<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
--------------
Pursuant to Section 13 of 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 23, 1997
BOSTON PROPERTIES, INC.
(Exact name of Registrant as specified in its Charter)
Delaware
(State of Incorporation)
1-13087 04-2473675
(Commission File Number) (IRS Employer Id. Number)
8 Arlington Street
Boston, Massachusetts 02116
(Address of principal executive offices) (Zip Code)
(617) 859-2600
(Registrant's telephone number, including area code)
<PAGE>
Item 5 Other Events
(a) On November 21, 1997, the Company, through the Operating Partnership,
entered into an agreement to acquire Riverfront Plaza, an approximately 900,000
net rentable square foot class A office building in Richmond, Virginia, for a
total investment of approximately $174.4 million. The Company expects to
consummate its acquisition of Riverfront Plaza in January 1998. There can be no
assurances, however, that the Company will acquire Riverfront Plaza in January
1998, or at all.
(b) On December 4, 1997, the Company filed a Registration Statement on Form
S-11 relating to a proposed public offering of 14,000,000 shares of the
Company's common stock, par value $.01 per share (not including an additional
2,100,000 shares of Common Stock subject to the underwriters' overallotment
option).
Item 7 Financial Statements and Exhibits
The following financial statements are being filed in connection with the
acquisition of 100 East Pratt Street, Baltimore, Maryland, which closed on
October 23, 1997; the proposed acquisition of Riverfront Plaza, as described
above; and the proposed public offering of common stock, as described above.
(a) Financial Statements under Rule 3-14 of Regulation S-X.
Statement of Revenue Over Certain Operating Expenses of 100 East Pratt Street
for the year ended December 31, 1996 and (unaudited) for the nine months ended
September 30, 1997.
Statement of Revenue Over Certain Operating Expenses of Riverfront Plaza for the
year ended December 31, 1996 and (unaudited) for the nine months ended September
30, 1997.
(b) Pro Forma Financial Statements
Pro Forma Condensed Consolidated Balance Sheet as of September 30, 1997
(unaudited)
Pro Forma Condensed Consolidated Statement of Operations for the nine months
ended September 30, 1997 (unaudited) and the year ended December 31, 1996
(unaudited)
(c) Exhibits
23.1 Consent of Coopers & Lybrand, L.L.P., Independent Accountants
<PAGE>
BOSTON PROPERTIES, INC.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BOSTON PROPERTIES, INC.
/s/ David G. Gaw
--------------------------------------
David G. Gaw
Senior Vice President and
Chief Financial Officer
Date: December 4, 1997
<PAGE>
100 EAST PRATT STREET
STATEMENT OF REVENUE OVER
CERTAIN OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1996
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
Boston Properties, Inc.:
We have audited the accompanying statement of revenue over certain operating
expenses of 100 East Pratt Street in Baltimore, Maryland (the "Property") for
the year ended December 31, 1996. This statement is the responsibility of the
Property's management. Our responsibility is to express an opinion on this
statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statement of revenue over
certain operating expenses is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the statement. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
The accompanying statement of revenue over certain operating expenses was
prepared for the purpose of complying with Rule 3-14 of the Securities and
Exchange Commission, and excludes certain expenses described in Note 2, and
therefore is not intended to be a complete presentation of the Property's
revenue and expenses.
In our opinion, the statement referred to above presents fairly, in all
material respects, the revenue over certain operating expenses (as described
in Note 2) of 100 East Pratt Street for the year ended December 31, 1996 in
conformity with generally accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
Boston, Massachusetts
November 3, 1997
F-2
<PAGE>
100 EAST PRATT STREET
STATEMENT OF REVENUE
OVER CERTAIN OPERATING EXPENSES
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE NINE MONTHS
DECEMBER 31, 1996 ENDED SEPTEMBER 30, 1997
------------------ -------------------------
(UNAUDITED)
<S> <C> <C>
Revenue:
Base rent....................... $11,826 $ 9,218
Recoveries from tenants......... 2,966 2,133
Garage--net..................... 2,220 1,706
Other income.................... 353 267
------- -------
17,365 13,324
------- -------
Certain operating expenses:
Utilities....................... 1,661 1,406
Janitorial and cleaning......... 637 504
Security........................ 315 255
General and administrative...... 566 424
Repairs and maintenance......... 1,084 811
Insurance....................... 70 53
Real estate taxes............... 2,054 1,541
------- -------
6,387 4,994
------- -------
Excess of revenue over certain
operating expenses............. $10,978 $ 8,330
======= =======
</TABLE>
The accompanying notes are an integral part of the statement.
F-3
<PAGE>
100 EAST PRATT STREET
NOTES TO STATEMENT OF REVENUE
OVER CERTAIN OPERATING EXPENSES
(DOLLARS IN THOUSANDS)
1. DESCRIPTION OF THE PROPERTY
The accompanying statement of revenue over certain operating expenses (the
"Statement") includes the operations of 100 East Pratt Street, an
approximately 633,000 square foot office building located on the inner harbor
in downtown Baltimore, Maryland. The Property was acquired on October 23, 1997
from an unrelated third party.
2. BASIS OF ACCOUNTING
The accompanying statement of revenue over certain operating expenses is
presented on the accrual basis. This statement has been prepared in accordance
with Rule 3-14 of Regulation S-X of the Securities and Exchange Commission for
real estate properties acquired or to be acquired. Accordingly, this statement
excludes certain historical income and expenses not comparable to the
operations of the property after acquisition, such as interest income,
depreciation, amortization, and interest expense.
3. SIGNIFICANT ACCOUNTING POLICIES
Rental Revenue
Rental income is recognized on the straight-line method over the terms of
the related leases. The excess of recognized rentals over amounts due pursuant
to lease terms is recorded as accrued rent. The impact of the straight-line
rent adjustment increases revenue by approximately $361 and decreases revenue
by approximately $318 for the year ended December 31, 1996 and for the nine
months ended September 30, 1997 (unaudited), respectively.
Unaudited Interim Information
The combined statement revenue over certain operating expenses for the nine
months ended September 30, 1997 is unaudited. In the opinion of management,
all adjustments necessary for a fair presentation of such statement have been
included. The results of operations for the period are not necessarily
indicative of the Property's future results of operations.
Risks and Uncertainties
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
4. DESCRIPTION OF LEASING ARRANGEMENTS
The commercial and office space is leased to tenants under leases with terms
that vary in length. Certain of the leases contain real estate tax
reimbursement clauses, operating expense reimbursement clauses and renewal
options. Minimum lease payments to be received during the next five years for
noncancelable operating leases in effect at December 31, 1996 are
approximately as follows:
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31, (IN THOUSANDS)
------------ --------------
<S> <C>
1997......................................... $12,294
1998......................................... 11,727
1999......................................... 11,435
2000......................................... 11,185
2001......................................... 10,656
Thereafter................................... 39,516
</TABLE>
As of December 31, 1996, two tenants occupied approximately 42% of the
leasable square feet and represented approximately 48% of total 1996 Base
Rent.
