Per Occupied Square Foot						Average Physical Occupancy (2)						Average Economic Occupancy (3)
Name	2024		2023		Change (%)		2024		2023		Change (%)		2024		2023		Change (%)		2024		2023		Change (%)
Proto Kendall Square	$	3,179	$	3,034	4.8	%	$	5.85	$	5.57	5.0	%	95.4	%	95.6	%	(0.2)	%	95.3	%	95.3	%	—	%
The Lofts at Atlantic Wharf	$	4,346	$	4,434	(2.0)	%	$	4.81	$	4.91	(2.0)	%	95.4	%	95.9	%	(0.5)	%	94.8	%	96.4	%	(1.7)	%
Signature at Reston	$	2,798	$	2,670	4.8	%	$	2.88	$	2.77	4.0	%	95.8	%	94.2	%	1.7	%	95.8	%	93.4	%	2.6	%
The Skylyne	$	3,454	$	3,446	0.2	%	$	4.35	$	4.39	(0.9)	%	87.5	%	91.9	%	(4.8)	%	86.0	%	89.6	%	(4.0)	%

(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.

(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 $7.1 million for the six months ended June 30, 2024, representing a decrease of approximately $0.1 million compared to the six months ended June 30, 2023.

The following reflects our occupancy and rate information for the Boston Marriott Cambridge hotel for the six months ended June 30, 2024 and 2023.


	2024			2023			Change (%)
Occupancy	75.8		%	69.3		%	9.4	%
Average daily rate	$	317.26		$	323.14		(1.8)	%
REVPAR	$	240.50		$	223.95		7.4	%

Other Operating Revenue and Expense Items

Development and Management Services Revenue

Development and management services revenue decreased by approximately $6.3 million for the six months ended June 30, 2024 compared to 2023. Development services revenue and management services revenue decreased by approximately $3.1 million and $3.2 million, respectively. The decrease in development services revenue was primarily related to a decrease in fees associated with a tenant improvement project in New York City and decreases in development income earned from unconsolidated joint ventures in the San Francisco region. The decrease in management services revenue was primarily related to the elimination of property and asset

management fees earned from an unconsolidated joint venture in the Los Angeles region which we acquired the joint venture partner’s interest in December 2023.

General and Administrative Expense

General and administrative expense decreased by approximately $5.9 million for the six months ended June 30, 2024 compared to 2023 primarily due to a decrease in compensation expense and other general and administrative expenses of approximately $5.8 million and $0.1 million, respectively. The decrease in compensation expense related to (1) an approximately $0.6 million decrease in the value of our deferred compensation plan and (2) an approximately $5.2 million decrease in other compensation expenses.

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 each of the six months ended June 30, 2024 and 2023 were approximately $8.9 million and $9.1 million, respectively. These costs are not included in the general and administrative expenses discussed above.

Transaction Costs

Transaction costs decreased by approximately $0.5 million for the six months ended June 30, 2024 compared to 2023. 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 $26.9 million for the six months ended June 30, 2024 compared to 2023, as detailed below.


Portfolio	Depreciation and Amortization for the six months ended June 30,
2024	2023		Change
	(in thousands)
Same Property Portfolio	$	398,157	$	392,005	$	6,152
Properties Acquired Portfolio	27,828		—		27,828
Properties Placed In-Service Portfolio	11,017		4,998		6,019
Properties in or Held for Development or Redevelopment Portfolio (1)	1,256		14,308		(13,052)
	$	438,258	$	411,311	$	26,947

(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 573,000 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 $27.1 million for the six months ended June 30, 2024 compared to 2023, as detailed below.


Portfolio	Depreciation and Amortization for the six months ended June 30,
2024	2023		Change
	(in thousands)
Same Property Portfolio	$	394,757	$	388,641	$	6,116
Properties Acquired Portfolio	27,828		—		27,828
Properties Placed In-Service Portfolio	11,017		4,998		6,019
Properties in or Held for Development or Redevelopment Portfolio (1)	1,256		14,128		(12,872)
	$	434,858	$	407,767	$	27,091

(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 573,000 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, 2024 compared to 2023, income (loss) from unconsolidated joint ventures increased by approximately $27.6 million primarily due to an approximately $21.8 million gain on consolidation related to the acquisition of our joint venture partner’s economic interest in the joint venture that owns 901 New York Avenue during the six months ended June 30, 2024 (See Note 5 to the Consolidated Financial Statements).

Interest and Other Income (Loss)

Interest and other income (loss) decreased by approximately $3.0 million for the six months ended June 30, 2024 compared to 2023, due primarily to a decrease in interest income as a result of a decrease in our outstanding cash balances.

Gains from Investments in Securities

Gains from investments in securities for the six months ended June 30, 2024 and 2023 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 from investments in securities. During the six months ended June 30, 2024 and 2023, we recognized gains of approximately $2.6 million and $3.2 million, respectively, on these investments. By comparison, our general and administrative expense decreased by approximately $2.6 million and $3.2 million during the six months ended June 30, 2024 and 2023, respectively, as a result of 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

We invest in non-real estate investments, which are primarily environmentally-focused investment funds. As a result, during the six months ended June 30, 2024 and 2023, we recognized an unrealized gain of approximately $0.5 million and $0.4 million, respectively, due to the observable changes in the fair value of the investments.

Impairment Loss

At March 31, 2024, we evaluated the expected hold period for a portion of our Shady Grove property, consisting of 2 Choke Cherry Road, 2094 Gaither Road and a land parcel, located in Rockville, Maryland. Based on a shorter-than-expected hold period, we reduced the carrying value of a portion of the property that we anticipate selling to a third party developer to its estimated fair value at March 31, 2024. As a result, each of BXP and BPLP recognized an impairment loss of approximately $13.6 million. Our estimated fair value was based on Level 3 inputs as defined in Accounting Standards Codification (“ASC”) 820 “Fair Value Measurements and Disclosures” and on a pending offer from a third party (see Notes 3 and 14 to the Consolidated Financial Statements)..

Interest Expense

Interest expense increased by approximately $34.9 million for the six months ended June 30, 2024 compared to 2023, as detailed below.


Component	Change in interest expense for the six months ended June 30, 2024 compared to June 30, 2023
	(in thousands)
Increases to interest expense due to:
New mortgage loan financings (1)	$	37,029
Issuance of $750 million in aggregate principal of 6.500% senior notes due 2034 on May 15, 2023	18,342
Unsecured commercial paper (2)	5,050
Decrease in capitalized interest related to development projects	1,544
Amortization expense of financing fees	458
Total increases to interest expense	62,423
Decrease to interest expense due to:
Repayment of $500 million in aggregate principal of 3.125% senior notes due 2023 on September 1, 2023	(11,180)
Repayment of $700 million in aggregate principal of 3.800% senior notes due 2024 on February 1, 2024	(7,983)
Decrease in interest due to finance leases	(5,248)
Decrease in interest associated with unsecured term loans and the unsecured credit facility, net	(2,419)
Other interest expense (excluding senior notes)	(740)
Total decrease to interest expense	(27,570)
Total change in interest expense	$	34,853

(1)Consists of the mortgage loan and, if applicable, fair value debt and swap adjustments collateralized by (1) 325 Main Street, 355 Main Street, 90 Broadway and Cambridge East Garage (also known as Kendall Center Green Garage) properties located in Cambridge, Massachusetts, (2) Santa Monica Business Park located in Santa Monica, California and (3) 901 New York Avenue in Washington, DC (See Note 6 to the Consolidated Financial Statements).

(2)On April 17, 2024, BPLP established an unsecured commercial paper program (See Note 6 to the Consolidated Financial Statements).

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, 2024 and 2023 was approximately $19.7 million and $21.2 million, respectively. These costs are not included in the interest expense referenced above. The decrease in capitalized interest is primarily attributable to a development project that had a finance lease and is now placed in service.

At June 30, 2024, our variable rate debt consisted of (1) BPLP’s $2.0 billion 2021 Credit Facility, (2) BPLP’s $700.0 million 2023 Unsecured Term Loan and (3) BPLP’s $500.0 million unsecured commercial paper notes. As of June 30, 2024, the 2021 Credit Facility did not have a balance outstanding. In addition, we have $900.0 million of mortgage notes collateralized by Santa Monica Business Park and our 325 Main Street, 355 Main Street, 90 Broadway and Kendall Center Green Garage properties that bore interest at variable rates, which have all been hedged with interest rates swaps to fix SOFR for all or a portion of, the applicable debt term. For a summary of our consolidated debt as of June 30, 2024 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 decreased by approximately $3.4 million for the six months ended June 30, 2024 compared to 2023, as detailed below.


