Boston Properties (BXP) 2 Aug 232023 Q2 Earnings call transcript

Good day, and thank you for standing by. Welcome to Q2 2023 BXP Earnings Conference Call. [Operator Instructions]. Please be advised that today's conference call is being recorded. I'd now like to hand the conference over to Helen Han, Vice President, Investor Relations. ahead. go Please

supplemental welcome GAAP Call. and distributed Second XXXX G. the In Quarter night non-GAAP reconciled Good measures in financial press to accordance release Conference to the X-K. Form The furnished directly were BXP and Earnings has and all comparable morning, most on BXP package, measure supplemental last Reg package with

webcast in of a the not call you receive copy, at these investors.bxp.com. are website did available A section Investors be available this of will months. for our If documents XX

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

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

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

Ray turn to Thomas Q&A address like any to over available Senior During Instructions]. our of Executive would his teams call call, now for the be will regional remarks. to Ritchey, questions. our portion Vice management formal President; and the I Owen [Operator

capital quarter, trends BXP's the and organizational a Today, cover operating above-expected performance impacting allocation key morning, personnel and and second everyone. and economic Helen, you, activities announcement. market good BXP, BXP's Thank in I'll

perform once industry sentiment the in the experiencing. what than again BXP office demonstrating we quarter, are to continued is worse in second

XXXX. we feet of XXX,XXX market challenging share in of both X years of conditions. above for guidance market the second was continued again, We quarter, all this a completed our square weighted And midpoint share of despite and term consensus our per lease FFO FFO quarter with increased own forecast. the once Our per leasing leasing average

financings, We sustained completed currently position access as very and growth there viable and economic is our multiple markets. liquidity to company challenging and different both theories X trajectories. capital demonstrating are elevating to asset-specific forecast U.S. the competing BXP's predicting

The consumption. first theory off is wearing under labor interest GDP pandemic and rate healthy anomalies strong a increasingly continued is hikes. remain Federal Reserve that economy the due control market inflation And and and driven by economic will with growth has to

recession already which the timing theory that interest create been well with is the and year. its rate occur The the and dislocation has under this will Federal as in second a has control, inflation and in real as sectors economy possibly regional result already is of Reserve later in to aggressive banks and estate increases, overly will as of magnitude soon commercial started

we We and outcome have which not second are the pursuing expenditures year-over-year U.S. in and experiencing in companies obviously raising being billion, S&P recession a economic for quarter. have for liquidity second at measured discretionary BXP capital additional $X.X hoping increasing for by first the but opportunities currently capital prepared the or activity. new X% in earnings, predicted an are Whether investment over drop XXX recession, to the are

slower earnings, last XXXX the leasing is costs, lower of driver versus the space, cut primary With look which half companies for expenditures year. first including to in our of

the the market. users, the behavior current two the employment largely in leasing bifurcated absent of which, companies, tech most are to In net cycle, new of market and groups. of Large is demand last underlying for important the space, sense, from analyzing into significant office space absorption it are broadest source understand

and less creativity in collaboration of core the IT repetitive the client a knowledge services accounting, support an who business business workers to functions provide collaboration such core and And are success. and/or functions to critical product more facing tasks execute imperative. their and and are areas of as of are workers where First, second, a who where

to dedicated working are a days as office. importance remotely office business are working office tying enforcing office and bonus number policies. plans. Knowledge firmer on have understand are companies year-end work the basis the cases, increasingly of are are evaluations announcing workers Companies in-person in Companies return this in workstations of to in-person expected and many generally In the the group hybrid work and for increasing levels attendance. leaders

workers often more and work workstations seats, in On attendance shared less workers policies. the much office hand, with with prescriptive other support

This premier workplace. utilize is to the workforce rich amenities attendance companies A between balance increase bifurcation market. tool an the and the to is creating easily premier gap worker workspace workplaces with modern location, primary provide a definition the of knowledge in ever-increasing commutable of office performance

puts buildings to are lower-quality for divergent knowledge Conversely, growth could on functions and locations. drives knowledge more building and the support jobs workstation in workplace market widen not assets. located in AI work performance job the as shared premier AI Therefore, continue impact support also as The of quality processes. pressure automate remote support on commonly and secondary gap

premier XX% XX% every Workplace in and the balance buildings. workplaces total At In of premier premier total of CBDs XX.X% the the workplaces operates, market. for end CBRE's the direct for vacancy the where of approximately the of represent space XX.X% share We the IR report our second versus on quarter, segment. was the BXP of materials quarter, performance X the

versus X.X the of second for for feet balance feet square negative around net the was for Also segment market. quarter, the the absorption million positive premier square XXX,XXX a

premier market. last For for versus feet feet million net negative million was XX.X the the square XX a square a segment balance absorption for positive the of quarters, the X.X

for marketplace. premier the and space and captures increasing Rents in attendance renovation, BXP in most of office in buildings leasing and XX% important two rent buildings Including our the growth driving buildings is activity. differentiator premier segment are all the rated BXP a higher workplaces, by for been we of workplaces, gross which believe undergoing in critical CBRE as statistics has is CBD

second transaction first real than Moving is rose private volumes Interestingly, XX% capital up weaker, the year. from sales classes and quarter down versus less more consecutive and for to volume quarter XX% year. the last though to estate markets, asset the other billion, in last quarter office is down versus second $X.X volume quarters U.S.

