Boston Properties(US:BXP)2025-08-06 18:20PART I. FINANCIAL INFORMATION This section provides unaudited consolidated financial statements, management's discussion, market risk, and controls ITEM 1. Financial Statements (unaudited) This section presents unaudited consolidated financial statements for BXP, Inc. and BPLP, covering balance sheets, income, cash flows, and notes BXP, Inc. Financial Statements This section provides BXP, Inc.'s unaudited balance sheets, income statements, and cash flow statements for the specified periods | Financial Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Assets | | | | Total real estate | $21,262,840 | $21,050,255 | | Cash and cash equivalents | $446,953 | $1,254,882 | | Total assets | $25,621,190 | $26,084,980 | | Liabilities & Equity | | | | Total liabilities | $17,766,779 | $18,137,324 | | Total stockholders' equity attributable to BXP, Inc. | $5,258,786 | $5,413,306 | | Total equity | $7,847,430 | $7,938,121 | | Income Statement Metric | Six months ended June 30, 2025 (in thousands) | Six months ended June 30, 2024 (in thousands) | | :--- | :--- | :--- | | Total revenue | $1,733,672 | $1,689,921 | | Total expenses | $1,229,024 | $1,192,965 | | Net income | $206,046 | $213,553 | | Net income attributable to BXP, Inc. | $150,161 | $159,498 | | Diluted EPS attributable to BXP, Inc. | $0.95 | $1.01 | | Cash Flow Metric | Six months ended June 30, 2025 (in thousands) | Six months ended June 30, 2024 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $563,181 | $564,659 | | Net cash used in investing activities | ($612,404) | ($553,504) | | Net cash used in financing activities | ($758,132) | ($886,221) | | Net decrease in cash and cash equivalents | ($807,355) | ($875,066) | Boston Properties Limited Partnership Financial Statements This section presents the unaudited balance sheets and income statements for Boston Properties Limited Partnership | Financial Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Assets | | | | Total real estate | $21,030,255 | $20,814,165 | | Total assets | $25,388,605 | $25,848,890 | | Liabilities & Capital | | | | Total liabilities | $17,766,779 | $18,137,324 | | Total partners' capital | $4,325,791 | $4,389,913 | | Total capital | $6,329,784 | $6,323,458 | | Income Statement Metric | Six months ended June 30, 2025 (in thousands) | Six months ended June 30, 2024 (in thousands) | | :--- | :--- | :--- | | Total revenue | $1,733,672 | $1,689,921 | | Total expenses | $1,225,618 | $1,189,565 | | Net income | $209,551 | $216,953 | | Net income attributable to BPLP | $170,702 | $181,907 | | Diluted EPS attributable to BPLP | $0.97 | $1.04 | Notes to the Consolidated Financial Statements This section details accounting policies, significant transactions, and subsequent events impacting the consolidated financial statements - As of June 30, 2025, the company owned or had joint venture interests in a portfolio of 186 commercial real estate properties, totaling approximately 53.7 million net rentable square feet, including ten properties under construction/redevelopment76 - On June 27, 2025, the company sold land at 17 Hartwell Avenue to a new joint venture for approximately $21.8 million, recognizing a gain of approximately $18.4 million for BXP and $18.5 million for BPLP, for redevelopment into a 312-unit residential property100 - On March 28, 2025, BPLP amended its revolving credit agreement, increasing the revolving facility to $2.25 billion (from $2.0 billion) and adding a new $700.0 million unsecured term loan facility, with proceeds used to repay the existing $700.0 million term loan119125 - The company is involved in a legal dispute over performance-based fees for a New York City property, with potential liability as high as an additional $31 million plus interest if the court agrees with the seller's calculations141144 - On July 31, 2025, the company elected to proceed with full vertical construction of 343 Madison Avenue, a 930,000 rentable square foot office development, and acquired its partner's 45% interest for approximately $43.5 million191 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses company performance, emphasizing strong leasing, development, and liquidity, with net income slightly down due to interest expenses Overview and Outlook This section outlines BXP's core strategy, market position, and positive outlook, driven by corporate confidence and return-to-office trends - BXP's core strategy involves developing, acquiring, and managing premier workplaces in gateway markets, focusing on long-term leases with financially strong clients, validated by outperformance in occupancy and rental rates204 - The company's Central Business District (CBD) assets, representing approximately 89% of its annualized rental obligations, were 89.9% occupied and 92.5% leased as of June 30, 2025205 - The outlook is positive, supported by improving corporate confidence, a continued rebound in office utilization, and favorable macroeconomic developments, with return-to-office trends strongest in East Coast markets207208211 Leasing Activity and Occupancy This section details the company's leasing volume, occupancy rates, and changes in cash rents across various regions - In Q2 2025, the company executed 91 leases totaling over 1.1 million square feet with a weighted-average lease term of 9.4 years, and leasing volume over the last four quarters (5.7 million sq. ft.) was 18% higher than the prior four-quarter period213 - Overall in-service office and retail property occupancy was 86.4% at June 30, 2025, a 0.5% decrease from the prior quarter, with a leased percentage of 89.1% representing approximately 1.3 million square feet of signed leases yet to commence revenue recognition215216 | Region | Leases Executed (sq. ft.) | Occupancy | Leased | Change in 2nd Gen Cash Rents | | :--- | :--- | :--- | :--- | :--- | | Boston | 235,824 | 89.7% | 91.2% | (0.13)% | | Los Angeles | 7,322 | 86.3% | 86.9% | (48.64)% | | New York | 344,170 | 84.4% | 90.2% | (15.18)% | | San Francisco | 159,599 | 78.7% | 80.7% | (18.71)% | | Seattle | 18,556 | 84.6% | 85.9% | —% | | Washington, DC | 356,350 | 90.5% | 92.3% | (14.51)% | | Total / W.A. | 1,121,821 | 86.4% | 89.1% | (14.27)% | Results of Operations This section analyzes the company's