Property	Noncontrolling Interests in Property Partnerships for the six months ended June 30,
2024	2023		Change
	(in thousands)
767 Fifth Avenue (the General Motors Building)	$	6,288	$	6,181	$	107
Times Square Tower	10,325		11,098		(773)
601 Lexington Avenue (1)	4,442		7,253		(2,811)
100 Federal Street	5,675		6,057		(382)
Atlantic Wharf Office Building	8,044		7,839		205
343 Madison Avenue (2)	6		—		6
300 Binney Street (3)	135		—		135
290 Binney Street (3)	131		—		131
	$	35,046	$	38,428	$	(3,382)

(1)The decrease was primarily attributable to depreciation and amortization expense related to new and expiring clients.

(2)Property is held for future development.

(3)Property is currently under redevelopment or in development.

Noncontrolling Interest—Common Units of the Operating Partnership

For BXP, noncontrolling interest—common units of the Operating Partnership decreased by approximately $2.2 million for the six months ended June 30, 2024 compared to 2023 due primarily to a decrease in allocable income. 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, 2024 and 2023

Net income attributable to BXP, Inc. and net income attributable to Boston Properties Limited Partnership decreased approximately $24.7 million and $27.3 million, respectively, for the three months ended June 30, 2024 compared to 2023, as detailed in the following tables and for the reasons discussed below under the heading “Comparison of the three months ended June 30, 2024 to the three months ended June 30, 2023” within “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

The following are reconciliations of Net Income Attributable to BXP, 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, 2024 and 2023. For a detailed discussion of NOI, including the reasons management believes NOI is useful to investors, see page 68.

BXP


	Three months ended June 30,
	2024		2023		Increase/ (Decrease)		% Change
	(in thousands)
Net Income Attributable to BXP, Inc.	$	79,615	$	104,299	$	(24,684)	(23.67)	%
Net Income Attributable to Noncontrolling Interests:
Noncontrolling interest—common units of the Operating Partnership	9,509		12,117		(2,608)		(21.52)	%
Noncontrolling interests in property partnerships	17,825		19,768		(1,943)		(9.83)	%
Net Income	106,949		136,184		(29,235)		(21.47)	%
Other Expenses:
Add:
Interest expense	149,642		142,473		7,169		5.03	%
Loss from unconsolidated joint ventures	5,799		6,668		(869)		(13.03)	%
Other Income:
Less:
Unrealized gain on non-real estate investment	58		124		(66)		(53.23)	%
Gains from investments in securities	315		1,571		(1,256)		(79.95)	%
Interest and other income (loss)	10,788		17,343		(6,555)		(37.80)	%
Other Expenses:
Add:
Depreciation and amortization expense	219,542		202,577		16,965		8.37	%
Transaction costs	189		308		(119)		(38.64)	%
Payroll and related costs from management services contracts	4,148		4,609		(461)		(10.00)	%
General and administrative expense	44,109		44,175		(66)		(0.15)	%
Other Revenue:
Less:
Direct reimbursements of payroll and related costs from management services contracts	4,148		4,609		(461)		(10.00)	%
Development and management services revenue	6,352		9,858		(3,506)		(35.57)	%
Net Operating Income	$	508,717	$	503,489	$	5,228	1.04	%

BPLP


	Three months ended June 30,
	2024		2023		Increase/ (Decrease)		% Change
	(in thousands)
Net Income Attributable to Boston Properties Limited Partnership	$	90,827	$	118,098	$	(27,271)	(23.09)	%
Net Income Attributable to Noncontrolling Interests:
Noncontrolling interests in property partnerships	17,825		19,768		(1,943)		(9.83)	%
Net Income	108,652		137,866		(29,214)		(21.19)	%
Other Expenses:
Add:
Interest expense	149,642		142,473		7,169		5.03	%
Loss from unconsolidated joint ventures	5,799		6,668		(869)		(13.03)	%
Other Income:
Less:
Unrealized gain on non-real estate investment	58		124		(66)		(53.23)	%
Gains from investments in securities	315		1,571		(1,256)		(79.95)	%
Interest and other income (loss)	10,788		17,343		(6,555)		(37.80)	%
Other Expenses:
Add:
Depreciation and amortization expense	217,839		200,895		16,944		8.43	%
Transaction costs	189		308		(119)		(38.64)	%
Payroll and related costs from management services contracts	4,148		4,609		(461)		(10.00)	%
General and administrative expense	44,109		44,175		(66)		(0.15)	%
Other Revenue:
Less:
Direct reimbursements of payroll and related costs from management services contracts	4,148		4,609		(461)		(10.00)	%
Development and management services revenue	6,352		9,858		(3,506)		(35.57)	%
Net Operating Income	$	508,717	$	503,489	$	5,228	1.04	%

At June 30, 2024 and 2023, we owned or had joint venture interests in a portfolio of 186 and 191 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 months ended June 30, 2024 and 2023 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 net operating income between periods more meaningful, it is important to provide information for properties that were in-service and owned by us throughout each period presented. 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.

investment, gains from investments in securities, interest and other income (loss), 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 BXP, 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.

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 depreciation expense when those properties are sold. For additional information see the Explanatory Note that follows the cover page of this Quarterly Report on Form 10-Q.

Comparison of the three months ended June 30, 2024 to the three months ended June 30, 2023

The table below shows selected operating information for the Same Property Portfolio and the Total Property Portfolio. The Same Property Portfolio consists of 129 properties totaling approximately 40.7 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, 2023 and owned and in-service through June 30, 2024. 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, 2023 or disposed of on or prior to June 30, 2024. 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, 2024 and 2023 with respect to the properties that were acquired, placed in-service, in or held for development or redevelopment or sold. We did not sell any properties during the three months ended June 30, 2024 and 2023.


	Same Property Portfolio								Properties Acquired Portfolio				Properties Placed In-Service Portfolio				Properties in or Held for Development or Redevelopment Portfolio				Total Property Portfolio
	2024		2023		Increase/ (Decrease)		% Change		2024		2023		2024		2023		2024		2023			2024		2023		Increase/ (Decrease)		% Change
	(dollars in thousands)
Rental Revenue: (1)
Lease Revenue (Excluding Termination Income)	$	735,479	$	743,950	$	(8,471)	(1.14)	%	$	25,001	$	—	$	16,724	$	5,029	$	576	$	1,449		$	777,780	$	750,428	$	27,352	3.64	%
Termination Income	841		(164)		1,005		612.80	%	—		—		—		—		—		—			841		(164)		1,005		612.80	%
Lease Revenue	736,320		743,786		(7,466)		(1.00)	%	25,001		—		16,724		5,029		576		1,449			778,621		750,264		28,357		3.78	%
Parking and Other Revenue	31,939		25,789		6,150		23.85	%	1,903		—		451		411		30		—			34,323		26,200		8,123		31.00	%
Total Rental Revenue (1)	768,259		769,575		(1,316)		(0.17)	%	26,904		—		17,175		5,440		606		1,449			812,944		776,464		36,480		4.70	%
Real Estate Operating Expenses	299,366		281,527		17,839		6.34	%	9,875		—		5,227		2,433		1,219		1,293			315,687		285,253		30,434		10.67	%
Net Operating Income (Loss), Excluding Residential and Hotel	468,893		488,048		(19,155)		(3.92)	%	17,029		—		11,948		3,007		(613)		156			497,257		491,211		6,046		1.23	%
Residential Net Operating Income (2)	6,487		6,470		17		0.26	%	—		—		—		—		—		—			6,487		6,470		17		0.26	%
Hotel Net Operating Income (2)	4,973		5,808		(835)		(14.38)	%	—		—		—		—		—		—			4,973		5,808		(835)		(14.38)	%
Net Operating Income (Loss)	$	480,353	$	500,326	$	(19,973)	(3.99)	%	$	17,029	$	—	$	11,948	$	3,007	$	(613)	$	156		$	508,717	$	503,489	$	5,228	1.04	%

(2)For a detailed discussion of NOI, including the reasons management believes NOI is useful to investors, see page 68. Residential Net Operating Income for the three months ended June 30, 2024 and 2023 is comprised of Residential Revenue of $12,226 and $12,253 less Residential Expenses of $5,739 and $5,783, respectively. Hotel Net Operating Income for the three months ended June 30, 2024 and 2023 is comprised of Hotel Revenue of $14,812 and $13,969 less Hotel Expenses of $9,839 and $8,161, 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 decreased by approximately $8.5 million for the three months ended June 30, 2024 compared to 2023. The decrease was a result of our average occupancy decreasing from 90.2% to 88.4%, resulting in a decrease of approximately $15.5 million, partially offset by our average revenue per square foot increasing by approximately $0.82, contributing approximately $7.0 million.