lower Real sellers declining costs and estate a activity, to values capital due creating markets. be in specific transaction in prices, unwilling have continue common to higher demand sectors, reset down and and accept most slowdown challenges to

sponsors loan to office leased banks domestic with and/or New weighted recapitalizations long sales mortgage financing invariably values. at Non-U.S. for will involved financing the average assets only and lenders. and modest Completed and seller is available from for not consider terms financing. highest office buildings lease quality

asset by firm Boston activity, transaction are $XXX X.X% a from there leased a lab in area a a pricing determine, sold small is Waltham equity Second X XXX% for public difficult a and of XXX,XXX A REIT. were initial rate. portfolios dearth fund to representing of years, private feet, on relevant buildings number manager which Avenue foot for over comprising square of quarter. pricing but past and the Given purchased this cap backed data office million, the Three points two $XXX

which Drive and a foot. BXP's for Port Way square square $XXX XXXX pricing foot under at Also site cap Also XX,XXX $XXX was Santa buildings X.X% price in initial Memorial and representing next Peterson a to million, on Clara development located of campus in square a sold comprising in $X,XXX redevelopment just feet for the a deal, vacated $XX sold Cambridge two of million, for rate.

pension comprises building and square a fund domestic XXX,XXX The fully manager. basis feet. on leased domestic a It's to fund long-term a sold by was

Now market activity moving to the capital second quarter. BXP's for

will and attractive in We become new this are being activity as grow number in environment. investment more patient believe acquisition with we opportunities

on We our target life focused opportunistic science development and will premier residential remain and solely X markets. workplaces, in

with capital developments. select We and through are additional ventures considering in-service assets our dispositions and raising pre-leased residential joint

we XXXX quarter, into Pennsylvania Washington, XX% placed leased. This in workplace XXX,XXX market-leading Avenue, square-foot a fully that is premier D.C. service

Pavilion, has Boston development as into workplace an panoramic Platform in Back the phase that XX X-story Downtown View top project well West June, the Boston's neighborhoods been Prudential as landmarks. the of experience, In Google's offers showcasing and Boston, BXP and tower views service cultural opened we placed the a of late Bay in observation to city premier Jose. constructing of adjacent San immersive first many a

the total owns have the and the space Valley, Silicon in Google, in in the square Jose, vacancy, BXP sublease a San direct as meaningfully well companies, first including project X.X includes phases, space foundation market phase requirements few with building in feet. which million XX% garage a for all and significant putting a large including rising deteriorated will comprise square foot technology XXX,XXX interest as three in market. Unfortunately, conditions

for will to market is of decided of Garage with two have more that ground-up disappointing, XXXX. year-end the we as to Though to project than quickly have Foundation a development. As and XX delivered a a result, project years, we recover, XX at which under construction users be in scheduled can the months completion pause conditions

foot the in development our venture important liquidity. XXX predevelopment workplace accomplished global decision who square with premier Midtown in $XXX enhancing this two of near-term BXP reduces XX% joint estate Madison leading own real XXX,XXX our thereby will Further, approximately investor a We by interest spend recently a completed Manhattan. the milestones million, the a in project.

as Madison lease completed site. Island Side the with construct Transit venture direct the project Avenue the for Madison. Railroad the East terms ground Access Further, XXX Under a lease, known is the the joint joint Metropolitan a into of the entrance XX-year Central to required venture Long Grand Authority

is be transit with in offering the With have anchor the can Grand and ground to access tight the relatively in Madison constructive. The submarket, to direct reimbursed preliminary Central unique joint costs Central discussions clients XXX terminate Grand venture for been lease potential and Madison. its constructing a access

with generate lab, delivery. projected BXP and significant aggregate X.X projects are These billion of investment be office, residential continues attractive million upon to feet remaining retail yields square projects with XX approximately funded to and development $X.X execute $X.X billion to and BXP a underway. pipeline

XX-year career elected to Francisco retire Pester matter, year. On early a a personnel Bob after BXP, San distinguished running has next region,

strong are our who asked With success Bob. to leasing is with an currently with BXP's commercial we Rod, runs of veteran clients. a structure. BXP region have San accomplished organizational Rod record track change, XX-year an succeed adjusting in also We this Diehl, leader Francisco BXP

on continue will regions to its Coast. business three and in execute West has the BXP

are However, unified and three new structure organizational shareholders. a given that L.A. the regions regions and across of resources sharing regions Rod will the clients manage we benefit Seattle under currently these BXP BXP's for relatively with and underscaled, to

and L.A. Lovshin, Cameron will the representative continue Cohen our Melissa region senior region. senior representatives in our and Seattle Kelley in to Alex be the

well premier is sentiment, current positioned to strong productive and expectations access with development our had market position workplace BXP to share our market a market the leadership segment, dislocation. with pipeline strong the So dividend. despite negative to clients potential growth above to another performance our multiple quarter leasing given in our in BXP the liquid and slowdown providing significant weather sheet gain balance summary, due economic market stable both financial and and assets current in sources, and capital

Let me to over it Doug. turn

Owen. Thanks,

our line during top occupancy, meetings, activity our leasing June conversation NAREIT income. drives operating So was frequent since our most topic net revenue of on the it obviously

So I'm signed highlighted second my of the morning. leases the remarks here focus going Owen quarter. to volume this during

translates feet the expectations and million our which guidance the Just providing leasing feet X earnings year X last been million to everybody, million per XXXX. square we've or XXXX during to X remind for square square average X.X into quarter on feet between XXX,XXX embedded months,

first the XXX. during quarter, signed So we

of end target. on pretty As feet, of half of first million 'XX, completed X.XX square the much the we've

the a renewals, were firms, new square XXX,XXX XX had also feet we XX firm X government Three time agency. included and the leases There expansions. X and two along the of were with contractions law quarter, of law tenants. XX This expansions contractions although transactions, nonprofit

