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Segment Information | 6 Months Ended
--- | ---
Jun. 30, 2019
Segment Reporting [Abstract] |
Segment Information | 12. Segment Information The following tables present reconciliations of Net Income Attributable to Boston Properties, Inc. Common Shareholders to the Company’s share of Net Operating Income and Net Income Attributable to Boston Properties Limited Partnership Common Unitholders to the Company’s share of Net Operating Income for the three and six months ended June 30, 2019 and 2018. Boston Properties, Inc.
| Three months ended June 30, |  | Six months ended June 30,
| 2019 |  | 2018 |  | 2019 |  | 2018
| (in thousands)
Net income attributable to Boston Properties, Inc. common shareholders | $ | 164,318 |  |  | $ | 128,681 |  |  | $ | 262,431 |  |  | $ | 304,682 |
Add: |  |  |  |  |  |  |
Preferred dividends | 2,625 |  |  | 2,625 |  |  | 5,250 |  |  | 5,250 |
Noncontrolling interest—common units of Boston Properties Limited Partnership | 19,036 |  |  | 14,859 |  |  | 30,627 |  |  | 35,311 |
Noncontrolling interests in property partnerships | 17,482 |  |  | 14,400 |  |  | 36,312 |  |  | 31,634 |
Interest expense | 102,357 |  |  | 92,204 |  |  | 203,366 |  |  | 182,424 |
Impairment loss | — |  |  | — |  |  | 24,038 |  |  | — |
Net operating income from unconsolidated joint ventures | 24,715 |  |  | 16,227 |  |  | 50,064 |  |  | 32,287 |
Depreciation and amortization expense | 177,411 |  |  | 156,417 |  |  | 342,005 |  |  | 322,214 |
Transaction costs | 417 |  |  | 474 |  |  | 877 |  |  | 495 |
Payroll and related costs from management services contracts | 2,403 |  |  | 1,970 |  |  | 5,798 |  |  | 4,855 |
General and administrative expense | 35,071 |  |  | 28,468 |  |  | 76,833 |  |  | 64,362 |
Less: |  |  |  |  |  |  |
Net operating income attributable to noncontrolling interests in property partnerships | 45,562 |  |  | 43,049 |  |  | 92,647 |  |  | 88,958 |
Gains from investments in securities | 1,165 |  |  | 505 |  |  | 4,134 |  |  | 379 |
Interest and other income | 3,615 |  |  | 2,579 |  |  | 7,368 |  |  | 4,227 |
Gains on sales of real estate | 1,686 |  |  | 18,292 |  |  | 781 |  |  | 114,689 |
Income from unconsolidated joint ventures | 47,964 |  |  | 769 |  |  | 48,177 |  |  | 1,230 |
Direct reimbursements of payroll and related costs from management services contracts | 2,403 |  |  | 1,970 |  |  | 5,798 |  |  | 4,855 |
Development and management services revenue | 9,986 |  |  | 9,305 |  |  | 19,263 |  |  | 17,710 |
Company’s share of Net Operating Income | $ | 433,454 |  |  | $ | 379,856 |  |  | $ | 859,433 |  |  | $ | 751,466 |
Boston Properties Limited Partnership
| Three months ended June 30, |  | Six months ended June 30,
| 2019 |  | 2018 |  | 2019 |  | 2018
| (in thousands)
Net income attributable to Boston Properties Limited Partnership common unitholders | $ | 185,715 |  |  | $ | 145,961 |  |  | $ | 299,097 |  |  | $ | 346,868 |
Add: |  |  |  |  |  |  |
Preferred distributions | 2,625 |  |  | 2,625 |  |  | 5,250 |  |  | 5,250 |
Noncontrolling interests in property partnerships | 17,482 |  |  | 14,400 |  |  | 36,312 |  |  | 31,634 |
Interest expense | 102,357 |  |  | 92,204 |  |  | 203,366 |  |  | 182,424 |
Impairment loss | — |  |  | — |  |  | 22,272 |  |  | — |
Net operating income from unconsolidated joint ventures | 24,715 |  |  | 16,227 |  |  | 50,064 |  |  | 32,287 |
Depreciation and amortization expense | 175,199 |  |  | 154,474 |  |  | 337,881 |  |  | 318,327 |
Transaction costs | 417 |  |  | 474 |  |  | 877 |  |  | 495 |
Payroll and related costs from management services contracts | 2,403 |  |  | 1,970 |  |  | 5,798 |  |  | 4,855 |
General and administrative expense | 35,071 |  |  | 28,468 |  |  | 76,833 |  |  | 64,362 |
Less: |  |  |  |  |  |  |
Net operating income attributable to noncontrolling interests in property partnerships | 45,562 |  |  | 43,049 |  |  | 92,647 |  |  | 88,958 |
Gains from investments in securities | 1,165 |  |  | 505 |  |  | 4,134 |  |  | 379 |
Interest and other income | 3,615 |  |  | 2,579 |  |  | 7,368 |  |  | 4,227 |
Gains on sales of real estate | 1,835 |  |  | 18,770 |  |  | 930 |  |  | 117,677 |
Income from unconsolidated joint ventures | 47,964 |  |  | 769 |  |  | 48,177 |  |  | 1,230 |
