BXP, Inc. (BXP) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to BXP's 2025 Investor Conference. I'm Helen Han, Vice President of Investor Relations, and I want to thank you for joining us, whether in person or via the live stream. We're excited to spend the day together, and those of you who have joined our team bright and early for the 5-mile fun run this morning, thank you for bringing that extra energy into the room today. We have a terrific program lined up for you all today. In addition to hearing from Owen Thomas, Doug Linde and Mike LaBelle, you'll also meet members of BXP's senior leadership team from across the company, who will share insights into our strategic priorities, long-term growth objectives and funding plans. Before we get started, just a few housekeeping items. I wanted to call your attention to the above statements regarding forward-looking statements made during the conference. Today's sessions are being recorded and streamed. A replay, along with the presentation materials, will be available both on our Investor Relations website and the Investor Day Microsite. Following each session, we'll have 5 minutes for Q&A. And then at the end of the day, Owen, Doug and Mike will return for a final Q&A and closing remarks. Lunch will be served at around 12:05, and there's also an afternoon break at around 2:40. I know that everyone has been asking about charging stations. And because there are so many of you, we are unable to accommodate them in this room, but there are overflow rooms outside where you can charge and the event is being streamed as well. So you don't miss anything. Finally, we hope you'll join us at the cocktail reception tonight at Coco's at Colette, located on the 37th floor of the GM building, beginning at 5:30. Please keep your name badges for access. It's a fantastic venue and a great example of BXP's premier workplace portfolio. And because no event for BXP is okay without some swag, behind your name tag, there's a little ticket, which you will redeem for your piece of latest [ BXPire ], which is first debuted today. Once again, thank you for being here and your continued interest and support of BXP. With that, it's my pleasure to introduce Owen Thomas, Chairman and Chief Executive Officer.

Okay. Helen, thank you very much. Great to see all of you. Thank you all so much for being here. Also, thank you to all the fund runners that came out this morning. We had perfect weather after a pretty tough rainy weekend. I'd also -- while we're doing the welcoming, I'd like to welcome Joel Klein, who's sitting over here by the column. Joel is our Lead Independent Director, and he'll be here all day. So if you want to ask him any tough questions or give him any good feedback, he would welcome that, I am sure. We only do this investor conference every 3 years. So it's a very important event to us, for us and hopefully for you. And the purpose is obviously to explain our strategy, explain our detailed plans. But I think even equally importantly, if not more importantly, is to showcase the depth of our talent. So we have all of our regional heads here in attendance. You'll hear from all of them and a number of other BXP executives are also here. Most of them are lined up here on the side. And again, you'll have lots of opportunities to interface with them informally during the day. Okay. So let's jump into the first presentation. I'm going to start the day with the big picture. I'm going to introduce as well several of the deep dive presentations that you're going to hear later during the day that my colleagues will address. But specifically, this morning, what I'm going to address is what's our strategy. Number two, what are the key trends that are impacting BXP today and for the foreseeable future. And as a result of those 2 things, what is our strategic focus and what is our specific action plan? So let's talk a little bit about our strategy. So the most important thing about our strategy is if you were here at our last investor conference, it hadn't changed. So this is a reminder. Our BXP strategy remains consistent. And I think it actually goes back to what I used to hear Mort Zuckerman say all the time when I joined the company 13 or 14 years ago, which is, oh, our strategy, that's simple. We're going to own the best buildings in the best markets. And that is a very quick, clear, concise articulation of what we try to do. Now clearly, we flesh that out a little bit, and I'm going to take you through that. And there are environmental factors that come up from time to time that make us focus on certain elements of our strategy and make modest adjustments. So the strategy basically has 4 components: assets, where do we own assets? How do we operate the business and how do we -- what's our investment philosophy? So on the assets, we're very focused on premier workplaces. So this is the high end of the office business. We also have a life science business, and we also build residential. You're going to hear a lot about residential today. Most importantly on the assets, quality. We want to be in the premier workplace segment of the office industry. We want to only own buildings that are considered in the top 10%, 15% of their local market. These buildings we lease at premium rents to industry-leading clients. Our positioning, which we embrace and are going to continue to attack as the luxury brand in office real estate. The other thing we prefer on assets is to own clusters of buildings. Think about Prudential Center, Reston Town Center, Embarcadero Center. Why? We serve our clients better with clusters. If they get bigger, we can move them to another building. If they get smaller, we can accommodate them. Also, any capital we spend on amenitization, we can spread over a larger base of assets. So we love clusters that we always try to build on our clusters. Okay. Locations. We're a gateway market company. Why? We want to be in cities that have the most extensive talent pool of highly educated workers that will attract industry-leading creditworthy firms. We also want a diversified talent base by industry. And importantly, we own buildings and we basically build and develop and hold. So we want rents to go up over time, albeit we understand they'll go up cyclically. So we need barriers to entry. And then we are much more focused today on the CBD than the suburbs, which I'm going to get into. How do we operate the business? I would like to say that I always say that, well, BXP is a -- it's a set -- a portfolio of regionally managed property companies that are centrally funded. So what do I mean by that? Well, in every one of our regions, we have vertical integration. We've got in-house leasing, development, construction, property management, legal and marketing. These are not national practices. Each of those individuals that run those areas report to our regional management. Why do we do this? We're a big company, but in all of our local markets, we're competing with generally smaller companies, local entrepreneurs. We need to be nimble. We don't want to tie down our regional leadership with having too much national structure. That all being said, we do make investment decisions centrally. We're centrally funded. So Doug, Mike, myself, often the Board will approve major investments. We obviously fund the company centrally, which we're going to talk a lot about today and then, of course, our corporate services. And then lastly, investment and capitalization. So our core goal at BXP is to grow our FFO per share using moderate leverage, which we would describe as investment-grade leverage. We are -- we love to acquire things, and we will if we can find something that fits with the strategy that I described. But generally, we're a developer. I think we have a greater competitive advantage in our development business. And as a result of that, by the way, we -- over 40% of the buildings that we currently own in the company are ones that we developed. We also have a long-term hold versus a merchant approach, except for residential, which we'll talk about. And then we do use private equity joint venture partners from time to time on acquisitions on existing assets and sometimes on development. And this allows us to extend our capital and also create a greater yield for shareholders in the investments that we make. So that is our strategy. In the back, the slides are not syncing here. So next thing I want to talk about are market trends. What are the key trends that we are focused on today that are having the biggest impact on BXP's business, that's going to inform the action plan that I'm going to talk about in a minute? Well, the 4 that we think are most important today are remote work, higher costs, what's going on with AI and also a change in our shareholder base and therefore, shareholder preferences. So let's start with remote work. This is something we've obviously talked about altogether since the pandemic. And the good news is this is moving in the right direction. I talked about this on the last earnings call. In the Fortune 100 companies, JLL did a survey. 2 years ago, those companies only 5% said they were fully in the office. Today, which this survey was done in the second quarter, it's 54%. That's a tenfold increase. That's huge. And the other good news is this is definitely going in the right direction. It hasn't stopped. And the other thing that I would conjecture is we've had some weak job reports over the last few months, and this is also going to drive more in-person work because the job market is tough, employees that are thinking about whether they're going to come to the office or not are probably more likely to come to the office. So I think this is going to get better. Work from home or working in the office is strongest in New York City. There's no question about it. It's also stronger on the East Coast generally and the West Coast is still lagging. I think it's getting better, but it's definitely lagging. That all being said, I do think work habits have changed post-pandemic. We're not going back to a pre-pandemic world in this area. Hybrid work, even though it was 78% 2 years ago, is still 41%. So office demand per person that's working in an office is less today than it was before, and it probably will stay that way. But that demand is -- that lack of demand is expressing itself much more greatly in lesser quality buildings. Premier assets like the ones that BXP owns are outperforming. So why is that? Well, what's happening is employers want their employees back in the office. And the way they're doing -- and these -- the clients that we have generally in our building have a very highly educated, talented workforce, and they respond much better to incentives than rules. And so employers are trying to coach their employees back to the office. And one of the ways they're doing that is to lease great space in easily commutable locations. If every one of your workers every day is deciding, is the commute worth it? Make the commute easier and it's more likely to be worth it. So I do think the most important amenity today is access to transit. But these other things listed on this slide are also important in terms of modern systems, efficient floor plates, sustainability and other amenities. So we have been talking about the premier workplace segment of the office industry for over 3 years, and we've provided you all this data that CBRE has put together for us. And it's -- I hope you follow this because I think it's very important, and it shows one of the reasons why we're outperforming as a company relative to the overall office market. The markets -- these are the 5 CBDs that we operate in. The square footage that's considered premier is 14%. It's only about 7.5% of the buildings. The vacancy rate is only 12.5% for the premier, it's 20% for everything else. This gap is widening. And then the net absorption is very high for the premier buildings and it's negative for everything else. And if you look at this over time, here's the direct vacancies on the left and the asking rents are on the right. The asking rents have been consistently 50%, 5-0 percent higher for premier workplaces than the rest of the market for the last several years. And more recently, the vacancy rate for Premier is coming down and the vacancy rate for the rest of the market is going up. So I often hear, I'll hear from some of you, well, OT, this has happened before and the price gets so high on the premier buildings, ultimately, the clients aren't going to pay it, and they're going to go into the B and C and if the gap is going to narrow. Well, that could happen, but it has not happened yet. And this is the biggest gap I've ever experienced in my career working in the office industry. The other impact that we're going to spend some time talking about on remote work is the impact of it is much greater on our suburban portfolio than our urban portfolio. Our occupancy is down, as you know. We're working on building that back up, and you're going to hear a lot about that today. But the occupancy in the CBD portfolio is only 5% lower than pre-pandemic. It's 15% lower in the suburbs. So clearly, the suburbs are underperforming given the new world of work that we're dealing with. And as a result, that's informing how we want to operate our company and our strategy going forward. So the next slide I want to talk about is higher costs. As financial investors, I don't need to explain to any of you the slide on the left. The Fed funds rate is higher, the tenure is higher. We're all hopeful we're going to get some relief on Fed funds this year and next. I'd be a little less sanguine about getting any relief on the 10-year over the next couple of years, but you shouldn't listen to me on that topic. We're being prepared for whatever outcome we get. But financial costs are higher, needless to say. And then the cost of construction for office materials is up 45% because of all the inflation from pre-pandemic. This has an impact on how we operate our business. Clearly, our financing costs are higher, as you can see on this chart. Our average debt costs have risen 88 basis points so far. Mike LaBelle, James Magaldi, our finance team have done a magnificent job with creativity trying to mitigate these additional costs like CP programs and converts and bank loans and so forth. And you're going to hear all about that later today, but the costs are higher. The second thing that this has had an impact is office development. This is an incredible chart if you look at it. Look at where office development is in 2025, it's pretty close to 0. And it's incredible in my mind for a couple of things. One, we've got 2 major projects that we've launched while this has been going on. So it tells me a lot about our competitive advantages as an office developer. But the second thing is, maybe more importantly, is as frustrating as this graph can be to my colleagues here who are in the development side of BXP's business, we own 48 million square feet of space, and we are at a sub-historical level of occupancy. And the fact that we've got no new competition, no new deliveries happening is going to help us fill that space, and it's going to also push rents higher. And we're already seeing that in our tightest markets. Rents are growing at a clip that's greater than inflation. So this is going to be a positive for BXP's footprint going forward. The other impact from high cost is what's going on with housing. So if you look at this chart, what this shows you is a couple of things. One, housing is less affordable in our core markets, which I think we know because of where we are. But as a result of that, guess what's happening? We're all building less housing. Why? Because it's more expensive. It's harder to make the numbers pencil and some government incentives, particularly here in New York, have been diluted. So what does this mean for BXP? Well, what it means is we're going to be a more active developer of housing because we can find more projects that pencil. And second, we're taking land that we own in the suburbs that was previously directed towards potential office development, and we're scrapping those plans because those aren't going to be office buildings. And we're having a lot of success dealing with local townships and having them reentitle these assets to residential, and then we're either building the housing or if it's for-sale housing, we're selling. So this is really helping us monetize a lot of our nonproducing assets because of the need for housing in the country. Okay. Next is AI. As you can see from -- I don't think I need to talk a lot about what's going on with AI. I think this is an incredibly important trend. And I'll bet you anybody in this room that we're going to be talking a lot more in the next 3 years about AI that we're going to be talking about work from home when we talk about office demand. So what's happening? Well, one thing, when you look at the venture funding that's going into AI, almost all of it is going into BXP core markets, which is a huge plus. And by the way, 70% of that is going into the Bay Area. And we're already seeing positives. You're going to hear from Rod and Christine later today about this. But over the last 3 years, somewhere between 20% and 27% of all office leasing in San Francisco has been to AI companies. And today, there's a total in-place square footage of 6 million square feet of AI companies. And this is all growth. These companies aren't -- their leases aren't coming up and they're moving. This is -- virtually all of this is new growth, which is a huge plus. And then lastly, the bigger question is, well, what does this AI mean in terms of jobs? And what does it mean in terms of office demand? And I don't think any of us really know. I thought this chart from McKinsey was kind of an interesting place to start. But our theory on this is AI is going to create jobs and it's going to disrupt jobs. And it's going to create jobs in companies that are creating AI infrastructure, AI products, AI services as well as the support network that goes with that, all the investment dollars that go in and the legal services and the business services. And that's going to happen where the AI venture funding is going, and those are BXP's core markets. And San Francisco is already proving my point because of the 6 million square feet of growth that's already been put in place in San Francisco. So jobs are clearly being created. But then on the other side, AI is going to disrupt jobs. It's going to be more in the back office, in the repetitive, and the processing jobs. And I would conjecture that there are fewer percentage of those jobs that are in gateway markets, and I know there's a lower percentage of those jobs that are in premier buildings. So I do think our positioning as a gateway premier workplace company, we could benefit from AI at a maximum and at a minimum, I think we're more insulated from any negative impacts from AI because of our competitive positioning. Green Street published this chart, which came from Oxford Economics, and this is about AI susceptibility risk and the left are those cities for the reasons that I just outlined, they believe are less susceptible to AI risk. And on the right are the ones that are more. And if you look at this, I think it's because there's more back office and processing jobs in the cities on the right than the cities on the left. And by the way, these vacancy rates are total for the city, not just premier workplaces. So for the premier, I would say they should be a little bit lower. But again, this gets us excited about the footprint that we already have as a company. So let's move to shareholder preferences for a moment. So this is a chart that shows our top 30 shareholders 10 years ago and what they are today. And a couple of things I'd point out. One, index has gone from 43 to 50. But most importantly, if you look at the bottom of this, this is the active shareholders, the price makers. 10 years ago, that was 37% generalists, 63% REIT dedicated. Today, it's 86% generalists. That's a major change. So what does that change mean for our company? One, clearly growing -- I mean, this is maybe obvious to all of you, but growing FFO per share has never been more important. This is a chart of that of FFO per share growth versus stock price. And before the pandemic or 2019, that correlation was a little less clear, but today, it's very clear. So a couple of other things that we focus on in terms of shareholder preference, leverage. I don't think this is about generalists. I think this is about all of you, but less leverage generally improves trading multiple. And you're going to hear a lot today from us about BXP reducing its leverage and getting a multiple advantage as a result. The other thing that's interesting to talk about is, do you want to be a local sharpshooter or do you want to be multi-market? And we believe being multi-market will generate long-term outperformance. This chart is a good one to look at. The light blue or the white line at the top are the 3 CBD West Coast companies, which are Douglas Emmett, HPP and Kilroy. And the light blue line are the CBD New York companies. So that would be ESRT, PGRE, SLG and Vornado. And then, of course, we're BXP Blue in the middle. So this was the period from 2015 to 2020. Don't forget, tech companies were growing. It was all about tech. And not surprisingly, the West Coast won from a performance standpoint. We were just below them, but we were in the middle. So let's go to the next 5 years, pandemic to today, the reverse happened. West Coast came out of COVID much more slowly. The New York has recovered more quickly. So now the light blue, all the New York names are at the top, the West Coast names are at the bottom. For the last 5 years, BXP is in the middle. So what happens over 10 years, BXP outperforms because we have less cyclicality than those companies that are regionally focused. Our outperformance is about 13% versus the West Coast companies and it's 16% versus the New York-based. It doesn't mean it's going to happen every quarter or every year or maybe even over a 2- or 3-year period of time. But we're in your multi-market, the cyclicality balances itself out. Also, lastly, scale is rewarded. All REIT sectors, as you know, have an industry champion, thinking Simon in malls, Prologis in industrial, the office sector is more fragmented than most of the other sectors. We are the largest player in the segment. There are huge advantages for being the segment leader, 2 to 2.5x multiple turn advantage, 9% to 11% premium to NAV and borrowing costs that are 100 to 130 basis points lower. So we appreciate we have to grow, but we also appreciate having scale is very valuable. Okay. So with all that, what are we going to focus on? If those are the trends, and that's our strategy, what do we need to be focused on? Well, we want to -- we're already the highest quality office REIT. We want to elevate that further. We want to focus more on the CBD than the suburbs. We want to maintain our current footprint. We want to keep developing, although we know we're going to have to be more selective in office, and we'll probably do more in housing. And those are the operational goals. And then financially, we want to grow our FFO per share. We want to increase our scale, and we want to deleverage. So how are we going to go about doing that? So here's our fundamental action plan. And by the way, all of these or most of these will lead to various modules of discussion that you're going to hear about later today. We need to lease space and improve our occupancy by leveraging our premier portfolio, and Doug's got a -- he's coming up next, and he's going to tell you all about how that's going to work. We're going to stick with our existing footprint. So I'm just going to announce it now. We're not going to the Southeast or the Southwest. So you can ask us about this at future meetings, but we're not going to do that. We're going to continue to be a developer. We're going to sell a lot more assets, and I'm going to spend a few minutes on that. And as you know from our announcement this morning, we did reset our dividend. So leasing space. Good news is we're the luxury brand in a quality-focused market. We own some of the most notable assets in our core cities. You're familiar with all these. So I won't go through them in detail. I think very importantly, another thing to be aware of and that to the extent you're not, we have largely amenitized our portfolio. We've spent the capital, and we've refreshed these assets. So if you haven't seen some of these amenities, Savoy Club at GM, 200 Club at 200 Clarendon, Mosaic at Embarcadero Center. And by the way, these investments have paid. These buildings are better leased. Some of them are completely full, and all of them are better leased because of these investments that we've made. And they've been made. They don't have to be made in the future. The other good thing that's going on is the leasing market has momentum. If you look at our last 12 months of leasing versus the prior 12 months, it's up 18%. And if you look at a snapshot at the end of the first half of this year, if you look at the leases signed plus the leases under negotiation, that number is 22% higher than it was on June 30, 2024. So we've got lots of good things going on in the leasing market, and it's showing up in our statistics in terms of what we're doing and our pipeline. And then again, Doug is going to spend a lot of time on this, so I'm not, but we've got a record low level of lease rollovers coming at us in the next 2.5 years. So in the next 2.5 years, we have about 4.7 million square feet, only 4.7 million square feet of roll, and we're leasing space right now at over 1 million square feet per quarter. So -- and we got 10 quarters. So again, Doug will explain the details, but those are very positive facts. Stick with our existing footprint. I think this is self-explanatory. But the one thing I do want to point out is we are the biggest landlord already on office in Boston and in San Francisco, and we're obviously significant in New York and in Washington, D.C. But the office business is fragmented. So it's not like there's nothing we can't do already in these cities. Even in Boston, we're only 14% of the office space in the city. And we can try to buy other premier workplaces, but probably more likely, we're going to build them and add to the existing stock of premier workplaces in our selected gateway cities. Okay. So we are going to be selective as a developer. These 2 projects on the left are underway, 725, 12th in D.C. and 343 Madison in New York. And as we look at our whole portfolio of land and buildings out of service and options, we think 3 Hudson Boulevard and 171 Dartmouth are probably next phase. I don't know if it's a year from now, 2 years from now, 3 years from now, but these are the ones that are most likely. We've taken a very sharp knife or pencil or whatever you want to say, to our land holdings, and we have been very discerning about what we think can be developed as office, what can be developed as residential, and we are going to be selling a lot of those assets and monetizing them on behalf of shareholders because the world has changed. Particularly, office development in the suburbs is going to be very, very difficult to do, in our opinion, for the foreseeable future. The other thing that's going to go on in the future is we're going to be doing a lot more housing development. Rich Ellis is here from our Washington office, who runs our residential business, and he's going to talk a lot about this, so I'm not. But we've got 3 big projects underway right now, which are probably about 1,400 units. And then if you add that to what we're looking at, that's in various stages of entitlement and raising capital and all that type of thing, we're at about 6,600 units. So one thing just to be aware of, on office development, we're going to own those, maybe we bring in partners. But on housing, we're going to bring in a partner. And the deal we just did at 17 Hartwell, we brought in an 80% partner, which was a financial institution. And we're also -- unlike in the office world, we're going to be much more merchant. So once these buildings are up and leased and full, we don't manage them. It's less strategic to our company, and so we're going to sell them. And we can sell them accretively because of their cap rates. Okay. Next thing I want to talk about part of the plan is asset sales. So since the GFC, we've sold $4.5 billion of assets, and that's about $340 million a year with having sold nothing in '23 and '24. One of the reasons why BXP has such a high-quality portfolio today is because we did this. We sold a lot of the noncore, nonstrategic stuff, which left us with a better portfolio. And today, we want to get back after that. So we are in the middle of a more aggressive asset sale program. And we -- I would describe this as being in 3 fundamental buckets. One is land and nonproducing assets. There's about 12 deals, and it's about $400 million of proceeds. This will be accretive to the company because if you think about it, we're paying real estate taxes on this stuff now, and we're not getting any revenue. And then once we get the $400 million, Mike is going to take it and pay down our debt at whatever, 5-plus percent. So that's going to accrete earnings. Residential, we're going to sell our in-service residential portfolio or at least 4 of the assets. And that's going to generate, we think, over $500 million in proceeds. And by the way, these are low-cap-rate assets. So these will be accretive sales for BXP. We've been holding these assets as a bank, if you will, for lower cap rates, and we're at that point. And given the 343 development, we're more in need of capital, and so this is the right time to sell them and we're going to do it. And then lastly, we need to continue to recycle our portfolio, and we're going to sell some nonstrategic office. There'll be some in the cities, but most of it will be in the suburbs. And this will be dilutive because my guess is the cap rates, not for all, but for many of these sales, will be above BXP's look-through cap rate. So in total, this is a little bit under 30 deals. It's about $1.9 billion of capital. And when you do the accretion dilution, we think it's going to be roughly neutral, which is a very important point, right, because we're selling assets, and we're going to, we think, be neutral to FFO because the first 2 categories are accretive. And by the way, we might sell more. We're going to try other sales. And if we can get great prices, we might sell more. The other important point on this is -- we're not starting this today. We're -- this is in process. So today, we have either closed under contract or are marketing over $1 billion of that $1.9 billion pipeline. And as you can see here, $400 million plus is closed or under contract, and it could be over $700 million of proceeds even in 2025. The other point I'd like to make when we're talking about selling assets is bringing a partner in on 343 Madison. We've talked a lot about this. Just big picture numbers, this is a $2 billion asset. So that's our funding requirement right now. If we brought in a partner, we'd probably go out and get a $1 billion construction loan. We've talked to lenders. This is available to us. We -- this partner would probably buy 30% to 50% of the equity, which would be $300 million to $500 million, and would reduce our funding requirement to $500 million to $700 million. We're not in a huge hurry to do this because we are derisking this asset. We have a letter of intent with an anchor client. We need to sign that lease. We're in discussions with additional clients to lease more space. We're talking to construction trades about the construction cost. Some of that is very good news. Hilary and Rich are going to talk a lot about this during -- at a later presentation. But we think if we derisk -- we continue to derisk this asset, we'll be able to raise capital against it on more favorable terms. And then lastly, as you know from our announcement this morning, we've decided to reset our dividend, which we did talk about on the last earnings call. Why? Retained earnings is our cheapest source of capital. And the new level of dividend is in line with our net income, which is where our dividend should be from an efficiency standpoint. By doing this, we're raising $50 million a quarter in capital. So when you launch something like 343, our needs for capital are greater and $50 million a quarter is very significant. If you do the math, this will accrete earnings. So dividend is lower, but we're paying down debt. We're borrowing less money. It will accrete earnings. It will allow us to have capital for things like 343 Madison. And then when we look at the adjusted dividend at about 3.9%, this was a few days old, it's in line with REIT averages overall. And then now we've got the dividend set to our net income. You're going to hear a lot today about occupancy increases, which will lead to FFO, and we can become a dividend grower. So the next time we are engaged in the conversation about what we're doing with our dividend, it will be about when we're going to raise it as opposed to if we're going to cut it. So let me just finish by -- with the following. What are our current strengths? BXP is the office REIT with the highest quality assets in a quality-focused market. We're the leader in the most important gateway markets, which are less prone in our opinion, to impact from AI. We have growth opportunities from lease-up and from delivering pre-leased developments. We're already the office REIT with the highest credit rating, but we definitely have a capacity to improve. So what's our action plan? Double down on quality, lease space to grow occupancy, be a merchant builder for housing and be selective as an office developer, sell assets and deleverage, introduce a capital partner for 343 Madison and reset our dividend. Management is incredibly excited about and confident in this plan. We, for the first time in a very long time, have tailwinds in terms of trends that are going on in the business that are helping us, and we couldn't be more excited about the future prospects for growth and creating value at BXP. And I have 3 minutes left to answer any questions that you have.

