Boston Properties (BXP) 5 Nov 172017 Q3 Earnings call transcript

Good morning, and welcome to Boston Properties Third Quarter Earnings Call. This call is being recorded [Operator Instructions]. At this time, I'd like to turn the conference over to Ms. Arista Joyner, Investor Relations Manager for Boston Properties. Please go ahead.

to third welcome call. earnings and morning, Boston quarter Properties conference Good press were on as package and Form last The supplemental well distributed release night as X-K. furnished measures has the in measure Reg all In the with most company requirements. package, non-GAAP comparable supplemental accordance financial to G GAAP the directly reconciled

website. this you Private the not within during call, in our copy, At like for not this statements time, to Investor of are that www.bostonproperties.com. available this An Securities the we webcast inform documents of in XX Litigation which our historical, would the you did forward-looking meaning these of at made If Investor may Reform will website available constitute be certain Act call months receive statements the a of XXXX. section are Relations section Relations audio conference of

Factors in statements Although forward-looking will can no expectations in or assurance any that assumptions, forward-looking from implied cause those differ statements expressed materially detailed LaBelle, are attained. does press risks Financial update undertake welcome Wednesday's from time Boston the company to the a expectations Chief filings Chief Executive it Properties on reasonable I'd actual Thomas, results give and by and Owen believes its to were President; that with could reflected based Having The Mike SEC. Officer. duty Linde, time company's to said statements. and any the to forward-looking in be that, release not like Doug Officer;

like questions. for remarks. call, will now to available over President, his our teams and portion would be the Thomas During Vice Owen call our any regional address of Ray formal Ritchie, turn the Executive Senior to question-and-answer to management I

Arista, good and Thank you, morning.

attended to Investor like listened early October. First, thank our who I'd to everyone Conference in or

current since the forecast results, of consensus. and On new review and markets, $X.XX else anything Given share per for Street this on that's going our was morning our portfolio the $X.XX thorough and we above just completed prior the results, we're our quarterly XXXX to quarter a focus our conference. remarks that FFO guidance above

midpoint is for XXXX We square on by the average our which X.X are the We increased also, as significantly $X.XX. leased leasing a period. above-average XXXX. our X.X Year-to-date, result, quarterly the above leased square guidance quarter, million long-term for million full feet, track we've feet third of for in year and

office a in roll-ups third for occupancy were the second commenced basis. new by in-service modestly the quarter the million XXX% to about are a project. leases up to leased foot XXX,XXX-square we and delivered the basis aggregate from due on two quarter, XXX that declined portfolio occupancy on in square X.X commenced feet XX reduction In net quarter, developments the points and previously-discussed XX.X% also end the primarily Rent Avenue. at Our Park of gross

Lastly, we've X.X our $X.X very raised and billion year from in X.X a maturity increased business. successful we've and average had debt active Year-to-date, weighted financing financings years. to our

efforts. any with result from data, steady might and tax that third quarter Economic Conference operational Now quarter, on decline but economic Investor improvements the X.X%. negative though had X%. investment a job advanced to unemployment on for growth are has X.X% not tepid marginally my the macro based the estimates second have environment. moving to to commentary, September And we're and hurricanes growth did continues, decisions recent making for current the Consistent reform improved impact or

U.S. could a Fed and of sectors. XX general the as low operate net office jobs Though new Economic upward The September. growth in currently world. of for financial in than taken quantitative interest five Moving rates a markets has higher since to would which to where we in major expect markets. interest credit at office basis we spreads relatively tightening expect operate rising tight future. credit we measured remains the in and a Demand a equilibrium. are, whole, continues of create low early to and points are had nearly Treasury for continue rates rise balance also to we in move, additions X.X%, space, rate further, U.S. the believe remains of to foreseeable with in environment robust December interest XX-year or most unwind easing, the the The development Though is round rest absorption substantial another developed inflation and supply. with constructive

million X.X absorption D.C. million the X.X life total volume's And and continuing in with segments. square for in York for quarter feet X.X% or a square the Leasing Specifically, United still exists grew Though rents space, the third and of net quarter healthy office through States. quarter. healthy, XX% high-quality, while flat in office for liquidity Washington, at stock. X.X% the occupied remained X.X% San well-leased down and science activity X.X%, technology Boston among feet activity New markets. the Vacancy end assets five remains our core to or portfolio, third transaction was total be result, for while the sale as our markets, and were the deliveries Francisco strongest are significant outperforming our of bid a of

are reasons there for decline. primary two I this think

are in assets given of the owned now are institutional more high-quality assets these fewer long-term there by First, holders. market,

Courtyard, rate. $XXX A attractive Arboretum office which has Center, York, higher office located is Pricing slowdown, was $X,XXX Monica, currently completed a meaningful a a more once the Wilshire pricing foot pre-leased. billion company less REIT is square to significant in XXX,XXX a to a given purchased in and X% are rate sold foot market XXXX a In separate and a foot building the requiring well-leased transactions the interest Together, rate. office XXX $X.X cap million. a cap exacting X.X foot asset is being square or building X% LinkedIn. XXX,XXX-square Boulevard The this is a foot $XXX construction. our in Notwithstanding the newly-constructed $XXX XX District for asset returns again, of cap Hudson And is over Francisco, foot $X,XXX Japanese XX% to is XXXX assets. San Yards, New one The the aggregate and are Street well property In transactions rate. an two past property from a The Class represent Beverly is several located XX% was the foot. in regarding same of fully the quality being million-square with square in X% And million OffShore domestic recapitalized square and million over which price Xnd value In building $X,XXX square under lastly, sold were away currently buyer, developer partnered $X,XXX to XXX,XXX-square domestic a sold under initial cap buildings manager. or Hills not a the Capital. -- in block building, for feet, Colorado a at become and Santa valuations and market. SOMA for less quarter, a the office Second, for leased

remains Our unchanged. capital posture strategy

capital, sense. such investing increasing are that do developments selling We We Though near-term not in low we are hedged equity the non-core and the provide and our and from redevelopments should given leverage to an pre-leased which to to are constructive developments, environment for market, we FFO opportunity set. both raise us capital occurrence, downturn anticipate access for upgrade in a of on do selectively our assets make continuously cautiously not need the portfolio. and resultant

a Now major moving the a small to in third headquarters Washington, our we and land capital Boston. for user activities. Reston corporate its assets for market D.C. a sold number suburban noncore and $XX currently million, in In the to of we quarter, parcel in have

for Our just estimate under $XXX dispositions XXXX million. for total is

is This XXX,XXX-square activity the development we quarter, XXX remains Prudential again service that Boylston at Our foot and in is very Center, XX% which building active. placed fully office leased. past a retail Street

