Boston Properties (BXP) 30 Oct 242024 Q3 Earnings call transcript

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

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

to quarter welcome call. earnings and morning, BXP's XXXX third conference Good press were X-K. on package and last The supplemental furnished distributed release night and 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 made available receive of for this during this to available not Act. inform not you Securities website time, our statements you copy, which these call of forward-looking If are that at we Litigation conference months. At documents would are this a certain in historical, statements like section investors.bxp.com. call, within A the Reform constitute may the meaning be Private

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

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

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

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

to ask those and X X yourself call only participating of please in you to the We limit that the Q&A portion of question.

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

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

everyone. and morning, Helen, good you, Thank

and the of continued capital recovery. Our resilience third performance and property BXP's demonstrated evidence in market quarter provided

was for third line $X.XX quarter. share our above FFO in consensus forecast the with market Our and per

quarters term office the greater X achieved million than past XXXX, Weighted the quarter average of at of last levels more quarters leasing the leases quarter, X remained we our for for And completed over this third square the volume leasing quarter of XX% years. long feet first year. We was X% X.X of 'XX. in than signed in first X.X

receive just industry-leading awards of to NAREIT named Kendrick our Impact quarter, And sustainable In BXP for Sustainable we Time in Building sustainability. most the A work for BXP world's Design last and our companies, the continue XXX redevelopment project. Award awarded Magazine and one Statista the

Now a moving environment. to markets BXP's to We the rates, corporate that operating return are interest tailwind forces the performance. for important favor, for valuation working believe economic our and the of market outperformance and office in as private in being most all serving public workplaces, the behavior, and earnings, premier BXP, currently

possibly cut X recent the additional reductions basis XX The Federal at has most points in Reserve Fed more signaled and meeting for in cuts 'XX XX point funds basis rate and XXXX. September the its is The funds stronger cuts. released has growth previously GDP into inflation and timing most recently the signaled question economic economy put data additional magnitude rate Fed and than believed and of

BXP's how as real The coming performance resolves corporate is earnings activity. for given important another well matter are are rates growth, for as interest correlation short-term No positive leasing very debate which facts estate this driver its to down, valuations, itself.

of XXXX. in After as corporate earnings, to XXXX, remaining flat all health, grow are for proxy S&P expected X.X% a for XXX

hire this year. and before, volumes to mentioned earnings much companies leasing demonstrated growing likely are in with As more space growth invest, BXP's procure as

in We decision-making the do our of not evidence recession of see clients. a looming

financing, rate and market long-term been more less shorter-term rates interest than is recently by particularly becoming smaller behavior ones, are forces use driven it expensive. true have floating many that which corporations, While rising, Fed

staff, all that to days starting X. including Return-to-office behaviors office a support improving the Amazon the has workers, are to been week is we publicized clearly requiring return where X December It across operate. cities highly

of could Dell, other be and companies employees. work scale presence, Salesforce, their and Amazon's have for recently future Starbucks decision in-office more policies this technology requirements announced harbinger companies. stringent the Given industry a other for

of this surveyed X year X,XXX in-person work survey from within be The just the training were offices. inadequate X past for and productivity, policies. innovation diminished cited at work a increase will completed collaboration, full about CEOs those their KPMG of years, supervision maintaining CEOs of ago. XX% vacant regarding reason companies and younger employees, for a and up cost concerns return-to-office the summer believe XX% of there the

our which BXP in versus competes Direct the Premier of primarily as of CBR's XX% premier markets. are workplaces for square CBD is million versus defined buildings, a feet years space, outperformance. market, premier workplaces XX.X continues million to feet X last over square workplaces broader in material negative sector, segment for absorption the representing total demonstrate net research highest-quality the vacancy workplace X office in a Likewise, been of the market. X.X% XX.X% positive the for X.X broader premier XX.X% the for has

the from market, consistent broader quarters. Asking gap are rents than higher workplaces a prior premier for XX%

in evident portfolio workplaces. where CBD the is CBDs outperformance and located third quarter. are the from predominantly our XX% assets occupied This XX.X% leased of NOI end XX.X% approximately of are premier of comes in assets These BXP's that as

publicly valuation a from real return market, which of XXXX, X first appraisal determined changes generated largely traded based. in daily are perspective, the changes the by a office Lastly, industry, trading, timing public valuation are the estate in companies of XX%. which quarters In lead private

in over by were unleveraged best private values, for NCREIF returns market which While office the same proxy period. X% the the negative private measured market, a the as is Index,

the to current office In markets attempt of private sector, trading in to market market conditions. catch marks public expectations appraisal-based in on other words, still up higher an are based dropping a are while recovery the

in premiums opportunity make investments and private underwrite to increasingly accretive market to As a acquisitions has selective result, that both versus in developments levels. BXP the pre-pandemic yield

in estate capital pickup equity evidence quarter private activity. third Regarding in office markets, a volume the provided of real sales the

interest 'XX, activity for and Specifically, XX% above debt rates, of drivers. the was short-term quarter office greater and sales volume locations, last for of leasing significant assets quarter to access second billion, than the increased XX% U.S. and were certain better third year. Lower financing $X.X the

$X.X at the in relatively been fixed the include CMBS pricing. at in availability Park and of scale a execution at An the a rate of attractive with financing assets Rockefeller XX% Center XX% for examples debt Avenue XXX loan-to-value, a increasing of has Very rate market $XXX CMBS X.X%; recent office important X%. X-year environment of for billion, of X-year million, a refinancing loan-to-value, refinancing fixed change

quarter for Center leasehold X.X% with land the XXX,XXX the District Office rate. a to BXP's Kendall private owner square conveyed A real a to XXX/XXX portfolio building from million estate a Main and interest sales sold $XXX Cambridge leased comparability was past initial in or cap this $X,XXX foot of and owner multi-use fully Street, a science include foot developer. assets square for life

a In a Santa million and Avenue, square a $XXX buyer. new foot a for rate. adviser or manager, fully foot initial XXX,XXX Colorado and A Monica, leased XXXX square office fund square a South, be a for and REIT a $XXX foot private located seller, A Broadway, is and contract was square pension the XXX sold cap family building building cap to million XX,XXX approximately XX% office $X,XXX X.X% the The the initial sold or estimated yield foot a leased $XXX Midtown the in to X.X% is building to upon European is rate. X% office. building sell stabilization. under

pursuing active lenders. We estate owners Moving to acquisitions both in from BXP's allocation capital activities. real remain and

by pipeline encouraged including agreements [ with the but ] sites are pre-leasing and imminent, we activity. new is residential node potential No opportunities Our potential, of growing, are acquisitions, building and near-term developments.