Yes, sir. Yes, John.

So why not sell more assets that might include earnings [Technical Difficulty] would go down. If you're not selling more suburban assets [Technical Difficulty].

No, I think -- John, I mean, we might end up selling more. I think the $1.9 billion that I showed in this deck, which was a little under $1 billion for suburban assets. And there's some urban in there. It's -- we might sell more. We could. I think it's going to be just very dependent on can we get a reasonable cap rate. One good thing that's going on in the business today is on the private equity side, there's a lot of capital coming into the office sector. And look, those investors know about premier workplaces, and those are the assets that are most desired. But if we see capital spilling out into the suburbs and some of our assets that we would consider nonstrategic and we can sell more, we absolutely will do it. Alex?

One, noticed that L.A. wasn't included in any of the footnotes on the markets. And then two, as far as reassessing your portfolio, how has the benchmark, the threshold for projects, changed? Like obviously, cost of capital is up, cost of construction is up. But before was there a tendency just to let projects sit longer and hope they would work out. And now you're like, hey, if this thing doesn't work in the near term, it's out. Just curious how the thinking on asset holdings has changed.

So on Seattle and L.A., those are micro markets for us. We basically own 2 assets in each of those markets, and they're each 1% to 2% of the company's NOI. And we reorganized the company to have those regions all under Rod. And so just to make this presentation more simple, let's just focus on the big cities. So don't read anything into us not talking a lot about those. They're just small. They don't have a huge impact on the company. And then in terms of your question about how we underwrite new developments, well, first of all, our yield requirements have gone up. So a project like 343 Madison before the pandemic, we would have been fortunate to get a 6% yield on that. And now we think it's over 8%. So I think the development yields have gone up a couple of hundred basis points from where they were prior to the pandemic because it's office, but also because capital costs have gone up. And then to your question about these land sales that we're doing and how do we underwrite a project, I think we're just seeing land out in -- particularly out in the suburbs that we either had buildings on. So it was kind of a covered land play or it was a site that we owned. We just don't see -- I mean, it's not about does it pencil or not. We just don't see that project getting leased -- at any time in the near future. And then as we look at where we are today, where we need capital for 343 Madison, and we want to be -- this is a great time to invest in office. And we want to be more active investing in office. So we want to take those assets that we don't think have as bright a future in terms of how -- what we were going to do with them, and we want to turn them into cash so we can recycle that capital into something that is more fitting to the office market of the future. And with that, I am out of time. Thank you very much.

Please welcome Doug Linde, President.

