BOSTON, Aug. 13 /PRNewswire-FirstCall/ -- Boston Properties, Inc.
(NYSE: BXP), a real estate investment trust (the "Company"), announced today
that Boston Properties Limited Partnership, a Delaware limited partnership and
the Company's subsidiary ("BPLP"), has priced its offering of $650 million
aggregate principal amount of exchangeable senior notes due 2014 with a coupon
of 3.625%. The maturity date of these notes is February 15, 2014. The
aggregate net proceeds from this offering, after the initial purchasers'
discounts and expenses (which expenses do not include the cost of the capped
call transaction described below), are estimated to be approximately $636.1
million. An additional $97.5 million aggregate principal amount of notes may
be issued, at the option of the initial purchasers, to cover over-allotments,
within 30 days.
Boston Properties intends to use the net proceeds from the sale of the
notes, after deducting the initial purchasers' discounts and estimated
expenses related to the offering, to pay the cost of the capped call
transaction described below and for the repayment of debt, real estate
development opportunities, real estate asset acquisitions and other real
estate investment opportunities. Pending the uses described above, Boston
Properties intends to invest the net proceeds in short-term, interest-bearing,
investment-grade securities.
Upon the occurrence of specified events, holders of the notes may exchange
their notes prior to the close of business on the scheduled trading day
immediately preceding January 1, 2014 into cash and, at BPLP's option, shares
of the Company's common stock at an initial exchange rate of 8.5051 shares per
$1,000 principal amount of notes. The initial exchange price of approximately
$117.58 per share of the Company's common stock represents an approximate 20%
premium to today's closing price of the Company's common stock of $97.98 per
share. On and after January 1, 2014, the notes will be exchangeable at any
time prior to the second scheduled trading day immediately preceding the
maturity date at the option of the holder at the applicable exchange rate.
The initial exchange rate is subject to adjustment in certain circumstances.
BPLP may redeem the notes at a redemption price equal to 100% of the
principal amount plus accrued and unpaid interest at any time prior to
maturity to the extent necessary to preserve Boston Properties, Inc.'s status
as a real estate investment trust. The notes are not otherwise redeemable by
BPLP at its election.
Note holders may require BPLP to repurchase the notes for cash at any time
prior to their maturity upon a fundamental change at a price equal to 100% of
the principal amount of the notes being repurchased plus any accrued and
unpaid interest up to, but excluding, the repurchase date.
The notes will be sold to qualified institutional buyers in accordance
with Rule 144A under the Securities Act of 1933. The notes and the common
stock issuable upon exchange of the notes have not been registered under the
Securities Act of 1933, or any state securities laws, and unless so
registered, may not be offered or sold in the United States except pursuant to
an exemption from the registration requirements of the Securities Act of 1933
and applicable state laws. This release shall not constitute an offer to sell
or the solicitation of an offer to buy any of these securities, nor shall it
constitute an offer, solicitation or sale in any jurisdiction in which such
offer, solicitation or sale is unlawful.
In connection with the offering of the notes, BPLP has entered into a
capped call transaction with affiliates of certain initial purchasers of the
notes (the "option counterparties") in order to increase the effective
exchange price of the notes to $137.17 per share of the Company's common
stock, which represents an approximate 40% premium to today's closing price of
the Company's common stock of $97.98 per share. The cost of the capped call
transaction was approximately $38.6 million. The capped call transaction is
expected to reduce the potential dilution upon exchange of the notes in the
event that the market value per share of the Company's common stock, as
measured under the terms of the capped call transaction, at the time of
settlement is greater than the strike price of the capped call transaction,
which will correspond to the initial exchange price of the notes. If,
however, the market value per share of the Company's common stock exceeds the
cap price of the capped call transaction, as measured under the terms of the
capped call transaction, the dilution mitigation under the capped call
transaction will be limited, which means that there would be dilution to the
extent that the then market value per share of the Company's common stock
exceeds the cap price of the capped call transaction. If the initial
purchasers of the notes exercise their option to purchase additional notes,
BPLP expects to use a portion of the proceeds from the sale of such notes to
increase the notional size of the capped call transaction.
In connection with hedging the capped call transaction, the option
counterparties or their affiliates have entered into various derivative
transactions with respect to the Company's common stock concurrently with or
shortly after the pricing of the notes. These activities could have the
effect of increasing or preventing a decline in the price of the Company's
common stock concurrently with or shortly after the pricing of the notes. In
addition, the option counterparties or their affiliates may from time to time
following the pricing of the notes enter into or unwind various derivatives
and/or purchase or sell the Company's common stock in secondary market
transactions. These activities could have the effect of decreasing the price
of the Company's common stock and adversely affect the price of the notes
during any observation period related to an exchange of notes.
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.
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.
SOURCE Boston Properties, Inc.
At The Company, Michael Walsh, Senior Vice President, Finance,
+1-617-236-3410, or Arista Joyner, Investor Relations Manager,
+1-617-236-3343; or At Financial Relations Board, Marilynn Meek, General
Information, +1-212-827-3773
