Q3 2025 BXP Earnings Call

Operator: Good day and thank you for standing by. Welcome to Q3 2025 BXP Earnings Conference Call. At this time all participants are in a listen only mode. After the speaker's presentation there will be a question and answer session. To ask a question during the session you will need to press Star one one on your telephone. You will then hear an automated message advising your hand is raised. To rejoin your question, please press Star one one again. 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. Good morning and welcome.

Speaker #2: Good day and thank you for standing by . Welcome to Q3 2025 Bxp Earnings Conference Call . At this time , all participants are in a listen only mode .

Speaker #2: After the speakers presentation , there will be a question and answer session . To ask a question during the session , you would need to press star one one on your telephone .

Speaker #2: You would then hear an automated message advising your hand is raised to withdraw your question . Please press star one one again . Please be advised that today's conference is being recorded .

Speaker #2: I would now like to hand the conference over to your first speaker , Helen Han Vice President , Investor Relations . Please go ahead .

Speaker #3: Good morning , and welcome to Bxp Third Quarter 2020 Earnings conference call . The press release and supplemental package were distributed last night and furnished on form 8-K in the Supplemental Package .

Helen Han: To BXP's third quarter 2025 earnings conference call. The press release and supplemental package were distributed last night and furnished on Form 8-K. In the supplemental package, BXP has reconciled all non-GAAP financial measures to the most directly comparable GAAP measure in accordance with regulation. If you did not receive a copy, these documents are available in the Investors section of our website at investors.bxp.com. A webcast of this call will be available for 12 months. At this time, we would like to inform you that certain statements made during this conference call which are not historical may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Although BXP believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained.

Speaker #3: Bxp has reconciled all non-GAAP financial measures to the most directly comparable GAAP measure in accordance with Reg G . If you did not receive a copy , these documents are available in the investor section of our website at investor Comm .

Speaker #3: A webcast of this call will be available for 12 months . At this time , we would like to inform you that certain statements made during this conference call , which are not historical , may constitute forward looking statements within the meaning of the private securities Litigation Reform Act .

Speaker #3: Although Bxp believes the expectations reflected in any forward looking statements are based on reasonable assumptions , it can give no assurance that its expectations will be attained .

Helen Han: Factors and risks that could cause actual results to differ materially from those expressed or implied by forward-looking statements were detailed in yesterday's press release and from time to time in BXP's filings with the SEC. BXP does not undertake a duty to update any forward-looking statements. I'd like to welcome Owen Thomas, Chairman and Chief Executive Officer, Douglas Linde, President, and Michael LaBelle, Chief Financial Officer. During the Q&A portion of our call, Ray Ritchie, Senior Executive Vice President, and our Regional Management teams will be available to address any questions. We ask that those of you participating in the Q&A portion of the call please limit yourself to one and only one question. If you have an additional query or follow-up, please feel free to rejoin the queue. I would now like to turn the call over to Owen Thomas for his formal remarks.

Speaker #3: Factors and risks that could cause actual results to differ materially from those expressed or implied by forward looking statements were detailed in yesterday's press release , and from time to time in Bxp filings with the SEC .

Speaker #3: Bxp does not undertake a duty to update any forward looking statements . I'd like to welcome Owen Thomas Chairman and chief Executive Officer Doug Linde , president , and Michael LaBelle Chief Financial Officer , during the Q&A portion of our call , Ray Ritchey , Senior Executive Vice President and our regional management teams will be available to address any questions .

Speaker #3: We ask that those of you participating in the Q&A portion of the call to please limit yourself to one and only one question .

Speaker #3: If you have an additional query or follow up , please feel free to rejoin the queue . I would now like to turn the call over to Owen Thomas for his formal remarks .

Owen Thomas: Thank you, Helen, and good morning to all of you. Our financial results for the third quarter demonstrate a continuation of BXP's positive momentum. FFO per share was $0.04 above our forecast and $0.02 above market consensus, and we raised the midpoint of our earnings guidance for the full year 2025 by $0.03. This past quarter, BXP also completed a very well attended and successful investor day, during which we provided a detailed execution plan on how we intend to increase FFO per share, fund development costs, and deleverage over the next two and a half years. This morning, I will provide a reminder of the action steps in our plan as well as an early update on our progress. Our first goal is to lease space and grow occupancy given the modest rollover exposure BXP faces over the next nine quarters.

Speaker #4: Thank you Helen and good morning to all of you . Our financial results for the third quarter demonstrate a continuation of Bcp's positive momentum FFO per share was $0.04 above our forecast and $0.02 above market consensus , and we raised the midpoint of our earnings guidance for the full year 2025 by $0.03 .

Speaker #4: This past quarter , Bxp also completed a very well attended and successful Investor Day . During which we provided a detailed execution plan on how we intend to increase FFO per share fund development costs and deleverage over the next two and a half years .

Speaker #4: This morning , I will provide a reminder of the action steps in our plan , as well as an early update on our progress .

Speaker #4: Our first goal is to lease space and grow occupancy . Given the modest rollover exposure , Bxp faces over the next nine quarters , in the third quarter , we completed over 1.5 million square feet of leasing , 39% greater than the third quarter of 2020 .

Owen Thomas: In the third quarter, we completed over one and a half million square feet of leasing, 39% greater than the third quarter of 2024 and 130% of our last five-year average leasing for the third quarter. Year to date, we've leased 3.8 million square feet, which is 14% greater than the first three quarters of 2024. As we have explained on prior calls, leasing activity is tied to both our clients' growth and the use of their space as a proxy for BXP's client base. Over 87% of the S&P 500 companies that have reported earnings this quarter as of last Friday are beating estimates. S&P 500 earnings have been growing for nine straight quarters, and for 2025 are projected to grow around 11% to 12%, up from single-digit estimates last quarter.

Speaker #4: For and 130% of our last five year average leasing for the third quarter . Year to date , we've leased three point 8,000,000ft² , which is 14% greater than the first three quarters of 2024 .

Speaker #4: As we have explained on prior calls , leasing activity is tied to both our clients growth and the use of their space as a proxy for bxp client base .

Speaker #4: Over 87% of the of the S&P 500 companies that have reported earnings this quarter , as of last Friday are beating estimates . S&P 500 earnings have been growing for nine straight quarters and for 2025 are projected to grow around 11 to 12% , up from single digit estimates last quarter .

Owen Thomas: Return to office mandates continue to grow and take effect, though the West Coast lags the East Coast on this measure. Placer AI just released their office utilization data showing a material uptick in office utilization from a year ago. In September 2024, office utilization was 34.8% below 2019 levels, and last month's utilization was 26.3% lower, indicating a 13% increase in office utilization over the last year. This data captures a large set of office assets across the U.S., and though premier workplace utilization in gateway cities is higher, the overall trend is relevant. Our second goal is to raise capital and optimize our portfolio through asset sales. During our investor day, we communicated an objective to sell 27 land, residential, and non-strategic office assets for approximately $1.9 billion in net aggregate sale proceeds by year-end 2027. We are off to a strong start.

Speaker #4: Return to office mandates continue to grow and take effect , though the West Coast lags the East Coast on this measure . Placer AI just released their office utilization data showing a material uptick .

Speaker #4: There has been an uptick in office utilization compared to a year ago. In September 2020, office utilization was 34.8% below 2019 levels, and last month's utilization was 26.3% lower, indicating a 13% increase in office utilization over the last year.

Speaker #4: This data captures a large set of office assets across the US , and though Premier workplace Utilization in gateway cities is higher , the overall trend is relevant .

Speaker #4: Our second goal is to raise capital and optimize our portfolio through asset sales . During our Investor Day , we communicated and objective to sell 27 land , residential and non-strategic office assets for approximately $1.9 billion in net aggregate sale proceeds .

Speaker #4: By year end 2027 . We are off to a strong start . So far , we've closed the sale of four land assets for total net proceeds of $57 million , have under contract , nine assets for total net proceeds of approximately $400 million and are in the market with ten additional properties for estimated total net proceeds of 750 to $800 million .

Owen Thomas: So far we've closed the sale of four land assets for total net proceeds of $57 million, have under contract nine assets for total net proceeds of approximately $400 million, and are in the market with 10 additional properties for estimated total net proceeds of $750 to $800 million. In total, we have 23 transactions closed or underway with estimated net proceeds of roughly $1.25 billion. Dispositions completed for 2025 could aggregate approximately $500 to $700 million in net proceeds. Office transaction volume in the private markets continues to improve as more equity investors get constructive on the sector and financing becomes more available at scale, particularly in the CMBS market. With tightening credit spreads in the third quarter, significant office sales were $12.9 billion, up 6% from Q2 2025 and up 55% from the third quarter last year.

Speaker #4: In total , we have 23 transactions closed or underway with estimated net proceeds of roughly $1.25 billion . Dispositions completed for 2025 could aggregate approximately 500 to 700 million in net proceeds .

Speaker #4: Office transaction volume in the private markets continues to improve as more equity investors get constructive on the sector and financing becomes more available at scale, particularly in the CMBS market.

Speaker #4: With tightening credit spreads in the third quarter , significant office sales were were 12.9 billion , up 6% from the second quarter of 25 and up 55% from the third quarter last year .

Owen Thomas: Relevant transaction activity that took place in the third quarter is as follows. In New York City, Park Avenue Tower, a nearly fully leased 620,000 foot office building located at 55th Street, is under agreement to sell for $730 million or approximately a 6% cap rate and nearly $1,200 a square foot. Another 5% interest in One Vanderbilt, located adjacent to Grand Central Station in New York City, sold for over $2,800 a square foot and presumably a very low cap rate. In Boston, 399 Boylston Street, a 245,000 square foot office asset that is 90% leased with relatively short weighted average lease term, is under agreement to sell for $124 million or just over $500 a foot and an 8.3% cap rate.

Speaker #4: Relevant Transactive relevant transaction activity that took place in the third quarter is as follows . In New York City , Park Avenue Tower A nearly fully leased 620,000 foot office building .

Speaker #4: Located at 55th Street , is under agreement to sell for $730 million , or approximately a 6% cap rate , and nearly $1,200 a square foot .

Speaker #4: 5% interest in one Vanderbilt , located adjacent to Grand Central Station in New York City , sold for over $2,800 a square foot and presumably a very low cap rate in Boston , 3.99 Boylston Street , a 245,000 square foot office asset that is 90% leased , with relatively short weighted average lease term , is under agreement to sell for $124 million , or just over $500 a foot , and an 8.3% cap rate in Beverly Hills .

Owen Thomas: In Beverly Hills, Maple Plaza, a 290,000 square foot office asset that is 75% leased, sold for $205 million or $713 a foot and a 6.5% cap rate. Lastly, in Redmond, Washington, 1 Estera, a 250,000 square foot office building fully leased to Microsoft on a long-term basis, sold for $225 million or a 6.5% cap rate and over $900 a square foot. Our third goal is to increase our portfolio concentration of premier workplace assets and CBD locations in our core gateway markets. As backdrop, the premier workplace segment, defined as roughly the top 14% of space and 7% of buildings in the five CBD markets where BXP competes, continues to materially outperform the broader office market. Direct vacancy for premier workplaces in these five markets is 11.7%, 5.7 percentage points or 22% lower than the broader market.

Speaker #4: Maple Plaza , a 290,000 square foot office asset that is 75% leased , sold for 205 million or $713 a foot and a 6.5% cap rate , and lastly , in Redmond , Washington , one Estera , a 250,000 square foot office building , fully leased to Microsoft on a long term basis , sold for Another or a 6.5% cap rate , and over $900 a square foot .

Speaker #4: Our third goal is to increase our portfolio concentration of premier workplace assets and CBD locations in our core gateway markets . As backdrop , the premier workplace segment , defined as roughly the top 14% of space and 7% of buildings in the five CBD markets where Bxp competes , continues to .

Speaker #4: Materially outperform the broader office market . Direct vacancy for Premier workplaces in these five markets is 11.7% . 5.7 percentage points , or 22% lower than the broader market , and asking rents for Premier workplaces climbed to a 55% premium over the broader market over the last three years .

Owen Thomas: Asking rents for premier workplaces climbed to a 55% premium over the broader market over the last three years. Net absorption for premier workplaces has been a positive 10.3 million square feet versus a negative 9.2 million square feet for the balance of the market, nearly a 20 million square foot difference for BXP. We continue to reallocate capital to premier workplace assets in CBD locations. We recently launched new developments at 343 Madison Avenue in New York and 725 12th Street in Washington, D.C., and most of the office and land assets we are selling are in suburban locations. There are an increasing number of higher quality office assets in our core markets available for acquisition, some on an off-market basis. We evaluate everything, pursue deals selectively, but are being disciplined about quality, pricing, and the resultant leverage and earnings dilution impacts.

Speaker #4: Net absorption for Premier workplaces has been a positive ten point 3,000,000ft² versus a negative nine point 2,000,000ft² for the balance of the market , nearly a 20,000,000 square foot difference for Bxp .

Speaker #4: We continue to reallocate capital to premier workplace assets in CBD locations . We recently launched new developments at 343 Madison Avenue in New York City and 725 12th Street in Washington , D.C.

Speaker #4: , and most of the office and land assets we are selling are in suburban locations . There are an increasing number of higher quality office assets in our core markets available for acquisition , some on and off market basis .