I'll let everyone settle down. So thank you all for being here. I don't quite understand why you are all here. We are in the office business. And at least from an analyst recommendation perspective, office has been sort of the least favored sector of REITs for a long time. So -- and you haven't gotten the swag yet. Maybe it's the swag that is keeping you here. And I'm assuming that we had nobody in Missouri or Texas this weekend, so we had no Powerball winners, although I know -- there are a couple of you I know who are buying some tickets out there. Just looking at a few faces. I'm going to try and be very concentrated on my remarks this morning and talk about one thing, which is the ramp-up in our occupancy and how that translates into incremental earnings, FFO, cash flow, et cetera. Mike is going to put it all together and sort of show you how it impacts our going forward financial strategy, but I'm going to get into the sort of specifics of why this is an unusually opportune time for BXP relative to what we have in front of us and how we are doing. I'm also going to just sort of level set and remind you that everything that I am talking about this morning is based upon change from 6/30/2025, so the end of the second quarter. And the next 30 months, so the next 10 quarters are really the focus period of time that I'm going to be talking about. All of these properties are in the in-service portfolio. And so everything that we are going to do because of the fixed costs associated with operating our assets is going to fall to the bottom line. There may be a slight amount of margin, some cleaning, a little -- maybe a little bit of energy, but basically, 100% of the revenue that we can create is going to fall directly to the bottom line. And I think at the end of this sort of period of ramp-up, I hope you agree with me that this is a unique time to be a BXP shareholder. So this is our portfolio as it sits, 6/30/2025. And this 48.2 million square feet is what we should be focusing on. I'm going to give you some other information so that when the analysts write their reports about our occupancy declines during 2025 and '26 because we're adding properties to the portfolio or if we sell an asset and it impacts the occupancy, because we're changing the numerator and denominator, all that stuff is just noise, okay? This is what matters. It's what's going on with the portfolio that's 48.2 million square feet. And as you can see, we're 33% Boston, 26% New York, 23% West Coast with 16% of that in San Francisco and then 18% in D.C. and more than half of that, 10% of the entire company is in Northern Virginia. And again, Northern Virginia from our perspective, that is a CBD portfolio. That is not a suburban portfolio. That's a sort of dirty word as Owen was describing it. And we view Northern Virginia as an urban core. We're going to put 3 properties into service during the third quarter. If they stay as they are leased today, our numbers are going to show a 70 basis point reduction in occupancy, doesn't matter from an NOI perspective, doesn't matter at all. And I would hope that we will start to see additional leasing in this portfolio. So as we move forward, everything we do is going to be incremental to what I'm about to talk about. We'll be at 48.9 million square feet. 2026. We're going to add 2 more properties to the portfolio. 651 Gateway, which, by the way, we have already ceased capitalization on. So anything incrementally is positive. And then 290 Binney Street, which is 100% leased, and Mike is going to describe the FFO and the AFFO and the cash flow impacts of how that is going to be additive to the portfolio in 2026 when that building is "in service". So at the end of 2027, theoretically, we're at a 49.8 million square foot portfolio, if we don't sell anything, but as Owen said, we're going to be selling some assets. So this number is going to change. Again, this is why I want to focus on 48.2 million square feet. If you look at that development portfolio, there's 556,000 square feet of additional opportunity to grow our FFO, our income, our AFFO if we are able to lease that space. None of that. None of that is part of what I am going to be talking about. So 100% of what we do on that portfolio is incremental to what could happen from an occupancy ramp-up in the in-service portfolio. So let's explore the company's portfolio. We have a pretty unique strategy, which is we go long and deep on every lease we possibly can. And so as you can see, we have an average lease length of over 7.6% and our clients invest significant capital on top of what we do when we provide in tenant inducements. And for those of you who don't know, you're sitting in a BXP building, 599 Lexington Avenue is one of our development assets. This asset and you're sitting in A&O Sherman space and this conference center, right, was part of what they redid when they renewed their lease 2 years ago. And obviously, we gave them a tenant improvement allowance and then they invested their own capital into revitalizing their space and signed a 20-year extension. Again, those are the kinds of leases that we focus on when we are doing our urban developments in particular, but as much as we possibly can. And as you can see, we have a pretty staggered rollover maturity in our portfolio. It actually kind of feels a lot like how Mike runs our balance sheet, right? It's very, very sort of stratified, it's not lumpy. It's long and it's strong. Historically, what I've looked -- what I'm doing here is I'm showing you how much space was going to roll over in the 6-month period post the end of the second quarter. So in 2025, at the end of the second quarter, we had 0.85 million square feet, 850,000 square feet of space rolling over. And how does that compare to the last decade? And as you can see, it's a pretty low number on a relative basis. But it's sort of what I would refer to as sort of in line. And as we get close to the end of the year, this is sort of what we typically see. But if we fast forward to what it's going to look like in the next "18 months" starts to look a little bit different. So we are at 60% of the rollover as we enter the next 18 months than we have looked at over the last decade. And if we look at the next 30 months, we are still 60% of the rollover in our portfolio compared to the last 10 years. And those are -- that is, from my perspective, a very, very unique place for the BXP portfolio to be as we enter this next period of leasing. And again, as Owen said, we have some tailwinds, right, behind us relative to the amount of leasing that we are doing. So this is the setup that we are staring at as we enter the end of 2025, 2026 and 2027. So in the last, call it, 30 days, we have leased another 300,000 square feet. Actually, we've leased another 100,000 square feet that happened on Friday after these slides were published, but who's counting? So the number is actually lower than what I just showed you. So I showed you 5 million square feet. The number is actually 4.6 million square feet as we sit here today. So again, we are doing our work, doing lease extensions and leasing vacant space on a day-to-day basis. So let's look at sort of how we, as a company, have been leasing space. What's the -- that's sort of what's the negative, that's the tailwind, the expirations and what's the headwind? How much space are we leasing on a sort of quarterly, quarterly, annual, annual basis? So this is the last 38 quarters of leasing, 9.5 years. And we have done over 1 million square feet in 26 of those quarters, 68% of the time, 15 of those quarters is over 1.5 million square feet and only 4 quarters was less than 750,000 square feet. Important number, 1 million square feet. And if you look at it on an annual basis, this year, we're going to do over 4 million square feet. So I'm sort of "cheating" here a little bit. But 7 out of the last 10 years, we have done over 4 million square feet of leasing at 70% of the time. So just to sort of level set in terms of how we're going to think about what this all means on a going-forward basis. And if you look at the granularity of our portfolio over the next 3 years, this includes the next 2 quarters of 2025. It's a pretty granular portfolio. In other words, there is no 300,000 or 400,000 square foot lease that's going to expire that's going to sort of change the attitude and the portfolio makeup, right? In 2024, we had 2 leases over 200,000 square feet, actually between 200,000 and 300,000 square feet. And this year, we had 2 leases over 350,000 square feet expiring. So we had a pretty heavy lease expiration schedule earlier in this year. And as you look forward into the next 2.5 years, it's a pretty granular, manageable piece of work in front of us. How much space are we leasing that's vacant? This is really sort of where the heart is. And this is where Ray, Rich and I have a running disagreement. Ray loves all leasing. Ray applauds any lease we can possibly do. My view is that early renewals are great. They're foundational, but what's supercharges the BXP earnings is leasing vacant space, vacant space leasing. And after over the last 6 or 7 quarters, we've been doing 400,000 to 500,000 square feet per quarter of vacant space leasing. And this quarter, we've done just over 300,000 square feet. Bryan, I think is another 100,000 square feet is going to get done today, right? Yes. So we'll be close to 400,000 square feet by the end of the day. It's in our Urban Edge portfolio, i.e., suburban. So it's actually a really good leasing. But this is the pattern that I think we're going to continue to see as we move forward into this period of time. So what does this all mean? Let's all put this together from an arithmetic perspective. So let's use that 1 million square feet as sort of our average volume per quarter. That's our run rate. And if we multiply that by 10, we get 10 million square feet over the next 10 quarters. And my leasing friends over on the left-hand side of the room are probably gulping right now, 10 million square feet. We're going to lease 10 million square feet, but actually, that's what we do. That's what this company does. And as what I said earlier, what's going to drive occupancy is leasing vacant space, and we're doing that 400,000 to 500,000 square feet. And so the question for me is, and how do we think about this is how much space is logically reasonable to think we're going to lease that's both vacant space and taking care of our expiring space. So I'm going to make the assumption that 65% of the leasing that we do overall is on that portfolio, which means 35% of the space we're doing are these early renewals, these foundational pieces of leasing. So I'm not suggesting that we are going to lease 1 million square feet of vacant or rolling over space in the next 10 quarters per quarter. I'm just going to sort of haircut that and use 65% of that. So we have 4.7 million square feet of expiring space over the next 10 quarters. Actually, 4.6 million, but who's counting, which means we're going to pick up 180 basis points of leasing. This is leasing, not occupancy. Remember that word, leasing. That's 3.7% additional leased square footage over the next 10 quarters. At the end of the second quarter, we reported that our leased square footage was 89.1%. So if we add 3.7%, we're at 92.8%. Again, this is not occupancy, this is leased. So how do you get to occupancy? Well, we've been showing you our occupancy and our lease percentages every quarter for the last 7 or 8 quarters. And there's about a 200 on average basis point historical difference, 210 basis points. So if I pull 210 basis points off of that, and we were at 86.4% at the end of the second quarter. And what we've said to the market is based upon that 48.2 million square foot portfolio, we're going to be at about 87% at the end of '25. That means between the end of '25 and the end of '27, we're going to pick up just over 200 basis points of 400 basis points of occupancy and get to 91%. So if we can lease 1 million square feet a quarter and 65% of that square footage is on vacant space in our expirations over the next 2.5 years, we should be at approximately 91% occupancy at the end of '27. How about '26? So we'll sort of pull back a little bit. So we have I think I'm one slide off. So we have right now in action, 2.1 million square feet of leases either under negotiation or that have been signed since the end of Q2. 1 million of it's done, 1.1 million to go. And if you look at that, almost 1.7 million square feet is on either vacant or expiring space, right? So if we start with our 41.7 million square feet of occupancy at the end of the second quarter, we've also told you that we have 1.3 million square feet of leases that are going to start revenue, so be in occupancy by the end of 2026. It's back-loaded, but by the end of '26, we're going to have virtually all of the square footage that has been leased to date start revenue recognition. And if we assume that we're going to -- all those leases that I just showed you on the vacant and the expiring space are going to also be in occupancy by the end of 2026. So that's 0.65 million square feet of expirations and another 750,000 square feet of work that we're doing on vacant space. That means we need to do about 1.4 million square feet of additional leasing in occupancy to get to 43 million square feet at the end of 2026, which would be about 89%. So what we're telling you today is that we think at the end of '26, we will be at around 89% at the end of '26. So that doesn't mean that we're going to be there at the beginning of '26, right? So we're going to start at about 87% at the end of '25, and we're going to ramp up to 89% by the end of 2026. To give you a perspective on sort of where a lot of the current vacancy in the portfolio is, it's sort of scattered, but it's -- actually, there's a reasonable amount in Manhattan in New York City. And then there's a heck of a lot in San Francisco. And so listening to what Rod and Christine have to say is going to be pretty important because that's where a lot of the ramp-up is going to come from as we move into '26 into 2027. And then there's a reasonable amount of availability in our Urban Edge portfolio in Greater Waltham, and Pat and Bryan are going to talk about that, and they're going to give you sort of the granularity on where the leasing activity is today, and it's surprisingly robust compared to where it was 12 months ago. So that sort of gives you a perspective on where we're going to be from a "granular leasing" need as we move into 2026 and 2027. Okay. So what does this all mean? How do you sort of translate this? So this is math. This is the way we are sort of looking at our portfolio today. So the average rent on the vacant and the expiring space, and we've sort of broken it into 3 portfolios. We have our East Coast portfolio, we have our West Coast portfolio, and then we have our suburban portfolio. That average is about $71 a square foot on a weighted basis. So we're going to use $71 as the number as we think about what the occupancy ramp-up means. And we have 5.7 million square feet of vacant space, and we have 4.5 million square feet of expiring space. And you'll not -- look at that footnote, Alex, I've excluded the Santa Monica Business Park, Colorado Center and Safeco Plaza. Why? Because I don't think we're going to do a lot of leasing in those 3 assets over the next 2.5 years. And if we do, it's certainly not going to hit occupancy because it's going to be out, and that's because those are just our weaker properties in our weaker markets. So I'm excluding that stuff from what we have to get done. So we have 48.2 million square feet of space, 100 basis points of occupancy is 482,000 square feet, 482,000 square feet at $71 on a gross basis, and I'm using a margin of 95%. I'm giving myself some sort of leeway in terms of the operating expenses associated with cleaning and electricity, et cetera. That's $32.5 million or $0.18 per share per 100 basis points of occupancy. So that means at the end of 2026 on a run rate basis, we're talking about $65 million. And by the end of '27 on a run rate basis, $130 million of incremental bottom line NOI, FFO, AFFO cash flow. And where is it going to come from? It's going to come from, as Owen sort of described, this office amenitization that we have been doing. And we are at a point where we are always looking at what we can do to maintain and enhance the assets, but the big, large-scale $25-plus million redo amenitization, amenity centers, conferencing, "gathering spaces" have basically been done in virtually every one of our CBD portfolio buildings as well as our large suburban assets. So I'm sure you're going to hear from Pat that one of our strategies in the Urban Edge of Waltham has been to up our game from an amenitization perspective. And where we have done that, we have had very strong success leasing space. And so that concept has sort of been part of our DNA over the last, call it, 6 or 7 years. And we're -- there will be a couple of projects here and there that may need to get done. But by and large, the CapEx associated with these types of projects is really in the rearview mirror. So simply put, in conclusion, the next 30 months, if you remember those 3 slides I showed you, 60% of where we would typically be on an average year over the last 10 years is what's the headwind against us. And as Owen described, and you're going to hear later this afternoon, the tailwinds in terms of the leasing momentum we're seeing in our markets is getting stronger. I'm sort of pulling back and saying, let's just assume we're going to do 1 million square feet a year. Let's assume we're only going to do 65% of that in terms of sort of utilizing our expiration schedules in our vacant space. Suddenly, you get 400 basis points of incremental occupancy by the end of '27, and we have $130 million of incremental revenue. That's kind of the bottom line in terms of the in-service portfolio and the growth that we are going to see at BXP from basic blocking and tackling and doing the work from a regional basis that we do each and every day. And I will stop there and answer any questions if you have some. Tony?

Doug, do you think office leasing will behave differently if the economy slows this time versus previous downturns?

So I think that overall, the flight to quality in a downturn becomes more accentuated because what typically happens in a down economy and what we're not seeing other than -- right now in our greater portfolio in San Francisco is a lot of incremental growth. We're seeing a lot of musical chairs. We're buying or basically eating a lot of additional market share, but the market actually isn't growing. And so my perspective is that we are sort of in a point in time when the overall leasing activity will remain relatively constant because all of the headwinds that Owen described are still part of what we are facing. And I think they have sort of pulled away a lot of the incremental demand. And our sense is that companies still need space, and they are looking to bring their people back to work. So I don't think we're going to -- we would see a dramatic shift in overall leasing activity if we see another sort of negative economic environment. I'm not suggesting if we have a deep recession, that's a different question. But if we sort of have a soft landing and a slowdown, I would expect that the leasing activity that we're seeing is a consistency associated with what we've seen over the last couple of years. In the back. David?

Could you talk about what you're seeing in terms of TI trends at the moment? And what would be your working assumption over the next couple of years in terms of those trends? That's a macro overlay as well, but you ultimately have -- must have an in-house working assumption as to what your cash flow numbers are going to be looking like.

Yes. So Mike will show you later on that we are more than breaking even and creating cash flow on an operating portfolio basis year in and year out. Overall, tenant improvement dollars in the Greater Boston market, in the greater New York market, in the Northern Virginia market and the Washington, D.C. market are all on the down slope. In other words, they are coming down, both in terms of what we are required to provide as an inducement in both TI and in free rent. I'd say the one area where that's still a drag is in the greater San Francisco marketplace, where TIs have been continuing to go up. So on average, across the portfolio, it's going in the right direction, but that one particular market is where sort of the numbers are going in the other direction. And I'm going to -- I'll wait until my regional teammates are up here talking about their individual markets, so I don't sort of steal their thunder in terms of what they're seeing relative to what those numbers actually are.

And your working assumptions in-house for the trends over the next couple of years? Are we close to the bottom here?

Yes. I would say, as I said, we're going in the right direction everywhere other than the West Coast. So we -- I'd say that's what our working assumption is.

So I know the focus here was on occupancy, but can you talk about rent growth and how you're feeling about spreads throughout all of this leasing?

Sure. We're not counting on rent growth. We are seeing rent growth in Midtown Manhattan. We are seeing rent growth in the Back Bay of Boston. We are not really seeing rent growth in Northern Virginia or in San Francisco. Those markets are, I would say, static at best and to some degree, slightly on the downtrend still, meaning the West Coast rents are still sort of, I would say, mark-to-markets are negative as opposed to positive. But the other markets on the East Coast, we are clearly seeing meaningful rental rate growth. And again, I'm going to hold off answering the question until our -- my folks on the regional side are up here because I don't want to again steal their thunder, but you'll see evidence of that. Ron?

Just can you talk a little bit more about the life sciences? It hasn't really come up today. I remember a few years or quarters ago, it was talked a lot about just from a leasing perspective, what are you seeing and how those assumptions are factoring in?

