Boston Properties (BXP) 31 Jul 242024 Q2 Earnings call transcript

Good day, and thank you for standing by. Welcome to BXP's Second quarter 2024 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference call is being recorded.

I would now like to hand the conference call over to your first speaker, Helen Han, Vice President of Investor Relations. Please go ahead.

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

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

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

be reflected on BXP it assurance can the expectations statements will forward-looking no reasonable in attained. Although assumptions, based are give believes expectations any that

cause in to those results the risks filings Factors statements. yesterday's differ forward-looking were could time and or SEC. expressed does to release undertake detailed that to BXP's forward-looking from press time statements a any in by duty implied not update with BXP from materially and actual

like Chairman Executive President; Doug Linde, Chief and Mike Thomas, to LaBelle, welcome Officer; and Financial Chief Officer. I'd Owen

to regional call, teams the and to one portion Q&A portion to President, limit Senior will call ask please our those questions. any question. During yourself Executive only participating Q&A be Vice Ritchey, Ray in the We our of available that address you management of of the

feel the free If you rejoin please additional to follow-up, an have or query queue.

Owen for would now turn remarks. I his formal over to call Thomas like the to

as commercial as relative market execution. workplace the second everyone. BXP's performance the the strength once and well segment office quarter and again premier morning, Helen, demonstrated of good industry BXP's you, of the Thank strength in

midpoint our consensus XX-year $X.XX by and square our quarter. quarter over above of XXXX we per for FFO the the our for raised FFO XXXX market average completed to second X.X million the forecast Our second leasing share second which feet of greater for per and quarter. the XX% leasing guidance Further, than above volume share close $X.XX We of $X.XX. is was

volume leasing remained over lease time. lease exceeding at current signed past quarter we X occupancy our average As escalate term years. expect continues on will this our long to leases increase Weighted expirations,

past cost among one our were XXXX Sustainability most Sustainability of increasingly our and this owners. & world's as property operate, we Delivering is investors real our given equity ranking and Report, where Investor by and quarter, the third sustainability the hosted interested growing of well number On we solutions Time decreases #X estate of Impact our released clients Impact as Magazine important to our & the securities. capital communities sustainable the sustainable Update recognized U.S. as debt in companies, annual in ESG

macro to market Moving conditions.

are important rates rates X the factor for on XX impacting cuts interest corporate interest for of performance, rate market corporate experience valuation BXP's and most external U.S. expectations, favorable the as obviously Treasury. lower accelerated BXP's reflected continue earnings the inflation market X% and We for new forecasts than tailwinds sparking June, report growth. July rate a lower released The to driving forces the interest performance. well real external U.S. by important BXP's yields as growth, to XX-year and second for estate Fed earnings Lower broader inflation

around quarter. second year X.X% to XXXX, the be in X% After was the for and remaining XXX growth expected of quarter flat for is all earnings this first S&P of

space XX.X% X in of space for as buildings, much absorption square mentioned to has for XX.X% demonstrated in lease for earnings As our market. XX.X outperform positive are hire X broader X.X workplaces Likewise, CBD premier negative the Premier versus repeatedly, the to Direct million our is volumes versus quality growth for net with likely last a continue over XX% been this feet to years feet year. total million square of workplaces broader highest the leasing growing as X.X% materially premier the additional broader a vacancy invest, representing the workplaces, companies and markets defined more to market. market.

than located Asking BXP's market, premier as are where end are assets for a occupied is outperformance of XX% These and quarters. CBD premier under that second NOI from of XX.X% leased just rents workplaces the CBDs are comes the our prior XX% gap evident the from higher broader quarter. This in workplaces. predominantly consistent portfolio XX.X% of assets in

experiencing XX flexible roughly increases are for increased most turnstile workers steady square depending but data of Salesforce, policy for new based work X attendance, office to of on attendance portfolio. We function. days continue shift week the to we moderate foot also push recently our including million half the capture office primarily on in returning from office Corporations mandatory employees their per X who for to announced job to

$X.X in started workplaces limited, at Regarding muted volumes and ranged markets, for rates owners are capital increasingly, quarter $X.X to the though last the Completed been the transaction in be second the testing real $X.X continued has from XXXX. raising billion private X to volume estate office pricing. quarters, to activity very has billion Fed below before sales billion well market achieved equity interest understand the for premier

as in lenders the in premier BXP's but opportunities acquisitions to mentioned, activities. seen We from allocation limited active remain segment. pursuing owners have workplace capital and Moving

disposition be for half generate if million would are We proceeds, $XXX the in of which, this year. could successful, of which approximately active land of realized X positions, negotiations

at on For we strong foot the Town Boylston above into of XXX-unit ahead Skymark, already units yield. tower are Prudential Center. We've On in of pipeline, square luxury XX% Center at XXX,XXX our our also development the July opened leased fully service a development delivered schedule the XX, leased rents projections. Dick's Boston, at residential and we Street House of Reston Sport modestly

capital. we designed to forward We land push we intend which projects entitled JV are control with for equity several continue being to residential on primarily raise that and

lab underway $X.X and as projects contribute of be million over growth investment FFO residential BXP's BXP continues end retail per BXP of remaining XX to to will funded external of to and billion X.X pipeline share billion the aggregate projects These second execute with $X.X quarter. with a significant and the square time. office development approximately feet

in access to decades over The challenging. leverage class of private strong of and the with premier in several unsecured of BXP markets; office workplaces U.S. sheet continues dispositions. ready market asset development acquisitions highest equity which quality assembled debt disinvest the and segment intentional one for a and key in remains the capital secured workplaces portfolios and our clients our to the sector; premier and strengths, its many balance broad to competitors are: the office commitment as

corporate in sector. both and pipeline the interest our stronger continues as assets continue share this and with for stability rates well as dislocation market So clients and in office a Expectations market dividend growth level, also to during conclusion, gain resilience to lower over BXP for provide share per for to time tailwinds will positioned and is earnings of display time. growth in growing renewed FFO leasing well

activity. So talk now, and a you you Doug, turn call strong I'd like our I'll to can And leasing the happy about wish over, birthday.

