Boston Properties (BXP) 31 Jul 192019 Q2 Earnings call transcript

Good morning and welcome to Boston Properties' Second Quarter 2019 Earnings Call. [Operator Instructions].

Our speakers will address your questions after the formal remarks during the question-and-answer session.

At this time, I would like to turn the conference over to Ms. Sara Buda, VP, Investor Relations for Boston Properties. ahead. go Please

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

are this not available of XX did a be Relations receive our Investor Relations bxp.com. these documents section available the the you section website. on If our An copy, Investor audio call for at website in of webcast months of will

conference call are may time, within meaning forward-looking historical, I'd the which statements to constitute this the Reform that Act. like Litigation this Private certain Securities of you not At during inform statements made

the assumptions Factors on Boston give no the are SEC. Although, believes cause Properties materially that in based will reflected statements release from forward-looking or by in statements could yesterday's implied that can risks in forward-looking that with expectations any be detailed were from differ reasonable results expectations assurances and filings the Company's time to and to the those time expressed actual press attained.

not like and a Mike Chief The to Company LaBelle Executive does any Douglas I'd update President Linde, undertake Officer. welcome duty Chief forward-looking statements. to Officer, Owen Thomas, Financial

Executive Ritchey, be During President the available questions. question-and-answer any Senior our Vice address regional portion Ray call, teams to our and management will of

Owen remarks. like call to for Thomas his turn the I'd now to And formal over

execute growth of good another and revenue and morning earnings had Sara strategy. quarter Thank our accomplishments to and continue on We successfully you, everyone.

financial with highlights. key start me Let

the share majority outperform which of quarter for per FFO REITs our of year per share share of above per grew also guidance and terms every above overall. XX% vast and a growth was to second the of over this In in XXXX, past the This we our midpoint street. quarter of quarter, sector Company $X.XX continue $X.XX we FFO the

same cash very of X% also share NOI quarter. for property was growth at Our strong the

in-service per FFO of also full the increase XX% This our points XX from again, and marks office retail basis in We our guidance last and from well growth occupancy in to portfolio midpoint, XXXX by We ago our at year basis year-over-year, would which share XXX five increased occupancy result quarter highest ahead years. year point a over XX.X%. a $X.XX also peers. for raised FFO

of balanced of developments Hub well And delivery in construction completed began XXX retail Google and we in Boston quarter. million our the starting in new is X.X million and Causeway We in as above to podium on quarterly busy raising had We terms attractive Main $XXX market. components and Cambridge for performance. long-term our coming phase both bond completed in the well Our from unsecured period. at of and of Street online average leasing, first we offering second the productive growth green which over Properties' debt moves come is feet for same-property RapidX terms activate is operational square highlights a

conditions. transition business me let So to

majority on which vibrant leasing lens economy remains throughout portfolio. vast primary the is Our activity the our of

check were quarter, second XXX,XXX X.X% in the the inflation jobs the there that activity. experiencing US X.X% data In a Through highs down rate first at so historic GDP quarter was also and rents economic appears technology X.X% was second with in in created quarter, the life the demand fact, driven by reported from unemployment are growth X.X%. lens markets, economy in science is of and healthy in leasing and

sector reporting for the in China slowed in its see they its economy, interest potential XX Fed favorable has manufacturing is Germany has Notwithstanding years our and deepening of dovish in with the rate a has numbers is a increasingly accounts risks, signaling economy large which outside recession. is attention. which Growth weakest the backdrop, a in US cut portion also turned this of because

As a are US geopolitical banks There result, world tensions war a central China, turning around deal trade accommodative. Middle East. including Brexit and risks, the also are with the no in

reliance more Lastly narrow growth in in down XXXX. US corporate earnings the has and modestly become and also were consumer

recession clearly low this are slowing for global estate real tailwind for all and the interest Boston around and in world are mean rates the US are calling recession near does rising. We a Central and risks should what but not Properties? are action a bank So US the a demand commercial evaluation. result for economies and term, as help clear

bullish We investment. are to actively new continue and pursue selectively and cautiously make

So we in number of are a our all markets. investments considering core

Bay about risks and and We technology York Area LA, New of of West driven demand, by Northern life most are our Virginia. more City markets, enthusiastic Francisco our Boston taking incremental footprint, and in segments including San science

all emerging. for That when said is hedged if in Boston and being prepared and downturn, well Properties a

modest. remains corporate Our leverage

early We of a leases and number are renewing large completing new tenants.

is rising. And Our development weighted XX% are eight has years, under average pre-leased. construction buildings our pipeline in-service given the and approximately lease modest term risks

is from globally over a XX% estate making investments year office private up at market across from large ago. US equity institutional either and this the capital the to transaction has we been strong Significant real year quarter sites private volume in hotly and for are sectors investors. XX.X% with moving -- It billion, Every buildings Now quarter assets the market very markets. last up transaction liquid. real in geographies. second many competitive ended and multiple There in investors interested for $XX.X remains core on qualified which pursued have estate our

joint this a quarter. XX% $X.X square private a manager Yet in and which retain a Ombudsman seller equity interest. foot The office sold again leased XXX,XXX lab is venture complex to of billion, XX.XX fully a foot investment and is local Cambridge, transactions is this operator. and rate, in cap leasehold there triangle sold freehold Boston that asset are X.X% numerous significant our a the a markets and interest in Starting square about a in past for

West LA sold X.X% $XXX that's foot Culver million rate is leased property a sold cap XXX,XXX to square or creative In this office and $XXX campus fund square fully for and foot, a creative manager. a a

to is square XXX Moving Mission to cap and Bay XXX,XXX in San $XXX under sold and X the just Francisco foot a towns million, office that's a X,XXX foot, is building, this for square which fully a Districts a sell DC, leased under real foot, private Place million, interest X,XXX Washington in And finally, XX% then a square $XXX just a X a sold cap. about is Trail investment estate a and agreement to for firm. under

a XX% office square XXX,XXX is wealth sovereign building This a to sold foot leased fund.