Yes. So BXP, again, from a life science perspective, has 2 primary areas where we have exposure. The first is the Urban Edge of Boston. And I'm going to let -- I'll let Pat and Bryan when they come up here, talk about that. But what I would tell you is we have surprisingly leased close to 400,000 square feet of space to life science companies, one of which has a pseudo lab facility, but the rest have been pure office deals, meaning life science companies that want to be in life science buildings, but they do not need any benches. On the West Coast, and again, I'll let Rod and Christine get there, I would say it's been much less robust, and there has been more supply that has been an issue there. And so for us, 651 Gateway, which is the development property that we are no longer capitalizing interest on. So it's already in the numbers. It's going to be a while before that building is "stabilized" from a leasing perspective. It's a small tenant building. And that's -- we have 100,000 square foot building in suburban Boston that will be available, hopefully, that's the only one at the end of this next quarter. And that's the literal amount of exposure we have. Again, our Cambridge portfolio is 100% leased, and we have no exposure until 2028. Steve?

I know this is mostly a revenue discussion, but anything on expenses, OpEx, real estate taxes that we should be thinking about over the next couple of years?

So what I would say is energy costs are going up. They're going up more materially in certain CBD markets than others. We have locked in, in 2 out of the 4 markets where we can fixed-rate contracts. So nothing that you're going to see in '26 or '27. Real estate taxes on the West Coast are going down. There -- it's either through appeals or through reassessments. On the East Coast, they are much stickier. There's an acknowledgment that abatements are happening. But in a market like New York, those abatements get pushed through over a 5-year period of time. So it takes a while for them to sort of show up. So I don't think you're going to see enormous increases in taxes, but you're not going to see sort of what a -- the revaluation should show you the tax rates are going to be. And in Boston, I'd say there's sort of a flatness associated with assessments and the question will be whether the legislature will allow the administration in Boston to increase the burden on commercial. They were defeated in doing that in 2025, and I'm sure they will try again in 2026. But net-net, nothing significant. And then our sort of controllable and our tertiary vendors, security, cleaning, R&M, we are working like hell to maintain a deceleration of those increases. And so we've been able to sort of see the sort of 2% to 4% on average increase. Many of our -- as you know, our leases are gross, and therefore, we pass along the escalations. Many of our leases are net where we pass on 100% of the expense. So I would say that the margin changes associated with operating expense increases is not going to be something that you're going to see in a discernible way over the next couple of years. Any others?

Have you been experimenting at all with any AI tools to get a better feel for what demand could look like in your markets, in your buildings? Is there any sort of companies out there focusing on that? And have you had any interactions? And what are your thoughts on it?

So if you're talking about the utilization of our buildings, we are working on a couple of experiments right now where we are putting some building management system overlays in some of our buildings to sort of see what that will show us relative to occupancy sensors and therefore, how we are going to be operating our buildings. And when Ben Myers gets up here as part of our sustainability, that's one of the sort of things he has been spearheading for the company. So I would say the answer is slowly, yes, but the technology is still working its way out.

Where that return to office kind of pie chart would look like 2 years from here?

Yes. So I think that what it's going to show us is that we don't have to operate our buildings nearly as long as we are currently operating them because the density of use on those buildings for certain parts of the day and certain days of the week is less concentrated. I would say that we will continue to -- and my expectation is that we will see a ramp-up in the overall utilization during peak periods of time because it feels like that's what's going on with our customers and that they are asking their people to come in more densely during different parts of the week, and they're being less concerned with "overall utilization" on a 5-day week basis. No further questions, we'll move on. Thanks.

Next up, please welcome Mike LaBelle, CFO.

All right. I am going to stand over here. Good morning, everybody. It's Wow, this room is full. It's great to see. We really appreciate all the interest they have in us and all the support, certainly, that you've provided for us. What I'm going to cover today is a few topics. I want to talk about development. Development has been our DNA historically. As most of you know we do have development funding that we have over the next few years, and I want to describe that, and so you can understand the scale of that. And then I'm going to describe our funding strategy for it. How are we going to fund it? What is the impact going to be on our balance sheet going forward? And then the last thing I'm going to cover is some insights for 2026. So we're not going to give guidance today, that's not the goal of today. But I do want to give you some sense of some of the key components and the direction they're going, so you can have some help as you kind of go into the third quarter, we're not going to provide guidance until the fourth quarter but you can have some help of where our earnings trajectory is going to be going in 2026. Before I kind of start with that, I just want to reset a little bit, and I want to build on Owen's comments that he made. We are the sector leader in premier workplace. Our portfolio is highly diversified, our portfolio is the highest quality, we believe, and we're the largest company in our sector. We have $3.3 billion of annualized revenue, and we have annualized EBITDA that is nearly $2 billion. And by the way, and I'm not sure everybody realizes this, our revenue and our EBITDA has consistently grown over the past 5 years, even though we had to deal with COVID, we had to deal with remote work, and we've had to deal with a lot of economic uncertainty related to a lot of these things, we have continued to grow our revenue base. Our income trajectory, which has been pretty flat, maybe a little bit negative in a couple of years has really been more impacted by interest rates and interest expense versus our kind of top line revenues. Our balance sheet is really strong. It has always been strong. It continues to be strong. We have an investment-grade rating. We have the highest rating among our sector. And if you look at our unsecured bonds and you follow how they trade and you follow the activity that we have, our credit spreads reflect credit strength that the company has. So development. As Owen mentioned, development has been the principal strategy of BXP. I mean when the company started 50 years ago, it started as a development company. It remains a very important strategy for the company. If you think about how our regional teams are structured, our regional teams are structured to manage the risk of large-scale development. We achieved higher investment returns on development than we would by buying assets. And the other thing that we get is we consistently are improving our portfolio because we're bringing brand-new assets into the portfolio and they don't have any capital expenses or leasing costs for many, many years after they become delivered. And that's a key advantage of development. If you look at the last 10 years, we've delivered $9.2 billion of developments, maybe it's the last 12 years. The approximate return on cost for that development pipeline that has been delivered is about 7%. The developments that we deliver, they have long-term leases. They have contractual rental increases. So the GAAP return is even higher than the 7%. And how did we fund this $9.2 billion? Well, we had asset sales, Owen mentioned, I think it was $4.5 billion of asset sales that we have had over the last decade. We have excess operating cash flow. Somebody talked about our AFFO and FAD. We consistently had positive operating cash flow every single year that has helped fund that. And then we used incremental debt. So our debt has increased, and James Magaldi is going to talk about our debt portfolio this afternoon but it's increased pretty significantly over the last decade as we funded a portion of this pipeline. The other thing that it's done for us is it's -- we've grown right? So over the past 10 years, we've grown our FFO from $5.36 to our midpoint of our guidance for 2025 at $6.88. And if you look at cash flow or AFFO, it's grown even more. So in the last 10 years, our AFFO has gone from $3.48. And if you look at our AFFO for full year 2024, it was over $5. So that's more than a 50% increase or nearly a 50% increase in our AFFO, a lot of it came from development. And if you think about the assets that we've built, I mean, these are some of the best assets, the most premier assets, the most sought-after buildings in the market. And as Owen described, our portfolio is full of buildings that we have built. Nearly 50% of our current portfolio are buildings that we've built and we've sold a lot of buildings as well that we had developed over time. So again, this portfolio has been curated with buildings that are new, that have been built by us and that are modern and really sought after by our client base. So looking forward, this is what we have to deal with going forward. We continue to find opportunities to put capital to work and find new interesting developments with yields that are accretive and that are desirable to our clients. So just this year, we started 343 Madison. We have a 30% letter of intent commitment from a client to lease that building. We started 725 12th Street in Washington, D.C. It's 87% pre-leased to 2 prestigious law firms. If you look at just those 2 projects, the total investment is $2.3 billion, and we expect to generate a cash-on-cash return of 7.5% to in excess of 8% on those 2 properties. So this is the projected remaining development spend, not only for those 2 developments but for the entire current development pipeline that we have. So that's $2.6 billion. And as you can see, the majority of it is really getting spent over the next 3.5 years. So how are we going to fund this? I want to spend a few minutes talking about this $2.6 billion and how we anticipate funding it because it's going to be a little different than how we funded the last 12 years. So these are our funding options. We have a lot of funding options to think about many of them. And over the last couple of quarters when we've been talking about this, almost everyone has been asking me, so how do you prioritize these? Like what's the list? How do you prioritize it? What do you think is best for the company? So this is the list and how do we think about it? Well, we think about the key metrics and the key metrics that we think about include the impact of each option on future earnings per share on our leverage ratio. And we think about how we can best create shareholder value over time, that's what we think about. And so if you look at the top 4 options here, those all meet the criteria that we're talking about, and we expect to use a combination of these 4 options to fund our external growth. So I'll talk a little bit about asset sales. Owen covered this a little bit, certainly but it's comprised of land parcels, residential and nonstrategic office sales. So on the land, our goal is to sell a portion of our land holdings. That portion that we don't think we're going to be able to develop in the near term. The sales are clearly accretive to us because right now, we're paying carrying costs on the land. So there's insurance, there's real estate taxes, there's some maintenance associated with them. So every dollar we can get out of that is accretive to us because we're using the money, right, to fund our business instead of using cash or borrowing money. The next goal is to harvest the value and the residential projects that we have developed. So the market for high-quality multifamily projects in the markets that we are in, right, is a very, very good market. It's strong, and we expect we're going to be able to get cap rates on these asset sales that are below our borrowing costs, below our cost of capital. So that will be accretive to us. And then the last thing we're going to do is look at nonstrategic office assets that we don't think are going to grow as fast as other assets that we have. As Owen said, some of these will be dilutive but it's good for us to continue, as we have always done, to pare the portfolio and continue to improve the overall quality of the portfolio. So in total, we're projecting about $1.9 billion of asset sales at a minimum over the next few years. We already have $400 million under contract, and we have about $700 million that's either actively in the market or it's going to be in the market in the next couple of months. And we believe, overall, as Owen said, the program is going to be neutral to earnings when it's completed. But importantly, in some earnings periods, it's going to be dilutive and some earnings period, it's going to be accretive. So it's going to be different kind of over time. And I'll talk a little bit about that when we get to 2026. So the dividend. As we -- as you saw in our press release today, we've decided to rightsize the dividend. We rightsized it to $0.70 per share. It is more aligned with our taxable income. We appreciate that nobody wants a dividend reset but there are real benefits to the company to using this inexpensive capital to fund our external growth needs. We're going to be able to retain about $500 million over the next 10 quarters. I mean that's a lot of capital for us to use. It improves our leverage. It's accretive to our earnings. So as you can see from this chart on the right-hand side of the slide, utilizing this excess capital in lieu of incremental debt continues to improve our earnings over time. So that if you can push that out further, it will just continue to be more and more accretive over time. And as Owen also described, the dividend yield on our reset dividend is still in the high 3s. And so we still think that's an attractive dividend yield to shareholders. And it's in line with both the office REIT peer set and kind of the overall REIT peer set. So we think it's an appropriate dividend to have. And then importantly, resetting the dividend provides us the opportunity to return to being a dividend growth company. Over the past 5 years, we've been really reticent to raise the dividend because it was so much higher than our taxable income, just didn't make sense to us. And now we're much more closely aligned to taxable income. So as we grow our income, through adding developments, through growing our portfolio occupancy, our income is going to go up, and we're going to be a lot more likely to raise our dividend in the future. So our view overall with our dividend is there's a negative perception to cut -- to resetting the dividend. There's no doubt about that. We think it will be short-lived, and we think investors should focus on the fact that we are using this money accretively to create growth for the company and to add shareholder value. That's why we're doing it. I want to talk a little bit about private equity. James Magaldi is going to cover more of this a little bit later but it's also a funding source for us. We have many, many years of experience in dealing with private equity. It's provided incremental funding to the company, it increases our investment returns because we get operating leverage and we get fees, development fees, property management fees, asset management fees. So it's accretive in that manner. We have nearly 15 million square feet of assets today that are funded in part by private equity. And if you look at who our partners are, they're some of the largest and most sophisticated investors in the world. It's a great group of partners we have, and we really appreciate what they provide to us. Owen kind of described this, one of our goals is to raise private equity 343 Madison. And we think that given the quality and the scale and the location of that asset, it's going to be very, very attractive for us to try to find capital and prospective investors for that asset. We've already spoke to many companies about that, many investors about that. Our strategy is to raise between 30% and 50% of the development costs, as we described before, we're not necessarily going to start right away. Owen talked about how we're derisking the property by doing leasing and getting our construction costs lined up and getting our contracts signed. So all of that is going to improve what we have to provide as a -- to a prospective investor. So we're going to wait until those things are done before we start. Why do we plan to keep 50% of it? Because we think it's a great investment. So we're just going to raise up to 50% of the capital because this is a long-term hold for the company. This is going to be a great asset with great long-term growth. So just to summarize these 3 funding strategies. So using these 3, we think we have the ability to grow to fund and increase funding of over $3 billion with these 3 things. So that's more than the $2.6 billion that we need. So it provides additional liquidity to also do other things. I want to talk a little bit about operating cash flow growth. Doug kind of spoke about this as well. We believe we're going to have good operating cash flow in the next few years. That doesn't raise capital directly but what it does is it increases our free cash flow and it creates additional balance sheet capacity that we can utilize and it's meaningful. Starting with our developments. So this is 290 Binney Street. 290 Binney Street is our largest near-term development. It's a life science project. It's located in Cambridge and Kendall Square. It's 100% leased to AstraZeneca on a 15-year lease. They're going to commence paying cash rent in the second quarter of 2026. We are building the tenant improvements for them right now. We believe that they will be in occupancy of the space either at the very end of the second quarter or early in the third quarter. So our expectation is it's likely to start revenue recognition in the third quarter of 2026. Even though we're going to start getting cash rent a quarter earlier than that, we just can't recognize that cash rent until the client takes occupancy and completes their work. 290 Binney is a consolidated joint venture. Norges is our partner so we own 55% of it. For 2026, we expect our share of cash NOI from the property to be $31.4 million and that's going to grow to $43.3 million in 2027. So it's meaningful to the company. The 2027 cash NOI, that represents an 8.5% return on our cost. And if you look at the GAAP NOI because there's a 3% annual increase in this lease, the GAAP NOI is $54 million a year. So the GAAP return on cost is over 10%. So this is a phenomenal investment for the company and going to provide a lot of growth for us over time. We also have a handful of other developments that have either already delivered in '25 or will be delivered in the next couple of quarters. There's still some leasing to do. But on stabilization, we anticipate that these developments are going to add about $44 million of aggregate incremental NOI as they stabilize over the next couple of years. And Doug talked a little bit about this but our view is the majority of the incremental income from these assets is not going to hit our numbers until 2027. 1050 Winter Street, which is on the right-hand side, that's the only one that is going to be fully stabilized and revenue recognizing for all of '26. We will be done with that project in the third quarter of '25. It's 100% leased. That client is going to be going into occupancy in the third quarter of '25. So we'll have full revenue recognition on that project in the third quarter of '25. Reston Next, which is the one on the left-hand side, that's also basically fully leased. But the client doesn't need to be into the space until 2027. So we have already delivered that building. And so we will be ceasing capitalized interest in '26 and -- or in '25, and the tenant is not going to go until '27. And then the other 2 projects, which is 360 Park and 651 Gateway, we still have some leasing to do on these properties. And the space has to be built out before we can start recognizing revenue, so it's going to be a little while. At 360 Park, we recently signed 2 leases. So those will be going into service sometime in -- some time in mid '26 so that's good. But for the remaining space that we think about in these buildings, it's going to be a 12-month build-out. We don't have signed leases today. So as you think about it, I mean, it's really going to be the very end of '26 or into '27 before we have revenue recognition. As Doug mentioned, 651 Gateway, we haven't had a lot of demand on that. So that could be even more extended than that. And then there's the existing portfolio that Doug described. I mean, he went through this in a lot of detail. We expect that we're going to be able to grow occupancy, we believe every 100 basis points of occupancy should result in about $33 million of incremental NOI. So if we increase the portfolio to 91%, we think the annual run rate in the portfolio NOI should be close to $150 million. Doug our math is a little different. I got a little -- I got $20 million more than you, Doug but we'll see somewhere between $130 million and $150 million. Again, that's on a run rate basis. starting kind of at the end of '27 because that's when we would expect to kind of have that occupancy. So it's obviously not a straight line. I want to talk a little bit about the debt markets because that's another source of funding for us. I don't think it's going to be as critical for us going forward but we do have some refinancing to do as well. I would say that it's always been an incredibly reliable source of funding for us. I would also say that 2025 has been a really, really good year for the debt market. It's trending positively, coming off at '23 and '24, which is great. We primarily use the unsecured bond market to fund ourselves, but we're active in all the markets. So the bank market, the secured debt market and more recently the CP market, and we're going to also talk about the convertible debt market because we're involved in that as well. If you look at the bond markets, 2025 is a record year. In terms of issuance, in terms of performance, in terms of money going into fixed income products because rates are higher. So that's been a really, really good market for us. Our outstanding 10-year bonds are trading at spreads somewhere between 130 and 140. So pricing for a 10-year bond on this slide says 5.75%, there's been some rallying in the 10-year over the last few days. So it's actually probably closer to 5.5% as of this morning because there's been a big rally in the 10-year. But it's a very attractive and active borrowing source for us, And again, it's the biggest market that we rely upon. Exchangeable debt or convertible debt, whatever you want to call it. This is a market that we also are looking at. We haven't used it in over a decade. We had some convertible notes outstanding in 2006 through kind of 2013. That was the last time we used this market. The convert market is a 5- to 7-year security. It has a coupon that's a lower coupon than an unsecured bond but you're offering the holder a conversion premium so that if your stock goes above a certain set premium, they get paid additional interest. And so that's why they're willing to offer you a lower coupon. So the current pricing for us for a 5-year convert with a conversion premium up 40% on our stock price is about 4%. And so that's a security that we've been looking at. Mortgage market, a little more spicy than the unsecured bond market, I would say, pricing has a wide range. It's really dependent on leverage, asset quality and weighted average lease term. We're seeing pricing at somewhere -- anywhere between the high 5s and 8%. CMBS market, which is an important piece of the secured debt market is improving. We've seen a lot of large office single-asset securitizations go off. And during '25, you've seen the credit spreads come in and the trends improving in that market. And you also have a conduit market, so if you have a loan that's probably $200 million, $250 million or less, you can really hit that conduit market, and that's an active market as well. We have a loan on the Hub on Causeway in Boston that we need to refinance. So we're actively doing that now, and we expect to refinance that kind of in the lower end of this coupon range. Then we have the bank market. So the bank market is really our line of credit and we have term loans outstanding in the bank market. So we have about $1 billion outstanding in the market today. We price at 100 basis points over SOFR. So that's roughly 5.25%. And then commercial paper is another market that we're in, and we have $750 million outstanding in the commercial paper market. We've had this outstanding for probably 1.5 years. It's been a very, very attractive place for us. You can see that the coupon is somewhere between 4.5% and 4.6% today. The maturities are usually within 30 days, it's priced over SOFR as well. It's our cheapest source of debt capital that we have. So we do expect -- so the bank market and the commercial paper market are floating. So we have roughly $2 billion of floating rate debt. So depending on what the Fed does and the direction of SOFR, we do expect that we will have some earnings benefit if SOFR goes down at the Fed cuts. So every 25 basis point decline in the SOFR rate will reduce our interest expense annually by about $5 million. So that's about $0.025 a share. The other benefit or the other goal for our funding strategy is to enhance balance sheet strength, reduce our leverage. So we have a goal to improve leverage over time. As Owen described, we think that's going to help our multiple because companies that have lower leverage have higher multiples. If you look at the second quarter of 2025, we reported net debt-to-EBITDA of 8.2x. The investment in our development pipeline, the $2.6 billion and the portion of that goes out before the end of '27 increases our leverage, right? We're putting out capital and we don't have any income associated with that capital until those properties deliver. Asset sales, reduce our leverage by 60 basis points. The dividend reset improves our leverage by 25 basis points. Bringing in a partner on 343 Madison reduces our leverage by 25 basis points. So these 3 funding strategies that we've spelled out to you will fully mitigate the impact of funding that development over the next 2.5 years. And then if you think about the growth in our EBITDA, that's also going to help delever us. So we've got development deliveries and we've got occupancy growth in the in-service portfolio. So we think that can improve our leverage by another 100 basis points over time. And so by the end of 2027, we believe that we can be at roughly 7x net debt to EBITDA. And then when you think about 343 Madison and you think about 725 12th and those coming into service and adding EBITDA in the future, that's going to delever us even further. So all of this is design, right, to enhance our balance sheet capacity. So we continue to do new investment. So just to summarize the funding strategy, I think that we've come up with a creative funding strategy that fully funds our development pipeline, and it also achieved several other very important corporate goals. It improves our leverage, it's accretive to our earnings. It creates capacity for new investment and it positions us for future dividend growth. So all are important to us. So now I want to turn to another section of my presentation, which is to talk about 2026. For 2026, Doug described an occupancy growth trajectory. So we provided a lot of detail on the leasing plan and how well positioned we are to gain occupancy over the next 2.5 years. The gain is expected to result in positive same-property NOI growth that will be a contributor to earnings growth. However, the occupancy is not going to grow in a straight line, right? You have to think about the timing of our lease expirations during the next 6 quarters and the timing of the revenue recognition that we have from leases we've already signed as well as leases we plan to sign or new leasing that we're going to have. So we described in our last call that we expect to reach about 87% occupied by the end of 2025. And so if you look at our expirations that occur right at the end of '25 and then you look at the first quarter '26 expirations, we actually anticipate that occupancy is going to decline slightly in the first quarter of '26. But then our expirations really fall off and a lot of the signed leases that we have are going to start taking occupancy. So we have visibility that we think we're going to be able to increase our occupancy on the back 3 quarters of 2026 to get to the point that Doug talked about, which is about 89% occupied at the end of '26. So that means that the average occupancy that we expect next year is between 87.25% and 88%, that's about 70 basis points higher than '25. Near-term development deliveries. So we expect to have NOI growth from our developments though it will be muted by the burn-off of capitalized interest. As I mentioned earlier, 1050 Winter and 290 Binney Street will contribute to our growth next year. The other developments on this page, given the timing of the build-outs and the timing of occupancy, we think we'll have -- will not have a meaningful impact on 2026. But we're going to be losing capitalized interest on all of these properties. So that's important to think about. So the impact of the burn-off of capitalized interest from year-to-year will increase our interest expense by $0.07 per share in '26. As the developments on this page lease up in the future and later in '26, in '27, as Doug mentioned, that's going to all fall to the bottom line because we've already ceased to capitalize interest on all of that. 290 Binney Street needs a little bit of explanation, and I apologize that I'm going to have to talk about accounting. But the accounting for this -- for the capitalized interest for this project is really unique. And I want to make sure that you all understand the impact that it will have on our FFO growth next year. So as I mentioned before, we own this property in a consolidated joint venture. We are funding this project entirely with equity. So that means the venture has no construction debt at the venture level, right? All of the capital had been raised at the corporate level. In this circumstance, the accounting guidance requires that we capitalize interest at 100% of the consolidated cost, even though we only own 55%, we're capitalizing at 100% on our books today. When the project delivers next year, we're going to recognize 55% of the GAAP NOI but we're going to lose 100% of the capitalized interest on the cost. So there's a mismatch. And so the mismatch occurs, and that means that the GAAP FFO growth from this asset is not going to be as great as you would otherwise think it would be. So the incremental FFO that we're going to generate from '25 to '26 is only $6.5 million for this property. So that includes both the GAAP NOI offset by the capitalized interest while our share of the cash NOI is $31.4 million. So this seems really nonsensical but unfortunately, we have to deal with GAAP and the vagaries of the GAAP. But I just want to make sure all of you understand it because it's important for your models given the scale of this development to the company. I mentioned sales -- asset sales earlier, and I said they're going to be accretive in some periods and they're going to be dilutive in some periods. So in 2026, we expect the asset sales based upon our projection of the timing of all the sales will be dilutive to us by $0.04 to $0.09 per share next year. Bond maturities, so this is another thing to think about. So we have 2 bond expirations in 2026, they both have below market interest rates. We've been benefiting from these low rates for the last 10 years. They include a $1 billion bond that expires in February at 3.77%, and another $1 billion bond that expires in October at 3.5%. So we need to refinance these bonds and our plan right now is to use a combination of 10-year unsecured bonds, which was about 5.75%, and convertible debt at about 4%. So depending on which one you use, the incremental interest expense is different. So if we use all converts, right, it's only dilutive by $0.02 per share. If we use all bonds, it's diluted by $0.14 per share. So despite the fact that the convert sounds really great because the dilution is less, it's not very likely that we're going to do $2 billion of convert, okay? Because we want to ladder out our maturity much further than that. So I expect that we're going to use some combination of these 2 securities to refinance this debt. So I kind of look at the midpoint and say, you should be thinking that we're going to have higher interest expense by about $0.08 a share from refinancing activities in 2026. And that's kind of the best kind of assumption that we have right now. So to summarize all of the bread crumbs to 2026. Our leasing plan is going to lead to what we believe to be projected average occupancy of 87.25% to 88%. So that's up 70 basis points from 2025. We anticipate that we're going to get some NOI growth from our development delivery, primarily 1050 Winter and 290 Binney. Our dividend reset is adding $0.04 a share. We will have $0.07 a share of capitalized interest burning off that's going to increase our interest expense, so that's dilutive. Our refinancing activity will be dilutive. So we expect interest expense to be higher from refinancing by about $0.08, $0.02 to $0.14, somewhere in there. Sales activity $0.04 to $0.09 dilutive in '26. And then depending on what your view of Fed rate cuts is, we should get some benefit on our floating rate debt portfolio. So that's all I was going to cover. Hopefully, it's been helpful. Happy -- I've got a few minutes for questions, if anybody has any.

