BXP - Earnings call transcript Q4 2024 | Boston Properties, Inc.

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Operator

Good day, and thank you for standing by. Welcome to BXP's Q4 2024 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker, Helen Han, Vice President, Investor Relations. Please go ahead.

Helen Han

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

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

BXP from it in attained. or update risks that time SEC. detailed Although duty undertake statements forward-looking assumptions, yesterday's can forward-looking time give to statements DXP's any a press could BXP cause filings no those Factors were to and actual implied from its the reflected forward-looking statements. with materially not in and expressed the be believes by results assurance does in will reasonable are any release based to differ on that expectations expectations

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

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

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

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

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

Owen Thomas

you. and all Happy you, Lunar morning New of Great. Thank to Helen. Good Year

recovery is property performance given and underway. demonstrated in results capital execution our strong Our and fourth quarter the that market the

fifth leasing and for largest fourth was the We with since quarter in our our quarter fourth market of quarter, million X.X FFO XXXX. per most have quarter. ever. XXX% in for average leasing the we It quarterly square was which leasing line our quarter long-term feet of Our the was second leasing consensus share completed the and over experienced the of forecast of

few XXXX, over and our term the with X.X fourth XXXX in as the quarter our all XXXX, years. & for Capital, usually momentum the clearly building greater was McDermott leases and have square XXX KnitWell. under we which effects, average most over leased in several due feet made such Gray, quarter completed productive Though the Ropes clients Will for than leasing & announcements Over of just leasing market year-end We Bain million results. last Emery was months, significant seasonality XX% and is is leasing to important XX

release with X% factor in a risen at more performance. months December BXP, as discussed corporate as creation important the is last for outperformance serving I of X return work employment of a to and premier Fed's Inflation the target, in most behavior expectations. to job trajectory to has CPI The excess our impacting quarter, forces favor, As the stubbornly market uncertain above one critical office interest the and X.X%, continues growth, earnings indicated length well measured workplaces BXP's some market was rates. new last tailwind

rates become XXX than capital. September for clients' XXXX fixed basis our Fed in nearly lower in last result, should since up fund Notwithstanding short-term XXXX, in rate in of a lowering And the were XXXX. of forecast rates year. a cautious, Fed Fed's more the interest the As markets, first its has interest and cost cuts points remain long-term would positive be which these uncertainties, our rate cut income

BXP's less regulation, federal result, be of stimulating and activities. policies policies articulated lower building early positive confidence the as are the administration our of clients, for many we its believe the of on which business impact activities. their a frequently administration's do new question stages executing will leasing receive new in plan, we project One we is Though taxes particularly to the are and friendly, the

efficiency of with in and be GSA space would should workers reduction their for the our therefore local federal street the return environment by retailers exposure rationalized life be having to the and a if a are and More in contractors significant reduces Regarding leases federal returning impacted Washington, urban region. clients. more D.C. likely to who government government the BXP to and positive requirements, offices business would workforce in directly GSA initiatives, many for GSA is line positive space to D.C. not has BXP's limited our a in users Washington, offices be requirements. even their is

administration's area to of from rates, implemented, concern fiscal to the in the lead that if new is inflationary the debt long-term yields and policies be given higher new interest larger resulting could tax could markets. impact with potential An cuts treasury deficits tariffs,

impacted. the those but all is that early fires with progressing no this incident. and fully process L.A. of impact of the market, on the recent impact shocked office empathetic are L.A. the are is a fire aware the of to sale We in office devastation It future understand apparent tragedy we too pricing post by to significant

are for in X.X negative broader XX% the the the higher primarily the premier a Premier feet XX.X% As in premier last versus square space past, Premier workplaces ago. market. in are workplaces the research been than broader broader broader CBD defined Direct more discussed versus to outperform currently XX.X% total approximately a the office up continues premium years X is materially vacancy XX% in million repeatedly our for buildings, X representing feet premier highest Likewise, as workplaces X sector, for market, positive rents Asking for market. square XX.X net for market, which absorption over XX% years than from the workplaces has X% million a of markets. workplace of the CBRE's office the competes quality BXP segment of

a quarter real Regarding volume of office estate continued markets sales deal activity. capital equity, the the private acceleration in demonstrated fourth

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

was transactions approximately Francisco New $X,XXX in Boston, past York Pricing Nuveen. the a in Vanderbilt square One Though workplace limited markets, our for that [ minority quarter in for Central D.C. a purchased did a were notable foot premier interest this assets XX.X% investor interest an to cap Grand and sale and own that City foot X.X% XX% in reported ] X purchased core there deals in of is not square XX% include average San from portfolio non-U.S. already located a leased. A Washington, a $XXX portfolio on rate. next Norges

Moving to Washington, capital in development D.C. allocation BXP's and new exciting new activities office we investments, commenced an

XXth Center, Specifically, million adjacent converge. its transit located, foot. vacant building office D.C.'s Washington, is stop for we from very $XXX Street, XXX where or to well square a acquired lender a X lines immediately busiest Metro $XX The site train

Will a of a client on Emery anchor Concurrent XXX,XXX another long-term with the the remaining new to all we letter substantially workplace for a feet acquisition, we site. square development prelease & have commitment to lease from Further, intent premier the anchor of space. secured with McDermott

and Our below-grade spaces foot amenities square clients. rebuild entry a the existing new premier parking structure development XXX,XXX and plan meeting is X our reuse with to demolish and building, anchor for market-leading unique workplace the outdoor

acquisition the yield including We projected for December, in the the in land costs, initial expect capital has development development expect our our building budget, million, and be we cash X%. and development over to late will project XXXX. full acquisition The approximately with and $XXX commenced deliver is

owners, opportunity. create investment The able in building in current Washington, Well opportunity buildings. around execution Street building. The clients, is access D.C. lenders execute, notwithstanding reputation a existing design unique for development accretive market existing capital XXth high how new to is BXP workplace will done, empty the an and example pay the new was and U.S., and XXX BXP and default fund the relationships construct team experience a team to of the given ability needed its And creating Industry-leading with clients our space industry-leading vacancy levels D.C. to of environment. and discounted has premier in great both markets a the want BXP fulfillments, with and and in to the loan trusted uniquely acquisition market-leading to

and new located of I escalator X with Continuing our Concourse south Madison square Grand direct with foot XXX developments. described XXX,XXX Midtown blocks last headquarters project Madison Central access building. new JPMorgan's to quarter lobby in

most in-demand potential to site Terminal, XXX,XXX ranging in clients submarket Madison square the in only Central in immediately are XXX,XXX anchor conversations proximity the active as feet. with to viewed widely the We Grand XXX actionable office development several is close U.S. office from

a in interest. launch billion as to $X this XX% expect reminder, a BXP project We where, owns XXXX,

XXXX developments also We serve owner project. expect in as a where the minority residential developer and launch of a BXP to X new will

in Boston details being when is the Hartwell later projects re-entitled a project of and in these launch One that York we XX projects Avenue New this year. we in More these own Lexington forthcoming site at region. the already is on other will suburban is be

partners, and Convention located across project a the X as Javits of XXth BXP, XXth XXth known to directly build also the site along Avenue commercial X Street, separate podium. approximately was and in K, by York, between component New over residential an awarded with units New Site at X-story our a is York affordable from State City. towers to X,XXX hotel adjacent a plan Boulevard and The Hudson in X XXX-room Center with

be by We The construction RFP are to predevelopment several to in selected work this project needs been design is completed. very given State and from competitive away years entitlement, and the that New pleased York commencement honored have highly process.

lab of incremental fully achieve service to long-term of Street, October, delivered foot development square basis schedule. were to we Institute Broad on project, XX.X%. where a yield also XXX In the this a ahead on completed BXP past office first quarter into conversion we cash a to able capital Binney X year XXX,XXX projects leased