Direct reimbursements of payroll and related costs from management services contracts | 2,403 |  |  | 1,970 |  |  | 5,798 |  |  | 4,855 |
Development and management services revenue | 9,986 |  |  | 9,305 |  |  | 19,263 |  |  | 17,710 |
Company’s share of Net Operating Income | $ | 433,454 |  |  | $ | 379,856 |  |  | $ | 859,433 |  |  | $ | 751,466 |
Net operating income (“NOI”) is a non-GAAP financial measure equal to net income attributable to Boston Properties, Inc. common shareholders and net income attributable to Boston Properties Limited Partnership common unitholders, as applicable, the most directly comparable GAAP financial measures, plus (1) preferred dividends/distributions, 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) gains from investments in securities, interest and other income, gains on sales of real estate, income from unconsolidated joint ventures, direct reimbursements of payroll and related costs from management services contracts and development and management services revenue. The Company believes NOI is useful to investors as a performance measure and believes it provides useful information to investors regarding the Company’s results of operations and financial condition because, when compared across periods, it reflects the impact on operations from trends in occupancy rates, rental rates, operating costs and acquisition and development activity on an unleveraged basis, providing perspective not immediately apparent from net income attributable to Boston Properties, Inc. common shareholders and net income attributable to Boston Properties Limited Partnership common unitholders. 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 the Company may not be comparable to NOI reported by other REITs or real estate companies that define NOI differently. The Company’s internal reporting utilizes its share of NOI, which includes its share of NOI from consolidated and unconsolidated joint ventures, which is a non-GAAP financial measure that is calculated as the consolidated amount, plus the Company’s share of the amount from the Company’s unconsolidated joint ventures (calculated based upon the Company’s percentage ownership interest and, in some cases, after priority allocations), minus the Company’s partners’ share of the amount from the Company’s consolidated joint ventures (calculated based upon the partners’ percentage ownership interests and, in some cases, after priority allocations, income allocation to private REIT shareholders and their share of fees due to the Company). The Company’s share of NOI from unconsolidated joint ventures does not include its share of gains on sale of real estate from unconsolidated joint ventures which is included within income from unconsolidated joint ventures in the Company’s Consolidated Statements of Operations. Management utilizes its share of NOI in assessing its performance as the Company has several significant joint ventures and, in some cases, the Company exercises significant influence over, but does not control, the joint venture, in which case GAAP requires that the Company account for the joint venture entity using the equity method of accounting and the Company does not consolidate it for financial reporting purposes. In other cases, GAAP requires that the Company consolidate the venture even though the Company’s partner(s) owns a significant percentage interest. As a result, the presentations of the Company’s share of NOI should not be considered a substitute for, and should only be considered together with and as a supplement to, the Company’s financial information presented in accordance with GAAP. Asset information by segment is not reported because the Company does not use this measure to assess performance. Therefore, depreciation and amortization expense is not allocated among segments. Preferred dividends/distributions, interest expense, impairment loss, depreciation and amortization expense, transaction costs, payroll and related costs from management services contracts, corporate general and administrative expense, gains from investments in securities, interest and other income, gains on sales of real estate, direct reimbursements of payroll and related costs from management services contracts and development and management services revenue are not included in NOI and are provided