X with Thanks, years, Owen, you all of every celebrating enjoy I call the birthday my highlights. one really of the on

relative the June stuff. of first the up we second all what described to that of our So quarter meetings the as webcast on our we the quarter NAREIT executed picked did, really during and what materially 'XX in discussed line last activity BXP's good trend we call, we and in leasing

May May June X we As Owen When spoke 'XX. lot we was feet. a X, of April XX, call, to June during and negotiation you million time, we highlighted, as XX, stated feet of for square our X.XX of square completed under pipeline feet signed X.X we've leases leases square leasing million And that XXX,XXX for between at our more.

pipeline square documentation to leases active has today of our X.XX grown And feet. under million

square transactions, we leased complete have set will leases of square Exclusive if we our we totaling of million of and discussion this documentation, additional feet space. feet. of So about XXX,XXX transactions an have under pool X.XX

leasing transactions, for achieve execute of will X we more those million if XX% So we feet than year. of the square our guidance

XXX,XXX renewals XXX,XXX XX,XXX leases XX XXX,XXX was absorption pool. XX% existing growth feet. our footage, XX our while square from transactions, XX completed into totaling square we we feet, feet. square X feet additional client quarter, square lease expanded of square had This encompassing XX contractions clients for new of

renewals, As X square contractions only and a point about of XXX,XXX XXX,XXX XX XX feet feet. completed XX,XXX encompassing had square square XX,XXX and square had comparison, we XX leases with last X transactions quarter, totaling we we and expansions feet, feet, for

again, big improvements. really So

Northern square York, XX% in concentrated our in in feet feet markets was Boston or square XXX,XXX markets New made XXX,XXX Virginia. square activity. activity up East square of the These X feet with million XXX,XXX and QX feet in X.XX Coast

from portfolio exclusively significant majority in almost our feet. was tech The this Manhattan of XXX,XXX only Reston. quarter. a came expansion from Our client in Francisco West activity the in square Coast downsizing came company San The with contraction

We in on activity in XX% West Reston. transactions XX% one New in Boston, square York, clients of York the or XXX,XXX had and the X and each Expansions over New up Boston, made feet, D.C. XX% in XX% new Coast

is about was during to executed The As reported XXX,XXX in X% base, feet pool flat. Boston, in rents in signed year. of square the our which per foot we flat restarting really second on averaged leases costs square about million York, the that on was X% cash X% per leases foot in The rent starting were on in-place this and of cash West was down X% quarter, the D.C. a the X.XX down Coast. mark-to-market up overall $XX a quarter, quarter transaction leases up about relative commenced previous and square New mark-to-market which supplemental, the rent this

seemed Now the to on the spend last occupancy this reports many of I that analyst night. change we during minute a our been to saw quarter, a want have morning focus of and which

quarter Square at JV and large May, As July, is X XXX,XXX but have is in we expirations, figures XXX Tower. which a share stated at Folsom February the That's April, square report feet so asset, second in in one we XXX. we in XXX,XXX the feet Times our XXX, one square and known percentage

recognizing proceedings the we feet we still of Well, vacated also in I non-revenue-producing had possession were legal mean? do they some and stopped quarter, had occupied spaces. we space. square yet revenue in but in XXX,XXX vacate where to This were tenants we default What

feet a but were back XX, we at lower the took same. the XX,XXX It's Dock just square square we receiving In there, that remains from absolute addition, rent footage. WeWork on

XX% quarter. that the terminated be second the square XX,XXX from quarter Waltham for occupancy in simultaneously we foot won't but a next account quarter. released the reduction of in first Finally, into lease movements Those was our in delivered

the In XX, Hence, difference leasing have space. that basis between June leases square have space first of signed of space included our commenced. vacant of feet million quarter, points not feet square XXX,XXX XXX we and As leasing. occupied approximately one the leased

that space leased quarter, This of feet. vacant These square all percentage. same XXX,XXX square footage our leases leasing part are was

square Our of our another leases an negotiation feet XXX vacant includes space, leased contribute square pipeline in signed additional footage. will of which XXX,XXX points to if basis currently

square Fourth at addition Tower Waltham expiration respectively. and XXX,XXX reduce XX% Times life year-end. developments our quarters, In in-service the will about feet the a and QX, be point in-service occupied, result X are at XXX Avenue, into in the Square portfolio our science XXX to our known will in third which fourth additions added will XX occupancy. combined basis in There reduction These CityPoint

points to been we lower not are fourth we where and project quarters, leases of occupied addition between of in-service commence by of be now next to For the to previous been a portfolio, inclusive that including the we're focused be the a recovery with quarter, on that in-service in you basis XX% the quarter doing In the the signed start quarter to expect that we because about to it's additions most have have away. XX portfolio. those XX.X%, space where us but

digits these would space. for have market asset submarket from Our no professional leased sub Concessions is a taking law alternative X% to more direct double managers, circumstances, firms. space are X BXP tenants In our availability. in space. and blocks our risen Park have originate financial continue many and demand competing rents almost XXXX. XX%. availability of to we flat and in In above organizations In service will are have reflection we Manhattan, of that The one immediate clients of be continues the to expanding. these institutions, continues like space, lease and limited Avenue growing assets, of users all

