Boston Properties Completes the Acquisitions of 540 Madison Avenue and Two Grand Central Tower

    BOSTON, Aug. 12 /EMWNews/ -- Boston Properties, Inc.

(NYSE: BXP), a real estate investment trust, announced today that it has

completed the acquisitions of 540 Madison Avenue and Two Grand Central

Tower in New York City from affiliates of Macklowe Properties for an

aggregate purchase price of approximately $705 million, including $309.9

million of assumed indebtedness.



    Each acquisition was completed through a joint venture among Boston

Properties, US Real Estate Opportunities I, L.P., which is a partnership

managed by Goldman Sachs, and Meraas Capital LLC, a Dubai-based private

equity firm. Boston Properties has a 60% interest in each venture and will

provide customary property management and leasing services for the venture.

Boston Properties expects to account for its investment in each joint

venture under the equity method of accounting rather than on a consolidated

basis.



    The debt that was assumed as part of the transactions consists of the

following:



    540 Madison Avenue



    -- two secured loans having an aggregate principal amount of $119.9

million and a weighted-average fixed interest rate of 5.20% per annum, each

of which matures in July 2013



    Two Grand Central Tower



    -- a $190 million secured loan having a fixed per annum interest rate

of 5.10%, which matures in July 2010.



    Boston Properties expects to complete shortly the previously announced

acquisition of 125 West 55th Street, also located in New York City, through

a joint venture in which the Company will own a 60% interest. The purchase

price for 125 West 55th Street is approximately $444.0 million, including

the assumption of an aggregate principal amount of $263.5 million of

secured and mezzanine loans having a weighted-average fixed interest rate

of 6.31% per annum, all of which mature in March 2010. The closing of this

acquisition is subject to customary conditions and termination rights for

transactions of this type. There can be no assurance that the closing will

occur on the terms currently contemplated or at all.



    Boston Properties projects (1) its share of the 2009 Unleveraged Cash

Return, including fee income, from 540 Madison Avenue, Two Grand Central

Tower and 125 West 55th Street to be approximately 5.8% and (2) its share

of the properties' 2009 Unleveraged FFO Return, including fee income, to be

approximately 7.3% - 7.6%. The calculation of the projected returns and

related disclosures are presented on the accompanying table entitled

"Projected 2008 and 2009 Returns on Acquisitions." The projections are

based on current information and assumptions regarding these properties

(including the completion of the acquisition of 125 West 55th Street) and

are forward-looking statements within the meaning of the federal securities

laws. Actual results may differ materially to the extent that our current

information or assumptions prove incorrect or as a result of the risks and

uncertainties described below.



    540 Madison Avenue is a 39-story building located at Madison Avenue at

55th Street that contains approximately 292,000 rentable square feet. Two

Grand Central Tower is a 44-story mid-block tower that runs from 44th to

45th Street between Lexington and Third Avenue and contains approximately

664,000 rentable square feet. 125 West 55th Street is a 23-story building,

spanning from 55th to 56th Streets between Avenue of the Americas and

Seventh Avenue, which contains approximately 591,000 rentable square feet.



    This press release contains forward-looking statements within the

meaning of the federal securities laws. You can identify these statements

by our use of the words "expects," "plans," "estimates," "projects,"

"intends," "believes" and similar expressions that do not relate to

historical matters. You should exercise caution in interpreting and relying

on forward-looking statements because they involve known and unknown risks,

uncertainties and other factors which are, in some cases, beyond Boston

Properties' control and could materially affect actual results, performance

or achievements. These factors include, without limitation, the ability of

our joint venture partners to satisfy their obligations, the ability to

enter into new leases or renew leases on favorable terms, dependence on

tenants' financial condition, the uncertainties of real estate development

and acquisition activity, the ability to effectively integrate

acquisitions, the costs and availability of financing, the effects of local

economic and market conditions, the impact of newly adopted accounting

principles on the Company's accounting policies and on period-to-period

comparisons of financial results, regulatory changes and other risks and

uncertainties detailed from time to time in the Company's filings with the

Securities and Exchange Commission. Boston Properties does not undertake a

duty to update or revise any forward-looking statement whether as a result

of new information, future events or otherwise.



    Boston Properties is a fully integrated, self-administered and

self-managed real estate investment trust that develops, redevelops,

acquires, manages, operates and owns a diverse portfolio consisting

primarily of Class A office properties and one hotel. The Company is one of

the largest owners and developers of Class A office properties in the

United States, concentrated in five select markets - Boston, Midtown

Manhattan, Washington, D.C., San Francisco, and Princeton, N.J. Visit the

Company's web site at http://www.bostonproperties.com.