Speaker #4: We evaluate everything , pursue deals selectively , but are being disciplined about quality , pricing and the resultant leverage and earnings dilution impacts .

Owen Thomas: The fourth goal is to grow FFO through new development more selectively with office given market conditions and more actively for multifamily, which we'll do with a financial partner for office. We're allocating capital more to developments and acquisitions because we are finding very high quality development opportunities with pre-leasing that we believe will generate over 8% cash yields upon delivery, which are roughly 150 to 200 basis points higher than cap rates for debatably equivalent quality asset acquisitions. An additional advantage is new buildings generally have longer weighted average lease terms and limited near and medium term CapEx requirements. The trade-off is timing as developments obviously take several years to deliver.

Speaker #4: The fourth goal is to grow FFO through new development . More selectively with office given market conditions and more actively for multifamily , which we'll do with a financial partner for office .

Speaker #4: We're allocating capital more to developments than acquisitions because we are finding very high quality development opportunities with Pre-leasing that we believe will generate over 8% cash yields upon delivery , which are roughly 150 to 200 basis points higher than cap rates for debatably equivalent quality asset acquisitions and additional advantage is new buildings generally have longer weighted average lease term and limited near and medium term CapEx requirements .

Speaker #4: The trade off is timing as developments obviously take several years to deliver for multifamily . We are selling for properties totaling over 1300 units , have three projects with over 1400 units under construction , and are in various stages of entitlement and or design for 11 projects totaling over 5000 units , two of which could commence in 2026 .

Owen Thomas: For multifamily, we are selling four properties totaling over 1,300 units, have three projects with over 1,400 units under construction, and are in various stages of entitlement and/or design for 11 projects totaling over 5,000 units, two of which could commence in 2026. We expect to capitalize new development starts with financial partners owning the majority of the equity. We continue to advance our development pipeline. This quarter we delivered three office projects: 1050 Winter Street, Reston Next Office Phase Two. The office component of both these assets are fully leased, and 360 Park Avenue South, currently 38% leased and experiencing accelerating leasing activity. We have eight office, life science, residential, and retail projects underway comprising 3.5 million square feet and $3.7 billion of BXP investment.

Speaker #4: We expect to capitalize new development starts with financial partners owning the majority of the equity . We continue to advance our development pipeline this quarter , we delivered three office projects , 1050 Winter Street , Reston , next office phase two , the office component of both these assets are fully leased and 360 Park Avenue South .

Speaker #4: Currently , 38% leased and experiencing accelerating leasing activity . We have eight office Life science , residential and retail projects underway , comprising 3.5 million square feet and $3.7 billion of Bxp investment .

Owen Thomas: We expect these projects will deliver strong external growth both in the near term with the delivery of 290 Benny Street midway through next year and over the longer term. Our Washington, D.C. team is also working on another premier workplace build-to-suit opportunity. A final goal is to introduce a financial partner into our 343 Madison development project, which is under construction as we have described. 343 Madison is a leading premier workplace new development project in New York City. Given its location with direct access to Grand Central Terminal and state-of-the-art amenities and design, we are finalizing a lease commitment with a financial services client for 30% of the space in the middle bank of the building. We are also in discussions with several other large users for the balance of the space in the project.

Speaker #4: We expect these projects will deliver strong external growth both in the near term with the delivery of 290 Binney Street midway through next year and over the longer term , our Washington , D.C.

Speaker #4: , team is also working on another premier workplace build to suit opportunity . A final goal is to introduce the financial partner into our 343 Madison development project , which is under construction .

Speaker #4: As we have described . 343 Madison is a leading premier workplace new development project in New York City . Given its location with direct access to Grand Central Terminal and state of the art amenities and design .

Speaker #4: We are finalizing a lease commitment with a financial services client for 30% of the space in the middle bank of the building. We are also in discussions with several other large users for the balance of the space in the project.

Owen Thomas: Our financial goal is to introduce an equity partner for a 30% to 50% interest in the property. While we are in very preliminary discussions with a small number of investors who have expressed interest, we believe the value of the asset will appreciate given our leasing progress and the accelerating market rent growth in the Midtown office market and do not expect to finalize an investment until sometime in 2026. In conclusion, our clients in general are growing healthy and more intensively using their space, creating increasingly positive leasing market conditions concentrated in the premier workplace segment of the market. New construction for office has virtually halted, leading to higher occupancy and rent growth in many submarkets where BXP operates. Debt and equity investors are becoming constructive on the office sector, resulting in more availability of capital at better pricing.

Speaker #4: Our financial goal is to introduce an equity partner for 30 for a 30 to 50% interest in the property . While we are in very preliminary discussions with a small number of investors who have expressed interest , we believe the value of the asset will appreciate given our leasing progress and the accelerating market rent growth in the Midtown office market .

Speaker #4: And do not expect to finalize an investment until sometime in 2026 . In conclusion , our clients in general are growing healthy and more intensively using their space , creating increasingly positive leasing market conditions concentrated in the premier workplace segment of the market .

Speaker #4: New construction for office has virtually halted , leading to higher occupancy and rent growth in many submarkets , where Bxp operates . Debt and equity investors are becoming constructive on the office sector , resulting in more availability of capital at better pricing .

Owen Thomas: BXP is very much on track executing our business plan as outlined last month, which we believe will deliver both FFO growth and deleveraging in the years ahead. Let me turn it over to Doug.

Speaker #4: Bxp is very much on track , executing our business plan as outlined last month , which we believe will deliver both FFO growth and deleveraging in the years ahead .

Speaker #4: Let me turn it over to Doug.

Douglas Linde: Thanks, Owen. Good morning, everybody. It has been six and a half weeks since we made our presentations.

Speaker #5: Thanks , Owen . Good morning everybody . So it's been six and a half weeks since we made our presentations at our Investor Day .

Michael LaBelle: Our Investor Day, and I'm going to.

Speaker #5: And I'm going to begin my comments this morning by affirming our expectations relative to our same store leasing , occupancy growth and bottom line contribution to future earnings .

Douglas Linde: Begin my comments this morning by affirming our expectations relative to our same store leasing occupancy growth and bottom line contribution to future earnings. As you probably noticed, our beat this quarter came directly from better operating portfolio performance. We have entered a 30 month period of very light lease expirations, 60% of the historical annual average over the last 10 years, and we've now reduced our 2026 and 2027 expirations by another 8% from 6/30/25. The total expiring square footage on our 49 million square foot portfolio is 3.8 million square feet. During 29 of the last 39 quarters, we executed leases in excess of a million square feet. With this quarter's 1.5 million square foot performance added, we will surpass our goal of 4 million square feet for 2025.

Speaker #5: As you probably noticed, our beat this quarter came directly from better operating portfolio performance. We have entered a 30-month period of very light lease expirations.

Speaker #5: 60% of the historical annual average over the last ten years , and we've now reduced our 26 and 27 expirations by another 8% from 630 , 25 .

Speaker #5: So the total expiring expiring square footage on our 49,000,000 square foot portfolio is three point 8,000,000ft² . During 29 of the last 39 quarters .

Speaker #5: We executed leases in excess of 1,000,000ft² with this quarter's one point 5,000,000 square foot performance added . We will surpass our goal of 4,000,000ft² for 2025 , Mike says .

Douglas Linde: Mike says to say confidently, as I described in my remarks in September, leasing vacant space improves occupancy and delivers the highest contribution to revenue growth. During 1H25, we leased 810,000 square feet of vacant space and this quarter we leased an additional 490,000 square feet of vacancies, making this the seventh consecutive quarter of between 400,000 and 500,000 square feet of vacancy leasing post 10/25. At the beginning of the fourth quarter, we had 1.8 million square feet of leases in negotiation, which is where we began the beginning of the second quarter. We have continued to replenish the pipeline. The space under lease negotiations includes 650,000 square feet of currently vacant space, 71,000 square feet of known 2025 expirations, and 450,000 square feet of 2026-2027 expirations.

Speaker #5: To say confidently , as I described in my remarks in September , leasing vacant space improves occupancy and delivers the highest contribution to revenue growth during the first half of 25 , we leased 810,000ft² of vacant space , and this quarter we leased an additional 490,000ft² of vacancies , making this the seventh consecutive quarter of between 400 and 500,000ft² of vacancy .

Speaker #5: Leasing post 1025 . So at the beginning of the fourth quarter , we had one point 8,000,000ft² of leases in negotiation , which is where we began the beginning of the second quarter .

Speaker #5: So we have continued to replenish the pipeline . The space under lease negotiations includes 650,000ft² of currently vacant space , 71,000ft² of known 25 expirations , and 450,000ft² of 2627 expirations .

Douglas Linde: In addition, we have active dialogue on other space that's not yet in lease negotiation totaling about 1.1 million square feet, and that includes more than 125,000 square feet on buildings that were delivered into the portfolio this quarter, aka 360 Park Avenue South. Last quarter on our call, we called out the delivery of the three development properties in our portfolio that would occur this quarter and result in an estimated 70 basis point reduction in our occupancy from the portfolio additions. I'm happy to report that the in service occupancy as of 9/30/25 decreased by only 40 basis points to 86% BXP's total sequential same store portfolio occupancy excluding the portfolio additions. Looking back to where we were at the end of the second quarter, occupancy actually increased by 20 basis points and ended the quarter at 86.6%.

Speaker #5: In addition , we have active dialogue on other space that's not yet in lease negotiation , totaling about one point 1,000,000ft² . And that includes more than 125,000ft² on buildings that were delivered into the portfolio this quarter , aka 360 Park Avenue South last quarter .

Speaker #5: On our call , we called out the delivery of the three development properties in our portfolio that would occur this quarter and result in an estimated 70 basis point reduction in our occupancy from the portfolio .

Speaker #5: Additions . I'm happy to report that the in-service occupancy as of nine 3025 decreased by only 40 basis points to 86% . Bcp's total sequential same store portfolio occupancy , excluding the portfolio additions .

Speaker #5: So, looking back to where we were at the end of the second quarter, we actually increased by 20 basis points and ended the quarter at 86.6%.

Douglas Linde: The largest lease starts and expirations this quarter all came in the Urban Edge portfolio of Boston. We had 160,000 square feet expiration at 1,000 Winter Street, which by the way is a building that we are considering for a potential conversion to residential. We executed and delivered 104,000 square feet at 153 Second Avenue. The full building lease at 1050 Winter Street, 462,000 square feet, commenced this quarter. We placed 360 Park Avenue South Reston next phase two into service and we added 130,000 square feet of occupied space and 405,000 square feet of vacant space, of which 120,000 is leased but not yet occupied. BXP's total portfolio percentage leased for the quarter was 88.8%, a decline of 30 basis points excluding the impact of placing the three development properties in service. Going back to 630, the lease percentage increased by 10 basis points to 89.2%.

Speaker #5: The largest lease starts in expirations this quarter all came in the urban Edge portfolio of Boston . We had 160,000ft² expiration at 1000 Winter Street , which , by the way , is a building that we are considering for a potential conversion to residential .

Speaker #5: We executed and delivered 104,000ft² at 153 Second Avenue in the full building lease at 1050 Winter Street for 162,000ft² , commenced this quarter .

Speaker #5: We placed 360 Park Avenue South , Reston . Next phase two into service , and we added 130,000ft² of occupied space and 405,000ft² of vacant space , of which 120,000 is leased , but not yet occupied .

Speaker #5: Bxp total portfolio percentage lease for the quarter was 88.8% , a decline of 30 basis points . Excluding the impact of placing the three development properties in service .

Speaker #5: So again , going back to 630 , the lease percentage increased by ten basis points to 89.2% . The difference between the leased and occupied square footage has grown again this quarter , and now sits at one point 4,000,000ft² , 300,000ft² is expected to become occupied in 25 .

Douglas Linde: The difference between the leased and occupied square footage has grown again this quarter and now sits at 1.4 million square feet. 300,000 square feet is expected to become occupied in 2025. About a million square feet is going to commence in the back half of 2026 and another 100,000 square feet in 2027. Owen described the magnitude of the operating assets being actively marketed for sale. As we dispose of assets, we will disclose the incremental impact of occupancy from the changes in the portfolio. Looking forward, we project that the current in service portfolio, which includes the recent development deliveries, to end 2025 at approximately 86.2% occupied and 2026 at 88.3% occupied, a 210 basis point increase with most of the improvement in 2H26.

Speaker #5: About 1,000,000ft² is going to commence in the back half of 26 , and another 100,000ft² in 27 . Owen described the magnitude of the operating assets being actively marketed for sale .

Speaker #5: As we dispose of assets , we will disclose the incremental impact of occupancy from the changes in the portfolio . Looking forward , we project that the current in-service portfolio , which includes the recent development deliveries to end 25 at approximately 86.2% , occupied and 26 at 88.3% occupied , a 210 basis point increase , with most of the improvement in the second half of 26 .