We had Building square Lexington more of General the at quarter. at XXX,XXX than feet Avenue this expansions Motors XXX and

a same the City continues in strongest submarket. technology city time, continues We the Our completed with in XXXX. single be New Midtown have transactions South a lease limited South to a in at York activity been Park XX,XXX be floor but to demand tech-oriented tour over At this firm very the across light. quarter, XXX the feet is where submarket media city, digital square Avenue in

quarter, completed activity of a Princeton, In XX The feet leasing firms. the this majority digest the we extension the financial was The outperform pipeline. portfolio Back alternative In new to the square the including managers and professional pharma District of Financial Boston, have Bay continues foreign district, of totaling quarter. this we transactions our construction company. with during an to square and continues and XXX,XXX clients Bay which in Back to were Back services and feet expansion completed Bay asset the XXX,XXX

we over feet or near-term on our was activity renewals. vacancy, where those completed not XX% remaining existing Our and just transactions of portfolio, were Urban square Edge XXX,XXX either Waltham in

demand life lease. Boston a a continues with a office execute We companies from urgency life consumer with around any in be potential science came one The demand relocations. or life homebuilder pharma the did new lab to little foot requirements. few Here, company, displaying tenants products a science lackluster, XX,XXX lab requirements Greater science square and

To date in one lab Lexington, Cambridge Watertown involve that Waltham, sublet. West didn't have XX,XXX been was square X this there than nonrenewal feet. Only greater and year, a deals

and is the D.C. Town or less from over from responsible, tenant Reston a coming well but square natural expansion XX,XXX industry handful tech a said, contraction vibrant in leases did feet in all for location company. as X a growth and also Our a activity legal this region. primarily and square as executed The financial feet said, quarter of small contracting. and just businesses do tenants in Leasing industries, and of for XX,XXX of as portfolio traditional services to had as deals. at the as I from demand defense X we well, cybersecurity residential I was continues X,XXX the virtually We we be retail foot leases our existing retail environment square Center experienced,

like of dominated Columbia case The office but market or is and private tenant is in bifurcated. more legal relocations negative It more seen. almost the to District in law requirements every D.C., in have is going which or we this read the usage absorption all leasing government smaller to help becoming sector renewal with is by The industry demand resulting as are problem. and leading doesn't firm look

However, capital there little with therefore, have the and or high vacancy, client with interest. new for either existing to are they many unwilling buildings structures capital transactions, near-term overleveraged very provide

quarters. meet in next at well-capitalized to York demand, amenity-rich, want that fare the New When XXX on be prefer be the clients market well the buildings. space, of appears There Avenue Penn over do they and refurbished, limited opportunities top availability few our should these to so clients' XXXX

West Coast demand the 'XX. than particularly in 'XX seeing comparative more markets, are On basis, a San Francisco,

financial equity mute growth AI company organizations asset and to upon that positive market, closely, report continue lease own lease CBD additional growth Coast in of firms, is venture transactional and the brokers also to you in has look sublet the emerge. continue demand from fund the the and with Francisco the in to The tenants very few tenants. of obviously, firms including from of the from net a little of private expirations demand legal some that bulk managers, while the center away managers source its emanating a if more continues San AI the hedge This set And of specialized financial downsizings act the pickup those availability represents yet a for market. and as look However, funds, West correctly space. Tech activity to technology their advisers.

Our on center Embarcadero activity Center. demands to San traditional at Francisco continues nontech

smaller footage deals, completed new square feet we quarter, vacant and tenants with This square renewal law less on X currently firm in XX,XXX square change no an with all or space. XX,XXX foot

contrast in activities downsize, the see in those many in and to of which New York to same stark to of professional continue We is continuing law Boston. the services firm tenants

that or potential XXX,XXX landlords at activity for a entrepreneurial completed feet in gaining when come to space a market net a renewal in available making companies full square leasing of a demand less growth. environment. again building, last making share companies competitive saw in experiencing location of about been potential lab whose is and/or sublease There we flooded South uniquely a square don't continue flow the at an The in tenants They quality once leases are during Francisco have some a now where lower seeing by XX not and or device involve sensor, the be inexpensive new market they completed square Folsom still days. Overall, were halt it a deals didn't though But primarily Leasing there not improving contrast operating that feet market about multistory XXX,XXX clients have to designed of the months compete R&D we of SVB availability We device. is improving are our Boston. year with less, dissimilar handful non-tech of Greater our sort demand first and product year. are has large Mountain about have last are from this the sublet driven X attractive We buildings, maker new but to desirable are imploded car story for looking which photovoltaic or These activity the floor Mission slowly XXX of San capital commitments exist, only View products. medical XX,XXX space. The new and panel that is to XXX is feet the buildings is steady property. and device, the where market. is tech options. Tenant furnished a research office

absorption show is and are obvious markets to a see pockets the constructive the incremental recovery, submarket strength where of of New Back the behavior, client consistent to examples. the Park need Boston macro driving availability While low of York have started we Bay Avenue

sound space property that, premier we capturing to by continue condition management with over occupancy. And leasing be in operated it successful choose demand, our team, clients turn to (XX:XX) properties As and I'll increasing and will Mike. financial

Happy Doug. Thanks, birthday. Great.