close We are in disposition negotiations non-income-producing over XXXX proceeds. successful, million generate for should X of which, active $XX in if the of and sites,

leased. our our which CityPoint initial XX% we XXX,XXX square leasing Park a located exceeded underwriting, the was in asset market delivered For CityPoint, development XXX softened in into Waltham. pipeline, lab leased, completed our foot building, before the is service Though fully

development opening Center, and of and Reston residential Town Skymark, track leased units having luxury the our The terms the believe at to of tower base schedule. go we are building, well, we to underwriting XX% rents on our XXX-unit in the achieve of of continues at

able deliver been in project our the We square client fully XXX,XXX fourth redevelopment the service Center accelerate into and in of Kendall a completion Street, the XXX foot quarter. in to lab will and have to Binney leased Cambridge,

to to partially intend residential that projects, control several being we on which capital. with venture with for forward are continue land joint we primarily and fund equity push entitled We and designed

Lastly, in submarket north XXX of we vacant and is United feet XXX space broke access Avenue under which, headquarters ground of York City, Terminal's arguably over access Avenue, with on the no is Madison New commute, of square given with south to the one-stop building, and block Grand new of Park States. Grand available X% Central strongest Vanderbilt. blocks phase block the of Madison office Concourse X One X submarket direct located competes JPMorgan's Central XXX,XXX its Madison the

has for Midtown. we When on potential XXX over core project includes been the feet years, the this anchor hope located BXP $X building Grand Madison, a are to interest. working of Central next BXP We direct XX workplace will fully well a and constructive handful ready-to-commence of clients. the state-of-the-art launch Terminal. having sustainability only billion with comprise reminder, where, owns XXX,XXX as as entitled, And in development a conversations complete, which is escalator approximately XX% square into features year, as access

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

intentional the commitment competitors BXP which sheet and as So its with sector. in U.S. premier access capital acquisitions strengths, dispositions. of equity disinvest the our private portfolios clients our decades key A and premier And workplaces quality of in over to several workplaces ready the and highest leverage continues assembled to to in and conclusion, balance from public many one are development, of strong markets. debt the office

resilience benefiting from of interest capital. premier environment workers workplace lower and dividend to very leasing rates, of per positioned to gain continued with to competitive their share outperformance stability in a more the both offices, earnings well well constructive of corporate BXP FFO continue level, we and in assets and pipeline while growing as a returning market clients higher are as and continues a to display cost sector, share growth,

Over to Doug.

morning, Good everybody.

in Owen period, X.XX the 'XX. through have we documentation leases this So leasing square our under of And the of feet our sits at square million feet, signed X.X XX% as Post pipeline higher is QX, noted completed third quarter, than fourth of active second square leases. end million October of 'XX during since that will quarter execute compared the pool feet X.XX over remaining that million of leases feet feet during done quarter. million the most of X.X X, square square post the we XXX,XXX transactions. we We've to executed about If end at year leases. the

feet. Our January 'XX X.X guidance square assumes million

we totaling currently vacant Exclusive have that XX% of transactions also additional involves will X.X of over our activity. pipeline just million in an under XXXX and that the discussion square documentation, our feet About seed space. leases

XX, between keenly our our occupied September and of of There towards has now feet As doubt vacant X.XX is space million No basis on is signed space leases yet and commenced. community looking space. we difference a that XXX analyst leased occupancy. have XXXX the not XXXX square point

guidance for call. occupancy our 'XX our provide will next on We

following inputs own about provide think can you models. the your we However, as

square 'XX QX X.X totaled expirations million 'XX and year feet. Our full

fourth of square XXX,XXX the will, We 'XX, exposure, and have signed on an totaling million feet. feet square we which uncovered leases creates revenue for of XXX,XXX, XXX,XXX square of during that you if recognize X.XX feet quarter will 'XX

and renewals, covers Obviously, of square space involve early square remainder Our expirations additional negotiation set XXX,XXX pipeline vacant in an all feet feet renewals XXX,XXX 'XX. to and after 'XX. of commence of with in of leases 'XX this the currently

X commencing X revenue This next feet, of be about forma leaves million square the portfolio. to the quarters in-service for pro leasing us flat for for

the starting talk you total Additional business this in process we the 'XX, plans to in in of be their the will and next be EVPs regional time. leasing leasing for guidance when basis volumes with 'XX our building embedded our will are of revenue for additive. Each

square the development If foot square sublet Center in XX,XXX years; the feet Corporate Waltham; feet last in Center; X that; service which feet Embarcadero is you're multiphase at of Fifth large out Avenue, square by XXX,XXX building leased Town feet of square will XX% Reston 'XX-'XX to Street 'XX. at own January question which for which firm square Center, Winter Weston Biogen, wondering at Reston leases site often at GSA. we been next about get, Corporate leased law a but is the XXX building X, Center, and and our XX,XXX XXXX the taken XXX,XXX This are XXX,XXX for known is at has on expirations, be we largest

portfolio developments will active materials: Gateway, with have Reston and is to be XXX added also XXX X. that in in that We our Next Park Avenue noted our 'XX availability supplemental in-service South, Phase

are office highest use regional land teams the waiting buildings energy lot for leasing. alternative office in vacant our BXP spending recovery Our be uses best of suburban a includes and for portfolio, may which which pursuing not for a

allow We first and Park Grove repermitting A working buildings units is including are are the site Rockville, on rezoning XXX containing in X and now deep where multifamily process with Hartwell XXX Lexington for a World Office in Avenue townhomes, units. our office Shady for similar Herndon, townhomes. Gate a to XXX public units Virginia, XX underway for phase Maryland, XXX XX multifamily at process in the for and in we

