To Our Shareholders OPERATING IN A RECESSION YEAR 2001 was a challenging year for our country, the national economy  and the real estate markets in which Boston Properties concentrates. Given this, we are pleased to be able to report that your Company  continued to grow and record significant accomplishments and is in  very strong financial and operational condition. As difficult conditions  persist in many of our markets and the national economic outlook remains uncertain, the Company has taken the steps necessary to best position itself going forward both to deal with these immediate issues and to actively pursue its objective of continued growth in shareholder value.  This year Boston Properties faced the exigencies of operating during a recession that, accentuated by the  economic impacts of the horrendous events of September 11, was reflected in a steep decline in demand for office space. Tenants who as recently as the start of 2001 had strong appetites for further growth began offering for sublease space to which they were already committed. Robust leasing activity was replaced by limited new deal flow.  Not surprisingly, the impact on market rental rates and on direct and sublease vacancy rates was negative. This is the context in which we must assess our performance last year.  We achieved an average increase in net rent during 2001 of 49.2% on lease extensions and new tenancies totaling 2.7 million SF in our existing portfolio. We re-leased 48% of the space scheduled for lease expirations in 2002, with 931,000 SF committed through renewals and new tenancies. And in the face of a national rise in office vacancy to 13.4%, our vacancy rate at year’s end was 4.6%. While this vacancy is higher, and achieved rents on new leases and renewals lower, than we had hoped at the start of the year, overall we grew Funds From Operations (FFO) by 7.9% and Earnings Per Share by 18.8%. 2 CONTINUES Mortimer B. Zuckerman, Chairman of the Board (right) and  Edward H. Linde, President and Chief Executive Officer FFO Per Share 1 and Dividends  Per Share 2 For 1997, Pro Forma Funds From Operations are presented as if the Company’s initial  offering of common stock and related  formation transactions (which were completed on June 23, 1997) had occurred on January 1, 1997, and the dividend is annualized 1 Diluted ■ FFO ■ Dividends $1.96 $2.50 $2.89 $3.57 $3.31 $1.62 $1.64 $1.75 $2.04 $2.24 1997 2 1998 1999 2000 2001