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Segment Information
 12 Months Ended
Dec. 31, 2020
Segment Reporting [Abstract]  
Segment Reporting Disclosure [Text Block]
13. 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 years ended December 31, 2020, 2019 and 2018.
Boston Properties, Inc.
 Year ended December 31,
202020192018
(in thousands)
Net income attributable to Boston Properties, Inc. common shareholders
$862,227 $511,034 $572,347 
Add:
Preferred dividends10,500 10,500 10,500 
Noncontrolling interest—common units of the Operating Partnership
97,704 59,345 66,807 
Noncontrolling interests in property partnerships48,260 71,120 62,909 
Interest expense431,717 412,717 378,168 
Loss from early extinguishment of debt— 29,540 16,490 
Impairment loss— 24,038 11,812 
Net operating income from unconsolidated joint ventures94,943 97,716 79,893 
Depreciation and amortization expense683,751 677,764 645,649 
Transaction costs1,531 1,984 1,604 
Payroll and related costs from management services contracts
11,626 10,386 9,590 
General and administrative expense133,112 140,777 121,722 
Less:
Net operating income attributable to noncontrolling interests in property partnerships
162,887 183,989 177,365 
Gains (losses) from investments in securities5,261 6,417 (1,865)
Interest and other income (loss)5,953 18,939 10,823 
Gains on sales of real estate618,982 709 182,356 
Income (loss) from unconsolidated joint ventures(85,110)46,592 2,222 
Direct reimbursements of payroll and related costs from management services contracts
11,626 10,386 9,590 
Development and management services revenue29,641 40,039 45,158 
Company’s share of Net Operating Income$1,626,131 $1,739,850 $1,551,842 
Boston Properties Limited Partnership
 Year ended December 31,
 202020192018
(in thousands)
Net income attributable to Boston Properties Limited Partnership common unitholders
$979,979 $580,102 $656,903 
Add:
Preferred distributions10,500 10,500 10,500 
Noncontrolling interests in property partnerships48,260 71,120 62,909 
Interest expense431,717 412,717 378,168 
Loss from early extinguishment of debt— 29,540 16,490 
Impairment loss— 22,272 10,181 
Net operating income from unconsolidated joint ventures94,943 97,716 79,893 
Depreciation and amortization expense676,666 669,956 637,891 
Transaction costs1,531 1,984 1,604 
Payroll and related costs from management services contracts
11,626 10,386 9,590 
General and administrative expense133,112 140,777 121,722 
Less:
Net operating income attributable to noncontrolling interests in property partnerships
162,887 183,989 177,365 
Gains (losses) from investments in securities5,261 6,417 (1,865)
Interest and other income (loss)5,953 18,939 10,823 
Gains on sales of real estate631,945 858 190,716 
Income (loss) from unconsolidated joint ventures(85,110)46,592 2,222 
Direct reimbursements of payroll and related costs from management services contracts
11,626 10,386 9,590 
Development and management services revenue29,641 40,039 45,158 
Company’s share of Net Operating Income$1,626,131 $1,739,850 $1,551,842 

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, loss from early extinguishment of debt, 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 (losses) from investments in securities, interest and other income (loss), gains on sales of real estate, income (loss) from unconsolidated joint ventures, direct reimbursements of payroll and related costs from management services contracts and development and management services revenue. The Company believes NOI is useful to investors as a performance measure and believes it provides useful information to investors regarding its 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 economic 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’ economic 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 impairment losses on its investments in unconsolidated joint ventures or its share of gains on sales of real estate from unconsolidated joint ventures, both of which are 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, loss from early extinguishment of debt, impairment loss, depreciation and amortization expense, transaction costs, payroll and related costs from management services contracts, corporate general and administrative expense, gains (losses) from investments in securities, interest and other income (loss), gains on sales of real estate, income (loss) from unconsolidated joint ventures, direct reimbursements of payroll and related costs from management services contracts and development and management services revenue 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.
Included within the Office property type are commercial office and retail leases, as well as parking revenue.  Upon the adoption of ASC 842, any write-off for bad debt, including accrued rent, will be recorded as a reduction to lease revenue. As a result of COVID-19, during the year ended December 31, 2020, the Company wrote off approximately $67.7 million related to accrued rent balances and approximately $22.6 million related to accounts receivable balances. The write-offs were for tenants, primarily in the retail, entertainment and co-working sectors, that either terminated their leases or that the Company considered their accrued rent and/or accounts receivable balances no longer probable of collection.
In addition, parking and other revenue for the year ended December 31, 2020 decreased by approximately $32.9 million compared to 2019. These decreases were primarily in transient and monthly parking revenue.
The degree to which the Company’s commercial and retail tenants’ and parking operators’ businesses are, or will continue to be, negatively impacted by COVID-19, including by measures intended to reduce its spread, such as mandatory business closures and “stay-at-home” orders, could result in a reduction in the Company’s cash flows or require that the Company write off additional accrued rent and/or accounts receivable balances, and this could have a material adverse effect on lease revenue and thus the results of the Company’s Office property type.