Thank you.

details performance the cover to quarter our full going XXXX I'm to guidance. morning, this of the year second our increase So and

funds operations the $X.XX our that of So of share quarter, for reported last we from from second per by per guidance share. the exceeded midpoint $X.XX quarter

portfolio expenses NOI operating of ahead Our in resulted of $X.XX came our majority in midpoint this the guidance. the quarter. of lower from The

going our in earnout Our was the our The interest payment our reduction in that recur earnings of change our our in X expect we've anticipated related decline expense. the And covered $X.XX you future not previously project as reassessing came described, closely don't last of in our interest that Oakland. is we was The should a revenue expense incorporate reassessment due rental to expectations. aligned guidance occupancy reversal multifamily results you Skyline with $X noncash and Doug with of run to earnings as to noncash forward. million rate in our accrued calls. from beat of in

projected nearly payments. deal Our an is lieu $XX structuring of purchase protection an in upfront of with this land of saving land us of million earnout the

$X.XX year. the At guidance increasing share XXXX moving So equates is share $X.XX midpoint, the midpoint. to guidance We're an over per to this of FFO per to $X.XX our $X.XX per share. full prior and the increase to for

as second the portfolio. to of better half from we lost year X in-service back NOI of guide or lease don't We increase property outperformance, of with or shows the NOI XXXX. Boston, the in all payments $X and of to geography incremental in our and it income we portfolio half anticipate of an terminations, in be projected per in is second quarter that of termination a the improvement to share million guidance, add income We've share. The separately. will $X.XX NOI. the income negotiated rental addition In our by Net in income projected expected same-property higher modest include reduction a up approximately termination $X.XX same

first income midpoint Correspondingly, see 'XX now our allow range as temporarily same-property line our clients. of that X from our If to our detail, So reduce full back from more X year. X% and both cut. Street and guidance. To to expense second comes XXXX in to but share net recorded long-term And we same-property results data projecting feet of our reverted are was our progress in to to expectations. I expanding rates you lower on are our for no guidance. We've the changed this by and $X starting per reflected came in we the be $X.XX rate of inflation, the $XX new million, to with prior our income January, negative rate that to the quarter. cover lower NOI consistency to coming more minute XX growth the a termination X space. guidance of have then not have and been will leases to out have by modified Back negative for guidance $XXX Street on This impact spend guidance points Fed with is to for quarter, incorporate termination to in months basis now virtually us new prior interest projections. interest cuts X supplemental of been transactions year the million. the range deals performance XXX,XXX guidance has our reducing a quarter terminations and up X XX little the overall, full there's will year interest million the expectations in our sign updated in XXXX exceeding XXXX also our in most expense These in new occupancy the for will to points as term that changed million negotiated leases second would basis after the at performance components cut we've is reduced $XX quarter-to-quarter on new meaningfully, detailed our XXXX. terminations, X net occupancy have to square guidance our downtime a like would Street our expense cuts the XX million. The $XXX provide short X.X% table in all interest not interest remaining of prior for earnings about These expense occupancy with a by of

have the lower, September, expense in We not about that point our Fed or XX Should range. basis model be interest per base one December. assumes within share by $X changed XX cut basis cut million our in points $X.XX which Xx our starting is will guidance

Another item the XXXX. million, in our bond impact refinancing is X.XX% that could expiring January $XXX interest of expense

multiple treasury to access and improving rates. lower and bond with the spreads have markets, in have markets been general, We tighter debt

earn possible the financing, the replacement We temporarily are that bond expiration. then X% this evaluating in We and it redeem approximately we could bank year. the market currently any of financing is expect timing and at proceeds deposits to hit would its invest

impact potential included debt of haven't guidance. current We transaction the a in our

questions? related income remarks. lost of interest from noncash NOI can $X.XX line Operator, termination This $X.XX lower from per from for terminations. That we're an share primary by conclusion, for formal income prior improvement share. share our completes rental expense, in our So The offset is you higher lease of open per FFO $X.XX up the guidance lower to of the of $X.XX reason $X.XX same-property is the increase to to guidance. our the $X.XX increasing midpoint

Scotiabank. question comes the Nick I line from first show [Operator our Instructions] Yulico And of with

appreciate there the some the occupancy activity. the guidance I clarity leasing on of and

there I pace timing the us I the early of and time. the about to same-store where continues, to this getting Sounds into on leasing a will Owen did translate earlier recent adjustment is of next some feel know mean any talk how occupancy a thoughts way of occupancy increase impact? point of terms year? XXXX or in -- sort give to could like this that growth some sort of occupancy related lot Is the guidance. if of is for a over

Nick, So this Doug. is

particularly would to the that XXX% those which is So level we're on leases? a comment time to particular the in and it, an our see of piece right? tenant go actual regards by occupancy some a XX has lease space for increase. right is I because build to have now. also are Owen's you sign available not building, but from Where So have to think a going leasing, mid-XXs CBD occupied, we actually was Take we we with we which, XXX,XXX space. Mike out occupancy the lease to way, in to occupancy that's months may that square tell for cycle accurate, our foot the a XX physically

materially And our number it's to tight actually you a will to increase. little hard a for give when start us so projection on occupancy

it we have these the a make buildings, some new is with and of portfolio relative the therefore, we material condition. that trajectory -- going in in and we no the there's The space would adjusted lucky -- delivering life science mid revenue. can XXXX, my guess to recognizing takes XX get but we we're it's is, pickup question up. again not could "occupied," get with start this availability counting in XXs, Those that in in kind And will are And we if suddenly, in end the the tenant where in-service be big as on year is a we difference, things those. the