Termination Income

Termination income increased by approximately $1.0 million for the three months ended June 30, 2024 compared to 2023.

Termination income for the three months ended June 30, 2024 related to nine clients across the Same Property Portfolio and totaled approximately $0.8 million, which was primarily related to clients that terminated leases early in Washington, DC.

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

Parking and Other Revenue

Parking and other revenue increased by approximately $6.2 million for the three months ended June 30, 2024 compared to 2023. Parking and other revenue increased by approximately $0.5 million and $5.7 million, respectively. The increase in other revenue was primarily associated with the View Boston observatory.

Real Estate Operating Expenses

Real estate operating expenses from the Same Property Portfolio increased by approximately $17.8 million, or 6.3%, for the three months ended June 30, 2024 compared to 2023, due primarily to increases in repairs and maintenance of approximately $7.3 million, or 15.1%, and other real estate operating expenses of approximately $8.1 million, or 3.5%. The increase in repairs and maintenance was primarily in Boston and New York City. In addition, there was an approximately $2.4 million increase related to the marketing and operating expenses associated with the View Boston observatory.

Properties Acquired Portfolio

The table below lists the properties acquired between April 1, 2023 and June 30, 2024. Rental revenue and real estate operating expenses increased by approximately $26.9 million and $9.9 million, respectively, for the three months ended June 30, 2024 compared to 2023, as detailed below.


		Square Feet		Rental Revenue									Real Estate Operating Expenses
Name	Date acquired		2024			2023			Change			2024			2023			Change
				(dollars in thousands)
Santa Monica Business Park	December 14, 2023	1,182,696		$	18,472		$	—		$	18,472		$	6,769		$	—		$	6,769
901 New York Avenue	January 8, 2024	523,939		8,432			—			8,432			3,106			—			3,106
		1,706,635		$	26,904		$	—		$	26,904		$	9,875		$	—		$	9,875

Properties Placed In-Service Portfolio

The table below lists the properties that were placed in-service or partially placed in-service between April 1, 2023 and June 30, 2024. Rental revenue and real estate operating expenses from our Properties Placed In-Service Portfolio increased by approximately $11.7 million and $2.8 million, respectively, for the three months ended June 30, 2024 compared to 2023, as detailed below.


	Quarter Initially Placed In-Service	Quarter Fully Placed In-Service		Rental Revenue						Real Estate Operating Expenses
Name		Square Feet	2024	2023		Change		2024		2023		Change
				(dollars in thousands)
2100 Pennsylvania Avenue	Second Quarter, 2022	Second Quarter, 2023	475,849	$	9,230	$	5,440	$	3,790	$	2,921	$	2,433	$	488
140 Kendrick Street - Building A	Third Quarter, 2023	Third Quarter, 2023	104,166	1,886		—		1,886		557		—		557
180 CityPoint	Third Quarter, 2023	N/A	329,000	3,774		—		3,774		1,399		—		1,399
103 CityPoint	Fourth Quarter, 2023	N/A	113,000	1		—		1		115		—		115
760 Boylston Street	Second Quarter, 2024	Second Quarter, 2024	118,000	2,284		—		2,284		235		—		235
			1,140,015	$	17,175	$	5,440	$	11,735	$	5,227	$	2,433	$	2,794

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, 2023 and June 30, 2024. Rental revenue and real estate operating expenses from our Properties in or Held for Development or Redevelopment Portfolio decreased by approximately $0.8 million and $0.1 million, respectively, for the three months ended June 30, 2024 compared to 2023, as detailed below.


			Rental Revenue						Real Estate Operating Expenses
Name	Date Commenced Held for Development / Redevelopment	Square Feet	2024		2023		Change		2024		2023		Change
			(dollars in thousands)
105 Carnegie Center (1)	November 30, 2022	73,000	$	—	$	—	$	—	$	136	$	—	$	136
Shady Grove Innovation District (2)	March 31, 2023	184,000	70		612		(542)		187		326		(139)
Lexington Office Park (2)	March 31, 2023	167,000	252		346		(94)		361		497		(136)
171 Dartmouth Street	March 28, 2024	N/A	—		—		—		87		—		87
1050 Winter Street (2)	March 31, 2024	162,000	140		36		104		350		361		(11)
17 Hartwell Avenue (2)	June 30, 2024	30,000	144		455		(311)		98		109		(11)
		616,000	$	606	$	1,449	$	(843)	$	1,219	$	1,293	$	(74)

(2)Lexington Office Park, 1050 Winter Street, 17 Hartwell Avenue and a portion of Shady Grove Innovation District are no longer considered “in-service” because each property’s occupied percentage is less than 50% and we are no longer actively leasing the property in anticipation of a future development/redevelopment. The properties will be considered held for development or redevelopment until the last client has vacated the property and the property is no longer revenue producing. This portion of Shady Grove Innovation District is comprised of three buildings, 2092 and 2098 Gaither Road and 15825 Shady Grove Road.

Residential Net Operating Income

Net operating income for our residential same properties increased by approximately $17,000 for the three months ended June 30, 2024 compared to 2023.

The following reflects our occupancy and rate information for our residential same properties for the three months ended June 30, 2024 and 2023.


	Average Monthly Rental Rate (1)						Average Rental Rate Per Occupied Square Foot						Average Physical Occupancy (2)						Average Economic Occupancy (3)
Name	2024		2023		Change (%)		2024		2023		Change (%)		2024		2023		Change (%)		2024		2023		Change (%)
Proto Kendall Square	$	3,204	$	3,065	4.5	%	$	5.90	$	5.62	5.0	%	96.0	%	95.8	%	0.2	%	96.1	%	95.8	%	0.3	%
The Lofts at Atlantic Wharf	$	4,435	$	4,440	(0.1)	%	$	4.93	$	4.91	0.4	%	95.7	%	96.5	%	(0.8)	%	95.0	%	97.5	%	(2.6)	%
Signature at Reston	$	2,822	$	2,663	6.0	%	$	2.90	$	2.77	4.7	%	96.0	%	94.6	%	1.5	%	96.1	%	93.6	%	2.7	%
The Skylyne	$	3,430	$	3,447	(0.5)	%	$	4.33	$	4.39	(1.4)	%	87.1	%	92.4	%	(5.7)	%	85.3	%	89.9	%	(5.1)	%

(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 Average 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 $5.0 million for the three months ended June 30, 2024, representing a decrease of approximately $0.8 million compared to the three months ended June 30, 2023.

The following reflects our occupancy and rate information for the Boston Marriott Cambridge hotel for the three months ended June 30, 2024 and 2023.


	2024			2023			Change (%)
Occupancy	80.6		%	77.2		%	4.4	%
Average daily rate	$	372.29		$	371.58		0.2	%
REVPAR	$	299.94		$	286.79		4.6	%

Other Operating Revenue and Expense Items

Development and Management Services Revenue

Development and management services revenue decreased by approximately $3.5 million for the three months ended June 30, 2024 compared to 2023. Development services revenue and management services revenue decreased by approximately $1.9 million and $1.6 million, respectively. The decrease in development services revenue was primarily related to a decrease in development income earned from unconsolidated joint ventures in the San Francisco and Washington D.C. regions and a decrease in fees associated with a tenant improvement project in New York City. The decrease in management services revenue was primarily related to the elimination of property and asset management fees earned from an unconsolidated joint venture in the Los Angeles region which we acquired the joint venture partner’s interest in December 2023.

General and Administrative Expense

General and administrative expense decreased by approximately $0.1 million for the three months ended June 30, 2024 compared to 2023 primarily due to an approximately $0.4 million decrease in other general and administrative expenses, partially offset by an increase in compensation expense of approximately $0.3 million. The increase in compensation expense related to an approximately $1.6 million increase in other compensation expenses partially offset by an approximately $1.3 million decrease in the value of our deferred compensation plan.

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, 2024 and 2023 were approximately $4.8 million and $4.6 million, respectively. These costs are not included in the general and administrative expenses discussed above.

Transaction Costs

Transaction costs decreased by approximately $0.1 million for the three months ended June 30, 2024 compared to 2023. 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 $17.0 million for the three months ended June 30, 2024 compared to 2023, as detailed below.