Skymark, Town high-rise project having delivered at pro ahead of is a XXX-unit fully above rents schedule, this located Center. well lease-up Reston The the into after over luxury opening. also units residential XX% leased of X development We of months service only in forma

sales, the the successful, sites XXXX. remain approximately of net land $XXX proceeds, both service sites to in active are closings X nonproducing monetization these although pushed of land generate taken market of if property. of will active into operating out our buildings the sale assets, and In one to aggregate, and negotiations activity. evaluating are for possible gets more put million is the disposition and We it to We preparing generate

is fourth the second we $X.X lab billion with underway pipeline feet the residential development of second development completed the projects of significant BXP to a XXX Binney to the leased execute million end and XXXX, half deliveries of Cambridge in and AstraZeneca projects expected aggregate X to in fully the billion of XXXX. and investment approximately $X.X continues with These deliver in quarter, of of Notwithstanding office square BXP retail the to remaining largest be funded. which quarter X.X as

is our a and debt and in to the activity of capital leading So in and cities. workplace premier in of segment conclusion, office and our BXP and favorable both conditions strategy clearly momentum new more our investment public presence private the clients leasing commitment access due market to to and market markets industry, equity core gaining both our

in on the our business the lay environment for We years will momentum in growth for this foundation the to ahead. build additional constructive

our over Doug. report Let turn me to

Douglas Linde

Thanks, Owen. Good everybody. morning,

as a our So feet. our significant the over leasing expectation pattern said, exploration that XXXX amount followed leasing had we regional This we of baseline quarter months. X.X effect had XXXX year fourth and expirations. has exceeded and did of greatly an last set during leasing dramatically reducing the XXXX future square quarter, fourth the We of teams XX a million outstanding BXP's Owen which

During XX than XXXX our expirations by months, were feet. more X.X the cut square million last

is X.XX the XXXX square XXX,XXX expirations of square in So we portfolio. is expiration expiration as XX/XX/XX, have the feet, XXXX XXXX of million in largest and feet, X.X% sits square XXXX the we And have feet. at X.X feet, square and million largest sit at XXX,XXX X.X% portfolio

material X keep vacancy expiration. We and occupancy. Because emphasizing are going. going rollover X 'XX discussions 'XX, thought be we expiring there 'XX will XXXX improvement in right basis just a is but space feet replacement XXX,XXX I be points. Why exceptionally the million this? client lease low more million am today of feet feet Mike than should for or XXX and BXP. XXX,XXX to square there on and our in years in if continue 'XX today, renewal I will stop I'm to to square square of

point and XX.X% where year call. footage increase slightly the finished XX reflects of from our Our estimate the of Remember, quarter basis provided in-service GAAP square ahead are occupancy, on last we last the occupancy recognizing our a revenue. properties space we at

Our square of commence to footage end leased yet have were that quarter, At addition spaces have any the but leased. of the includes the fourth GAAP leased been we revenue. XX.X%

X square as little our said, the help well. goal since focus completion million and of me at the revenue development from of occupancy. projections, variability XX.X%. Our all over which our which 'XX it on timing captures for in-service and We is just We've lease from is square regions, leasing completed lease eliminates square the of start footage, feet. footage bottom-up our recognition tenant governs GAAP revenue and XXXX future the with our I just improvements, as of deliveries And emanate

So me, -- that's our goal 'XX. excuse for 'XX

completed leasing X.X square million space. on vacant we feet 'XX, about of In

about currently clients. successfully renewing feet includes earlier. estimate will our leasing will expirations, on known of million future year remainder the expirations, 'XX Our 'XX and space feet square The be execution X.X XXXX talked the square vacant be where we X I feet leasing the on about we and believe million of XXX,XXX move-outs square of of

said, leases Our Owen but we XXX,XXX XXX of square It negotiation ] million stage X.X expirations feet remaining LOI transactions, square These after at spaces of good pipeline feet the expirations, about covers with of are space, of which XX,XXX that 'XX with feet million of have clarity. XXX,XXX include transactions square of are vacant feet. Street. feet lease in square pool our XXX,XXX renewals, currently involving square as XXth active current 'XX second X vacant another and There's square where not [ deals 'XX in is feet space.

in start We're off good to 'XX. a

square currently feet [ points. of quarter-to-quarter budget now, the of our 'XX leasing XXX which our all a is we by adjustment the be be expiring ] have vacant will footage, and year, will feet the million end XX% X.X Park net end basis we're end expirations feet in which [ take of space the 'XX. out from in pickup B X.X I the of XX% XX out and we though. we in-service X be our will to cause the portfolio Gateway, about Block impacts by get leased So contractual million to square the about leased. achieve we expect square Avenue lease it to of of If square space the portfolio, higher fluctuations before year, and be and XXX,XXX Reston The Right lot of to currently service, they number will but South, are adding which developments, of would one XXX even will this changes guarantee some of XXXX. ]

path we This out the follows In suburban assets in service. took XX, office we're a few taking of 'XX.

we actually demand higher in critical residential for by pent-up economy local affordable development can for a and better where a leading is action successful housing change construction permitting taking communities. to to some our governments development our a assets. in are of use There's for frame and component attitude that We acknowledgment have additional economics towards housing This today. work of in the that [indiscernible] is

in markets our working for towns in years constructive counties. more We and many of have these XX have established been relationships than and

to for-sale working rent are We housing. communities to and/or local commercial rezone the with office for

in December. is a service a of have of where that 'XX Avenue, late Hartwell Lexington XXX-unit first this. example projects said, the we is building took we and entitlements in Owen XX for received the as in This out

We expect under 'XX. development early be in to

we entitled townhouses agreement the in the agreement in Grove, This a We X 'XX. in land service have a done a have an and site have out with townhome expect also we to Maryland townhouse development. and sites. space sell taking are XXX-unit have for executed we to an townhouse buildings first we Shady executed same development that to office is to sell what Virginia, buildings of holding where projects rental for And Herndon, the We've rezoned the a already existing thing accomplish developer.

stabilized to Manhattan additions every Our leasing are spigot of stocked picked over Sublet last or have Virginia in Boston, what has office and absorption have up in market markets have have the District Northern year. Francisco, seen negative Midtown tailed improving. activity either in the the off, appears Columbia following San already and we

concentrations, property our is Bay remain of sparse, Boston concessions and strongest and to rents the Midtown Our the X in constant. Availability largest Manhattan are Back continued portfolio. markets increasing be

meaningful the and are the job job reductions no reducing across technology are space jobs economy, that short companies in of still footprints. there's are are has of growth While headcount, their there but increasing pace slowed. others office-using There U.S. that

though in are witnessing growth utilization We space they market. industries, pockets of vary by

a industry legal in Francisco When making estate anticipation time, York our of in The expanding, upgrade the long-term confident, and improvement San firms on at footprints. in firms Boston and Washington, There same are as of sentiment, activity deal constructive they are continue are New improving while D.C. law and real but are the the commitments. in are Take robust law that raising reduce case point. more confidence their to the a business clients environment more our customers. potential existing capital and

'XX While continues on right going on illustrates data a we best don't the And market is by pickup assets. dramatic our certainly to absorption, are to leasing the activity be space to migrate in think premier characterized that we track. the

identified amenity-rich? these accommodate the our a none by began pursuit our Owen better market. in XXX Were to transaction when a as development buildings in brokerage of Class clients. short-term When have the XXX the could development, the of he one relocate of to than of existing under this is client. that JV extension there's And buildings defined order no in real. also construction deemed example the North the new the they expired owned are rather ability this we trophy? Do a at they square Well, the we executed opportunity, bifurcation asset were lease As X of community foot A XXth. including delivery XXX,XXX than the D.C., the at said, their inventory bridge or to top be by they that existing building acceptable new to Capitol, BXP, by premier The described client

X.X lease the not for XXX,XXX the region. square XXth. feet completed XXX,XXX scheduled feet square currently feet BXP's space. on was expirations, activity 'XX involved involved for vacant York, the extensions on and we XXX activity square the expire square vacant space, of existing in on was about XXX,XXX leasing fourth D.C. quarter was XXX,XXX New in any by Coast and that million for development XXXX. feet dominated XXX,XXX post to in at We were new XXX,XXX square feet and XXX includes XXX Boston, West The space 'XX

executed West saw quarter down Across with excuse X%, York, XX% me, leases with you the XX% a a of and that X% -- the supplemental had Coast, decrease were a pretty revenue portfolio, quarter. decrease this deals for the our consistent on mark X% New what about in a hit D.C. decrease the in this in a increase in Boston,