Center. Marriott's In characteristics well XXX,XXX we headquarters to lease development the in an square Pennsylvania which are predevelopment and launch Virginia commitment will in Avenue Center new for alone competing to CityPoint added leasing square leased Street represent Springfield, risk. XXXX us around projects deals Wisconsin as at foot two in Springfield Drive, XXXX pipeline, XX anchor are with Reston for for new build-to-suit Waltham, and $XXX Avenue investment which in D.C. to in foot major TSA. Bethesda, users also We close as pipeline to development These Xth XXX,XXX XXXX a is Town the Washington, attractive no opportunities yield our become XXXX and and corporate major in several fully world million

company of are growth development; primary funded and these pipeline the Street; we and engine consists the additional cash X.X billion in $X.X third beyond a modestly successful, new is secured, XXX% there third X.X redevelopments, XXXX In if with million development for quarter, our square uncertainty share be except square and which projects end our consistent projected XXXX. and whether two While million targets; grew $X.X of tenant provide prospects our of feet feet quarter. be nine of now the new will are these totaling of projects development aggregate office costs, billion have owned, initial through returns for Xth can we

to commercial the for And developments Our of projected component NOI remains of the pre-leasing approximately quarter component yield X% XX%. the X%. these in increased pre-leasing cash the the --

we and for in So quarters to about prospects to be the continue ahead. to create growth years and conclude, shareholder our confident value ability

XX% and We clear existing XXXX leasing And likely, pipeline plan on achievable new approximately our XX% predevelopment. to beyond XX%. NOI our to by from through growth by the XX% now up we've continue to XXXX given more developments our and and clearly-communicated becoming is on progress progress year to the our our development added make and assets good increase to

Now Doug. turn let to over me it

days since my Thanks, pretty morning conference less the portfolio Owen. XX everybody. the robust view a you I've truncated comments this than at morning, ago. of provided Good with we

to, Let XX me of our on supplemental. the latches that's that something that's start of with sort on and comparisons because everyone Page mark-to-market

on So basis. stat In of we of all statistics. it website. Boston, was our investor on in charts In package, assets, Embarcadero portfolio. our a XXX,XXX was it at XXX to in floors we see square hit was low-rise up and are explicitly of about about feet, we San York $XXX. The pretty sync was Francisco, were New we second-generation during XXX,XXX rollover about XX% roll-down mentioned that City, on second-generation from about and majority a were quarter. much about leasing the net and the going about that heavily up Fifth part provided all with the our were XX,XXX that the Waltham, It's feet feet. I quarter included square We're to really $XXX feet, XXX,XXX available Avenue, smaller were we it one moving and a those And of square remember, this weighted to I Center, and talked it space suburban that we square In XX%. there

square very down And X% no yet XXX,XXX XXX,XXX by that's down $X -- about foot East a only D.C. with Street, was costs, XX%. about low a basis. Now at was little which in costs, New big almost was was with obviously low net feet. only pool square pool And GSA that TIs, XX and the year, again, we of that downtime. renewal then XX% rollover, dominated no And very XXX still it transaction with the down City on D.C., TIs, were transaction York in

me let which is my temporary feet Tower, of leasing. regional we've a during square of XXX,XXX occupancy, now certificate we At XXXX, milestone. with our And So great received completed Salesforce comments. start

foot X.XX are million-square So building. feet on done at square million that we X.XXX

XXX,XXX of negotiations feet. Mr. being leased remaining by feet on means Pester of the XXXX. of lease not to his And Every year. to commence signed quarter we've meet square or XX% is bring that lease square would negotiating of third the have That scheduled We leased. out end the XXX,XXX unfortunately, will goal us XXX% the by

deliveries. our numbers that of we you the So terms those conference at pretty in the sync timing in again with of showed much

Turning CBD of XXX% XXX now other construction in the leased. Fremont is new San to the Francisco.

is Exchange The heard leased, leases are and for XXX% of You XXX in now XXX% there Bush. progress

direct is and until new that beyond construction delivers that likely So that which in are means Tower's foot the the Xst from is market. Large and That available available is blocks to is in late only Park San contiguous XXXX, XXX,XXX be in Mission basically Francisco. product space building, XXXX under it. absent of square

for They announced the $XX our mid entire as-is gross. tenant XX remaining office, quarter, square are XXs. This their XX,XXX at leased San basically closing foot at which the is they and Hawthorne starting space negotiating, sublet entire Francisco were rents term, for

will Sublet expected space sublet large transaction. We that their in it's the very block part low, market though a the share on of Dropbox inventory is as will profits. put

podium The robust office users. negotiations traditional XX,XXX are leasing St. James feet square two looking So leasing and deals law of of Clarendon Francisco, We And remaining on to Causeway month. to to retail the reached the to guess of you're San completed of our expanding. space at space. XXX,XXX That for with Tower And of of the XXX,XXX hope adding we feet three lease if quarter Embarcadero The is space activity another from tenants, I retail square another XXX,XXX that for point this with those XXX have all at XX,XXX this and square for at nontraditional technology the leased week. square growth feet you'd XXX,XXX on at XXX limited foot square gets at the us view feet Boston, the agreements Yet, feet Salesforce at less and requirement. firms we Hub have Center the in In square Hub. users their the we space and as all during retail part XX% complete are

in some are seen exploration-driven tech activity the large While requirements not continue. and CBD, have of there we growth some lot a Boston inbound

Properties have to that in XXX,XXX a In of one third for suburban of the During as handful a involved and that through 'XX, our commitments XXX,XXX-square at be Causeway. that that in from quarter XX,XXX as Boston into tenants square move space talking to the CBD, through There recapturing The tenants XX made Both we then largest extension. tenants continue and on one and other are XXXX. quarter, our modest-sized city, at asset for feet and from tenants feet square goes and feet are expanding new assets, the this foot portfolio, exploring leases our Place XX,XXX XX that Needham Hub the alternatives Lexington. two of other the December the re-leasing goes lease Waltham to square November Reservoir well includes

a and start building, that build-to-suit about new deliver space appears our for lease And the of early to between at for the CityPoint occupancy the third 'XX. suggested, XXX,XXX-square of as in One proposals in if forward. and a be land, XX% to moving Owen we're XX% able foot will quarter construction in 'XX project. of sign is we This