Portfolio	Depreciation and Amortization for the three months ended June 30,
2024	2023		Change
	(in thousands)
Same Property Portfolio	$	199,286	$	198,434	$	852
Properties Acquired Portfolio	13,688		—		13,688
Properties Placed In-Service Portfolio	5,903		3,214		2,689
Properties in or Held for Development or Redevelopment Portfolio	665		929		(264)
	$	219,542	$	202,577	$	16,965

BPLP

Depreciation and amortization expense increased by approximately $16.9 million for the three months ended June 30, 2024 compared to 2023, as detailed below.


Portfolio	Depreciation and Amortization for the three months ended June 30,
2024	2023		Change
	(in thousands)
Same Property Portfolio	$	197,583	$	196,752	$	831
Properties Acquired Portfolio	13,688		—		13,688
Properties Placed In-Service Portfolio	5,903		3,214		2,689
Properties in or Held for Development or Redevelopment Portfolio	665		929		(264)
	$	217,839	$	200,895	$	16,944

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, 2024 compared to 2023, loss from unconsolidated joint ventures decreased by approximately $0.9 million primarily due to the acquisition of our joint venture partner’s economic interest in the joint venture that owned Santa Monica Business Park in December of 2023 and 901 New York Avenue in January of 2024 (See Note 5 to the Consolidated Financial Statements).

Interest and Other Income (Loss)

Interest and other income (loss) decreased by approximately $6.6 million for the three months ended June 30, 2024 compared to 2023, due primarily to a decrease in interest income as a result of a decrease in our outstanding cash balances.

Gains from Investments in Securities

Gain from investments in securities for the three months ended June 30, 2024 and 2023 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 from investments in securities. During the three months ended June 30, 2024 and 2023, we recognized gains of approximately $0.3 million and $1.6 million, respectively, on these investments. By comparison, our general and administrative expense decreased by approximately $0.3 million and $1.6 million during the three months ended June 30, 2024 and 2023, respectively, as a result of 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

We invest in non-real estate investments, which are primarily environmentally-focused investment funds. As a result, for each of the three months ended June 30, 2024 and 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 $7.2 million for the three months ended June 30, 2024 compared to 2023, as detailed below.


Component	Change in interest expense for the three months ended June 30, 2024 compared to June 30, 2023
	(in thousands)
Increases to interest expense due to:
New mortgage loan financings (1)	$	18,410
Issuance of $750 million in aggregate principal of 6.500% senior notes due 2034 on May 15, 2023	6,115
Unsecured commercial paper (2)	5,050
Decrease in capitalized interest related to development projects	282
Total increases to interest expense	29,857
Decreases to interest expense due to:
Decrease in interest due to finance leases	(7,539)
Repayment of $700 million in aggregate principal of 3.800% senior notes due 2024 on February 1, 2024	(6,709)
Repayment of $500 million in aggregate principal of 3.125% senior notes due 2023 on September 1, 2023	(3,992)
Decrease in interest associated with unsecured term loans and the unsecured credit facility, net	(3,689)
Other interest expense (excluding senior notes)	(736)
Amortization expense of financing fees	(23)
Total decreases to interest expense	(22,688)
Total change in interest expense	$	7,169

(2)On April 17, 2024, BPLP established an unsecured commercial paper program (See Note 6 to the Consolidated Financial Statements).

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, 2024 and 2023 was approximately $10.3 million and $10.6 million, respectively. These costs are not included in the interest expense referenced above.

Noncontrolling Interests in Property Partnerships

Noncontrolling interests in property partnerships decreased by approximately $1.9 million for the three months ended June 30, 2024 compared to 2023, as detailed below.


Property	Noncontrolling Interests in Property Partnerships for the three months ended June 30,
2024	2023		Change
	(in thousands)
767 Fifth Avenue (the General Motors Building)	$	3,439	$	3,778	$	(339)
Times Square Tower	5,043		5,415		(372)
601 Lexington Avenue (1)	2,339		3,242		(903)
100 Federal Street	2,774		3,245		(471)
Atlantic Wharf Office Building	3,973		4,088		(115)
343 Madison Avenue (2)	6		—		6
300 Binney Street (3)	130		—		130
290 Binney Street (3)	121		—		121
	$	17,825	$	19,768	$	(1,943)

(1)The decrease was primarily attributable to depreciation and amortization expense related to new and expiring clients.

(2)Property is held for future development.

(3)Property is currently under redevelopment or in development.

Noncontrolling Interest—Common Units of the Operating Partnership

For BXP, noncontrolling interest—common units of the Operating Partnership decreased by approximately $2.6 million for the three months ended June 30, 2024 compared to 2023 due primarily to a decrease in allocable income. 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 the $700.0 million of principal outstanding on the 2023 Unsecured Term Loan due May 16, 2025, $850.0 million of 3.200% unsecured senior notes due January 15, 2025, mortgage debt secured by our 901 New York Avenue and Santa Monica Business Park properties aggregating $502.2 million ($202.2 million of which we have the right to extend the maturity date for a period of four years, subject to certain customary conditions) and amounts that become due under BPLP’s unsecured commercial paper program;
fund capital calls from our unconsolidated joint venture investments to fund capital improvements, leasing costs and debt principal;
fund development and redevelopment costs;
fund capital expenditures, including major renovations, tenant improvements and leasing costs;
fund possible acquisitions of properties, either directly or indirectly through the acquisition of equity interests; 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 2021 Credit Facility, unsecured term loans, short-term bridge facilities and construction loans;
long-term secured and unsecured indebtedness (including unsecured exchangeable indebtedness);
sales of real estate and interests in joint ventures owning real estate;
private equity sources, including institutional investors; and
issuances of BXP equity securities and/or preferred or common units of partnership interests in BPLP.

We draw on multiple financing sources to fund our long-term capital needs. We expect to fund our current development/redevelopment properties primarily with our available cash balances, funding from institutional private equity partners, construction loans, unsecured term loans, and proceeds from possible asset sales, BPLP’s 2021 Credit Facility and BPLP's commercial paper program. We use BPLP’s 2021 Credit Facility primarily as a bridge facility to fund acquisition opportunities, refinance outstanding indebtedness, fund short-term development costs and for working capital. We also use BPLP’s 2021 Credit Facility to backstop BPLP’s commercial paper program. Although we may seek to fund our development projects with construction loans, which may require guarantees by BPLP, the source of financing for each particular project ultimately depends on several factors, including, among others, the project’s size and duration, whether the project is owned by a joint venture, 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, 2024 (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, 2024 (1)		Estimated Future Equity Requirement (1)(2)(4)		Percentage Leased (5)
Office
360 Park Avenue South (71% ownership) (Redevelopment)	Q4 2026	New York, NY	1	450,000	$	340,837	$	418,300	$	156,470	$	156,470	$	77,463	23	%
Reston Next Office Phase II	Q2 2026	Reston, VA	1	90,000	43,076		61,000		—		—		17,924		4	%
Total Office Properties under Construction/Redevelopment			2	540,000	383,913		479,300		156,470		156,470		95,387		20	%

Laboratory/Life Sciences
103 CityPoint	Q4 2026	Waltham, MA	1	113,000	90,502		115,100		—		—		24,598		—	%	(6)
180 CityPoint	Q2 2026	Waltham, MA	1	329,000	225,827		290,500		—		—		64,673		43	%	(7)
300 Binney Street (55% ownership) (Redevelopment)	Q1 2025	Cambridge, MA	1	236,000	34,821		112,900		—		—		78,079		100	%	(8)
651 Gateway (50% ownership) (Redevelopment)	Q3 2026	South San Francisco, CA	1	327,000	121,834		167,100		—		—		45,266		21	%	(9)
290 Binney Street (55% ownership)	Q2 2026	Cambridge, MA	1	573,000	207,568		508,000		—		—		300,432		100	%	(10)
Total Laboratory/Life Sciences Properties under Construction/Redevelopment			5	1,578,000	680,552		1,193,600		—		—		513,048		65	%

Residential
Skymark - Reston Next Residential (508 units) (20% ownership)	Q2 2026	Reston, VA	1	417,000	40,240		47,700		28,000		22,332		1,792		21	%	(11)
121 Broadway Street (439 units)	Q2 2029	Cambridge, MA	1	492,000	56,453		597,800		—		—		541,347		—	%
Total Residential Properties under Construction			2	909,000	96,693		645,500		28,000		22,332		543,139		10	%

Retail
Reston Next Retail	Q4 2025	Reston, VA	1	33,000	22,968		26,600		—		—		3,632		—	%
Total Retail Properties under Construction			1	33,000	22,968		26,600		—		—		3,632		—	%

Total Properties under Construction/Redevelopment			10	3,060,000	$	1,184,126	$	2,345,000	$	184,470	$	178,802	$	1,155,206	53	%	(12)

(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, 2024.