Douglas Linde: We are reaffirming our guidance from the Investor Day adjusted for the 70 basis points of impact from the Q3 new deliveries, which we also disclosed at that time. The overall mark to market on leases signed this quarter on a cash basis was up almost 7% with a 12% increase in Boston, a 7% increase in New York, flat results in Washington, D.C., and a 4% decrease on the West Coast. This quarter we executed a number of larger leases, including five that were each over 75,000 square feet. 60% of the square footage involved renewals or extensions and 40% was either new clients or expansions from existing clients. Existing client expansions encompassed 84,000 square feet of the activity. The second generation rents in the leasing statistics this quarter represent about 523,000 square feet and are down on a gross basis about 4%.

Speaker #5: We are reaffirming our guidance from the Investor Day , adjusted for the 70 basis points of impact from the Q3 new deliveries , which we also disclosed at that time .

Speaker #5: The overall mark-to-market on leases signed this quarter on a cash basis was up almost 7%, with a 12% increase in Boston, a 7% increase in New York, and flat results in D.C.

Speaker #5: , and a 4% decrease on the West Coast . This quarter . We executed a number of larger leases , including five that were each over 75,000ft² , 60% of the square footage involved renewals that extensions , and 40% was either new clients or expansions from existing clients .

Speaker #5: Existing client expansions encompassed 84,000ft² of the activity . The second generation rents in the leasing statistics this quarter represented about 523,000ft² , and are down on a gross basis of about 4% .

Douglas Linde: The LA statistic had a whopping 1,300 square foot lease and San Francisco included 117,000 square feet with 74,000 square feet, so about 2/3 coming from our Mountain View properties. I want to pivot my remarks now to the market conditions and the activity we're capturing. Our leasing this quarter came from 79 transactions, 398,000 square feet in Boston, 795,000 square feet in New York, 191,000 square feet on the West Coast and 140,000 square feet in D.C. In the BXP portfolio, Midtown, New York City, the Back Bay of Boston and Reston, Virginia continue to have the tightest supply and therefore the most landlord favorable conditions. What this means is that net effective rents are increasing due to either higher rental rates or flat or decreasing concessions or both.

Speaker #5: The LA statistic had a whopping 1,300 square foot lease, and San Francisco included 117,000 ft² with 74,000 ft². So about two-thirds are coming from our Mountain View properties.

Speaker #5: I want to pivot my remarks now to the market conditions and the activity we're capturing . Our leasing this quarter came from 79 transactions , 398,000ft² in Boston , 795,000ft² in New York , 191,000ft² on the West Coast , and 140,000ft² in D.C.

Speaker #5: in the Bxp portfolio , Midtown New York City , the back Bay of Boston and Reston , Virginia continue to have the tightest supply , and therefore the most landlord favorable conditions .

Speaker #5: What this means is that net effective rents are increasing due to either higher rental rates or flat or decreasing concessions , or both .

Douglas Linde: The big complications in Boston this quarter took place in our Urban Edge portfolio where we completed over 200,000 square feet of leasing to life science clients. This included a 104,000 square foot lease with a drug development and medical device research services company and five, counted five, additional pure office leases with life science organizations. Our remaining first generation life science availability in the Urban Edge is now limited to 70,000 square feet at 180 City Point and 112,000 square feet at 100103 City Point. That's a total of 180,000 square feet. That's our life science first generation exposure. Demand for wet lab space continues to be tepid. There are a few lab users actively touring, but the requirements from very early stage clients continues to be limited. In the Boston CBD, we continue to complete renewals.

Speaker #5: The big compliments in Boston this quarter took place in our urban Edge portfolio , where we completed over 200,000ft² of leasing to life science clients .

Speaker #5: This included 104,000 square foot lease with a drug development and medical device research services company , and five counted five additional pure office leases with life science organizations .

Speaker #5: Our remaining first generation life science availability in the urban edge is now limited to 70,000ft² at 100 City Point and 112,000ft² at 103 103 City Point .

Speaker #5: So that's a total of 180,000 ft². That's our life science first generation exposure. Demand for wet lab space continues to be tepid.

Speaker #5: There are a few lab users actively touring , but the requirements from very early stage clients continues to be limited in the Boston CBD , we continue to complete renewals in the back Bay portfolio .

Douglas Linde: In the Back Bay portfolio this quarter we completed about 140,000 square feet. As you can see from our property occupancy tables, availability is very limited. Net effective rents are improving. In New York, our executed leasing activity was focused on the Midtown East portfolio. The underpinning of this demand is the growth of clients in a variety of asset management strategies. I described a series of client initiated early extensions under negotiation last quarter. 500,000 square feet were executed this quarter, with the largest being at 399 Park Avenue. There have been many unconfirmed press reports about our lead tenant for 343 Madison. If that client were to come from one of our Midtown assets, there would be strong demand for the space at either 601 Lexington Avenue, 599 Lexington or 399 Park Avenue.

Speaker #5: This quarter, we completed about 140,000 ft², and as you can see from our property occupancy tables, availability is very limited. Net effective rents are improving in New York.

Speaker #5: Our executed leasing activity was focused on the Midtown East portfolio . The underpinning of this demand is the growth of clients in a variety of asset management strategies .

Speaker #5: I described a series of client initiated early extensions under negotiation last quarter . Well , 500,000ft² were executed this quarter with a largest being at 399 Park Avenue .

Speaker #5: There have been many unconfirmed press reports about our lead tenant for 343 Madison . If that client were to come from one of our Midtown assets , there would be strong demand for the space at either 601 Lexington Avenue , 599 Lexington , or 399 Park Avenue .

Douglas Linde: The average in place fully escalated rent is under $110 a square foot, which is significantly below market this quarter. While our executed leases were primarily in Midtown, the new client inquiry story was focused on 360 Park Avenue South, where we have our largest availability. In Manhattan, activity at the building has grown substantially and we executed two leases during the quarter. There are a few AI companies in the mix, but much of the activity is being driven by financial service and asset management organizations, the heart of New York City. We have 56,000 square feet of leases in negotiation and letters of intent discussions on more than 125,000 square feet.

Speaker #5: The average in place fully escalated . Rent is under $110 a square foot , which is significantly below market this quarter . While our executed leases were primarily in Midtown , the new client inquiry story was focused on 360 Park Avenue South , where we have our largest availability in Manhattan activity at the building has grown substantially , and we executed two leases during the quarter .

Speaker #5: There are a few AI companies in the mix , but much of the activity is being driven by financial service and asset management organizations .

Speaker #5: The heart of New York City , we have 56,000ft² of leases in negotiation and letters of intent . Discussions on more than 125,000ft² .

Douglas Linde: All of these leases would commence in 2026 with a tightening of availability in the Park Avenue and now the Sixth Avenue submarkets. We are also seeing stronger activity at Times Square Tower, where we are in lease negotiations with over 100,000 square feet of new client demand. Down in Princeton, we completed over 160,000 square feet of leasing with eight clients, including a 134,000 square foot renewal with a life science client, again with no lab infrastructure. In San Francisco, the demand from organizations that describe themselves as AI business continues to accelerate. The bulk of this demand is concentrated south of Mission Street. The majority of these requirements are looking for inexpensive, fully built and furnished space with short term commitments.

Speaker #5: All of these leases would commence in 26 with a tightening of availability in the Park Avenue . And now the Sixth Avenue submarkets .

Speaker #5: We're also seeing strong , stronger activity at Times Square Tower , where we are in lease negotiations with over 100,000ft² of new client demand .

Speaker #5: And down in Princeton , we completed over 160,000ft² of leasing with eight clients totaling , including 134,000ft² . Renewal with a life science client , again with no lab infrastructure in San Francisco , the demand from organizations that describe themselves as AI business continues to accelerate the bulk of this demand is concentrated south of Mission Street .

Speaker #5: The majority of these requirements are looking for inexpensive , fully built , and furnished space with short term commitments . To date , these criteria have been available in either sublease situations or with landlords that have direct space that was vacated by tech companies over the past three years .

Douglas Linde: To date, these criteria have been available in either sublease situations or with landlords that have direct space that was vacated by tech companies over the past three years. These opportunities in medium sized blocks, 25,000 to 100,000 square feet, are quickly shrinking. The result has been a dramatic pickup of activity at our 680 Folsom, 50 Hawthorne assets, which are south of Mission between Foundry Square and Mission Bay. We have had multiple tours every week and are exchanging proposals with tenants ranging from a single floor to over 200,000 square feet. During the first six months of the year, we had 11 unique tours of the property. In the month of July, we had seven, in August nine, in September ten, and so far in October fourteen. That AI demand has not translated into a commensurate pickup in ancillary professional services.

Speaker #5: These opportunities in medium sized blocks , 25 to 100,000ft² are quickly shrinking . The result has been a dramatic pickup of activity at our 680 Folsom , 50 Hawthorne assets , which are south of mission between Foundry Square and Mission Bay .

Speaker #5: We have had multiple tours every week , and our exchanging proposals with tenants ranging from a single floor to over 200,000ft² . During the first six months of the year , we had 11 unique tours of the property .

Speaker #5: In the month of July , we had seven . In August , nine in September , ten , and so far in October 14 that AI demand has not translated into a commensurate pickup in ancillary professional services .

Douglas Linde: Growth in the high rise assets in San Francisco. While San Francisco is unequivocally the financial capital of the west, the organizations that are growing assets under management in San Francisco are not expanding at the same levels we're experiencing in our New York and Boston portfolios. There's clearly been a pickup in activity and the premier buildings are gaining market share, but it's just nothing like the client growth from the AI companies south of Mission where CBRE reports that there are 36 AI active tenants with aggregate growth of 1.5 million square feet in the market right now. In our towers we completed about 100,000 square feet of transactions this quarter. The rest of the west coast activity came from Mountain View where we signed 30,000 square feet and Seattle where we completed 54,000 square feet of vacant space. Leasing activity in Washington, D.C.

Speaker #5: Growth in the high rise assets in San Francisco , while San Francisco is unequivocally the financial capital of the West , the organizations that are growing assets under management in San Francisco are not expanding at the same levels .

Speaker #5: We are experiencing growth in our New York and Boston portfolios. There's clearly been a pickup in activity, and the premier buildings are gaining market share, but it's just nothing like the client growth from the AI companies south of Mission.

Speaker #5: CBR reports that there are 36 AI active tenants with aggregate growth of 1,500,000 ft² in the market right now. In our towers, we completed about 100,000 ft² of transactions this quarter.

Speaker #5: The rest of the West Coast activity came from Mountain View , where we signed 30,000ft² . In Seattle , where we completed the 54,000ft² of vacant space , leasing activity in DC continues to be concentrated in Reston Town Center .

Douglas Linde: continues to be concentrated in Reston Town Center. This quarter we executed a 51,000 square foot lease on space that was vacated by Meta in June of this year as well as a handful of smaller office and retail leases. The government shutdown has had minimal impact on government contractor leasing activities. The private sector clients that have space needs are all still active in the market. Before I conclude my remarks, I want to update our construction activities, particularly because we are in the process of establishing our GMP for 343 Madison. Subcontractors are actively bidding the job after taking into consideration the tariffs associated with non-domestic suppliers and the most recent country agreements. We expect to purchase our steel from U.S. manufacturers and we are within our expected budgets with all included anticipated savings relative to our last GC estimate.

Speaker #5: This quarter , we executed a 51,000 square foot lease on space that was vacated by Meta in June of this year , as well as a handful of smaller office and retail leases .

Speaker #5: The government shutdown has had minimal impact on government contractor leasing activities . The private sector clients that have space needs are all still active in the market .

Speaker #5: Before I conclude my remarks , I want to update our construction activities , particularly because we are in the process of establishing our GMP for 343 Madison subcontractors are actively bidding the job after taking into consideration the tariffs associated with non domestic suppliers and the most recent country agreements , we expect to purchase our steel from us manufacturers and we are within our expected budgets with all include anticipated savings relative to our last GC estimate .

Douglas Linde: Given the overall slowdown in construction activity in our markets, there is enough subcontractor interest to provide savings in spite of all the tariff increases. Remember, construction is a composition of labor cost, material cost, and profit. Let me hand the call over to Mike.

Speaker #5: Given the overall slowdown in construction activity in our markets , there is enough subcontractor interest to to provide savings in spite of all the tariff increases .

Speaker #5: Remember , construction is a composition of labor costs , material costs and profit . And let me hand the call over to my .

[Company Representative]: Great. Thanks Doug. Good morning. Today I'm going to cover some of our activity in the capital markets as well as our third quarter earnings results, an update to our full year guidance, and some updates on our expectations for 2026. Since our Investor Day in early September, the debt markets have been steadily improving. Throughout 2025 and this quarter we opportunistically and successfully accessed both the secured and unsecured markets. In late September we closed on $1 billion of five-year unsecured exchangeable notes at a 2% coupon. If you include closing costs, the interest cost we will record for GAAP is 2.5%. This will refinance a $1 billion bond issue that expires in February of next year and carries a GAAP yield of 3.77%. The notes include a conversion premium at a stock price of $92.44 per share.

Speaker #6: Great . Thanks , Doug . Good morning . Today I'm going to cover some of our activity in the capital markets , as well as our third quarter earnings results .

Speaker #6: An update to our full year guidance and some updates on our expectations for 2026 . Since our Investor Day in early September , the debt markets have been steadily improving throughout 2025 .

Speaker #6: In this quarter , we opportunistically and successfully accessed both the secured and unsecured markets . In late September , we closed on $1 billion of five year unsecured exchangeable notes at a 2% coupon .