York. Prudential block with in respective Bay the New there continues are large actions or and demand of to XXXX. availability West lease submarket There also in clients extensions Coast completed this Coast Ropes Avenue little quarter and Gray Park markets Boston client between the exist, the are in that in the & Back these different. Center of was at in bifurcation The the East we begins of The the

than this and recall with in extensions. early MFS in earlier construction another XXX we may the year moment, You embedded the in justify to an Boston did Bain extension was the [ 'XX. rents Avenue are At necessary new ] rents considerably at that higher Capital Huntington

Bay term, clients long Our place. remaining large remain to to alternatives are that the recognize a few Back they there want in in

at in Boston, the Atlantic did would to This significant CBD larger options and Wharf. a clients and XXX that in the in other vacant greater to quality one X Clarendon changes have we These renewals meant in the quarter, market, had space location. other but go

Edge availability. tenant large been. of is expirations do, and Our concentration demand do our where We vacant space, portfolio, we Boston it that tight science technology markets is ever science our to have clients, as These which to on traditional CBD life availability portfolio are and as have however, work life growth some continues has and be science known in weak. focused largest Urban life clients,

than Traditional life science demand. office demand is weaker

pure sublease exclusively are acquiring trials as and looking need discussions discovery We space science they on companies office are are few in their capital developments with drug lab for products infrastructure. allowance. life and in a that it even Lab improvement focus Shell therefore, a rather don't space of that derisked very than lab offerings if considerable available [ make with these new significant tenant economics There provide difficult compete the is we for to ]

Manhattan Midtown Midtown South. have in availability in we Our a none, concentration almost but is

We at and are XXX picking XX% small At XXX is some overall XXX,XXX feet inquiry. of 'XX with square we lease Avenue have tenant where it pre-COVID. tech was availability has in nontechnology But client improvement still what negotiations there in is Park than feet. South, of less Avenue been up, in square tech demand demand a Fifth for XXX,XXX

single-floor in another are We Park with XXX at tenant lease South. Avenue

is direct in about at square the the a the firms Motors Lexington feet During in availability There's of Avenue. Building, Avenue XXX of Park clients Avenue. we no result have their leased on of these experienced quarter, at footprint. Each Park General to and growth question financial seen the lack at XXX XXX the Madison we activity that Lexington XXX,XXX submarket

Madison. in Midtown XXX opportunity largest Our 'XX at is

small month floor earlier an leasing a amenity XXX at offering CBRE The square our at and made this square of at floors multiple floors. that ] Madison foot as was XXX,XXX who upgrade the small in slight Lever large House have area, the position on availability of premium support finishing Park the XXX,XXX our to rents construction this quarter We are and Madison to value market rents market [indiscernible] market. by took feet starting leasing are [ about sparse a for Avenue availability selection rents up There big where great the portends commitment necessary that news it is that rents and in get will at new which ability current well in a to is we're a to block at XXXX XXXX. XXX only space be

The leasing excitement of growing. on that businesses storage the not their sure San rely since operating we're West Coast proprietary that training in models. these is city is the 'XX in defines that the of the continues AI to a solutions this working describing are be the power city seems the it model, point, Francisco established what on growth computing that on At are and language an critical large from organizations AI The are Peninsula of technology organizations technology company new even are and companies where of and ecosystem number in data bulk there San industry-specific point of and Francisco.

last housing estate addition, cost in been cheaper. Area. is cost available of cheaper and there more office has decade in The Bay In talent is the significantly of the than real there is the

growth have the in CBD traditional continued our has San in which of portfolio Francisco availability traditional Many rationalize users wide San space CBD city, in Our largest in if the office any, our to led market. their a to Francisco. little, is

is workers on into his CBD, and very in the We and shoppers and a in Embarcadero there new priorities his and at large competitive. to well. at offering of have also but available amenity is are the buildings up sections Street just visitors bringing view one as December widely job, of and Folsom occupancy amenity a [ lower a now is new XXX focused spaces center new and we and [indiscernible] Center ] spaces completed supply back are finishing where short weeks block increasing

comments new the to remarks. of I the ] a [ want a earnings accomplished Mike Before lot my leasing to reiterate discuss top guidance, 'XX. lot at to rules my I over of hand of in 'XX and early We call

of leasing see 'XX to accomplish will very there square is at lease increases we known little to get will a we headwinds. vacant on to and space pace anything 'XX modest be a footage expect We 'XX, 'XX what in and we exploration lease lease be we percentage our focus like year going 'XX, expirations. as accelerate. If and hope we When

to the it's and 'XX. about talk time guidance Mike, quarter for

Michael LaBelle

Excellent. Thanks, Doug. Good morning, everybody.

I to details So I'm describing fourth time our was our most this our supplemental of full details to morning, the guidance initial included earnings and 'XX financial release of additional quarter 'XX our going package. in that plan And performance. my year spend cover in press with

$X.XX revenues share. billion full For of XXXX, $X.XX and or of we FFO reported total consolidated year billion $X.X per

new service. We continue developments by to grow from bringing our portfolio and saw revenue increase X% in primarily XXXX, into

in line quarter guidance performed the FFO our share with consistent our with we of provided $X.XX of last the per midpoint and was quarter fourth portfolio Our expectations.

occupancy As XX.X%. by this Doug mentioned, climbed XX quarter to basis our points

continued that XX% are contribute nearly of workplace premier revenues buildings XX.X% Our occupied and XX.X% to CBD outperform company's and leased. the

in fourth quarter the absorption improved positive points basis Seattle. Boston, in and New York Our by CBD City XX with occupancy

FAD XXXX as million. also which exceeds $XXX we full We reported $XXX in refer supplemental, which our payout year million to our by AFFO, of dividend over

of and not totaling $XXX we Center, in While Commons FFO, Plaza. include Safeco to Colorado X all unconsolidated this The our to million assets ventures. quarter Gateway noncash joint our and located relate recorded the impairment related Coast West our interest charges impacting on charges

NOI development portfolio On contribution higher our same-property flat XXXX of to XXXX turn items can deliveries, of fee will be income, off interest growth fund high lower compared guidance. for I be a These cash income XXXX income, taking that, balances full termination level, loss future our With and to of service lower developments from a guidance debt our year a to utilizing from XXXX. our out and summarized development. and relatively from offset buildings as will follows: pay NOI by

and in Cambridge fully we with In at our activities. the development Center XXX from in Prudential the properties, start DICK's delivered I'll House XXXX, leased Street Boston. of Sport X growth Binney

We and in Reston also XX% project Skymark, in currently our lease-up is leased that delivered today. multifamily

it's exceeding pace As Owen absorption mentioned, rental our on and both expectations rates.

the XXX Gateway to in CityPoint science will will quarter delivered projected and service into life San XXXX. interest capitalization Gateway and we deliveries be Francisco continue in cease XXX to Our XXXX. our and minimal lease-up of South at XXX be with earnings in XXX in in Waltham contribution first

South opened in our Midtown lastly, Avenue development XXXX. Park And XXX in late South

seeing meaningful We have activity. a in leasing pickup X are floors occupied and

either the in in likely leasing incremental XXXX, the complete year will We or be late but commencement in revenue will XXXX.