Bay Waltham, being evaluated. land sites Jersey Northern Virginia actively Northern Additional in the Area, New and are

quarter, took X that Virginia. This in we service and in Northern X re-entitle, to out X Waltham will we buildings work of

point that a basis I slight that. quarter partially portfolio, XX our would XX%. XXX CityPoint. up a ending in due QX to our a basis deterioration, occupancy explained XX the addition noted for Owen see in we our at in-service reduction experienced decline point During call, of last development the we only the at With leased to

basis of by CityPoint, spite quarter the which points XXX% We XX XXX fourth in is delivery expect to the XX of available. improve to during

additional This XX% total XX,XXX leasing quarter XX than square clients feet York, feet. XXX,XXX in and the feet square encompassing Boston, on XXX,XXX square feet, with We D.C., XX XX X feet was for and contractions with clients of feet had Activity Ten square in XXX,XXX volumes. completed transactions and XXX,XXX renewals concentrated in expanded Coast. in XXX,XXX we square XXX,XXX we feet. new with lease completed XXX,XXX square square West New our into more Boston totaling

from And financial company of the they contraction Waltham. about quarter came majority They firms. have our portfolio The Back of the from feet a all XX,XXX client the and came in tech significant downsizing vacated. square were this went space XX,XXX. expansion that we The in only Bay re-leased to

the and and which was We experienced West continue to and see in clients Embarcadero D.C., downsizing X Coast firm of quarter. in our on this Center, we renewal downsizing legal a

XX,XXX square feet executed X of and We feet. transaction in only excess over square others X XX,XXX

activity Our leasing this quarter was very granular.

The quarter, our compared costs signed from supplemental, starting this were of that they XX% to during last Boston, mark-to-market the As leases 'XX been cash rents feet, reported about second-generation the or in per relative quarter. New then the the square of executed on feet, and X.X% in leases year coming contribution quarter the leases Coast. 'XX, averaged and cash down XXX,XXX 'XX with was X.X have signed up X%, commenced primary or and mark-to-market X% on transaction to about actually area. West this million or in in may quarter, the run so overall Boston this we on the square in cash on $XX the starting 'XX in-place space York, up XX% of rents the D.C. was XX% previous down The $XX.XX

lots to the while completed, to being and note of takes continue zeitgeist source the time, in-person The transactions by in more process and the improvements the of that with around I of is work translating level the colleagues into time. market. slow, economy greatly vary about would comments the decision-making and activity. state continues of Owen's demand be the incremental also importance are improvement of leasing

are Our provided with market showing organizations submarkets firms the with activity. alternative space. of are we commentary service consistent taking expanding the pretty this asset largest the as in clients rents institutions, circumstances, The 'XX. financial the and have during views quarter consistent absorption And year. this some of during most from and we are concentration Concessions these risen are users law pickup professional in saw managers, quarter, flat

the space. the limited of about growing New availability City, is direct users think if York competing Avenue and So submarket reflection sub-X% we for these a of in Park blocks

Park no expand these buildings, we or on availability Avenue need Lexington. neighbors. possible discuss XXX When to have at XXX their We terminations clients proactively with

space. has quite tenants always find like unable to XXX not that Park been the one first Lex While over to strong Avenue, Park of is markets in the Avenue building are of this, the experience spill

are a in We with building tenant in to a for couple of unable Park its lease that Avenue now floors. current was grow

Motors quarter equity in the expansion building. of the XX,XXX We Our transactions, was another. a of General square during the addition including most client active private the building York New new of completed feet and

other to floor availability to the market of middle decisions. given Our this has tends This at smaller particular building demand been This where foot the XXX firms an plate. slower make we in market amenity refresh. are Madison itself segment square XX,XXX in of to is lend financial

leases by been pretty has Year-to-date, light. tenants technology executed in still Manhattan

We have this at will we current among XXX Fifth technology market, tenants touring South in Avenue. encouraging and seen given the XXX our a availability pickup is availability have Park activity and Avenue at

tenants with negotiation. We to none lease buildings, active progressed a both are in in at conversations have but

was of building BXP XXX Boston in in were well leases the the added all active Virtually industry, portfolio XX% and space. the during as of those as the management leases. Street. square feet in with than asset Clarendon completed alternative more clients most the The entire additional existing clients We quarter XXX,XXX

with new of completed transactions square Boston This clients feet X up made portfolio. for Edge leasing X also was in XXX,XXX our BXP. Urban over and We separate of

investment availability tenant positioned Our of terms both installations. quality portfolio in of new uniquely for and in capital is

life firm, manager. technology came small with demand a office a companies a from requirements, the and few retailer, a Here science national fund

We in in any any new didn't science life our potential clients requirements this execute very display urgency little Life Greater science Boston, development new about leases to continue relocations. quarter. or

larger We on square there and Boston. of have from Year-to-date, but have tours of that users, outside occupancy. handful leases about been the signed in 'XX Cambridge markets some requirements shelf 'XX for had total feet the and XXX,XXX late are a space

and for continues in Our leases growth demand Leasing the region. primarily executed D.C. the our defense industry areas, during X was tenant XX% activity and Reston quarter responsible cybersecurity from contracting. come portfolio to of

a growing square had we Center has quarter, sixfold Reston X,XXX its XXXX double This X firm signed and lease feet grown in Town initial for This years. its client than footage. cyber last more in square the in

One of to clients. BXP's the accommodate in the advantages our of great large our growth Reston holdings of is ability

a requirements and CBD which D.C. good Penn saw of We at XXXX and our leases pickup completed X We clients one in this XXXX smaller Avenue. news. customers with new Capital had quarter, portfolio at another X Connecticut was Gallery, expand,

demand to law by financial or tenant the potential the The dominated product quality, be the existing not legal continues either firm condition. clients condition, district's inventory, industry. to due sector private Many asset's these are of with the satisfied

market There in to traditional lease and in or are is a renewal outlet firm finance be limited relocation law buildings, smaller for micro expirations. appetite traditionally the firm a is tight new requirement, the which amenity-rich, absorption, prefer leading been to these law refurbished the in no has from in resulting lenders While to the firms every construction, which creating top almost case, well-capitalized negative any is market. which opportunities