XX.X% the XXXX in the market, feet Avenue down the Francisco. in added XXX,XXX in-service XXX,XXX ended Boston, as with XXX,XXX quarter. XXX,XXX York, square last square in portfolio. by volume in Pennsylvania occupancy quarter of second said, we We to Breaking San square Owen compared But square feet New XX.X% in-service an D.C. feet feet a and to

calculate The only but building XX% we of occupancy revenue our how is statistics. XX% for occupied purposes recognition, leased is which

you occupancy remains if property, quarter. exclude the flat that additional So our for actually

in approximately signed to anticipated have feet today, XXXX. with here vacancy, have commence commence XXX,XXX sit XX% portfolio, that is feet include we totaling development on square square does leases not which in-service As yet the our X leased. million feet X.X square million That to and we

entered to large The compared in feet We transactions as one versus renewal also square pool renewal, is over X.XX square leases currently XXX,XXX the slight there square negotiation have that XXX,XXX acceleration. over active was we XX feet as second quarter is negotiation quarter, largest totaling one feet about million of a this difference in the last feet. XXX,XXX square so just

a totaling We of over additional million active have X.X pipeline square also current proposals feet.

right leases if half leasing during for bring XX% X.X additional negotiation million which X.X to our square proposals. X would the of have feet, in we the going complete feet So total We hope target. of execute 'XX, just million and on original of we second of square XXXX million will to back square feet our X/X embedded about currently expectations of the over leases again, to

expiration XXXX feet. remaining square million Our are X.X

in square Street, feet third leases leased XXX,XXX the portfolio into an square with commencement. signed and square XXX% in-service quarter of feet fourth quarter. Gateway, XXX XXX,XXX We Kendrick be XXXX anticipated the the have We'll XXX delivering feet in XXX,XXX

have will by the portfolio, occupancy up across activity which additional year-end. get our We will XXXX slightly

as further a statistics the impact But they bit elsewhere The this and their included was executions of jump commencing leased to that an XXXX, occupancy out year floor a at get quarter previously rebuilding additional existing rent calendar we lease XXXX. into space in explanation. below-market a second-generation regions, were little as leasing New will York tenant need deals building. The after

a We and a lease subsequently under the this is impact hitting relet quarter. space new the tenant long-term to

basis on New a you and be transaction, basis. strip a would net that If down out on XX% York gross X.X%

we roll-ups very and in in have roll continue downs and building New and while general, As Virginia, to Boston Northern before, Francisco, in said San York I D.C. is lease-specific.

To The The foot included we square basis. on look leases in in was quarter that second-generation this pickup Princeton New this continue the incremental Boston, in renewal reality, space XX% as XXX,XXX X% The York San our month-to-month down an XX% point XX% D.C. down said. signed New and in a trend worse we leases on activity of quarter as were in up than we down our daily Francisco, York in lines. own a signed in portfolio, XX.X% Owen the see sentiment cash office is the illustrate in to at

our XX% Boston in We in seeing City, Salesforce.com unique into our against building measure the client and New in Using and number they York WeWork don't we access are buildings weekly Francisco, day every because CBD excludes usage methodology, employees desks workstation/office coming today. San of in of XX% use a XX% this our this system. and card

at there discrepancy look is we individual utilization. firms, wide in When a

clients of daily have are XX% We had close that that their they high to pre-pandemic.

have a days The done. as this work as Owen's is across of Francisco. office and low data, are three making the frequency of about insurance we where type companies office in on includes point sort few our the that back at per track being the While San week that's work markets XX% we

that So days are back work, X-plus coming week. to a people

clients supply clients. Contrary didn't for outlier real a picture From space. office to be second are in perspective, our a popular their quarter. the broad to the continues using Fridays improve sentiment our

industry reports of about all the absorption across time. all availability high very in United some -- the them. third-party major the for States, of modest markets U.S. scintillating you'll The read negative every clearly in in for market all And noted headline

also with reports tighter. rate A submarket reality, premier City not availability while face Avenue is the sentiment effective are it's that in rates However, lower reported, availability theme rents the that an the and of buildings is flat worse New or the Park concessions. even indicate and XX% net brokers rising higher the York the in inventory Class the continuing in the that has And

all the with BXP the since the requirements XXX client AI absorption. much create our and are multi-floor new Away from Midtown fourth at increase. of space with Avenue the XXXX, we will of portfolio, negotiations There a XX% first in for now number more are demand in in demand increased than Tenant companies has net Park technology considering responsible South. San the the actively significant quarter CBD of market Francisco

on the rapidly potential to it's we vacancy. increasing organizations, result to going space expect growth AI in market, not in sublet the field is direct growth. job Global and their tech well-built in readily would investment Given available demand that center is the at this these

quarter. market the San during XX% money the These capital jobs, third York encouraging New is venture eventual the San of more of in San office new at CBRE leading and Boston, by recovery is that than followed are facts the market. investment Seattle labor Francisco in AI AI Francisco be CBD, invested New is Francisco can reporting receiving constructive concentrated CBD only for the total Francisco and in and York research San with

The teams managers, companies venture, private this To user workplaces. investment typically XX-year renewal demand a of their speaking, firm growth City. with an funds, for equity, Boston is multi-floor hedge under a our specialized full strength still pool quarter, broadly growing management. clients a equity These concentration capital with and illustrate manager This to alternative XX-year are in managers. fund floor renewal asset of York we premier and during occupy did private New point, the in wants with

Prudential core XXX San in the Building the Virginia D.C., Pennsylvania as In Tower don't in strongest Embarcadero Francisco. properties and Center activity have and the our in directly. Northern of our Motors of assets Boston, general, urban in Town We in Reston availability Avenue at Manhattan, Salesforce Center XXXX XXXX ourselves General [indiscernible] in Center

important active clients firms for BXP. loss portfolio and are The in also our

D.C. and law This in one Boston our firm York, completed quarter, three three we New in leases portfolio. in

reducing of outside Manhattan, also of Center. the the general, loss stage transactions law proposal a footprint. number active in from however, are firms We their In Embarcadero have at