Mike, can you just talk about the decision a little bit more to cut the dividend instead of pursuing more asset sales, higher quality assets, lower cap rates or even using, let's say, some ATM issuance over the next several years to fund development?

So we didn't talk about equity. Obviously, it's a source for us, but it's a more expensive one in our view at the current share price. Our view is that the dividend we were overpaying it and given the investment pipeline that we have, we would like to use that capital more accretively to invest in properties. And we really felt like it was appropriate that we should not be overpaying the dividend when we have this external growth going on. The asset sales, we'll see how they go and whether we increase them more in the future or not. I mean that is a little bit more speculative because you don't know exactly what you're going to get as we think about kind of the next $500 million or $1 billion that we could potentially sell, whereas resetting the dividend today is unknown, right? So we know that we're going to get that money, and we're going to be able to use that money accretively to put it in. So those are the kinds of things that we thought about when we made that decision. And we tried to be very kind of transparent and clear with all of you because we've been talking about it for the last 3 or 4 months to make sure that nobody was surprised. Alex?

Just going through the [indiscernible] range you provided a lot of negatives. And there was a lot of talk of '27 so it sounds like '26 is going to be a flat year at best or down from this year unless you some positives that are offsetting the known negatives.

I mean I don't think that's necessarily the case, Alex. There was a lot of positives in there, too.

I know but you didn't articulate [indiscernible] . And given the annual lengths that we all have with the annual outlook, just trying to get a sense of where -- how we should use this -- the information you provided as we go back to our models to think; about?

Sure. I mean if you think about 70 basis points of average occupancy growth, right, Doug said 100 basis points of average occupancy growth was $33 million. So 70 basis points about $25 million. So that's positive on 177 million shares. So I don't know, $0.14, something like that potentially. And then if you think about the development, I mean, 290 Binney has the offset of the capitalized interest but that's in the $0.07 of dilution. So on the other side is the GAAP NOI growth that's coming from that asset and the NOI growth from 1050 Winter. So I provided those in the presentation, that's meaningful growth. And then the dividend reset is accretive. So I think there was 3 accretive things and 3 dilutive things, and then there's the floating rate debt. So I know you can kind of use that to kind of create your own range. I mean I don't want to give guidance today. That's not our goal here. I'm really just trying to give some insights to what can happen, but I don't think I'm trying to tell you that it's going to be a down year.

Have you thought about providing a core flow number? Some of your peers do it maybe in other sectors but even with an office because it seems like you are conservative with the way you capitalize interest, you provide a NAREIT FFO basically. So when you have refinancing, that's another headwind but it seems like there's always some kind of offset to what should be organic growth. So I'm wondering if internally, you've discussed providing a different figure.

We have discussed that over many, many years, and we are very pure in how we report and we've always taken the road that there's a NAREIT definition to FFO, and we should be using it. And by the way, we've got a lot of generalists that are in our share base, and we don't want to confuse them by providing multiple metrics. So we're trying to be transparent as pure as possible. I don't anticipate that we're going to start adding additional metrics to what I think would complicate the story, personally. Going back to the room, John.

Two quick questions, if I may. Do you anticipate providing '26 guidance with the third quarter earnings? Sorry, yes, fourth quarter -- third quarter earnings or we wait until January?

We will provide it in January, which in January, we've been doing the last few years.

Right. And the second question is, would you anticipate many of the sales would generate special dividends? Or are you going to be able to protect from that?

Our objective is to not have any special dividends. So we've kind of -- we've designed this because some of them will have gains and some of them will have losses, and we've kind of timed out the whole program to not have special dividends. I think that's all the time I have. We can do a couple more. Fantastic. Okay. So we're not getting lunch. We're just going to have questions. Any other questions? Yes.

I think you initially outlined the $1.9 billion that was going to be kind of neutral to earnings, but then the $1.7 billion is the $0.04 to $0.09 dilutive. So would that -- should we be thinking about that $200 million balance being accretive to 2027? Or how should we be thinking about that?

Yes. In 2027, we have 2 pretty large land sales, one of which is already under contract. There's just some entitlement risk associated with it. And those 2 land sales are because of their size, they're very accretive to us. So they're going to offset that '26 dilution. Good question. Okay. Time for lunch. Thanks, everybody.

So lunch will be served right outside the store right here. There's a buffet, and we will be getting out the squad shortly. You're welcome to sit in any of the rooms. There's -- you can sit back in your seat here, and there's conference rooms available as well. [Break]

Next up, we have Ben Myers, our SVP of Sustainability.