NOI the will the million. Park we $XX will XXXX $XX and in XXXX. to Overall, be leasing. quarter from from XXX capitalization contribution in is our of significant occupancy gain into service XXX NOI to we third for interest our Park developments XXXX expected incremental be cease delivered new have expect growth in will million the as We to

is NOI over XXXX. months same-property detail share contributor leased our the lease the the Our we to XXXX, that our of XX including our $X.X in will for earnings, in our expectation next expirations execute described plan grow largest Doug approximately as billion and leasing portfolio generated and joint our we ventures. of percentage

occupancy as described, expirations occupancy between a know, a larger at XXXX, half you These negotiating there impact occupancy. the lease Fifth we signing achieving include where, of GAAP in In feet revenue. As a will Doug XXXX. XXX for we're XXX,XXX replacement several first is lease, have square and lag generating that our

spread suburban first X feet is signed our of This We X.X% have XXXX. occupancy leases expirations expected feet will XXX,XXX X XXXX. occupancy and to square take portfolio of in also relatively the in in that across have result in totals the declining evenly slightly Boston. months totaling We square XXX,XXX do uncovered

results the year. relatively and XX.X% averaging to Our our stable during leasing in occupancy XX% plan remaining

to Our project same-property NOI and we is X.X% growth X% also NOI anticipated to 'XX stable, be same-property negative XXXX. positive from of

have from Our will cash up as flow portfolio. basis a XXXX to cash up we increase the our increase will same-property rent by NOI on free actually that XXXX burning from X.X%

the South in fee New incremental management Fifth which This on in be fees Street Park Cambridge. leasing Binney improvements City, XXX we joint commissions our XXXX primarily AstraZeneca also generate a properties. XXX earning to higher income, construct as York and Avenue will for expect to in and construction and XXX tenant our Turning is from venture we

for projection the from to XXXX. an million, $X increase at in $XX XXXX million fee is income midpoint $XX million Our of

XXXX was a Our $X.XX in million per In than XXXX, of projecting share. typical higher $XX or income. we're $X and termination million termination totaled normalized $X million income to more

in million $XX projected a in midpoint our guidance. the of results XXXX this at revenue decline So

of cash project pay balances be in we our XXXX last to quarter, income. lower higher unsecured our reported January, senior interest carrying of cash we expiring $XXX will of will lower resulting At note. in $X.X on million be call year-end, net utilized we we available as At cash the balances, interest we expense described As off billion. beginning an

million XXXX. $XXX approximately our in forecasting $XX spend on reducing Overall, by of will also our average are We in balance million XXXX, million lower development average year-over-year. cash interest be we approximately project $XXX income

in rates in rate flat XXXX cuts. in reflected an $XXX expected cuts is project with at the this net our to expense portfolio as Fed is of Overall, low floating, $XXX million will end And guidance. of that million increase XX% to benefit XXXX, interest relatively the of from versus year $XX our and be expense Fed interest million midpoint. assuming XXXX interest expense no we debt we consolidated the 'XX of Our

including described we This X.X building the space. we lease highly service Town development to as and of have or that development next million Lastly create ability quarter, will XXx The Center taken is nearly NOI successful that the the over the we in expiration of density on and site mixed-use buildings XXXX. of multifamily on this commercial per the significant Center full time. increase square both Reston will encompass The share our $XX Reston lose Corporate by and Center will new $X.XX location upon I phase of -- Corporate XX/XX/XX. million buildings generated value feet anticipate out for XXXX future of earnings at the in last Reston

XXXX of $X.XX, and to to interest of at are the of comprised higher a FFO from XXXX. midpoint, lower higher range decline to expense decline share, all loss of So is per up, initial the the $X.XX sum lower guidance of of developments is fee projected income this net At high of $X.XX NOI and Corporate $X.XX of $X.XX, higher from for NOI same-property out $X.XX higher the from our our representing service. income end be $X.XX, $X.XX Center partially by These G&A of termination Reston offset X% pulling of $X.XX.

balances is our from as well income future termination in out primarily for Again, growth, lower that service to development as development the pulling pipeline modest future decline income. cash we generate buildings will interest due in fund decline lower noncore a as of FFO XXXX

opportunities. incremental any included in for not have are we guidance, We activity acquisition actively looking though our

in opportunity XXXX, forward Looking demonstrate see to to portfolio. growth an meaningful our we

expirations delivery space project leased the development we portfolio and have of Binney lease of deliveries. in growth limited positive and the in a Street our in-service fully in embedded through XXX XXXX lease-up and the the in absorption the very available mid-XXXX XXXX development have opportunity We pipeline and

triannual about regional You of New more will at all our a future on City. ] and from into conference in be the include Investor opportunity X Conference can our and to The presentations an and portfolio will [ this deep outlook fall our this company. dive York hear our our for teams, depth will September see offering investors hold of we

save of forward We the send all and to will we hosting out date look you. soon,

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

Operator

first Our Instructions] Sakwa the [Operator line from ISI. comes from Steve Evercore of question

Steve Sakwa

no given to leasing move you guess that year, of able think do of I high space sort rollover vacant provided this you of And your when retention level, at sure on year? the expiring space? out, was I'll you to Doug, a transcribe then not through the new activity information. for, it a just XXX% But like of call, your the at what look this expect I Yes. kind expectation accurately. and retain help ratio litany what broad me all is I'm

Douglas Linde

Okay.

unlikely expiring year [ foot ] In square square expirations, we've your highly those XXX,XXX to that that feet, leases XX,XXX retaining probably very circously. have have so when we're a high year lease and going answer I'm question are When have the organization. a So expiring, feet our between we a we of retained tenants. square lease XXX,XXX percentage have that or we multitude large we of X,XXX when very

as already vacancies, space of other what leasing we I have are we've remaining that are in be we to forward of into expirations, So all sort large customers. known look "acknowledge" the to now are XXXX and -- that going known 'XX ones

to example and square on XXX we're replacement way going obvious foot the the talk about we that's that's a Avenue, the square on XXX,XXX that in call So is that tenant think of So right? -- I have that, we expiring are a Fifth foot negotiation XXX,XXX sort on works.

"nonlarge" our XX% a generally, somewhere lease existing tenants. expiration are "renewing" In we XX% year, between and of

are growing. Some those actually of

So there, we our is. square may be "known that's actually sort additional picking of footage what up retention rate" but

square moving year expirations and of process. will you X through tenants expiring If sort looking plus we leasing XXXX, look of normal that the cover are feet renewals minus are what of the smaller at somewhere that neighborhood million forward vacancy the of the plus of in are is at this known that tenants we or

those. whole So we have host a of

today we're as the we're I in of described what So some space. currently year, on working vacant sort covering

on ordinary known sort in expirations portfolio. about leases square on of that course sort expirations. I on of just of leases then And normal we basis are occurring an as said the have have progress XX,XXX a feet business of We day-to-day in

move in renewals, million actively remarks. up feet. million square as today, my are That a low, the expect when my feet So point into I done way. And and feet bulkiness this point number of that numbers the the forward 'XX, if XXXX, going for look get pattern which X I also 'XX is million in square meaningful I'm of square on vacant XXX% means initial X.X known we will sort with the square a somewhere I in of my feet I to I neighborhood XXXX. If under exceedingly XXXX, working supplemental occupancy right? to that be basis, to and in to is get are year And those expirations and million 'XX I'm also picking into low, XXX,XXX lease average that in a start X.X on have of on of and sort was X that

Operator

Andrew And of our I of ] line next America. [ show from the question comes Berger from Bank

Unknown Analyst

detail. the on This for is Andrew Jeff. appreciate I all

the Boston like it obviously, mentioned lot Bay, that markets. and Manhattan there's activity the volumes. Midtown that's of by a sounds Back reflected great And Doug, are So you strongest

just concessions aggressive really more curious with mentioned to I'm also are take does concessions? activity, though to this reduce what start You And flat. become all that it and

Douglas Linde

and to you to going it. ask I'm I'll on ask So give quick a then hilary Bryan I'll answer, comment and

last terms years. answer of happened my quick is the So is, in X over inflation real what

cost the went somewhere So XX%. of up XX% building probably anything and between

So XX%. just assume

move of is new space higher. materially and rebuild clients, or -- for our their cost the into one space to So

is basis So a what it that of giving spend. up we portion they have actually real sort them the contribution to of on are makes smaller a

stickiness Bryan, why about concessions and the of Hilary markets? sort talk in Hilary? of you But your don't