Speaker #6: If you include closing costs , the interest cost , we will record for GAAP is 2.5% . This will refinance $1 billion bond issue that expires in February of next year .

Speaker #6: And carries a GAAP yield of 3.77%. The notes include a conversion premium at a stock price of $92.44 per share. So, if our stock trades above the conversion premium during the term, our diluted share count will increase.

[Company Representative]: If our stock trades above the conversion premium during the term, our diluted share count will increase. We also acquired a capped call to increase the conversion premium to 40% or $105.64 per share to reduce the dilution from the increase in our share price. The capped call has no impact on our P&L or our diluted share count during the term; it is settled at maturity. The market demand for our deal was exceptionally strong and we were five times oversubscribed. That allowed us to price the security in the low end of our expected pricing range and upsize the deal from the $600 million initially offered to $1 billion. We also closed a $465 million mortgage refinancing on our Hub on Causeway office and retail complex that we own in a joint venture where our share is 50%.

Speaker #6: We also acquired a capped call to increase the conversion premium to 40%, or $105.64 per share, to reduce the dilution from an increase in our share price.

Speaker #6: The capped call has no impact on our PNL or our diluted share count . During the term . It settled at maturity . The market demand for our deal was exceptionally strong , and we were five times oversubscribed .

Speaker #6: That allowed us to price the security in the low end of our expected pricing range and upsize the deal from $600 million.

Speaker #6: Initially offered to $1 billion . We also closed a $465 million mortgage refinancing on our hub on Causeway office and retail complex that we own in a joint venture where our share is 50% .

[Company Representative]: This loan was executed as a single asset securitization in the CMBS market and it priced at a 5.73% fixed rate for a five and a half year term. This is approximately 50 basis points lower than the floating rate on the prior loan. The pricing equated to about a 200 basis point credit spread for a premier quality secured mortgage with a 55% loan to value ratio. There have been about a dozen single asset securitizations completed on office buildings in the past six months and that demonstrates the CMBS market is supportive of financing high quality large office assets on competitive terms and credit spreads have been consistently improving. We expect this will help lead to a healthier sales market as Owen described. Overall, we continue to have very strong access to all the capital markets to finance our business.

Speaker #6: This loan was executed as a single asset securitization in the CMBS market , and it priced at a 5.73% fixed rate for a five and a half year term .

Speaker #6: This is approximately 50 basis points lower than the floating rate on the prior loan . The pricing equated to about a 200 basis point credit spread for a premier quality secured mortgage with a 55% loan to value ratio , there have been about a dozen single asset securitizations completed on office buildings in the past six months , and that demonstrates the CMS market is supportive of financing high quality , large office assets on competitive terms and credit spreads have been consistently improving .

Speaker #6: We expect this will help lead to a healthier sales market as Owen described . Overall , we continue to have very strong access to all the capital markets to finance our business .

[Company Representative]: This includes the debt markets as well as the asset sales environment where we expect to be increasingly active. Now I would like to turn to our earnings for the quarter. Last night we reported funds from operations for the third quarter of $1.74 per share, which is $0.04 per share above the midpoint of the FFO guidance range we provided in July. All the outperformance came from better than projected same property portfolio NOI due to a combination of the straight line rent impact of completing early renewals at higher rents and lower net operating expenses in the portfolio. Our occupancy came right in line with our expectations. As Doug described, occupancy in the same property pool increased by 20 basis points from last quarter. We grew occupancy sequentially in Boston, New York, Reston, and Princeton.

Speaker #6: This includes the debt markets as well as the asset sales environment, where we expect to be increasingly active. Now, I would like to turn to our earnings for the quarter.

Speaker #6: Last night we reported funds from operations for the third quarter of $1.74 per share , which is $0.04 per share above the midpoint of the FFO guidance range .

Speaker #6: We provided in July . All the outperformance came from better than projected same property portfolio NOI due to a combination of the straight line rent impact of completing early renewals at higher rents and lower net operating expenses in the portfolio .

Speaker #6: Our occupancy came right in line with our expectations. As Doug described, occupancy in the same property pool increased by 20 basis points from last quarter.

Speaker #6: We grew occupancy sequentially in Boston , New York City , Reston and Princeton . The improvement showed up in our top line lease revenues that increased $4 million this quarter in our leasing activity this quarter , we executed for early renewals totaling 500,000ft² at 399 Park and 200 Clarendon Street , with future starting rents nearly 15% higher than our in-place rents .

[Company Representative]: The improvement showed up in our top line lease revenues that increased $4 million this quarter. In our leasing activity this quarter we executed four early renewals totaling 500,000 square feet at 399 Park and 200 Clarendon Street, with future starting rents nearly 15% higher than our in place rents. We are locking in future rental rate increases and a portion is straight lined into the current period and improving 2025 revenues. Our portfolio revenues exceeded our guidance for the quarter by approximately $0.02 per share. On the expense side, we experienced lower than anticipated repair and maintenance expenses this quarter and that contributed $0.02 per share to our outperformance. I anticipate that we will give some of this performance back in the fourth quarter as our teams complete RNM projects that were budgeted for Q3 but not completed in the quarter.

Speaker #6: We are locking in future rental rate increases, and a portion is straight-lined into the current period, improving 2025 revenues. Our portfolio revenues exceeded our guidance for the quarter by approximately $0.02 per share.

Speaker #6: On the expense side , we experienced lower than anticipated repair and maintenance expenses this quarter , and that contributed $0.02 per share to our outperformance .

Speaker #6: I anticipate that we will give some of this performance back in the fourth quarter as our teams complete projects that were budgeted for Q3 , but not completed in the quarter .

[Company Representative]: We also recorded $212 million of impairments this quarter related to assets that are part of our strategic sales program we announced on our Investor Day. The accounting guidance requires that we recognize impairments to fair value when we shorten our hold period and prior to an asset sale actually closing. On the flip side, gains on sale are not recorded until the sale closes. If you look at our sales program as a whole, we anticipate that the aggregate gains less impairments will total nearly $300 million. We expect gains will be recorded in future quarters as we execute our sales strategy. Looking at the rest of 2025, we've increased our guidance range by $0.03 per share at the midpoint and we expect full year 2025 FFO of $6.89 to $6.92 per share.

Speaker #6: We also recorded $212 million of impairments this quarter related to assets that are part of our strategic sales program . We announced on our Investor Day the accounting guidance requires that we recognize impairments to fair value when we shorten our hold period and prior to an asset sale , actually closing on the flip side , gains on sale are not recorded until the sale closes .

Speaker #6: So if you look at our sales program as a whole , we anticipate that the aggregate gains less impairments will total nearly $300 million .

Speaker #6: We expect gains will be recorded in future quarters as we execute our sales strategy . Looking at the rest of 2025 , we've increased our guidance range by $0.03 per share at the midpoint , and we expect full year 2025 FFO of $6.89 to $6.92 per share .

[Company Representative]: Our increased guidance includes a $0.07 increase in the low end of our range, reflecting outperformance from the third quarter, some of which was incorporated into our guidance range we provided last quarter sequentially. We expect Q4 funds from operations to be higher than our Q3 actual FFO from higher portfolio NOI and lower net interest expense. With respect to changes in our guidance, the outperformance in our same property portfolio is expected to add an incremental $4 million to our full year NOI assumption that equates to about $0.02 per share of improvement. We have reduced our net interest expense projections for the full year 2025 by approximately $6 million or $0.03 per share.

Speaker #6: Our increased guidance includes a seven cent increase in the low end of our range , reflecting outperformance from the third quarter , some of which was incorporated into our guidance range .

Speaker #6: We provided last quarter. Sequentially, we expect Q4 funds from operations to be higher than our Q3. Actual FFO will result from higher portfolio NOI and lower net interest expense.

Speaker #6: With respect to changes in our guidance, the outperformance in our same property portfolio is expected to add an incremental $4 million to our full-year NOI assumption.

Speaker #6: That equates to about $0.02 per share of improvement . We have reduced our net interest expense projections for the full year 2025 by approximately $6 million , or $0.03 per share , the improvement is from our new billion dollar exchangeable notes offering , where we're recording interest expense at 2.5% , and we're actually earning over 4% on the proceeds until we repay our expiring bonds on February 1st next year .

[Company Representative]: The improvement is from our new billion dollar unsecured exchangeable note operating where we're recording interest expense at 2.5% and we're actually earning over 4% on the proceeds until we repay our expiring bonds on February 1st next year. We also improved the interest rate with our Hub on Causeway refinancing, and we're projecting several asset sales to occur in the fourth quarter that will reduce our debt. These increases to our FFO are anticipated to be partially offset from the reduction of about $0.02 per share of NOI from asset sales that we expect will close in the fourth quarter. If you include the associated changes in interest expense, our fourth quarter asset sales are projected to be diluted by a penny per share.

Speaker #6: And we also improved the interest rate with our hub on Causeway refinancing . And we're projecting several asset sales to occur in the fourth quarter .

Speaker #6: That will reduce our debt . These increases to our FFO are anticipated to be partially offset from the reduction of about $0.02 per share of NOI from asset sales that we expect will close in the fourth quarter .

Speaker #6: If you include the associated changes in interest expense, our fourth quarter asset sales are projected to be dilutive by a penny per share.

[Company Representative]: To summarize, we've increased our guidance range for 2025 FFO by $0.03 per share at the midpoint, $0.02 of higher same property NOI, $0.03 of lower net interest expense, offset by $0.02 of lower NOI from asset sales. At our investor conference last month, we provided some insights into our expectations for FFO growth in 2026. Doug described our active leasing pipeline that we expect will lead to higher occupancy primarily in the back half of next year. We are off to a strong start on our refinancing plan with our unsecured exchangeable note deal pricing with a GAAP yield that is 75 basis points better than we anticipated. The impact is about $0.04 per share of lower interest expense in 2026 than we described at our investor day. We still have a billion dollar bond issue expiring October 1st next year that has a 3.5% yield.

Speaker #6: So to summarize , we've increased our guidance range for 2025 FFO by $0.03 per share at the midpoint , $0.02 of higher same property NOI , $0.03 of lower net interest expense , offset by $0.02 of lower NOI from asset sales at our investor conference last month , we provided some insight into our expectations for FFO growth in 2026 .

Speaker #6: Doug described our active leasing pipeline that we expect will lead to higher occupancy , primarily in the back half of next year . We are off to a strong start on our refinancing plan with our exchangeable notes , deal pricing with a gap yield that is 75 basis points better than we anticipated .

Speaker #6: The impact is about $0.04 per share of lower interest expense in 2026 . Than we described at our Investor Day . We still have $1 billion bond issue expiring October 1st next year .

Speaker #6: That has a 3.5% yield . We currently project that we will refinance it with a ten year unsecured bond , where we could issue today at approximately 5.5% .

[Company Representative]: We currently project that we will refinance it with a 10 year unsecured bond where we could issue today at approximately 5.5%. The other factor that is fluid and will have an impact on our 2026 results is the timing of our asset sales. As we stated at our Investor Day, we expect the program to be slightly dilutive in 2026. We are seeing good response to date, which could accelerate some of our sales. We will continue to update you every quarter on the success of the program as it evolves. That completes our formal remarks. Operator, can you open the lines for questions?

Speaker #6: The other factor that is fluid and will have an impact on our 2026 results , is the timing of our asset sales . As we stated at our Investor Day , we expect the program to be slightly dilutive in 2026 .

Speaker #6: We are seeing good response to date , which could accelerate some of our sales . We will continue to update you every quarter on the success of the program as it evolves .

Speaker #6: That completes our formal remarks . Operator can you open the lines for questions ?

Operator: Thank you, sir. As a reminder, to ask a question, you would need to press Star 11 on your telephone. To withdraw your question, please press Star 11. Again, we ask that you please limit your questions to no more than one, but feel free to go back into the queue, and if time permits, we'll be happy to take your follow-up questions at that time. Please stand by while we compile the Q&A roster, and I share our first question comes from the line of Steve Sakwa from Evercore ISI. Please go ahead.

Speaker #2: Thank you sir . As a reminder to ask a question , you would need to press star one . One on your telephone .

Speaker #2: To withdraw your question , please press star one one again . We ask that you please limit your questions to no more than one , but feel free to go back into the queue and if time permits , we'll be happy to take your follow up questions at that time , please stand by while we compile the Q&A roster .

Speaker #2: And I share . Our first question comes from the line of Steve from Evercore ISI . Please go ahead .

[Analyst]: Yeah, thanks. I guess I wanted to go back to maybe some of the comments you made about reallocating capital into the premier locations. As you're looking at deals, how are you thinking about some of your smaller markets like Seattle and LA, where you haven't had the success in scaling those markets? Are you seeing the opportunities to buy high quality assets in the submarkets that you want to be in? Are you finding development opportunities, and how do you think about those markets long term if you aren't able to scale?

Speaker #7: Yeah , thanks . I want I guess I wanted to go back to maybe some of the comments you made about Re-allocating capital into to the Premier locations and , and you know , as you're looking at deals , you know , how are you thinking about some of your smaller markets like Seattle and LA , where you haven't had the success in scaling those markets ?

Speaker #7: And , you know , a are you seeing the opportunities to buy high quality assets in the submarkets that you want to be in ?