Hello. All right. This is loud. Welcome back, everybody. I'll take it as a good sign that you're here back from lunch ready to hear a very concise overview of our sustainability program, some of the areas of focus and how we're adding value through our sustainability initiatives. So I'll start by going through some conditions. And I want to say that one of the reasons BXP is a globally recognized leader in sustainability is because we have a long-term ownership model. We have leadership and a view from the top that this matters. We also have a commitment to quality and premier workplace that is correlated with highly sustainable operations and development, and we're vertically integrated. So this is a picture from our engineering leadership summit earlier this year. And many of these engineers, all of them, I work with closely on the energy initiatives I'm going to talk about today. One of the conditions that we're facing is load growth, capacity constraints and energy cost escalation. So the load growth story driven by generative AI, driven by electrification, advanced manufacturing in EVs is real, and it's causing energy prices to escalate. In our regions, we spend about 60% more than the median across the U.S. for commercial rates -- power rates. So very important that we control that $140 million energy expense, and that's part of my job. Next, regulation. We have building performance standards in New York, Cambridge, Boston, Washington, D.C. and Seattle. And so existing buildings are now subject to these regulations and need to implement changes operationally, implement CapEx to comply with these regulations. I'll talk a little bit about how we're doing. We have client demand. So we have commitments from our clients that have their own public targets. And so a lot of our engagement and transactions is informed by the commitments of our clients, and they're asking us questions about how the building performs, whether it's LEED certified, Energy Star certified. And we also have climate risk. So the intensifying physical risks associated with climate change. So these are the conditions. We're very much focused on what we can control, and we seek wisdom from the stoics, right? The obstacle is the way, put simply. And I'm going to highlight this obstacle is the way theme with an example. Do you -- does anybody remember Frogger? All right. So I grew up during the '80s, James, thank you. And in Frogger, you advance -- the player advances this amphibious protagonist across a series of death traps, right, advancing across these different obstacles. And energy infrastructure development in 2025 has become Frogger on hard mode. So here we have our energy infrastructure project developer, and you might be thinking solar and wind, but this is really all kinds of energy infrastructure from solar and wind to batteries to transmission to natural gas generators. All of this has gotten more complicated. A project developer is navigating permits and utility interconnection queues, which may span 4 years and local approvals that have gotten harder to secure. There's uncertainty around policy, regulation, tax code and tariffs. And all of this is resulting in the alligators, capital markets and project finance, which is getting harder to secure. It's taking longer to close on project finance and the cost of capital is getting harder for many infrastructure projects, largely in reaction to the first 2 death traps here. So it's very hard to become a successful project developer in 2025. And this is contributing to our view of what the priorities are for our program, controlling energy cost escalation, which is inevitable in this Frogger environment of project development. So our team, a small, but mighty team of 3 in Boston is focused on the following priorities, and I'll unpack them a little bit for you today in the small amount of time I have with you. Cost control, energy efficiency, load flexibility, so flexing our power down during times of peak demand to control cost and clean energy procurement where it's cost effective. Compliance and differentiation. We have a tremendous amount of internal expertise on green building and sustainability that we want to use during transactions and are using. We want to use it to inform operations for more cost control and then development execution, and we're going to hear more today about 343 Madison. That's a project where we're putting a lot of these skills into practice from our sustainability team down through our construction and development teams in the field. And finally, risk avoidance. There are climate-related physical risks. And as I said, these risks are intensifying. There are ways of assessing those risks, proactively identifying risks and adapting our portfolio and our developments to become more future-proofed. We are, as a company about less talk, more action. And this is reflected by our performance since looking back to the 2008 base. So here, we have 2 metrics. One is energy intensity measured in kBTU per square foot. So think total energy use divided by square foot of our actively managed office portfolio. And then Scope 1 and 2 carbon emissions, so the carbon intensity of those operations. Both have declined dramatically since 2008. Energy use is down 39% across our portfolio, and we've reduced our Scope 1 and 2 emissions to 0 as of the end of 2024. An example of how we're reducing energy use so dramatically is exemplified by the GM building here in New York up the street. When we acquired this building, it had the highest energy use intensity in our portfolio, about 140 kBTU per square foot. We've essentially cut that in half, down to the mid-70s. We did this through a central plant modernization. So it's a $13 million investment in the Chiller plant, the deployment of Nantum, which is a solution that allows us to more dynamically control the building, set back temperatures, set back fan speeds to achieve more operational savings. And we estimate that in 2026, as a result of these investments, we'll save about $3 million for the calendar year on energy-related expenses at the GM building. We also avoid Local Law 97 penalties through 2034 and perhaps beyond, but we're looking out to 2034 now. And we achieved the Energy Star certification for the first time in February. This is a graph that shows that dramatic reduction in steam. So this is through the cooling season. Before the Chiller plant modernization, this building used steam for cooling. So it had an old steam turbine chiller that would provide most of the cooling for the building. Now it's -- since the modern electric drivelines were installed, we've cut our steam use 60% through that season, reflected here by the dark red line versus the dotted red line, which is 2022 pre-modernization. Of our energy initiatives, there's 3 I would highlight here for you today. I'll cover very briefly. Retro commissioning. So this is going through point by point through our portfolio, through the equipment and making sure the systems are operating as intended. We've retro commissioned 15 million square feet over the last 2 years, and that has resulted in $1.6 million of energy cost savings. So that's a sub-2-year payback on our retro commissioning program. It's a very successful program. We intend to do more. Demand response. When I mentioned load flexibility and flexing load, at the ISO level, so the regional service providers, transmission operators like New York ISO, ISO New England, they have programs that essentially pay us for reducing our consumption during peak congestion periods as do the local utilities like Eversource in Massachusetts and Con Ed here in New York. We are participating actively in those programs. We have over 50 properties enrolled in Boston, New York and Washington, D.C. and have extended that program to San Francisco and continue to participate in demand response. Third, energy efficiency. This is the largest cost savings across our portfolio. We can point to hundreds of projects where we've reduced energy consumption cost effectively. This results in about $49.5 million of avoided annual energy expenses when you look at that 39% intensity reduction. We also set new 2030 targets this year for energy and a science-based target for carbon. There was a question earlier about AI and where the AI opportunities are. I definitely think in this space, retro commissioning and energy auditing, there are large opportunities to use data from energy submeters and occupancy to turn down spaces given new occupancy patterns. For example, where we see occupant densities dropping on Fridays, in particular, turning down those spaces and saving energy when we can on Fridays and more accurately tracking occupancy throughout the building so we can do space level, zone level turndowns of equipment, fans and conditioning to save more power. We're also piloting an AI energy audit at 200 Fifth Avenue. It's the first time we're doing that. And one of the challenges in this space is that it's been so expensive to develop these customized energy and decarbonization plans at the asset level, AI is going to make that much more efficient. So the cost to get a really high-quality energy audit is going to come way down, meaning we can do a lot more audits. There's only so many parameters you need to enter for buildings. Yes, everyone is a Snowflake, but say you have 150, 200 parameters that you can identify for a building, you could quickly do audits rather than paying a consultant over a 6-, 12-month process to come up with good recommendations for asset level efficiency measures. Our energy mix is rapidly shifting from brown to green. So today, about -- of our total energy use across our entire actively managed office portfolio, 10% of it is natural gas. So we use that high-efficiency boilers, I think 98% efficient condensing boilers. 10% of our total use is natural gas. The balance is steam, which is 16% and the rest is clean energy from different sources. One of the new sources that's coming online in 2026 in September that I'm particularly excited about is this project called Nutes Solar, a 20-megawatt AC ground-mounted utility scale solar project in Farmington, New Hampshire. It's being delivered to BXP under a direct PPA, meaning the electrons will flow to power our operations in Massachusetts. We've done and participated in a variety of on-site solar projects over the years. Our first project was at Weston Corporate Center, now the quarry in Weston. It was a 110-kilowatt ground-mount system in 2010. At the time, that was the largest privately held solar array in the state of Massachusetts, it's hard to believe. Since then, we've developed a total of 14 projects for 11.5 megawatts on site. And we've added these 2 projects, one is called Estonian and the other Nutes I was just talking about that add another 40 megawatts -- 41 megawatts of new solar capacity, bringing our total solar capacity under contract to north of 50 megawatts. One project I'll highlight that delivered in March of this year is Reston Town Center Garage Canopy. The community loves this project. It's a 1.3-megawatt solar array that we delivered in partnership with Microsoft. Microsoft had an interest in the attributes. So they wanted to take the carbon credit for this project. They can see it outside their window down the street at 2 Freedom. So they asked us, hey, could we work on this with you? And we were happy to. So we brought in a developer, partnered over a long-term PPA. And through Microsoft's agreement to buy the attributes and our agreement to buy the power at a cost below what we were paying the utility, we were able to make this work, and we get the benefit of covered parking. So very excited about these urban infill garage canopies. We've done several of these and then think there is a real opportunity to do more. If you look at the entirety of our clean power procurement, the 50 megawatts of new solar capacity under contract, 32.5 megawatts of which has been delivered from the 14 projects we have in service, we save about $400,000 a year on the utility expenses. Every project we've done, we've done and it has delivered utility cost savings. So we're not doing this at a cost premium. We're not doing it because it feels good. We're doing it because it saves us and our clients dollars on their energy expense. In 2027, I should add that Estonian, this is a project in Delta County, Texas, which COD in January of this year, and Nutes will add considerable value. So our value from solar really jumps up in 2027 due to the combined value created by the power itself, cheaper power, but also RPS compliance. So these are state-level requirements where you have to buy a certain amount of your power being green. We can sell the RECs. We can sell the attributes into the market, monetize those. We also get benefits from building performance standard compliance where our compliance pathway may be green power. So we've strategically pursued projects that produce the value, whether it's BPS compliance, utility cost savings or the attributes themselves, which have value due to RPS requirements at the state level. On building performance standards, as I mentioned, we've gotten a lot of questions, how are you prepared to handle Local Law 97, Boston's BERDO, Cambridge's BEUDO. These 3 charts from left to right, New York, Boston and Cambridge show with the dash line what the caps are, the caps are specific to our portfolio based on our office asset class and the carbon emissions factors that are defined in the regulation. So regulation essentially tells you how to convert power to carbon, and they do that with a carbon emissions factor. So the dash line moves over time based on the local regulation and how that definition is made in the regulation. So in all cases, through 2034, we are compliant with building performance standards. And we will continue to plan for the future and see how these building performance standards are enforced, how they change, and we do expect that enforcement and change will be dynamic over time. Net zero commitments. There has been a lot of noise this year around the disbanding of the Net Zero Banking Alliance, the walking back of targets. I just want to emphasize that we still see strong commitments from our key clients. So clients like Salesforce, Google, Akamai, their commitments to energy and carbon remain strong. And we -- I mentioned the engagement with Microsoft. We have a lot of clients that this still matters to them. They want to be in buildings that are LEED certified at the highest level. They want an Energy Star label. And to the extent it's possible, they'd like to avoid on-site fossil fuel combustion. One such client is AstraZeneca. So we're going to hear more about the BXP Life Science Center in Cambridge, Massachusetts. It's come up today earlier. This is a 570,000 square foot laboratory facility with no on-site fossil fuel combustion. It's the first time we've done this. It's one of the rare cases in the U.S. where you have laboratory that's fully electrified. What makes that challenging is that you have so many air changes. The amount of air volume you have to condition at single pass, you're not -- you don't reuse air in a lab, and you're doing 6 to 12 air changes per hour. So you need a lot of capacity, heating and cooling capacity on site. Doing that with a fully electrified system requires new modern technology, new air source heat pumps that are more efficient at delivering heating and cooling that allow us to electrify. So these are -- this is an air source heat pump building. We do have standby backup steam. So it is a belt and suspenders approach where we have for resilience, a connection with steam at the street in the event we need it. So that helps me sleep better at night, and I think it helps AstraZeneca sleep better at night, too. This whole project is really a story about electrification because it also includes a substation and public park. Substation will add about 360 megawatts of new power capacity as part of Eversource's grid modernization efforts, and we're delivering the shell for that substation as part of this development project, along with a 420,000 square foot multifamily residential building, 121 Broadway, which is also fully electrified and is targeting LEED Gold certification. So this whole development is really an electrification story unfolding in 2025 that is quite exciting for the sustainability nerds like myself. 343 Madison, there's a lot to say about this building. V4 -- LEED V4, it's an early adopter of V4, maybe a late adopter of V4. But I think it's the right adopter of V4 because it's fully electric, LEED platinum. It has an all -- it has air source heat pumps at the crown. You can see them here in yellow. It is transit-oriented. It has -- it's energy efficient. So it's a 43 kBTU per square foot building, benchmarks very well against everything like it in the city of New York. It's a tower that not only provides efficiency, but it also provides tremendous daylight and views. And that's always a tension. How much glass can you have in a building while also remaining efficient, how much fresh air can you deliver to occupants. And here, 30 CFM per square foot is well above the recommended ASHRAE level. So it's going to have very fresh air, MERV 13 filtration. It is the epitome of advanced green building today in the United States. And finally, climate resilience disclosure and applied analytics. We have partnered with a company called First Street to do risk assessments across our portfolio, looking at flood risk, looking at wildfire risk, sea-level rise. And we've aligned our disclosures with the TCFD. So we'll continue to disclose transparent information around how we view climate risk in BXP's portfolio to our investor community. And we're proactively addressing risks at developments like 290 Coles Street. Here, we've elevated the first floor. Critical equipment is mezzanine level and above. We have 750 kW of backup generation, and we have the aquafence at low-lying areas on site that we can deploy in the event of a superstorm Sandy weather -- extreme weather event. Some performance highlights I'll leave you with. The 39% energy use intensity reduction, 49% water consumption reduction results in $53 million of avoided annual utility expenses. We've won a number of awards. We filled the trophy case. I won't go into the awards, but you can read more about them in our 2024 sustainability and impact report, which includes an awful lot more detail. We released it on Earth Day. I want to thank you all for your engagement and support of BXP's sustainability efforts. Thank you.

Unfortunately, we have no time for questions, but then we'll be available at the cocktail reception.

Thank you.

Next up is Rich Ellis, SVP of Residential.