XX,XXX as-is foot relet the we in a XX,XXX rent. at X% suite operations Lexington, than it company we completed And did on extension Street Winter three XXX quarter, During shut South a that where Massachusetts. the its our San in March. prior at floor and full Francisco. the We pharma was biotech we square leases, square foot basis XXX lease life completed down the an science higher Gateway We rent in second had

for We in installation to speculative The we will are XXX and lease at and our intend on a also each complete additional negotiating turnkey an to to a build-outs. turnkey XXX at open date, property lease 'XX floor. partnership third full complete requires Gateway Gateway,

across market the unleased that moderate there science are life fully But are market. Francisco, both requirements to being bulk said, added previously supply is small companies demand that built private the and San to touring. space. are from be the in and few Activity There continues South have for the new Boston as looking a I is large of

Our fits client new profile. this at Winter XX

our that a to we are inflation relative decreasing budgeting. transactions falloff also the I market in slightly work The are costs in our to to by but market, this numbers are in want tenant reduction we completed that largely improvement markets. TIs jobs note in due we by different are XXXX, on seeing seeing

gain going BXP's to portfolio is occupancy.

space our our comprised will and premier of be are workplaces. the spaces. in these demand in The and new of continue portfolio building market available in infrastructure, We types lease amenities capital fundamentally the to tenant majority is properties investing to existing because of we and wants clients

the buildings take many is transition these buildings seeing extended of stress or capital all recapitalization an that going The due to are feeling to their time. are current structure. We

commit many to capital happening, leasing or of is interest clients. for which a greatly position existing in assets this new them their are impacts in these the tenants, to brokers While considering not

than invest to space our buildings their to BXP, sentiment with competitive in compete some returning position capitalization our while not the is the of And the and owners mode. available reality assets for to theme worse is so to unwillingness their is capital much are due in the not restructure a in the markets of

second. will XXXX. leases clients the our space. the small completed We the bulk and professional XX first Medium Our leasing are during using the in completed service clients up financial XX and of we quarter, during make

medium-sized be had Mike. only year Occupancy renewal. stop here leases and the through feet leases above and a this We have gains I'll lots new square will of turn captured renewals. XXX,XXX and was small- call slowly and two to over each

rate We quarter to Great. our a to and I Thanks, a Doug. our XXXX Good morning, comments to our we performance in risk. plan details and opportunistically sheet on everybody. the then manage balance with had markets, few I'm busy second of the to our cover earnings and bolster quarter continue liquidity changes and debt start the interest going guidance. our

In was When credit from of our $XXX issued strong reduce market, XX-year in had our and income support the fixed notes well the bonds. we basis initial underlying was X.X% and oversubscribed, upsize treasury spread we X.XX% investors allowing We from the unsecured to our green pricing deal guidance. issued us was the XXX and bond points. million May, the transaction

spreads have to basis X%. the over significantly XX-year Our credit today, XXX under increased points has rallied while to

all if volatility, be would coupon. despite we today, similar the a it So at issued another XX-year

market, our million Washington, the mortgage Street $XXX we refinanced North Capitol expiring on In D.C. mortgage in XXX

for extensions Marriott office Boston. on We and our Hub X-year the the mortgage headquarters in Bethesda loans in exercised Causeway on tower also

limited mixed-use Our cash on loan with maturities $XXX maturity podium that loan Causeway as XXXX we to on a to Hub building. a expect mortgage repay as our bond million well remaining are

of our in million. additional option. is terms plus in only We're held expect Causeway The years loan refinance the to Hub a loan two share for third X-year joint quarter $XX finalizing and and extension venture the the on is a

swaps we also unsecured lower the fix XX to $X.X through at rate basis than term our XXXX. points entered fixed rate quarter, loan term rate SOFR SOFR That's of interest where the sits on approximately May billion into X.XX%. We today. This term

cash billion line $X.X $X.X is in availability and full Our It liquidity credit. under billion our consists $X.X at the strong of billion.

through XXXX development final and spend on of $XXX with mortgages pipeline, of $X.X bond $X.X maturities liquidity projected include our needs end by the Our million of maturities billion of XXXX. billion

XXXX XXXX rights mortgages into of billion and XXXX. and loan that have our We $XXX or mature do another in million $X.X have extension term

million maturities in prior with off September to to refinance bond $XXX So expiring million our mortgage February and the in $XXX continue unsecured XXXX, pay cash. or the our our is to maturity Refinance secured through ample the maintain liquidity. either plan bond its market, financing

turning our results. earnings to Now

For share. per the from funds reported second quarter, $X.XX operations we of

exceeded revenues portfolio, our $X.XX of $X.XX with to by the of of better-than-expected outperformance operating Our midpoint in expenses. range per results combined share. due the $X.XX guidance The lower-than-expected was

The projected were portfolio. stronger earlier service our parking revenues higher spread revenues It across included outperformance than lease hotel. commencements, the and and at

the split On ledger, the maintenance and expenses. and lower side lower operating expense between the savings of of and consumption were repair deferral energy costs from rates both the

project expenses benefit lower be most get We from until as the lost that year. in of the maintenance projects will later deferred the

to performance we're second the to raising full year quarter to full guidance same-property we expect our $X.XX of year. per for So flow the $X.XX to portfolio, our FFO most In through share. XXXX, the

our raising assumptions points. increasing basis growth by our for same-property the We're our NOI of by bottom XX end range

X.X%. to So of also increasing to same-property X% growth growth XXXX for assumption X.X%. X.X% our cash we're assuming NOI from same-property We're to now NOI