$XXX in in Notably, closed asset quarter approximately on are year a $XXX of dispositions sale targeting our interest. Avenue are we this we dispositions with completed Manhattan, well XX% sales way we to which on achieving year-to-date. and Madison having sticking million million this XXX, Midtown of this So earned the goal in

in we building. Our advisor their the the to right sell on reinvesting was significant attractive the their market NOI portfolio partners project York entire join property, the $XXX is New position. are at the elected current asset on feet market same XXX,XXX served pricing square $XXXX as an the on yield in square X.X% we to XX% million given to potential for City building of in the fund exercise sale a very to the to seeing US an growth time sale which interest per behalf pension X.X%. The Street and closed its us XXrd of the on and relative them the state interest After which office in we and Building. opportunity The at also we campus the stabilizes to saw prune our foot our asset, GM to

process other assets lastly, capital And depth The sales for for particularly our course, the office we of Midtown development the investment. renewed the and sale this pipeline asset scale. confidence and experienced Manhattan in our during of of market buildings, new for competitive operate

primary capital current developments and be for pipeline to development robust. future continues shareholders, activities remains our of to for creating Moving other and value our strategy

this XXX,XXX this development, creating an relationship across our only and office investment. XXX extended square current With Google, also quarter Center XX Street leases pipeline, pipeline in additional our representing investment feet at our our feet important other million comprising an Main addition, with mentioned, share. $X.X this development for we relationship Google, stands an and XXXX. X.X and As Cambridge redevelopments, Not in our Kendall $XXX development billion expected of with X and square client, developments through we buildings does grow added residential to million

aggregate The commercial projected is of yields pre-leased XX% this cash X%. approximately are and component portfolio

investment. of XX% the to This an development million will building estimated XXXX quarter. expect with pre-leased the feet add also to XXX,XXX pipeline office Avenue XXX in We add square next space Pennsylvania

Most fund. have development underway to and $X.X of is remaining pipeline of the well we capital billion

of sales public asset without growth and equity the ratios. or current development forecast NOI accessing able pipeline selected the pipeline from the in-service markets our either to being we portfolio Given fund anticipate our increasing delivery leverage scheduled development current our

and the capital opportunities to our pursue increasingly additional pipeline we use the accessing add As new of to we investment and partners our equity returns. extend hence equity private will be

to capital for Jose. in For private project future venture a development platform example, are completing joint a close our we San XX with partner

properties, to across make our to them to long-term So attract workspaces remains retain with allowing robust high core sectors to commitments talent in conclude, leading our tenant amenities. quality and demand edge companies continue and markets

modest FFO in our overall this maintaining while among Financially, most the levels year, share per highest we well, of leverage. delivering REITs growth and are sector

to and advantage, shareholders. us been and focus long-term strong has value for will to drive be on continue returns and and growth development Our our new differentiator create allowing

with continued And given in will investments Doug. pursue to financial confident the sheet years and resources, our pipeline I and turn balance growth it our under current ahead. we strong are over new of development coupled available and value robust And creation

extent our Last described leasing and quarter activity days, in more Owen, of the Columbia, changes all over healthy adjustments renewals, have been tenant pretty good of to morning there these form positive we been conditions markets, the and Thanks, everybody. the expressed the have except early active to more District requirements, of the XX that growth. past across more

to space and showing trade impacting when are sectors of are impacted in constant. great considering or retain using space behaviors the While growth that economic referenced that have the are Owen to attract, tenants new been employees the it markets comes the and economy, slowdown and buildings our not resiliency the to dispute extent global our tenants the in their remained recruit, in

move demand continued said are put creating to changes college our our with by workforce short-term how or are the seeing is or market. We life for businesses service workforce based on technological be tight growth the continued on as labor requirements the degrees impacted from for The demographics demand graduate the decisions the is not some Owen sublet markets, financial to of but hold rate tenants The markets list science will media, unemployment driven tenants. technology, in innovation buildings. also from and

about market XX or feet. San occupied end tech second In reported of about XXXX of the up feet, XX Francisco, of that embedded XXXX and As of made made XX% the CBRE Tech market quarter million in square square the of XX% up the million

In Midtown employment. XX.X banks million the XXXX, in of CBRE jobs companies. that was had Francisco. million, of like and end York this X.X San to of quarter were at there Manhattan feet is the square X.X% square more technology There X.X% 'XX in feet million in or tech technology the At first occupancy occupied then New organizations increased isn't excludes financial texture traditional have significant XX.X the service market, by reported

At for Demand at square active delivered. this technology the Manhattan in at leasing, companies that requirements each of in As feet has four we on least NAREIT is few and have Manhattan past and by market X.X represent there technology we June, and are significant a significant years tenant. over robust. seen speculative remains said size in discussions between been of growth obscured the the Conference the the million the supply in XXX,XXX they moment,

product. firms, a XXX,XXX feet of are in insurance our banks, requirements to firms, there dozen new construction addition, excess with companies either relocation non-technology are seriously In media renovated law companies, or considering that square

these has in in development, Boulevard up. our in strong. of are product, a clients almost are Hudson contracting in case, we X new remains at starting which price, their growing on excess but demand Some they in more rents leasing others balance, including is picked Interest non-tech are square anticipated. quickly project new Large the than up blocks every $XXX of it's foot footprint,

existing from significant be relocations. still will There known supply

availability shrinking transaction continue view the next we of a economics newly medium optimistic are have the over while So we the of term, constructed about few years. space cautious in to

we XXX,XXX during expiration the the excess today. in in has Manhattan one years renewal our with next square of lease X tenant Boston that in Properties are and portfolio feet discussions

at New floor remaining portfolio at focus in completed We and Avenue. this our lease the York Our General Building Park a remains block on GM XXX the Motors quarter. one at

a high-end starting much The with hasn't market. $XXX excess really of square last the The changed final over rents space XX in foot days.