F-4
<PAGE>
RIVERFRONT PLAZA
STATEMENT OF REVENUE OVER
CERTAIN OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1996
F-5
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
Boston Properties, Inc.:
We have audited the accompanying statement of revenue over certain operating
expenses of Riverfront Plaza in Richmond, Virginia (the "Property") for the
year ended December 31, 1996. This statement is the responsibility of the
Property's management. Our responsibility is to express an opinion on this
statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statement of revenue over
certain operating expenses is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the statement. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
The accompanying statement of revenue over certain operating expenses was
prepared for the purpose of complying with Rule 3-14 of the Securities and
Exchange Commission, and excludes certain expenses described in Note 2, and
therefore is not intended to be a complete presentation of the Property's
revenue and expenses.
In our opinion, the statement referred to above presents fairly, in all
material respects, the revenue over certain operating expenses (as described
in Note 2) of Riverfront Plaza for the year ended December 31, 1996 in
conformity with generally accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
Boston, Massachusetts
November 25, 1997
F-6
<PAGE>
RIVERFRONT PLAZA
STATEMENT OF REVENUE
OVER CERTAIN OPERATING EXPENSES
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE NINE MONTHS ENDED
DECEMBER 31, 1996 SEPTEMBER 30, 1997
------------------ -------------------------
(UNAUDITED)
<S> <C> <C>
Revenue:
Base rent...................... $13,723 $11,263
Recoveries from tenants........ 2,976 2,017
Garage--net.................... 2,175 1,760
Other income................... 436 382
------- -------
19,310 15,422
------- -------
Certain operating expenses (Note
2)
Utilities...................... 1,578 1,118
Janitorial and cleaning........ 741 541
Security....................... 339 270
General and administrative..... 360 245
Repairs and maintenance........ 683 470
Insurance...................... 164 117
Real estate taxes.............. 1,638 1,219
------- -------
5,503 3,980
------- -------
Excess of revenue over certain
operating expenses.............. $13,807 $11,442
======= =======
</TABLE>
The accompanying notes are an integral part of the statement.
F-7
<PAGE>
RIVERFRONT PLAZA
NOTES TO STATEMENT OF REVENUE
OVER CERTAIN OPERATING EXPENSES
(DOLLARS IN THOUSANDS)
1. DESCRIPTION OF THE PROPERTY
The accompanying statement of revenue over certain operating expenses (the
"Statement") includes the operations of an approximately 899,720 square foot
office building located in Richmond, Virginia. The Property will be acquired
by Boston Properties, Inc. from an unrelated third party.
2. BASIS OF ACCOUNTING
The accompanying Statement has been prepared on the accrual basis of
accounting. The Statement has been prepared in accordance with Rule 3-14 of
Regulation S-X of the Securities and Exchange Commission for real estate
properties acquired or to be acquired. Accordingly, this statement excludes
certain historical expenses not comparable to the operations of the Property
after acquisition such as amortization, depreciation, property management
fees, certain bad debts, corporate expenses and certain other costs not
directly related to the future operations of the Property.
3. SIGNIFICANT ACCOUNTING POLICIES
Rental Revenue
Rental income is recognized on the straight-line method over the terms of
the related leases. The excess of recognized rentals over amounts due pursuant
to lease terms is recorded as accrued rent. The impact of the straight-line
rent adjustment increased revenue by approximately $621 and $143 for the year
ended December 31, 1996, and the nine months ended September 30, 1997
(unaudited), respectively.
Unaudited Interim Information
The statement of revenue over certain operating expenses for the nine months
ended September 30, 1997 is unaudited. In the opinion of management, all
adjustments necessary for a fair presentation of such statement have been
included. The results of operations for the period are not necessarily
indicative of the Property's future results of operations.
Risks and Uncertainties
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
4. DESCRIPTION OF LEASING ARRANGEMENTS
The commercial and office space is leased to tenants under leases with terms
that vary in length. Certain leases contain real estate tax reimbursement
clauses, operating expense reimbursement clauses and renewal options. Minimum
lease payments to be received during the next five years for noncancelable
operating leases in effect at December 31, 1996 are approximately as follows:
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
--------------
(IN THOUSANDS)
<S> <C>
1997......................................... $13,615
1998......................................... 13,870
1999......................................... 13,148
2000......................................... 12,427
2001......................................... 10,574
Thereafter................................... 39,718
</TABLE>
As of December 31, 1996, two tenants occupied approximately 55% of the
leasable square feet and represented 56% of total 1996 Base Rent.
F-8
<PAGE>
BOSTON PROPERTIES, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1997
(UNAUDITED)
The following unaudited Pro Forma Condensed Consolidated Balance Sheet of
Boston Properties, Inc. (the "Company") is presented as if the following
transactions had been consummated on September 30, 1997; (i) properties
acquired or to be acquired subsequent to September 30, 1997 (the "1997
Acquired Properties" and "Pending Acquisition", collectively the "Acquisition
Properties"), and (ii) the completion of the offering as described hereafter
(the "Offering"). This Pro Forma Condensed Consolidated Balance Sheet should be
read in conjunction with the Pro Forma Condensed Consolidated Statement of
Income of the Company for the nine months ended September 30, 1997 and the year
ended December 31, 1996 and the historical consolidated and combined financial
statements and notes thereto of the Company and the Boston Properties
Predecessor Group (the "Predecessor Group") included elsewhere in this
Prospectus. In management's opinion, all adjustments necessary to reflect the
above transactions have been made.
The following Pro Forma Condensed Consolidated Balance Sheet is not
necessarily indicative of what the actual financial position would have been
assuming the above transactions had been consummated at September 30, 1997,
nor does it purport to represent the future financial position of the Company.
The Offering
The Company has filed a registration statement on Form S-11 with the
Securities and Exchange Commission with respect to the Offering of
approximately 14.0 million common shares at an estimated offering price of
$33.25 (excluding 2.1 million common shares that may be issued upon exercise
of the underwriters' overallotment option).