Hilary Spann

in on broadly, is geographic More some Hilary. in I Avenue that margins discrete go. that about the area. concessions to is folks corridor, availability This a submarket, reductions is want even in they there would in and Park Midtown, Sure. the Park defined say the there are instances but in choices of buildings where on have Avenue very

concessions And outside levels are Park so the Avenue the availability the submarket. of are because sticky elevated

given New York. so think radical part And not that of seen I overall the flattening, in concessions that's decline reason of in but you've sort Bryan? reflect the statistics

Bryan Koop

also, let's we comment. with Doug concessions regarding TI the Yes. on I'd say then inflation And ] say, the are that in feeling, on Bay. was some the flattening definitely spot Back [

TI, used for and on Bay is be However, noticeable can in definitely our it's firmed in downtown position, that very But not it though. market Back negotiations. only

Operator

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

Alexander Goldfarb

So question for you guys.

what sounds like I year it next into a few not outlined equal, dilutive you're And see service 'XX pickup for what but of for really and taking else accelerating end stop in FFO. year lot that of FFO are stop What out all exposure. from outlook 'XX solid we of leasing -- tail or You've redevelopment, next? the for would giving you a addressing this into guidance risks acquisitions offsets? of pretty or it should be example, meaningful from a end the know Like, buildings as years, sort of far would guys as tail sounds this like, may like

Douglas Linde

I'll answer and give going let So half give half the the the let you you -- you answer. of Mike me other I'm give to

answer, I XXXX. of increases those half "assets" my believe So the if our and development, be portfolio and in our same contribution there from we move on as XXXX into at meaningful property NOI the our you from will look

Michael LaBelle

So of mean rate things, is I think going. on side other the there's I interest where our

debt the mean So XX% interest somewhat where long-term every be and our expiring by short-term bonds for that and that rates to are floating. portfolio are year. does to as lower is refinance that offset expense interest XX% And is that what of rates what on our going is floating we likely

Operator

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

John Kim

on provide office widespread impact I'm you any looking commentary And that by life the the geography if of AI believe companies? And mentioned science you exclusively. think of wondering how on stage this or Doug you space either its if for biotech could a is sector? is tenants and reflection

Douglas Linde

Okay.

I'll to try you well. a perspective let else Rod I'll as have give give on well. if as you want And then you add Bryan, that, perspective you anything and a So to

is right out a life able looking to they "proven" idea, the raise as a been suburban those that to are the efficacy right stage And growth" trials of are some being started a bunch that instead is science Boston, new of product So move raised figure seeing relative with to and of to sort take And is capital sector of believe preponderant of kind how in "starting" in the that is now, and life are are advantage for what have for "expansion forward. shown brand companies have already on going later science. there are things. that they management that now certainly to and that do the we money opportunities looking teams I of that there to

numbers kind been space have we of to they ready significant a have now move That's given companies level of they of seen from. and into their are capital same was kinds the to going the next where point 'XX go permanent because more the not a What to all in is a by in was 'XX, demand VCs order right? where way that incubator happening to in 'XX, coming of

I'd So of say there's sort that shift.

San Rod, comment in And to on market. you may South the want Francisco seeing you're what

Rodney Diehl

Thanks, Doug.

it's that's was negotiations are looking larger space. to around think mind San now science life the to tenant always So have actively We catered component case. down the with Francisco our for keep in important I in office more lab South that of office in office a there. still business specifically that buildings That's the

part as definitely came in there's life is that market. that I tenants. but are a office of to your through, mix it. piece attributable So our That's John, AI very users if question don't the typical of science know it's

Douglas Linde

Bryan?

Bryan Koop

what seen of say, Urban to not Doug I'd say And a bit are Boston, to here, Edge In situations it's a that market. we've indicative discussed Yes. let's X X and evidence, it's only enough trend. of the in say, little we've big but

Operator

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

Nicholas Yulico

guidance. occupancy I had a the on question

where being you're you assumes midpoint into the ended QX, the put So doesn't but roughly include guidance developments from service. that flat

how includes think be the was developments that added hoping quantify occupancy through being in. year I'm developments in-service the asking reporting I occupancy year? you'll is The number much you this can those drag an actually reason will I So

would be to it helpful So that. know

Michael LaBelle

Sure. Happy to Nick. answer that,

because had so to our where provide we and in of quarter, expect brought for of XXX the of in-service we a kind occupancy end and But is fourth portfolio to we the original what our we Reston part XX.X% XXX at some about third the think at to where brought quarter, the XX.X% down It's we from guidance as basis online that year, We're Corporate the of the help service. negative NOI going. a occupied. going right, I you're start points of of at impact the store determine we'll XXXX occupancy year end in what we leased. remove we're in supplemental, to Center buildings not for those only CityPoint online fully big the be is in-service It's the way and was same portfolio. At guide net that. impact. not XX then is in you XXXX, is in the going, CityPoint kind the It's

it's on at QX. going XXX D XXX are QX. in, in have in, you and a our negative basis developments that XX impact If If XX% to And Gateway is delivering, occupied. then Park they as any now, the in will my more roughly occupancy, Block occupancy. of notes, Right they're on points achieve mentioned coming come don't I look

as mentioned, got Doug Now at XXX Park. activity we've some there, especially

have going do we we're think to So to a certainly they're going be occupancy there, little leased. bit more not fully but

also buildings remove mentioned to going that in the we're some service suburbs. Doug other from

close developments, couple thinking build a thinking about. basis Suburban Princeton best actually we're could because there's use do residential points. buildings to have Boston goes and assets in that us of we higher that So the we're to we by And and about in other for if those were and to direction a help XX that Suburban

be going these impactful. determined, buildings Doug we that kind to of this But as point, X out haven't net of is mentioned, right, take of service. So things at to those not a

Douglas Linde

on just where sort think some won't pipeline there some see you'll me progress on and to development in comment progress. start see let And and and I you going what's our of Yes. where

in about that So be a going Park where not a during in lab we're Hilary, therefore, probably talking we're building lease lab not we're there. actually Again, activity to talk we're probably and that And some footage tenants infrastructure out its can to square space, building space. the at likely year about is XXX space, progress office the lab sees leasing office CityPoint. And our also sort be XXX lab the building it's space. going to then you seeing of building most then knock wood. we're South, relative of on activity the Avenue seeing terms

So we're not going comment spending to doing on the want capital. also of we're Jake, what Reston sort and Block seeing same And may be at then, you to D.

Waltham see increase say, in The occupancy going which you there's a situations, activity ARE in lease particular then XXXX. of with believe little at in to submarket. in Gateway, occupancy more all challenge percentage I building at those we sorry, we is we're X are have, a lab CityPoint, XXX during where of very meaningful XXXX. have the hit until the Where is that -- So right building now. will which I'd And have XXX the won't second

Jake, you then Park can start about Bryan Avenue and aboutXXX Block Hilary can and about And But South talk we why talk D? CityPoint. with talk don't XXX

Jake Stroman

we just that majority in market discussing, space just all delivered. in XX,XXX and say the foot we've I square Doug. seen proposals Yes, uptick the sure. we Thanks, And a pretty the across meaningful few Town Block the D development activity or taking will that Reston particular, and clients we're have Center prospects a with. that of and

coming good have very better in quarter news or two. to here hope activity to and the deliver So

Douglas Linde

Hilary?

Hilary Spann

earlier, full XXX At have that for we Avenue Thanks, lease at as South, Doug Doug. mentioned a X out Park building. floor

So square we're demand that where muted be a we that to we've will same so really in XX,XXX that the the larger there. roughly trading call Midtown actively X fifth tenants. The square be remained other floor has as in And that to the the are feet, X leased foot there XX,XXX size, X or tenant floor And about to seems X proposals That's have floor spot sweet floors. plates that reminder, are submarket. South. it, demand XX,XXX

it quite will have XX,XXX see the could expect that to a [ in that of the pace. the XX,XXX up And to tenant, if But up fill case which is throughout that lease year get we continue course quickly. ], I chance a we'll so there think continue larger outside the still good we we'll that very to leasing activity building and

are it to one have out with just the discussions to with several a how plays active to size in and tenant demand, for regards we but with lease tenants out floor. we'll full So particular see in

Douglas Linde

Bryan?

