On January 3, 2012, the Company commenced the redevelopment of 12300 Sunrise Valley Drive, a Class A office project with approximately 256,000 net rentable square feet located in Reston, Virginia. The Company will capitalize incremental costs during the redevelopment. The property is 100% pre-leased.

On January 10, 2012, the Company announced that holders of the 2.875% Exchangeable Senior Notes due 2037 (the “Notes”) of its Operating Partnership had the right to surrender their Notes for purchase by the Operating Partnership (the “Put Right”) on February 15, 2012. On January 10, 2012, the Company also announced that the Operating Partnership issued a notice of redemption to the holders of the Notes to redeem, on February 20, 2012 (the “Redemption Date”), all of the Notes outstanding on the Redemption Date. Holders of an aggregate of $242,735,000 of the Notes exercised the Put Right and on February 20, 2012, the Company redeemed the remaining $333,459,000 of outstanding Notes at a redemption price equal to 100% of the principal amount of the Notes plus accrued and unpaid interest thereon.

On January 25, 2012, the Company’s Compensation Committee approved outperformance awards (the “2012 OPP Awards”) under the Company’s 1997 Stock Option and Incentive Plan to officers and employees of the Company. Recipients of 2012 OPP Awards will share in a maximum outperformance pool of $40.0 million if the total return to shareholders, including both share appreciation and dividends, exceeds absolute and relative hurdles over a three-year measurement period from February 7, 2012 to February 6, 2015. Earned awards are subject to two-years of time-based vesting after the performance measurement date. Under the Financial Accounting Standards Board’s Accounting Standards Codification (“ASC”) 718 “Compensation – Stock Compensation” the 2012 OPP Awards have an aggregate value of approximately $7.7 million, which amount will be amortized into earnings over the five-year plan period under the graded vesting method. The Company recognized approximately $0.5 million of compensation expense associated with the 2012 OPP Awards during the first quarter of 2012.

On January 31, 2012, the servicer of the non-recourse mortgage loan collateralized by the Company’s Montvale Center property located in Gaithersburg, Maryland foreclosed on the property. The Company was not current on making debt service payments and was accruing interest at the default interest rate of 9.93% per annum. The loan was originally scheduled to mature on June 6, 2012. As a result of the foreclosure, the mortgage loan totaling $25.0 million was extinguished and the related obligations were satisfied with the transfer of the real estate and working capital to the servicer. The transaction resulted in a gain on forgiveness of debt of approximately $17.8 million. The operating results of the property through the date of foreclosure have been classified as discontinued operations on a historical basis for all periods presented.

On February 13, 2012, E. Mitchell Norville announced that he would resign as Executive Vice President, Chief Operating Officer of the Company effective on February 29, 2012. In connection with his resignation, Mr. Norville entered into a separation agreement with the Company. The Company recognized approximately $4.5 million of expense during the first quarter of 2012 in connection with Mr. Norville’s resignation.

On March 1, 2012, the Company acquired 453 Ravendale Drive located in Mountain View, California for a purchase price of approximately $6.7 million in cash. 453 Ravendale Drive is an approximately 30,000 net rentable square foot Office/Technical property that is currently 100% leased.

On March 12, 2012, the Company used available cash to repay the mortgage loan collateralized by its Bay Colony Corporate Center property located in Waltham, Massachusetts totaling $143.9 million. The mortgage financing bore interest at a fixed rate of 6.53% per annum and was scheduled to mature on June 11, 2012. There was no prepayment penalty. The Company recognized a gain on early extinguishment of debt totaling approximately $0.9 million related to the acceleration of the remaining balance of the historical fair value debt adjustment.

On March 13, 2012, the Company acquired 100 Federal Street in Boston, Massachusetts for an aggregate investment of approximately $615.0 million in cash. In connection with the transaction, the Company entered into a long-term lease with an affiliate of Bank of America for approximately 735,000 square feet. 100 Federal Street is an approximately 1,264,000 net rentable square foot, 37-story Class A office tower that is currently 94% leased.

During the first quarter of 2012, the Company utilized its “at the market” (“ATM”) stock offering program to issue an aggregate of 1,048,800 shares of its common stock for gross proceeds of approximately $110.5 million and net proceeds of approximately $109.3 million. During the second quarter of 2012 through April 9, 2012, the Company issued an additional 421,600 shares of its common stock for gross proceeds of approximately $44.3 million and net proceeds of approximately $43.8 million. The Company’s ATM stock offering program provides the Company with the ability to sell from time to time up to an aggregate of $600.0 million of its common stock through sales agents for a three-year period. As of May 1, 2012, approximately $400.3 million remained available for issuance under this ATM program.

On April 2, 2012, the Company used available cash to repay the mortgage loan collateralized by its One Freedom Square property located in Reston, Virginia totaling $65.1 million. The mortgage financing bore interest at a fixed rate of 7.75% per annum and was scheduled to mature on June 30, 2012. There was no prepayment penalty.

