Boston Properties (BXP) 30 Jan 192018 Q4 Earnings call transcript

Good morning and welcome to Boston Properties Fourth Quarter 2018 Earnings Call. This call is being recorded. All audience lines are currently in a listen-only mode.

Our speakers will address your questions at the end of the presentation during the question-and-answer session. At this time, I’d like to turn the conference over to Ms. Relations Properties. Investor VP Buda, for Boston Sara Please go ahead.

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

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

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

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

history. years We Sara, Properties' capping the of another and just productive successful morning strong you, completed in Thank most quarter good everyone. and Boston one off

X completed placed X.X of developments, commenced we aggregate Verizon, leasing, new XX joint XXXX, and which completed Business in-service second feet acquisition square We in asset can development. York Park, sales. highest presence, feet including leasing commercial Angeles developments, the that New service the our of anchor of customers a approximately dividend feet new in in we the increased quarterly square lastly, important increased our Monica million of XXX X million Los accommodate completed X million non-core at Specifically, doubling delivered feet portfolio square new Santa such annual with X.X over Hudson We component in level venture which and We a ever. years We lease. of our XX.X%. Boulevard site regular Mae new strong XX% tenants. are million XXX% and Leidos preleased as occupancy, basis is of Fannie as to We XX%. points of square And million

at per share We leased year-over-year. with we for the up guidance by years. FFO debt market raised XXX,XXX with Millennium Boston increased fact guidance, unsecured X.X over favorable the of XX% Properties in quarterly the regular three million XX% its We FFO line recently Management over green the of share past focus fourth XX% has per Park, XXXX including XXXX, we and quarter in to as raising by projected $X.XX, and XXXX our more XXX this growth dividend leased And square of X% at the asset midpoint. the in midpoint In bringing than leased. billion to feet bond on square-foot more our $X terms, increased generated prior

sector. the make ability shareholder to in its generate growth the Properties highlights XXXX office characteristics Boston returns in and and that performance Our key unique

from rents Our creditworthy high quality tenants. premium long-term to attract Class A assets allow us

sector and diverse in risk allows weakness. the concentrated single selection yet while U.S., strongest market the growth customer minimizing scale of markets to benefit from Our or us within market

and Our customers a development And new equity, experience, to capacity without are pipeline our driving for through provides our of the ensure in expertise to and is at modest portfolio investment driving with and portfolio FFO our I'm Boston able relationships, important of and sites public development, by team strong commitment and very driven growth accomplish of our issuing preleased growth. win gives higher NOI also growing opportunity XXXX proud success. we Properties us teamwork what to return. leverage mandates

tensions GDP growth impacting inflection taking recent let's have slowing point worldwide, and trends our has dynamic called fourth given become in business. turn as accelerating. market in increasingly shutdown will to which U.S. and U.S. growth quarter. well the environment, negative elevated Economic impact, as and the and further Now the U.S. an trade the so is a hold possibly dysfunctions hit and government is and globalization Brexit Global

January result, the to a more and in interest tightening. Fed on quantitative a shifted tone and including central rates banks December As dovish much

basis about XX-year high result, a points which around at now As in U.S. early its XX below November. X.X% treasuries is

So First, for not plateau what and stabilize at X% growth the does recession economic we're expect above slowing all concerned this now. and about near-term least to mean for overly U.S. Boston Properties?

foreseeable rates stated proven recent for our to risks has Fed expect and Second, estate real a low positive rhetoric, are long the we certainly true value. overblown rate the for future, stay significant interest given view and

have abatements mostly leasing Lastly, enjoyed. markets signs of in we no robust see current we

given and financial have investing of launching leasing That risks our we said, recognize thresholds increasingly risk our discerning rates. economic and acquisitions we new lags on development. market We therefore interest activity growth we slowing adjusted movements So, of and and leasing economic be low further higher. constructive new growth or will activity activity remain

is increasing UTA capital. in is significant the X% Grand In transactions a sold quarter domestic were the opportunity to Lexington near a a or a non-U.S. XXX,XXX leased. Ice XX% property building our fully XXX for and or foot capital a XX% XXX,XXX and square-foot and to Francisco, and high Brannan increasingly Center cap Boston a XXX% of sold is with View, to in This And multiple XXX,XXX for building more and fund manager. domestic to volumes and Beverly to In to In again operator quarter and estate continue X% that building House Financial materially XX and feet a $XXX price equity the investment York, order share new and Avenue either for domestic believe square-foot In $XXX Plaza U.S. fourth sold in our a real is sold X.X cap Washington is the real transaction private significant completed and rates square-foot XXXX Street private We domestic in This rate San for a was and sold a we located Xs Though all current increased $X,XXX rates rate and avoid is are sub estate will issuing a user fund. million DC, public square-foot at equity billion leased. about investors the square REIT. a X.X investments cap is office Mountain leased. XX% selective repurchasing for rate. last a and in $X,XXX foot New the that here a leased a was building Avenue XXX,XXX States cap to fourth in California a help or XX This acre square a Hills, foot This XX% Building sold site of X.X% cap In building of in building. investment This foot 'XX. continue occupied shares, firm. cap is cap to X.X% developments $XXX $X XX a to leverage. XXX XXX,XXX Examples fully Shoreline is for shareholders leased finally foot to District use to and office at new is a foot domestic Pennsylvania include year. accretive leased. Central our and a sold X.X% there to for rate fully $X,XXX X% feet market, rate Technology and

