BOSTON PROPERTIES LTD PARTNERSHIP: Your Annual Investment Snapshot (Fiscal Year Ended December 31, 2025)

This summary provides a clear, straightforward overview of Boston Properties' performance and strategic direction for the fiscal year ending December 31, 2025. We delve into their operations, financial health, and future outlook, offering key insights for investors.

Business Overview: Who is Boston Properties? Boston Properties (BXP) stands as one of the largest publicly traded real estate investment trusts (REITs) in the United States. The company specializes in owning, managing, and developing Class A office properties, primarily in leading innovation markets such as Boston, Los Angeles, New York, San Francisco, and Washington, D.C. While office properties form its core, BXP also invests in mixed-use developments that include residential, retail, and hotel components, enhancing the value of its urban campuses. As a REIT, BXP must distribute at least 90% of its taxable income to shareholders annually, making it an attractive option for income-focused investors.

Management Discussion: Operational Highlights & Strategic Growth

BXP actively pursued significant initiatives in fiscal year 2025, demonstrating its commitment to evolving its portfolio and driving future income:

• Development Completions Fueling Future Income: BXP successfully brought several key projects online, adding valuable assets to its portfolio and positioning the company for increased rental income. These completions include:

  • Reston Next Retail (January 2025): Expanding BXP's mixed-use presence in a key market.
  • 1050 Winter Street (July 2025): A new office development.
  • Reston Next Office Phase II (July 2025): Further strengthening the Reston campus.
  • 343 Madison Avenue (July 2025): A prime New York City office tower.
  • 2100 M Street (December 2025): A significant mixed-use project in Washington D.C., combining office and retail spaces. These projects are expected to contribute substantially to rental revenue and Funds From Operations (FFO) in the coming years.

• Strategic Portfolio Streamlining: BXP actively managed its asset base through targeted dispositions. The company sold various non-core land parcels and office buildings throughout 2025, including land at 17 Hartwell Avenue, Shady Grove Parcel Three, Springfield Metro Center, and office buildings like 1330 Connecticut Avenue and North First Business Park. This strategy allows BXP to recycle capital into higher-growth development projects, reduce debt, and enhance overall portfolio quality and efficiency.

Financial Performance & Health: A Closer Look at the Numbers

BXP's financial performance for 2025 reflected a resilient business model, though influenced by broader economic trends:

• Debt Management and Interest Rates: BXP has a clear strategy to address maturing debt, likely through a combination of refinancing, new debt issuance, or using available cash. To manage interest rate volatility, BXP actively uses financial tools like interest rate swaps and caps. These instruments help fix or limit the interest rates on a portion of its variable-rate debt, protecting the company from sharp increases in borrowing costs. BXP has fixed or hedged a significant portion of its debt, providing stability in a dynamic interest rate environment.

Risk Factors: Key Risks to Consider

While BXP demonstrates strong operational and financial management, investors should be aware of potential risks:

• Customer Concentration Risk: A notable risk is BXP's potential reliance on a few large tenants. If a major tenant were to default, downsize, or not renew their lease, it could significantly impact BXP's rental income.
• Office Market Dynamics: The long-term impact of hybrid work models and economic slowdowns could affect demand for office space, leading to higher vacancies or pressure on rental rates, particularly in certain submarkets.
• Interest Rate Fluctuations: While BXP hedges a significant portion of its debt, rising interest rates could still increase borrowing costs for unhedged debt and new financing, impacting profitability and development feasibility.
• Development and Construction Risks: Delays, cost overruns, or failure to achieve projected occupancy and rental rates for new developments could negatively impact returns.
• Economic Downturns: A broader economic recession could reduce tenant demand, increase defaults, and depress property values.

Future Outlook: Strategic Outlook and Future Focus

Looking ahead, BXP's strategy centers on:

• High-Quality, Amenity-Rich Properties: Continuing to invest in and develop premium, well-located properties that attract top-tier tenants seeking modern, collaborative, and sustainable workspaces.
• Mixed-Use Development: Expanding its mixed-use projects to create vibrant urban environments that enhance tenant experience and property value.
• Sustainability and ESG: Integrating Environmental, Social, and Governance (ESG) principles into its operations and development, aiming for certifications like LEED and reducing its carbon footprint. This focus is increasingly important to tenants and investors.
• Disciplined Capital Allocation: Prudently managing its balance sheet, using proceeds from dispositions to fund new developments and maintain a healthy debt profile. BXP typically provides forward-looking guidance for key metrics like Funds From Operations (FFO) per share for the upcoming fiscal year. BXP's guidance generally reflects management's expectations for rental income, operating expenses, and capital expenditures, considering market conditions and its development pipeline.

Competitive Position Boston Properties operates in highly competitive real estate markets. Its competitive advantages typically stem from:

• Prime Locations: Owning and developing Class A properties in highly desirable, supply-constrained urban and suburban innovation markets.
• High-Quality Assets: A reputation for developing and managing state-of-the-art, amenity-rich properties that attract and retain high-credit tenants.
• Tenant Relationships: Long-standing relationships with a diverse base of leading companies across various industries.
• Development Expertise: Proven ability to execute complex development projects, often in partnership with leading architectural and construction firms.
• Financial Strength: A strong balance sheet and access to capital markets, enabling strategic investments and development. The company competes with other REITs, institutional real estate owners, developers, and private investors for tenants, property acquisitions, and development opportunities. BXP's ability to maintain its competitive edge depends on its capacity to adapt to evolving tenant demands, manage operating costs, and strategically allocate capital.

Boston Properties navigated 2025 with strategic developments and effective portfolio management, supported by a solid financial foundation. While the office market continues to evolve, BXP's focus on prime locations, high-quality assets, and disciplined financial management positions the company to adapt and pursue long-term value creation for shareholders.