changed. previously, activity demand I known XXXX I is pool light last hasn't leasing concessions, Manhattan remains incremental today. simply about a As of demand describe this said availability impact economic price not the in quarter submarket our or and it smaller about that and it's

at income vacant million Park, here Building. the spaces. $XX have of should we million space future in XXX a revenue with about of the currently in about see is those that from from XXXX in $XX combined When space GM XXXX We expiring

want we here to into rent begin also recognition E a 'XX XXXX XXrd July, be to our improvement be has completed they XXXX. in that XXX,XXX in tenant as will collecting this note will which on our date are XXXX November unlikely their incoming But in push I at of to revenue we construction, square sit means and yet Street feet. cash

open for and we XX is to September the to in expected amenity October. we in space expect Dock open work

tech almost grow. that but some have area signings as for of NOI in sector. company We the tenants no continue fertile In Virginia, to Northern originate have the to the DC growth employment there we're imminent identified Metro our are tenant lease continuing are a discussions, XX%

feet Reston In expanding addition, with In that we're homeland space, tenants XXX,XXX have the getting we square the XXXX. a take security includes and is in discussions Center, the to absorption contractors lease that service defense positive square involving Town XXX,XXX are robust. active X back demand picture of up feet

have at occupy square of XX,XXX discussion. currently other expansion We contractors looking three that stage early technology in feet and square feet defense XX,XXX

We DC, working are team Stralman, have and Jake to a availability. his in new XXXX leader leasing he and cover that aggressively

the west ago this defense with XX renewal few anticipated XXX,XXX availability weeks related of part the feet. not for government completed town and Just a of renewal a entity year center, team in square the a known it's We Reston.

vacancy it's X% there announced In a a is build-to-suit and limited Boston, construction raw at rate few availability, speculative office. time more seem XXX,XXX space. under subsidiary delivering committed square for is quarter until feet we're lab where stated very in contiguous be part or blocks every the than operating market and part The fully to are very portions later aren't of of XXXX this there new

on basis. New a close to are construction gross $XXX rents

requirements Lexington, are are In Waltham Boston converted to This migration lower of this than most square market which less resulted of into over has the 'XXs has feet rents -- space. mid space million tenants for product In western labyrinth a and TI of X% Cambridge the lab Allowance. the and the in the in feet triple office over $XXX office availability into square under even mid older rate new higher moving tenants even a with with X growth construction with growth departure million new new pushed and construction of or is the which net of $XX rents available 'XXs. was triple-net office in suburbs over in

taken square leasing the activity CBD has majority and involves are of Our who XX,XXX Street negotiating leased XX,XXX currently of renewals of at another feet our feet higher square for this renewals Pat square region is Boston expansion. leadership Mobinil, have At year XXXX XXX,XXX the including early with XXX,XXX team they and expansions year-to-date Clarence portfolio XXX tenants, portfolio of over including feet XXXX leases and existing early XX% rents. and feet the expirations Boston his hence recently CBD completed of square

an XX% feet tenant space XXX,XXX immediate the In other we with additional rents for Our feet increase which increasing we've an leases would that largest up our to growing Causeway existing deals in to the date the gross in signed bring to along is floors firm completed involve pre-leasing in a ongoing at XX,XXX CBD negotiation services also square of the with committing transaction lease from totaling have a addition average of on one on floor XXXX a XXXX. late Center with in To pipeline, pre-leasing in an at basis. Prudential Boston development square release two XX,XXX financial feet square XXX when two to recapture XX%.

the anticipation infrastructure conversion. lab Apple Street convert XX% is a and in properties. the systems, occupancy Lexington to Waltham lab market. will this I quarter, to $XX the a we terminate fourth $XX the starting vacate quarter We'll Last of Occupancy building the in XXX of And enhanced rents happening. service. quarter. about West the development be converting fact space between and of in is as the investing drop footage enable costs, our Hence, in out base the this while leases carry to provide triple-net in that's suburban million to on plans the described Lab Waltham transaction TI building Google $XX are square decline

single, not this high We return investment. expect double-digit incremental on the if

draw it a for development XXX,XXX this proposal product, fits office user permitted XXX,XXX feet to feet lab as lab is XXX,XXX XXX building site and designed user made is new permit to an building. a suburban next the our all same We that being feet fully City square ready. we in As Point store. that's and square Waltham proposal recently our square

lab these whether buildings We and move can are Waltham out also known few additional in XXXX reviewing a support have conversion. we a in

vacancy digits. single Boston, has low a San the rate to Francisco Similar in

in point Boston the forward move involving city development has a has Francisco, the [indiscernible] The large receive and LPA issues sequel the and sites can Brandon create club allocations. before much allocation solar significant litigation plan more and formally the XXX,XXX in with go opportunities allocation. and fall LPA the the and in with project Nothing currently authorizations market Planning to future for and Commission LPA's to expect M for a XXX propane situation. constrained we Prop the San for the is changed processing While but Central partial tennis our M partial in authorize and Prop subsequently -- feet, city Harrison square fourth our we approved

[indiscernible] full housing would Francisco Prop election further the financial super San city. for for goals, future summer great this allocation a M affordable last a current level vacancy office including that allow tightening allocations supply crisis. the was is space sites March Recently lowest The citywide but began to for future block XXXX proposed TI the Central of at after its in rate the in since ours cycle

XXX,XXX portfolio ended occupied. XX% to have commenced have it but occupied, feet city square bring at Our for expiring XX% that quarter the leases not that we would