The and refinance better term other than earlier we're we than projected, we maturity last carrying rate seeing higher so assumption improvement more are By cash a lower bonds the balances, our new rate on earning seeing are our floating September plus our the deposit while interest on rates $X.X liquidity. from billion was savings. are to interest quarter, had in swapping area we And expense. fixed we issued net interest loan locked to rate we've our is in

top $X.XX at midpoint. $X.XX guidance share share XXXX portfolio volumes The mark-to-market the and we're activity. are conclusion, capital of lower expense. growth, leases had $X.XX FFO primarily improved share range raising a of our revenue by per outperformance, per our increasing quarter leasing per on commenced changes earnings interest net we better positive same-property Overall, and timely line from with NOI In strong

environment and Our outcome. excellent are in balance positioned shape, economic sheet uncertain is an for any well we in

further environment at continue forward, be expect we interest low-cost expiring rates. refinance to we to the anticipated Looking high a as headwind do higher rate debt

unsecured X.X% notes in and expire million a have XXXX, example, $XXX approximately that rate of expect early X.X%. a of For refinancing we rate we fixed

debt billion of that by rates. In addition, we have rate SOFR impacted in $X.X floating changes is

loan floating May a rate our $X.X fixed Our been to XXXX. debt billion include rate swapped term does through that has of

We our improving few open add we that formal be you same of property our and questions? service remarks. will Operator, the to years. through occupancy time, continue our up to developments into over That can to placing lines expect completes next stable, with over for portfolio income all the

Instructions]. [Operator

question So the Markets. Capital John our first line comes from BMO of Kim from

you I could think development total a the both regions commentary XXX And to question you the level least additional building that expect, and try the on access forward multipart costs site ask the pre-leasing yields on or I'll in? you provide of what what is who itself, partner to at Madison. need of Any move the they're for project?

fourth. your question, let we'll the Hilary So let parts and me answer the answer of then three first

hasn't building. designed yet. the The building designing been we're So

not talk rationalize in XXXX would than the development different I been Clearly, return building to the returns. the necessary XXXX. in to than side. let they be economics were, putting a will into the the about position higher capital thresholds have We are are discuss of so Hilary or to they capital going demand or are the markets

premier they're out the Owen in folks in Avenue Class mentioned, submarket are for more demand the still even and of this build take yet businesses of building the has for has and the to space with Park is little interesting that, out, who boxed tightness as Thanks, sense the side larger interested been from spite that clients very available inbound themselves expanding designed to in workplace are occupy would finding Doug Doug. it building. as generally the we're in years Plaza anchoring being the receiving in district options. do, The several to there's in the fact calls This as and the A pointed sense building that that development district,

it, And on would with very clients interest a to XXX,XXX building so XXX, fact been place in information say, call building. I in very ranging the the we the have has that program multiple for given seeking marketing from square feet the particularly not very, robust XXX,XXX had active

for And John, honoring Owen. are partner's our lastly, confidentiality. request And it's we

And I the from Griffin comes next Michael from Citi. show our question line of

your IRRs the be opportunities and potential transaction there. that some weigh acquisition what kind activity you color appreciate maybe you kind buybacks. relative could I to of Owen, on opportunities on kind of and potential potential I how could give of comments out wondering about share if those the was

mean, Well, a Michael, got I my right in find to on on to try mentioned frankly, that very now. completed. that of really are IRRs, I the call, quarter, spectrum deals hard deals give just think not I things remarks, many happening. there out And I as there's it's this every

look, I went XXX where before more there's up up were again, think They've not occurring points the data that's or basis more, But workplace given today, in conjecture. expensive. segment, is in the Xs probably capital though So the was many and transactions the rates points clearly would I say. overall, premier IRRs even interest gone

opportunities for As as our we value development think uses a may also it buybacks, stock capital, But tremendous relates we present have been that to pipeline the represents we our and have opportunity. saying, themselves.

to buyback elected time. And not program so at a we pursue this have

Blaine of line the from comes question Heck from next our Fargo. Wells And

in Then they're are sort raising through high targeting you side, just investment? you And think in I can noncore that capital just properties. or in JV concentrated the this give for ideal returns some looking mentioned would dispositions capital environment of joint Can potential what ventures. you on those color dispositions higher referenced? expand Owen, costs considering given be whether the an on investors what assets you quality on and

those I cost with impacted at And terms also leased categories Well, our of in would two residential I ventures capital that asset least and my looking mentioned dispositions and cap the represent development joint properties. assets probably in portfolio rates. we're our think in remarks our and of increasing

think liquid So I the selling, more than certainly workplaces segment residential liquid is premier There it's but are in no asset office. office. today more

development to in leased evaluate And So we're those also we're evaluating pipeline. going our opportunities opportunities.

the upon cash following what future. I looks the comment. but dependent Blaine, IRR And sort the of would expectations your they're the is obviously, upon, make what analytic for still very just flow And like, are dependent

And and what XX the the enough be and are smart to underlying growth the rents about view they're be be buildings of of years, to is how rates in they're years so the not potential offering years, might to that able viewing we much XX to they capitalization our minds partners them. in how thinking as we going X read

hard really it's their So minds. get to into sort of

As we not don't Owen know easy expectations for lowered rates, rents they've But their on residual said, it's was But XXXX. lot it's than some cap higher or if they've answer. their an those growth it their in question because it's rates combination. lowered to a higher

And Steve I Evercore from of our from Sakwa comes next the question show line ISI.

through uses Or building other back long office just maybe to you to how residential? guess, term? hold just that if for near I doesn't switch Owen, have before West in wanted does XX. up Platform XXX to you've circle I with And past. in Can But I gone this? kind this building the the of maybe realize on the XXth come you prepared are