Great. Thank you. For those I've not met, I'm Rich Ellis. I've been with the company 18 years now and the last 6 years focused on our residential business. So as many of you know, the residential business, while still a small part of the company is growing. And my goal today is to provide an update on what we've been up to. And as Owen and Doug and Mike have mentioned, it is a focus as we think about not only our land pipeline, but kind of how we grow given kind of the overall macro environment. So I thought I'd start with why residential for BXP. We are clearly a premier workplace company. Why is this something that senior management has had us focus on over the last 5 or 6 years. First, as we've mentioned earlier this morning, this is now the highest and best use for many of our suburban assets. And I'll walk you through a couple of examples of suburban office assets that have been quite accretive to the company for many years, but times have changed. And today, residential is the highest and best use. We own the land. What's the best way to kind of create value. Number two, it clearly adds -- it's a use that adds vibrancy to our mixed-use environment. So if you look at Kendall Square or Reston Town Center or the Hublong Causeway, residential is a key use within that environment to help drive our premier workplace. And we've kind of developed now an expertise to do that use ourselves, and we'll walk you through some examples there. As I just mentioned, we have built more of this now. We've built about 3,000 units, but we have team members in pretty much every one of our regions that's done residential outside of BXP. So we think this has now become a bit of a core competency for the company. Everything we've done in the last couple of years and will do, as Owen mentioned, will be kind of on a JV basis. So development in this product type is a bit different on the office side where it's capital light. We don't have an operating platform. We're always engaging a third-party property manager. And we're earning fees and hopefully driving value on given sites. It's a highly liquid asset, and we've done this a couple of times through the years, and I'll go through those, and we're actively in the market right now on a couple of assets. So it's a product type that is more easy to transact on, especially in some tough times. And another reason why we like to kind of keep this within the portfolio. And most importantly, we have a track record of creating value. As Owen always says, we're doing this to make money, and we've demonstrated that throughout history, and we'll show you some examples of that. A quick time line, if you will, for our residential business. So really, our first project of scale occurred back in 2011. Some of you know our Square 54 project, where our 2200 Pennsylvania Avenue office building is. We got into that project when our residential partner at the time decided not to proceed with the deal, ended up being a great thing for the company, for me personally, but a huge success. We delivered in a market with really no new supply. So that was our first project. From 2011 to 2015, we delivered 3 projects, about 780 units in total. And these were all high-rise projects, highly integrated into office environments where the reason we were doing the overall mixed-use project was for the office use. And then from 2018 to today, we've delivered an additional 5 projects, and some of you have toured some of these, mainly in, again, environments where we're building and owning office. Skyline in Oakland was kind of a one-off example. And our most recent delivery, I'll highlight in a second, is Skymark in Reston Town Center that we delivered about a year ago. So in total, we've delivered about 2,900 units. We actually have 3 projects under construction right now, I'll quickly update you on, which is another kind of 1,200 units. So this is growing fairly quickly within the overall company. As I think about the framework of our residential business, again, within the framework of the overall whole company, there's these different buckets, and I'll provide a quick update on each. The first is our current operating portfolio, which is about 2,200 units. This portfolio has performed quite well, growing anywhere from 3% to 6% year-over-year. 2 to 3 of these projects, as Owen mentioned and Mike mentioned, we will be in the market with, if not already, and hope to close on by the end of the year or Q1 of next year. We have 3 projects under construction that I'll walk you through. We have what I would call our nearer-term pipeline, Worldgate, Kingstowne and Weston I'll walk through. These are projects that we hope to start in the next year or 2 or 3, we'll see. Some are more imminent than others, if you will. And then we have a whole host of land pipeline that Owen walked through, and I'll walk through quickly that we're working on that we're in a cost-effective manner, advancing entitlements on, and we'll kind of see where the timing of those lead. And then we're always looking for new opportunities. If you look at our 290 Coles project, if you look at our Worldgate project, those are residential opportunities where we're creating value. And those were not assets we owned previously for office uses. Those were sourced by the local teams, which is another differentiator we think we have. So real quick, I won't get into this much detail. Our current in-service portfolio, like I mentioned, 2,200 units, pretty much every one of these buildings is the top building or 2 in its given comp set from a kind of occupancy rent perspective. And as we've mentioned a couple of times, we think now is the time to seek to dispose of a couple of these assets, given the current operating status, those and the overall kind of cap rate environment. The 3 projects under construction, a total of about $1.2 billion in project costs. But most importantly, we are about $720 million of that. That's primarily our 121 Broadway project, which is a key component of the overall Kendall Square development. So these projects are all under construction now. 17 Hartwell and 290 Coles Street are good examples of kind of an 80-20 like JV structure and both of those started this year. And then if you look at our land pipeline, this slide was shown earlier, but this is land that the company controls completely. We have teams in each of these markets with amazing relationships on the entitlement front. And I would say that Northern Virginia, suburban Boston are some of the, as you guys know, most desirable multifamily markets, and that's where this is, Santa Monica Business Park. So these -- and many of these projects could yield additional units over time. And so our goal right now is to, again, in a cost-effective manner, advance entitlements and design so that we can take advantage of the residential opportunity. And that might be selling the land as entitled residential. It could be finding an 80% partner and proceeding. It will just depend, but we think that we've gone through and called the portfolio and said, hey, residential is the highest and best use in these sites. How do we best advance those plans going forward. So I thought I'd walk through a couple of examples. Like I said, we are in the residential business to create value. And I think we have a couple of good examples of that. And each strategy was a bit different. So 17 Hartwell Avenue is something you might have heard about, the Boston team started back in July. So this is a legacy office building that was -- I think one of the assets that seeded the company, built in 1966, very successful 30,000 square foot office building for many, many years. It just kind of kept rolling and rolling. In the fall of 2023, Bryan Koop's team got Impact Mobile Hill, got noticed that the tenant was not going to renew their lease. So we made a decision to seek to rezone to residential. The town of Lexington is not an easy jurisdiction to kind of get rezonings done in. The tenant left in the spring of 2024, and we started construction in June of '25. So an amazing execution by the local team. This will be a 312-unit project. We sought an 80% partner here. And so we formed the JV back in June. And essentially, that joint venture gave a value to the land of $22 million. So if you apply that to the 30,000 square foot office building, it's a pretty $700 plus or minus a square foot deal. 80-20 joint venture. We have no incremental investment going forward. There's a promoted infrastructure, and we feel like our partner, great about this project as there's such limited supply in Lexington. So just an example of taking an accretive office asset for many, many years for the company, pivoting to residential given the change in the environment, using the local team to get the entitlement done, to get the deal started, and we're excited that's under construction. Our first project, the Avenue is another example. This is -- again, we stepped into a potential partner shoes to satisfy the overall mixed-use environment. Ray had done a major office lease on the office component and our partner didn't want to close on the resi. So we took it over, ended up being an amazing project at 7-plus percent return. We decided it was a short 60-year ground lease. So we decided for a couple of different reasons to sell back in 2015 and created $73 million value. And then finally, the Avant in Reston Town Center. So we've built now 3 projects in Reston Town Center. The Avant was our first, and we decided to sell this in 2022 because we were, at the time, acquiring an asset in Seattle. And so the decision was made to have a reverse 1031 exchange, and it was a difficult interest rate environment and overall market environment. But again, residential is a more liquid asset class. And so the decision was made to sell this. We were told get this done in, I think, 90 days, which we were able to do. So I think the example here is the ability to have residential assets on our -- within our portfolio creates optionality in terms of raising capital as we move forward. Quickly, the 3 near-term projects that we're most focused on. So first of all, Worldgate is a project in Herndon, right near Reston Town Center that we bought into in January of 2023 with a 50-50 partner. We've taken that through a rezoning. Half the site will be for sale townhomes that we are now under contract for and hope to close on in 2 different tranches starting in January of next year. And then we have designed a 359-unit apartment building. And the beauty of this deal is that the existing parking deck that serve the office building will remain. So we think we have a very attractive basis at, call it, $350,000 a unit. Similar to 17 Hartwell, we are now going to launch in the next couple of weeks, a process to find a -- hopefully an 80% partner and hope to start that in Q1 or Q2 of next year. Kingstowne real quick is -- we have not done a true office to resi conversion, though we've looked at many and we continue to look at many. But this is an example of one we think could have some legs, if you will. We own 2 office buildings, as you might know, in Kingstowne, Springfield, Virginia. We have decided to take one of those buildings and take it -- rezone it to residential. And the idea here is to convert the existing plus or minus 150,000 square foot office building and then actually add 5 levels of wood frame units on top of the existing parking deck. And we think this could have some legs because there's no new parking that needs to be added, but you're adding kind of efficient wood frame units to get to a total unit count of 280 that could work. So anyway, that's a little bit further out, but we're in the process of getting that rezoned. The county seems receptive. And then Bryan Koop's team is working on Weston quarry, which again, Weston is an amazing residential submarket if you can get entitlements. And so we are hopeful there and his team is making good progress. Just quickly, as Owen mentioned and I mentioned earlier, everything we're doing on the residential front now is with private capital partners. We spent a lot of time over the last 3 or 4 years meeting with groups ahead of any given project just to educate them on our residential capabilities because some might say, you're a premier workplace developer, why are you the right sponsor? And I would say that we've gained lots of traction there. We've now done 4 joint ventures, almost 2,000 units. And I think what partners see in us on the residential side is that we have these local teams that are deeply, deeply embedded in places like Lexington and Waltham, et cetera. For us, it's important because it allows us to increase our development yields, earn some fees, both on the asset management side, in some cases, definitely development fees. And then we think that the existing relationships we've developed through the process, whether it's with PGIM or with Weston, et cetera, will hopefully be helpful as we seek to do some repeat business, as they say. Skymark is a good example of that. This is our most recent development I mentioned earlier. This delivered almost 14 months ago, 508 units with PGIM. And the key thing here was this was a hard project for us to get to pencil at the time, $214 million project, but we thought it was a critical last component of the first phase of RTC Next for those of you who have toured it. The office building, 70,000 square feet that Owen mentioned earlier that's now leased as part of this project, if you will. The ability to bring in an 80% partner allowed us to really reduce incremental spending here, earn fees and most importantly, finish out the project. So now the place feels complete. And it's been a huge home run. We opened this, like I mentioned, July of last year and hope to be stabilized this year. So pretty incredible given the size of the project, and our rents are 10% plus above pro forma. So as we look forward, again, this is a business that's small within the scale of the company, but one that's growing and we think is important as we move forward. We now have dedicated resources besides just myself focused on residential, both the asset management, how do we advance the land pipeline and also looking for new opportunities. We think our in-service portfolio is as good as it gets. And as Owen mentioned, we think the time is now to dispose a couple of these that have done quite well over time, and we are in the process of doing that. We hope to capitalize the near-term project I mentioned. Worldgate is we are hopeful, will be our next project, similar to 17 Hartwell will start, call it, early to mid next year. And then we're going to be focusing efforts on how do we keep advancing this nonproducing assets pipeline. Decisions have been made that residential is the highest and best use, how do we kind of advance those projects going forward. And as I mentioned, private capital and those relationships will be key to funding anything we do. So with that, I would be happy to answer any questions. If any -- right on schedule.

Next up, we have James Magaldi, SVP of Finance and Capital Markets.