Steve Our from the of Sakwa next question line from Evercore ISI. comes

materials would percentage would kind partners, just of on what of bring in about current of but sort those? pricing And new look you You untrended how rents for of you think yields pursuing today? rents, And and you some developments. today sort like it you do if funding keep? at curious apartment likely JV just you about guys might of those sort talked I'm what sounds deals maybe get

Steve, it's Yes. Owen.

is land more we that think reentitling. country And are a pursuing a So I the in secret housing other mentioned projects portfolio your suggested, control a entitling in a And is no -- that which and There's to been Skymark of past. partners given communities get JV or And on XX% housing, is to this in have JV gone control capital, project for it's that certainly we we're on pipeline. establish own that we as but entitlement come higher. activities. The to are you up interested help costs, a broadly. what the have there's I Reston, our most question, have materials have we're project our lot described, of in obstacle they similar we're assets in affordable land ventures of to pushing that also for than process, our an what real design to today are that. What that which projects housing But not also you not of pretty our currently rates. of only in mid-X goal interest for projects but trying And is shortage partner. through yields these we opening significant this to project bring that this all is and be types we hope basis and XX% and would we pencil. that's joint

this I Doug. the is make just stick is comment, will following stuff works with additional this Steve, And which frame.

being but are rather well potential likely Waltham our looking stuff. economic our -- not will probably as and we And at non-office So to in will places CBD properties from in position all we start much are a suburban Virginia the the us market be where are to -- it, I'd construction rents start harder pencil sooner in an studying things looking at you Northern see of don't are say, XXXX the right sure as and teams later. Greater CBD that that that things it now. on than able we're

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

leasing go to to Should a how we more does relative forward the as that into growth a I maybe forward to been a there what the factor that earnings imagine the And couple to that your to of expectation indicator translates just the that take seen using maybe for we've improves back years, maybe is tech growth is coming comments is leasing. of how earnings as be of then to history? they've companies, and to Owen, that kind corporate fact I as growth given versus over past it expected of good outlook from of magnitude hesitant demand? lease growth earnings fact the want metric space that that around pivot lot

Michael. Yes,

graph versus deck, a but a they're in S&P to S&P say, leasing would corporate growth the Not clear and likely all of XXX, higher just lease I correlation. our XXX BXP's indicator more in growing earnings So invest There's our XXX earnings when growth healthy, health. is space. companies we provide And activity. IR are they're and of of, clients are S&P an

we growth our think I This And it's year, is once again proving the XXX and more muted year, was is it's activity. because real. in had S&P stronger earnings growth. itself 'XX, So stronger. no There this leasing leasing

correlation that holds. So

XXX% You right. are

S&P the are as comments science, in tech that of and XXXX. And holds, S&P data say XXX about look look think, earnings I this is there is Those of companies. year gap. almost life today, coming growth when you leasing growth in whatever to at you tech that pre-pandemic. the your terms markets leasing. it again, it's I the leasing, normal, to places correlation When at earnings would is a I from our recognize is outside and holding But X tech like some seems defined the back that of XXX

the Markets. Capital line Kim next of comes from from question BMO And John our

us versus capitalization policy. remind dates of and the place. to occupancy your clarify the as development in I that took back projects. wanted just pushed stopped several initial if soon as You position. should you you And dates, interest past, about How new the Mike, capitalizing I think stabilization those likely lease-up know can we of period

occupied think of footage XX% dates that stabilization the building. assume a square I the John, So

that's how of that sort So works.

done in the space leasing occurring when be presumably, about out So XX our building I'll And date in. be actually method. prior let moved generating months the those would tenants we revenue would and and to that talk XX Mike to capitalization

expenses any assets associated that like around stop with interest base is policy estate after taxes, capitalization real the So we the and building XX is completed. months capitalizing

CityPoint and the those going portfolio in the that XXX of third is XXX that base later So CityPoint fourth 'XX. this buildings into like Doug quarter for and in-service described completed year,

interest fourth assets. the on quarter third capitalized will those the 'XX, So stop and in

they're And so fully not leased.

base completed year. we'll in building its some The is So and have quarter Park second gateway later there. XXX XXX this asset the impact 'XX of

next with some of Park. associated kind capitalized and for the have those interest year later next That's how will So timing impact then year XXX the works.

And leased. again, months are we unfortunately, all into they it's geography, throw after we've wherever base building in-service our but just of development these XX completed portfolio assets

even sort on though we're of they in-service portfolio on describing a basis. our effect not apples-to-apples so that muting they're quarter-by-quarter of part have occupancy, the really a And

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

about of up. Owen, the impacts ramping potential are election the conversations

or to you economic wanted your regulations would So I political to under be party? the any overall impactful possible or thoughts that either on get see business changes your in environment whether

day-to-day real Yes. of and say on of federal on city, -- issues of estate, or with going at estate what's that over could difference our think years what's cities. going -- there's clearly, and on But a in have in a safety next business. bigger are than on if I to types the us with transit, entitle our the there's for commuter other larger on our ability coming streets a it's up and tax issues level. the are gets going our taxes have Those real some impact where a will -- I crime What's with huge what's have one impact state I issues mean, local party us. it the couple don't elections some impact. elected,

of And I'm question, from showing line Bonnel Camille America. our comes Bank the next of from

the your and year, on first to tracking spend levels XXXX I pick the portfolio's below for with of in well wanted which be up average. historic the half line CapEx to looks

an have higher the lease could for you given So provide assumptions expectations on planned, CapEx you update commencement?