XXX,XXX-square XXXX, XXth foot the block attractively-priced block foot feet on building. Investor at high the a with eight floors space at the completed the very XXX with most Park nine. We of seven, the said the base base a portfolio square XXX,XXX And opportunity trade of improvements at expiring on we Park, significant addition is in City. New floor that's in and of have XX,XXX York Avenue As occupancy Conference, a we contribution square for the our us leaving in

we where floor, the Midtown multiple square discussions for in XXth XX,XXX between lease as low-rise of the square tower all X-floor square available. feet as XX,XXX the for we with XXX,XXX completed feet, X- space, XXX,XXX feet requirements active and are we and a for In that in have entire tenants space addition, and well some currently

future as this the their I not renewal Taylor a XXXX XXXX out, Times executed we expiration. City mentioned in during Ann with described. Square of won't build in on early the through space Tower our part We were long-term conference. projections, run income working of and space lease Well, the also did the of XXXX are one New the for condition Michael the Given leases our them extensions for completed at week. and we York

those While new commitments. far there's to feet Side, deals, seen lease of XX of been West continues XX,XXX we've the lots have renewals. Midtown of beginning the nine this and leasing been major square not over year, on each, leases, Since support

push of high of the quarter, far on $XXX themselves side as by products been this a foot, you over leases deals with done. a market to over totaled activity amount the got there and If the feet. a Three $XXX is leases there's involve XXX,XXX square you tenants. define at under, square over the completed as the lot and rents competing users, smaller activity continue west a of if tremendous But end foot, thresholds feet starting to square space XX,XXX pricing more high-end much those for square

three Our themes. follows activities in D.C. Washington,

we're this a franchise TSA we said We're dialogue Penn. Marriott our to able unprecedented is XXFifty complete in has an tenants The been active the of Reston. at match sites at series to and quarter, and first completed that working XXXX together spur Owen build-to-suits. deal and to in

a we tenant Street, an construction amount anchor requirement talking have at Xth We are Phase would XXXX and X, we're All about upon tremendous consolidation our large site signing for chasing leases. to activity. Reston a commence of

tech The the a market second Town our for as real private-sector Reston strength magnet tenants. theme contractors is and in Center

This leasing. quarter, one transactions working completed square XXX,XXX square feet are X on we feet, feet, of ago. which, square of XXX,XXX we XX,XXX for X signed And days

The for is buildings. lots multitude of lot have including that tenants. the challenge good a lots for existing is leasing D.C. of options and of repositioned The this third that B we highly-competitive lots smaller is and space. there news assets, don't are The market the

So summing things up.

add leases towards XX%, of component million. bridge. versus of "revenue And points the incremental NOI added XXXX last we at -- re-leasing $XX completed million to includes we've we goal up our $XX expect NOI, we to growth today, net anticipate finally, of million that million our basis for is $XXX in-service $XXX -- XXX of of bridge. the quarter. of development about annualized Park will $XXX our that As where annualized million our This We're our XXX

point Now Owen portfolio any the I commence just leasing that, new of want new not does and basis. on of doesn't Marriott, it include described we to at out any include that or will that that TSA a the going-forward developments

trying and here, that assumptions the percentage our of provide pool $XXX that's describe So review the XXXX the keep together tight going I'll we're and then quarter, Mike committed. the that stop million and let and estimates. to behind I'm been to

great last webcast, Good Investor to says, your Doug. do I mean thank appreciate in attending via in and morning. what We month. both I had truly thanks, but Owen person for and Conference our don't we pile want interest to Great, everybody onto our attendance, BXP.

hear about to talk talent XX got individuals I our really their You all company. from initiatives, and disciplines it over the that in we across projects their strong depth think and have demonstrates and

This we new quarter, capital-raising closed on two the front, financings.

The Center. is million, interest which on XX Colorado a bears $XXX loan very The is fixed first years, X.XX% XX-year attractive. for mortgage at

a X.XX%, the all costs this for construction development. $XXX closed on joint also It's it loan on the plus priced will and phase development at first project. We remaining million Hub our LIBOR venture Causeway fund of of

Turning earnings. to our

in Our of midpoint per third is That about per share. last at quarter or range from $X.X the above our from operations million guidance $X.XX $X.XX share came funds quarter.

most Our projects. And did closer recur. quarter we portfolio run to of project from this from in lastly, We anticipated related our for quarter, rate lower-than-expected operating and our We per return recorded full-year about one lower costs. should professional not million to the $X.XX second third service outperformance, savings. the our income, the health our generated We experienced And G&A. of this revenues we to it and at and G&A third-party rental development our services into income rest per be next but share development about of to by quarter. $X expect services to of completion related don't higher-than-projected was $X.XX guidance, which care half accelerated fee share of expense higher

NOI same-property year of was third growth basis, period up Our the on ahead projection. same cash the a slightly in X.X%, was quarter from last X.X% which

Avenue. same-property the a full occupancy loss XXX growth to turn of As XXX,XXX Park we square fourth NOI anticipate quarter, our all at in feet to quarter negative we've been due forecasting year, of the of

$X.XX in raising fourth funds our services as are in our At share, is of per assumptions income, growth performance our to operations to quarter will primarily the additional projections incorporating commencement from improvement in XXXX. X.X% per XXXX of guidance termination be $X.XX of per Overall, XXXX the losing from year in share and $X.XX over portfolio This spite well to midpoint per as FFO of second to share Park from Marriott We related diluted due half expect share of for XXX the we'll development the $X.XX and full at of overcome project. a $X.XX by lost the increasing our $X.XX joint downtime operation building, Avenue. per range XXXX, FFO. per In we're venture at to of development share. $X.XX we full the share have XXXX year income funds

in mind So impact I our portfolio NOI -- please XXXX behind XXX keep assumptions this The same-property estimates. our of in income the our up as describe shows growth.