as reconciling items to the Company’s reconciliations of its share of NOI to net income attributable to common shareholders/unitholders. The Company’s segments are based on the Company’s method of internal reporting which classifies its operations by geographic area. The Company’s segments by geographic area are Boston, Los Angeles, New York, San Francisco and Washington, DC. The Company also presents information for each segment by property type including Office, Residential and Hotel. Beginning in 2019, the Company modified the presentation of its geographic area classification for all periods presented to include the Los Angeles geographic area to align with its method of internal reporting. The Company expanded its presence in the Los Angeles geographic area with its equity method investment in Santa Monica Business Park located in Santa Monica, California. As of June 30, 2019, the Company has equity interests in a portfolio of 27 office and retail properties in the Los Angeles geographic area aggregating approximately 2.3 million net rentable square feet, all of which are owned through investments in unconsolidated joint ventures. The Company is presenting the Los Angeles geographic area as a reportable segment to align with its method of internal reporting given the increased significance as a result of commencing a full reporting period of ownership of the Santa Monica Business Park portfolio. The inclusion of the Los Angeles geographic area has also resulted in a change in the reported measure of segment profit or loss from NOI to the Company’s share of NOI. This change has been reflected in all periods presented and the impact of the change can been seen within the tables below. The Company has not presented rental revenue and rental expenses for properties owned through investments in unconsolidated joint ventures, including those in the Los Angeles geographic area, as the Company accounts for these properties using the equity method of accounting. Information by geographic area (dollars in thousands): For the three months ended June 30, 2019:
| Boston |  | Los Angeles |  | New York |  | San Francisco |  | Washington, DC |  | Total
Rental Revenue: (1) |  |  |  |  |  |  |  |  |  |  |
Office | $ | 217,961 |  |  | $ | — |  |  | $ | 251,556 |  |  | $ | 131,506 |  |  | $ | 96,486 |  |  | $ | 697,509 |
Residential | 3,222 |  |  | — |  |  | — |  |  | — |  |  | 5,777 |  |  | 8,999 |
Hotel | 14,844 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 14,844 |
Total | 236,027 |  |  | — |  |  | 251,556 |  |  | 131,506 |  |  | 102,263 |  |  | 721,352 |
% of Grand Totals | 32.72 | % |  | — | % |  | 34.87 | % |  | 18.23 | % |  | 14.18 | % |  | 100.00 | %
Rental Expenses: |  |  |  |  |  |  |  |  |  |  |
Office | 77,660 |  |  | — |  |  | 96,809 |  |  | 43,708 |  |  | 35,672 |  |  | 253,849 |
Residential | 1,279 |  |  | — |  |  | — |  |  | — |  |  | 2,843 |  |  | 4,122 |
Hotel | 9,080 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 9,080 |
Total | 88,019 |  |  | — |  |  | 96,809 |  |  | 43,708 |  |  | 38,515 |  |  | 267,051 |
% of Grand Totals | 32.96 | % |  | — | % |  | 36.25 | % |  | 16.37 | % |  | 14.42 | % |  | 100.00 | %
Net operating income | $ | 148,008 |  |  | $ | — |  |  | $ | 154,747 |  |  | $ | 87,798 |  |  | $ | 63,748 |  |  | $ | 454,301 |
% of Grand Totals | 32.58 | % |  | — | % |  | 34.06 | % |  | 19.33 | % |  | 14.03 | % |  | 100.00 | %
Less: Net operating income attributable to noncontrolling interests in property partnerships | (10,031 | ) |  | — |  |  | (35,531 | ) |  | — |  |  | — |  |  | (45,562 | )
Add: Company’s share of net operating income from unconsolidated joint ventures | 818 |  |  | 15,454 |  |  | 1,696 |  |  | — |  |  | 6,747 |  |  | 24,715 |
Company’s share of net operating income | $ | 138,795 |  |  | $ | 15,454 |  |  | $ | 120,912 |  |  | $ | 87,798 |  |  | $ | 70,495 |  |  | $ | 433,454 |
% of Grand Totals | 32.01 | % |  | 3.57 | % |  | 27.90 | % |  | 20.26 | % |  | 16.26 | % |  | 100.00 | %
_______________
(1) | Rental Revenue is equal to Total Revenue per the Company’s Consolidated Statements of Operations, less Development and Management Services Revenue and Direct Reimbursements of Payroll and Related Costs from Management Services Contracts Revenue per the Consolidated Statements of Operations.