                             BOSTON PROPERTIES, INC.

                  PROJECTED 2008 AND 2009 RETURNS ON ACQUISITIONS

                              (dollars in thousands)



                                        540 Madison Avenue, Two Grand Central

                                             Tower & 125 West 55th Street

                                          Fourth Quarter        Year 2009

                                          Low       High      Low       High



    Base rent and recoveries from

     tenants                             $22,338  $22,338  $101,031  $101,031

    Straight-line rent                     1,215    1,215     3,070     3,070

    Fair value lease revenue               4,400    5,400    14,100    17,300

    Parking and other                        583      583     2,392     2,392

    Total rental revenue                  28,536   29,536   120,593   123,793



    Operating Expenses                    10,412   10,412    42,234    42,234



    Revenue less Operating Expenses       18,124   19,124    78,359    81,559



    Interest expense                       8,237    8,237    32,937    32,937

    Fair value interest expense            1,800    1,500     7,100     5,800

    Depreciation and amortization         15,800   13,000    51,200    45,200



    Net loss                             $(7,713) $(3,613) $(12,878)  $(2,378)



    Add:

    Interest expense                       8,237    8,237    32,937    32,937

    Fair value interest expense            1,800    1,500     7,100     5,800

    Depreciation and amortization         15,800   13,000    51,200    45,200



    Unleveraged FFO (1)                  $18,124  $19,124   $78,359   $81,559



    Less:

    Straight-line rent                    (1,215)  (1,215)   (3,070)   (3,070)

    Fair value lease revenue              (4,400)  (5,400)  (14,100)  (17,300)



    Unleveraged Cash                     $12,509  $12,509   $61,189   $61,189



    Purchase Price                    $1,149,000

    Closing costs                          5,340

    Total Unleveraged Investment      $1,154,340



    Unleveraged FFO Return (1)              7.1%     7.4%      7.3%      7.6%



    Unleveraged Cash Return (2)             5.1%     5.1%      5.8%      5.8%

    (1) Pursuant to the revised definition of Funds from Operations adopted

by the Board of Governors of the National Association of Real Estate

Investment Trusts ("NAREIT"), we calculate Funds from Operations, or "FFO,"

by adjusting net income (loss) (computed in accordance with GAAP, including

non-recurring items) for gains (or losses) from sales of properties, real

estate related depreciation and amortization, and after adjustment for

unconsolidated partnerships and joint ventures. FFO is a non-GAAP financial

measure. Unleveraged FFO excludes, among other items, interest expense,

which may vary depending on the level of corporate debt or

property-specific debt. Unleveraged FFO Return is also a non-GAAP financial

measure that is determined by dividing (A) the Company's share (60%) of

Unleveraged FFO (based on the projected results for the three months ending

December 31, 2008 (annualized) and the year ending December 31, 2009) plus

the Company's share of fee income by (B) the Company's share of Total

Unleveraged Investment. Management believes projected Unleveraged FFO

Return is a useful measure in the real estate industry when determining the

appropriate purchase price for a property or estimating a property's value.

When evaluating acquisition opportunities, management considers, among

other factors, projected Unleveraged FFO Return because it excludes, among

other items, interest expense (which may vary depending on the level of

corporate debt or property-specific debt), as well as depreciation and

amortization expense (which can vary among owners of identical assets in

similar condition based on historical cost accounting and useful life

estimates). Other factors that management considers include its cost of

capital and available financing alternatives. Other companies may compute

FFO, Unleveraged FFO and Unleveraged FFO Return differently and these are

not indicators of a real estate asset's capacity to generate cash flow.



    (2) Unleveraged Cash Return is a non-GAAP financial measure that is

determined by dividing (A) the Company's share of Unleveraged Cash (based

on the projected results for the three months ending December 31, 2008

(annualized) and the year ending December 31, 2009) plus the Company's

share of fee income by (B) the Company's share of the Total Unleveraged

Investment. Other real estate companies may calculate this return

differently. Management believes that projected Unleveraged Cash Return is

also a useful measure of a property's value when used in addition to

Unleveraged FFO Return because, by eliminating the effect of

straight-lining of rent and the SFAS No. 141 treatment of in-place above-

and below-market leases, it enables an investor to assess the projected

cash on cash return from the property over the forecasted period.



    Management is presenting these projected returns and related

calculations to assist investors in analyzing the Company's recent

acquisition. Management does not intend to present this data for any other

purpose, for any other period or for its other properties, and is not

intending for these measures to otherwise provide information to investors

about the Company's financial condition or results of operations. The

Company does not undertake a duty to update any of these projections.