This completed at square If a full XXXX. quarter, Center. has of feet a XXX,XXX floor square XX%. completed XXXX XXX,XXX wants with leasing gross prior we've To an tenant one option we July date of increase rent Embarcadero feet average in of to receipt, he

square XXX rent for the one asking space, to multi-floor Embarcadero other for that or end block of the an only we low-rise if properties a to tenant block foot. is looking market 'XX, have but the an starting $XXX We of at a comparable over is at with have good a Center expiration available prior

in from purchased large in Uber to development and and in Yahoo Caltrans Google to opportunities the a square Sunnyvale Verizon recently This market experience campus proximity a Facebook. Valley. XXX,XXX square station. feet strong has has led We to growth station Caltrans taken portfolio Apple, Silicon Verizon again close continues Clara close Google, former the Santa XXX,XXX in the by feet have leased

as in of to looking are continuing headquartered other aware San companies well We for grow. the blocks Francisco valley large that space companies, are as of value

space In triple to product. the and are release space. looking net our to that we or we at Mountain in for tenants At existing making presentations site enabling excess prior for blocks renew in San single-storey Platform XX portfolio, rents View large Jose $XX of of continue are

three we over quarter XX% with This an rental XXX,XXX completed leases square average rents. feet of increase net on for the

is our occupancy we overall up we're availability So our and our billion it about be 'XX good in making summarize, Boston the In rental 'XX, end deliver 'XX growth New is lease the driven When along high strong active XXXX the and add Mike. to portfolio stop that are is and will continued $X.X of our market contribution here progress development York, headline Reston. 'XX, and leasing to to in prospects. the increases we going limited with by 'XX, with space DC, is the growth San over pipeline, what's driving In growth Francisco, turn performance. our which our from excited really I'll availability.

Thanks, Good Doug. morning, everybody. Great.

again Owen We now described, at the another we and projecting XX% we're had quarter. increased full-year our As midpoint. strong guidance growth FFO FFO year-over-year

results, the Before been would sales. our capital like debt in and into both active financial property a through very touch get to little raising I because capital markets, raising, I capital the issuances on we've

We green million and second attractive market sales at quarter. XXX, interest XX-year Madison smaller in raised two in fixed raised with very bond of rate. bond a $XXX our suburban assets June with million the the X.X% non-core $XXX this We Avenue

the closed headquarters of venture XX-XX XX% Boston. also And interest. have stages where financing development development we in Street on $XXX million a our development We construction the office financing Marriott the million we joint to a XXX of are closing Causeway venture fund of for final $XXX joint construction in

now over credit full plus of cash on billion billion $X.X available. facility have hand, $X We our

$X.X totaled a complete of in position development costs pipeline to We billion fund are remaining the to investment. of total billion our $X.X which strong

have EBITDA net to a currently leverage pipeline projects overall these reasonable as to complete no debt expect need our that issue equity improve we and public deliver. times X.X to at continue will to our We

drive a that to leverage will and are growing strong We liquidity development maintain pleased shareholder modest future growth sheet and while ability with return. funding balance our our pipeline and

details Now, the into let's quarter. the get for

and and our quarter. results at and lease square basis now in up leasing on replacement were a XX% that revenue on the XX% basis was demonstrated of exceeded portfolio of our the outstanding, over XX quarter leasing FFO again XX.X%, over rents last with year. up strong approximately second roll-up our points gains respectively and up this XX% We expectations XXX,XXX up in Our net prior commenced feet occupancy

Our improvement FAD of this quarter million, results leasing to is quarter's came higher dividend which a an an $XXX and in over costs. strong provides coverage with last at This revenues due lower ratio XX%. FAD payout

FFO share, per $X second we of exceeded about per projections. our Our revenues the dollars, our for leases than of from quarter earlier prior by where $X.XX range primarily beat or higher came midpoint it X commenced portfolio the was per guidance share share our $X.XX million $X.XX

lower share expenses. year. items of and as maintenance we of in the not half gained expected, back $X.XX also per as consisted the operating expenses completed from anticipate This quickly incurring We repair we these

per $X.XX $X.XX quarter's beat earnings benefit the year. share only per will this of full share So

is of our of achieving higher share same-property and as on from increases combination X% a release we and up occupancy This spaces. in X.X% our rents quarter of expiring basis NOI coming cash a

of the of this high the second in in partially XXXX will back We rate as be comparable higher to anticipate due not that growth periods half half XXXX.

downtime new before XXXX for primarily suburban come rest and where in. due leases see our occupancy to some the of to Boston in we also explorations suburban moderate project San will pending We Francisco

the the occupancy of our XX% around rest to expect We year. hover for

to in and from share increase include at continued NOI represents revenue and quarter our the in our full it's X.XX% leasing of combination from in strong our basis This our midpoint of growth most an quarter the year performance XXXX, last XXXX. second of the out the of guidance XX points activity the of For over assumptions markets. same-property X%

by New We a have for LA. Boston, in renewals on $XXX we're available Francisco we sold the Avenue higher and nearly million our owned of on number San Madison of City, quarter we York working at the At West activity rents of second early all end and space which XXX, XX%. of in

$X is The higher timing balances also the changes our loss deal of next as $X.XX net on $X.X be the projections. or our interest asset year to per interest our due mortgage development transferred impact property the from lower NOI of We our assumptions our our the of lower, for cash so rates, months share full of funding. X the expense will XXXX share the share of well as reduced expense interest million we've in to sales, bond million

net year expense $XXX at And million, quarter. higher income expect our to $X projected guidance We coming midpoint interest $XXX our modestly projections increased of have construction at million midpoint, the of we the management from fee for million $X last reduction from a by million fees. the

per per $X.XX NOI $X.XX $X.XX Madison by share from XXXX sale we share share are offset for $X.XX by increase from fee the funds XXX So expense, net $X.XX from revenue projected of share. portfolio the to overall, of share lower per operations midpoint, new higher consists at per in NOI of guidance from share increasing $X.XX from our per higher per interest loss The the to a range $X.XX of Avenue.