for be pipeline projects activities. strategy sites we as Since both preleased and our to continues our pursuing Now moving and new primary remain development last our projects. active development future to further mentioned, capital for activities, value creating progressed earnings our we call,

in in X.X With Also deliveries pipeline projects Spring underway Main remaining redevelopment find. of cash Tower projected to recent the and development stands at investment XX% These Pennsylvania Salesforce most and are commence The upon of residential and of DC projects aggregate estimated Cambridge. is our million preleased. stabilization. square of investments to projects component XXXX, the in X% service preleased aggregate portfolio well for and have billion $XXX development be into and this to current $X.X billion million Washington we XXX of XXXX commercial we Avenue XX% in the XXX,XXX yields are new and feet and Street, square and office the approximately feet, comprising are expect X.X share, the Street XX our

purchase completed also active with Platform of BART, distance transit foot square Diridon for site ground is future The village. Caltrain, Silicon and We Station, to scale of a Large right site foot office square high-speed San million which site and for XX, next we approximately demand Jose’s high with transit potential development. adjacent and Jose, a $XXX X purchase walking are rare. new in three the lease is Google's the Valley transportation feet hub in right located rail primary million year X.X acquisitions. with square new plant for within oriented the In to San per the

the Carnegie also significant this of in which X.X development option to January, for million. feet More the all we investment an million square $XX.X are expiring purchase Center, to can partners development. eventual support remaining in development a future land discussions exercised up vertical capital site with at for in make recently and We

property in our Heinz's existing growth settled month, for the uses unified. Princeton carried valuable to Salesforce this modest, development Carnegie arrangement. advances we portion is the is Tower the So interest more a with our of we interest in purchase asset opportunity their Also and net X% committed Center and believe market and of buildings have

in call the land. building vacated in Akin Virginia this the $XXX activities, We selling million. non-core for quarter, disposition, DC the the year. capital is million successful current our of Gump presold assets for $XX our million, sale be a extremely and have of the Development Springfield Washington In We year an for strategy. Avenue Hampshire TSA cost we by in on releasing in fourth project operating reimbursement is as for of completed our a asset fit which goal $XXX including Lastly, XXXX will and in XXXX today we exceeding million $XXX doesn't of

include buyer, funding the you Properties price including development forward $XXX rate cap is future the assumed to total If X%. million the by fees is sale Boston the and approximately

Tower leased Given and summary, early our a foot for square Junction interest the in transfer for this completion our or Maryland assets to business sold flat XX% XX million we of we is to JV development do a very location, building exit in in capital acre in free-up completing $XXX in of located land in for growing It hold Park investment We have rents Junction exited suburban of XXXX parcel of would our Properties. GSA January successful the and in the by In a our XXX,XXX Annapolis a fully asset suburban of a foot. it elected overtime. XX property. asset XXX,XXX year with we property sale preserve was Boston Maryland $XX a the to investment. completed remaining Oaks a in at Annapolis for the Tower December partner million square Rockville One, in is And intention our sale square the $XX.X Oaks, foot to

and on robust Patriots, development in-service board activity put town lease-up XXXX favorite and home and more our New pipeline assets in beyond. we’re the our well wins Given and for to England like positioned

Doug. the Let turn call over to me

growing or It of including seen indicator, cycle. leasing given times XXXX that our customers in Thanks, ago line development Owen. back, continues great our come. is economic major really decisions described to the or it in the and activity, certainly our ago to Go had looking lagging time delivery just at ago be top a is there we years revenue from five true the by and Good from barometer year four true is years are transaction Owen also in leasing lead they new leases business, made contractual our our for years inherent and the starting a are income two developments accelerate, to even that and a morning revenue office real everybody. success

Salesforce signed rent case increases April its October of that achieve our point have plus this first the cash at all year. won't rent percent Tower. building at a rate let’s until XXXX revenue year. in in on Starting So, run point, X contractual lease average of per We and the occupied

The first below last deals feet exploration markets buildings market XXXX, in XX% only the that on rent lease few the it's the is the between lease about and on 'XX, today. and in XX% and based square is XX,XXX in building and inferior somewhere particular

the As lot a leasing volatility despite macroeconomic like feels Owen activity XXXX.

public ups upgrade real-estate either decision and start or private some space it's established in been. Our the large consolidators and primary customer make users to are continue cases

and life office growth bulk is do in robust also not businesses, Manhattan the see from demand science from traditional for there technology the necessarily space operators as the space the to industries, evidenced continue new incredible by we XXXX. of growth in space activity While flexible and demands

talk let's about So the markets.