The Boston Marriott Cambridge closed in March 2020 due to COVID-19. The hotel re-opened on October 2, 2020 and has been operating at a diminished occupancy due to the continued impacts that COVID-19 has had on business and leisure travel. The closing of the hotel for more than two fiscal quarters, weak demand and low occupancy since its re-opening, have had, and are expected to continue to have, a material adverse effect on the hotel’s operations and thus the results of the Company’s Hotel property type.
Information by geographic area and property type (dollars in thousands):
For the year ended December 31, 2020:
BostonLos AngelesNew YorkSan FranciscoWashington, DCTotal
Rental Revenue: (1)
Office$897,915 $— $935,966 $508,327 $336,587 $2,678,795 
Residential13,616 — — 155 24,375 38,146 
Hotel7,478 — — — — 7,478 
Total919,009 — 935,966 508,482 360,962 2,724,419 
% of Grand Totals33.73 %— %34.36 %18.66 %13.25 %100.00 %
Rental Expenses:
Office318,509 — 384,753 163,156 132,051 998,469 
Residential5,378 — — 2,261 11,100 18,739 
Hotel13,136 — — — — 13,136 
Total337,023 — 384,753 165,417 143,151 1,030,344 
% of Grand Totals32.71 %— %37.35 %16.05 %13.89 %100.00 %
Net operating income
$581,986 $— $551,213 $343,065 $217,811 $1,694,075 
% of Grand Totals34.35 %— %32.54 %20.25 %12.86 %100.00 %
Less: Net operating income attributable to noncontrolling interests in property partnerships
(41,849)— (121,038)— — (162,887)
Add: Company’s share of net operating income from unconsolidated joint ventures
10,765 57,907 (5,326)14,928 16,669 94,943 
Company’s share of net operating income
$550,902 $57,907 $424,849 $357,993 $234,480 $1,626,131 
% of Grand Totals33.88 %3.56 %26.12 %22.02 %14.42 %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 year ended December 31, 2019:
BostonLos AngelesNew YorkSan FranciscoWashington, DCTotal
Rental Revenue: (1)
Office$895,098 $— $1,011,912 $533,189 $384,435 $2,824,634 
Residential13,786 — — — 23,128 36,914 
Hotel48,589 — — — — 48,589 
Total957,473 — 1,011,912 533,189 407,563 2,910,137 
% of Grand Totals32.90 %— %34.78 %18.32 %14.00 %100.00 %
Rental Expenses:
Office322,282 — 389,532 177,994 144,217 1,034,025 
Residential5,071 — — — 10,914 15,985 
Hotel34,004 — — — — 34,004 
Total361,357 — 389,532 177,994 155,131 1,084,014 
% of Grand Totals33.34 %— %35.93 %16.42 %14.31 %100.00 %
Net operating income
$596,116 $— $622,380 $355,195 $252,432 $1,826,123 
% of Grand Totals32.64 %— %34.09 %19.45 %13.82 %100.00 %
Less: Net operating income attributable to noncontrolling interests in property partnerships
(40,109)— (143,432)(448)— (183,989)
Add: Company’s share of net operating income from unconsolidated joint ventures
5,494 61,338 4,174 — 26,710 97,716 
Company’s share of net operating income
$561,501 $61,338 $483,122 $354,747 $279,142 $1,739,850 
% of Grand Totals32.27 %3.53 %27.77 %20.39 %16.04 %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.
For the year ended December 31, 2018:
BostonLos AngelesNew YorkSan FranciscoWashington, DCTotal
Rental Revenue: (1)
Office$838,341 $— $959,050 $397,180 $396,088 $2,590,659 
Residential6,694 — — — 15,857 22,551 
Hotel49,118 — — — — 49,118 
Total894,153 — 959,050 397,180 411,945 2,662,328 
% of Grand Totals33.59 %— %36.02 %14.92 %15.47 %100.00 %
Rental Expenses:
Office315,653 — 377,992 130,016 142,886 966,547 
Residential3,632 — — — 8,972 12,604 
Hotel33,863 — — — — 33,863 
Total353,148 — 377,992 130,016 151,858 1,013,014 
% of Grand Totals34.86 %— %37.32 %12.83 %14.99 %100.00 %
Net operating income
$541,005 $— $581,058 $267,164 $260,087 $1,649,314 
% of Grand Totals32.80 %— %35.23 %16.20 %15.77 %100.00 %
Less: Net operating income attributable to noncontrolling interests in property partnerships
(33,862)— (143,562)59 — (177,365)
Add: Company’s share of net operating income from unconsolidated joint ventures
2,866 42,750 6,590 — 27,687 79,893 
Company’s share of net operating income
$510,009 $42,750 $444,086 $267,223 $287,774 $1,551,842 
% of Grand Totals32.86 %2.75 %28.63 %17.22 %18.54 %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.