The Properties
The Company will own a portfolio of 83 commercial real estate properties
(the "Properties") aggregating approximately 16.4 million square feet, 72% of
which was developed or substantially redeveloped by the Company. The
properties consist of 70 office properties with approximately 11.8 million net
rentable square feet (including five office properties under development
containing approximately 1.0 million net rentable square feet) and
approximately 2.5 million additional square feet of structured parking for
6,913 vehicles, nine industrial properties with approximately 925,000 net
rentable square feet, three hotels with a total of 1,054 rooms (consisting of
approximately 940,000 square feet) (including one hotel currently under
development), and a parking garage with 1,170 spaces (consisting of
approximately 330,000 square feet). In addition, the Company will own, have
under contract or have an option to acquire six parcels of land totaling 39.0
acres, which will support approximately 629,000 square feet of development.
Acquisitions included in pro forma:
<TABLE>
<CAPTION>
Rentable Date of
Property Name Location Sq. Ft. Acquisition
------------- -------- ------- -----------
<S> <C> <C> <C>
Newport Office Park Quincy, MA 168,829 6/23/97
280 Park Avenue New York, NY 1,198,769 9/11/97
100 East Pratt Street Baltimore, MD 633,482 10/23/97
875 Third Avenue New York, NY 691,088 11/21/97
Riverfront Plaza Richmond, VA 899,720 Pending
<CAPTION>
Purchase Price (dollars in thousands)
Common
Property Name Cash Debt OP Units Stock Total
------------- ---- ---- -------- ------ ------
<S> <C> <C> <C> <C> <C>
Newport Office Park -- 21,700 -- -- 21,700
280 Park Avenue 102,650 220,000 -- -- 322,650
100 East Pratt Street 137,500 -- -- 16 137,516
875 Third Avenue 1,500 180,000 28,000(1) -- 209,500
Riverfront Plaza 52,561 121,800 -- -- 174,361
</TABLE>
(1) The Company issued Operating Partnership Units in the amount of 890,869 for
875 Third Avenue (valued at $31.43 per OP unit).
F-9
<PAGE>
BOSTON PROPERTIES, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1997
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
BOSTON -----------------------------------
PROPERTIES, ACQUISITION OFFERING OTHER
INC. PROPERTIES (A) ADJUSTMENTS PRO FORMA
----------- ----------- -------- ----------- ----------
<S> <C> <C> <C> <C> <C>
ASSETS
Real estate and
equipment.............. $1,433,376 $521,377(B) -- -- $1,954,753
Less: accumulated
depreciation.......... (285,505) -- -- -- (285,505)
---------- -------- -------- ---------- ----------
Total real estate and
equipment............. 1,147,871 521,377 -- -- 1,669,248
Cash ................... 25,989 (56,919)(C) $441,061 $ (208,500)(C) 201,631
Escrows................. 10,673 2,631 (D) -- -- 13,304
Tenant and other
receivables............ 13,170 227 (E) -- -- 13,397
Accrued rental income... 50,377 -- -- -- 50,377
Deferred charges........ 34,707 -- -- -- 34,707
Prepaid expenses and
other assets........... 8,933 -- -- -- 8,933
Investment in Joint
Venture................ 3,918 -- -- -- 3,918
---------- -------- -------- ---------- ----------
Total assets........... $1,295,638 $467,316 $441,061 $(208,500) $1,995,515
========== ======== ======== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Mortgage notes
payable............... $ 914,614 $301,800(F) -- -- $1,216,414
Unsecured Line of
Credit................ 71,000 137,500(F) -- $(208,500)(F) --
Accounts payable and
accrued expenses...... 16,073 -- -- -- 16,073
Accrued interest
payable............... 3,639 -- -- -- 3,639
Rent received in
advance, security
deposits and other
liabilities........... 13,663 -- -- -- 13,663
---------- -------- -------- ---------- ----------
Total liabilities...... 1,018,989 439,300 -- (208,500) 1,249,789
---------- -------- -------- ---------- ----------
Minority interest in
Operating Partnership.. 81,168 28,000(B) -- -- 109,168
---------- -------- -------- ---------- ----------
Stockholders' equity:
Preferred stock, $.01
par value, 50,000,000
shares authorized,
none issued or
outstanding........... -- -- -- -- --
Common stock, $.01 par
value, 250,000,000
shares authorized,
38,693,541 issued and
outstanding
(historical) and
52,694,041 shares
issued and outstanding
(pro forma)........... 387 -- $ 140 -- 527
Additional paid in
capital............... 172,315 16(B) 440,921 -- 613,252
Retained earnings...... 22,779 -- -- -- 22,779
---------- -------- -------- ---------- ----------
Total stockholders'
equity................ 195,481 16 441,061 -- 636,558
---------- -------- -------- ---------- ----------
Total liabilities and
stockholders' equity.. $1,295,638 $467,316 $441,061 $(208,500) $1,995,515
========== ======== ======== ========== ==========
</TABLE>
The accompanying notes are an integral part of the pro forma condensed
consolidated balance sheet.
F-10
<PAGE>
BOSTON PROPERTIES, INC.
NOTES TO THE
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
NOTES TO THE PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER
30, 1997:
(A) Represents the net proceeds obtained from the issuance of 14.0 million
common shares in the Offering as follows:
<TABLE>
<S> <C>
Gross proceeds from the Offering................................... $465,500
Underwriters' discount and other offering expenses................. (24,439)
--------
Net cash proceeds.................................................. 441,061
Par value of common shares(/1/).................................... (140)
--------
$440,921
========
</TABLE>
- --------
(/1/) Represents the issuance of 14.0 million ($.01 par value per share) common
shares in the Offering at an assumed offering price of $33.25 per share.
(B) Represents the purchase price, including closing costs, of the 1997
Acquired Properties and the Pending Acquisition as follows:
<TABLE>
<CAPTION>
PURCHASE
1997 ACQUIRED PROPERTIES PRICE
------------------------ --------
<S> <C>
100 East Pratt Street (/1/)........................................ $137,516
875 Third Avenue (/2/)............................................. 209,500
</TABLE>
<TABLE>
<CAPTION>
PENDING ACQUISITION
-------------------
<S> <C>
Riverfront Plaza (/3/)............................................. 174,361
--------
Total Acquisition Properties................................... $521,377
========
</TABLE>
--------
(/1/) The acquisition of 100 East Pratt Street was funded by a draw-down of
$137,500 from the Unsecured Line of Credit and the issuance of 500 shares
of common stock (valued at approximately $16, based on a value of $32.00
per share).
(/2/) The acquisition of 875 Third Avenue was funded by the assumption of a
$180,000 mortgage note, payment of $1,500 in cash and the issuance of
890,869 Operating Partnership Units (the "OP Units"). To the extent that,
for the ten trading days through and including December 31, 1998 the
average daily closing price on the New York Stock Exchange of shares of
common stock is less than $31.43 per share (such average, the "Share
Average"), the Operating Partnership shall issue to the contributor of
875 Third Avenue a number of additional OP Units (the "Additional OP
Units") such that the product of (x) the Share Average, multiplied by (y)
the sum of $890,869 plus the Additional OP Units, equals $28,000.