industry an guidance projecting in FFO are leading at we midpoint the range. XXXX summary, of our growth In XX%

strong executing driving We locking and roll. which leasing markets, are in organic effectively through growth in rents occupancy is in as the increases higher leases

property starting likely not that X.X% growth year. higher NOI and basis XXX our we gain this occupancy organic growth roughly of occupancy our level project Given XXXX same the revenue match will points

to on near-term as However, as a the to growth leases. mark occupancy market XXXX well expiring positive for offer incremental opportunity continues capturing by portfolio

and years have XX% beyond. for developments our in also of now multiple That completes substantial that We XXXX pre-leased a to pipeline are remarks. formal and growth will our contribute

questions? open for you line can the Operator,

Nick comes question with first Your Scotiabank. Yulico line Instructions] [Operator from the of

how asset Thanks. macro environment pricing and is the very Owen, is about still slowing strong. you talked get

mean that or stakes San of you see this So portfolio? or sales how new developments thinking did maybe I in we'll more the wondering for JV buildings your you Does capital a how thinking capital start, mentioned you guess are there allocation. JV about I'm and is changes on Jose candidate core

Yeah.

then and sales about talk talk down question that break about me let investments. new So

$XXX going on I of always and assets think successfully, know aggressively million core from to XXX continue would in did we kind and Madison sell itself as last time on over been take being certainly to to we're it $XXX with sales non-core range. the that's and time sales -- we've want opportunistic And say, done to but few years then not fairly as that. I assets advantage a our I to sold presents something of are the

we same not rate a purchasing continue I'm not sure perspective. yields, shareholders, think be and don't I at or X% new interest these so we're almost deal to be at do our and stabilized have in opportunities one developments of big are pipeline there's from kinds that a which to give to pick the X% to cap every focused I core NAV to cash on going continue dilutive or the add can opportunity those are approaching that environment very we and not every of we examples growth that which, to trying relative assets buying relative will environment, rate cap do assets. our marketplace both -- our a investments. But development new On that in perspective change rate through and trades we to and our that cities to X we're what accretive quarter, out a NOI that's are

our our private more is in Recently talked joint markets, entered new ventures. capital your about are question we we've of really number the And time partners into a partners, we we on then That more I willing fund. decision JV platform XX. are ability -- that about lastly, -- to about meeting spending

We our mentioned, to to where economy. leverage, share given price. with given we issue want are our don't the want increase our we As don't equity we

our constraints if financial get resources financial exceeds pipeline partners our when logic private and So our investment the been on. those given equity that's that's introduced

GM, same right, leased vacancy in one there guess, some that Park if us -- are other be mentioned All got helpful. question XXXX? remind in items to I this other you -- can a that the and be some buildings growth slowing is the how known. XXX can XXXX benefit actually year, how at then that's some how store to year But you I create are what that about move-outs, could is, you've could next benefit of some just you've GM, XXXX

Sure.

is is that space condition. The is this a be at situation, in to perfectly blunt, just XXX sale of So, reality the Doug. the

from And but least build net today so, we do today won't in for that would that of contribution million the today. space there $XX we if Motors General time over all -- out XXXX likelihood assets in about $XX have currently at and a in significant space a be rolling is pool of the available million period of Building is that a the positive and have

a that. is square about divide excess can -- this then major portfolio in we before, restaurant XX have, the out months our figure and other you want square foot. of beginning of in the So how the what million is we average of in $XX about to And known said I think feet by you rent and have expirations X.X XXXX exposure

about So you $XX million on of number that. can a put

higher in that are that build expanding is we there of earlier. for occupancy we have are that some because some is can therefore and a space -- and we of us So currently that ready space and revenue out recognize we back getting tenants some have of sooner, that probability have

feet and So because is important have been East but the have which the that's, more those delayed supplemental, the we building when now thing unsure as little XXrd that's of XXXX complete as when they stabilization to to and for One our start, is their that date big build and numbers and the a leases pushed thing, our that their planning that revenue at out just our square notice are off. they will to construction other X out cash because we to they're Street sort the impact and XXXX going have in their block. our, in right we you'll documents of were space, XXX,XXX so

the to going, leasing space follow-up is for going you're is discussions Okay get are on how There . at any I guess, here. and just XXX GM done? that that remaining trying just commentary one

you to do cover that? want John,

Yeah.

action some have We going some on and proposals and We've a back forth. good XXX. trade got people

X.X for it or of Some X. a

the end the the and number we'll Thanks some market high this on supply a little GM for at we on space, market think a everyone. hard been are of this this have progress then past. year. looking in there make in them prospects I of is that has the So more

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

get do Hey, on better? you good of at for large looking or of What to level demand morning have everyone. number Maybe confidence the spec the given amount the Owen us, space. go is project be to or Doug of on started to X that more Hudson you high level that remind demand pre-leasing a of tenants giving in

this Manny we've question past. answered the in

about Let me and little bit about the I'll pre-leasing. a talk building the talk then

a is from described, the a more but traditional companies both in requirements tech relocating. new also very marketplace So positive of as companies activity, Doug from lot activity there

has significant again and our the an of encouraged by We've encouraged without been level seeing we're it's building being been the been won't we've how well the very start very It's a by pre-lease. that receiving offering. and very market activity We exciting property received.