The lease-up the XXX be between portion the a XX% XX% occupancy Prudential good In parts a at And vacancy XXXX As Street fully XX%, that and the overcome Doug is NOI low build alone for our XXX basis have at of basis be rebuilt to loss occupancy fact sufficient we We XXXX we expect This this the to point, on to year. we will in vacant revenue after growth growth demonstrate it our City tenants, XXX represents even of of we mentioned, be and Park. start our to new in by be leased. space XX%. expect income improvement, portfolio. continue the Boston, to do including a space the and of of expect we occupancy space expected on while On be anticipate the above portfolio it's drop from point given there remainder points expect the in growth NOI, the with the no overall, New we occupancy Clarendon to year average, other York completing of at but occupancy approximately Center. end XXX of same-property year-to-year. will not will

and majority experience improvement between our XXXX Boston project roll-up by between leasing their year-over-year improvement achieving X% been rents we've the San moved of in higher X%. Francisco, project Federal same-property in portfolio XXXX X% be in also activity. of we in We XXXX. where Putnam X%. In into at We project will Street, in our strong space on XXX new and total, as growth to We NOI

of over we XXXX. this Washington, completed assumes at of achieve earnings. square have rollover In On exposure from Now year. X% a Bain is these feet we any do at known leased D.C., cash XXXX. basis, space blended growth impact have at to past of be of In into new Reston, square in already will we foot our San GAAP renewal that where the revenue been -- portfolio million-square we're Center vacated our activity where not in there in moves cash is premises expiration, center expect properties, their feet move-outs has we Salesforce from Tower that we all XXX,XXX that Francisco lease be expirations next projected early minimal currently were NOI to XX% town years Embarcadero XX,XXX when of the couple our in -- and X.X excess vacancy XXXX our early stable, CBD the

in some higher We NOI cash XXXX growth same-property but between up the who and will of X.X% from will both a the the that from likely growth will be on a have NOI have by impact we'll XXXX. from our expanding center portfolio. tenants X.X% portfolio Overall, we our basis that space, within a and GAAP portion project downtime take

rents signed XXX these They're NPV the other they the mark deals long as renewals include They're of term. and cash exchange result offering avoid in for good for in higher New portfolio projections our free But term still both up in XXXX. to is basis not the rent Now they cash same-property do but for was growth downtime lower Doug we would first, have NOI both positive, York points actually two City. if extensions. in NOI market, in XXXX week, early described negotiation. be which long this in for and

The from of approximately always occurred have termination Avenue comes floors at earlier two million. XXXX, floors year. at and income same-property $XX Fifth that this both income. Park to be Our assumptions termination impact this excluded project XXX In of we the two Avenue, majority XXX

Our current XXXX assumption million $X for is in between and termination income $X million.

on in primarily contribution to XXXX lose portfolio. comprised be approximately from of That's our $XX expect year-to-year. deliveries. We contribution from impact our we incremental is The million in is our rules our development about a properties new between million $XX non-same-property $XX projected to versus related recognition these modestly strong of from initial are we in and The the So to the million a project adoption reduction will million. $XX to not The of We from accounting project of plus have management to income, booked Boylston million of development approximately FASB. range year for of services million. where the but The full Street, elimination to share modified our negative primarily also old income expenses million we demolition contributors $XX in method. of that decline a commencing this the have this It $X stabilized biggest at growth of XXXX. our Tower. includes rules year, XXX impact do the income anticipate recurring XXXX XXXX. revenue tenants occupancy Salesforce $X and XXXX project We

losing $X The we're of simply like last in to expense. interest I cover other million is would words, revenue. So, item

reported on interest reduced GM XX% expense. over The prior the our a interest to discussed Building of on of impact a loan the accounting expense paid. our we quarters, what meaningful included loan has adjustment our the actually couple last the refinancing of that we for As fair value

in Salesforce our $X and increase We project offset our development be which year. XXXX new $XXX year XXX have approximately by both loan is as growing fund anticipate residential year, deliveries our we currently interest of Street our our projects aggregate billion. corporate and million from untapped and development and addition, revolver, to of of pipeline. two this of Tower term unsecured an funding this We to next project next our capitalized In availability additional Boylston debt year our capitalized from are developments to interest roughly equivalent facility this

project midpoint. to is $XXX $XXX Building be in related million interest and our net between noncash at we GM increase midpoint to of overall, the from So the this $XX the change from million of XXXX. in increase $XX interest our million represents expense refinancing. an million XXXX This

from also interest our unconsolidated We expense joint $X ventures reflecting interest higher year full by share Center. expense project to the of million, a of from Colorado financing be of

in you point, share We if share from per from This $X.XX income to at G&A from $X.XX strong most per range generate interest offset $X.XX share and share XXXX higher as $X.XX of interest and our external share. increase guidance higher growth, a lower our funds $X.XX our share. and importantly, income, non-controlling fee by In projection developments. by the of development per assumptions, portfolio, summary, So project projecting per new for to reduces midpoint that of per project we projected an are share midpoint the same-property operations results $X.XX and and deliveries. portfolio in XXXX for of we a our of $X.XX $X.XX partially per of termination use per expense. $X.XX our growth slightly summary, is This share higher per XXXX lower from continues starting

the termination fair into growth impact guidance portfolio on GM Net prior Our FFO at loss midpoint we accelerated if of income, the and revenues income would range. X.X% the loan be XXXX XXXX projected of the termination the Building. to of of stronger our receiving benefit approximately much value been at increase not by project our our that year-over-year interest revenue for noncash we've

the of impact currently contribution NOI have per share. two do market any on for projections approximately from $X.XX We two acquisitions The the not operating is disposition. dispositions. properties properties include these or Our

As we space XXXX Investor expressed and Avenue and continues the we expect as portfolio growth during the stronger we grow. the rest vacant NOI from our in portfolio at of Conference, Park lease XXX our to expiring in

you a significant I'd also portion the adding substantial done our up anticipate quarter. our development We the XXXX, already That completes to leased. as appreciate of expect investments, $X.XX we for this in deliveries we between formal questions. it now of and XXXX increase And our Operator, a lines with remarks. open new from development the end as delivering continue we've contribution pipeline could in billion project if

comes line with first of question from Guinee [Operator the Instructions] John Your Stifel.