Consequently, for accounting purposes, the OP Units were valued at
approximately $28,000, based on a value of $31.43 per unit.
(/3/) The acquisition of Riverfront Plaza will be funded through the payment
of $52,561 in cash and mortgage acquisition financing of $121,800.
(C) Represents the cash transactions as follows:
<TABLE>
<S> <C>
Net proceeds of the Offering described in Note (A) ............. $ 441,061
Proceeds and working capital used for the Acquisition
Properties..................................................... (56,919)
Paydown of Unsecured Line of Credit with proceeds from the
Offering....................................................... (208,500)
---------
Net increase in cash............................................ $ 175,642
=========
(D) Net increase reflects the following:
Required escrow deposit for the debt assumed on
the acquisition of 875 Third Avenue............................ $ 2,631
=========
</TABLE>
F-11
<PAGE>
BOSTON PROPERTIES, INC.
NOTES TO THE PRO FORMA CONDENSED
CONSOLIDATED BALANCE SHEET--(CONTINUED)
(DOLLARS IN THOUSANDS)
(E) Reflects tenant note receivable purchased in connection with the Pending
Acquisition of Riverfront Plaza.
(F) Represents the debt transactions as follows:
MORTGAGE NOTES PAYABLE
<TABLE>
<S> <C>
Debt assumed in connection with the acquisition of 875 Third
Avenue........................................................... $180,000
Seller financing in connection with the acquisition of Riverfront
Plaza............................................................ 121,800
--------
Net increase in mortgage indebtedness............................. $301,800
========
</TABLE>
UNSECURED LINE OF CREDIT
<TABLE>
<S> <C>
Draw-down from the Unsecured Line of Credit in connection with
the acquisition of 100 East Pratt Street...................... $ 137,500
Paydown of the Unsecured Line of Credit from proceeds of the
Offering, net ................................................ (208,500)
---------
Net decrease in Unsecured Line of Credit....................... $ (71,000)
=========
</TABLE>
F-12
<PAGE>
BOSTON PROPERTIES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND FOR THE YEAR ENDED DECEMBER
31, 1996
(UNAUDITED)
The following unaudited Pro Forma Condensed Consolidated Statement of Income
for the nine months ended September 30, 1997 and for the year ended December
31, 1996 is presented as if the following transactions had occurred on January
1, 1996; (i) the consummation of the initial public offering (the "Initial
Offering") and related Formation Transactions, and the Offering (ii) the
acquisition of the property acquired concurrent with the Initial Offering (the
"Initial Offering Acquisition Property"), (iii) the acquisition of properties
acquired subsequent to the Initial Offering (the "1997 Acquisitions"), (iv)
the acquisition of the pending acquisition (the "Pending Acquisition") and (v)
the closing of the mortgage financing.
The Development and Management Company has been included in the pro forma
financial information under the equity method of accounting due to the
Operating Partnership's ownership of a noncontrolling, 1% voting interest.
The operations of the hotel properties and the parking garages have been
included in the pro forma financial information pursuant to participating
lease agreements to be entered into in order for the Company to continue to
qualify as a REIT under IRC Section 856.
The unaudited Pro Forma Condensed Consolidated Statement of Income is not
necessarily indicative of what the actual results of operations would have
been for the nine months ended September 30, 1997, or for the year ended
December 31, 1996, had the previously described transactions actually occurred
on January 1, 1996 and the effect thereof carried forward through the nine
month period ended September 30, 1997, nor do they purport to present the
future results of operations of the Company.
F-13
<PAGE>
BOSTON PROPERTIES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
BOSTON
PROPERTIES
PREDECESSOR
GROUP PRO FORMA ADJUSTMENTS
BOSTON PROPERTIES, INC. JANUARY 1, --------------------------------------------------------------
JUNE 23, 1997 1997 INITIAL
TO TO OFFERING
SEPTEMBER 30, JUNE 22, FORMATION ACQUISITION 1997 PENDING OTHER
1997 1997 TRANSACTIONS PROPERTY ACQUISITIONS ACQUISITION ADJUSTMENTS
----------------------- ----------- ------------ ----------- ------------ ----------- -----------
(A) (B) (C) (C)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue:
Rental:
Base rent........ $57,892 $80,122 $ 9,396 $1,498 $54,440 $13,412 --
Recoveries from
tenants.......... 6,144 10,283 -- 101 7,639 2,017 --
Parking and
other............ 217 3,397 (1,061) -- 347 382 --
------- ------- -------- ------ ------- ------- --------
Total rental
revenue......... 64,253 93,802 8,335 1,599 62,426 15,811 --
Hotel............ -- 31,185 (31,185) -- -- -- --
Development and
management
services......... 2,221 3,685 (452) -- -- -- --
Interest and
other............ 1,879 1,146 (352) -- -- -- $(1,200) (D)
------- ------- -------- ------ ------- ------- --------
Total revenue... 68,353 129,818 (23,654) 1,599 62,426 15,811 (1,200)
------- ------- -------- ------ ------- ------- --------
Expenses:
Rental:
Operating........ 8,828 13,650 (353) 437 14,580 2,761 --
Real estate
taxes............ 9,065 13,382 1,345 172 13,049 1,219 --
Hotel:
Operating........ -- 20,938 (20,938) -- -- -- --
Real estate tax-
es............... -- 1,514 (1,514) -- -- -- --
General and
administrative... 3,164 5,116 391 -- -- -- 425 (E)
Interest......... 16,091 53,324 (28,151) -- 11,813 -- 16,839 (F)
Depreciation and
amortization..... 10,113 17,054 124 210(G) 7,646 2,288 --
------- ------- -------- ------ ------- ------- --------
Total expenses.. 47,261 124,978 (49,096) 819 47,088 6,268 17,264
------- ------- -------- ------ ------- ------- --------
Income before
minority interests
.................. 21,092 4,840 25,442 780 15,338 9,543 (18,464)
Minority interest
in property
partnership....... (69) (235) -- -- -- -- --
------- ------- -------- ------ ------- ------- --------
Income before
minority interest
in Operating
Partnership ...... 21,023 4,605 25,442 780 15,338 9,543 (18,464)
Minority interest
in Operating
Partnership....... (6,169) -- -- -- -- -- (8,019)(H)
------- ------- -------- ------ ------- ------- --------
Income before
extraordinary
item.............. $14,854 $ 4,605 $ 25,442 $ 780 $15,338 $ 9,543 $(26,483)
======= ======= ======== ====== ======= ======= ========
Income before ex-
traordinary item
per common share.. $ .38
=======
Weighted average
number of common
shares outstand-
ing............... 38,694
=======
<CAPTION>
PRO
FORMA
---------
<S> <C>
Revenue:
Rental:
Base rent........ $216,760
Recoveries from
tenants.......... 26,184
Parking and
other............ 3,282
---------
Total rental
revenue......... 246,226
Hotel............ --
Development and
management
services......... 5,454
Interest and
other............ 1,473
---------
Total revenue... 253,153
---------
Expenses:
Rental:
Operating........ 39,903
Real estate
taxes............ 38,232
Hotel:
Operating........ --
Real estate tax-
es............... --
General and
administrative... 9,096
Interest......... 69,916
Depreciation and
amortization..... 37,435
---------
Total expenses.. 194,582
---------
Income before
minority interests
.................. 58,571
Minority interest
in property
partnership....... (304)
---------
Income before
minority interest
in Operating
Partnership ...... 58,267
Minority interest
in Operating
Partnership....... (14,188)
---------
Income before
extraordinary
item.............. $ 44,079
=========
Income before ex-
traordinary item
per common share.. $ .84
=========
Weighted average
number of common
shares outstand-
ing............... 52,694
=========
</TABLE>
The accompanying notes are an integral part of the pro forma condensed
consolidated statement of income.