Avenue late New and XXXX XXX will today. fare and well, at a Penn documentation York we for known XXXX lease expiration actually Penn at in XXXX are availability Our

deals in On as than leasing specialized with seeing West much from the small own in Francisco of their a activity at basis, This 'XX. and a equity, of and advisers. private these for in and venture including legal continues Mission these Francisco market 'XX fund source be XXX managers San year. clients Coast San the the from has There funds act financial hedge did CBD and and perspective. also clients space, non-tech of during it transactions set is managers, The looking the financial its the the of is actively bulk of Tour asset we more center are lots to improved continue to Center. the seeing demand Embarcadero comparative today

square footprint. totaling on we negotiations XXX We availability have still of or have completed X/X number square feet This leases a are Embarcadero the case, X Center, go. the with is existing feet Mission. cover but law downsizing XX,XXX another about potentially In and At will building, firms. of in we at XX,XXX the each a current to relative discussions in relocating to requirement of the

albeit retain We majority space clients, will reductions. the our with of

the sizes are are takes small, new time. so but other adding gaining We occupancy transaction customers,

which Additional continue lease from continue is reductions from demand JPMorgan from acquisition to their lease First organizations expiration of the the for stemming tenants larger upon market, to is emanating space. the AI latest, look additional the mute in Republic, positive that

in During but in the And of the Francisco. still headquarters tenants their announcement market it's Bay. great Mission large the sparse got XXX expansion XXX,XXX requirements are square OpenAI's quarter, at from long-awaited San renewed expansion Airbnb foot Brandon, that technology

Mountain our buildings and of attractive in improving XXX,XXX is feet activity square tour we product. where about have uniquely View Research vacancy Tenant its R&D

companies quarter. for large photovoltaic building a and We significant kind multistory proposal. building. designed automotive making are sensor, vacant buildings feet health a care an They office We improvement the This flooded issued from of device, a don't in diagnostics last XX,XXX that the are have are device. renewal for a multiple or full is market. from recently These with compete a with a company panel year company, with that some be it car a last completed has square and lease product for medical a

a they but to positive be not we continue our to will properties Mike? in the to of in but year overall demand markets, In may grow, at some and their summary, and lag, these BXP. We a clear continues market market, development continues are respective in highest-quality gain workplaces will to shaping to XXXX is up be better-than-expected absorption leasing lease. share. relative Leasing

I'm the everybody. our comments and earnings to aware XXXX with of and cover plan XXXX. I'll the you morning, few moving well pieces details Excellent. markets, and provide a our then good into third going performance as some debt for changes insight on to as of the of be several the quarter should Thank you, that to Doug, start guidance,

the multiple markets. continue this transactions We quarter completed have debt to to and access strong

we mortgage right SOFR to year our exercised extend This Causeway $XXX secured additional loan million our Boston an XXX Street plus XXX quarter, basis at in by for points.

We of the a unsecured to $XXX for also million mature year term for points pricing closing was basis SOFR that loan unsecured at extensions, financing Business into to is extended mortgage mortgage that Park matures XXXX. July and And Monica loan basis XXXX, SOFR in million $XXX scheduled Santa bifurcated million attractive terms. loan $XXX loan. loan points. a We The the million plus X XXX we at will priced X-year be with XXX plus in the X mortgage and reduced at $XXX

significantly leverage The Credit large points less. in meaningful SASB liquidity the compressed, low but SASB AAA have is secured the pricing the nonexistent reopened executions. loans well-leased and XXXs. that with office markets spreads in $XXX in are million most of XXXX. both high-quality, have market, there in or improvement early buildings for financed, are XX% tranches XXXX, The at conduit was excess this of It debt shown spreads for where in for quarter more and markets CMBS which

overall financing liquidity buildings in More improved can strong is of for challenged improved in a tighter. the lease trend significant terms results higher with remains have market be spreads a pricing, AAA conduit mid-XXXs, signal pricing short-weighted into and average recently, sector, This the even though improvement which or vacancy, the leverage. in

take these and extend conditions plan $XXX market part we new million that capital These We of and term. include million development a We XXXX Bethesda our Boston. in have several financings Marriott's X interest our mortgage Hub loan the Causeway our for improved of totaling on of assets. on headquarters advantage the plan, XX% and in to own $XXX building in in mortgages are deals each

million million is August coupon. the in issued an market, late in holding unsecured of January repayment proceeds expiring we at pending bonds $XXX that X.XX% XXXX. $XXX XX-year a the In cash of We're bond

our $X.XX that in not this described bond our account in interest net incremental prior per by share August, in was we reduced As we with expense to FFO our press release guidance issuance issuance for XXXX earnings associated guidance. the

That's our to for earnings for bond results deal. quarter. of operations funds our recent G&A driver from ahead our guidance is lower-than-projected of primary share. $X.XX We quarter the earnings $X.XX as The the midpoint adjusted turning our from beat of per third Now announced behind expenses.

expectations Our portfolio line for in with the quarter. performed our

Doug our pipeline. signed leasing our both and leases in in in described the improvement activity,

fourth between a get into of have to we As XXXX a in the revenue of and revenue and the occupancy due most achieving lease third activity quarters recognition. year, this will lag impact not and the signing

is that surprised should revenue immediate our forecast. in point is aligned Renewals have you late an who is impact, know be portfolio year. our with in not XXXX but we advance, the and that the performance My this generally closely is our renewing included forecast in