Bryan Koop

were quarter year that lease had seeing. CityPoint, fourth we as for from probability the there. that the seeing up market pickup and in clients in confidence highest noted, Yes, quarter. the some fourth XXX been the some they of And really we're say a over that getting gain And started in probably I'd

science and So the the that is building for description market but in looking is deals, hopeful. at product couple It's life life of science it we the best about have office a excellent. that for

XXX, bit zone [ more this ] GMP more although a challenging. a that a about still optimistic little year. building little quiet, possible It's is we're and that bit lease for

Operator

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

Michael Goldsmith

in Doug, leasing of occupancy. feet past, commented to flat the million square that you X equates

nice lot some -- a about job future talked You back of cutting done expirations. the of on a you've

million about should hard occupancy is How here? there X still flat it So forward? equates is we [indiscernible]? it going from nice a Or think to

Douglas Linde

Yes.

million increase feet. million portfolio meaningful in XX X flat is in in X million So is occupancy, Again, a XXXX, our square XXXX occupancy. is

is So XXX XXX,XXX square basis points. feet

and you of 'XX. feet you. that X X expirations, do math the doing projection I'm for under square a if square on a mean expiring a leasing material would million and suggesting So just we not -- feet we pickup for giving I'm I'm I'm amount. of have million vacant

Operator

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

Floris Gerbrand van Dijkum

Owen, 'XX? in markets like capital, how And you or that How of at was question are transactions kind do maybe What you to many getting are for very you looking your where could. are think the capital the think about on in you the who D.C. types about obviously, going A think sellers this also active at which markets product -- you what if markets? as -- XXX from, touch you're deploying in or be on most interesting. you're you do the of allocation. other XXth transaction

Owen Thomas

Flor. Okay,

So development acquisitions. I and would break it between first

by current rents New really development, market the is where development is on So York. Midtown only market supported in

of want launch project, and D.C. dynamics clients buy be have identify -- in number very space, we in we the my one. have, anchor we And are I in And to two, that given speaking XXX was several magnificent mentioned the it's in remarks, There's development my accretive mentioned remarks, strong appropriate new default you're allocation we a this expect aware which the a to to for D.C., at we given think Number think as to the creating of I so the team they our for very an clients that loan a decision were that a price. in firm. Also building did interesting year, premier we and in Madison, capital opportunity, as that. -- job which where loan I able yields and

premier worked and So they a market good there we interest given and all to a land math of in derisk from by the were in got basis. leasing able all the And clients the standpoint, workplaces. project their the relationships

support as don't my think and in will control great Right that we closer. Boston strongest that site X it's Back a Bay rents pencil the now, I said, have of Boston. an ] New Because the site standpoint. [ getting And of probably also in. markets market we're Back is Midtown Bay but We again, the that's Doug expectation the next York are office that from development,

team remarks and regions just then going building that. did clients they the what to development, we're teams want D.C. our And do to to the replicate on created, other if that finish and can other the with

answer. development that's So the

the Any the properties looked in continue specifically able again, looking to to BXP And deals, and he out acquisitions. workplaces. for in acquisitions. we're can That's portfolio. great at premier expect acquisitions office time premier make our ones to then be its workplaces accretive certainly currently fully about to anything are have real next that And buildings we But estate, been or yields Mike that could identify there's -- think a that to on later estate has downtick been going either add accretive market real able the history. a I to to market. this be his of term. And in point answer, happen to didn't put right said, in we we for itself. different we that there's But we're will cycle, lot cycle. And year be the that continue that in we in as specific that's that's projections at and year, mean present we're new the we something going hopeful that near again in But won't interest the I nothing now this get doesn't of done to

Operator

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

Michael Griffin

for year. leasing the going your to assumptions vacancy Doug, around maybe back

kind a the stands in look still vacancy I As San from Francisco. of out portfolio, is perspective

in thinking for York, say, X demand accelerate to that goal? really able space? from mean in leasing. need to portfolios XXX Folsom, that see Mission could of examples So I there about that see some it as New Or be vacancy leasing to D.C. in market demand enough I'm hit vacant to your have high-quality XXX do properties suffice you you do

Douglas Linde

Sure.

from perform and sort available I'm the San expectations going new talk to being clients, our Rod all need space markets what are in about going mandate what's there. let increase to an That's leased Francisco But in So right? of our we environment to of upon particular and as property portfolio what pull might has and we for their the the expectations, everybody have higher part. sort the to Obviously, as all lower the expectations of demand be reasons across that. of entire well to the have depending particular on

do really good grabbing because that, capture demand In San Mission Francisco, of the building of in at that and the done XXX is has job that need actually that leasing sort apt we've available interestingly, space had more that. to demand, success to a it we of

those are Rod activity more in do at at and We need Folsom. to we also Center leasing that things some XXX we to Embarcadero leasing can need Rod? more to do And of doing our talk about properties. the accelerate

Rodney Diehl

both is premier and and first we've there an a has at had hit which really Yes. XXX and around experience And XXX, environment. Folsom pipeline in great Well, in of leasing amenity-based a XXX on centered we're 'XX, good strategy, to offering talking Embarcadero at you deals got workplace still.

finished we Embarcadero gotten think reviews the it's fantastic the [ clients draw called center this something is for I every not great don't that amenity certainly bringing quality. just and It's super other offering, a great new in Center building ] So Mosaic. It's at in.

Embarcadero. at that doing we're So

have We've another of some portion to amenity going the a floor, under lobby construction be similar offering will ground tenant to the a at We type and XXX now done Folsom. amenity. add remodeling focused we're on which

So that's also going roof to deck. going get some We're enhance to the traction. definitely

that's the deck of place be a which, building. this to Folsom, to completed We nice to again, capital way is differentiate have plan in XXX going be on year that roof a going

we're positioning these all for think I So success. buildings

We program those And it's the the years. did that have down list of that are great used them suites. a suite spec we we've deals buildings last all in many when a you spec in year, over go of

an but important only certainly and we're to focus, it's that. So going the keep doing focus, it's not

had just -- I in for that That hasn't long happened quarter. net positive I'll fourth And close a on point absorption Francisco San the the time.

So it's feel in And our a good activity. it sign. we

going good so we're And have we're year. optimistic a to

Operator

Wedbush from show comes of from line next Richard the Securities. question Anderson I our And

Richard Anderson

the course next that plans days of on a next to and for eventually the not return can about few have over or the whether full a the for conversations Or your having Trump week you're comment a over tenants successful few this JPMorgan, So years? are platform? to Then X-day at you into how Amazon, government of for Is be lack 'XX leasing Salesforce. it outlook workers. RTO critical is GSA return the perhaps the contractors X of X I'm you leasing to you defense 'XX to business. you years outset, But talked your approach do to week or have to your ramp exposure office their to the kind enough follow wondering in negotiating what of you need and about office. to with terms

Owen Thomas

accelerating, helping office is to return our and leasing No, it's Yes. clearly activity.

different it's different industry, think we different by regions. see bit bit concentrations little because it by a I have therefore, in a differently industries and varied region

a earnings actually to -- important positive. even we and as but is that's it's leasing, health office growth a So important, for to corporate said that's always is more also plus. Look, also proxy corporate a big have a return

those serve. would health both the category in I base you of when of that put So the client same think we the about

terms number there, they the office on that they're in everybody collaborate. why week, only the think days to in days want days I that's in clients of coming are it's X week, for even same the of look, mean, because X I or In a

to come hard save People it's Friday. Monday, and Thursday, in okay, So space. you group Tuesday, allocating, aren't comes this in

from increases under days to logic. space X going necessarily So don't days I X demand that think

Operator

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

Blaine Heck

Related cost and I'm a maybe but those and in change and And willingness in to into move quality? pressures, so, you've place concessions of increasing question factor because on wondering your And more given the of to how above what their slowing whether to whether them you've like earlier to leasing in given preference renew strategy? space driven a if does the upgrade that's build costs TIs? move that and space cost tenants' out noticed higher their to costs. over to higher even

Douglas Linde

Yes.

many have have let if clients they that the clients. our are competitive forced old is do on unless space, employees. we been that if then many our of would to attractive of space within sort call it, place to very what have from to move you associated damage have space they that, So and space, said, them. you is regions sense that, our with would had many buildings brain we something we with response our in But move. is to XX-plus our they in. available year do going rebuild can't cases, offering give I'm renovating in chime In to I a we because I'll And prefer to to be to cases, seeing staying interestingly, My prefer And it have to that. older and of our not the most

Owen making capital again, talked that their upon the say, are ahead good space. based have confidence the that going the a them, and clients is time they that as about to money. giving And conviction and spending economy I'd sort right allocation so now, be of And the earlier, it's to our

perhaps, in So going can and talk then you Hilary And Jake, the can Reston. on you then Rod? CBD about And of maybe about you start. Rod, what's Bryan, talk sort location.