(3)Includes approximately $62.3 million of unpaid but accrued construction costs and leasing commissions.

(4)Excludes approximately $62.3 million of unpaid but accrued construction costs and leasing commissions.

(5)Represents percentage leased as of July 31, 2024, including leases with future commencement dates.

(6)As of June 30, 2024, this property was 4% placed in-service.

(7)As of June 30, 2024, this property was 46% placed in-service.

(8)The institutional investor funded approximately $212.9 million at closing for its investment in 300 Binney Street. We withdrew approximately $212.9 million at closing and will fund all future costs of the project.

(9)As of June 30, 2024, this property was 14% placed in-service.

(10)On March 21, 2024, we completed the sale of a 45% interest in 290 Binney Street (See Note 9 to the Consolidated Financial Statements). The project budget reflects our 55% share of joint venture costs related to 290 Binney Street. We have the sole obligation to construct an underground electrical vault for an estimated gross cost of $183.9 million. Upon completion, we have entered into a contract to sell the electrical vault to a third party for a fixed price of $84.1 million upon completion. The net investment of $99.8 million will be included in our outside basis in 290 Binney Street. We have invested $47.1 million for the vault as of June 30, 2024.

(11)This property was partially placed in-service on July 12, 2024 (See Note 14 to the Consolidated Financial Statements).

(12)Percentage leased excludes the residential properties.

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, interest earned on cash deposits and, from time to time, the sale of assets. We believe these sources of capital will continue to provide the funds necessary for our short-term liquidity needs. 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, meet debt service and principal repayment obligations, and satisfy our REIT distribution requirements.

As of June 30, 2024, we had 10 properties under development or redevelopment. BXP’s Share of the estimated total investment for these projects is approximately $2.5 billion, of which approximately $1.3 billion remains to be funded primarily with equity through 2029.

During the second quarter of 2024, we further strengthened our balance sheet by sourcing additional liquidity and reducing our debt obligations. Notable transactions include:

On April 17, 2024, BPLP established an unsecured commercial paper program. Under the terms of the program, BPLP may issue, from time to time, unsecured commercial paper notes up to a maximum aggregate principal amount outstanding at any one time of $500.0 million, with varying maturities of up to one year. The commercial paper notes are sold in private placements and rank pari passu with all of BPLP’s other unsecured senior indebtedness, including its outstanding senior notes. The commercial paper program is backstopped by available capacity under the 2021 Credit Facility. As of July 31, 2024, BPLP had $500.0 million of principal outstanding under the commercial paper program that bears interest at a weighted-average rate of 5.58% per annum and has a weighted-average maturity of approximately 53 days, from the issuance date.
On April 29, 2024, BPLP increased the maximum borrowing amount under the 2021 Credit Facility from $1.815 billion to $2.0 billion. All other terms of the 2021 Credit Facility, including its maturity date of June 15, 2026, remain unchanged. BPLP had no borrowings under the 2021 Credit Facility as of July 31, 2024.
On May 16, 2024, BPLP exercised its one-year extension option on its 2023 Unsecured Term Loan. The 2023 Unsecured Term Loan now matures on May 16, 2025. After making an approximately $500.0 million optional repayment on April 29, 2024 with the proceeds from BPLP's unsecured commercial paper program, the 2023 Unsecured Term Loan has an outstanding principal balance of $700.0 million as of July 31, 2024.

Our consolidated debt maturities through July 2025 include (1) $850.0 million aggregate principal amount of BPLP’s 3.200% unsecured senior notes due January 15, 2025, (2) $700.0 million of principal amount borrowed under the 2023 Unsecured Term Loan, which matures on May 16, 2025, (3) approximately $202.2 million of mortgage debt secured by our 901 New York Avenue property located in Washington, DC maturing on January 5, 2025 (unless we exercise a four-year extension option, subject to certain conditions), (4) $300.0 million of mortgage debt secured by our Santa Monica Business Park maturing on July 19, 2025 and (5) amounts that become due under BPLP’s unsecured commercial paper program.

As of June 30, 2024, our share of unconsolidated joint venture debt maturing through July 2025 was approximately $469.0 million. The foregoing debt matures at different times through July 2025 and, to the extent not refinanced, we expect to fund the repayment of this debt using available cash balances, proceeds from asset sales, draws on BPLP’s 2021 Credit Facility, proceeds from BPLP’s unsecured commercial paper program, secured debt or unsecured debt, or both. We expect our net interest expense will increase in 2024 compared to 2023 primarily due to higher interest rates on our outstanding debt and debt that we refinance, the impact of non-cash interest charges related to recent acquisitions and the assumption of below-market debt, and lower interest income as we use cash balances to repay debt and fund our development pipeline.

As of July 31, 2024, we had available cash of approximately $352.1 million (of which approximately $124.4 million was 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 $2.0 billion available under BPLP’s 2021 Credit Facility, of which $500.0 million is being used to backstop the unsecured commercial paper program, and our available cash, as of July 31, 2024, are sufficient to fund our remaining capital needs on existing development and redevelopment projects, fund acquisitions, repay our maturing

indebtedness when due (if not refinanced or extended), satisfy our REIT distribution requirements and still allow us to act opportunistically on attractive investment opportunities. We are currently in active negotiations for the disposition of four land positions which, if successful, would generate approximately $150 million of proceeds, half of which could be realized this year. However, there can be no assurance that we will complete any of these transactions on the terms currently contemplated or at all.

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 then-current interest rates, the overall conditions in the public and private debt and equity markets, and our existing and expected leverage at the time, we may decide to access one or more of these capital sources. Doing so may result in greater cash and cash equivalents pending our use of the proceeds, which would increase our net interest expense.

We have not sold any shares under BXP’s $600.0 million “at the market” equity 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 $737.5 million and $1.6 billion at June 30, 2024 and 2023, respectively, representing a decrease of approximately $891.0 million. The following table sets forth changes in cash flows:


	Six months ended June 30,
2024			2023			Change
(in thousands)
Net cash provided by operating activities	$	564,659		$	613,183		$	(48,524)
Net cash used in investing activities	(553,504)			(554,864)			1,360
Net cash (used in) provided by financing activities	(886,221)			833,359			(1,719,580)

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 7.7 years as of June 30, 2024, with occupancy rates historically in the range of 87% to 92%. 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, 2024 and June 30, 2023 is detailed below:


	Six months ended June 30,
	2024		2023
	(in thousands)

Construction in progress (1)	$	(313,602)	$	(235,331)
Building and other capital improvements	(66,799)		(78,344)
Tenant improvements	(117,848)		(135,743)

Acquisition of real estate (net of cash received upon consolidation) (2)	6,086		—
Capital contributions to unconsolidated joint ventures (3)	(60,461)		(103,595)
Capital distributions from unconsolidated joint ventures (4)	—		7,350

Investment in non-real estate investments	(625)		(733)
Issuance of note receivables (including related party) (5)	(1,423)		(10,500)

Investments in securities, net	1,168		2,032
Net cash used in investing activities	$	(553,504)	$	(554,864)

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

(1)Construction in progress for the six months ended June 30, 2024 included ongoing expenditures associated with 760 Boylston Street, which was fully placed in-service during the six months ended June 30, 2024, and 180 CityPoint and 103 CityPoint that were partially placed in-service during 2023. In addition, we incurred costs associated with our continued development/redevelopment of Reston Next Office Phase II, 290 Binney Street, 300 Binney Street and 121 Broadway.

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.

(2)On January 8, 2024, we completed the acquisition of our joint venture partner’s 50% economic ownership interest in the joint venture that owns 901 New York Avenue, located in Washington, DC, for a gross purchase price of $10.0 million and we acquired net working capital, including cash and cash equivalents of approximately $16.1 million.

(3)Capital contributions to unconsolidated joint ventures for the six months ended June 30, 2024 consisted primarily of cash contributions of approximately $17.9 million, $15.8 million, $11.1 million and $7.5 million to our Gateway Commons, 360 Park Avenue South, Platform 16 and Dock 72 joint ventures, respectively.

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.

(4)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.

(5)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 payoff, 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 an approximately 231,000 square foot premier workplace in Washington, DC.