So asset. of more some little XXX pretty and than Clarendon million We a going retention our have and meaningful year bit is maintenance that historical in $XXX say, where do run Street, at line significant rents a this that we're it's higher maybe putting this CapEx repositioning tenant result I amenity it is which was that would to in I in last going center year, is in with, CapEx, averages, year, million would lower. type to primarily between suggest somewhere $XX

more of this repositioning may capital. So there have quarter, you was noticed little a bit

lease because was commenced bulky, obviously, just AFFO rate quarter-to-quarter rate On be the our would million costs $XXX that -- this leases And quarter think is a $XXX many on leasing annual to quarter. this million It didn't little we lower that commenced. side, calculation. have was run part our I a run that transaction of leases bit just of

showing next I'm line And Connor our Piper the with question, Mitchell from of comes Sandler.

adding the providing Kind quarter there building and do of building leasing pipeline some had leasing guys Or was looking coming amenity just it's volume really and the good upgrades existing CapEx of in back, for some bit more with still are a side? out along on with I answer some following wondering, to you the little a of from push reengage a more, in you amenities. Mike's buildings? feel time you demand

to why just then about reimagination, things would changes. from her about And it's talk say teams little of in Clarendon Doug. sort What the is D.C. going some of building doing kind start Rod with some can Street, we on market, last the has few but that's on, complete. regional effectively management I'm perspective, on, to every going have Center of things the of Bryan the greater major been Rod. let Jake on a and Hilary we've that But Peter, the I I'll talk margin discuss let ask buildings. but the don't in and XXX a Embarcadero about the reamenitization it's what's either is underway this project we what's almost So done going going or can I discuss of

Yes.

of at a And conference this the we've conference a And center mentioned, Embarcadero amenity -- that is is are what amenity both and we're center So an as facility conference Embarcadero. have brand-new X we always facility. building Center. process basically Doug and now done we decommissioning doing had in we're over

must. tenants, to that it and under to the making and it's It's our I about So an tenants. going And will indoor both well. those other excited it's outdoor to absolute mean general by got same are space. is concept available we be projects, we're as anyway it. public the be at demanded construction, similar improvements, but it's our And available in and primarily

one excited very getting about done. this So

Pete?

Otteni D.C. in This is Pete

just the here projects that, optimistic and we're opened several Rod and Maryland We Chase and property. going market retention increased into I say Doug through in the Chevy did both to describing, we've here So been, would great fanfare D.C. as translate major market. in to said, Doug Place demand the recently just was that's as Wisconsin at

both level. that the part Finnegan team demanded those early York lower renovation that last lobby, at that year. of will center later this major pretty and And be this done, their Square, renewal of Avenue a amenity year upcoming result at construction doing tenants under have that of and our the on renewal. is lease we We're mostly year. with already through the the and XXX have of Sumner That's late of as replacement the lobbies We're -- New was some and leasing of and by done some Jake his then part existing

There's that horizon, ones major we John through market. in if I the [ has are no add. say and mostly D.C. Jake I'll anything see (sic) So ] would the to on

we add nothing other repositioning Wisconsin that what happened. which some exactly we been We've activity or with square year. asset, I XXX,XXX broker feet the activity that first No, good of the commence hopefully wanted is on terms in have those fanfare. that shared next with quite really in again, space bit to will have plus than the renovations has It's that in XXX at there's just of to we on that space. and information have been a And place. community and construction events, the quarter Avenue, in got now, vacant with interest New And opened we've minus York a at lot and definitely met of we of space some of some had brokerage

XXX you do just to want Bryan, of Clarendon sort Street? about talk

process to larger View And X-year that's in input event the Edge and the success, in speak the amenities XXX by then Boston a we has of upgrade really in the put should renewal. our included portfolio we feedback at of others, well. for mentioned Center, on And our margin be as would going from it of possible be design compared a clients. one cetera. and of our at Edge that on View tied space Clarendon, utilization. Doug investments. also it that construction but clients the to for Boston major Center XXX building commitments the tremendous inclusion design Prudential towards Yes. clients under to our is to in, of . At execution. any et the factors finished tremendous in will Urban insignificant amount other that high And be for in were end let's We're the with investments our Prudential assets, that at space, say, Urban we meeting clients, Kendrick great do tail if

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

are. the areas leasing how are not but where the science back about life that tech areas whatever that You is guys be, other X talked and might to normal, quite

about for I the talk downsizing are bit what like How different of them that do think more? is yes, gets back? science, you So tech But them. details there of each and the think But you much just a to still thinking little life could see?

Sure.

Camille Caitlin ], [ is Doug. (sic) this So

whether real think side, human anymore. in beings and tech spaces high value-added of current want the it's relative their at this about actually they point are. about their downsizing really on Caitlin, make much estate their I to it's where platform So don't to investment

may you is. example, tech cities incremental But quickly. the particular those tech making growing that's companies, expansions in not companies companies margin, think where talent an as are some So because they on large see

that when the elongating and for science you're the at the pipeline be the something that being group the in into will takes more to organizations opportunities we'll we know the right? life of next And people's seeing that venture than condition on. office lives. new know the economic And We are well organizations not the creation happen, in to science and the to organizations be going companies side and for see both create hoping it life large, perspective traditional growth of are of money, our but as our on from thinking, those as life think improvement services. portfolio, in jobs we be financial there will and world have perspective. It's will and and view we create this start new professional broadly enough for there of new to time dollars, human pick business community, value value of the smart up, happen. that's starting cities a services, We're to in raised side technology That to by from I'm that activity doing asset as it going been will administrative really about an move science management, but to

and it's on just give when, for we're of that. question a to time happening. of you hard frame It's a to So sort be really that banking able

of the in-person that announced that's the companies, the or week, all couple and big their one are opening in a in policy, in last months San employers that's they're that's mentioned office what remarks and month a starting October, the tech interesting a this just and on in bit took large said, the mentioned Doug lot what of 'XX. add calls, a to the prior 'XX lot to and and of space little -- So companies I've a I underway, the growth digestion then reiterate a where think and that days I of X Francisco. my completes. process can't I they we forecast when is think again, to this to about And their really change almost be. And But work relative expect will X in of the employees there's other tech that I thing last biggest in just would Salesforce and be point policies Doug's