For the three months ended June 30, 2018:
| Boston |  | Los Angeles |  | New York |  | San Francisco |  | Washington, DC |  | Total
Rental Revenue: (1) |  |  |  |  |  |  |  |  |  |  |
Office | $ | 207,810 |  |  | $ | — |  |  | $ | 234,006 |  |  | $ | 93,482 |  |  | $ | 98,505 |  |  | $ | 633,803 |
Residential | 1,195 |  |  | — |  |  | — |  |  | — |  |  | 3,604 |  |  | 4,799 |
Hotel | 14,607 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 14,607 |
Total | 223,612 |  |  | — |  |  | 234,006 |  |  | 93,482 |  |  | 102,109 |  |  | 653,209 |
% of Grand Totals | 34.23 | % |  | — | % |  | 35.83 | % |  | 14.31 | % |  | 15.63 | % |  | 100.00 | %
Rental Expenses: |  |  |  |  |  |  |  |  |  |  |
Office | 77,147 |  |  | — |  |  | 91,838 |  |  | 31,214 |  |  | 34,678 |  |  | 234,877 |
Residential | 706 |  |  | — |  |  | — |  |  | — |  |  | 2,207 |  |  | 2,913 |
Hotel | 8,741 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 8,741 |
Total | 86,594 |  |  | — |  |  | 91,838 |  |  | 31,214 |  |  | 36,885 |  |  | 246,531 |
% of Grand Totals | 35.12 | % |  | — | % |  | 37.26 | % |  | 12.66 | % |  | 14.96 | % |  | 100.00 | %
Net operating income | $ | 137,018 |  |  | $ | — |  |  | $ | 142,168 |  |  | $ | 62,268 |  |  | $ | 65,224 |  |  | $ | 406,678 |
% of Grand Totals | 33.69 | % |  | — | % |  | 34.96 | % |  | 15.31 | % |  | 16.04 | % |  | 100.00 | %
Less: Net operating income attributable to noncontrolling interests in property partnerships | (8,418 | ) |  | — |  |  | (34,751 | ) |  | 120 |  |  | — |  |  | (43,049 | )
Add: Company’s share of net operating income from unconsolidated joint ventures | 781 |  |  | 6,902 |  |  | 1,706 |  |  | — |  |  | 6,838 |  |  | 16,227 |
Company’s share of net operating income | $ | 129,381 |  |  | $ | 6,902 |  |  | $ | 109,123 |  |  | $ | 62,388 |  |  | $ | 72,062 |  |  | $ | 379,856 |
% of Grand Totals | 34.06 | % |  | 1.82 | % |  | 28.73 | % |  | 16.42 | % |  | 18.97 | % |  | 100.00 | %
_______________
(1) | Rental Revenue is equal to Total Revenue per the Company’s Consolidated Statements of Operations, less Development and Management Services Revenue and Direct Reimbursements of Payroll and Related Costs from Management Services Contracts Revenue per the Consolidated Statements of Operations.
For the six months ended June 30, 2019:
| Boston |  | Los Angeles |  | New York |  | San Francisco |  | Washington, DC |  | Total
Rental Revenue: (1) |  |  |  |  |  |  |  |  |  |  |
Office | $ | 435,372 |  |  | $ | — |  |  | $ | 510,187 |  |  | $ | 255,561 |  |  | $ | 192,831 |  |  | $ | 1,393,951 |
Residential | 5,923 |  |  | — |  |  | — |  |  | — |  |  | 10,791 |  |  | 16,714 |
Hotel | 23,782 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 23,782 |
Total | 465,077 |  |  | — |  |  | 510,187 |  |  | 255,561 |  |  | 203,622 |  |  | 1,434,447 |
% of Grand Totals | 32.42 | % |  | — | % |  | 35.56 | % |  | 17.82 | % |  | 14.20 | % |  | 100.00 | %
Rental Expenses: |  |  |  |  |  |  |  |  |  |  |
Office | 157,160 |  |  | — |  |  | 193,780 |  |  | 84,833 |  |  | 71,819 |  |  | 507,592 |
Residential | 2,485 |  |  | — |  |  | — |  |  | — |  |  | 5,411 |  |  | 7,896 |
Hotel | 16,943 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 16,943 |
Total | 176,588 |  |  | — |  |  | 193,780 |  |  | 84,833 |  |  | 77,230 |  |  | 532,431 |
% of Grand Totals | 33.17 | % |  | — | % |  | 36.39 | % |  | 15.93 | % |  | 14.51 | % |  | 100.00 | %