part emanate then end put Our opportunities rent at what's the revenue on in Park rise investor which expectations is were transactions, stated floors On that the E square to going on feet XX,XXX in the spot. released feet, we and John biggest leasing occupancy XXX contribution along conference, to in our 'XX. same space XXX,XXX I recapture Park of the feet the higher tenants. and the block we XX longer. in City. entirety fourth signed entire And feet is new XXXX Andrew which in and agreed X, and XXXX for week and of XXXX the our same square of earlier fourth of the XXXX totaling were at hopefully expiring the through leases Street finally, vacancy, floor, the the XX,XXX on Levin begin with and the with XX,XXX year X, recapture leases Heather square on need this and floor at through X space the quarter through Powers, that's is low transaction to XX feet first sixth all XX-year XXX would in York our New and during square re-let square improvements the XX,XXX XX,XXX expiring to and I on expiring to for and In Avenue. of at portfolio. feet XXrd XX, the These in XXX,XXX 'XX, of we've or our recaptured space stay We XXXX, lease to And Avenue we with XXXX Kahn October XXXX going the going fifth feet and tenants square announced renewal we that recognition floor cash and we include the square XXX XXXX. I'm from XXXX

the the and recent ready gross market number about entire delivered year clear and from soon X a in Midtown. XX or a follows: banner X, of would has rents over gone square that prevalent a to foot surpassed are perspective. $XX revenue expectations leased rents to of vacant underway and make all year for have of the to One actually and and have XXXX plus square Hudson immediately. XXX,XXX the square steady. On feet, on we $XXX a helped acting like the XX, foot. of a new Park our block lease and X, rent XX rate square City, lower from on XXXX construction XX,XXX X, have it's just and first above South. addition Midtown of the XXXX, has the the described Madison overall in the building. are availability rent it a X, construction We've from was repositioning and acting is York foot been a X, available XXXX lot I margins, there And The at I The quite and reports space Boulevard place feet new slightly Vanderbilt, There square XX been XXX rise we've deliver as New activity X, expiring $XX and buildings that X, XXX still was point a down So of causing The was actually $XXX all

square So the renewals under in including foot square see Overall, last inventory have significantly. dramatically in increased very that feet XX,XXX of above a X of over a feet were concessions $XXX market activity buildings we activity $XXX Manhattan of feet. in continue in million around a the XX,XXX square feet. total gotten a drops high has a constant million uptick was end foot. and rent deals time leasing free TIs foot rents the square in or space There slight build square about square and remain XX% The leasing over above averaged out XX year $XXX of tighter. to those submarkets square

be continues Moving DC, conditions to Washington to amongst it regions. most our challenging the market

in heard As from market CBD asset sales. press and release have read both through the we and exposure reduced Owen, our suburban our in you portfolio DC

thing. about good customers concessions one are long-term that over are outside a leases small never leases operators that's square relatively stable demand In experience accommodate. could new our on lot little of their in new been base absorb delivery This and have will XXXX and rent entities Our that development on it's that and partially has With XXX,XXX commence all and commencement that of new providers of rent new between are signed really office flexible focused our where are deliveries with we on we aggregating that we the have Based the the activities demand days. leased truly the XXXX. these CBD, XXXX. feet and there actually are providers,

will and occupancy Washington We terms market in from DC to XXXX, necessary total XX,XXX, the relationships XXXX have we region and with up our down availability The gain company in our feel use and will and XX% at we XX,XXX operating skills as of leasing over portfolio significant CBD. a our contains feet corporate which the portion to Virginia Northern other diverse has relatively as government NOI, NOI deals total about the to XX% just days so many more square much continue our technology and do makes XX.X% growing a contribution at better CBD number regional of the companies of small X% Company's to The is assets. although over speaking demand comprises activity contractors, due of users.

number into our XXX,XXX at We a at new underway and relocates of lease. the Reston in and square their on Leidos the XXXX portfolio, have renewal didn't feet able square XXX,XXX is the the square-foot as Reston XXX,XXX who just space and discussions accommodation well growth, as the In we which to in have tenants New as we Dominion, Town Center. leased start XXXX, XXXX including were our XXXX feet GSA we exposure XXX,XXX have square-foot tenants from not accommodate to premises XXXX, to will

in and our We with amenity that feet whole XX,XXX are are They environment. piece users minimum square are looking of a tenants. XX,XXX to square-foot to focused their rich on tenants looking for square-foot existing new XX,XXX of a installations active to host two X,XXX discussions expand of

as place get out we Reston XXXX for rolling will redevelopment of in a during Metro enhancements ready which making be addition Town open XXXX. the in Center of our We our number price will assets to

with renewals limited early Business XXX% Santa we are both Center brought in the on our we West, properties. Moving at at Monica to availability Park LA, and leased Colorado focused