a got of questions. I've bunch

Let just ask queue. back a get then I'll couple the in me

that First, if Tower, there on I'm looking actually cost at double Salesforce in the to Ritchey's then you're doesn't be XXth And valuation birthday, why your is that of second stabilize terms to And imagining until a $XXX XXXX. is, any stabilization? long? Tower at numbers will foot? Salesforce all-in Ray chance tie my question so is but a development I'm trying Marriott

hazard on guess on going first and how on John, building. somebody question, Salesforce, to try Well, a we're value not your might the

and Xs describing assets between somewhere quality eight Owen know, quarters view upon cap we the roll. generally or that high -- last the or high that quarters six think been for, CBD trading rates has Xs I rent don't in at have been low I initial depending seven quarters valuations

interesting about San Francisco rents that growth most underlying in Salesforce.com the in it's There's this building. mark-to-market much underleased Tower think been in we have at is point. big a so that I thing that

think in physically building. Marriott, the we regards I creation to With a expired can build of and a value there. their that question lot that lease in when Bethesda So of democracy simply is there's when out

shell middle to to the as and going will foundation core quickly XXXX. their We allow our can, middle and possibly as the which our is Marriott in are XXXX, TIs start of hope build of deliver us work in out to we the to

on foot year, to on comps building above San for square Francisco $X,XXX have foot. a They foot of been at -- definitely of pierced in said per pointing values trades Doug cap yield. And a been $X,XXX in X have in I've mentioned, out, Doug are sales -- the the going rising. last new add we're we've rate-wise. in also the been as buildings there to to Xs And said John, as and square the excess Salesforce, that deliver what just the several

that the is our not to which is that's Doug important building one I obligation be pointed think we're shell. done in the Marriott, also, on thing going out XXXX, with

any of recognize TI to do So Marriott work process. they're is and revenue maybe going all then a done X.X-year, But X-year we into a can't it's their that. occupancy, get and kind until with

kind 'XX we're actually finish can and of dependent be So sometime them book that to upon of in in before we're kind revenue. -- we any

a low. the Morrison a is another Well, is which quick Is And you the if in look going development about ask when yours. me Foerster different at Owen, that or expense, the one. occupant? talked you guess, second, Does let tenant low as MoFo city Or site? it at And to look major you statistics for as they you major in is it inflation tenant are costs, of being then an OFC indicate? national operating is And Doug, move they development I -- at are to as feel a D.C.? labor. actually Owen inflation look

just they're is going with of have a what at increase. months, in are. Federal so with the portion the been my going the head And we and built Boston. think, we going on continue X% that We two every days. that have second a tenant you've things is in busy up, average occurs. -- D.C. there's new or XXX of that up that Reserve annualized The has I One contract, reasonable any inputs costs So with the six got West people are rate. labor Street, exposure. X.X% buildings. a into a for conversation described how it XX And is gets union MoFo see people And and together at Boston Washington, don't to comments I about XXth every get talk

on means the bid is business, effectively. new the bidding so busier which the them attractive And sub-trades to less to they're that are, for lose it

pushing profit And so their margins. they're up

built issues. going And the I Washington, be in of some labor D.C. so that significant that for on those structures much cost and particular the to causing so that's there's are inputs And example, seems concrete way the now on think in one right are interesting most the There being input. is, pricing increases going

seeing all we're costs, together. rate we our those that are putting we of budgets our a of higher are increase and construction effectively escalations building in So into

the subs. returns of is our bids [GNP] escalation And the you that to when we so finalize assume a input all come that that, described to and of on all we our actually we

with question next Advisors. of from Reagan Your comes Green Street line the Jed

talked of feet You've square BXP I cap the about X.X any about guys pipeline a outlined. that million leasing I total a thinking as percent would existing there a pretty you that. mean active Is assets? a How of are And guys growth? you consider of questions out sort development you space? cap? for I of on financing of a would is that that guys coming near-term then couple there guess development think be

answer We development don't a enterprise, do pay to have obviously so $XX So have reasonable. we And completely of our enterprise. $X percent attention Jed, your as we around it's We how a that's now, cap. right think total a over question, billion. to we think we're billion much

add quarter, XXX% so very just added However, yield. out point attractive that leased, also I this they're developments we that development would these

those in partially-leased building obviously, of the different we and delivery timing. but building than buildings. or have theoretical building are risk of spec So terms with our tenants, costs very real risks the credit risk buildings But -- also the

continues forward. don't a the condition I described either very development we or of again, fully So substantially pre-leased. be all that is pre-leased cap. have a going to And And that

a we're one talking with one only us our of And presence to in tenants buildings. the Washington of in has

Yes.

pretty going I And are and they're a And be Conference, James are cash it net to those Magaldi think positive. off made flow we development pipeline his the when because presentation is in Mike their currently and buildings on coming significant side, going down. presentations funding our of that made down, debt-to-EBITDA at process down, we amount our burning that's made to clear, the Investor fruition,

And a so, to replacing with to that. balance higher underway effectively a use our what billion the $X is $X.X much currently with billion capacity we're amount, sheet fund today that's doing similar to

a the are on raising concern any have we a question So again, concern, we're if about equity. raising have is and think equity, we the I not answer we planning don't is, funding, do and

year. next guidance missed space I terms any have next And on but items XXX And of dispositions occupancy, two for of that Park housekeeping in for might you XXXX or what the of growth year? type does of guess sort I your year-end are kind this, of backfilling then projecting project?

our do acquisitions or to any in any doesn't of at as So expect XXXX. I for XXXX. occupancy that in the we include guidance all Park, mentioned, figures not at dispositions And XXX be space

demoed new putting and are the be mentioned, get signed going a that even won't I in lease rebuilt. XX-year-old Citibank those really, be As needs improvements, we to if they in be space, coming tenant The tenant improvements end of before to the space to it's today. tenants and complete XXXX able their

get So believe, we XXX. any or won't to be occupancy, any we in revenue able

Even on a GAAP basis?