So Steve, this Doug. is

the to at workplace buildings. to three Clearly, currently able the that it. focused the we suburban not have. that large project the have going we have commercial currently a moment on platform is be a premier we office is on project buildings building hold And we answer three in haven't structure So parking is

believe So picked there the in eventually the is in other transportation we allow the point, platform user But location location, will why this something which what this in believe believe land that. of in build. the we owns most rationalization the Caltrain, would first We the around than through of we for easily place. who the at

pushing we're that so market quickly going that's deliver use towards and owning going coming is not and of said, building doing the XXXX capital fundamentally, around the looked to at at be But other different a we best this is buildings today. of our in marketplace the to pretty moment. something there given And not probably availability

the decision to to fundamentally deliver the we're the that. that we So you'd at made I going Rod And just or and recover into the hold let that's market off Bob, add appropriate like know if more don't some and time. today.

to don't point. this I anything have Yes, at add

from And from Michael I next show our the UBS. line of question Goldsmith comes

long the pipeline. key case this development BXP We investment of tenets the recognize is one of

risk Are the building. pausing in should we future And so is expected your or And the think whether level just of in Like development or delayed? how of confidence at monetized one shelf term about about they being kind thoughts some pipeline projects? be and near this overall for you're now your is what yields of your when also your can the that on of now.

Yes.

balance what we the leased. So Owen. have of -- it's is of Most

ones have the the is faster. that we East and projects big Cambridge in fully are So leased one

of building. Park leased constructive The very one, client the letter some property by actually have and of fully and other having with other that XXX is for a Avenue on we're dialogues road. South a part intent

sublease made the was a Doug decision put So that pre-leasing. Valley/San described. speculative us Silicon Platform space with and XX it unique market the area project the been think us rather that's of brought completely That I to given -- was the that on no circumstances amount in Jose the feel

on yet finished. that not And almost leased again, everything that we development is currently pipeline that have is

So thing Relative there or is been projects. And future Madison to expectations a such I than is would I our development, future is return it have again, in XXX our where no XXXX XXXX. of these development. said, as mean, higher as delay

if would capital achieve have an of to So if going we those amount rationalize going those when incremental we into start -- returns to that opportunity we of are assets. necessary economic hope that kind buildings, an and new to we're the

from Sachs. from show I our of Caitlin line Goldman the question comes And next Burrows

earlier so company. relevant think mentioned because on you leasing the about your I to top that's NAREIT how at question was

velocity up it in quarter, that, volatile. I but significantly was be guess year-over-year. following the leasing in on up can down So

conversations . you now? in your that Or are XQ pickup of that drove from or what that pace that? And Was be the So something particular quarter? it there could like in do maintained signings expect be second can like you continued? the saw

Yes.

welcome So Caitlin. back,

first to what referred of XXX,XXX when I about during square feet -- had negotiation. the we call had quarter, the So we our as our in leases

we X.X quarter, And was square as so million that the over third enter feet. number

a as So I'd that. in said, say, modest acceleration I

just for And the we of feet our comfortable embedded with over million expectations are year. square X somewhere

how what year, of to for So with many second XXXX our the be lease get expirations And quarter those to XXXX, conversations leasing going be I'm occur really and early closer the end types will quarter and renewal activity quarter the we from clients. is because better conversations would quarter again, the we generated fourth anticipated. quarter closer as will it's of guessing the to to say I than upon depend the third quarter, slightly

we're tech mean, not West the I So particularly the materialize. constructive. as has on said, really Owen to demand started Coast,

that XXXX. probably that all generator And in big so the -- XXXX, changing don't our of and that companies product are anticipate mix. We for not was in a volume in

So Owen -- are our muted relative comparisons because think, we believe in office clients. an to we we prior we to be years, will the recession as are said, our

solve in creative so share general add leasing a be their not activity. is be to we're out what And and client which our how and about capture teams there's but to going asset figuring to massive going market it our because to our XXXX. to quality the to acceleration be likely in was Again, will market not occupancy, of propensity problems,

them increase clients. are people. of is time even of the strategy we're we're Workplace additional the title with seeing most strategy that activity where in Doug, And Director is on tremendous we a have spending that what them changes workplace only going facilities but comment amount the focusing of one versus on you directly access seeing And for forward. not are

these versus it is space that you strategy increasing the on to other weekly, had in specifically they to bifurcation and are do whole has be and And with workspace what going needed premier that conversations the the earlier. mentioned

the jump it's an the in been people coming have be pent been because up kicking to going because there's think activity that's here future I can. So

And comes of Sandler. Piper Alexander I line from from question our Goldfarb show next the

First, word congrats don't retirement maybe on time, use but retirement, we're Bob, if know I there. your to or going congrats part allowed to

West took do down Street many, credit going happen? you guys we before crisis back. continuing was think York, question for for need to to with Coast New see long It the If Wall Like like just out many on what's back and So here came it in companies? to time. quite the a What you, tech years the on theme.

need is with the for. what's to innovations from be space with overhired. mean companies, that seem they they on always For and new tech up to They're they certainly going work profitable. to sure they home. I not it seem need come hire

the the tech -- the see Coast you what things is on of industry office for reengage to on front. what So the proactively sort to West that are need

take tech has out. growth say, first the companies I at think all, I'll I'd that. Alex, a shot of flattened income of trajectory

think cycle there's new think has which cost, more space I growth as demand. changes demand. continues, be an technologies impact space and the are the So then on focus created on And more I and there'll advertising

that's think I part of it.

also lots of I in hasn't think been definitely that where of growth hired and were employees there taken space have overinvestment could there was materialized. an anticipation period that