F-14
<PAGE>
BOSTON PROPERTIES, INC.
NOTES TO THE
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
(DOLLARS IN THOUSANDS)
NOTES TO THE PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME FOR THE NINE
MONTHS ENDED SEPTEMBER 30, 1997
A. Reflects the pro forma Formation Transactions adjustment summary for the
period from January 1, 1997 to June 22, 1997 (the "Predecessor Period").
<TABLE>
<CAPTION>
RENT HOTEL
HOTELS INTEREST PROPERTY PROPERTY HOTEL REAL GENERAL
PRO FORMA AND PARKING HOTEL MGMT AND OPERATING REAL ESTATE OPERATING ESTATE & INTEREST
ADJUSTMENTS GARAGE INCOME REVENUE FEES OTHER EXPENSES TAXES EXPENSES TAXES ADMIN EXPENSE
- ----------- ------ ------- -------- ----- -------- --------- ----------- --------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(1)Assignment of
contracts..... $(452) $(430)
(2)Equity
investment
income........ $21
(3)Operation of
hotels and
garage........ $(1,061) $(31,185) $(353) $1,345 $(20,938) $(1,514)
(4)Rental of
hotels and
garage........ $9,396
(5)General and
administrative.. 821
(6)Amortization
of deferred
financing
costs......... $ (189)
(7)Release of
restricted
cash.......... (373)
(8)Depreciation
expense.......
(9)Mortgage
interest...... (27,962)
------ ------- -------- ----- ----- ----- ------ -------- ------- ----- --------
Pro Forma
Formation
Transactions
adjustment
summary total... $9,396 $(1,061) $(31,185) $(452) $(352) $(353) $1,345 $(20,938) $(1,514) $ 391 $(28,151)
====== ======= ======== ===== ===== ===== ====== ======== ======= ===== ========
<CAPTION>
PRO FORMA DEPRECIATION
ADJUSTMENTS EXPENSE
- ----------- ------------
<S> <C>
(1)Assignment of
contracts.....
(2)Equity
investment
income........
(3)Operation of
hotels and
garage........
(4)Rental of
hotels and
garage........
(5)General and
administrative..
(6)Amortization
of deferred
financing
costs.........
(7)Release of
restricted
cash..........
(8)Depreciation
expense....... $124
(9)Mortgage
interest......
------------
Pro Forma
Formation
Transactions
adjustment
summary total... $124
============
</TABLE>
(1) In connection with the Formation Transactions, certain third-party
management contracts were assigned to the Development and Management
Company. As a result of the assignment, operating income, expenses and
overhead attributable to the contracts were reflected in the operations
of the Development and Management Company as detailed below:
<TABLE>
<S> <C>
Management services................................................ $ 452
General and administrative expenses................................ (430)
-----
Manager contract income........................................... $ 22
=====
</TABLE>
(2) The Operating Partnership holds a 95% economic interest in the
Development and Management Company and records an equity interest of $21
on the $22 net income.
(3) In connection with the Formation Transactions, the Operating Partnership
entered into participating leases for the operation of the hotels and
parking garage. As a result of these agreements, revenue and expenses
will not be reflected from the operation of these businesses.
(4) Represents rental income from the leasing of the hotels and parking
garage owned by the Operating Partnership. The hotel lease arrangements
are with an affiliate.
(5) Reflects an increase of $821 in general and administrative expenses as a
result of operating as a public company.
(6) Reflects the net increase of $290 in the amortization of deferred
financing costs for the $1,800 fee and related professional costs on the
Unsecured Line of Credit, less a net reduction of $479 in amortization of
deferred financing costs related to debt paid off with the Initial
Offering proceeds.
F-15
<PAGE>
BOSTON PROPERTIES, INC.
NOTES TO THE PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME--(CONTINUED)
(DOLLARS IN THOUSANDS)
(7) Reflects the decrease in interest income as a result of the release of
cash previously required to be held in escrow per the terms of the
various mortgage note payable agreements.
(8) Reflects the increase in depreciation from depreciating over 40 years
the pro forma increase to real estate from the purchase of limited
partners' interests and transfer costs paid.
(9) Reflects the repayment of a portion of the existing mortgage
indebtedness from proceeds of the Initial Offering for the Predecessor
Period:
<TABLE>
<CAPTION>
PRINCIPAL INTEREST
PROPERTIES AMOUNT RATE INTEREST
---------- --------- -------- --------
<S> <C> <C> <C>
599 Lexington Avenue........................... $225,000 7.00% $ 7,547
Two Independence Square........................ 122,505 7.90% 4,637
One Independence Square........................ 78,327 7.90% 2,965
2300 N Street.................................. 66,000 7.00% 2,214
Capital Gallery................................ 60,559 8.24% 2,391
Ten Cambridge Center........................... 25,000 7.57% 907
191 Spring Street.............................. 23,883 8.50% 973
Bedford Business Park.......................... 23,376 8.50% 952
10 & 20 Burlington Mall Road................... 16,621 8.33% 663
Cambridge Center North Garage.................. 15,000 7.57% 544
91 Hartwell Avenue............................. 11,322 8.33% 452
92 & 100 Hayden Avenue......................... 9,057 8.33% 362
Montvale Center................................ 7,969 8.59% 328
Newport Office Park............................ 6,874 8.13% 268
Hilltop Business Center........................ 4,750 7.00% 159
--------
Total......................................... 25,362
Historical interest expense - Predecessor Peri-
od............................................ (53,324)
--------
Pro forma interest expense adjustment for the
Predecessor Period............................ $(27,962)
========
</TABLE>
B. Reflects the results of operations, as adjusted for depreciation, of the
Newport Office Park, acquired concurrent with the Initial Offering, for the
period from January 1, 1997 to June 22, 1997 (the acquisition date).
