Boston Properties has yet to commit to housing in Kendall Square, its SEC filings [PDF] show. Boston Properties Form 10-K, a submission required yearly of all public traded companies, states that residential properties are "not part of [Boston Properties] core strategy" and that it "may in the future decide to acquire or develop additional residential properties" beyond the two it operates and one that is has under construction.
Despite signing a letter of commitment to Cambridge[PDF] in 2010 stating "Boston Properties will agree to commence construction of a residential project [...] within seven (7) years after the issuance of a certificate of occupancy for the 2010 Additional GFA Building", neither its 2010 nor its 2011 10-K submission reflect this commitment. And, while that commitment letter agreed to a series of financial penalties if construction does not commence as scheduled, this future financial risk is not noted.
As a publicly traded company, Boston Properties is required to provide an annual disclosure statement to the Security and Exchange Commission, a so-called form 10-K. These disclosures include statements about the financial health of the business, business strategy, and risks associated with its business.
In its description of its business, Boston Properties says:
Our properties consisted of:
- 146 office properties including 128 Class A office properties (including six properties under construction) and 18 Office/Technical properties; one hotel;
- three retail properties; and
- three residential properties (one of which is under construction).
Three out of 152 of Boston Properties' holdings are residential property, one of which is under construction. Boston Properties expects to invest $137,250,000 on that construction, located in the town center of Reston, VA and consisting of 359 apartments. Last year, Boston Properties completed construction on one of the other residential properties at Atlantic Warf in Boston, comprising 86 apartments.
As Boston Properties outlines its business strategy, it focuses on high value, premiere space involving tenants with complex space and infrastructure needs.
In its section outlining the risks of competition, Boston Properties says:
In addition, although not part of our core strategy, we are currently developing one residential property and operate two residential properties that are incidental to our office properties and may in the future decide to acquire or develop additional residential properties. [...] Because we have limited experience with residential properties, we expect to retain third parties to manage our residential properties.
Boston Properties notes elsewhere that, for its office properties, it "directly manages" them in order to maximize renter retention. This places residential properties, for which it expects to have to employ others to manage, further outside Boston Properties mainstream business.
In describing the strengths of its business, Boston Properties acknowledges that managing governmental approval processes is one key way it adds value to the properties it acquires.
In the past, we have been particularly successful at acquiring sites or options to purchase sites that need governmental approvals for development. Because of our development expertise, knowledge of the governmental approval process and reputation for quality development with local government regulatory bodies, we generally have been able to secure the permits necessary to allow development and to profit from the resulting increase in land value.