Speaker #7: Are you finding development opportunities ? And like , I guess , how do you think about those markets long term ? If you aren't able to scale ?

Owen Thomas: Yeah, good morning, Steve.

Speaker #8: Yeah .

Speaker #4: Good morning Steve . So you're asking about LA and Seattle where they are smaller markets for us . Now we have a toehold a couple of assets in each .

Michael LaBelle: You're asking about LA and Seattle where they are smaller markets.

Owen Thomas: For us now we have a toehold, a couple of assets in each. You know, they're on the West Coast, so those markets from a leasing standpoint are weaker in general than our East Coast markets. I don't think there are development opportunities in LA or Seattle at the moment.

Speaker #4: You know they're on the West Coast . So those markets from a leasing standpoint are weaker in general than our East Coast markets .

Speaker #4: I don't think there are development opportunities in LA or Seattle at the moment . I don't think there are any in San Francisco either , because those markets are weaker .

Michael LaBelle: I don't think there are any in.

Owen Thomas: San Francisco either because those markets are.

Michael LaBelle: Weaker. The leasing is not as strong.

Speaker #4: The leasing is not as strong . The vacancy is higher . So I certainly don't see any near-term development opportunities . And , you know , if an acquisition opportunity presents itself in those markets , we would certainly look at it .

Owen Thomas: The vacancy is higher. I certainly don't see any near term development opportunities, and if an acquisition opportunity presents itself in those markets, we would certainly look at it, but acknowledge that those markets are smaller at this juncture.

Speaker #4: But acknowledge that those markets are smaller at this juncture .

Operator: Thank you. Our next question comes from the line of Anthony Paolone from JPMorgan. Please go ahead.

Speaker #2: Thank you . And I show our next question comes from the line of Anthony Pallone from JP Morgan . Please go ahead .

Owen Thomas: Yeah, thanks. Good morning. On a call yesterday, one of the other office names talked about just having done enough leasing in 2026 at this point that what's remaining just may have a lower retention rate. Just wondering how you're thinking about what's left for you all in 2026, given you've done so much this year and just, you know, any risk around or confidence level around the couple hundred basis points of pickup in occupancy you've outlined.

Speaker #9: Yeah . Thanks . Good morning . You know , on a call yesterday , one of the other office names talked about just having done enough leasing in 2006 .

Speaker #9: At this point that what's remaining just may have a lower retention rate . And so just wondering how you're thinking about what's left for you all in 26 , given you've done so much this year and just , you know , any risk around or confidence level around the couple of hundred basis points of pickup in occupancy outlined .

Michael LaBelle: Tony, this is Doug. We are working as quickly and as thoughtfully as we can to renew as many of our clients as we would have in the portfolio if we can accommodate their growth and if they're able to continue to want to be in business. I would tell you that our available set of tenants with expirations has dramatically decreased. There's not a lot there in the aggregate.

Speaker #5: Tony , this is Doug . We are we are working as quickly and as thoughtfully as we can to renew as many of our clients that that as we would have in the portfolio , if we can accommodate their their growth and if they're able to continue to want to be in business .

Speaker #5: I would tell you that our our available set of tenants with expirations has dramatically decreased . So there's not a lot there in in sort of the aggregate .

[Analyst]: Right.

Michael LaBelle: I said 3.8 million square feet of space over two years and we're a 48 to 49 million square foot portfolio. That's about 7%. Do I expect we're going to renew 50% of that?

Speaker #5: Right ? I said three point 8,000,000ft² of space over two years . And we're a 48 to 49,000,000 square foot portfolio . So that's about 7% .

Speaker #5: Do I expect we're going to renew 50% of that ? Yes . Do I expect that we're going to renew 60% of that ?

Douglas Linde: Yes.

Michael LaBelle: Do I expect that we're going to renew 60% of that?

Douglas Linde: No.

Speaker #5: No . We are leasing about 1,000,000ft² per quarter . If we're able to maintain that velocity , which I don't see any reason why we shouldn't , we will be able to meet or exceed the expectations that we outlined .

Michael LaBelle: We are leasing about a million square feet per quarter. If we're able to maintain that velocity, which I don't see any reason why we shouldn't, we will be able to meet or exceed the expectations that we outlined when I sat in front of you all in September, which is about a 200+ basis point increase in occupancy by the end of 2026 and another 200 basis points of increase in occupancy at the end of 2027. Those are our projections. We're confident in them today and that's what we're sort of sticking with.

Speaker #5: When I sat in front of you all in September, which is about a 200 basis point increase in occupancy by the end of 2026, and another 200 basis points of increase in occupancy at the end of 2027.

Speaker #5: Those are our projections . We're confident in them today , and that's what we're sort of sticking with .

Operator: Thank you. Our next question comes from the line of John Kim from BMO Capital Markets. Please go ahead.

Speaker #2: Thank you . And I show our next question comes from the line of John Kim from BMO Capital Markets . Please go ahead .

[Analyst]: Thank you. I wanted to ask about the recovery in San Francisco. It sounds like, Doug, from your commentary that your high rise product is not where AI demand is currently. I'm wondering if that's something you plan to address. I also wanted to see if you had any early thoughts on Salesforce's $15 billion commitment into the city and what that could mean for job growth and office demand.

Speaker #10: Thank you . I wanted to ask about the recovery in San Francisco . It sounds like , Doug , from your commentary , that your high rise product is not where AI demand is currently .

Speaker #10: And I'm wondering if that's something you plan to address . And also wanted to see if you had any early thoughts on Salesforce's $15 billion commitment into the city .

Speaker #10: And what that could mean for job growth and office demand ?

[Company Representative]: Sure.

Michael LaBelle: Let me start, and then I'll ask Rodney Diehl to make some comments. The AI demand is not a tower business right now. Although companies like Salesforce, I guess, are calling themselves a company now, so maybe that's slightly different. The AI growth relative to infrastructure companies or VC-backed companies is really a low-rise south of Mission Street demand pool, obviously with AI and Anthropic sort of headquartered in either Mission Bay or in Foundry Square.

Speaker #5: Sure . So let me let me start , and then I'll ask Rob deal to to make some comments . The AI demand is not a tower business right now .

Speaker #5: Although , you know , companies like Salesforce I guess , are calling themselves AI companies now . So maybe that's , you know , slightly different .

Speaker #5: But the AI growth relative to infrastructure companies or VC-backed companies is really a low rise south of Mission Street: demand pool.

Speaker #5: Obviously , with AI and anthropic sort of , you know , headquartered in either mission Bay or in Foundry Square . Right . That's kind of the the world where I'd say the , the nucleus of that is and it's it's unlikely you're going to see an AI company taking a 25,000 square foot piece of space at one of the buildings in Embarcadero Center , or at 535 Mission Street , or at Salesforce Tower .

[Analyst]: Right.

Michael LaBelle: That's kind of the world where I'd say the nucleus of that is. It's unlikely where you're going to see an AI company taking a 25,000 square foot piece of space at one of the buildings in Embarcadero Center or at 535 Mission Street or at Salesforce Tower if there was availability, as opposed to going into, as I described, what they would like to go into today, which is shorter term, cheaper, less expensive furnished space, which is really in what I refer to as some of the buildings that were occupied by technology companies from 2015 to 2019. During that sort of booming period of time, I don't think there's much we can do to position our properties differently. The demand for Embarcadero Center in particular is really professional services, administrative services.

Speaker #5: If there was availability , as opposed to going into , as I described , what they would like to go into today , which is shorter term , cheaper , less expensive , furnished space , which is really in what I refer to as some of the the buildings that were occupied by technology companies from 2000 and call it 15 to 2019 .

Speaker #5: That during that sort of booming period of time , I don't think there's much we can do to position our properties differently . The demand for Embarcadero Center , in particular , is really professional services , administrative services .

Michael LaBelle: That's not to say that there aren't a couple of small startups that have a couple of thousand square feet in a suite here or there. It's hard for us to imagine a large growth component there. They're very different. At 680 Folsom Street, you know, it's a mid-rise building with 35,000 square foot floors with 16 foot clear glass, with availability today and more availability coming, and as the Macys.com lease expires, it's the perfect setup for an AI company from a growth perspective. Ryan, maybe you can comment on the Salesforce initiative relative to their contributions into the sales.

Speaker #5: That's not to say that there aren't a couple of small startups that have a couple of thousand square feet in in a suite here or there , but it's hard for us to imagine a large growth component there , very different .

Speaker #5: At 680 Folsom Street . 680 Folsom Street . You know , is a mid rise building with 35,000 square foot floors , with 16 foot clear glass with availability today and more availability coming as the Macys.com lease expires .

Speaker #5: It's the perfect setup for a for an AI company from a growth perspective , and maybe you can comment on on the Salesforce initiative relative to their , you know , contributions into the city .

Owen Thomas: Yeah, thanks, Doug. On Salesforce, I mean, it was great.

Speaker #11: Yeah . Thanks , Doug . On Salesforce , I mean , it was great to hear that news . And that was a fantastic bit right in front of their Dreamforce event , which happened last week .

Operator: To hear that news, that was.

Owen Thomas: A fantastic bit right in front of their Dreamforce event, which happened last week. It was very well attended, which.

Speaker #11: And it was very well attended , which is great for the city . So we haven't heard more specifics on what exactly that investment is going to look like .

Operator: is great for the city. We haven't heard more specifics on what exactly that investment's going to look like.

Owen Thomas: I think being the largest private employer in San Francisco, making a commitment like that is pretty meaningful.

Speaker #11: But , you know , I think being the largest private employer in San Francisco , making it like that is pretty meaningful . And so we're eager to see where it leads .

Operator: We are eager to see where it leads.

Owen Thomas: As Doug said, the other activity in the buildings that's kind of driven by this AI push, we're seeing it at 680 Folsom.

Speaker #11: And as Doug said , I mean , the other activity in the buildings . That's kind of driven by this AI push , we're seeing it as 680 Folsom .

Operator: We're very encouraged by that activity.

Speaker #11: We're very encouraged by that activity . And just the overall just optimism that a lot of that brings to , you know , our city .

Owen Thomas: The overall optimism that a lot of that brings to our city is positive.

Speaker #11: So it's positive .

Douglas Linde: Yeah, I just want to make one.

Speaker #4: Yeah .

Speaker #5: I just just want to make one other comment on that , which is there have been a lot of articles and news reports about the reduction in jobs , white collar jobs over the past .

Michael LaBelle: Other comment on that, which is there have been a lot of articles and news reports about the reduction in jobs, white collar jobs, over the past, call it three or four days.

Speaker #5: Call it 3 or 4 days in particular . And you know , San Francisco is sort of the the opposite of that , right ?

Owen Thomas: In particular.

Michael LaBelle: San Francisco is sort of the opposite of that. We are seeing growth from these companies in terms of the amount of space they are looking to lease and obviously the number of people they are hiring. You sort of see these tongue in cheek articles as well about the.

Speaker #5: We are seeing growth from these companies in terms of the amount of space they are looking to lease, and obviously the number of people they are hiring.

Speaker #5: And you sort of see these tongue in cheek articles as well about the the intensity of which people are working and the fact that they are working in premises .

Douglas Linde: Intensity of which people are working, and the fact that they are working in.

Michael LaBelle: Premises all of the time. I mean that is sort of what we are experiencing from the technology companies in San Francisco as we sit here today in 2025.

Speaker #5: All of the time . I mean , that is sort of what we are experiencing , you know , from the technology companies in San Francisco as we sit here today in 2025 .

Operator: Thank you. I show our next question in the queue comes from the line of Richard Anderson from Cantor Fitzgerald. Please go ahead.

Speaker #2: Thank you . And I show our next question in the Q comes from the line of Richard Anderson from Cantor Fitzgerald . Please go ahead .

[Analyst]: Thanks. Good morning. Can you talk about the percentage of the portfolio of, let me say it this way, leases that were signed pre-pandemic that have yet to have been addressed at this point, and just how with the passage of time your experience has been with tenants in terms of their willingness to take more or less space, space per worker, you know, square feet per worker? How are those dynamics changing, and what's left pre-pandemic that still has to be addressed by you guys? Thanks.

Speaker #12: Thanks . Good morning . Can you talk about the percentage of the portfolio of let me say it this way , that leases that were signed pre-pandemic that have yet to have been addressed at this point , and just how with the passage of time , your , your , your experience has been with tenants in terms of their willingness to take more or less space , space per worker , you know , you know , square feet per worker .

Speaker #12: How are those dynamics changed and sort of what's left pre-pandemic ? That is still sort of , you know , has to be addressed by you guys .

Speaker #12: Thanks .

Michael LaBelle: Really hard question to answer in a specific way. Let me try and answer it in a more general fashion. BXP traditionally has been leasing space on a long-term basis with an average lease length today of about eight years. All of our new leases that we generally do are between 15 and 20 years. There's a lot of pre-pandemic.

Speaker #5: So , so rich . It's really , really hard question to answer in a , in a specific way . So let me try and answer it in a more general fashion .

Speaker #5: Bxp traditionally has been leasing space on a long term basis , with an average lease length today of about eight years . But all of our new leases that we generally do are between 15 and 20 years .

Speaker #5: So there's a lot of of quote unquote , pre-pandemic leasing in our portfolio . Right ? It's just that's just a matter of of how we come compose the portfolio .