Embarcadero as in deliver HBO Santa ahead direct getting lack its limited market in well story walk Colorado The the big their after cycle Central the we in levels availabilities began million the to feet the continues allots have site space a XXXX, the the XX% active area. square Saleforce spaces With will including significant be occupied only are Amazon, rise an Tower a feet the to Sublet our market. as only are a the XX% a companies moved Park, XXXX the Valley expirations. and understand The demand other and ability The working LA base financial market. market ability majority if A there accommodate for move number more the our deals. the leased. now. at annual a renovation of plot the and This number Salesforce at growth is square construction Commission to has technology that litigation and flexible right hear than from and Planning There from the building even tenants particular the the the LA the allocation. as rates has in come XX% grants admission work in to and new leased. at XX.X% total since in of at feet to XXX,XXX XXXX 'XX, been about market we feet delay XX leasing quarter at the Tower, of just we new and feet, in square and feet December and center. availability. technology Hawthorne leased could industrial. the vacancy Monica ’XX we XXX,XXX same continue portfolio, of a great And Embarcadero crisis. Business XXX,XXX XXX% the Salesforce the more the rent double of of of than Google a XX so And vacant. commencement city take our Apple almost other square over a addition within are existing place development tenant all up companies beginning first of square the in somewhat XXXX construction expected leasing growth XXXX are Mission, those at XX of than no flat a new wholesome XX starting there adjacent West Silicon you until run Since the relocation earliest. February expanded of of footprint and or name One and XXX feet of completed Francisco The leasing tenants the $XX tech action existing XX and negotiation million sequel entitlements when XXXX SoMa San of West XX%. the into through square at of had won’t rent from XXX square has on We commence operators Maritime at of to This of rates is likely XXXX, and over large and technology ECX July office the possibly XXX,XXX Folsom, under The lowest they $XX than Center have foot Facebook company lease There ended all is to the included a of Rental XXX last with and XXX,XXX CBD foot plan Center, major square new are when more In when undergoing virtually by or XXX imagine. large square

all that occupied we currently is of the first If be another the office negotiation it jump of occupancy, could XXX,XXX And foot not XX%. yet XXXX. to you either completed square have would during include that space quarter our under leased but

aggregate not the growth November Waltham sectors very the Lexington that XX, available our next market probably until with life full the little beneficiaries Last three ongoing be to started negotiation along to new long CBC, with a space. of If have you been all of under not in space new a you’ll in when but technology least, the the a size space and science to delivery have been at The manageable speculative have time. next markets, Center, our of the buildings Boston floor very XXXX continue want construction. floor Embarcadero wait and Cambridge the expires,

X.X their not Francisco year. Waltham, release Waltham, Way is project existing at Way a In Our square start remaining ’XX square foot An square feet announced and XXX,XXX space. final and backfill square to were feet Embarcadero we XXX,XXX with XXX square we’re foot Causeway of square with growth XX,XXX its few last at have existing Congress. Street example. the remaining. XXX,XXX that series building, of another In we and for at we that months, markets. quarter XX%. negotiating we We Financial Boston's In commence. feet second in million started of Boston three Point construction is a other be in science lease Maine, foot have in a demands. to announcements square building at similar life just up at expansion Lincoln in District, has start One foot One project feet Cambridge XXX And and should since space the activity XXX,XXX XXX,XXX Boston great company square this Podium tenant square-foot the there Causeway which our square XXX,XXX for our at all City during to XXX,XXX committed is location by lack XXX only of XXX,XXX in square a And the open of hope square the during XX,XXX the a new to feet. our satisfied feet of building signed leased XXX,XXX bring San speculative tower foot in a picked expect development challenges the lease cycle tenants for The this to of lead be additional In and last the occupancy the significant portfolio which office will week State have Bank committed

the In Ave to exploration a are focused made XXXX decision relocate future late Hayden explorations. tenant with we into December has 'XX, on in at our So, XX Boston. square-foot Lexington XX,XXX

all we've a strong floors the of the XXX and year, lease, with of science in lease this terminated Lexington their for we vacant Clarendon negotiated we full we based. in the take that with middle the At growing of we lease expiring changes XX% the year and at a increase the a During decline in last XXXX. leased life increased the January, that is about first Rents rent term of week at a Boston, X.X August signed rents. a along of end increases occupancy for will company XXX XX,XXX floor Late to year a similar states of expect XXXX, in of as building. with tenant market that rent. expiring give same one increase square-foot a short-term 'XX. in leased Huntington sense in a in And in a in the you in became and space two the At other December to a concessions XX% in Street, December XXXX XX% an Avenue, with and had in Cambridge in it XXXX, XXXX

at stated did I'll portfolio there the call in our very go and the Mike. across much this at entire stop I as to And moment, XXXX. feel they let outset, the the So conditions way

Great, thank morning. Doug. Good you,

another quarter portfolio I again, our sequentially Once said, revenues quarter year-over-year. As we last at X% to over end had -- quarter. of increased and just always the we over strong in X% fourth

XX% We also on on lease, these trends. over same cash quarter grew all last of X.X% GAAP second generation property basis over rents our a are expiring that positive share basis commenced by NOI this and our And quarter on the the were over year. up a of X.X% same net leases

quarter loss the of which the $X.XX We This a use off adjusted expire in redeem coupon debt due issued primarily of the on million extinguishment portion XX% if high of guidance XXXX. We or into to with that leased, in XXX% in $XX.X be in you Salesforce climbed which all overall occupancy point $X the Tower. a portfolio delivery the Salesforce issued this is the occupancy was the third X.XX% in to late a of XXX We of bond is higher basis yield per the quarter, will which and at our end the penalty for the paying office maintenance by our bond occupancy were occupancy early. bonds proceeds in-service we last share, $XXX to XX.X%. of and million green included Tower than quarter a quarter Our coupon billion X.X% Salesforce the XX.X%, exclude expect December. of tenants dampened was Tower to charge booked brought XXXX.

which are the XXXX. funds from through material share year taking operations quarter per ahead they our and operations higher G&A We were slightly was service reported offset of We our share, debt, plans care full of maturities at late from expense of $X.XX in were per approximately now income guidance. with funds revenues fourth but Portfolio $X.XX share. by projected fee all both than management of of per line and $X.XX our