$X.XX our new for range for deal, full guidance range FFO our the we're the of to XXXX, dilution our our year midpoint guidance. updated $X.XX of the per narrowing For share. $X.XX bond Adjusted maintains from to

guidance items full of where that consider. in the from provide have will we for in we are a XXXX While should community couple the there a you seen January, XXXX number variations analyst of models

interest XXXX payoff balances utilize of size. Since project our cash we January the and for where we to going next offering year. First expiring rates that is cash $XXX of in interest in lower are been million in the holding same August, bond bond income, have we our

developments. also to We're fund using cash balances our in operating with cash flow combination

holdings cash were in they XXXX. lower our $XXX We approximately be XXXX to expect average than million in

lower will of fair the expense year debt our value interest of expense SOFR impact our rate from next floating to on expect burn-off We be portfolio. lower flat interest the rates and modestly

vacating in Center, his comments. described the Reston be which will Doug project Corporate also We is

will We older out totaling lease X X, when the January taking buildings low-rise feet building be these XXX,XXX square full expires. service XXXX on of

as Town site in mixed-use expect build next square time. to where our entitlements incredibly to we Reston feet create the multifamily and successful X and significant lead value million over incremental of have will This the density on over a commercial increase earnings Center. We phase of residential to

have we development of of Dick's year a Sports contribution our XXX and will Binney we From pipeline, second delivered the quarter quarter. full Street the from this delivering store in House

our have residential the our income development also and where XX%. Skymark incremental will is in of We lease-up completion from Reston, ownership

beat Overall full we quarter strong of maintained our solid and continuation last volumes earnings year. quarter modestly expectations. guidance the year up our and a our a leasing year-to-date We over XX% had with momentum FFO for

can our That questions? open formal remarks. you completes for line Operator, the

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

guess leasing just just what give of Coast, to think markets, for been more markets? improve maybe San suburbs I the that in can portfolio? change a for a dynamic needs bit change drag vacancy well Boston Francisco, kind as on little West I turning to where of more needs What to feel to the sort it's those in you of

of formations of or with to sort private of demand I'll technology public, on particular. and aren't see it give the go their but A give both the a I'll downsizing sort general, we biotech San to retrenching really sort more need being right? and life XXXX, of picture in perspectives then Bryan a say, technology new businesses lot which has back both 'XX, and that jobs not markets, new a to means science of to market the part are and demand we Boston 'XX. and life of capital tech sort from company large generated In ideas go therefore, I statement to come Rod It's into see to companies slight would public. And science. general Francisco of formed. And 'XX, in either of So see let kinds 'XX, be suburbs and, the and, been need need then new of hoping public we able in more been

talk you Francisco, Rod, Waltham. then of San So can and CBD sort of the talk about can about Brian

picked certainly. to I to at needs what comment Nick. demand that least Thanks, up think in Doug's Yes. just San the add I happen, has Francisco, would

sectors out the technology that multiple still and got in traditional we've heard, are dominate, companies you tenants there's as market. the from activity but So plenty good of

would of see happen the that with is best to been to the going space, say but of be about spoken There's sublease feet needs still an us buildings for. burn-off what in changes a that some space. sublease has think going compete overhang. sublease is some difficult. before That is of there, some square There's to space the you're availability. I out meaningful I But to still X.X causing million still which that's statistics are

be vacancy see So in our and buildings, happening. think assembly need better up, going spaces particularly those in some I direct of leased you're the before some changes to to is which

it's been couple the So of happening last years. for

an total off, of excellent surprise, In Boston, I'd at. job Doug say, where the did underwriting first no market we're

in then I it, because Road, Ring those before, was different. our say to corridor say, So as call Route you this that X and than, Edge, Urban heard at relook the and encourage Edge between would things is the much spot the I'd on we and with is XXX the much Urban on. Pike particular, I-XX say let's PX us you've different

for themes differences. us drastic is The

then drastic the all today, a between the other rates. say, leadership suburbs in between PX about a activity drastic in space has There's and, let's rest product and difference CityPoint, And the else there's corridor is our rental the difference product. of anything So talked our premier and the also at terms market. of that the

a that amount there's space CityPoint tremendous XXX, that CityPoint, office XX the But these of now the And And at that the is different. premier then that CityPoint much we're biggest markets it's things. between seeing. is XXX, that's drastic between includes product XX also difference years Reston, differences important is cluster dragging we over and that And XX of amenities. to which vintage, note old. product difference see There's And location. is what down in XX and

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

there. guess, XXX you some and But of disappointment I of mentioned the Park. XXX Owen, also you're of about places in doing happening Madison you that leasing like the the not seeing sort talked work

move the that the has would the you thinking pre-leasing development like? light XXX Madison of So you to fact take that been is, some than are I kind how question and slower up lease of you risks the forward guess at in of about to the

Yes.

question. that it's I think answer XXnd and your Steve, legal Hilary. strong, to to of it big is services turn and picture financial services, going very is north access I'm The Street over market, primarily to to a the with particularly Grand Central.

over go Hilary. Doug with much But described. issues turn to tech-driven more that You Street, south let of XXnd this the me

has a completed in leasing said, several that Street, well XXnd proper, Owen. meaning there the have echo large sizable I of third what just I add end you, quarter. been would as and post the in that to Midtown printed Steve, of the lease Owen that as would transactions north Thank very quarter

Ares lease. X So feet. XXX,XXX signed Bloomberg square XXX,XXX a lease million foot square feet. Farr for signed a Willkie signed renewal for square a

and All all these of at proper in leases they're scale. were Midtown

client marketplace. is demand question And we're think a it's demand of workplace tenants that in right build. planning larger there with So matching just the from profile the to I the premier

market, Very in different media South. The by alluded Midtown is and tenancy. tech as proposition Owen to, dominated

to leasing demand jobs Midtown simply and more way tenant-based, in not more are Midtown the tech in But proper. that traditional that finance space to the poke media they have some have continues very available. the adding it would there's clients support space that that and industries the see of are high-quality I from bulk and We little as around in say out been starting traditional and figuring South Midtown be

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

few feet Trying of the what's puts the building helpful million quarters, of next the X be day, to of commencements next forward. square you you the very with leases But signed end figure set takes X need to out quarters and at to the in over on flat. the blocks the next over mentioned trajectory Doug, for quarters. remain occupancy occupancy going gave

pace And square of that This feet I'm how on leases. how year, is. commencing realistic X.X And much wondering million is that to sign of you're this year?