On April 30, 2012, the Company completed and placed in-service 510 Madison Avenue, a Class A office project with approximately 347,000 net rentable square feet located in New York City. The property is 51% leased.

On May 1, 2012, the Company entered into an agreement to sell its Bedford Business Park properties located in Bedford, Massachusetts for approximately $62.8 million in cash. Bedford Business Park is comprised of two Office/Technical buildings and one Class A office building aggregating approximately 470,000 net rentable square feet. The sale is subject to the satisfaction of customary closing conditions and, although there can be no assurance that the sale will be consummated on the terms currently contemplated or at all, it is expected to close by the end of the second quarter of 2012.

Real estate

Construction in progress

Land held for future development

Less: accumulated depreciation

Total real estate

Cash and cash equivalents

Cash held in escrows

Investments in securities

Tenant and other receivables, net of allowance for doubtful accounts of $1,370 and $1,766, respectively

Related party notes receivable

Interest receivable from related party notes receivable

Accrued rental income, net of allowance of $2,631 and $2,515, respectively

Deferred charges, net

Prepaid expenses and other assets

Investments in unconsolidated joint ventures

Total assets

Liabilities:

Mortgage notes payable

Unsecured senior notes, net of discount

Unsecured exchangeable senior notes, net of discount

Unsecured line of credit

Accounts payable and accrued expenses

Dividends and distributions payable

Accrued interest payable

Other liabilities

Total liabilities

Commitments and contingencies

Noncontrolling interest:

Redeemable preferred units of the Operating Partnership

Equity:

Stockholders' equity attributable to Boston Properties, Inc.

Excess stock, $.01 par value, 150,000,000 shares authorized, none issued or outstanding

Preferred stock, $.01 par value, 50,000,000 shares authorized, none issued or outstanding

Common stock, $.01 par value, 250,000,000 shares authorized, 149,463,241 and 148,186,511 shares issued and 149,384,341 and 148,107,611 shares outstanding at March 31, 2012 and December 31, 2011, respectively

Additional paid-in capital

Dividends in excess of earnings

Treasury common stock, at cost

Accumulated other comprehensive loss

Total stockholders' equity attributable to Boston Properties, Inc.

Noncontrolling interests:

Common units of the Operating Partnership

Property partnerships

Total equity

Total liabilities and equity

Revenue

Rental

Base rent

Recoveries from tenants

Parking and other

Total rental revenue

Hotel revenue

Development and management services

Total revenue

Expenses

Operating

Rental

Hotel

General and administrative

Transaction costs

Depreciation and amortization

Total expenses

Operating income

Other income (expense)

Income from unconsolidated joint ventures

Interest and other income

Gains from investments in securities

Gains from early extinguishments of debt

Interest expense

Income from continuing operations

Discontinued operations

Loss from discontinued operations

Gain on forgiveness of debt from discontinued operations

Net income

Net income attributable to noncontrolling interests

Noncontrolling interests in property partnership

Noncontrolling interest—redeemable preferred units of the Operating Partnership

Noncontrolling interest—common units of the Operating Partnership

Noncontrolling interest in discontinued operations—common units of the Operating Partnership

Net income attributable to Boston Properties, Inc.

Basic earnings per common share attributable to Boston Properties, Inc.:

Income from continuing operations

Discontinued operations

Net income

Weighted average number of common shares outstanding

Diluted earnings per common share attributable to Boston Properties, Inc.:

Income from continuing operations

Discontinued operations

Net income

Weighted average number of common and common equivalent shares outstanding

Net income attributable to Boston Properties, Inc.

Add:

Noncontrolling interest in discontinued operations—common units of the Operating Partnership

Noncontrolling interest—common units of the Operating Partnership

Noncontrolling interest—redeemable preferred units of the Operating Partnership

Noncontrolling interests in property partnerships

Loss from discontinued operations

Less:

Gain on forgiveness of debt from discontinued operations

Income from continuing operations

Add:

Real estate depreciation and amortization (2)

Less:

Loss from discontinued operations

Noncontrolling interests in property partnership's share of funds from operations

Noncontrolling interest—redeemable preferred units of the Operating Partnership

Funds from operations (FFO) attributable to the Operating Partnership

Less:

Noncontrolling interest—common units of the Operating Partnership's share of funds from operations

Funds from operations attributable to Boston Properties, Inc.

Boston Properties, Inc.'s percentage share of funds from operations—basic

Weighted average shares outstanding—basic

FFO per share basic

Weighted average shares outstanding—diluted

FFO per share diluted

Boston

New York

Princeton

San Francisco

Washington, DC

Total Portfolio

Class A Office Portfolio

Office/Technical Portfolio

Total Portfolio