So think of a digestion aspect there's this. I

well are remarks, on back are America now, paying Others have May office rolled as I based as These happen. suggesting some companies And to other increase we're as out demand are seeing companies on I to Amazon it's rolling and come evaluating technology the in with about take going policies Federal like my to are think been And performance the corporate think people have think back that said that I office policies office. also the attendance. for technology will space. time. office. companies. rest and behind things the And in I their the the lastly, out to came There And of the return the government, by those X. way, it tech

other have Doug, views on else Rod, anybody this?

but the just I'll add, real. Owen would I comment stretch now and Doug We've quickly. a and of positive the we're think gotten and in tech drivers Alex, those is deals both This point, the I in one it's It's real seen it's is of is addressed seeing just Rod. market, which this deals not market, signed, any happening. them by demand. the have AI majority still the few of that

downturns. of has us other So a new technology that out it's that of pulled opportunity

rightfully so. think and I a of this attention, getting is And so lot

our Nick Scotiabank. I line And next from comes the Yulico question show of from

the want just commentary, on and up and Doug, I to all on gave you pipeline follow the activity. leasing

clear wanted we're this. make on sure Just to

Are look numerous in times now suggesting half based the right year-to-date you lease of you in down was So actually the be in that then year mentioned if have XXX to points. rate? part visibility we you portfolio. second is basis of that the lease for going is rate, the at gains your improvement also it occupancy back about the on And

you at that actually that a clear portfolio? the And want saying at a are to be year for year point, is growing next so this think And is bottom. you I going occupancy just year be occupancy to this

it's Yes, So going I'm the yes. be not you lease first. it's mean question second modest, but what to I'll answer sure by rate.

we X almost If that doing leasing just quarter going on we to it's we're basis mean, for AstraZeneca not you're why a down I did feet quarter-by-quarter in talking build-to-suits . the are in to that -- doing XXXX square XXXX. that's in Cambridge XXXX, we years, the And with the again, amount including and relative million of previous every about to be in compared XXXX

and number lot a services which check the of firms the numerical transactions, in obviously law because services is financial what the So but the of I terms described leases nature professional size from demand smaller of that coming before. is more again, the is firms of -- we're and small doing and

provided, quarter again, we of So of X-plus on the embedded XXXX. that fourth good in construct neighborhood feet within is square quarter third of going And first million second which basis, to a quarter, be activity relative pipeline the about to our it's projections to we feel space. earnings the I -- quarter somewhere of

question Vikram Malhotra show Mizuho. of from the from comes I our next line And

sheet. of uses So on just balance you capital, building the about maybe talked

or a fund office what the of uses value Today, we've you XX stepping say, related in how [indiscernible]. unique view to do X, workspace is to this is about just space. that, ability X, wondering, over, year in far. you sort opportunity perceived premier sustainable I'm is market so But the the And office, something premier do your have strategic we what of know the to to for given in or given seen transaction run-up just period, run-up Your implied little back more NAV. the a relative capital trend you

I'll way. NAVs and rent earlier, that which things. based it lot are hard these rate they're growth residual this judgments of a about talked Doug on on your and So are Vikram, is what answer cap assumption -- all

I way did can't to that So think about cap And is highlight it the the is workplace it's around the Valley does think what proper X.XX%. today, rates. simplest look-through is was assets, don't that I sold and think you -- X.XX%. through look in what Silicon one BXP's cap I premier X.X%. the tell what I rate cap BXP's but rate its is for

the reasons our liquidity workplace expanding looking make in And so Life and of in them. during looking I markets, we to focused want does capital on because so development going and premier why in our one we the the segment residential of think we that actively the it we're we're be for kinds And significant interested have I in segment. these Science are have available balance in think always to that's represent at value. this Look, available time to we involved investments. that to And stay have, going sheet -- segment the

line from next our question comes Bonnel from the show Camille of America. I And Bank of

portfolio, in well which your year a activity of leased. is past You've leasing lot the had over Boston CBD

office comments could life traditional markets? be any for breaks how users great. is speak more sciences leasing your your pipeline So more trending would you And how generally, and on suburban down demand tenant to between

Boston to growing of called group 'XXs, technology And regards space the Highway we and we XXX, 'XXs, bulk in on is we how upon perfect assets which of the developments once of the was where were the solution that suburban have which that the things, there facilities. company then no have XXXX. a including sort depending Cambridge, are XXX have Technologies this we're created that doing, you value market, with which is available define either, new the So our were for

those to are over buildings been science life locations. doing we've locations been we some from of those And fabulous locations what as locations have time office converting still and

Boston set look if our deals see science. the do focus both so mean in greater there the actually the with traditional and in office we Massachusetts. market over we we side. It's pipeline, the life I'd doing available likely because than time that in there on out renewals isn't our technology our development is are opportunity life office Greater growth necessarily demand at in science And leases, doesn't Waltham, Lexington And growth with for market demand Waltham, more demand. It you new of because bulk is, say,

in now. than market general, demand material market amount I tell a will office suburban But that is Boston right the CBD you by the slower

or when the a recovers. market are strong we science for time positioned we've to sense these for to basis market rationalize buildings not a of economic to incremental And free a tighten return such perspective. so foot, for demand point time a $XXX to from well is we can get effectively building. And again. the because build simply square $XXX "stable" come said, we science and low have makes or we buildings do land investment life that and market in We're where purchased where the were this, market as sake We're going have to a the going us it and capture as for to the wait incremental demand to life to and the

the that in the has best have know additional -- capturing light. suburban. comments? Bryan And any in -- greater happen space I absolutely we for But locations locations. general as of the suburban sort traditional it to want market is Bryan, So I no best you we to there say the what there, would best don't It's viewed because properties urban and make demand some Boston are it's edge if in the office our is turned in longer

things strategy to early age a lead one trend a Two in this these the about knowledge companies a with are that our that the We're focused in is more point workplace talking into this really transaction may one we for gets workers. to to to assets. on strategy, put have that has completed could their who future Yes. back spoke I downtown already urban which of tenant, two

et And work Top are clear heights over early in for has for some X Tech, for then but space displays of up portion months maybe certain. it's benches, we're cetera, last Doug, that bigger what seeing, which sales, needs trend, use people let's calling the is some picked say, the