I the actual how number terms things can't answer were much your latter commenced. question because the in of that I this know all has year, signed don't

square would will million minimum, that XXXX at feet that that at and revenue of are, point, XXXX, we so our a have X-plus in I leases will this will sign be occupancy be We optimistic flat. commencing say,

we're will we through moment. to when giving the our guidance going go be we're for see process at EVPs, planning better some I'm than that opportunities our hoping with XXXX not that that. again, But

show the I Securities. of question from our And comes line America next Spector Jeffrey Bank of from

it's know But presence such know of I important you smaller question that the back. is I year, and in on already, our back skepticism the West return-to-office did an not topic, mandates, using it's there. Coast, hearing, when tour, it Just there lot given just and but discussed they're tech, over in latest people the stick we know we I particular, kept bring tech. earlier a the

Owen, some little And so Francisco. I talked San that challenges about a you about talked bit. Doug, know, of the you in

it's there Are tech several to York truly comparing just New for need learned out are going Coast really dynamics, West to figure we do and New take City? Coast? West firms really just lessons from space to stop Or needs? years to York their different

business on cities business and New I is cultural the West community Coast differentiation. community Boston. answer is there's there a a do think difference York in the and my And Jeff, the like So between

the company people I days difference any of the demands of come company's in differentiation, a any that space However, perspective. It of in their terms utilization from will don't believe, particular number result work. to may reduce

are we of the to will in month no we after is years, associates more number us pickup to be continual said, West more months over a we our the we see so next of been time. present I be and saying the and a organizations month, have believe Coast. lot Owen longer working as doing seeing, of more need for aggressive about And asking whatever

the a large scale the in and clearly, we and said need of that have industry that sector means we economy intelligence the top that need from the talent an need relative in are to our dominate perspective. space. larger required do pickup will are culture speed out the be work we needing different to I Rod, "on hope have companies the of And a artificial to would be that's all starts the other productivity. we space see to as And involved may to that a you there, in And which perspective to winner" responding of people companies even

down they in And the it tracking lobby, have that very kind up. have are feel if getting at agree. there would And back were perspective. today can were And don't I And picked a I particular, of X, they of that of seems our closely sitting building data when office. their it the team has completely instituted -- as Salesforce, building. tell a policy that you different you October year different I a vibe in in did to you people that you in with than ago. and you that's

X lots. And it And Wednesday, last then system, That in in parking up is hasn't few station rail on go coming BART to, filling cars very is the I third live, days for Thursday. basic there's which lot And had happened the the most that the lot our which from which East system, Tuesday, light years. few I one was distant before. where other small is Bay, that I'm the train anecdote, train

going somewhere, going into city. they're they're So the

shift. I And are a we seeing so think

And of back in took been done Madison branches XXXX. just in again, add up to at and them But Jeff, are both Seattle, cases floor the their an technology they -- other pandemic, in additional gave space early thing. and anecdotal. of to more leases companies that return Center. when policy needed And Center I'd work, during have at one changed this these relative space Both X we've very is from Madison

to suggest how We the know not are going back said to have for demand and technology are they're have going there they if don't. need does we everyone of any to don't that comes people. we that people want start West these is that going companies our So people "stick" firing in in space business organizations clearly Coast to But the the that work. space the have to those and on

JPMorgan. our the of from show And next from Anthony comes I Paolone line question

alluding to maybe private markets to comments invest. opportunities markets, mentioned leading your in Owen, you public

sense might be what external give XXXX? think you or if to can we maybe make about on or think might being shown? getting something capital And us start like think see on XXX where to you as you BXP's in So you growth opportunities you really cost maybe where a you investment should Madison versus

yes, BXP's cap Yes. in today mid, prices share call at look-through rate the mid-Xs. current it,

our although In then they're terms bit think development which that's a feels And a and over leasing at I the in place, the target. And it's lease certainly status the premier high couple that. were few materially little the the yields in last least X% of on all of rate in again, stabilized quarter, yields going this And to pandemic, remarks. me is been before basis. to my But things. to on I it kind on like segment, deals a those ground have done depends higher workplace in provided New there of very be X%. all were X% development than today, York, bid about there And acquisitions, and types cap

So is. that's where market the

accepting CMBS terms that other could that there in transactions, described. many market, that's transaction the the activity of takers is but sellers change. I and think of quarters in I why probably go availability In up been coming that been of a that. also will particularly the price because haven't clearly words, there In there more which are financing, of haven't lot not acquisitions,

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

a along So markets in you about Seattle. you've your you given those been whether now? on those operating are grow think in and environment, tougher opportunities pretty just you'll of focus L.A. healthier whether changed same the about and investment transparent that you Or the talk are efforts little like guess, do past, seeing any all to you guys at those desire most grow appetite markets? interesting acquisition just entered bit has recently, in markets your in can I that lines, to have markets guys your some the

Yes.

we are down a X markets places the Reston, have we that the establish in with operate which Waltham in, like some, couple a outside of top strategy that Our perimeter, cases is including to and CBD.

So that's for the top-down strategy.

We're bottoms can on that available? have the teams what actually we in, best terms those return investments invest What for find? What's opportunistic. What we it's of going execute up. to our opportunities. In can and generate? look We're risk

contributions our opportunistic certainly that to but various the come I from be we described. look the within deals at overall way regions where perimeter do in we to the So we result, want the

say York the at I'll or there on a opportunities you're say Reston in thing they're last this New are underwrite. looking is in area, The building for West, the to are in When challenging harder have but example, because what what assets, clearly the of a Boston, in the to rents, what on view the should types can West, we Whereas expect? leasing for easier it's particularly the velocity that's leasing slower. more some be, is or

but do to or suggesting not deals won't underwrite. try they're I'm we harder West, the in to do So

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

Bain I'm you in they were curious and XXX Dartmouth. you've color potential the them for maybe moving not renewal a a Back whether Boston there in just any over in got candidate potential would Bay, or the if need that you maybe Did average on development? development of give any term helpful. to the justify new just rents lease weighted to more be color terms or of commitment Just can

we sort and Owen of recently And Back existing construction both can the on building land. to foot probably comment rents to higher a you rent that neighborhood rents that expectations, in going not if described financial that or the than of to in somewhere value want $X,XXX that district Bain's a $X,XXX new delivered construction you under buildings say development the today whether is a Bay. and not decision-making the I'm will need command achievable what for our return, square about to materially So in level and in include process depending it Suffice of was. create cost a new the in a Boston that are currently

development doesn't at moment that rents timing existing And to the relative think where for so really Boston the pencil I in new are.