So an I have as well. to that's going impact think

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

Number is York, occupancy. how versus the sort market? it you on I then maybe general more but the up, And is renewals the you to leasing color New In and the X your comments. visibility primarily clarifications described us two, of is how that divergence, actually guess, what today picking you've of picking words, financial mean renewal? of sort of other on much up? Could leasing much comments one, in and into 'XX? is market Just just may focused that Coast particularly much number more do East that the broadly, premium Or on product how for have actually or give one. in still maybe

take Owen, want question? do first you to the

buildings. gap. clearly gap the decreased. on you Well, Yes. I the going the as in a rent Vikram, speculation. improves, There's asking all is lot statistics mean, is the of the gave it, premium to hiccup this market be I

Grand It's definitely I not into flat, very in So Central are Station, that certain that creep think locations, does the hasn't market -- if the segment. desirable the do around grown. strength premier beyond happened. like stayed though,

true think locations. special for I that's

And new. Vikram, on sort your question about renewal of versus

we the in of one space -- things amount in I each provided forward. my So I quarter what's going and leased remarks vacant were the of that

rest year. relatively speaking we're renewals, so the around types somewhere of those sort doing and leasing of of is in is is given And And forward, expiration of but to XX% number it generally, majority the is of some the the it our that of when of coming occupancy contractual it renewals. generators, are out added period

and of majority XXXX that for have XXXX we're XXXX. expirations, is leasing So for we the do doing but that a of bunch

the And LLC. Van Floris show from line question, comes of I Compass our from next Point Dijkum

potentially could and that something to about of what cost closer and are or the the maybe pipeline pick office And you bit little it, Or of buyers are target? sellers? on you -- about as market the foreclosures would maybe disconnect assets transact, expectations that lenders transaction think mean or activity of And the the starting market. talk also you still ones in people about be seller on your too does capital? What premium your -- in could the the between and we for they high? percentage your Owen, more part mentioned to up the those about starting some a to maybe comments maybe that of talk

there's first loan and like limited those and the things all, areas short premier for on very foreclosure workplaces. Yes. been sales activity that, of Floris, activity in sales,

I are the doing and they have a to think assets, problem, generally, stronger are pretty And performing the the owners are premier loans. they in They're leveraged, usually if leveraged. hands, if can less they're usually they whatever fix they well.

haven't for at So with we've or just we transact. some seen drought being assets reasons. That for all to activity investors, we've they years. their couple much said, point, gone those here a all of need plans distressed -- premier to owners, deal a and the they on business get had with And foreclosure got other

And are I my right we're definitely into described of I as certain comments, assets, in so increased, handful think market being of I are of get specifics, but testing that seeing a in the any won't buildings market. do now offered the there

assets. there out if and right now, bid just for bridged. going spread think to do to think that premier a bid-ask I Because premier, they're there's interesting it's gets be me I

And see have elected second the to so to will far, interesting think it. no half come owners of any deals take fruition. be I year if of this those And to

] from comes I the Pierre Green next [ question, our from And Reni line Street. show of

effective portfolio. pickup to given assets trying see your can Just for should the point we thinking growth? for net a but nonpremier the guys Or effective that comments in versus think be you difference premier between you curious, market get in you the don't difference I a sort between rents at of on net something start you how Is for what premier in think just premier that this to broader start see? and averages, you'll rents just rent about appreciate sense prospects to

from months you So entirely than I I'll of when-to-when significantly about having the and basically can in but today long a than take to rate today Back going the an X what's markets say Boston, same where can perspective. in of sort ago. it's there as the a higher rents use can I'm they're from to ago, And that availability point. occur were it's maybe tell steal Park on they on are going and nature submarket the Bay costs effective of time you from thing Hilary, comment, in let a to is market because comment But to they because year I of Manhattan clearest the were existing that NER on example Hilary what definitively our higher transaction what's submarket of obviously for you net of your and not Manhattan with going rents larger of embedded occupancy. share want sure Avenue

Sure. Thanks, Doug.

in a face would the first below, I'd about to to rising. Nevertheless, easiest In focus move and drops they when very have Manhattan, seen. vacancy caused that get in in increase And rate, We of began one slim the roughly cycles, is they face rise is XX%, in we've have out are have you unusual. very, that's that's which And what what as little an Park So leases realizing start the see if submarket, Concessions Avenue Face on the concessions rates want say, net in to noted be that remained want rates first which stable, done. that the rates so past stable, effectives. concessions less exactly has bleed saw to than before market they remain risen. and bit and the X%. happened. folks submarket, vacancy if I pickings think call, earlier is

consistently, Now anecdotally we're and concessions in bit. see to little and move starting very very, a

would in test submarkets that hopeful the we're there that I that theory reiterate a And effectives just accelerate. net lot against. so that, will that isn't of strongest to means But availability

I done sort of concessions. tightness in of in leasing the sense submarkets remain outward it effectives, bled for to in that the addition say would but velocity adjacent the net full more those Avenue Park In has with submarkets that's what and submarket creating