Net operating income | $ | 288,489 |  |  | $ | — |  |  | $ | 316,407 |  |  | $ | 170,728 |  |  | $ | 126,392 |  |  | $ | 902,016 |
% of Grand Totals | 31.98 | % |  | — | % |  | 35.08 | % |  | 18.93 | % |  | 14.01 | % |  | 100.00 | %
Less: Net operating income attributable to noncontrolling interests in property partnerships | (19,404 | ) |  | — |  |  | (72,795 | ) |  | (448 | ) |  | — |  |  | (92,647 | )
Add: Company’s share of net operating income from unconsolidated joint ventures | 1,590 |  |  | 31,162 |  |  | 3,482 |  |  | — |  |  | 13,830 |  |  | 50,064 |
Company’s share of net operating income | $ | 270,675 |  |  | $ | 31,162 |  |  | $ | 247,094 |  |  | $ | 170,280 |  |  | $ | 140,222 |  |  | $ | 859,433 |
% of Grand Totals | 31.49 | % |  | 3.63 | % |  | 28.75 | % |  | 19.81 | % |  | 16.32 | % |  | 100.00 | %
_______________
(1) | Rental Revenue is equal to total Revenue per the Company’s Consolidated Statements of Operations, less Development and Management Services Revenue and Direct Reimbursements of Payroll and Related Costs from Management Services Contracts Revenue per the Consolidated Statements of Operations.
For the six months ended June 30, 2018:
| Boston |  | Los Angeles |  | New York |  | San Francisco |  | Washington, DC |  | Total
Rental Revenue: (1) |  |  |  |  |  |  |  |  |  |  |
Office | $ | 412,807 |  |  | $ | — |  |  | $ | 476,404 |  |  | $ | 183,375 |  |  | $ | 197,817 |  |  | $ | 1,270,403 |
Residential | 2,347 |  |  | — |  |  | — |  |  | — |  |  | 6,611 |  |  | 8,958 |
Hotel | 23,709 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 23,709 |
Total | 438,863 |  |  | — |  |  | 476,404 |  |  | 183,375 |  |  | 204,428 |  |  | 1,303,070 |
% of Grand Totals | 33.68 | % |  | — | % |  | 36.56 | % |  | 14.07 | % |  | 15.69 | % |  | 100.00 | %
Rental Expenses: |  |  |  |  |  |  |  |  |  |  |
Office | 157,471 |  |  | — |  |  | 185,600 |  |  | 58,842 |  |  | 71,021 |  |  | 472,934 |
Residential | 1,220 |  |  | — |  |  | — |  |  | — |  |  | 3,965 |  |  | 5,185 |
Hotel | 16,814 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 16,814 |
Total | 175,505 |  |  | — |  |  | 185,600 |  |  | 58,842 |  |  | 74,986 |  |  | 494,933 |
% of Grand Totals | 35.46 | % |  | — | % |  | 37.50 | % |  | 11.89 | % |  | 15.15 | % |  | 100.00 | %
Net operating income | $ | 263,358 |  |  | $ | — |  |  | $ | 290,804 |  |  | $ | 124,533 |  |  | $ | 129,442 |  |  | $ | 808,137 |
% of Grand Totals | 32.59 | % |  | — | % |  | 35.98 | % |  | 15.41 | % |  | 16.02 | % |  | 100.00 | %
Less: Net operating income attributable to noncontrolling interests in property partnerships | (16,547 | ) |  | — |  |  | (72,697 | ) |  | 286 |  |  | — |  |  | (88,958 | )
Add: Company’s share of net operating income from unconsolidated joint ventures | 1,315 |  |  | 13,976 |  |  | 3,367 |  |  | — |  |  | 13,629 |  |  | 32,287 |
Company’s share of net operating income | $ | 248,126 |  |  | $ | 13,976 |  |  | $ | 221,474 |  |  | $ | 124,819 |  |  | $ | 143,071 |  |  | $ | 751,466 |
% of Grand Totals | 33.02 | % |  | 1.86 | % |  | 29.47 | % |  | 16.61 | % |  | 19.04 | % |  | 100.00 | %
_______________ (1) Rental Revenue is equal to total Revenue per the Company’s Consolidated Statements of Operations, less Development and Management Services Revenue and Direct Reimbursements of Payroll and Related Costs from Management Services Contracts Revenue per the Consolidated Statements of Operations.

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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