part in it's we wanting Street. nonexistent at Back from Now of and in tenants softening is over some but not new happen down, there some lending from future, point cost in at some of portfolio and if XXX and XXX, to about the inputs our XXXX. start to the Bay conversation building a X%, in to that some hope the points could the the point, go basis the over, SOFR probably comes sort building number building, to the calculus go of to building of different curve that conditions to to Dartmouth XXX with X.X% of at goes a there's XXX And

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

market. Just a question on the D.C.

in echoes on we what's saw You and in guys certainly down that made earlier some month. positive what were the market on going D.C. when we comments

looking Just about market that rents, think the as trying had that especially over twofold. One, those down? in rolling D.C., rolling see directionally, you are past you has in up, rents time tough a sense do rolling to the at district, the given this a Just decade. get

to just two, the are Or willing willingness, do the development? for themselves tenants buildings the now? necessary to there And as trying this you that a have you really is cram into right see existing then market pay new rents

Yes.

part. going the question. the I'm Jake Alex, part, the to let for first answer thanks I'll second and So answer then Stroman

of leases generally, XX we years Columbia, XX X% between at somewhere that a District has minimum XX the in and those and So of sign bump. lease are years. every And annual a X.XX% to generally

rents we -- to with have it on D.C. roll the rent a like in And a if rents, up impossible so where is started those almost that compound you building.

let Jake how might sort new of new the describe in the impact might where Jake? However, us. what for might market sort and opportunity and buildings rents of I'll be be for that

and prospects to for alluded in and are active the Alex. And legal Yes, are the preeminent product. there driven the and for definitely doubt preeminent opportunities there there's is Alex, are hello, Doug, that well-located, space looking his comments. in sure. demand office no space by the and Doug in high-quality as Look, that exist, better-amenitized district market office industry, Thanks, new, that the

will market on D.C. opportunities. those is the whereby, be in there that believe do we hopefully, able to so opportunities capitalize BXP And

that the would those and what Jake, are where just And rents, be product -- of is? compared for sort to necessary existing

than to existing Yes, probably product XX% quality of XX% trophy in they're the exists sort that market. higher

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

public, to all public the Owen, them a if I are like owners, in by bit of office some light way, a and at this look of them, the earlier you getting but the alluded the grow remarks, of yourselves your not market. externally sort green little from to

this have to You're as But and all lack the consensus in market issue at trading about NAV. transactions a estimated of well. premium you the

of think going -- as that And or fund are timing for potential, activity the occur cost the do potential do you to your need what about forward? up? going are How to to transactions equity transaction how about to catalysts you think pick those

the in mid-Xs. which second it's cap rate I today, Well, Yes. on look-through question answered mentioned I our different -- earlier, but the models, is depending

the the to would going One, a rates think of I is activity, about what help. is I of new lower CMBS which very terms things, is office In market or more phenomenon, which opening several interest things. for spark the one market certainly talked of multiple several sector. constructive, new of

to buyers think I buy that will help liquidity create things.

I So a that's think catalyst.

And the then sales fatigue lastly, side. think, on I

your an office a sell downsize you want exposure, building. you of have strategy, to a particular owner to want asset, You're you an business

capital You do to else. want to something reuse the

forward going try to goals. move those You have some goals. and accomplish point, And to at you're

of forward that So going I part as be think will the well. calculus

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

as aren't refinanced, further inclined any so you consider debt kind could bigger probably those of online, of But of know building in-place to guess, FFO? you I I comments said, can picture, talk you're on giving coming XXXX occupancy improving less quantify development with Or give that trajectory out. guidance, blocks? being you you the any

growth X amount say, And points of more to we meaningful occupancy you're significant continue basis so basis I time. optimistic at pick should so the talking over internally. portfolio, get a believe feet square or every feet, foot, $XX we XX are is around space. that And a you're amount and talking we rent a million is an million XX square foot square -- XXX-plus up times to average of believe markets our and occupancy will of therefore, XX hopefully Caitlin, a stabilized recover, we on times and level will XXX,XXX somewhere we point in a points group both of that some that will about here, square and, That's of XXX gain. about occupancy just

transactions, which believe to accretive, just long-term short, medium- a we described external to lot hopefully Owen short the would be would in certainly on maybe a ability not do basis. some term, the but

we're of So over time. our optimistic the about growth earnings

but at a And is rates coming sort I'm to the of BXP short-term where interest relative are good that it's clear outlier interest down, rates which are, thing. long-term

that expense the of good things, think next interest over floating we come perspective. as us in have we'll down. "fixed feel side. that refinance of we some the of to rate" of And So amount long-term billion our $X.X sort going neutral rate But on because bit about a a that's increase the of little of debt years sort number I be we for have will

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

Could do percentage of then have space? know San us Francisco some currently I sense sublease are your you subleasing but about And color already, others? you you your the what a of about market their across talked what give the on tenants markets?

with. on So the issue City, have we New Coast, off problem clearly that, and a much not markets in then it's are After the Seattle. in really dominated sublease falls sublease is San York it -- in Francisco don't of dramatically. the most the in is West that pretty way and competing biggest in certainly We

portfolio, had like I probably that's Biogen space sublease we've million X been for And time. that market." just overall where X quarters we square Weston not ago, Again, million space. space our to [ there's their long in ] In Bend feet the these had X the sublet "on sublet described transactions has a of River

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those board. We college in with rest have the of of one Virginia

it's at of So sort level. that I'd say

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

Yes.

their like you're XX% sort coming about CEOs the next could conversations? real that guess So you you people know X back a sort week of I days I XX% time or that think see the what on-the-ground something with seeing for couple talked of I of survey over square just years. X been But results calling the just curious what kind folks Coast. are their there with a tenants some to of and you survey the tech like yielding. West have back week, that with your anecdotes days of on gave how office helpful reality some the we the of conversations square

Sure.