F-16
<PAGE>
BOSTON PROPERTIES, INC.
NOTES TO THE PRO FORMA CONDENSED
CONSOLIDATED STATEMENT OF INCOME--(CONTINUED)
(DOLLARS IN THOUSANDS)
C. Reflects the historical results of operations, as adjusted for base rent
and depreciation, for the 1997 Acquisitions and Pending Acquisition for the
nine months ended September 30, 1997 as follows:
1997 ACQUISITIONS
<TABLE>
<CAPTION>
280 PARK 100 EAST PRATT 875 THIRD
AVENUE(1) STREET AVENUE TOTAL
--------- -------------- --------- -------
<S> <C> <C> <C> <C>
Revenue:
Base rent.......................... $17,012 $10,924 $18,646 $46,582
Adjustment(2)...................... 7,437 397 24 7,858
------- ------- ------- -------
Total base rent.................. 24,449 11,321 18,670 54,440
Recoveries from tenants............ 1,707 2,133 3,799 7,639
Other.............................. 80 267 -- 347
------- ------- ------- -------
Total rental revenue............. 26,236 13,721 22,469 62,426
------- ------- ------- -------
Expenses:
Operating.......................... 7,772 3,453 3,355 14,580
Real estate taxes.................. 6,677 1,541 4,831 13,049
Interest........................... -- -- 11,813 11,813
Depreciation(Note G)............... 3,355 1,934 2,357 7,646
------- ------- ------- -------
Total expenses................... 17,804 6,928 22,356 47,088
------- ------- ------- -------
Net income......................... $ 8,432 $ 6,793 $ 113 $15,338
======= ======= ======= =======
</TABLE>
- --------
(1) Reflects the results of operations for the period from January 1, 1997
through September 11, 1997 (the acquisition date).
(2) Represents an adjustment to straight-line rent based on the pro forma
acquisition date of January 1, 1996 and also includes an adjustment for
rental income from Banker's Trust during the period they occupied 280 Park
Avenue as owner/occupant of the building (the rental figure is based upon
the lease entered into by Banker's Trust concurrent with the sale of the
building to the Company on September 11, 1997).
PENDING ACQUISITION
<TABLE>
<CAPTION>
RIVERFRONT
PLAZA
----------
<S> <C>
Revenue:
Base rent.......................................................... $13,023
Adjustment(1)...................................................... 389
-------
Total base rent.................................................. 13,412
Recoveries from tenants............................................ 2,017
Other.............................................................. 382
-------
Total rental revenue............................................. 15,811
-------
Expenses:
Operating.......................................................... 2,761
Real estate taxes.................................................. 1,219
Interest........................................................... --
Depreciation(Note G)............................................... 2,288
-------
Total expenses................................................... 6,268
-------
Net income......................................................... $ 9,543
=======
</TABLE>
- --------
(1) Represents an adjustment to straight-line rent based on the pro forma
acquisition date of January 1, 1996.
F-17
<PAGE>
BOSTON PROPERTIES, INC.
NOTES TO THE PRO FORMA CONDENSED
CONSOLIDATED STATEMENT OF INCOME--(CONTINUED)
(DOLLARS IN THOUSANDS)
D. Reflects reduction in interest income as a result of cash used for the
acquisition of 280 Park Avenue.
E. Reflects the incremental increase in general and administrative costs
related to the 1997 Acquisitions and Pending Acquisition.
F. Reflects the net increase in interest as a result of the following debt
transactions:
Payoff of the Unsecured Line of Credit with proceeds from
the Offering for the period sub-sequent to the Initial
Offering, net of amounts capitalized......................... $ (411)
Acquisition mortgage financing of 280 Park Avenue in the
original principal amount of $220 million computed at an
interest rate of 7% for period January 1, 1997 to
September 11, 1997 (date of acquisition)..................... 10,675
Amortization of deferred financing fees for the period from
January 1, 1997 to September 1, 1997 (date of acquisition)
as a result of approximately $1.1 million of fees associated
with the mortgage financing of 280 Park Avenue. The deferred
financing fees are amortized over the five year term of the
loan ........................................................ 153
Seller financing of Riverfront Plaza in the principal amount
of $121,800 computed at the 10 year U.S. Treasury Note rate
(5.88% at November 17, 1997) plus 1.15% ..................... 6,422
-------
Increase in interest expense for the period subsequent to
the Initial Offering......................................... $16,839
=======
G. Detail of pro forma depreciation expense is presented below for the Initial
Offering Acquisition Property, the 1997 Acquisitions and the Pending
Acquisition:
<TABLE>
<CAPTION>
ESTIMATED
PURCHASE LIFE OF PRO FORMA
PROPERTY(IES) PRICE ASSETS DEPRECIATION
- ------------- -------- --------- ------------
<S> <C> <C> <C>
INITIAL OFFERING ACQUISITION PROPERTY
Newport Office Park(1).......................... $21,700 40 $ 210
======
1997 ACQUISITIONS
280 Park Avenue(1).............................. 322,650 40 $3,355
100 East Pratt Street........................... 137,500 40 1,934
875 Third Avenue................................ 209,500 40 2,357
------
$7,646
======
PENDING ACQUISITION
Riverfront Plaza................................ 174,361 40 $2,288
======
</TABLE>
- --------
(1) Reflects pro forma depreciation expense for the periods prior to
acquisition.
H. Adjustment to minority interest to reflect the minority investors interest
in the Operating Partnership of approximately 24.35% following the Offering
and issuance of OP Units and common shares.