Because start the its space be to can't has for intended revenue. are ready use. GAAP space the is that rules we The demoed,

of their until recognize comes own, have you you own if even but dime, revenue their existing on uses in done. then So make that cannot and they're own not the some they if necessarily changes improvements, somebody on -- their

line comes John from the Capital Markets. of BMO Your Kim next with question

buyer decided the corporate why quarter. sell You've had just you the land rather this for some activity in to them? Can develop comment to Reston you on than

Sure.

part we've think, it's land It's refer parcel it's of Town per center miles a the And and parcel is Center of urban in better that So more development the se. Reston. I to Ray site greenbelt I south. the that really years, not of will owned as physically, X.X to of the part to the for Reston opposed actually XX guess, you'd a -- of as parcel describe a what an

want lease you. and it. so, to And corporate who a the building to them. and had we own they we building said we we'd to to so the And sell build And said, to and build we said, wanted it ultimately, us came along user they love decided for

the add plus. you can occupancy And a Fortune any that's time to name XX Reston list, a tenant

site, strategically-important just as it was So the the to and suburbs a really it corporate in premier not validate of Reston location continues Washington.

as that as FAR also, discuss the the additional of you're entitle And company? can of you far land? cost that looking to also and use X that is million the Who

I -- guess release can I guess General Dynamics, right? did. we just it's I

think I you did.

million of across directly by the occupied currently Reston to Center. land million street will X from Metro And X That's a be stop. feet. it's rezoning It the actually Center square the Corporate Town Reston that's

basis, given owned will And the be residential, density very add? of over Peter, of, bringing that Metro land million XX Center, which to half forth for it's half part to will Reston at with that will a Town have be on of again, you mix we've a square commercial. feet, do and additional competitive it a of of be million years. -- X anything comes introduction we're owned As which X the between building again, we've

going that core I got urban it the think No, be sums mixed-use up. It's to development of center. town just in continuation we've a the

any go At risk signed the that Armour since down does over you space. some GM retail Under Is a not year of been this is the Building, their over price Since for it's there share XX%. then, through? lease

of and and XXXX, Under they're to in building. very the have and full until out. lease probably going effect, So to will space expect build it the we the the then occupy delivering is Armour force to We're not Armour Under end

times. positive restructuring has have there's we're strong this So company, is is they trajectory of expect no quarter. two $X a X.X assume of sales This quarters. question debt-to-EBITDA that for XXXX. Remember, just plans Even their don't charge, had quite in the still going last to net to over Armour income. their be for my believers. over billion real net They a be they're had billion that there a changed growth But some guess after time. Under They $X.X and

of with Citi. Korchman from line Your the next comes question Manny

thinking modeling just us to year. with next or growth help about maybe Mike, for

growth on year? both contribution a NOI NOI development to GAAP were much as the general reaggregate next you external expect from basis growth, well the other year-over-year properties and cash just in same-store as you If and do properties how

I think not to he's some math. a I'm does -- going until him he answer question that's let got to

issue you to with describing buildings as coming increase give the development doing the margin basis in over an and space on is 'XX. quarter The it NOI answer from changes online, I by is the revenue think to pipelines the each the dependent that that upon those is we our delivered. development that to attempted 'XX contribution on an

to I you back that on to So get will have one. Mike think

size kind of I same-store roughly XXXX $X.XXX the billion That's is the of our pool mean, same-store contribution. approximately.

get NOI So guess, same-store it. guidance $XX I of that's want add if you the to the X.X%, million I how that would to to provided you to X.X% development million $XX on the of

us Got guidance it, you that's helpful. the then, And gave nuggets without of guidance. full XXXX Mike, giving few Day, at Investor a

that there One anything was of like that? to looks guidance them It million. $XX specific last increase expense interest the now million night. given being is Is up smaller $XX driving

do No. line use funded we of what to a cash, that XXXX. refinancing that upon I going our of and our to development are And need projections some still we've tell they're mean, our expire re-projections got there's outflows in do on We versus nothing loans specific. on how quarter. do based couple us. versus be every re-projections Obviously, what that we

on around be of quarter, -- that we little a until kind we what think timing expect line in you simply and again, So bit. that the December. might well as, in February, of rates be some be would as be don't the expected in development our the and We last our interest might you changing change line that of now function that's we'll a outflow at

the all brought kind just you in it bit. expense down when of interest little things the a those model, put So

you of And TI the a lot spend provide is takes about of do money, customers. we our it a One dollars development them long it. to of time lot most a ask to them that when things interesting for the and

just there haven't yet. Salesforce and draw And side not of so a the gotten Tower on insignificant, outflow are TI the that we -- much

to pay we And we're early advantage having would liked. getting capital so the the out not have as as of

O'Neill. comes question Daniel with from line of next Sandler Your Santos the

for questions two Just me.

first is XXXX The guidance. on one

Street $X.XX, of where below midpoint a is which gave guys You is. The

items disconnect? into you The that caused had the Just insight that wondering that any what major missing if Street is

the describe points, it XXX X.X%, in that try the impact pretty We quarters, weren't I is those which same-store at Investor be best think. and and our X.X% would last on to If growth. did same-store XXX our Park have strong, of to, like Conference for our basis couple really up our would

like everything I So the some of we Perhaps didn't the that. major on feel down to maybe $XX items. kind is do termination we focus could tried million, that in income people

million is got about income $XX.X $XX right, that XXXX for that in termination of we've million we the the all Although, the already project. and talking already numbers, we're

of impact kind The it know it's And of terminations the So kind that estimate of on our full that GM very that that our we I expense. that of following now of I'm to Street interest get of through refinancing non-controlling happy have it's also interest or because confusing until that harder I but a understands the the estimate. year year think the you and big was think we going typically very we're don't Building a in all cleaned we typically about. and to up, full run rate it, don't just

the GM non-controlling not up share million, and anymore that, that midpoint here Maybe expense the guidance the quite interest had in is it with demolition at both is of get refinance. some our the to people by happening commented interest in of -- non-controlling didn't $X in about do So their Building really $X.XX. I

areas. the those think are I So

CBS that guys the being expand interest asset? any up given do the have to and separately, desire for L.A. in And in sale, Studios you

comment We're specific investments to not that we're going pursuing. on

As it say we're month do we Investor to acquisitions. I in the at Conference. pipeline more improved and over We're are going our on basis. L.A., things. development looking actively We've has to grow would our seen a last goal probably both is -- know, and the you measured since that opportunities

I also Jon on ground the think our been Lange, L.A. having has in new colleague, helpful. very

next with line comes America of Lynch. Bank Feldman of Merrill the Jamie question from Your

talk thoughts for Investor the Mike, you and bump your next dividend prospects guidance means detailed for on for and about Can thanks a outlook? Day. a what also, coverage guidance maybe year? comprehensive very And the AFFO any