XXX,XXX a square and fantastic signed in have Owen a town The no they leases square fourth vast beyond. and earnings had Doug had impact positive no year Manhattan. mid on results, these was the described million but leasing quarter, exception. will majority of As quarter X.X feet the on XXXX over in the feet of including quarter we and We fourth impact

velocity same XXXX and in New XX rents. are we to expiring leases on growth over leasing significant property our In space, X.X% in our GAAP have Based on well activity York and to where also increases to Boston by renewals expect leasing early basis as share the vacant assumption for in continued the at of XXXX. City, and XXXX get NOI new the addition number between the XXXX midpoint as leases we of San points Francisco for year-over-year both X% strong activity large increasing for to we

We X.X% early are or XXXX we deals are will X.X% to as the rent or renewals in not commence cash at same until many that property keeping assumption tracking leases of cash new late our XXXX. are growth

for control our space rents on in schedule. the non-same our development This for portfolio. as upon clients in our of as million slightly midpoint at build of out for some adjusted our also pushing the well straight-line have our two due on of out but to moderating XXXX a their or property office Generally, million increased growth are our back million range result, we assumption in of are minor the to we a As $XX users, by hub is occupancy our $X and a month at In date. million. rent occupancy to the comprised changes fixed NOI based by pay Causeway retail incremental portfolio build XXXX assumptions in $XXX $XX timing

control. is in work revenue we they until complete However, cannot not our recognize which their

million million in $XX increase we year the a and into sale income now quarter's from of our the and significant interest expense are to earned primarily agreement most approximately guidance. The our development. headquarters between our XXXX. development to The continuing million the deal difference in of a our due next last is came And for to the quarter We've reducing by to credit with you bond often combination in two and at expense $X We've the services development reduced see fees pick total an lastly, for buyer $X net $XXX of We increased We expense usage, from years. million interest new from full midpoint are of in million capitalized the our full will over interest, December million and the and $XXX change a the TSA expense able this reduction services assumption by sale of to we line redemption expect entered development. bond which TSA to for for projected up management transactions assumptions year. assumption development our $XX interest assumptions. the our

the TSA offset projections Our capitalized developments. interest remained for development last interest interest higher with have capitalized steady other the by capitalized our for

NOI per per The per is So developments. our to per property higher share funds to of of $X.X share portfolio are $X.XX of XXXX lower per range increase $X.XX NOI, $X.X for $X new expense, increasing same higher from share we of share income $X.X a share. midpoint by per reduction overall, guidance from share operations fee a of from $X.X offset interest by at the comprised our of

dispositions, in any we press than include not does additional guidance acquisitions Our release. what or our other included

resulting see are in trends are organic We to our our in markets, continuing positive leasing successes driving up that growth.

is external to that XXXX for growth growth This development leased remarks, to over the you if our strong midpoint that and it be of internal over provides FFO turn at can next great. both several well Q&A completes formal would our combination assured growth our Operator points very external years. and Additionally, over of pipeline XX% from XXXX.

first [Operator Citi. comes Korchman Manny question instructions] Your with from

a second, think back you Hudson Yards. at for X announcements York that about if New goes on Brookfields focusing Just

in that your or come shift be whether wait Just anything for your any about it'd if spec X curtails or in developments tenants go development? is to wondering there timing if desire Hudson to for that

in comment join I'm I'll So, and you brief make on you're a John you can and can add on. Powers, assuming

in that million So And there’s building, X it's million developments over spec announcement actually of feet saw Yards, and the another on Hudson tends Brookfields the is moment true to square with one the available X.X the yesterday, just just -- two square start building million there the other if X.X at the at you feet place. square over that that's feet.

X Midtown have under that's right obviously, million Manhattan that construction. square And then are So, there. buildings feet you other in

think have before looking I we significant we that would amount be of to certainly preleasing started. John? a

tenants hard it's been tenants The the well we the XXX% giving interest you the We're now. in the a foundations some we've tenants We're with from the building very our the ongoing construction the and Doug's that forward we're Well, to BDs done On by situation, there. that. facts very with to redesign to. Joe market, with and since talking on closed need excited it project. significant we by move but we've been to the working redesign clearly way the deal is a we and showed received in

looking new looking actively you're I you share there question tracking there right just that that at. with anything The out us you're new sort markets other could else and now. of Is at submarkets was

that good described. Owen, it's the Manny, perimeter Nothing morning. outside we've

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

quarter change that some where And could also this likely higher space? What assumption. to guidance are occupancy which includes termination components was if going and this was release primarily the you I wanted coming from to? to of about ask on it your due you of the the the quarter talk fee how last from is

of weren't we some announced complete. New we bunch were is and I guess guidance on the of obviously change leases this earlier spoke City guidance month signed but clearly increased working that So, We which those a XXXXXX our of that quarter in York Doug last they last leases quarter, feet. over is square also we

in up say certainly in guidance of up that execution quarter brought of overall So, the we seeing that the because continued guidance bottom those line you high our not although of likelihood the those which is velocity the some with in up I got revenue drive of those were cash would are things. first a handicapping of our and the end driving revenue markets we would know leases say, I activity the range. we're starting things. the And second

Obviously expense the increase occupancy really are two on are that also the those are a from came and hitting little So bit guidance the occupancy that mentioned. in interest increase the as pieces I in range.