Hilary Spann

very agree difficulty seen is Hilary. to be This reluctant in that. entirely We've I place. the would around the comment with renovating do clients regarding

New that think future. around the market I models there around of base and York York is in direction a the in client and of the their their business economy for portfolio confidence lot New BXP's the

into a seeing of new taking what so in and a coming out. also that generally new building the that we clients space seeing tenancy is full And We're our always is And space new are portfolio. build. of lot buildings, expanding demand course,

help compete expansion a compete we'll So and case employees, space of that of they're it's I new units, business are drivers help demand think much want fresh the will them more for of they where the the clientele. and and for economy them -- expansion

York. trend that I the in see that's So New

Douglas Linde

Rod?

Rodney Diehl

it's talking just extension even, or X-year I most is in or what that think hard I of do seeing the renewals. mean a that XX-plus then to would looks willing the what are a tenant a it's people short-term of confident cases, willing tough. we're long-term commitments, renewals But Most pandemic. short-term to in we're clients or I think we are years. just and I the early is make those future the not in If not pull for that saw out somebody moving add X-year X- like like of are to building. our of out asking to

exactly And them looking entice then pull to you to which that we're I think better definitely. of seeing that we're to that their existing trying back other the offering is our they're So and out buildings for of ones a they're what Doug, build employees tenants said, all doing come and back. across

Douglas Linde

the about Reston and of sort are the where doing. opportunities that where they're we're X tenants they they talking on want, to comment Jake, what the stay And that have to next,

Jake Stroman

a the in mean we Center, having is a Over motivate say the rents I to who's defense the our community. holdings market-leading Northern can want I of seeking again, that and mixed-use quality pay interesting who that are of attract half and home which region are is just product to very Virginia and groups conversations in sure. because they base. the market. Yes, in would trophy And with lot their in and retain what environment. of of these are productive and And are employee D.C. lots is Reston cybersecurity clients the Town

of lots inbounds seeing regard. in we're So that

Center. for the exciting future it's so And Reston Town of

Douglas Linde

the But X where are talking what keep lower next -- Block sake, of tenants would again, going actually at just and what D, to they about than we the we're this sort on charging that correct? debt to to Reston significantly have is pay ability rent stay we're

Jake Stroman

that with Absolutely. clients for to come Absolutely. won't to accept happily these do to the clients. want to work And important motivate to do landlords the and them. continue generate work case, change. in their would They But revenue these employees each renewals they

more to floor So up we're environments they're Reston. spaces in and their excitement better more mixed-use more and move amenities. change for And employees in exciting their provide ground to that plane that seeing a these and and environments looking are

Douglas Linde

Bryan?

Bryan Koop

Yes.

they did space their bit significant had Ours today renewals, they situations how that is time well how ahead had that in we was to at was a thoughtful begin with say X but X just up, some exceptional did significant, I adding that's to lease. really and plans example I'd say, amenities, in but of an of work when that fresh would little from But nothing extraordinarily much different clients its initial than thoughtful. the those And more varied. they isn't it did we some previously. cases, they X spaces original least of good some where they're and

is their I've to about may clients probably it's new see to a I've we redid we to really the new interest of want and tour XX, a in tenant least of I the talk additional from layouts. trends amount own of would and we've our on where see at clients of seeing willingness seen, of on the our incredible, we it we provide just more add create On that are space. side, definitely great the dollars ever top that examples seeing space we far how than of seen And say also to we coming [ see it. never us to the this own But Level future a own much had a people. situation and clients space ] have how the response day finish

Owen Thomas

they from San no here conversation BXP the just would X has to add and floor I space, Center moved our have cooking. a [indiscernible] Boston Francisco Embarcadero for to been both lower this they energy build-out were well over the of doubt months, our decade. for And in in region lot to eating The And a in own last in We're in at region Yes. lower new floor. standpoint. enthusiasm the a is a there that created and teams. and Boston

phenomena you're about this And hearing that so we're firsthand. experiencing

Operator

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

Caitlin Burrows

And are space. positive earlier also did few then negative XQ. footprint law to in mentioned you that seemed You and But firms in absorption absorption still Francisco others stopped markets. rationalizing in San you in their have Francisco the spigot mentioned San that reducing a mention are

from So what it would you're it absorption tenants. makes the increase that seem consistently difficult that's just if seeing

is went advantage be the what some in will amenities you're gives absorption on that confidence take that you Francisco? I'm then the if So you wondering to creating through positive that San of give there And details can to you like before? continue demand

Douglas Linde

Rod, take do to want you that?

Rodney Diehl

would we've some it cases, of traditional firm I mean of law that there's experienced no Yes. I say, some tenants some clients. own our the I are rightsizing. existing, in question with mean still,

I that add have you into just coming from new growing companies. think that, is to demand the though, these technology

wave Area out say Bay and of traditionally is you the You just of Francisco San particular down which brought it's in these AI it's can technology cycles. new companies, or say the can

even these others tenants and list that think are AI and it. a going as seeing AI we're and seeing to, I've the Scale the obviously, of done that can bigger you never names heard that companies, We're have with And deals of point examples deals market. use I Anthropic some So OpenAI of in to out of space. are

And showed I and going in the right it this direction, quarter. finally numbers in up think so the we're

for But see what we'll it a feels different I Caitlin, much, you happens. than year did So ago. can sure. tell it that

Operator

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

Upal Rana

Great.

broadly given So to they [ announcement? on X.X read-through Biogen ] department was any term? And years life I announced And their And wondering some week. there's last they their potential impact have layoffs only left about third there BXP, is on research your do are this any if largest on tenant. for science

Douglas Linde

has gone So Biogen Square. I through look, that it think, starts Kendall fits is over been company that and a has many the in decades

We basically location in building, the them, that's lab for I XXXX. with Square, lab is that's There's lab in world election building the and have expires space. like look but lease now cycle. to much the what on going Kendall space of I so then. middle the that the one happen than globe And less midst between and which -- it's in that's the a of more the rather would will even have can't contemplate one next

the have we'll to Biogen. And with downsize extent ready that the that so is we capture or decision only it's the be to whatever in to Biogen a opportunity makes grow, they that again, And building. building

The years. other for has building organization basically in that been building master Biogen we been there, have already to been last XX has the that and has leased -- not another

Operator

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

Dylan Burzinski

X Just are your as back be concessionary elevated guys markets, mean, you we're we to of some on sort once likely guess effective you 'XX, significant of that to push think of years, on rent I in of within can significantly you put a for New And environment around basis, able guys some quite York, net and push years? that sort pick least right, into mentioned guys improvement? see to I able was. of to to should to and your about I us? going the so it your be rent you guess what expect some in then those starting starting net comments being portfolio, you tighter as to base sort up the next 'XX remaining Or guardrails going occupancy. Boston such effective also at able to growth incremental