financial performance, including net income, NOI, and key factors influencing period-over-period changes | Metric (Six Months Ended June 30) | 2025 (in thousands) | 2024 (in thousands) | Change (in thousands) | % Change | | :--- | :--- | :--- | :--- | :--- | | Net Income Attributable to BXP, Inc. | $150,161 | $159,498 | ($9,337) | (5.85)% | | Net Income Attributable to BPLP | $170,702 | $181,907 | ($11,205) | (6.16)% | | Net Operating Income (NOI) | $1,025,878 | $1,017,537 | $8,341 | 0.82% | - For the six months ended June 30, 2025, Same Property Portfolio NOI decreased by 0.62% ($6.2 million), driven by a 3.9% increase in operating expenses (primarily repairs, maintenance, and utilities) which offset a 1.16% increase in rental revenue242245248 - Interest expense increased by $14.7 million for the six months ended June 30, 2025, primarily due to the issuance of $850 million of 5.750% senior notes in August 2024 and higher borrowings on commercial paper288289 - For the three months ended June 30, 2025, Net Income Attributable to BXP, Inc. increased by $9.4 million, driven by an $18.4 million gain on the sale of real estate, which offset a $13.1 million increase in interest expense298300 Liquidity and Capital Resources This section assesses the company's cash position, available credit, development funding, and debt structure to meet financial obligations - As of July 31, 2025, the company had approximately $255.6 million in available cash and approximately $1.0 billion available under BPLP's Revolving Facility after backstopping its commercial paper program360 - The company is actively negotiating the sale of nine land sites and empty buildings, which could generate approximately $300 million in gross proceeds over the next 24 months, with definitive agreements in place for five sites totaling $176.3 million361362 - As of June 30, 2025, the company has 11 properties under development/redevelopment, with a total estimated investment of $4.3 billion, and approximately $2.9 billion remains to be funded through 2031365367 | Debt Summary | June 30, 2025 (in thousands) | | :--- | :--- | | Unsecured Senior Notes, net | $9,800,577 | | Unsecured Commercial Paper | $750,000 | | Unsecured Line of Credit | $185,000 | | Unsecured Term Loans, net | $796,640 | | Mortgage Notes, net | $4,278,788 | | Total Consolidated Debt | $15,811,005 | Funds from Operations (FFO) This section presents the Funds from Operations (FFO) for BXP, Inc. and BPLP for the three months ended June 30 | FFO Metric (Three Months Ended June 30) | 2025 (in thousands) | 2024 (in thousands) | | :--- | :--- | :--- | | FFO attributable to BXP, Inc. | $271,652 | $278,399 | | Diluted FFO attributable to BXP, Inc. | $271,713 | $278,430 | | FFO attributable to BPLP | $301,769 | $310,956 | ITEM 3. Quantitative and Qualitative Disclosures about Market Risk Primary market risk is interest rate exposure; $1.6 billion variable-rate debt, 100 bps hike increases interest expense by $12.5 million - As of June 30, 2025, approximately $13.3 billion of indebtedness bore fixed interest rates, while approximately $2.5 billion was at variable rates, of which $900.0 million has been hedged with interest rate swaps422 - A 100 basis point increase in market interest rates on variable rate debt would have increased interest expense by approximately $6.3 million for Q2 2025 and $12.5 million for the six months ended June 30, 2025424 ITEM 4. Controls and Procedures Management, including CEO and CFO, concluded disclosure controls for BXP, Inc. and BPLP were effective, with no material changes to internal controls - The Chief Executive Officer and Chief Financial Officer of BXP, Inc. concluded that the disclosure controls and procedures for both BXP, Inc. and Boston Properties Limited Partnership were effective as of the end of the period covered by the report427429 - No changes in internal control over financial reporting occurred during the second quarter of fiscal year 2025 that materially affected, or are reasonably likely to materially affect, internal controls428430 PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and exhibits ITEM 1. Legal Proceedings The company is involved in ordinary legal proceedings, generally insured, with no expected material adverse effect on financial condition or results - The company states that it is subject to ordinary course legal proceedings which are generally covered by insurance and are not expected to have a material adverse effect on its financial position, results of operations, or liquidity433 ITEM 1A. Risk Factors No material changes to risk factors were reported from those disclosed in the Annual Report on Form 10-K for December 31, 2024 - There were no material changes to the risk factors disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024434 ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds BPLP issued 40,669 common units to BXP for incentive plans, and BXP repurchased shares for employee terminations and tax obligations - BPLP issued an aggregate of 40,669 common units to BXP in exchange for approximately $60.85 in proceeds from BXP's common stock issuances under its 2021 Stock Incentive Plan during Q2 2025438 - BXP repurchased a total of 1,615 shares of common stock during the quarter, primarily related to employee terminations and tax withholding obligations on vested restricted stock436437 ITEM 3. Defaults Upon Senior Securities The company reported no defaults on its senior securities during the reporting period - None441 ITEM 4. Mine Safety Disclosures The company reported no mine safety disclosures for the period - None442 ITEM 5. Other Information No other material information was reported, and no directors or officers modified Rule 10b5-1 trading arrangements - During the three months ended June 30, 2025, no directors or officers adopted, terminated, or modified a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement445 ITEM 6. Exhibits This section lists exhibits filed with the Form 10-Q, including credit agreement amendments, CEO/CFO certifications, and XBRL data files - The exhibits filed with this report include CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act for both BXP, Inc. and Boston Properties Limited Partnership, as well as Inline XBRL data files446