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XX% still that in a However, West San we of at Francisco, on of sort Coast level. the are

are are in a people of week. of And days that's the the also all the that, so coming coming are what that markets, us. us X-plus telling in telling sort that's -- buildings in the They're

when identify, general, by card-swipe very coming human can frequently. we coming So you are in, individual that you're a -- doing being in in

And so coming the that going "activity" these of people buildings. I to in in is think more thing it's just those question more are building who creates of sort of a that be the number frequently

I've times employees are remote so work. CEOs not first on add have want very back do to just Doug's They in a to And -- been competitive they're purposes. about data, the to this all, positive calls, mentioned They few and of Yes. prior reluctant office. for

it It's And is and saying, are competitors you know what, this to Amazon start-up many has able allow like work a companies think real compensation, and we notable take will I Remote their they're provide cost. that like think that because but employees. is all similar want, you back. a employees to benefit benefit taking groups a particularly that I we're Salesforce, other come no actions need those for talent. provide, competing those longer companies, you actions benefits all the it's AI And to

It's the not hear slowly dissipate continue from clients, will we I in surprised So I'm to time, issue and over think this by survey. what our importance. CEO

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

New tenants what seeing of is, York the I'm on I in activity front Doug, you was guess are maybe are any talked in that AI Can touring some lead excluding to at tech Coast or West about of York. even to the of as it well? in touring that pickup picking Owen, tech activity gateway New you you acceleration or tenant up get trying market? your touring activity the kind that compare that markets,

make Francisco, So and talk talk about Rod demand own the will can your let you San Hilary in I'll New in York, the let tech and I about tech conclusion.

Day. really interest I tech little board Labor pretty the up say, think close a I The it at was it bit an And making across planning easier Hilary. is to this time this like perk to And started just rate having the Dylan, decisions point. demand, businesses coincident seems timing of after would the with cut. are

to to making point people process get earlier, actually take. about is exceptionally That having through Doug's to long what it a decision said, time of been space want the taking an they

in there them the So committed say at touring OpenAI trend toward solid too There tenants amount market building. are to the a is early they're are I it's that the think in recently to taking. that space of the tech but other Puck space marketplace, increasing

they're the South. more been of and, we've be for space Midtown still the in sorting market, of the to out of means tech I process think they in going But talking the as to we're need. amongst constructive space amount therefore, Certainly, what taken in on particularly actual that amount back-to-office companies, executives that's

broader down the in note that Valley. that which a add but Just to a in are companies, them down And our there's autonomous make of technology AI some we're are Coast addition base industry. handful of tenants just there clients, coming of has great, would headlines on the vehicle -- I already one definitely been of out others. talking of There's to that the there's the I companies, particularly think, the other West

AI, definitely. so just not it's And

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

the the looking health Can market to the you expectations quickly into guys New in Just York much decline in at just quarter-over-quarter how overall of occupancy. your was that speak of baked and that Manhattan the were And by quarter? in forward, looking the headwinds you faced market? do maybe any office a there expect appreciated as rebound not quarter? Or market are fourth the that well

that Times our occupancy clear in Square I I would And & fact, that's in we other we've Manhattan the third major in at going only lose say, in to that Manhattan. in our Tower expectation. the Meyers is entirely been were change hope pretty activity above O'Melveny leasing quarter, and

rolled amount yet, dialogue Park haven't Tower, XXX lot are Fifth active South interest. But Park of XXX in of buildings activity we XXX have Manhattan Now of significant side a occupancy. so many our those buildings into like they haven't buildings Times And at leases Avenue seeing commenced Avenue, a at Avenue, like Square Lex. at

in of and transactional it's Midtown so possible we And really good market our is feel and, about sort 'XX Park hopefully, as South 'XX Avenue/South level Midtown for well. that demand our of overall the --

the the question from comes queue in our show I last Brendan Lynch from And line of Barclays.

in acquiring residential have more beginning residential you're entitlement you It some process. projects the interested and sounds like potentially

if on give some there. playbook us color the wondering you could Just is what

Yes.

is you So what said all true. of

we today, market And we potentially projects pushing we're on think in and thought residential. a well suited control at that own they And office. described in X,XXX that looking be re-entitled pushing can might that sites to his we remarks, land prior forward we're as units, we -- be have other We several Doug with. some have we for

do in different Skymark construction. we did in development be -- We the example life is playbook from entitled with all and good site, site, Town own we supervising what work, a residential Our office the the science. the we're to Center. we this going is of at Reston

We we and an properties. also XX% And manage the have capital partner. don't lease

I residential generation minority of profits fees, of what hold generation generation opposed hold. and you interest, our expect less on business of from and is carried LP long-term a think long-term to So should more interest as

our again, following this prepared the I my inventory. would I about And land And add said Yes. remarks. in just

amount we where operating well recover. capital as a a of sit perspective an going markets for perspective. to have wait to as the land are inventory significant And both around We and carrying from are of cost not that we just

And so with money, get That's how developer going it's we the townhouses what described accretive looking an to sold. referred resources multifamily that And are are where to are. at parcels actively the be sell of will likely we potentially -- those and in can use units where both we Owen put we couple probably will those way. a third-party parcels,

some use. might -- sites also are for good have box big we We be that

centers. that have do in we've site somebody wants to contact a been who data with We

value as to we relative that you are significant there's no over not some quarter first XX to our we land in And from Avenue we'll the as because And when that next are going for it couple will of share so this think it's on of And our development as looking the we announcing there this years. at occurring Hartwell to XXXX and try inventory actually Lexington, be the effectively create first which amount of credit commencement price. hopefully of be to get sheet balance quickly will anywhere try and of of possible, this we a and these things. see start mine the opportunity

and Q&A our CEO, like At I'd session. Owen Thomas, turn back time, concludes conference That you. Chairman to to for closing remarks. this Thank the

Yes.

to for in of We all your have no you interest formal Thanks BXP. more remarks.

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

You now disconnect. may