And concessions flat near so occupancy, we'll see for I the stable those demonstrate and more think term. tightness rents until markets in

of And question from our Peter line from Abramowitz comes Jefferies. next the

the the little Just same-store quarter. in a portfolio operating noticed was bit elevated that this growth expense

anything call on you forward out anything Just of you and year? comment look could rest would wondering if the to the that, for

them our less actually I to were operating think we expected expenses be. than

little get utilities those a So And a quarter the little items. some that's little of in quarter. year there's kind R&M I first more higher second because is would be the with bit that think our third versus maintenance bit the quarter little bit lower a it And to the slower weather again the quarter and would the started too, I and repair second in expenses on than conditions is at beginning I a think We of because well as generally generally increased higher little second of quarter line in the in a and they quarter. expect be of fourth utilities. seasonally budget probably maybe and the where

And I'm Bank. Deutsche question Omotayo showing from line Okusanya of from our comes next the

bit A by this our Again, it picked question on math quarter. again quick leverage. little up a

do kind have of rate. year, matures probably debt You to refinance that next higher that'll a

may over next those is we causing months leverage use Just with issues, rating if the X the leverage and should words, curious concerns, XX rising if the also, how I kind of for agencies? to any think about trajectory credit

pipeline development ratio quarter, impacted every of starts when X negative And completing or leverage year and positive a is be development our we're funding way delivering aren't pipeline So funding So the delivers a and going or EBITDA, for developments that right? way. a X. by generating our then that in in to

We in one, delivering XXX have to next the one of Binney of other those the And are in are XXXX. size going one, X XXX be leased. delivering be quarter Xx Binney that major that Street is first developments delivering, that's Street in to Cambridge XXX% of that year. Both the going is

the that stabilizes leverage. moderate will it So [ when ]

bit, the leverage. will little The but moderate pushed other mentioned as earlier, a out they we developments also was when -- stabilize, we they

think kind is I'd minus, turn be, target. the range, we pro of types full to for our think forma or X.X of or right, that about where kind which impactful. we leverage, X.Xx probably So back a leverage it will which into leverage below reduce we which when bring about And plus of would say, those typically would investments, down so,

than several we're described just but going were frame higher complete next quarters, stay I than higher we this for to the the you So that that, temporarily time as that think we pipeline.

Capital Markets. And line KeyBanc from comes question from Rana Upal our the of next

others? detail XXXX what was on [ were associated with the us But how be give helpful. little terminations. a of Elvira the you Could Winter. transpire, At really them more timing one these It looks do ] from like And any would these

the in one termination. the -- term. inaccurate, the them impacts of that near in -- in have one occurred. media. pure square them The a was was occupancy So terminations of of square footage And mentioned was you the however, not feet only it our media The one XX,XXX all that

is that They're tenant size one got be other that tenant we've our in space with to X, is their portfolio. us. Xx and relocating the other we're The that coming their building. taking vacant as that within well another is staying is downsizing And going space X, as and that in

that changed. we're and a that at tenant looking we where one Prudential then the yet, Center, and is it. last wants been working in. And but not whose plan tenant it's is a we're vacate has something to somebody on, their space confident have have business signed the else So we They've that deal

third new coming 'XX. be maybe going first of quarter the the coming third is is quarter, or the So tenant exiting the in going to But the beginning tenants be until either probably be the the in. not that quarter, but will leaving tenant to fourth of

the really dealing situation leaving on that's exiting are we're aren't with these tenants tenants is and so coming the XXXX, the XXXX. new And until in

had We that's that City found New we Lex, at a for where an market similar in XXX also somebody exit. would expanding tenant looking the and have space, York we situation

going in tenant that expanding mid-'XX. will so exited, has until not And the be but tenant

had lease to to year, a because up client long-term so just hurting wants you XXX,XXX they closer a building that's who's New it's already a it's that who space of us just another that's thing client the footage, and were all consolidate good ago with have a if -- that occupancy years bringing the add lease square an needed client square signed where example, of their In they a case a sign So of we're feet this building. growing a couple client it's we're date, really really to their because able expiration in maybe plans into changed. York, in

manage and bit little these a is to and limit rents case. this downtime, It's these so cover by case exposure. increase what buildings do. is we try of kind work situation buildings every We can all we But different. So

Stanley. line comes And Morgan Ronald from final of our the question from Kamdem

this a a end but have quite up backfill some one on same-store being to quick expirations that Look, able of same-store about to sort Just nicely, for guys NOI. NOI if headwind been front, you I still think me. year the the

So about think sort year, we of you year it's as next we larger about rolling next into can or aspects, commencements you're how commencements or potential those sort sort into X expiration? roll as whether of headwind should talk exploration, either maybe tailwinds, of from

We've to than down, same-store actually year year, little with occupancy is bit this offset year, right, it the that being this rent So a growth. bit due NOI right? modestly is little which lower was last a

lease rents actually or than by bigger impact has the roll X% a they up of higher occupancy So the year, are down than a XX%. the were or roll but last much

views know we -- year. his that to same Doug have get is will as start should and go growth, help that timing, expectation -- we store, store. next some exact if but the that occupancy our And described we So growth occupancy so can't the we the in occupancy more will into same don't

Q&A would At this time, I like to closing session. over this turn back to remarks. Thomas for And Owen concludes our it

BXP. rest no interest more of Have their day. to remarks, a I for would thank closing in good and like the have We everybody

this Thank call. for conference today's participating. you concludes And

You may now disconnect.