not state We are going specific number. to a

Mike, same delayed, And and of delayed how those going about how the expenses in are the year? then think the to for that rest actually was they're last the we Okay. quarter expenses do come being

gets the typically property our was it is year, same think later the that think delayed quarter that projected is expenses necessarily that. were done stuff then but R&M year quarter, very, have these things. don't teams the kind third for this period last is think of I of conservatively a the management just most of in time I when I it they're And item big

think quarter into much third higher will quarter. expenses the And that are third pushed anyway. I think be of would that I the seasonally So this

some also it that XXXX. think do in quarter, the I to I fourth may it done However, get drip all but into expect of

So I don't just expect to see of off. kind the stuff of with savings associated dropping some

one amount Is of there is The with I generation me. broader rent something second or something cash a final spreads specific that on LA were space your there? realize one of submarkets sort space. And there negative small from it's Great. going on in

the the quarter nothing available Business we all and interestingly I reason didn't doing on. about and --- large little are The renewal mainly all basically the we with relative talk space renewals, the the talking the we're which is property. because is of is discussions given year way LA by seeing transaction one for space I thing the going us came actually right that ground is very think lower that There which about Monica lease anticipated, is have issues to the because now it about five Park, was we're from associated thing costs probably we're right the repositioning we're and than broader Santa we seven this

Thanks everyone.

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

Snap your discussion Thank just if and with there their about Monica, I'm portfolio. wondering another similar York New sticking you. there's Actually on a was Santa presence situation a downsizing call in

Santa Our the through must is out interaction is that and there, all that take and Snap going our they're they're to park space with it. occupying sequentially Monica of their it business building

half is delay all in first Okay. of you update? retail, NOI provided you if the ago think could at calls this provide an a the Apple last impacted I GM moving has update that of year, cash that and just official Building couple

the Xth to think stages a at and at construction to been NOI. store. impacted have No, couple we're only site do come it I environment to rather opening a it past very, we're laborious but all has latter conclusion. about the late retail, corner for not the Avenue, that's which the our excited of the of going And on cash the Apple is for XXth of hasn't excited for years Street and what

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store is all spectacular when you it amazing. have come This would It's say to to the John. be I going to it. just is opened see

Armour you that, expect open? on just And when when is Under is Under Armour,

just XXXX take plans of expect space we're their vis-a-vis aware specifically hopefully we we the issues. with to store now there'll Armour -- the that year. and before in early we and working how deals launches and not of sometime product their But again on end is timing what opening seasonal -- Under and the that expect their that there be Right openings their possession we're and their

don't just we know. So

you that mentioned last then be and that shall quarter, were, what on at an is that's I I sound picking the provide doesn't as And bullish And you impact quarter update? prospects know to if you're you final XXXX asset? leasing but accurate, FFO up. interest think make is can also this don't It one two, like would

this reason that we're the because the last that aren't me So last hearing are to any quarters John I'll times was let I not quarter and to more would quarter I bullish you're start I will be comment. the same that talking there ones. we're say talking than tenants additional

just out. things are so being drawn of And sort

last assumptions Our pretty building to sometime why is in for the that lease XXXX. we for pickup assume revenue extended prolong which a up, the stabilization out quarter

built be those And tenants out obviously the build space so to has recognize on their future revenue space. out, until they

built out. some we benefit but leased So that be to in now and from we XXXX incremental their is space space, building so need would will other work space out get

says Doug of projections So kind some we've of elongated the that. revenue for

you. Thank Understood.

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

four going them back private the of your right guys. the view the bring give of of the development, upside? how appetite kind morning for of to commentary much partners guys and away you Could equity Hey, the stages you maximize and Maybe them kind different creation to value of just good too know JVs. in time in, discuss not just you to

question. I think, a good it's

some I I And estate is some think, look, there I go capital think is, it some value comments, that will demand some very plus, in of is into it of all for more development. that development, core, is add office. it of my of commercial generally there among in and more it's of then significant as wants available not even mentioned interested core real

there's in parse interest you but to it clearly kind of have So development.

we XX Dock me Our Platform view that case partner, bringing joint bought for entitled on we XX bought entitled site. on the excuse we're in venture it like that is paid project the recently and site we a so in

that So there. is not risk

So the is in risk leasing. the

entitled I same expect taking If to partners I basis that we a risks and So of site venture more introduced they're at at our which time had come JV the partners both what is the and and see basis, we don't in higher the entitlement us. want the of say would in the a along or and in that had those because development at bring with had development a the mitigated is probably guided you'll partner for to we we they introduce to to the a we we project because I and been done when expect a the, venture had that be some of pre-leasing we're decided both that think less had to stage, risks that tenants. needs, lot paid the and owned value call we kinds upfront. partner, talking deals are and would we most capital had would of long would for joint created

interested coming more later are these in they think of projects. I stages in

on this value through other development we the Craig, is And about ventures, pass particularly I significant pro with and we thing Perry are would say rata are creating not basis. joint that doing a

one putting are in that being extent or We the for success another. we're that we're position ourselves a successful paid form where, in to

the you the same but old an an the XX% or drive have is that's return rather do you yielding challenge asset XX% obviously could of or of would story that, a asset XX% that's of if do rather -- So And XXX% old XX%. yielding the old amount can't. Right. you

to position the hard investors. we to the use Xrd-party equity we're our return fiduciary going institutional fact, a we think ability But for ourselves be a put where in in long about to for JVs enhance so shareholder. and and going if, we're capital And and can great on

way? opportunities just on amounts, that. And us could some Waltham, for give we for when some have Doug, second, of come thanks more dollar conversions. and expirations you a you of Great, your that touched sense kind Could just of in then could timing

back lab to to the as and Xth as XXX we're likely a XXX that's TI September West to for August also looked well so in and getting usages how some year. we and start at be with order to then base at that also And start potentially about West Xrd this have the and month the XXXX-XXXX Xrd in Street is space that going we up and committed building we asset another complete so upon work is work being well Sure, and -- XX is available on will project. project one opportunity well. or be as of We're hard converted it quarter. Bay probably as that that's is And Street or depending are has Colony the how that lab a West quickly the