AFFO up. going be our is that think I to So

I it's to range. for our be in to And think closer the kind range. to we that be of XXXX, think $X.XX range to XXXX, going For somewhere will $X.XX $X.XX $X.XX

that. I I to occupancy million noncash square transaction to of to be our are be leasing rents of costs our do meet mean, to lower. same-store are lower. provided Our our rents tenant think And going about goals. got we've guidance X.X going We've feet

probably of and compensation what So million. million of CapEx run somewhere we get for we you the $XXX think that kind and $XXX somewhere have million. million transaction of should if return And costs. and between you adjustments of straight-line in at a XXXs, ground to that's high to $XX is And around leasing $XXX somewhere million look rate other million $XX $XXX our probably stuff, stock then rent

strongly So at midpoint. actually up it's going since to I over the pretty we're up up That's think and XXXX, be X% XX% XXXX.

rent that. free things and was very, growth of the like years, few as been the burned has AFFO strong our last Jamie? off So lot very What a other over we've question,

Just you'll pushing against need start bump whether the dividend? to up the

Yes.

which So about and a is talked to dividend, I income before line. be close we've think I fairly our in are where taxable expect we we XXXX mean, from and perspective in where

business mean, XXXX. next it. decisions is on of not we any over talk with don't board line we believe in which is that dividend lot if our We're And quarter what in But haven't currently say the I the we years. made a with years our few expectation decisions have cash fourth would to year. sell assets, quarter is. be over our We we I for significantly plan, dividend that made going haven't grow can fourth any this few our to are in the going growth about about yet meeting the more our next to NOI of growth

to lot time guys a know as Since at into go is buying going curious, expected of And time, to thoughts seen coworking. they And assets assets. be direct more WeWork we've seem you then talking you that your guys do are assets, what general forward? as and I that Day, Investor just something WeWork landlord a about own happen? looking to spent your owning I'm

changed hasn't Our or WeWork. on coworking on posture

WeWork, As have I coworking that office this described therefore have for think positive all we ways, factor has been the and, a cycle. in business we felt different

situation particular the what buying we not of all fully. if fund They thing one again, manager. coworking it -- we specifics big balance in And investing of, represented the are interests sheet. doing onto doing Investor haven't have it, not competing with I have to the they're a the doing XXX% I percentage net absorption study are they're are but in know country. positive. is I these partnership Conference WeWork they, certainly not is that's you gave them estate, assume, with properties, these an a all whom in -- think buildings run we people some a of a again, And data With real partner And that XX% but around for with it. building. that outside respect with at in -- which their themselves. the have And certainly, partially, it, investing all into don't aware a WeWork They're where

color anyone from else? other Any

that's No, I it. think

General would And see meaningful for you to defense then in just defense Ray, you your me. contractors demand leasing from in last you're say starting turn mentioned, and region? Dynamics, here tenant the a

they've can see we've seeing contracts best use more where retain and And now to three-year Well, funded. see We them budget, efficient more their we cutting through they clearly, motivate in on uncertainty users costs we're focused consolidate. been Reston the cycle, or two-year We going and and perhaps where defense Center, the really brightest. been clarity. still looking see and in being and a space recruit, those locations like be Town to defense

Virginia Reston. the these users now, Northern where very space budget. But and on helpful for it's space can that now, demand the in specific in situation getting market a defense and taking been continue down we're very always for it's direction be for our good So from they'll right fall to obviously rise

Your the next from with Morgan comes Stanley. question line Nick Stelzner of

York at New on I only a basis. if correctly, that So can the you XXX the portfolio? space for on about I XXX the was with guess, guess City said you mark-to-market roll-down the this heard I New a But give York roll-down net little down rent X%. XX% overall, quarter? rent you was about a was of leasing color only rest the And

fair perspective, From a of than more way roll-down. share weighting the it bore its

And significant feet of of that you rolling square was had we rolling a space over. roll-up most space the of have New York City. to down. were would one that in had couple pull had York about if I said, out, As rolled XXX,XXX small up. of we But City pieces We in a space New

missed on at XXrd? update leasing the earlier XXX And have then I may activity on, us you East give could this but an

John you to want Powers, take do one? that

Yes.

of XXX. well. now, done at showing hope would wall curtain think prospects, the than smaller I I deals. did. take than number going almost we think it's better more much we have two of building. is make Both good it's have The prospects half those one and We And we so a it

the comes Your is from line with Rob line open. Simone ISI. next your Simone, question Rob Evercore of

Fargo. next Your Heck Blaine question Wells with the line from of comes

Doug, don't expirations a but New in of pretty of especially them, lot have have XXXX, rental in you guys York, some high rates.

I'm guessing guys spreads have right see spread think that the to in can any assumptions rent this year. So some it? comment you we're into on way to Mike, you going guidance? maybe, moderation coming built about Is And

very this going-forward City basis there's New rollover little a York at in So on point.

the lease our are, what as most that we part, leases are up the hits year. so And statistics within one space, for

rents currently low number. lease leased see the at off XXXs. be the in and basically in flat building the is would of that space between and that so, high The the And XXs the a and we will were available, example, rolled to in in the for foot. we were a you we $XXX XXX the base expect square leased XXs, will between $XXX high expect space be tower And

of XXrd parts big the where or at very there lease in very Building, of major back of to And were those think that those low for XXth Motors a roll-up rents that the there If this the space I Gotshal. we're floor were be the we quarters, to General we two second said vacancy, because the couple a in I've as running would Weil basically place when are took be So from was generation occur XXXX. building. a

anything Mike, then, And assumed specifically in guidance?

For rollovers? the XXXX

spreads? for rent Yes,

XX,XXX of I are going active think two of pretty one said, as that we've on an the we've in is Doug we deal tenant floors. where spreads feet got XXX, rolling at flat. have do got rent that one that's those floors, one those on floors, The square

no with happen will downtime. hopefully that So

assume going be floor to down period going other of The time. we're to is a for

because on part, all would have we're XXXX think expecting would have downtime that of So I we negative it the with that a impact guidance our most piece. some that for rollover,

But mark-to-market will up. be

Yes.