Douglas Linde

Back constructive where block phenomenon availability in what were But in and 'XX. I closer Manhattan. constructive then in construction we're that space higher in in we mean, Midtown very In in quite for the are it's aren't do not yet. in the in getting large XXXX. probably we a a market, what not the elsewhere. what unequivocally, of So they they Boston. the amount fact except see our to entire Midtown markets across of our we rental markets I 'XX in have to XXXX same XXXX. suggestion unusual double Boston of than seen be in all groundswell portfolio the between we are relative Bay rents going market and 'XX greater the earlier call We're because those been the increases of of want closer new higher have and And increases rate modest and are will to increase of terms amount available, that and pricing discussed will Midtown to I minimis we're market, in make Avenue as we much a particular Park digit And 'XX those there has larger. marketplaces. see the in It's de that and environment think obviously, not the

Michael LaBelle

in just going I Doug, be would there's 'XX think new in, coming 'XX these that development thing add, no one markets. in I is and to the that's

there's those a from -- to for to look perspective, clients nothing So supply at.

that benefit so us. And will

Operator

Truist Michael And Lewis I comes our from from Securities. show question line the next of

Michael Lewis

flow So angles. as hit you concessions this a I higher the get topic leasing and When together and occupancy back the from cost, up think volume you we of the is the don't CapEx few different put increased we and least expect that until stabilize pressure the under but near for occupancy? case? of to term not you at should you FAD give that, guidance the Or be cash in kind

Michael LaBelle

for I'm to 'XX a not give going FAD. and 'XX for projection

pretty think I it. for feel good about XXXX, I

lower kind have a line be do the bit drop rent is We than year. that we burning had will this in it think of free little off. probably this I with that FFO year

expect So and flow our XXXX. TI higher a significantly little CapEx than as cash was in portfolio is be the could I I be increasing. But to expect 'XX. it mentioned, change. than meaningful were I don't from in bit don't they TI different a the

Operator

comes And Deutsche the Okusanya I show from from Bank. question our line Omotayo next of

Omotayo Okusanya

Yes.

curious regards kind leasing In the renewal year Just a or in be of think that renewals leases how to 'XX quick up to better next feel all today a ultimate I'm early about the leasing bit Maybe bit of curious and going one. risk X you earlier? little X leasing versus you from renewal. to little better? in the maybe can economics renew of waiting kind X think balancing how to kind just the X decision similar activity are those certainty very things months and reducing kind a 'XX, a where on or of through may expiring get of leasing a of you year just environment to

Douglas Linde

mentality can we of that's tenant a value the for leave best BXP split lease renewal client do you a waiting is we of matter market that but understands to I mean next the going split in would We cannot the a will if a stay, are eliminate and were extent cost way attempt any with with constructively this, the and And the we So to to timers. a be engage, fact the if we can downtime wants tenant not client. And that that be. tenant. been renewal, were transaction. that have and a if never is, be downtime with value will and that between the the it to to is have everyone never

our we market time. market and try we but going think are renewing, if we And and thoughtful work interested greedy them. be market to think are clients, what and the rents to try we Obviously, never we clients so everything of are going, where be from might cognizant be to where and we and never our to and we they try in be perspective, renew our are we commercial and are conditions going and with do have can we and

Operator

And last the I comes of question Feldman Wells our line in queue the show from Jamie Fargo. from

James Feldman

the Thanks taking from team. our Great. for follow-up

found Monica buildings function that market the specific? this to submarkets cycle there. of the want our We Avenue ] are think local [ and JV the Back context filling is Bay you in impairments Are they impairment It's with do JPMorgan don't how other tightening the we schools out. the encouraging tightening since recovery relocation your than Park way taken comment structured the portfolio thoughts play building about office to your as get think in Or you But are also also. backdrop, cycle on recovery investments to options. you it quarter? office submarkets get looking the Are So campuses they these and local pretty future? And do potential leasing of there more against same on you may The unique continues? you specific the to say Or better? hear was the be will up rather this accounting submarkets in across can particularly these indicate signals also interesting rest Santa rules? are Citadel's at a as tighten expect

Owen Thomas

in I'll what to this acute on There's been the spillover on take going Look, the have talked return leasing that Doug mean a most market office spillover benefits. corporate talking I'll which XXX our in about well the is I because It's for the Avenue. office to of of Third as about as Mike the Midtown Back turn behavior. action Bay, we we've portfolio It's that, Lex. Avenue. recovering That's Jamie, it but and over leasing from increased on certainly part going There's in Sixth the and is clearly impairments. there's at Park confidence call, Avenue. recovering. first

from the about. market, away depends we're but markets there's the X of it these So benefits clearly on talking that strength

how but It's of end some percentage the shake What demand it does probably hard don't there's forecast. don't you forget, you overall out in work all day? the I look, a that because also know. I actually to is? have growing But impact, think reduction So have remote at that office do economy. the of phenomenon.

adding So all they're all that. these point, for the at up make of growth employees. And will some companies are growing,

So I have forces think those you that work. are the at

that And positioned over is pay industries been we're that experienced throughout the seeking. And are again, leaders the about And the industry the whole that keys office that's we've outperforming phenomenon. of premium rent office talking of will the rest. premium in and and office is to as in that provider our one as materially to clients this over market stability we've BXP we're their segment the seeking that have

Douglas Linde

impairments, space playing that's about take the Yes. these Rod, sort they're current level also and -- the long sort of looking just what talks for West you in whether And and transactions configurations and activity should can these do they're how sort in market. to Mike for to before able you [indiscernible] how out is really schools the the of of on comment

Rodney Diehl

Yes.

Okay.

a school there this occupying. for is market of our sublease one So talking schools it's We're some particular are to true in one are actually space with We've buildings temporary that is that space in looking of got be that the them. going are that space. a

it's lot a temporary they do all down this what figure to is of fresh out with deal a there's there. chaos and rebuild. Obviously, just So until can the they're going been pretty

possible best school. done the help our with community. with the doing we're so effort And this to We've it

Oregon We the housed to but from and been were firefighters was over they there, had been We much Utah recently in community. we've and their trucks they XXX Business Santa they all trying and Monica engaged just had at Park. very also left support there our help and sleeping it

a out schools, that other few to these talking in that mean, But those are heard them. few town We've buildings there's are other I ones looking.

the So least space, that at will short term. of portion absorb in some

Michael LaBelle

touch getting I -- Congratulations, Jamie, question. the impairments. X on in will for on will But one questions we

if going you the consolidated the are long-term assets value govern because the undiscounted of for on So those impairments an effectively unusual way GAAP rules basis. a have that you're to assets and way hold

accounting abide have joint we Where ventures, unconsolidated there's have by. that different rules we to

have quarter, whether our impacted the joint a every and change. what be valuations So look might unconsolidated of at change we determine ventures think and temporary has we to there's a that than other

a where the haven't South so about in is space we've -- haven't call, of vacant We achieved Center. combination leasing we on And San completed didn't assets, we the additional West in market Safeco Plaza. talk about these Francisco at on about talked Colorado the life slower, talked this Coast being things there's it market, and Seattle, positive And but absorption at slow. we science

So the at every and we cash it this quarter, value quarter. evaluate and flows the test and this look assets our tripped

the And have which bigger the environment, temporary numbers more is so when and why which other bring were. distressed they it it rate trips kind of to value, fair market to is are basically to the than than using test, cap down you a discount

So issue. or on going of is these any in an outlook noncash. change is It any change it now. kind in in assets is It reflect what assets accounting right not our does these for

Douglas Linde

And just one last point on this, Jamie.

venture joint I So our understand, on they, investments. -- anything obviously, had as on mention their didn't call yesterday partner Gateway their and

So unconsolidated books, it's consolidated on their it's ours.

same So asset.

the And an where we same. obviously, position and a in to we are plans felt plans take impairment we their Our they had were and didn't.

So rules are again, these we have. that accounting

Operator

our would over Thomas, Owen the to That CEO, Chairman this like for I concludes and session. turn Q&A call to back remarks. closing time, At

Owen Thomas

hours, Year, thank you Happy for to we X.X gone your of no have wish interest all New closing a We in you and remarks. BXP. want and We've

Operator

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

now may You disconnect.

Boston Properties (BXP) 29 Jan 252024 Q4 Earnings call transcript