Cash used in financing activities for the six months ended June 30, 2024 totaled approximately $886.2 million. This amount consisted primarily of the repayment of BPLP’s $700 million in aggregate principal amount of its 3.800% unsecured senior notes due February 1, 2024 and payment of our regular dividends and distributions to our shareholders and unitholders and distributions to noncontrolling interests in property partnerships, partially offset by the approximately $97.2 million from the sale of a 45% interest in 290 Binney Street in Cambridge, Massachusetts. 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, 2024
	Shares / Units Outstanding	Common Stock Equivalent	Equivalent Value (1)
Common Stock	157,098	157,098	$	9,670,953
Common Operating Partnership Units	19,136	19,136	1,178,012			(2)
Total Equity		176,234	$	10,848,965

Consolidated Debt			$	15,367,474
Add:
BXP’s share of unconsolidated joint venture debt (3)			1,379,131
Subtract:
Partners’ share of Consolidated Debt (4)			1,361,372
BXP’s Share of Debt			$	15,385,233

Consolidated Market Capitalization			$	26,216,439
BXP’s Share of Market Capitalization			$	26,234,198
Consolidated Debt/Consolidated Market Capitalization			58.62		%
BXP’s Share of Debt/BXP’s Share of Market Capitalization			58.65		%

(1)Values are based on the closing price per share of BXP’s common stock on the New York Stock Exchange on June 28, 2024 of $61.56.

(2)Includes long-term incentive plan units (including 2012 OPP Units and 2013 - 2021 MYLTIP Units) but excludes the 2022 - 2024 MYLTIP Units because the three-year performance periods had not ended as of June 30, 2024.

(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 28, 2024, 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 - 2021 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, 2022 - 2024 MYLTIP Units are not included in this calculation as of June 30, 2024.

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, 2024, we had approximately $15.4 billion of outstanding consolidated indebtedness, representing approximately 58.62% of our Consolidated Market Capitalization as calculated above consisting of approximately (1) $9.8 billion (net of discount and deferred financing fees) in publicly traded unsecured senior notes having a GAAP weighted-average interest rate of 3.91% per annum and maturities in 2025 through 2034, (2) $4.4 billion (net of deferred financing fees and fair value interest adjustments) of property-specific mortgage debt having a GAAP weighted-average interest rate of 4.22% per annum and a weighted-average term of 3.9 years, (3) $0.7 billion outstanding under BPLP’s 2023 Unsecured Term Loan that matures on May 16, 2025, and (4) $0.5 billion of unsecured commercial paper borrowings having a weighted-average interest rate of 5.60% per annum and a weighted-average maturity of 49 days, from the issuance date.

The table below summarizes the aggregate carrying value of our outstanding indebtedness, as well as Consolidated Debt Financing Statistics at June 30, 2024 and June 30, 2023.


	June 30,
	2024			2023
	(dollars in thousands)
Debt Summary:
Balance
Mortgage notes payable, net	$	4,371,478		$	3,274,764
Unsecured senior notes, net	9,797,220			10,985,395
Unsecured line of credit	—			—
Unsecured term loan, net	698,776			1,196,046
Unsecured commercial paper	500,000			—
Consolidated Debt	15,367,474			15,456,205
Add:
BXP’s share of unconsolidated joint venture debt, net (1)	1,379,131			1,609,671
Subtract:
Partners’ share of consolidated mortgage notes payable, net (2)	1,361,372			1,359,380
BXP’s Share of Debt	$	15,385,233		$	15,706,496

	June 30,
	2024			2023
Consolidated Debt Financing Statistics:
Percent of total debt:
Fixed rate (3)	92.20		%	100.00		%
Variable rate	7.80		%	—		%
Total	100.00		%	100.00		%
GAAP Weighted-average interest rate at end of period:
Fixed rate (3)	4.01		%	3.95		%
Variable rate	5.97		%	—		%
Total	4.16		%	3.95		%
Coupon/Stated Weighted-average interest rate at end of period:
Fixed rate (3)	3.78		%	3.82		%
Variable rate	5.84		%	—		%
Total	3.94		%	3.82		%
Weighted-average maturity at end of period (in years):
Fixed rate (3)	4.7			5.0
Variable rate	0.5			—
Total	4.4			5.0

(1)See page 90 for additional information.

(2)See page 89 for additional information.

(3)At June 30, 2024, two of our mortgage loans aggregating approximately $900.0 million bore interest at variable rates. We entered into interest rate swap contracts that effectively fixed the variability of these loans for all or a portion of the applicable debt term and as such, they are reflected in our Fixed rate statistics.

Unsecured Credit Facility

The 2021 Credit Facility provides for borrowings of up to $2.0 billion, as described below, through BPLP’s 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 had the option to increase the original total commitment of $1.5 billion by up to an additional $500.0 million by increasing the amount of the revolving facility and/or by incurring one or more term loans, in each case, subject to syndication of the increase and other conditions (the “Accordion Option”). On September 28, 2023, BPLP exercised a portion of the Accordion Option, which increased the then maximum borrowing amount under the 2021 Credit Facility from $1.5 billion to $1.815 billion. On April 29, 2024, BPLP exercised the remainder of the Accordion Option and increased the maximum borrowing amount under the 2021 Credit Facility to $2.0 billion. All other terms of the 2021 Credit Facility remain unchanged.

At BPLP’s option, loans under the 2021 Credit Facility will bear interest at a rate per annum equal to (1) (a) in the case of loans denominated in Dollars, Term SOFR and SOFR, (b) in the case of loans denominated in Euro, EURIBOR, (c) in the case of loans denominated in Canadian Dollars, CDOR, and (d) in the case of loans denominated in Sterling, SONIA, in each case, plus a margin ranging from 70.0 to 140.0 basis points based on BPLP’s credit rating or (2) an alternate 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 plus 1.00%, and (d) 1.00%, in each case, plus a margin ranging from 0 to 40 basis points based on BPLP’s credit rating. In addition, there is a SOFR credit spread adjustment of 0.10%.

Based on BPLP’s June 30, 2024 credit rating, (1) the applicable Daily SOFR, Term SOFR, alternative currency daily rate, and alternative currency term rate margins are 0.850%, (2) the alternate base rate margin is zero basis points and (3) the facility fee is 0.20% per annum.

The 2021 Credit Facility is used as a backstop for BPLP’s $500.0 million unsecured commercial paper program (See “Unsecured Commercial Paper” below). As such, BPLP intends to maintain, at a minimum, availability under the 2021 Credit Facility in an amount equal to the amount of commercial paper notes outstanding.

At June 30, 2024 and July 31, 2024, BPLP had no borrowings under its 2021 Credit Facility, outstanding letters of credit totaling approximately $6.6 million and $6.2 million, respectively, and $500.0 million is being used as a backstop for the commercial paper program. Therefore, at June 30, 2024 and July 31, 2024, BPLP has the ability to borrow approximately $1.5 billion.

Unsecured Term Loan

The 2023 Unsecured Term Loan provided for a single borrowing of up to $1.2 billion. Upon entry into the credit agreement in January 2023, BPLP exercised its option to draw $1.2 billion under the 2023 Unsecured Term Loan. Under the credit agreement governing the 2023 Unsecured Term Loan, 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. On April 29, 2024, BPLP repaid $500.0 million of the outstanding balance under the 2023 Unsecured Term Loan from the proceeds of its unsecured commercial paper program (see “Unsecured Commercial Paper” below). The 2023 Unsecured Term Loan had an initial maturity date of May 16, 2024, with one 12-month extension option, subject to customary conditions. On May 16, 2024, BPLP exercised its option to extend the maturity date of the 2023 Unsecured Term Loan to May 16, 2025. All other terms of the 2023 Unsecured Term Loan remain unchanged.

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.

Based on BPLP’s June 30, 2024 credit rating, the 2023 Unsecured Term Loan bears interest at a rate equal to adjusted Term SOFR plus 0.95% per annum. At June 30, 2024 and July 31, 2024, BPLP had $700.0 million outstanding under the 2023 Unsecured Term Loan.

Unsecured Senior Notes

For a description of BPLP’s outstanding unsecured senior notes as of June 30, 2024, see Note 6 to the Consolidated Financial Statements.

On February 1, 2024, BPLP repaid $700.0 million in aggregate principal amount of its 3.800% senior notes due February 1, 2024. The repayment was completed with available cash and the $600.0 million proceeds from the mortgage loan entered into on October 26, 2023. The repayment price was approximately $713.3 million, which was equal to the stated principal plus approximately $13.3 million of accrued and unpaid interest to, but not including, the repayment date. Excluding the accrued and unpaid interest, the repayment price was equal to the principal amount being repaid.