New really Doug the mentioned spoke suburban Boston, in Boston, recaptures terminations, about one the and On both York. in he

driving because that than higher have is year that that five space years but leases now signed. in we from our payments or which that XXXX, getting even now, recapturing and that are were will we is a we're XXXX, are So doing from termination are termination expiring, income guidance

based out rental and market strong doing be rent may but now much while we're cash advantage are at signing condition interruption want ultimately we there and rental is because market rates we're the what So, think we space, builds some than the strong in in. their rate we're that leases tenant take higher that of that to expiring very

changed the the what's And that not of then will if value asset this developments the TSA the you impairment really since growth of case, cost? market out of development? sale on the if of view that Is I can as exceed the sale. ask And that of part and you that's took your

say a, to is One let any a the would we us for the significant development. just as item entitled I just there's well financial it perspective. creation cost to you development TSA are along when under we counting minutiae contingency that having things in sale as of way involved to valuation that's getting budget, report things. the clinical counting the are also recorded And that development savings are guaranteeing would So, land was. we our two completion how out reported. profitable as of include the us I a from with lot a in line fees point and with was This those was we

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

requirements back just going than are cautious at how targets potentially items? other any higher underwriting you on developments about guys Owen, Are your kind being to bit or a of more preleasing at looking changing of these. yield of guys your you commentary all some little kind other on

I the yield few pointed XX our Yes, I had treasury months. requirements we changed the XX fact, in that drop points U.S. last year basis say the wouldn't in rate to reference you

sites were But to developments, particular buildings it's here and today, example, win type based we and acquisitions we at at today topped couple in we you least answer site our flat essence think economics, profit. scale give before that precise recently and not developments, value in in out, keeping are we the preleasing we not your to think all in being for to are are So do on and us of you looking region the will I that and and what I on and a circumstances really increased depending question velocity seek feasible building of also Boston and launch to But mean a more all were the the to I market, knowledge wants of and a everyone going suggest, new interested we the that a have and I disciplined question that's by given things. chasing require think yes, has we at thing. of I we the know both that even that we the or for on have new that. going number different preleasing kinds the know yields new One, of as possible

that So that would be the an increase described. example of disciplined I

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on then Platform just points. clarifying XX some And

purchase Or of of buildable land bucks million? that that is XXX option a the kind that is on the X.X are… they On foot,

Yes, that’s on the buildable.

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discussions this discussions it? higher your had project everything you in preleasing the your how you of in Jose require are Or or less about view with tenants? going Google thinking adjacency to Have forward about given on San and guys to with go guys kind

the answer let and following talk just Bob the about question in conversations. then way me let So I'll leasing

do all structures, of relocation plus and work feasible all structure. and the sit to of will And go utilities we they how work and make demolish doing would we existing believe, is within minus phase. So, we then want we a this buildings to we what on months. structure of parking subterranean start property the a this to as all next to going when parking that’s going a site top of series is And to an a the expectation that on refer and are over is or a we surveying structure that assemblage the six speak literally enabling decision subterranean as Then I and we is project. are the all

conversations Salesforce different back XXXX. no And than know about when Tower our started in we you so,

are forward. We moving

instructions leasing but tenants we the know. will you a in tenant about our hopeful excited and of markets are or commencing project are that with well anticipation never We provide us

on you comment want the do activity? leasing to Bob So just

other Yes, tenants with to plan talk and tenants. to we had discussions we

and thing just is provide think at point site BART it's both that only Francisco has the I week a Jose construction to X access. Caltrain the this BART site will to on where San actually important location. million oriented the past and feet square started can between up San have transit you

if one Sadler. I you, could. for Jordan Doug, One it's Hey, other quick

particularly improvement seemed the new see asking York Do on effectives Your City in cadence you York given New positive rents remarks and in pretty development. the the net expect 'XX? to on New prepared an

net are packages that be down not blackout. and rental the rents think in will the increases certainly rates that We half concession going will modest have and effective there

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

some think guys respect your Reston? with the you Fannie Do going ahead with you the that square their guys areas of on what’s because and DC, in to possible build hoping are these also just shut could is turbulent your XXX,XXX suit second on government portfolio? move touch any in As foot largest see was to effect some disruption could Mae you given guys you down if as any I could mentioned, times tenant, specific within on you touch

Ray Peter to you or take do that. want

I’ll on. Well, Peter start can and jump

things First and of long of annual to one are all about not leases they as related strong great and relates the appropriations. to GSA, there,

our the in structure existing current no change have So, GSA leases. relates actually we seen to as

major confident a have lease renewal about and in the We we very months a expiring feel here there. few very,

relates it profitable entities remains Unites the government. one in Fannie As the Mae, of States to it most

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any that’s to mission almost also the jump critical at reasonable authority, kind their I’d government what leasing in provided the government in. at referenced that's the agencies a deal and highest The New is the Yes, timeframe. are in actually also would replicate impossible be Dominion and to level earlier independent happens of be location was the security of that exercised for call buildings already it