And I Stanley. of from line our question next show Kamdem comes the from Morgan Ronald

you science of on the sort heard and funding we've theme, about back these funding smaller life a think. staying impact Just could having of sort what of companies to for lot come

about could of and a portfolio. side. thoughts your we pipeline. I which hear seeing you're both the lot if the lot in supply just guys XX? on the of I have then the next competitive So brokers supply And XX would also think of you to over love How in your side, mean expectations on a Maybe terms hear you is thinking what are to about activity just your demand talk are -- the what it? to

to biotech new going calls -- I'm So on. I'm talk [indiscernible] the answer in and relative not large-scale all about of my truncate to demand sort to of things overall that on therapy this. about and science sorts to talk their try discoveries going the and going all life to particularly are that relative gene and

where VC where outsized. it perspective XXXX, in a from that was spike at market was, the amount the life is and an look it simply going had put and money and the of 'XX, you capital science enormous If 'XX into was way

at look on in what's slightly than XXXX, in, if XXXX. higher it's to XXXX it you And normalized where and going call it, was pretty

valuations shouldn't the funded whatever drops that not capital advantage, capital taking were is appropriate of available discovery in for very there to was frankly, that have given lots were valuations it's gave the of and so who quite And thoughtful, and the capital, those say people would probably businesses. I that being but dramatic stage is by them companies the in of it for

refer Francisco will sort we of science life companies both demand X what consolidations pharma some that are in small marketplace, acquired starting a the put the I demand or the believe drivers biotech that Boston and South that few are to issue of as companies with years over other lot the are medicinal big last greater we those continue and there is not -- requirements see in X in to than occurring have believe marketplace. and this, we some So some together

money way This hit there's was the "Aha. But is And issue, supply. which on the you the lots had the lots of when that is perfect property sector, who sort going it people and more of or into I'm solve the said, for convert problem lack me this of a and new in of build to take side. building." office land demand and going going take building the I'm to to this

marketplace we're lot. And the are to amount large going be there and these of a to locations, loser years. the locations to supply clear winner that's that going the a rather And it and deal is matter have couple next with there of are in ecosystems for

have the their well development or are years. the Gateway of Road is particular under have of that science Waltham the think past in well sort we requirements with over where life in XXX which San two our at the larger we X interchange cluster gone Totten really South we to Pond on X that so the of terms as properties positioned Francisco locations as And assets both

an we that. to to going desire I to allowance or as again, not. the before, said deal competitors lease which of we to have turnkey the with then so these putting will money product more we'll to many hoped, companies going doing. and do own of have may this may we with things Are that, the we give not are them But these I we're capital believe And they're installations capability or for up. And And their have the in. supposed what be do had economics believe,

little take you but the demand to just of projection better, these we demand -- not get months, as the we're going about thinking The that's is whether get XX XX to buildings can't we're way And going going So of it's or give to leased it. it's a bit a comes. I worse. time.

I And line Street. our comes next from the Dylan from Burzinski of question Green show

concentration, your concentration guess are to BXP's or of at there just looking over sell markets where possibly capital to see incremental you office you even I guys in terms certain portfolio reducing time? adding

bottoms capital way allocated way the up. is and -- gets we're markets Our we that the the is a we operate which are X strategically, the set in perimeter,

the shareholders them. arise deals make what sense So execute most that those and for in our we locations on

attention pay nimble those shifts be it's we we think markets, top and over think capital the as we what's have the line, from regions. important So very to but different about to contributions been across allocating time. the There opportunistic

that at look last Washington, the of years, and you would I that the If of a allocation capital CBD there's and out point would out. of clearly a been X change shift be

So the we from that's business way operate capital standpoint. a the allocation

Barclays. question show from I And last from our in the Powell queue comes Anthony

you same trended? revenues property and Could upside you as quarter. push How remind more variable level? in a to going of us the people that office think parking parking come where are the you back you a pre-COVID rates versus could source in on parking including rate And forward? was utilization mentioned I basis revenues,

I we're parking. pretty well I doing on think mean

are parking -- where a in actually Cambridge service we We parking, the year, fact garage of kind we this say, overall, would I were on we're before. if you removed exclude from that earlier

grow because we we think before that than have there's where opportunity were do increased better to because still rents. I we're

had occupancy these into buildings and come into cities. back have We these

parking there. increase modest. But in think already do So room quarter parking, we're still was I The this had for for that we there's there.

a was the the revenue beat It the different of bit in of As places. little I bit a kind a bunch board. across was said, little

every retail On back. the a million Francisco Francisco, dollars. pandemic I'd contribution say The San we're side, place, was San retail the before but few

So hopefully, that's close difficult, at our along. going in to next where point, say we that We sporting we're goods Boston, and retailers will we're still come a putting Lord open back I'd some year. fixed example, still But in down it's Taylor & for and point. do have at the returning, some retail this helping

be the that's retail additive mean it then was. to to hotel us going million a a where of And I from perspective. couple below still dollars

that. pretty improve stabilize above it where to where So I time it's was But get doing continue back well. I going to mean will know don't to that's where over and hopefully, it it was. and

further no the this showing CEO, I'm questions back and Owen time, for in queue. At conference closing the remarks. to I'd Chairman like to turn Thomas,

Thank That attention your all and concludes you. BXP. interest for for Thank remarks. our you

Thank participating. you. conference Thank for today's concludes you This call.

may disconnect. You now