F-18
<PAGE>
BOSTON PROPERTIES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
BOSTON -----------------------------------------------------------------------
PROPERTIES INITIAL
PREDECESSOR FORMATION OFFERING 1997 PENDING OTHER PRO
GROUP TRANSACTIONS ACQUISITION PROPERTY ACQUISITIONS ACQUISITION ADJUSTMENTS FORMA
----------- ------------ -------------------- ------------ ----------- ----------- --------
(A) (B) (C) (C)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue:
Rental:
Base rent.............. $169,420 $22,371 $2,908 $66,637 $16,420 -- $277,756
Recoveries from
tenants................ 22,607 -- 180 11,379 2,976 -- 37,142
Parking and other...... 2,979 (2,043) -- 412 436 -- 1,784
-------- ------- ------ ------- ------- -------- --------
Total rental revenue.. 195,006 20,328 3,088 78,428 19,832 -- 316,682
Hotel.................. 65,678 (65,678) -- -- -- -- --
Development and
management services.... 5,719 (936) -- -- -- -- 4,783
Interest and other..... 3,530 (705) -- -- -- -- 2,825
-------- ------- ------ ------- ------- -------- --------
Total revenue......... 269,933 (46,991) 3,088 78,428 19,832 -- 324,290
-------- ------- ------ ------- ------- -------- --------
Expenses:
Rental:
Operating.............. 29,823 (713) 879 18,751 3,865 -- 52,605
Real estate taxes...... 28,372 2,754 347 18,327 1,638 -- 51,438
Hotel:
Operating.............. 43,634 (43,634) -- -- -- -- --
Real estate taxes...... 3,100 (3,100) -- -- -- -- --
General and
administrative......... 10,754 834 -- -- -- $ 300(D) 11,888
Interest............... 109,394 (54,398) -- 15,750 -- 24,183(E) 94,929
Depreciation and
amortization........... 36,199 257 434 10,561(F) 3,051 -- 50,502
-------- ------- ------ ------- ------- -------- --------
Total expenses........ 261,276 (98,000) 1,660 63,389 8,554 24,483 261,362
-------- ------- ------ ------- ------- -------- --------
Income before minority
interests .............. 8,657 51,009 1,428 15,039 11,278 (24,483) 62,928
Minority interest in
property partnership.... (384) -- -- -- -- -- (384)
-------- ------- ------ ------- ------- -------- --------
Income before minority
interest in Operating
Partnership ............ 8,273 51,009 1,428 15,039 11,278 (24,483) 62,544
Minority interest in
Operating Partnership... -- -- -- -- -- (15,229)(G) (15,229)
-------- ------- ------ ------- ------- -------- --------
Net income.............. $ 8,273 $51,009 $1,428 $15,039 $11,278 $(39,712) $ 47,315
======== ======= ====== ======= ======= ======== ========
Net income per common
share................... $ .90
========
Weighted average number
of common shares
outstanding............. 52,694
========
</TABLE>
The accompanying notes are an integral part of the pro forma condensed
consolidated statement of income.
F-19
<PAGE>
BOSTON PROPERTIES, INC.
NOTES TO THE PRO FORMA CONDENSED
CONSOLIDATED STATEMENT OF INCOME
(DOLLARS IN THOUSANDS)
NOTES TO THE PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME FOR THE YEAR
ENDED DECEMBER 31, 1996
A. Reflects the pro forma Formation Transactions adjustment summary for the
year ended December 31, 1996
<TABLE>
<CAPTION>
RENT HOTEL
HOTELS INTEREST PROPERTY PROPERTY HOTEL REAL
PRO FORMA AND PARKING HOTEL MGMT AND OPERATING REAL ESTATE OPERATING ESTATE GENERAL & INTEREST
ADJUSTMENTS GARAGE INCOME REVENUE FEES OTHER EXPENSES TAXES EXPENSES TAXES ADMIN EXPENSE
- ----------- ------ ------- -------- ----- -------- --------- ----------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(1) Assignment of
contracts....... $(936) $ (866)
(2)Equity
investment
income.......... $66
(3)Operation of
hotels and
garage.......... $(2,043) $(65,678) $(713) $2,754 $(43,634) $ (3,100)
(4)Rental of hotels
and garage...... $22,371
(5)General and
administrative.. 1,700
(6)Amortization of
deferred
financing
costs........... $ (731)
(7)Release of
restricted
cash............ (771)
(8)Depreciation
expense.........
(9)Mortgage
interest........ (53,667)
------- ------- -------- ----- ----- ----- ------ -------- -------- ------ --------
Pro forma
formation
transactions
adjustment
summary total... $22,371 $(2,043) $(65,678) $(936) $(705) $(713) $2,754 $(43,634) $(3,100) $ 834 $(54,398)
======= ======= ======== ===== ===== ===== ====== ======== ======== ====== ========
<CAPTION>
DEPREC-
PRO FORMA IATION
ADJUSTMENTS EXPENSE
- ----------- -------
<S> <C>
(1) Assignment of
contracts.......
(2)Equity
investment
income..........
(3)Operation of
hotels and
garage..........
(4)Rental of hotels
and garage......
(5)General and
administrative..
(6)Amortization of
deferred
financing
costs...........
(7)Release of
restricted
cash............
(8)Depreciation
expense......... $257
(9)Mortgage
interest........
-------
Pro forma
formation
transactions
adjustment
summary total... $257
=======
</TABLE>
- ----
(1) In connection with the Formation Transactions, certain third-party
management contracts are assigned to the Development and Management
Company. As a result of the assignment, current operating income,
expenses and overhead attributable to the contracts are reflected in the
operations of the Development and Management Company as detailed below:
<TABLE>
<S> <C>
Management services.................................................. $936
General and administrative expenses.................................. (866)
----
Manager contract income............................................. $ 70
====
</TABLE>
(2) The Operating Partnership holds a 95% economic interest in the
Development and Management Company and records an equity interest of $66
on the $70 net income.
(3) In connection with the Formation Transactions, the Operating Partnership
entered into participating leases for the operation of the hotels and
parking garage. As a result of these agreements, revenue and expenses are
not reflected from the operation of these businesses.
(4) Represents rental income from the leasing of the hotels and parking
garage owned by the Operating Partnership. The hotel lease arrangements
are with an affiliate.
(5) Reflects an increase of $1,700 in general and administrative expenses as
a result of operating as a public company.
(6) Reflects the net increase of $600 in the amortization of deferred
financing costs for the $1,800 fee and related professional costs on the
Unsecured Line of Credit, less a net reduction of $1,331 in amortization
of deferred financing costs related to debt paid off with the Initial
Offering proceeds.
(7) Reflects the decrease in interest income as a result of the release of
cash previously required to be held in escrow per the terms of the
various mortgage note payable agreements.
(8) Reflects the increase in depreciation from depreciating over 40 years the
pro forma increase to real estate from the purchase of limited partners'
interests and transfer costs paid.
F-20
<PAGE>
BOSTON PROPERTIES, INC.
NOTES TO THE PRO FORMA CONDENSED
CONSOLIDATED STATEMENT OF INCOME--(CONTINUED)
(DOLLARS IN THOUSANDS)
(9) Reflects the repayment of a portion of the existing mortgage
indebtedness from proceeds of the Initial Offering and the corresponding
adjustment to interest expense incurred in 1996.