Interestingly, the number and that was we they a we got released that sublet to had tenant recaptured and it from space a of ago rolling was and over. it a conversion $XX was that tenant done called and years chose actually lab Juno the premium Therapeutics existing

the assets both suburbs work in lab a demand for for effectively have offices. efficiently and very and the that clearly we will of kinds these Waltham opportunity So

X? So it like will total those in total for million $XXX $XXX,

it that we them, somewhere area, all did three in be If would yeah. of

great. you. Okay, Thank

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

the just over or good next market Doug, generally on in growth you going that with still the expectation the recently the seeing to keep you're you whether to Thanks, expecting activity has level kind is it's muted. Manhattan, growth months you're and gotten higher is the that John sounded can supply morning. XX on more rent speak rent or positive Manhattan, at much demand a that side of more

different the as let slightly growth that opportunity there growth is may in a I'll is So there be the but today. for is to my I is growth be his result is is not there John quicker going view what market, in market it the in to demand express and and

it's not will General are more as the we availability. and or or there Park asking Avenue, still less move-outs market XXX six receiving at months more the ago were competitive any we Building, be or receiving So than Motors occur a

and construction going supply are the rent for so renovated no well diminished well But that assets there new for reduction regarded the -- or and of has types is of those highly supply the question new up. John.

in the as Doug a product. renovated have very but a is coming or still is there activity the and clearly in new market, on excess leasing market for good preference we Yeah, supply said product

products. a So situation bit skewed but types different characteristics we're in the availability market of constant, in we the pretty have, little rate of supply having a different with

Midtown now that for prices and alternative Net or so in space. law net, maybe space move are a limited looking that two seen is haven't when up for tenants there large market right opportunities holding one square firm have alternatives. or now feet are with let's we look say XXX,XXX the we in If

certain in So leasing still velocity. limited areas and strong supply

very guys market in particular more you on particular? have in then to this All Can coming about LA quick recently. seen touch helpful. like I in right. there outside to wanted deals And That's it acquisitions the real seems talk you are your point pursued Monica submarkets anything comfort footprint, or Santa whether out and pursuing are there with target your current whether any you guys at would we've

LA. terms want have, line happy want we and of in no, footprint LA Yeah, in presence. but other with size and that it make market in regions We're to more with grow we grow we definitely to the our

money as we're to shareholders. for been do disciplined but each make it a has where we've saying, going in it was deal to fashion So

that looking deals of in the We're that marketplace point makes at earlier not lower are LA my it's flows are our sake. sense. we portfolio to difficult but that for competitive going and it's and Lang criteria, to to his about find grow just hotly our rates actively fit most growth things think very John and and capital, team in of the fit interest

outside our expanded Santa have We footprint of Monica.

at things that LA City, in West Culver in We El and Beverly are of markets other Hills, looking Segundo in nature.

kind very accomplish be that and a to to, a of a to goal, goal and do but we informal but describing been know year do that want little it we're it's right continue is to in you hope a XXXX we able now to it's bit deal undetermined. to we hope continue We as to to try a and able whether yet

All right, guys. thanks

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

maybe Doug, Good Two just morning. in morning Francisco. San out questions, first, there. good So

be could Pier out projects potential projects the that Mission comments of in that. still so or the give amount you affects of Rock these RFPs if thoughts with and to your your of new on a sort want on on If projects XX just Portland there in shortage could the just X you tenants, construction, the about still can how take Xth amount demand much you space of Harrison there for even is talk the maybe that and

comment view Sure. I'll well. a brief Pester give and then make I'll Bob let you as his

of it so took of weren't of out So from demand X I my from little itself is where the transactions. significant and And in Boston that view there the that bit in both number in San there entitled yet no a when we're there in seats a today Pinterest are, surprising tenants significant cheap Francisco blocks manifested in is are think a the technology space amount salesforce.com and and space. on there market buildings blocks requirements in are

in are are big XX also a not a bit sort tenants locations on and I think there, Rock good phase blocks these many Mission SKU at Pier bigger And of from the And I looking but projects there space both larger one little basis. projects of for central time. further tickets, of one-off core,

in sites port really feel Harrison, that into with sites been we the the of Central when has new approved. potentially Xth, relative of could approved. the be So comfortable it the then that some it construction And put control. amount with minimis Bob. gets play de in and

million be next add would within feet and a Francisco the of I from Area. looking tenants that several leasing would in just that those both the Mission I Bay so of there bet square standpoint. is in or will gone San months XX projects downtown And

if switching line. is then on maybe Ray Okay. the costs And

update we and of houses off both want get got their spending guess takes of I fulfilled. DC the which years Just to debt Congress spending had ceiling for a just needs a budget X passage sort

really demand think from permanently the budget sequester government the changed in has that more So reprieve or of manifest sort is for leasing that ago, district? this in such demand government do in really you almost any up leasing decade the in X-year demand of there well a pick a

that the The is years from a general our we Hey, environment district. are in seeing consumer, Alex. policy demand still more much XX both contractors focused type pretty But addressed. where much so is of incremental is district to but the we're market the increased as seeing space, that in not the really importantly, alluded in government of demand Doug

terms being a have in the And centers, is we the as and and defense both our -- of in expansion leasing absorbed of result the a never of in experiencing from with west and a those is of parking the really the are and is in little and core those contractor. corporate the assets seen County we limited in totally Tysons have more tenant very existing Corridor revival Dallas terms level data the us, access two supply between Dallas new great costs which tenants Corridor user demand markets to restricted and the

Okay.

basically… So

in much downtown, the suburbs. too more Not but much

Okay.

even driving and contractor. private The government still It's anymore reprieve? and really Ray. leasing is not basically, wells So the budget

tenant, growth, just the really driving seeing leasing sector, incremental Washington, seeing with deals DC, continued in Well, now. -- that's downtown, we're we that we but new some are GSA that private right seeing renewed we are demand large the

Thank you.