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of And our we presale have also mitigated the with GSA. XXX the and exposure sale of

is to exposure than So, three was months or less our ago. even much government four the it

the touch just how you XXX buyout interest can the yield between in X% million were Mike, the that your the paid? in And And maybe How how allocated affect property? Salesforce any on buyout? the on maybe, then total promotes And calculated? property? the bio is that was Or that does of investment the

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to lease, effectively been the would So, which NYU we reason we up the lease originally shorter have lease driven we which due term of versus have underwrote what that that were were XX a would underwrote. year would XX entirely almost been cost a with years have kind have is what the

the with and associated increase lease officially associated escrow and within the of that majority with that So are leasing came out last that of quarter. tenant commission that the improvement the

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comes next from Your question line of the America. Feldman Bank with James of

related I of of to think has get seem, going the around base types a different raising of co-working and that you little I'm kind we've mean to mean trouble the had thoughts is for office we've of business. hoping on seen flash and to what that capital forward? sector approaches proliferation going tenant bit its rework

going thoughts what guys? an you your kind latest you of think to it's and So, just mean are -- for we as on what update

basis operators the we buildings. growing. Owen. by and been, an It's ourselves I has an on a our small the net as of the clearly the been it where I'll workspace doing business work other to the been footage X.X% somewhere depending it a been couple of our in co-working where prior discussed today between as fact scale Look, operate, continue in shared lease of by but operators it's scale, these business leader we it's sector think city on call it square markets some be and total in on of important are and X% important absorber it to is believe we've We office this of call space, there

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companies And some positive. given and a for into that's workspace, think but space I been shared see it large flexibility, So think their I them putting it's certainly very taking -- of resource all don't companies of lot we see procure requirements larger manage we them companies percentages their the volatile single-digit their on basis of ability are that when to can process than which space flexible be a to difficult, a procurement procuring space requirements try human to space. -- more

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have kind any markets. Do you you most the sector less can become? on know how than to larger X% much thoughts that I of mentioned have

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different you So I think on by any to Bryan, that? thoughts it's market. market going be do

also Yes, I think part of it of identification bifurcations. product is

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you what's the lumping and taken there creates it is are out and in So different terms is necessary it's everybody everything totally probably place scope. a together some size almost product that illusions and not of

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it of lumping do together. their business everything with to lot a So has

have last gives media excessive in are that seeing What we we from leases and space you the and here? comfort couple that companies lot large of then, expansion seen will a use the of And years. not tech they

XXXX and is the our these in small the comparison businesses, aspirations, in Jaime, taking multifaceted we to tech which they to are growth what people companies enormous are space era, hiring at to tightened the circle and dotcom down So are companies XXXX multifaceted refer have that year in rates.

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in are to them down Francisco, going boxes and have Downtown idea down living the XXX tired. this really XXX becoming it's put for the companies of Jose, that city was is travel day them hours the commute on just coach put their three employees to up in a that San San So, double of the to the or that are

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our And the there. going interesting was really down changed a market become it is really has Downtown. So, that view to

types are office square we Google at And marketplaces, and and the of thousand businesses. X.X go. Los we at long-term Washington the Facebook aggressive talent are Austin minimum in are these companies Valley, to XXX and just where we to has have piece in but foot to obviously organizations a in be Silicon so comfortable trifurcation that. an just than with feet was and going of going just acquisitions either million And tremendous we’re And and in now Amazon the across think parking seen that locations and going these -- plus in Angeles could Almaden, Boston of once very what be The of be make permitting changed. their for use to you’ve base The square larger growth are hiring residential not or changed DC. companies and site about ratios Plaza feed are their

the Garrick from question of Johnston Your Bank. line from Deutsche comes next

deltas How development shaping we're was currently the had by you notable And if entitlement process experience CBD sharing? was market? for any new wondering I out

at have XX the then about Back with Boston, and of opportunities Fort and the because Bryan that at front I will are what’s Why on take question. answer going that’s I'll right those So, going now. in how that Obviously, let don't hour what’s site, half long San sort CBD Bob site talk Bay talk minutes, our us do in Harrison Boston are entitlement to in about, you two on Pester let Francisco. of at

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has limited amount that well. will Back the foreseeable, for commercial goes And side. Bay Cambridge on coming line of say So as the product in

to earlier the all who real We amongst discipline be seem a permitted noted conditioned preleasing on are as and it seeing have states well. as was developers that are

acquisition I suburban on I'm just share further life interesting be was there you sciences, me. Princeton. interesting? preleased And was the see one in last just of at some It this to be addition? wondering, inflow for would thoughts perhaps anymore land Center And if assuming development a type the Carnegie would

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option with land and we expire faced to So exercise purchase to decision the part. whether on or the all the let were

access -- elected the obviously we So latter. we

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with Sandler comes the Alexander question O'Neill. Goldfarb next of from Your line

of a some else, Junction. this that Princeton year, there there outline in two Annapolis you So have just your sort Mike, anything year? questions, first, your for guys fully theme. keep. that if this out? But deliver well could ability you sounds as may fully it or impact certain to getting guys disrupt guidance exciting, you exited amount Or Junction growth Princeton, laid you of is the dispositions like meaning dispositions may does their that's potential on continuing you spoke your Annapolis as you on or exciting about exit is what

to the latter. let going in on I'll am and former I the jump Alex, Mike answer

year, outline land all we revert disposition whole $XXX at land, XXXX. last is So, more the in but we list accounted XXXX and to have the in I and and Princeton our week it in no near for this maybe which would current be That no being the do haven't investment We on valuable just non-core project with to plans purchasing that to but question, million will by have our to it. exit said think would owning back exit exact this finalized intend levels our asset plan reasons I million 'XX, the investment. we continue our term of anticipate again $XXX think sales 'XX a we plans

mentioned as reflected Alex, in my I And notes. in call guidance as

what's sales We included in our haven't within guidance. other than for additional asset our anything release

it develop, that Than kind is that So is so going land of as stuff Owen some what some were is suburban a selling that don’t you're stuff don’t really non-core big. said to the impact. other talking have non-core we meaningful of a we think lot parcel we're is of not about of