Unsecured Commercial Paper

On April 17, 2024, BPLP established an unsecured commercial paper program. Under the terms of the program, BPLP may issue, from time to time, unsecured commercial paper notes up to a maximum aggregate amount outstanding at any one time of $500.0 million with varying maturities of up to one year. Amounts available under the unsecured commercial paper program may be borrowed, repaid, and re-borrowed from time to time. The notes are sold in private placements and rank pari passu with all of BPLP’s other unsecured senior indebtedness, including its outstanding senior notes. The unsecured commercial paper program is backstopped by available capacity under the 2021 Credit Facility. At June 30, 2024, BPLP had an aggregate of $500.0 million of unsecured commercial paper notes outstanding that bore interest at a weighted-average rate of approximately 5.60% per annum and had a weighted-average maturity of 49 days, from the issuance date. At July 31, 2024, BPLP had an aggregate of $500.0 million of commercial paper notes outstanding that bore interest at a weighted-average rate of approximately 5.58% per annum and had a weighted-average maturity of 53 days, from the issuance date. Proceeds from the unsecured commercial paper program were used to reduce BPLP’s 2023 Unsecured Term Loan to $700.0 million.

Mortgage Notes Payable

On January 8, 2024, we completed the acquisition of our joint venture partner’s 50% economic ownership interest in the joint venture that owns 901 New York Avenue located in Washington, DC (See Note 3 to the Consolidated Financial Statements). The property is subject to existing mortgage indebtedness. At acquisition, the mortgage loan had an outstanding principal balance of approximately $207.1 million, bore interest at 3.61% per annum and was scheduled to mature on January 5, 2025. The mortgage loan was recorded at a fair value of approximately $198.7 million. On January 11, 2024, we modified the mortgage loan to provide for two extension options totaling five years of additional term, each subject to certain conditions.

The following represents the outstanding mortgage notes payable, net at June 30, 2024:


Properties	Stated Interest Rate		GAAP Interest Rate (1)		Stated Principal Amount		Fair Value Adjustment and Deferred Financing Costs, Net		Carrying Amount		Carrying Amount (Partners’ Share)			Maturity Date
	(dollars in thousands)
Wholly-owned
901 New York Avenue	3.61	%	7.69	%	$	205,074	$	(4,452)	$	200,622	N/A		(2)	January 5, 2025
Santa Monica Business Park	4.06	%	6.53	%	300,000		(2,947)		297,053		N/A		(3)(4)	July 19, 2025
90 Broadway, 325 Main Street, 355 Main Street, and Cambridge East Garage (also known as Kendall Center Green Garage)	6.04	%	6.26	%	600,000		(5,803)		594,197		N/A		(3)(5)	October 26, 2028
Subtotal					1,105,074		(13,202)		1,091,872		N/A

Consolidated Joint Ventures
767 Fifth Avenue (the General Motors Building)	3.43	%	3.64	%	2,300,000		(10,249)		2,289,751		$	915,937	(3)(6)(7)	June 9, 2027
601 Lexington Avenue	2.79	%	2.93	%	1,000,000		(10,145)		989,855		445,435		(3)(8)	January 9, 2032
Subtotal					3,300,000		(20,394)		3,279,606		1,361,372
Total					$	4,405,074	$	(33,596)	$	4,371,478	$	1,361,372

(1)The GAAP interest rate differs from the stated interest rate due to the inclusion of the amortization of financing charges, the effects of hedging transactions (if any) and adjustments required under Accounting Standards Codification 805 “Business Combinations” to reflect loans and swaps at their fair values (if any).

(2)Carrying amount includes an approximately $4.4 million fair value interest adjustment. The loan includes two extension options, subject to certain conditions.

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

(4)The mortgage loan bears interest at a variable rate of SOFR plus 1.38% per annum. The borrower under the loan entered into three interest rate swap contracts with notional amounts aggregating $300.0 million to fix SOFR at a weighted-average fixed interest rate of 2.679% for the period commencing on February 1, 2023 and ending on April 1, 2025. Stated interest rate reflects the weighted average fixed interest rate based on the interest rate swap contracts plus 1.38% per annum. Carrying amount includes an approximately $2.9 million fair value interest adjustment and excludes the adjustment required to reflect the interest rate swap at fair value upon acquisition of approximately $4.2 million.

(5)The mortgage loan bears interest at a variable rate of Daily Compounded SOFR plus 2.25% per annum. On December 7, 2023, BPLP entered into three interest rate swap contracts with notional amounts aggregating $600.0 million to fix Daily Compounded SOFR at a weighted-average fixed interest rate of 3.7925% for the period commencing on December 15, 2023 and ending on October 26, 2028. The stated interest rate reflects the weighted average fixed interest rate based on the interest rate swap contracts plus 2.25% per annum.

(6)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.

(7)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, 2024, the maximum funding obligation under the guarantee was approximately $8.5 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).

(8)This property is owned by a consolidated entity in which we have a 55% interest.

Derivative Instruments and Hedging Activities

As of June 30, 2024, we had $900.0 million of interest rate swaps outstanding, where hedge accounting was elected, with a fair value of approximately $12.1 million. For a description of these interest rate swaps, see Note 7 to the Consolidated Financial Statements.

Investment in Unconsolidated Joint Ventures - Secured Debt

We have investments in unconsolidated joint ventures with our effective ownership interests ranging from 20% to approximately 71%. Fourteen 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, 2024, the aggregate carrying amount of debt, including both our and our partners’ share, incurred by these ventures was approximately $3.2 billion (of which our proportionate share is approximately $1.4 billion). The table below summarizes the outstanding debt of these joint venture properties at June 30, 2024. 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)		Term of Variable Rate + Spread	Stated Principal Amount		Deferred Financing Costs, Net		Carrying Amount		Carrying Amount (Our share)			Maturity Date
	(dollars in thousands)
360 Park Avenue South	71.11	%	7.83	%	8.28	%	Adjusted Term SOFR + 2.40%	$	220,000	$	(455)	$	219,545	$	156,118	(2)(3)(4)	December 14, 2024
Market Square North	50.00	%	7.74	%	7.92	%	SOFR + 2.41%	125,000		(311)		124,689		62,345		(2)(3)(5)	November 10, 2025
1265 Main Street	50.00	%	3.77	%	3.84	%	N/A	34,185		(209)		33,976		16,988			January 1, 2032
Colorado Center	50.00	%	3.56	%	3.59	%	N/A	550,000		(555)		549,445		274,722		(2)	August 9, 2027
Dock 72	50.00	%	7.84	%	8.11	%	SOFR +2.50%	198,383		(694)		197,689		98,845		(2)(6)	December 18, 2025
The Hub on Causeway - Podium	50.00	%	7.35	%	7.75	%	Daily Simple SOFR + 2.50%	154,329		(733)		153,596		76,798		(2)(3)(7)	September 8, 2025
Hub50House	50.00	%	4.43	%	4.51	%	SOFR + 1.35%	185,000		(1,086)		183,914		91,957		(2)(8)	June 17, 2032
100 Causeway Street	50.00	%	6.80	%	6.95	%	Term SOFR + 1.48%	333,579		(85)		333,494		166,747		(2)(3)(9)	September 5, 2024
7750 Wisconsin Avenue (Marriott International Headquarters)	50.00	%	6.68	%	6.83	%	SOFR + 1.35%	251,542		(311)		251,231		125,616		(2)	April 26, 2025
Safeco Plaza	33.67	%	4.82	%	7.73	%	SOFR + 2.32%	250,000		(737)		249,263		83,927		(2)(10)	September 1, 2026
500 North Capitol Street, NW	30.00	%	6.83	%	7.16	%	N/A	105,000		(544)		104,456		31,215		(2)(11)	June 5, 2026
200 Fifth Avenue	26.69	%	4.34	%	5.60	%	Term SOFR + 1.41%	600,000		(7,347)		592,653		151,689		(2)(12)	November 24, 2028
3 Hudson Boulevard	25.00	%	8.94	%	8.94	%	Term SOFR + 3.61%	80,000		—		80,000		20,000		(2)(13)	August 7, 2024
Skymark - Reston Next Residential	20.00	%	7.33	%	7.65	%	SOFR + 2.00%	111,658		(836)		110,822		22,164		(2)(3)(14)	May 13, 2026
Total								$	3,198,676	$	(13,903)	$	3,184,773	$	1,379,131

(1)The GAAP interest rate differs from the stated interest rate due to the inclusion of the amortization of financing costs, which includes mortgage recording fees, the effects of hedging transactions (if any) and adjustments required under Accounting Standards Codification 805 “Business Combinations” to reflect loans at their fair values (if any).