[Company Representative]: Leasing in our portfolio.

Michael LaBelle: Right. It's just, that's just a matter of how we compose the portfolio. The fundamental important fact, however, is that if you look at who our clients are and we go through all kinds of disclosure in terms of who our top clients are, all of the growth that we are seeing is coming from clients who were pre-pandemic occupants taking additional space as the world has changed post-pandemic. Quite frankly, because so much of our clients are in the financial services, professional services, administrative services business, what is going on relative to those industries is much more important relative to this sort of composition of our portfolio and the growth than what is going on with companies that may or may not have taken additional space during the dot-com growth in 2000 or in the post-GFC or in the years leading up to the pandemic.

Speaker #5: The the fundamental , important fact , however , is that if you look at who our clients are and we go through all kinds of disclosure in terms of who our top clients are , all of the growth that we are seeing is coming from clients who , pre-pandemic occupants taking additional space as the world has changed post-pandemic and quite frankly , because so much of our our clients are in the financial services , professional services , administrative services , business , what is going on relative to those industries is much more important relative to the sort of composition of our portfolio and the growth than what is going on with companies that may or may not have taken additional space during the.com growth .

Speaker #5: You know , in 2000 or in the , you know , post GFC or in the , you years leading up to the pandemic , because that's just not what our portfolio is comprised of , because we're , you know , again , we're that's not who we are .

Michael LaBelle: That's just not what our portfolio is comprised of. Again, that's not who we are. As Owen has said, and you'll see it as we move forward over the next couple of years, we're reducing our exposure to what I would refer to as less of those types of buildings and those types of customers and clients in terms of the kinds of things that we are going to be disposing of. I don't think it's an issue of any significance relative to how much growth there was during the pandemic relative to the Amazons of the world that was described in a couple of those articles in the last few days relative to their pickup in the number of people that they had hired. We didn't experience that within our portfolio.

Speaker #5: And as Owen has said , and you'll you'll see it as we move forward over the next couple of years . We're reducing our exposure to what I would refer to as less of those types of buildings and those types of customers and clients in terms of the kinds of things that we are going to be disposing of .

Speaker #5: So I don't think it's an issue of of any significance relative to how much quote unquote , growth there was during the pandemic relative to , you know , than Amazon's of the world that , you know , was described in a couple of those articles in the last few days relative to sort of their their pickup in the number of people that they had hired , because we didn't experience that within our portfolio .

[Company Representative]: The other thing I would add is, we just don't have a lot of rollover, and the rollover we have is very granular.

Speaker #6: Let me tell you the other thing I would add is just, and we've mentioned it, we just don't have a lot of rollover.

Speaker #6: And the rollover we have is very granular . Right ? There's no really large tenants . I mean , there's no tenant over next two and a half years .

Owen Thomas: Right.

[Company Representative]: There's no really large tenants. I mean, there's no tenant over 150,000 square feet that expires in the next two and a half years. We just aren't exposed to some big, you know, vacancy coming. The other thing I would note that Doug described in his comments is, and this has been the case for the last few quarters, more of our tenants are expanding than contracting when they renew. This quarter, Doug mentioned we had 85,000 square feet of net expansion by clients that we did deals with where they stayed in our portfolio.

Speaker #6: So we just aren't exposed to some big , you know , vacancy coming . And the other thing I would note that Doug described in his comments is and this has been the case for the last few quarters , more of our tenants are expanding than contracting when they renew .

Speaker #6: So this quarter , Doug mentioned we had 85,000ft² of net expansion by clients that we did deals with , where they stayed in our portfolio .

Operator: Thank you. I show our next question comes from the line of Nick Yulico from Scotiabank. Please go ahead.

Speaker #2: Thank you . And I show next question comes from the line of Nicholas Yulico from Scotiabank . Please go ahead .

[Analyst]: Thank you. I know, Doug, you gave a lot of detail on leases in the third quarter and even some leasing in the works to address vacancy. As we think about that occupancy build that you had at the investor day and the component there that is leases that address vacancy, given that the build out could take some time, is it right to think that by next quarter you guys should be in a position to sort of maybe declare victory on the vacant space piece of that equation that gets the occupancy benefit by year end next year?

Speaker #13: Thank you . So I know , Doug , you gave a lot of detail on leases in the third quarter . And even , you know , some leasing in the works to to address vacancy .

Speaker #13: But as we think about that occupancy build that you had at the Investor Day and you know , the component there that is leases that address vacancy , given that the build out , you could take some time .

Speaker #13: Is it right to think that like by next quarter you guys should be in a position to sort of , you know , maybe declare victory on on the vacant space piece of that equation that gets , you know , the occupancy benefit by year end next year ?

Michael LaBelle: I guess I don't think about this on a quarter by quarter basis. You know, our projections were done on an annual basis. We, again, have a million square feet of current leases that are signed that are going to be starting in 2026, and clearly that's the driver of a lot of our confidence relative to 2026. I also said that the activity that our team, and I'll let Hillary describe it, at 360 Park Avenue is above our expectations. I think that all that activity will lead to leasing in 2026 and occupancy in 2026. 200 basis points is a pretty meaningful increase, right? Another 200 basis points is another meaningful increase.

Speaker #5: I guess I don't I don't think about this on a quarter by quarter basis . You know , our projections were done on an annual basis .

Speaker #5: We again , we have 1,000,000ft² of leases that are signed that are going to be starting in 2026 . And so clearly that will that's the driver of a lot of our our confidence relative to 2026 .

Speaker #5: I also said that , you know , the activity that , you know , our team and I'll let Hilary describe it at 360 Park Avenue is is above our expectations .

Speaker #5: Again , I think that all that activity will lead to leasing in 26 and occupancy in 2026 . So , so 200 basis points is a pretty meaningful increase , right .

Speaker #5: And another 200 basis points is another meaningful increase . So we're we're comfortable and confident that we will be able to achieve those numbers based upon the conditions that we're seeing now in the economy and in our marketplaces .

Douglas Linde: So.

Michael LaBelle: We are comfortable and confident that we will be able to achieve those numbers based upon the conditions that we are seeing now in the economy and in our marketplaces. Hilary, maybe you can sort of describe what's going on at 360.

Speaker #5: And , Hilary , maybe you can sort of describe what's going on at 360 .

Helen Han: Sure. At the moment we have six floors leased. In discussions with proposals out, we have covered every other floor except one. To the extent that we were able to secure all of the tenants that we're currently in negotiations with, we would have one floor available at 360 Park Avenue South. The tour activity has increased really dramatically. As Doug noted earlier, the clients that are coming to see the building and asking us for these lease proposals are not just tech and media, but also more traditional asset managers and financial services firms that are just looking for great space. Due to the tightness in the market, you know, are seeking out Midtown South, perhaps from Midtown, or seeking to upgrade their space from existing locations in Midtown South.

Speaker #14: Sure . So at the moment we have six floors leased and . In discussions with proposals out , we have covered every other floor except one .

Speaker #14: So to the extent that we were able to secure all of the tenants that were currently in negotiations with , we would have one floor available at 360 Park Avenue South .

Speaker #14: So the tour activity has increased really dramatically . And as Doug noted earlier , the clients that are coming to see the building and asking us for these lease proposals are not just tech and media , but also more traditional asset managers and financial services firms that are just looking for great space .

Speaker #14: And due to the tightness in the market , you know , are seeking out Midtown South , perhaps from Midtown or seeking to upgrade their space from existing locations in Midtown South .

[Company Representative]: One quick note for Boston, in terms of the speed of delivery of recent leases, there is a portion, and Doug and Mike could probably respond to this afterwards, but a portion of the activity that Doug mentioned in the Urban Edge is in existing product. They are spaces that don't need as much buildup. We would anticipate at least 150,000 to 200,000 square feet that could be delivered.

Speaker #6: One footnote for Boston , in terms of the speed of delivery of .

Speaker #4: Recent leases .

Speaker #6: There is a portion and Doug and Mike could . probably respond to this afterwards . But a portion of the activity . that Doug .

Speaker #6: Mentioned in the Urban Edge is in.

Speaker #4: Existing .

Speaker #6: Product , and they are .

Speaker #4: Spaces that don't need as much.

Speaker #6: Build out .

Speaker #4: So we would .

Speaker #6: Anticipate at least 150,000 to 200,000 ft².

Speaker #4: That could be .

Owen Thomas: In that zone next year.

Speaker #6: Delivered in that zone next year .

Operator: Thank you. I share our next question. The queue comes from the line of Seth Berge from Citi. Please go ahead.

Speaker #2: Thank you . And I show next question in the queue comes from the line of Seth Bergey from Citi . Please go ahead .

[Analyst]: Hi, thanks for taking my question. I think at the investor day, you had outlined $0.09 to $0.04 of dilution from asset sales. It sounds like pricing and the debt markets is coming a little bit ahead of your expectations. How should we think about that impact? I think you also mentioned potentially bringing some more assets to market. What are the puts and takes there?

Speaker #15: Hi . Thanks for taking my question . I think kind of at the Investor Day , you had outlined 9 to $0.04 of kind of dilution from asset sales .

Speaker #15: It sounds like pricing and the debt markets is coming a little bit in ahead of your expectations . You know , how should we think about kind of that impact .

Speaker #15: And I think you also mentioned , you know , potentially bringing some more assets to market . So just kind of what are the puts and takes there .

[Company Representative]: I think, as I mentioned in my notes, this one is harder to judge because it's based upon the timing. We estimated timing for the transactions that we have under our asset plan at our investor day, and now we have started to execute on that timing. We now have more assets under contract than we had at that time, and we have more assets in the market than we had at that time. We do feel like we're getting pretty good demand from people, pretty good response from people on this. I think we're going to be successful in that. The timing of when these things sell will impact the range that we provided, and if it was significantly earlier than that, could it be slightly more dilutive?

Speaker #6: You know , I think as I mentioned in my notes , I think this one is harder to judge because it's based upon the timing .

Speaker #6: So, you know, we estimated the timing for the transactions that we have under our asset plan at our Investor Day. And now we have started to execute on that timing.

Speaker #6: Right . So we now have more assets under contract than we had at that time . And we have more assets in the market than we had at that time .

Speaker #6: And , you know , we do feel like we're getting pretty good demand from people . Pretty good response from people on this .

Speaker #6: So I think we're going to be successful in that . And so the timing of when these things sell will impact the range that we provided , you know , and if it was early , you know , significantly earlier than that , could it be slightly more diluted .

[Company Representative]: Yes, it could be slightly more dilutive, but it's hard to provide a better answer than that at this moment in time. I think as we go through the next quarter or two, we will have more and more information and we'll provide it to you.

Speaker #6: Yes , it could be slightly more dilutive . But it's hard to , to provide a better answer than that at this moment in time .

Speaker #6: I think, as we go through the next quarter or two, we will have more and more information, and we'll provide it to you.

Operator: Thank you. I share. Our next question comes from the line of Alexander Goldfarb from Piper Sandler. Please go ahead.

Speaker #2: Thank you . And I show our next question comes from the line of Alexander Goldfarb from Piper Sandler . Please go ahead .

Michael LaBelle: Hey, good morning.

Speaker #16: Hey . Good morning . Good morning . Just a question on , you know , as you guys have tightened up the strategy since the Investor Day , just want to understand better on the investment side .

Owen Thomas: Morning.

Michael LaBelle: Just a question on, you know, as you guys have tightened up the strategy since the investor day, just want to understand better on the investment side, you know, how much that when you guys think about the investment pool are more likely when the regional people come to you to submit proposals, how much the criteria have tightened up, meaning have yields been raised that, hey, all deals now need to be 100 basis points higher or some degree higher. Just trying to understand how it's gotten, how you guys have tightened up again. Just thinking about some of the legacy deals like Platform 16, etc., that obviously don't want to repeat, but you have the 343 Madison. Just trying to understand how the investment criteria has tightened up and how many deals got kicked out of discussion because of the new higher thresholds.

Speaker #16: You know , how much that , you know , when you guys think about the investment pool are more likely , you know , in the people come to you to submit proposals , how much the criteria have tightened up , meaning , you know , have yields been raised that , hey , all deals now , now need to be , you know , 100 basis points higher or some degree higher .

Speaker #16: Just trying to understand how it's gotten , how you guys have tightened up . Again , just thinking about some of the legacy deals , like a platform 16 , etc.

Speaker #16: , that obviously , you know , you know , don't want to repeat , but you know , you have the 343 . So just trying to understand how the investment criteria has tightened up and how many deals , you know , got kicked out of , of discussion because of , you know , the new higher thresholds .

Owen Thomas: Good morning, Alex. We've talked about this on prior calls. Our threshold yield that we're looking at for developments, as we've repeated over and over again, has been about 8% or higher. Really, before interest rates went up and, of course, some of the diminution in demand that we saw from COVID, we were developing, depending on the market and the asset, between 6% and 7%. The yield requirement for office development has gone up 100 to 200 basis points. You combine that with the elevation in construction costs, it takes significantly higher rents to support development. As we said on investor day, what does that mean? That means we're going to be a more selective office developer.

Speaker #4: Good morning, Alex. We've talked about this on prior calls. Our threshold yield that we're looking at for developments, as we've repeated over and over again, has been about 8% or higher.