We have Guinee for Stifel. with one that and John comes question final from question time

Great. Ray, good you that on job such did one. a

square to maybe price-sensitive taking Yards, Doug, ability of willingness that Corridor more defense you the been ask sell I cost and Hudson guess except our just anywhere do will and your as foot? that a did new contractors Madison else XXX $XXXX are -- X think have Dallas and influence what couple me build from they second, still as Let then space they

a suburban because let number park me answer And And the quality, that's live greenfield Corridor. the be defense focus one are number about to That's commands talent. the cyber not the we're flight located. have primary demand and guys major where first and it. defense move that's a because going recruit and cyber to a possible me in these tech office to to So is all the contractors to X, where seeing -- Dallas John best going employees let

said for like the So again, I've Town as monitise Reston probably demand the XX seen I Center, in is in space strongest years.

Great.

cost don't not and don't cost I'm I I'm Hudson say going $XXXX significantly it's to this well think correlation John, other. than the the for I than relative properties. on price to don't not think really the the of a -- what between demand And basis one you a X specific Plaza so, Avenue building do -- more at and I moderately number XXX foot, to Boulevard, for sell Madison sold give suffice market so which X District Boulevard, any refer is our demand as that positioned I square more on what there's would is of the Hudson that I but for market

the high-end perspective. where to is is a us demand that fertile So the be for we think going more growth from

to growth new And to the alluded existing other so to continue we our that Manhattan. as in have muted we is from thought invest about and we what relative assets was a the decided by opportunities XXX perspective profile both to, greater things would be and product own capital

follow-up that Madison XXX statement have submarket? Just five ever Yards Hudson X you thought that ago, question, demand would a years possible stronger would than

for that anything the decision. which sites I possible. in in that and to the we it say not we've we retrospectively, would be would chose I the of we to do is we wrong various the admitted one is was the to that opportunity to say were, game, something late were past, that reasons had

All you. right, thank

with of the have Feldman do And question of Jamie additional you Bank Lynch. line America Merrill an from

you. brief I'll be thank here. Great,

covered for AFFO latest just your talk means terms guidance Mike, dividend you I can year? what So in and about guess of the it

So, sure, absolutely.

the over increase of we this was the because it still AFFO just share. this increase obviously footage pure an So of less we was coverage and the XXXX. And That in $XXX that a so because our obviously space kind much costs space. our last leasing to had. it Last expected of Last absorption we year of square year. it improved was a had AFFO quarter, huge showed up And quarter quarter was quarter. was

growth cash We've incremental in, we've the same-store our coming from got developments. got revenue cash

think more think what kind the for $XXX is we quarter our million about pieces probably I should kind of of because in that the FAD was the And of half somewhere minus you experience that the at can, it's costs be high. where or look leasing XX% if range. plus so are year-to-date than will you if we first the year,

$XXX and the to to costs. $XX I non-cash somewhere little our somewhere $XXX think will in of guidance, $XXX maybe $XXX lower year a which to is on leasing recurring for range. bit think million that the range $XXX we're the is in We be and million the we gave the in million the capex rest rents year

of are an items the then type which $XXX. again of last range in you non-cash if in the get of $XXX year, comp of the rest about which you're our AFFO at and kind then the adjustments adjustments higher is than which somewhere AFFO of you to And is somewhere high $XXX other stock of talking to look XXX so

Can more follow-up look on pickup that. think Okay, great. Silicon years? Thank talked kind couple next you just in you And you what large over one a for Valley. guys like might of of just then users that just I about markets, in space And about the talk you. had the

debt the Silicon a look, -- made on from development we've a So we've perspective. Valley

site we at $X.X we at North Platform site in is the way, million, in in the $X Peterson at have another station somewhere million site is have between the XX, million. have we square have and which $X which We and a a at site feet --which station XXX,XXX is our first

space sells XXX,XXX on I which growth technology I Valley leases other we folks Yahoo very to the is are that we and the number and continued a going big And so and the of said, of campus feet square companies we of large we're aware is what indicative companies of are when XXX,XXX there. these grow. the and think the about for are saw looking square feet more take headquartered of Uber as and Verizon valley optimistic from Google, down buyer there very continuing and CBD larger -- headquartered then blocks just are companies growth, is it's in And active

are others. grow. continuing continuing to is There Apple a grow. is Facebook to of number

and those we're we and very the transit station the for relatively optimistic attractive that the Caltrain tenants And which to places cool are environments. looking the large close have be for campus so public just, we're site for on sites to being the has ability about speaking

we And that coming so when what -- we we talk about describe, have forward.

in Pennsylvania $XXX going that's at $X.X million. don't put Avenue. service the plus billion XXXX They to be the describe On that

it us have in growth in front a a in portion and So where of Jose. is of significant of we lot downtown San

deals Okay. today's rents And the do with at you or movement? those pencil need

think formas mean, Yeah, no, that than I are -- bought the land the forma. that looked we at higher rents pro and at, there that the we penciled the pro

the want it's do is want, are of speculative So we on absorption the the -- be? is asking to Those questions some ourselves. it how for us much pre-leasing build a to what's we basis, question do we're going

right, you. thank Okay, all

to I want know And --

think sorry, Operator, -- I go ahead.

Go ahead. back to the you. I was over turning call

Okay.

I Boston questions. concludes interest think your attention day. Properties, you for have and concludes in remarks very all a Thank good much and that the our

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