<TABLE>
<CAPTION>
PRINCIPAL INTEREST
PROPERTY(IES) AMOUNT RATE INTEREST
------------- --------- -------- ---------
<S> <C> <C> <C>
599 Lexington Avenue................... $225,000 7.00% $ 15,750(1)
Two Independence Square................ 122,855 7.90% 9,813
One Independence Square................ 78,700 7.90% 6,276
2300 N Street.......................... 66,000 7.00% 4,620(1)
Capital Gallery........................ 60,751 8.24% 5,761
Ten Cambridge Center................... 25,000 7.57% 1,924
191 Spring Street...................... 23,942 8.50% 1,697
Bedford Business Park.................. 23,500 8.50% 1,998(1)
10 & 20 Burlington Mall Road........... 16,621 8.33% 1,385
Cambridge Center North Garage.......... 15,000 7.57% 1,183
91 Hartwell Avenue..................... 11,322 8.33% 943
92 & 100 Hayden Avenue................. 9,057 8.33% 754
Montvale Center........................ 7,992 8.59% 474
Newport Office Park.................... 6,874 8.13% 558
Hilltop Business Center................ 4,817 7.00% 318
---------
Pro forma totals....................... 53,454
Historical interest expense for the
year ended December 31, 1996.......... (107,121)
---------
Pro forma interest expense adjustment.. $ (53,667)
=========
</TABLE>
- --------
(1) The interest expense used in this calculation assumes the mortgage
loan was outstanding during all of 1996.
B. Reflects the historical results of operations, as adjusted for
depreciation, for Newport Office Park, acquired concurrent with the Initial
Offering for the year ended December 31, 1996.
C. Reflects the historical results of operations, as adjusted for base rent
and depreciation, for the 1997 Acquisitions and Pending Acquisition for the
year ended December 31, 1996 as follows:
1997 ACQUISITIONS
<TABLE>
<CAPTION>
280 PARK 100 EAST PRATT 875 THIRD
AVENUE STREET AVENUE TOTAL
-------- -------------- --------- -------
<S> <C> <C> <C> <C>
Revenue:
Base rent........................... $16,786 $14,046 $25,255 $56,087
Adjustment(1)....................... 9,991 528 31 10,550
------- ------- ------- -------
Total base rent................... 26,777 14,574 25,286 66,637
Recoveries from tenants............. 2,600 2,966 5,813 11,379
Other............................... 59 353 -- 412
------- ------- ------- -------
Total rental revenue.............. 29,436 17,893 31,099 78,428
------- ------- ------- -------
Expenses:
Operating........................... 10,169 4,333 4,249 18,751
Real estate taxes................... 9,908 2,054 6,365 18,327
Interest............................ -- -- 15,750 15,750
Depreciation(Note F)................ 4,840 2,578 3,143 10,561
------- ------- ------- -------
Total expenses.................... 24,917 8,965 29,507 63,389
------- ------- ------- -------
Net income.......................... $ 4,519 $ 8,928 $ 1,592 $15,039
======= ======= ======= =======
</TABLE>
- --------
(1) Represents an adjustment to straight-line rent based on the pro forma
acquisition date of January 1, 1996 and also includes an adjustment for
rental income from Banker's Trust during the period they occupied 280 Park
Avenue as owner/occupant of the building (the rental figure is based upon
the lease entered into by Banker's Trust concurrent with the sale of the
building to the Company on September 11, 1997).
F-21
<PAGE>
BOSTON PROPERTIES, INC.
NOTES TO THE PRO FORMA CONDENSED
CONSOLIDATED STATEMENT OF INCOME--(CONTINUED)
(DOLLARS IN THOUSANDS)
PENDING ACQUISITION
<TABLE>
<CAPTION>
RIVERFRONT
PLAZA
----------
<S> <C>
Revenue:
Base rent.......................................................... $15,898
Adjustment(1)...................................................... 522
-------
Total base rent.................................................. 16,420
Recoveries from tenants............................................ 2,976
Other.............................................................. 436
-------
Total rental revenue............................................. 19,832
-------
Expenses:
Operating.......................................................... 3,865
Real estate taxes.................................................. 1,638
Interest........................................................... --
Depreciation(Note F)............................................... 3,051
-------
Total expenses................................................... 8,554
-------
Net income......................................................... $11,278
=======
</TABLE>
- --------
(1) Represents an adjustment to straight-line rent based on the pro forma
acquisition date of January 1, 1996.
D. Reflects the incremental increase in general and administrative costs
related to the 1997 Acquisitions and Pending Acquisition.
E. Reflects the net increase in interest expense as a result of the following
debt transactions:
Acquisition mortgage financing of 280 Park Avenue in the original
principal amount of $220 million computed at an interest rate
of 7.0% for the year ended December 31, 1996.................... $15,400
Amortization of deferred financing fees as a result of
approximately $1.1 million of fees associated with the mortgage
financing of 280 Park Avenue. The deferred financing fees are
amortized over the five year term of the loan .................. 220
Seller financing of Riverfront Plaza in the principal amount of
$121,800 computed at the 10 year U.S. Treasury Note rate
(5.88% at November 17, 1997) plus 1.15%......................... 8,563
-------
Increase in interest expense...................................... $24,183
=======
- --------
F. Detail of pro forma depreciation expense is presented below for the
Acquisition at Initial Offering, the 1997 Acquisitions and the Pending
Acquisition:
<TABLE>
<CAPTION>
ESTIMATED
PURCHASE LIFE OF PRO FORMA
PROPERTY(IES) PRICE ASSETS DEPRECIATION
- ------------- -------- --------- ------------
<S> <C> <C> <C>
INITIAL OFFERING ACQUISITION PROPERTY
Newport Office Park............................. $ 21,700 40 $ 434
=======
1997 ACQUISITIONS
280 Park Avenue................................. 322,650 40 $ 4,840
100 East Pratt Street........................... 137,500 40 2,578
875 Third Avenue................................ 209,500 40 3,143
-------
$10,561
=======
PENDING ACQUISITION
Riverfront Plaza................................ 174,361 40 $ 3,051
=======
</TABLE>
G. Adjustment to minority interest to reflect the minority investors interest
in the Operating Partnership of approximately 24.35% following the Offering
and issuance of OP Units and common shares.
F-22
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this report on Form 8-K/A of Boston Properties,
Inc. dated December 4, 1997 of our reports dated (i) November 3, 1997 on our
audit of the Statement of Revenue Over Certain Operating Expenses of 100 East
Pratt Street for the year ended December 31, 1996 and (ii) November 25, 1997 on
our audit of the Statement of Revenue Over Certain Operating Expenses of
Riverfront Plaza for the year ended December 31, 1996.
Boston, Massachusetts /s/ Coopers & Lybrand L.L.P.
December 4, 1997