(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 spread on the variable rate may be reduced, subject to certain conditions.

(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 loan 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 joint venture entered into interest rate swap contracts with notional amounts aggregating $154.3 million through September 2, 2025, resulting in a fixed rate of approximately 7.35% per annum through the expiration of the interest rate swap contracts.

(8)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)See Note 14 to the Consolidated Financial Statements.

(10)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, 2024.

(11)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 is reflected as Related Party Note Receivables, Net on our Consolidated Balance Sheets.

(12)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. The deferred financing costs, net include the adjustment required to reflect the loan and interest rate swap at fair value upon acquisition.

(13)We provided $80.0 million of mortgage financing to the joint venture. The loan is reflected as Related Party Note Receivables, Net on our Consolidated Balance Sheets. As of June 30, 2024, the loan has approximately $32.8 million of accrued interest due at the maturity date.

(14)The construction financing has a borrowing capacity of $140.0 million.

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 attributable to BXP, Inc. and net income attributable to Boston Properties Limited Partnership (computed in accordance with GAAP), respectively, for gains (or losses) from sales of properties, including a change in control, impairment losses on depreciable real estate consolidated on our balance sheet, impairment losses on our investments in unconsolidated joint ventures driven by a measurable decrease in the fair value of depreciable real estate held by the unconsolidated joint ventures and our share of real estate-related depreciation and amortization. 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 a useful measure for understanding and comparing our operating results because, by excluding gains and losses related to sales or a change in control of previously depreciated operating real estate assets, impairment losses and real estate asset depreciation and amortization (which can differ across owners of similar assets in similar condition based on historical cost accounting and useful life estimates), FFO can help investors compare the operating performance of a company’s real estate across reporting periods and to the operating performance of other companies.

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 BXP, 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 BXP, 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 BXP, Inc. to FFO attributable to BXP, Inc. for the three months ended June 30, 2024 and 2023:


	Three months ended June 30,
	2024			2023
	(in thousands)
Net income attributable to BXP, Inc.	$	79,615		$	104,299
Add:
Noncontrolling interest—common units of the Operating Partnership	9,509			12,117
Noncontrolling interests in property partnerships	17,825			19,768
Net income	106,949			136,184
Add:
Depreciation and amortization	219,542			202,577
Noncontrolling interests in property partnerships’ share of depreciation and amortization	(19,203)			(17,858)
BXP’s share of depreciation and amortization from unconsolidated joint ventures	19,827			25,756
Corporate-related depreciation and amortization	(406)			(442)
Non-real estate depreciation and amortization	2,130			—


Less:






Unrealized gain on non-real estate investment	58			124
Noncontrolling interests in property partnerships	17,825			19,768
Funds from Operations (FFO) attributable to the Operating Partnership common unitholders (including BXP, Inc.)	310,956			326,325
Less:
Noncontrolling interest—common units of the Operating Partnership’s share of funds from operations	32,557			33,481
Funds from Operations attributable to BXP, Inc.	$	278,399		$	292,844
Our percentage share of Funds from Operations—basic	89.53		%	89.74		%
Weighted average shares outstanding—basic	157,039			156,826

The following tables presents a reconciliation of net income attributable to BXP, Inc. to Diluted FFO attributable to BXP, Inc. for income (numerator) and shares/units (denominator) for the three months ended June 30, 2024 and 2023:


	Three months ended June 30,
	2024		2023
	(in thousands)
Net income attributable to BXP, Inc.	$	79,615	$	104,299
Add:
Noncontrolling interest—common units of the Operating Partnership	9,509		12,117
Noncontrolling interests in property partnerships	17,825		19,768
Net income	106,949		136,184
Add:
Depreciation and amortization	219,542		202,577
Noncontrolling interests in property partnerships’ share of depreciation and amortization	(19,203)		(17,858)
BXP’s share of depreciation and amortization from unconsolidated joint ventures	19,827		25,756
Corporate-related depreciation and amortization	(406)		(442)
Non-real estate depreciation and amortization	2,130		—


Less:






Unrealized gain on non-real estate investment	58		124
Noncontrolling interests in property partnerships	17,825		19,768
Funds from Operations (FFO) attributable to the Operating Partnership common unitholders (including BXP, Inc.)	310,956		326,325
Effect of Dilutive Securities:
Stock based compensation	—		—
Diluted FFO	310,956		326,325
Less:
Noncontrolling interest—common units of the Operating Partnership’s share of diluted FFO	32,526		33,383
Diluted FFO attributable to BXP, Inc. (1)	$	278,430	$	292,942

(1)BXP’s share of diluted Funds from Operations was 89.54% and 89.77% for the three months ended June 30, 2024 and 2023, respectively.


	Three months ended June 30,
	2024	2023
	shares/units (in thousands)

Basic Funds from Operations	175,408	174,748
Effect of Dilutive Securities:
Stock based compensation	252	392
Diluted Funds from Operations	175,660	175,140
Less:
Noncontrolling interest—common units of the Operating Partnership’s share of diluted Funds from Operations	18,369	17,922
Diluted Funds from Operations attributable to BXP, Inc. (1)	157,291	157,218

(1)BXP’s share of diluted Funds from Operations was 89.54% and 89.77% for the three months ended June 30, 2024 and 2023, 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, 2024 and 2023:


	Three months ended June 30,
		2024		2023
		(in thousands)
Net income attributable to Boston Properties Limited Partnership		$	90,827	$	118,098
Add:
Noncontrolling interests in property partnerships		17,825		19,768
Net income		108,652		137,866
Add:
Depreciation and amortization		217,839		200,895
Noncontrolling interests in property partnerships’ share of depreciation and amortization		(19,203)		(17,858)
BXP’s share of depreciation and amortization from unconsolidated joint ventures		19,827		25,756
Corporate-related depreciation and amortization		(406)		(442)
Non-real estate depreciation and amortization		2,130		—


Less:






Unrealized gain on non-real estate investment		58		124
Noncontrolling interests in property partnerships		17,825		19,768
Funds from Operations attributable to Boston Properties Limited Partnership (1)		$	310,956	$	326,325
Weighted average shares outstanding—basic		175,408		174,748

(1)Our calculation includes OP Units and vested LTIP Units (including vested 2012 OPP Units and vested 2013 - 2021 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, 2024 and 2023:


	Three months ended June 30,
		2024		2023
		(in thousands)
Net income attributable to Boston Properties Limited Partnership		$	90,827	$	118,098
Add:
Noncontrolling interests in property partnerships		17,825		19,768
Net income		108,652		137,866
Add:
Depreciation and amortization		217,839		200,895
Noncontrolling interests in property partnerships’ share of depreciation and amortization		(19,203)		(17,858)
BXP’s share of depreciation and amortization from unconsolidated joint ventures		19,827		25,756
Corporate-related depreciation and amortization		(406)		(442)
Non-real estate depreciation and amortization		2,130		—


Less:






Unrealized gain on non-real estate investment		58		124
Noncontrolling interests in property partnerships		17,825		19,768
Funds from Operations attributable to Boston Properties Limited Partnership (1)		310,956		326,325
Effect of Dilutive Securities:
Stock based compensation		—		—
Diluted Funds from Operations attributable to Boston Properties Limited Partnership		$	310,956	$	326,325

(1)Our calculation includes OP Units and vested LTIP Units (including vested 2012 OPP Units and vested 2013 - 2021 MYLTIP Units).


	Three months ended June 30,
	2024	2023
	shares/units (in thousands)
Basic Funds from Operations	175,408	174,748
Effect of Dilutive Securities:
Stock based compensation	252	392
Diluted Funds from Operations	175,660	175,140

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, 2024, we paid approximately $77.3 million to fund tenant-related obligations, including tenant improvements and leasing commissions.

In addition, during the three months ended June 30, 2024, we and our unconsolidated joint venture partners incurred approximately $99.8 million of new tenant-related obligations associated with approximately 1,295,600 square feet of second generation leases, or approximately $77 per square foot. We signed approximately 27,100 square feet of first generation leases. The tenant-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 2024, we signed leases for approximately 1,322,700 square feet of space and incurred aggregate tenant-related obligations of approximately $105.1 million, or approximately $79 per square foot.

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