We're leased square going of $XXX in of nature the rents. hopefully, at a to foot roll square sort a the difference or That's the that's space foot. $XXX the and, $XXX we'll get

XX, you guys Doug, eight, nine if but right, consolidated XXX you this, Park, Day. at maybe space remembering seven, and I'm from on even touched the the on Investor then And

of consolidation that it types totals tenants you're about negotiations XXX,XXX talking stage in And color interest? of at a around kind more in think what the pickup this of any talk feet. are you you resulted on in noticeable to I point? whether Can and square

one John you John, want. comment, let -- make if I'll I'll short and

a what picture, we XXX,XXX-square big with substituted foot three big we nine. really and So floor did X on base is floors eight foot on XX,XXX-square

So you we talk sub-divisibility. immediately can improved about the block. our John,

that seven, also nine next we're and goes year. Park Eton back Well, and with eight XX from getting

the more but that's further good on right, leasable. building. light it's It's that's So block. feet. XXX,XXX core, very activity Avenue. air. and XX,XXX-foot center a feet about with we that's block on unique in little up higher more It's And have the And block. And the much XXX,XXX It's priced, you're of Park

on it. have good we activity So

XX appetite but New Owen, and been you how see York cap do we've in sales next we you substantially somewhat the the rates? in Can concern market from that's, us over transactions months? pricing there's still capital give your hit for on Have your trend I an a active, come the to we'll And year-over-year, you commentary foreign meaningful expect to expansion guess, just sources. year? about bottom think next investment points down view seen any

assets are they're long-term institutional now, have transaction holders a less shorter-term in the to I as and larger that assets And investors Well, sellers well. of true number's and New country. REITs particularly other in and XX%, time holders. it's down think more volume's The frame. York versus overall the more have like I trophy as institutional frequent said, traded do opportunistic the around

I less about definition, I community think see also risk. you the think exacting the by becoming investment so assets And more in and is market,

of is this not -- think in those York? The is it leasing New then Where location? transportation? leasing risk kinds Public So status. building York's less the Neighborhood? in return for have being What's I the enough. is and gone And just interest, risk New of requirements good up.

of in investors market. being that out of terms that but are said, I -- of the In continual rotation a think there's and

I I York Japan, other Canada, the to places and don't China, New interest of think East, gateway Singapore, changed. our other Asia. Middle investors think that's that in to markets Europe, continue be from

there of little bit bit getting are a investors is little are active. less now, more Right perhaps Chinese think bit active. a a cycling. The investors Japanese I little the

do operate And we're be think And will interest our of investors the interest keen yields going world. attractive. QE, be relatively-low of to therefore, will markets from to do In around estate other in real gateway to institutional reduction York environment. the rate from to New to will forecasting continue continue think rates for to interest we be it's terms related some might as end I of going year, difficult. increasing think that though I interest rates. and like think short very curve the it's the mentioned, of you next Fed be gradual things I a the the lead to And and see higher, even I

the products well. of scarcity the think as I

with just what scarcity also the Mike's less think does come that on I more creates when market one saying on the buildings market.

Mailman from with next Your comes line KeyBanc. Craig question of the

$XXX out updated go just give there the at guidance? the pricing -- on expectations of of thoughts thinking kind on in curve what you guys near far maturing the Mike, to and how 'XX, are you are in the the end million can

XX are There's term. comparable that refinance guidance that our it with expectations a So open within window, we it we refinance and days maturity. of an its

kind XX-year is XXXX. if deal. ladder, our for about We at a today do Also open XX-year at XXXX is expiration look X.X%. So open you of a deal can

do today. to X.XX% could deal closer a X-year and a we X-year So deal, is

think why going, And think market been market where where are have consistently to interest so, the be like that. but that's about or it bond rates markets. continue of the market I We're XXXX. to what monitoring think always we So the we timing, probably and XX-year going. would at we And very I something don't to [pitiful] respect with bond I we'll think kind a is in looking see. perspective. those reason has from looking do would at a won't believe maturity out we think go no and we're

we a And a that make-whole expect that coupon fair kind during piece look October maturing shouldn't bring at to in would it? of probably be way Is you -- 'XX. in too 'XX. higher to have of onerous The

the and like that about that all thinking do attractive we'll all to XXs calculations the say time a the certainly the prepayment so, high, not bit do any and that. time, we associated pretty little to We and penalty it's continue have. which but makes do in less is and It's with fair these the to guidance it to it XX something try

have question question, ISI. time one for Simone comes Evercore We from final and that Rob with

mute. I was on

credit that that debt. that development on follow-up you the on have incremental there, I And question is Mike, funding solely the the one pipeline? was interest a contemplate Just $XXX on that it about any and Is I -- existing requirement expense. Or the million future the from think term does mentioned developments? quick facility quick line.

existing the shown everybody. assuming we've only that pipeline That's

about, signing does leases which the some of So it Owen additional other at successful not and that Doug talked both our assume that would pipeline. increase we're in properties

the fund that interest a increase projects necessarily our would development doesn't Again, in all properties XXXX, capitalized into would of increase offset. why of and of expense expense And interest, the the so increase that, we're in bucket for to requirement expense. to we funding in get increase lot capitalized us this not kind 'XX stuff causes which also 'XX, that delivering benefit a those interest got just 'XX an projected some which interest normally, is interest as almost funding of so But drops case, far the start and kind of of your to have those however. you've fund because in

then just for going range Colorado Center Mike, by basis? interest increase for is provide mentioned financing is And inclusive about you last The guys million. expense, was from of one you of that expense a final $X your only your that that unconsolidated consolidated that of Or on guidance, the interest question. share share to all clarity?

The range we basis. provide a only consolidated is on

we unconsolidated pretty affect because point NOI that of out So it But and I on obviously, our typically it the share. that guidance, 'XX. -- unconsolidated small properties, pretty our quarter, for it's wanted this on small. to JVs, unusual big a it's change that We the include in we portfolio's because kind does the have same-store

year-to-year. doesn't it have why wanted said, our up which does, it This don't as we the typically, kind is So thing press in of impact. an it release. that only changes expense on pick of it point to I And I any interest the put might and affect in much call is to year, out

at That weeks. NAREIT you completes Thank in seeing our we in to Boston you. for couple many of and call. in questions. for your you Thank your forward Thank Properties, look you interest of Dallas a

you a good today's attending, Properties conference for and Thank Boston have call. concludes day. This again