Speaker #4: And really before interest rates went up . And of course , the some of the diminution in demand that we saw from Covid , we were developing , depending on the market and the asset , between 6 and 7% .

Speaker #4: So the yield requirement for for office development has gone up 100 to 200 basis points . You combine that with the elevation and construction costs .

Speaker #4: You know, it takes significantly higher rents to support development. And as we said on Investor Day, what does that mean?

Speaker #4: That means we're going to be a more selective office developer . But we are developing you know , we've launched two and a half a little bit under that billion dollars of new development projects in office , just in the last six months .

Michael LaBelle: We are developing, you know, we've.

Owen Thomas: Launched $2.5 billion, a little bit under that, of new development projects in office just in the last six months. That's the increase that you saw. As I just said in my remarks, we are looking at acquisitions. There hasn't really been much to look at up until the last three to six months. There's a little bit more today. The issue has been, we feel like we can get higher yields developing, albeit we'll have a new building and it'll have lower CapEx and longer wall and all those things. It takes several years to deliver the development. That's the trade off. We are going to continue to look at acquisitions and, as I said in my remarks, we are going to continue to be disciplined. I think cap rates are probably 150 to 200 basis points right now in the market below our development yield threshold.

Speaker #4: So that's the increase that you saw. And then, as I just said in my remarks, we are looking at acquisitions.

Speaker #4: There hasn't really been much to look at up until the last 3 to 6 months . There's a little bit more today . And you know , the issue has been , you know , we feel like we can get higher yields developing , albeit , and we'll have a new building and we'll have lower CapEx and longer Walt and all those things .

Speaker #4: But it takes several years to deliver the development . That's the trade off . So again , we're going to continue to look at acquisitions .

Speaker #4: And as I said in my remarks , we're going to continue to be disciplined and I do think , you know , cap rates are probably 150 to 200 basis points right now in the market below our development yield threshold .

Michael LaBelle: I just had one thing to sort of give you a reference point. The development at 343 Madison Avenue is a, call it $2 billion development. The development at 725 12th Street is a $300 million development. Knock on wood, Jake and Pete are working really hard at lining up a client who desperately needs a new building with a potential purchase of a piece of ground or an existing building to build another building. Let's assume that's another, call it $300 million plus. We are talking about having $2.6 billion of developments that the company is going to be executing on. That's a pretty significant amount of external growth.

Speaker #5: And I just want to add one thing, just to sort of give you a reference point. The development at 343 is a $2 billion development.

Speaker #5: The development at 725 12th Street is a $300 million development . Knock on wood , you know , Jake and Pete are , you know , working really hard at at lining up a client who desperately needs a new building with a potential purchase of a piece of ground or an existing building to build another building .

Speaker #5: Let's assume that's another call it 300 plus million dollars . So we're talking about having $2.6 billion of developments that the company is going to be executing on .

Speaker #5: That's a pretty significant amount of external growth . And so I would say that that the appetite for buying a building at a 6% NOI yield , where the cash flow yield is probably 150 basis points lower than that .

Michael LaBelle: I would say that the appetite for buying a building at a 6% NOI yield where the cash flow yield is probably 150 basis points lower than that and there is rollover in three to four years, it's just not as enticing as those other opportunities are today. That's the frame of reference that we're sort of looking at as we think about, quote unquote, acquiring new assets. If a fabulous building at an 8% cash return came up, quote unquote, off market and we thought it had great upside, of course we would be really thinking about doing something like that. These broker-initiated investments for core assets and CBD, the CBD locations are interesting and we are going to study them, but it's going to be hard for us to rationalize utilizing our dry powder for that.

Speaker #5: And there's , you know , rollover in 3 to 4 years , it's just not as enticing as those other opportunities are today .

Speaker #5: And so , you know , that's I'd say the frame of of reference that we're sort of looking at as we think about , you know , quote unquote acquiring new assets .

Speaker #5: Now , if a fabulous building at an 8% cash return , you know , came up , you know , quote unquote , off market , and we thought it had great upside .

Speaker #5: Of course we would be really thinking about doing something like that . But but these broker initiated investments for , you know , quote unquote core assets and CBD , CBD locations are they're interesting .

Speaker #5: And we're going to study them, but it's going to be hard for us to rationalize utilizing our dry powder for that.

Operator: Thank you. Our next question comes from the line of Michael Goldsmith from UBS. Please go ahead.

Speaker #2: Thank you. And I show our next question comes from the line of Michael Goldsmith from UBS. Please go ahead.

Owen Thomas: Good morning. Thanks a lot for taking my question. In the press release you called out 89% of BXP's rents come from the CBD portfolio. Given the outline dispositions are focused in the suburban markets, what percentage does that take CBD in the near term, and in long term is the goal to just, you know, to be 100% or completely CBD?

Speaker #17: Good morning . Thanks a lot for taking my question in the press release . You called out 89% of Bxp rents come from the CBD portfolio .

Speaker #17: Given the outline dispositions are focused in the suburban markets , what percentage does that take ? CBD in the near term and long term is the goal to just to be 100% or completely CBD ?

[Analyst]: Thanks.

Speaker #17: Thanks .

[Company Representative]: I can't give you an exact %. I would agree that we want it to grow. There are certain suburban markets that I think we will maintain exposure to where we feel like we have a good sense of place, where we can build an amenity-filled environment, and where we think that it's got a mature and dense demand profile. There are suburban markets that I believe we will stay in. I do believe though, it's not going to go to 100%, but it's definitely going to grow because both our asset sales focus, which is suburban, and also our new investment focus is more urban. We're going to be adding assets that are CBD and detracting assets that are suburban.

Speaker #6: I can't give you an exact percentage . I would agree that we want it to grow . There are certain suburban markets that I think we will maintain exposure to where we feel like we have a good sense of place where we can build an amenity filled environment and where we think that it's it's got a mature and dense demand profile .

Speaker #6: So there are suburban markets that I believe we will stay in . I do believe , though , it's not going to go to 100% , but it's definitely going to grow because our both our asset sales focus , which is suburban , but also our new investment focus is more urban .

Speaker #6: So we're going to be adding assets that are CBD and detracting assets that are suburban .

Operator: Thank you. Our next question comes from the line of Jana Galan from Bank of America Merrill Lynch. Please go ahead.

Speaker #2: Thank you . And I share our next question comes from the line of Jana Galen from Bank of America Securities . Please go ahead .

Helen Han: Thank you. Good morning and congrats on the progress you've already made on the priorities laid out at the investor day on the dispositions. Can you talk to the pricing you're seeing on land, residential and off relative to kind of initial expectations?

Speaker #18: Thank you. Good morning and congratulations on the progress you've already made on the priorities laid out at the Investor Day on the dispositions.

Speaker #18: Can you talk to the pricing you're seeing on land, residential, and office relative to kind of initial expectations?

Owen Thomas: I'd say that we're achieving pricing that is in line, if not a little bit better than our expectations.

Speaker #4: I'd say we're removing pricing that is in line , if not a little bit better than our expectations . It depends . I mean , it's very hard to say pricing for land because it depends on what the new user is doing .

Michael LaBelle: I mean, it's very hard to say.

Owen Thomas: Pricing for land depends on what the new user is doing. I think the real opportunity that we've had with land is that our regional teams have done a great job very successfully re-entitling many of these land parcels that were previously set up for office into residential. As we all know, there's a housing shortage in this nation, and many communities that were against housing in the past are for it today. That has allowed us to create a lot of value. The 17 Hartwell investment that I described last quarter is a great example of that.

Speaker #4: I think the real opportunity that we've had with land is that we have our regional teams have done a great job , very successfully .

Speaker #4: Retitling many of these land parcels that were previously set up for office use into residential is essential. As we all know, there's a housing shortage in this nation, and many communities that were against housing in the past are for it today.

Speaker #4: And that has allowed us to create a lot of value . The 17 Hartwell investment that I described last quarter is a great example of that .

Michael LaBelle: So.

Owen Thomas: It's a little bit hard to talk about, you know, quote, pricing for land. I think on the residential assets we are seeing cap rates below 5%, which we think is very attractive. On the office, it all depends on the location and the quality.

Speaker #4: So it's a little bit hard to talk about . Quote pricing for land , I think on the residential assets we are seeing cap rates below 5% , which we think is very attractive .

Speaker #4: And on the office , it all depends on the location and the quality .

Operator: Thank you. Our next question comes from the line of Floris van Dijkum from Ladenburg Thalmann. Please go ahead.

Speaker #2: Thank you . And I show our next question comes from the line of Flores van from Ladenburg Thalmann . Please go ahead .

[Analyst]: Hey, thanks for taking my question. Clearly it looks like your office markets, your core office markets are inflecting. Office underlying growth was positive. It was down, though, in the hotel and residential. I think maybe remind us, there was a big occupancy decline apparently in Washington, D.C. in the residential side. Could you maybe talk about that?

Speaker #19: Hey , thanks for taking my question . I clearly it looks like your office markets your core office markets are inflecting office underlying growth was positive .

Speaker #19: It was you know down though in the hotel and residential . And I think maybe remind us there was a big occupancy decline apparently in D.C.

Speaker #19: and the residential side . Could you maybe talk about that .

Owen Thomas: That.

Speaker #5: I I'm going to Mike is going to quickly look through the supplemental . The only thing I can imagine is that we brought 100% of signature is is in service .

Michael LaBelle: I'm going to. Mike is going to quickly look through the supplemental. The only thing I can imagine is that we brought 100% of signature.

[Company Representative]: Is.

Michael LaBelle: In service and we brought Skymark into service, and Skymark is probably not 98% leased yet, although my guess is that we're going to be stabilized, which I think is, call it, in the 93 to 94% this quarter, which is extraordinary given the amount of units that we have had deliver there. I'm guessing that's sort of what happened. I would not take that as anything other than a change in portfolio composition, not activity in our actual assets.

Speaker #5: And we brought Skymark into service . And Skymark is probably not 98% leased yet , although my guess is that we're going to be stabilized , which I think is call it in the 93 to 94% this quarter , which is extraordinary given the amount of units that we had delivered there .

Speaker #5: So I'm I'm guessing that's sort of what happened . But I wouldn't I would not take that as anything other than a change in portfolio composition .

Speaker #5: Not active in our actual assets.

[Company Representative]: Yeah, that's what it is, Doug, because this is a year over year concept. It's not a sequential concept. In September of 2024, the Skymark building was under development. Right. Now it's leasing up and it's actually leasing up quite well. It's, I think, around 90% and it's leased up better than we expected. The occupancy in the, you know, stabilized portfolio that has been in service for a while, it's been very strong and stable, and rents have continued to go up again. Our residential portfolio is located in pretty tight markets and places, you know, like the urban Boston market and Reston. We've seen good fundamentals with our.

Speaker #6: Yeah , that's what it is because this is a year over year concept . It's not a sequential concept . So in September of 24 , the Skymark building was under development .

Speaker #6: Right . And now it's leasing up and it's actually leasing up quite well . It's I think around 90% . And it's leased up better than we expected .

Speaker #6: The occupancy and the , you know , stabilized portfolio that has been in service for a while has been very strong and stable , and rents have continued to go up again .

Speaker #6: Our our residential portfolio is located in pretty tight markets . And so places , you know , like the urban Boston market and Reston , we've seen good fundamentals with our residential .

Michael LaBelle: Residential, but it is going to get smaller in 2026 before it gets bigger again.

Speaker #5: But it's going to get smaller in 2026 before it gets bigger again .

Operator: Thank you. Actually, our next question comes from the line of Ronald Kamdem from Morgan Stanley. Please go ahead.

Speaker #2: Thank you . And I show next question comes from the line of Ronald Kamdem from Morgan Stanley . Please go ahead .

[Analyst]: Hey, just same store in Hawaii. I think you talked about the occupancy inflection point, obviously improving 2026, 2027. Can you tie that back to what the expectations are as you think about same store and why should we expect similar 100, 200 basis point acceleration and what are the puts and takes there? Thanks.

Speaker #20: Hey , just on same store and why I think you talked about sort of the occupancy inflection point . You know , obviously improving 2627 just , just can you tie that back to what the expectations are as you think about same store and why should we expect sort of similar , you know , 100 to 200 basis points sort of acceleration .

Speaker #20: And what are the puts and takes there ? Thanks .

[Company Representative]: We're not going to provide guidance for 2026 or 2027 today. I think that most of our growth is going to come from occupancy and we've talked about that. I think the mark to market in the portfolio is improving because we're seeing rents go up in many of our marketplaces. I think that situation is improving and will continue to improve. I think we will see positive same store NOI growth as the occupancy climbs. Yes, we will. It will follow. It makes sense to follow and should. Good.

Speaker #6: So, we're not going to provide guidance for 2026 or 2027 today. I think that most of our growth is going to come from occupancy.

Speaker #6: And we've talked about that . I think the mark to market in the portfolio is improving because we're seeing rents go up and many of our marketplaces .

Speaker #6: So I think that situation will is improving and will continue to improve . And I think we will see positive same store NOI growth as the occupancy climbs .

Speaker #6: So yes , we will . It will follow . It makes sense to follow and should .