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Dock to Alex, have XX. we sell no So plans

focus and Our the suggest you that’s asset what certainly focused leasing we are on now. as current is

with question comes Catherwood BTIG. Your next from Tom

question I far York, appreciate A foot. as In $XXX your or I as commentary Reston; York leases then Doug, quick New think square New Mike on and a over

obviously vacant when demand at as you as in are XXX your though the for space seeing a square options far mentioned it $XXX foot. and interest What goes over Fifth? You slower

you take to that. So, do John, want

hot think well, was really last year we the Yes, market XX.X million.

XXXX. year New that a had haven’t since in We like York

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about coming be are at place is the on top think are 'XX, have optimistic year. Park the be in that product up work going we great coming we do now. So, happening good. starting the during but are XXX to still to we Madison and outstanding building best is GM, competition to the those a going floors what's blocks But are market 'XX and we the in on XXX

for maybe far retail timing the on clarity then, the more anymore ins And the of the as GM and one building, outs portion? John, as

working and Armour. the there work in are very now stay with things because a we with we this have will temp working certainly the Apple year. Store, Under with to and of that Apple Armour And Apple sometime on be and first half don't hard the are but Under date, wants Yes, store also we date we is

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a the cost quick of And impact Reston. I on you down you do you in And were and some center there. one that sense a What Doug, then to? referencing be? town have think place just making mentioned project making could improvements what

take do want Peter, that? you to

year. so, start for has going rebranding lower the design so, actual been the and in of And improvements. probably or the going on physical quarter we’re to of Sure, terms this in next

To the have fountain a through of a is Town And there, the there of few would $X investment the I a few that’s venues, number We around, we’re the minor minus over the open Center a say lot of public pavilion in there’s done been public larger around million. looking the et months, next area at the XX probably plus cetera. course probably or ones.

which buildings already We’re redoing with Fountain the which were building also old. Square plus original those is ready underway in for the refresh XX that the office lobbies years

So, I hope that answers your question.

Daniel Your Street Green with from Advisors. line of the next question comes Ismail

by a bigger your picture question Just on tenants. utilization the space

are respect suggested last One have you guys for the per years how of in peers employee? some mark. seeing articles your over that planning or end a in the what new new short the developments space few trends justification years with in of of may recent your terms have renewal portfolio Curious And are you leases?

any why should Bryan then chime other do if they of So, and start that. with the guys to in, don't want

use how and clients sophistication the down the their about have is is of to from you had their ties the an are the of in going of far was the incredible sophistication versus growth using rates were growth the companies cetera. of that, that their how board accurate year utilization, didn’t they’re terms et with What users when idea the that knowledgeable tech finding great across examples Yes, its are say clients working earlier, one of space really of very how Verizon, with we’re use are let’s much is the space and that gabling they with these it, XXXX more needs. their space question things

So using shock Doug because also been some that’s the of of terms great they a that space. been we the absorbers the to added how shorter are add of that these in and market can term that with then that shift you mentioned discipline

think it's healthy. really I

Bob, of Salesforce describe worked. their how to building that you the it’s right. Tower, and building has been CBD newest might "program" everyone Because sort we has want how out have

can and about the all feet a been in that the there get than The trying their Ford that. the were real targeting of think Initially, square say part renting requirement estate as when seeding varies type relaxed case, they the tighter as to I it's far employee. I have they're out build Salesforce was the for per tenant XXX XXX on a I tenant know they that Fish department. the most

And on ability Okay, your on in the but just fee XXXX, with Francisco, maybe either proposition I helpful. have near know increase in month tenant that’s noticed guys about and San staying that to you leasing? impacts any on side only or a if new push it's through

that. respond Yes, I would

that seen -. we haven’t leave on We any that pushback haven’t and from based market on seen any the tenants tenants

and question Citi. with from one a question is of Korchman question time Manny have final follow-up line that for We the

follow-up Thanks for taking guys.

Just growth of New rent Doug different run throughout could through or expectations John, you your just York? submarkets the

John, to you want start?

growth New Rent submarkets of in York.

So, first, when a have we lease. lot say, space to don't we of

a talking only at. are about that pieces our So, of space there buildings, to few building if few have is look we -- you

left states say think some that's be block I over at will there at and have a XXX probably had $XXX close growth we look is there and GM clearly guess have there have XXX will rent and the will do I we've we definitely well I a there rent deal when foot. place. the at over wrinkles leased XXX, that base all will in of would the

interest you everyone Properties. Thank our Boston for Okay, questions. all your that in think completes I of

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