Operator: Thank you, Nisha. Our next question comes from the line of Opal Rana from KeyBanc Capital Markets. Please go ahead.

Speaker #2: Thank you . And I share our next question comes from the line of Rana from KeyBanc Capital Markets . Please go ahead .

[Analyst]: Great. Thank you for taking my question. Could you provide some color on the current state of what you're seeing in terms of demand for life science, leasing, and supply across your markets? Given some softer commentary from another one of your peers, you mentioned a few things related to Boston and Urbanedge, but maybe you can broaden that out a little bit and maybe what your outlook is for that industry.

Speaker #21: Great. Thank you for taking my question. Could you provide some color on the current state of what you're seeing in terms of demand for life science, leasing, and supply across your markets?

Speaker #21: Given some softer commentary from another one of your peers , you mentioned a few things related to Boston and Urban Edge , but maybe you can broaden that out a little bit , and maybe your outlook is for that industry .

Michael LaBelle: Our life science exposure at BXP is comprised of two places. It's the urban edge of Boston, which I described. We have 180,000 square feet of first generation space available, and then it's our joint venture with another public REIT in South San Francisco where we have a large building that was developed a few years ago that is available for lease. I think I described the demand for wet lab space as being pretty tepid. Not much has changed on a relative basis there. We are seeing, quote, unquote, some inquiry, but we're not what I would describe as close to any major transactions at that building at this time.

Speaker #8: So our our life science exposure at .

Speaker #5: Bxp is comprised of two places . It's the urban edge of Boston , which I described . And again , we have 180,000ft² of of first generation space available .

Speaker #5: And then it's our our joint venture with another public retailer in South San Francisco , where we have a large building that was developed a few years ago that is available for lease .

Speaker #5: We're again, I think I described the demand for wet lab space as being pretty tepid. Not much has changed on a relative basis.

Speaker #5: There . We you know , we're we are seeing quote unquote some inquiry , but we're not what I would describe as close to any major transactions at that building at this time .

Operator: Thank you. Our next question comes from the line of Dylan Bazinsky from Green Street. Please go ahead.

Speaker #2: Thank you . And I share our next question comes from the line of Dylan Brzezinski from Green Street . Please go ahead , guys .

[Analyst]: Guys.

Michael LaBelle: Thanks for taking the question.

Speaker #22: Thanks for taking the question . I think you mentioned seeking or going out to market and seeking a capital partner for . 343 Madison sometime in 2026 , but I guess just given the tight availability that you're seeing in New York , especially in the submarket , that .

[Analyst]: Owen.

Owen Thomas: I think you mentioned seeking or going.

[Analyst]: Out to market and seeking a capital partner for 343 Madison sometime in 2026.

Michael LaBelle: I guess just given the tight availability that you're seeing in New York, especially in the submarket at 343 Madison.

Speaker #22: 343 Madison is in and likely continuing net effective rent growth , why not sort of put the brakes on on reaching out and getting the capital partner , given that sort of backdrop ?

[Analyst]: Is in and likely to continue net effective rent growth, why not sort of put.

Owen Thomas: The brakes on reaching out and getting.

Michael LaBelle: The capital partner, given that sort of backdrop?

Owen Thomas: Yeah, it's a good question. I think as I tried to describe in my remarks, we're just being patient. We've had some inbound inquiry. We know of some investors that are interested in the project. We're having preliminary conversations. As I mentioned in my remarks, we're not in a hurry. This asset is appreciating. We're having leasing success. Markets are improving, as you suggested, and I think this will happen sometime in 2026. We do want to match to some degree commitment of capital to raising the capital. So far the development draws and spend on the project have been reasonably modest, but they do start to accelerate next year. I do think 2026 will be an appropriate time.

Speaker #4: Yeah , it's a good question . I think as I try to describe in my remarks , we're just being patient . You know , we've had some inbound inquiry .

Speaker #4: We know of some investors that are interested in the project . We're having preliminary conversations , as I mentioned in my remarks , we're not in a hurry .

Speaker #4: This asset is appreciating . We're having leasing success . Markets are improving as you suggested . And I think this will happen sometime in 2026 .

Speaker #4: You know , we do want to match to some degree , a commitment of capital to raising the capital . And so far , the development of draws and spend on the project have been reasonably modest .

Speaker #4: But they do start to accelerate next year . So I do think 2026 will be an appropriate time .

Michael LaBelle: Dylan, just remember, as Owen said at the outset, we have three objectives, right? Our objectives that we outlined at our investor day were we want to grow our earnings, and that's mostly through occupancy and deliveries of developments that are currently underway. We want to fund 343 Madison, and we want to reduce our leverage. I think that our objectives in finding a partner sort of meet all of those requirements.

Speaker #5: And Dylan , just just remember , you know , you know , as Owen said at the outset , we have , you know , three objectives , right ?

Speaker #5: Our objectives that we outlined at our Investor Day were we want to grow our earnings . And that's mostly through occupancy and deliveries of developments that are currently underway .

Speaker #5: We want to fund . 343 Madison , and we want to reduce our leverage . And so I think that our objectives in finding a partner sort of meet all of those requirements .

Operator: Thank you. I show our last question in the queue comes from the line of Blaine Heck from Wells Fargo. Please go ahead.

Speaker #2: Thank you . And I show our last question in the Q comes from the line of Blaine Heck from Wells Fargo . Please go ahead .

Michael LaBelle: Great. Thanks, Owen or Doug. I was hoping to get your latest.

Speaker #23: Great . Thanks , owner Doug , I was hoping to get your latest thoughts on the New York mayoral race and any sort of impact you've seen .

[Analyst]: Thoughts on the New York mayoral rates and any sort of impact you've seen.

Michael LaBelle: Any commentary you've heard from tenants?

Speaker #23: Any commentary you've heard from tenants and just your general thoughts on whether it could or will have a notable impact on the New York office market .

[Analyst]: Just your general thoughts on whether it.

Michael LaBelle: Could or will have a notable impact.

[Analyst]: On the New York office, this market. Thanks.

Speaker #23: Thanks .

Owen Thomas: I would suggest that the significant negative rhetoric that's in the press and the media about the impact of the administration of Maramondami, I think it's just overblown. I'm not suggesting that there aren't impacts that we need to be conscious of and aware of. As we've described before, there are controls and guardrails that exist for the mayor in New York. The state has a lot of approval powers over things like public transit and increasing taxes. The state has indicated so far there's not a lot of appetite for increasing taxes in New York. That's something that we are concerned about. Again, our success as a company in any city is capped at the city's success.

Speaker #4: I would suggest that the significant negative rhetoric that's in the press and the media about the impact of the administration of the Mayor, I think it's just overblown.

Speaker #4: I'm not suggesting that there aren't impacts that we need to be conscious of and aware of. As we've described before, there are controls and guardrails that exist for the Mayor in New York.

Speaker #4: The state has a lot of approval powers over things like public transit and increasing taxes and the state has indicated so far there's not a lot of appetite for increasing taxes in New York .

Speaker #4: So that's something that we are concerned about. And again, our success as a company in any city is capped at the city's success.

Michael LaBelle: We want to do what.

Speaker #4: And so we want to do what we can to work cooperatively with the city and ensure that there are that it's a constructive environment for business .

Owen Thomas: We can work cooperatively with the city and ensure that it's a constructive environment for business. There is safety and security for the citizens, and those are the kinds of things that we're very focused on. The potential Mayor Mamdani has indicated that he wants to hire Jessica Tisch, who's the current head of the New York City Police Department. I don't know that she's agreed to do that yet, but we all think that's a great step because I think she receives high accolades for her performance and success today. Again, something that we're monitoring, but we are, I think, a little bit more constructive than what the media has been outlaying on this change.

Speaker #4: There's safety and security for the citizens , and those are the kinds of things that we're very focused on . The potential Mayor Mamdani has indicated that he wants to hire Jessica Tisch , who's the current head of the New York City Police Department .

Speaker #4: I don't know that she's agreed to do that yet, but we all think that's a great step because I think she receives high accolades for her performance and success to date.

Speaker #4: So again , something that we're monitoring , but we are , I think , a little bit more constructive than what the media has been outlaying on this , on this change .

Operator: Thank you. I do show we have one question in the queue from Brendan Lynch from Barclays. Please go ahead.

Speaker #2: Thank you . And I do show we have one question in the queue from Brendan Lynch from Barclays . Please go ahead .

[Analyst]: Great. Thanks for taking my question. I'm just interested in your view on the new office tower above South Station in Boston and how that might impact leasing dynamics in the market.

Speaker #24: Great . Thanks for taking my question . Just interested in your view on the new office tower above South Station in Boston and how that might impact leasing dynamics in the market .

Michael LaBelle: I'll give you a couple comments and I'll let Brian give you his perspective. The building that is currently open and has been available for the last number of months is a gleaming tower and it's, I'm sure, going to be successful from an occupancy perspective. At some point, there is a conversation, as I understand it, going on with a large financial institution to relocate there, not necessarily grow, but relocate there. The building hit the market at the absolute wrong time, and there's a bunch of availability in the financial district that it had to compete with. The economics of the investment are different than what I would tell you the success will be from an occupancy perspective because of just the nature of what's going on. I think it's unlikely that another building in the financial district will be started for quite some time.

Speaker #4: So I'll .

Speaker #5: Give you a couple of comments , and I'll let Brian , you know , give you his perspective . So the building that is is currently open and has been available for , you know , the last number of months is a gleaming tower .

Speaker #5: And it's I'm sure going to be successful from a occupancy perspective at some point . There is a conversation , as I understand it , going on with a large financial institution , to relocate there .

Speaker #5: Not necessarily grow , but relocate there . The the building , you know , hit the market at the absolute wrong time . And there's a bunch of availability in the financial district that it had to compete with .

Speaker #5: And so the , you know , the economics of the investment are different than what I would tell you . The success will be from an occupancy perspective because of just the nature of what's what's going on .

Speaker #5: I think it's unlikely that another building in the financial district will be started for quite some time . So if the market is able to continue to sort of absorb space , I think the financial market downtown will continue to recover .

Michael LaBelle: If the market is able to continue to sort of absorb space, I think the Peninsula Market downtown will continue to recover. We have an opportunity to build a building at 171 Dartmouth Street, which is in the Back Bay. There are obviously significant opportunities from a tenancy perspective because we have very, very, very tight supply in the Back Bay.

Speaker #5: You know , we have an opportunity to build a building at , you know , 171 Dartmouth Street , which is in the back Bay .

Speaker #5: And there are obviously significant opportunities from a tenancy perspective because we have , you know , very , very , very tight supply in the back Bay .

[Analyst]: So.

Michael LaBelle: I think there's a much higher probability of something going on there. We would obviously not start that building unless we had a major commitment from a lead anchor tenant, as Owen described earlier in terms of what our development yields were. I think that's what I'd say in my general views on that development.

Speaker #5: So I think there's a higher , much higher probability of something going on there . We would obviously not start that building unless we had a major commitment from a lead anchor tenant as own , sort of described earlier in terms of and and he said what our development yields were .

Speaker #5: So so I think that's sort of you know , what I'd say in my general views are on , on that development . Brian .

Douglas Linde: Brian?

[Company Representative]: Yeah, I'd comment on what's the impact to the BXP portfolio. As Douglas Linde mentioned, as you look at the Back Bay as the submarket, there's very little transfer of tenants that leave this market, and it's highly desirable. We look at our competitive set of the buildings we compete against daily, and it's a 3% vacancy. It's extremely tight, as Douglas Linde mentioned. In fact, we're actively asking tenants if they'd like to give back space because we've got growth in those sectors that Douglas Linde mentioned earlier. When you look at the downtown market, our buildings are leased up and tucked away for quite a few years now with limited, limited space at 100 Federal. The same is true at Atlantic Wharf and also Hub on Causeway.

Speaker #6: Yeah . So a comment on . what's the .

Speaker #4: Impact to .

Speaker #6: The BP .

Speaker #4: Bxp .

Speaker #6: Portfolio . And as Doug mentioned .

Speaker #4: As you .

Speaker #6: Look at the back Bay as the submarket , there's very little transfer of tenants .

Speaker #4: That leave .

Speaker #6: This market and it's highly desirable . We look at our competitive set of the buildings .

Speaker #4: We .

Speaker #6: Compete against daily . And it's a 3% vacancy . So it's extremely tight . As Doug mentioned . And in fact we're actively asking tenants if they'd like to give back space because we've got growth in those sectors that Doug mentioned earlier .

Speaker #6: And then when you look at the downtown market, our buildings are leased up and tucked away for quite a few years now with limited, limited space at 100 Federal.

Speaker #6: And the same is true at Atlantic Wharf . And also hub on Causeway .

Operator: Thank you. That concludes the Q&A session. At this time, I'd like to turn the call back to Owen Thomas, Chairman and Chief Executive Officer, for closing remarks.

Speaker #2: Thank you . That concludes the Q&A session . At this time , I'd like to turn the call back to Owen Thomas Chairman and Chief Executive officer for closing remarks .

Owen Thomas: No further remarks from us. Thank you all for your interest and your time and your interest in BXP.

Speaker #4: No, no further remarks from us. Thank you all for your interest, your time, and your interest in BXP.

Operator: Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.

Owen Thomas: Sam.