You can get the memo. It's a blue collar outfit for the afternoon. No one. How we are all doing? As Helen said, I'm James Magaldi. I'm Senior Vice President, Finance, Capital Markets. My primary responsibilities for our business are raising capital, public and private, debt and equity. You may be wondering why I'm dressed like this. I'm going to get to that, I promise. But I wanted to start by thanking someone specifically. Steve Binder, raise your hand. Number one, Steve -- sees with adage and wanted to say thank you for being a shareholder, number one. Number two, Steve calls Helen every quarter and sets up a call with me to talk about BXP, talk about capital markets, talk about deals. And I've developed a relationship with him while I'll ask him for his opinion. So I said, Steve, nobody at an equity conference wants to hear anything about the debt capital markets or the capital markets in general. And he said to me, "You know what, James, I actually really do. I want to hear about how are you going to be raising money for 343. And I may actually be more interested in hearing what you have to say than what Doug, Owen and Mike have to say regarding things like dividends or earnings growth or leverage. All those things are very important. So the checks in the mail, Steve, appreciate keep the calls coming. Thank you. So the middle of the afternoon, you've all had lunch, your sides, because you're going to get another 30-page slide presentation. My job to keep you awake. So hopefully, you appreciate that at the start. Big picture, anybody remember the GMC Trucks ad slogan from a while back where they talk about we are professional grade, anyone, Beuler, okay? We are a professional office company, and we are investment grade. We are Baa2 with Moody's and BBB flat with S&P. We have great relationships with the rating agencies. We are in ongoing dialogue with them about things like leverage and capital raising. So keep in mind, we're in regular contact with them. And we've had both of them go to committee in 2025, S&P most recently about a month ago, and they affirmed our ratings as they currently stand. As far as liquidity, we have $1.8 billion at the end of the second quarter. It's a pretty big number, comprised of $1.5 billion in availability under our credit facility and $0.5 billion in cash. So just to point out, this -- early in the second quarter, we recast our line of credit, increasing it by $250 million and providing capacity to do an additional $250 million in commercial paper, which I will get to why we did that. We are, however, and will continue to be a long-term fixed rate borrower. So of our $16 billion debt complex today, $10 billion of that is long-term fixed rate bonds. We do have some mortgage debt. It's primarily associated with our JVs and the largest of which is a $2.3 billion SASB financing on the GM building. So as far as our fixed versus float, we clearly believe that long-term fixed rates are best aligned with our 7.5-year [ vault ]. So why is that the case? It's the most economically resilient way for us to finance the company. So it's resilient to economic cycles, and that's why we do it. We do, however, have more floating rate debt today, as Mike had mentioned. You credit folks in the room don't get nervous. It's still only 13% of our overall debt structure. And why are we doing that? Why do we have a little bit more floating rate debt today? Well, in the short end of the curve with anticipated cuts by the Fed, each 25 basis point cut in interest rates based on our debt complex, a floating rate debt complex results in a benefit from an earnings perspective of about $0.03 per share, $0.025 to $0.03. Debt maturities. We've had a busy year so far. We basically handled everything that we have coming due this year. We do have mortgages on the Hub on Causeway in Boston, the office tower and the Podium Building. We are currently in process of refinancing those in the CMBS market with a 7-year SASB fixed rate financing that hopefully will close by the end of the month. Now Mike mentioned our bonds that are coming due in 2026. We've got $2 billion, the first of which are in February, and we plan on addressing the February and potentially the following maturity in either the convert market, and we'll get into that. Mike had already touched on that or in the vanilla bond market, depending on which one we decide is the most attractive at the time. Okay. I like this slide, and I want to show it to level set on interest rates. There's a lot of young people in this room that probably were not doing these jobs 10 years ago. So we've been in an interest rate environment of 0% floating rates for a decade and 10-year treasury of 1% to 3%. This tells you, on average, over the past 20 years, the 10-year treasury has been almost 3%. And since the 1960s, the 10-year treasury has actually averaged closer to 6%. But again, we've had muscle memory about this very low interest rate environment. And you know what, all corporates, not just REITs, they're adjusting to this new environment, which is an old environment and, quite frankly, closer to the historical averages. So as we, like every other corporate who issues bonds in the unsecured market, we've seen an increase over time, well, we actually benefited first and foremost, over the past 10 years, refinancing all of our bonds, right, at interest rates between 2.5% and call it 4%. So now with the 10-year treasury, it's right about 4% right now. You're seeing a creep in terms of our overall cost of debt capital and we expect that to continue, but we're exercising strategies to moderate that into 2026. But keep in mind, this level of -- this cost of debt at 4.37%, this is in line with historical averages. So we've been busy in terms of raising capital. The last really 4 years if you include 2025, $2.7 billion, $2.2 billion, $2.8 billion, $3.8 billion year-to-date in 2025. And that doesn't include refinancing the hub and it doesn't include some sort of liability management strategy as it relates to our February bonds. So 2025 is going to be a $5-plus billion a year of capital raising. I'm going to throw out a word and you can tell me what that means for James. B-O-N-U-S. Okay. So I've got a number of nick names at BXP, some nice, some not so nice. So why am I in dress like this? Because I'm a free spirit? Because I don't care about job security? Maybe, but it's my job to walk you through the capital markets, excuse me. And the team, Doug, Owen, Mike, we all refer to the capital markets as tools in the toolbox. So I'm going to -- I'm a car guy, if you don't know me. And I'm not just -- I don't just buy cars. I do work on them. So this is actually kind of legit. So I'm going to add the mechanic to my nick names at BXP, hence, the goofy outfit. So I'm going to walk you through the tools in our toolbox, bonds, converts, the bank market, mortgage market, CP and private equity. I would suggest to you that all of these markets are really running strong, and we have access to all of them at pretty attractive levels. So we have the bonds. Does anybody remember the movie, Tom Cruise movie, Days of Thunder? Come on, show some hands, liven up a little bit. Thank you. And do we remember the scene when Tom Cruise said, I'm dropping the hammer, Harry. No one? Mike knows. Anyways, the bond market is humming. My whole point is it's really crushing it right now. The chart on the left is credit spreads. The chart on the right is new issue concessions. Credit spreads, it might be tough to read the actual numbers. So I'm just showing you the trends. They are at historic lows for the investment-grade market. As far as new issue concessions, which is basically a little premium that you have to pay for doing a new deal in some cases, negative, in some cases, 0 but not more than a couple of basis points, which again suggests that these deals are just performing very well. How are REITs doing? This is -- keep in mind, these stats that I'm going to be showing you do not really incorporate last week. And last week was meaningful because there were some significant improvements in the markets. So we had $24 billion in issuance in the REIT space year-to-date. The sector is on pace to surpass 2024. Interesting data point, which my fixed income buddies in the back, I can see a few of them. The investment-grade bond market on September 2 this year, 26 deals, $43 billion. Now we think we're really special in the REIT space, $24 billion year-to-date relative to $43 billion in the investment-grade space without 1 REIT in 1 day. It's pretty impressive. We love the bond market. It's going to continue to be a critical component of our capital structure. It's one of the primary reasons we went public, got our investment-grade ratings, access to capital. The BXP name is amongst the most liquid in the REIT space. And our investors are of extremely high quality and they are what I would call repeat offenders because they buy into all of our deals, which we sincerely appreciate. And this market is open and continues to be open for all of our funding needs. Another interesting point about the REIT issuance this year. We've seen a steepening in the yield curve between the 5-year and the 10-year. So what does that mean? REITs actually can do deals cheaper, call it, 70 basis points or thereabouts in the 5-year tenor versus the 10. And I would say the majority of deals, 60-plus percent this year have been 5- and 7-year deals for REITs. Historically, REITs are always 10-year issuers, and you can see on the chart on the left that it's over 60%. So what does this mean for us? We love the 10-year end of the curve and where does our secondary trading imply where we would price somewhere around 140 over the 10-year and for a 5-year would be about 100 to 110 over. So in absolute numbers in coupons, that's a 5% 5-year and a 5.75% 10 year. I would suggest that all of those numbers are probably 10 basis points better today than they were when this information was produced just because of the rally in treasuries in the past week. And just because I'm dressed probably unusually for an equity conference, I'm just showing you these stats that I just didn't make that stuff up. This is a secondary trading, 140 and 98 implying for the 10-year at 141 in the 5-year at 98 basis points. Exchangeable notes or converts. $64 billion in year-to-date issuance, averages could -- it could probably exceed 2024 volume. There's been a, call it, 50-50 split between vanilla converts and convertible securities with some sort of call protection which basically buys up that premium -- excuse me, that exchange price that Mike had talked about earlier. So where do we price? Well, inclusive of a 40 -- up 40% to up 60% call spread, we would probably price a deal today in the area of 4% to 4.25%. Why does this matter? Well, relative to the vanilla bond pricing that I just walked you through and relative to a February 2026 maturity that has a coupon of 3% and 3.75%, doing a deal to refinance those bonds in the convert market limits the dilution. So the vanilla bond market is 100 to 150 basis points higher across the curve. The bank market. So this is corporate bank market. So revolving credit facilities, term loans, I only show you this statistic because I thought it was impressive. The banks are really busy in the corporate space. Second quarter alone had $500 billion of bank paper corporate closed. REITs have strong continued support in the bank market, $41 billion in closings through the second quarter. What does this mean for us? As I mentioned, we did a closing and upsizing of our credit facility. We extended it for 5 years. We extended our $700 million term loan for 4 years with an embedded extension option, so effectively 5 years. We lost 3 banks and we did not lose those banks because they don't like the BXP name, we lost them because they were not getting their fair share of wallet. And that's okay because now we have more wallet to go around for those that are remaining. So covenants, as far as that is concerned, some REITs you may have talked to, they've experienced some softening in their credit covenants, ours are unchanged. Our pricing is unchanged. Commercial paper. Okay, here's a quiz. If somebody out there can tell me -- you're going to have to raise your hand because I'll just sit up here until somebody answers, can tell me what that tool is? You get a prize. You don't -- I'm not going to tell you what it is yet. You get the prize. Did anybody else know that? Nice job. I'm impressed. Okay. Commercial paper, $1.4 trillion in outstanding CP. That's a record. The corporate CP market is up 19% since 2015, up 17% year-over-year, despite the tariff volatility from April even though we still experience some tariff volatility today, the CP market has been stable. The stronger supply is driven by higher interest rates and more working capital. And CP, as you've seen in Mike's deck and as you'll see again in mine, is a cost-effective capital raising tool relative to really all of the other options. So how have we done it? We've got more floating rate debt today, as you know, 13%. And the cost savings in comparison to our credit facility pricing is 75 basis points. So if you were just running some creative math not that complicated, $750 million in CP versus $750 million in revolver. It's in that 75 basis point interest expense savings on an annualized basis is $0.03 a share, something to think about. Mortgage market. This is -- if you ever talk to Robin Lidington, who handles our debt capital markets activity, this is probably how she feels every day getting hit in the head with a wrench. Anyway. So we're going to start off with life insurance companies and banks. It's kind of soothing, admit it. Okay. We'll move on from that. So it's not really fair to say that about the banks because I would tell you, and Owen mentioned this specifically in his comments, we have been in active discussions with the bank market regarding construction financings for things like 3HB and 343 Madison. And I would tell you that we actually get reverse inquiries from banks, domestic as well as foreign as to when are you going to start these things because we want to provide construction financing for you. So that market is open and it's available. It's available on a recourse basis at modest leverage with some level of pre-leasing, but it is there. As far as the CMBS market is concerned, and I was actually a little struck by these figures because in 2025, so far, the CMBS issuance has surpassed from a pace perspective all of the year since 2012. And we're on pace to actually exceed 2024 volume. That's pretty good. And that's despite what happened in April when we had Liberation Day, and I would tell you that CMBS market actually choked and stopped for a period of time. We're getting back closer to those 2025 tights in terms of spreads, AAAs are inside 80 basis points. And so for well-leased trophy office, and I would say, between 50% and 60% leverage pricing is in the area of, call it, 200 to 300 over. But every deal is different. They're all nuanced. What has BXP done in the CMBS market? Well, we did a 10-year fixed rate conduit financing on the Marriott headquarters in Bethesda, Maryland, we were able to execute on that deal at 124 basis points over the 10-year. It was about 50% to 55% leverage, that's pretty good financing from a -- in the mortgage market. And as I mentioned earlier and Mike had also said, you get a lot of that mini me, mini Mike, anyways. We're in the market with the refinancings of the hub, 7-year fixed rate, and I'm not going to tell you what the rate is, but it's going to be decent. So in summary, the 5 tools that are here in the debt market, bonds, exchangeable notes, converts, bank market, commercial paper and the mortgage market. And you can see the range, and this is very similar to a slide that Mike showed you, so I won't go through that again. Private equity, sometimes dealing with partners is you need players like pulling teeth. But we love private equity. Private capital, it's a big universe. So if you don't agree with any of these numbers called NAREIT, don't bother me because that's where I got them. So commercial real estate broadly, 90% privately owned. And then if you go to office, which is even more impressive in terms of the outsizing, 95% of office commercial real estate is privately owned. Mike had this stat, NOI for us is 21% from our JV assets. Our JV strategy is unchanged. We basically have 2 types of joint ventures, one is with strategic land partners or as Owen refers to them, deal access partners, and then we have institutional and financial. So I would say deal access, if you know who Delaware North is, they own the Boston Bruins, they had a development site that was occupied by the former Boston Garden. That site was raised, and we brought our development expertise, leasing expertise, access to capital, property management, construction, all of the above and we built a 1.3 million square foot mixed-use complex that is the front door to North Station and the TD Garden today. As far as our institutional partners, Norges is the largest, but we've got a pretty impressive list of global investors who are all active today. Regardless of the partnership, I think it's critical for us to continue to use the tenant that -- we want to partner with people that are like-minded. So we have a long-term view in terms of strategy and investment. A residential approach, and Rich, I'm not sure if you got into this at all, I'm not sure where Rich is, he's over in the corner. But it's a little different. Owen talked about the capital, it's 80%, somebody else's money if we can do that. And a couple of examples would be the Skymark in Reston and then most recently, 17 Hartwell, where we partnered with Northwestern and they -- we contributed the land and Northwestern Mutual provided the equity and the construction financing. That's a real picture from London and it's the only -- if anyone's seen my photo album from our world travels over the past 24 months, you're welcome to do so. It's pretty good. International Love by Pitbull, anybody know that song, anyone? I'm not going to play it. So over the past 24 months, we have traveled around the world, Middle East, Europe, Asia looking for a little of that international love, not that kind, you strange people. But we've been looking for public and private equity love. And we've been pretty successful in doing 2 things: one, relationship management, meeting with existing partners, talking about BXP, talking about their appetite and then, two, trying to cultivate new relationships, and we're gearing up for another round of that. The exact timing of it is yet to be determined, but 343 Madison is certainly going to be a focus, as you've heard about. And I would tell you that we've had a bunch of discussions with a number of institutional capital sources that are very excited about the Midtown Madison Avenue submarket in New York City. So we're feeling pretty good about the appetite and the interest in 343 Madison. Office is certainly back in terms of private capital. I mean I'm not going to bore you with the details from all of the media headlines of transactions that have happened, but there's a lot. They're in San Francisco, they're in Boston, they're in New York. And I would tell you that a lot of them are with B+ type properties where the acquirer is able to either buy a piece of debt or buy an asset at a discount, a significant discount, and they're willing to invest the capital necessary to lease and stabilize those properties. It's a little different than what we're willing to do today because our fundamental requirement is that we have to believe that it's going to be a premier workplace. So we're not going to be playing in the area of kind of B+, A-, commodity Class A office. And then what type of returns are private capital investors looking for, I would say, somewhere between the mid and high teens on an IRR basis. So again, this market is open. We're super excited about making new relationships and managing the ones that we already have. And with that, we're ready to go off to the race. Anybody F1 fans, by the way? Doug and Owen, if you're not raising your hand, I mean you've got to participate, anyways, congratulations to Max Verstappen, who won the Italian Grand Prix to Owen's Dutch heritage. Any questions, I've got 38, 39 something seconds. Yes.

[indiscernible] some means have kind of done that at discount.

Ask Jake Stroman and Pete Otteni. They'll get up here and talk about it. The short answer is yes. So we've actually done it, where we've had relationships, particularly in Washington, D.C. where we've been able to find opportunities to acquire loans at a discount. And 725 12, I'm sure it's part of your material, so I apologize if I'm -- you're going to -- if I'll end up stealing some of that is a situation where we bought a note at a discount. The team in D.C. brought their relationships and leasing expertise to the table. And we are building a 300,000 square-foot building that was effectively pre-leased. So yes, we are looking at that and seeing those opportunities. But again, getting back to what I said about how we viewed our joint venture relationships, it has to be an asset just because we can buy a loan at a discount doesn't mean we're going to do it. It has to be an asset that we think can be premier. Yes, sir.

Question about international capital. Just over the decades -- a question about international capital. Over the decades, it always seems like each region steps up into the deli line, it's Asia's turn, then it's Europe's turn, Middle East turn and sort of rotates around the world. Now we have heightened tariffs, FX volatility and immigration stuff that adds to the spice mix, if you will. Do you see any change in the normal cadence of rotation of capital around the world that's looking at the U.S., like has the current dynamic changed any of that? Or it's the normal cycle where each region sort of takes its turn at the deli line?

Since -- the way I would answer the question is since 2020, it's been largely crickets, right, in the private equity space. And that tone has clearly changed. And we were in Asia last fall -- excuse me, this spring and then in Europe and the Middle East, almost 2 years ago. we were getting traction with investors regarding their appetite for additional office investment. So I think that the precursor is it has to be premier, it has to be a live golf type execution if you understand my analogy where it has to be a headline, it has to be something sexy for the office market, and it has to be core. So yes, I think that the Asian investors are very active, and I think we're seeing plenty of -- I mean, look at Norges, Norges is buying in every single 1 of our markets. But again, it's B+, A- commodity-type Class A product where they're repositioning.

And that's it, James. Thank you. Next up, we have Hilary Spann, Executive Vice President for the New York region; and Rich Monopoli, the SVP for Development.

Hi, everybody. We are going to take a break from the numbers for a minute to present the exciting stuff. 343 Madison, we believe, is unprecedented in New York City and in the United States more broadly. We're going to start with a film that highlights some of the reasons why. Where is my phone? [Presentation]

All right. So 343 Madison Avenue is the only premier workplace building currently under construction in the Park Avenue submarket in Midtown Manhattan. We have an LOI signed and a lease out with an investment-grade client that represents 30% of the rentable square footage of the building. And why is that? Why is somebody willing to commit to this building 4 years ahead of its completion. It's because of its location, it's because of its quality, it's because of its hospitality experience, and it's because of its network effects where it's located within the business community. Here are the 4 pillars around which we organize ourselves when it comes to new developments, location, hospitality, workplace and sustainability. I'm going to let Rich talk about location.

We strongly believe it's extraordinary, and it speaks for itself. If you go to the next slide, 3 basic reasons. First, access to transit and talent. Before the completion of the LIRR east side access project, there were 500,000 riders that came through Grand Central every day between the subway and Metro North. Now with the opening of the LIRR, we have incremental 75,000 riders from Long Island. So that gives you access to talent in Westchester, Connecticut, Manhattan the boroughs and now Long Island. So it's a fantastic location from that perspective. Secondly, we always like to say, it's a company you keep, and you are in great company in that Park Avenue submarket between insurance, legal, financial, you have the greatest aggregation of users that will pay premium rents for premier workplace, right? Not comparable to anything in the country, so it's very special from that perspective. And then lastly, and this is kind of a micro market comment, the west side of Grand Central from 42 to 48, probably has investment clearly above $10 billion between One Vandy the repositioning of 22 Vandy, 343 and then 270 Park opening just less than a month ago, JPMorgan is bringing people into that space now and then JPMorgan is moving to redevelop 383. So that corridor on the west side is enhanced, it's beautiful. It's getting better and better and better. So we are ideally located on the west side of Grand Central and we can participate in those benefits. How are we getting access to all this great transit? Well, in part of our ground lease obligates us to create an entrance down to the new Grand Central Madison Concourse. This is the Northwest corner of our development site and image of the transit access down to those tracks. 3 escalators, a stair and an elevator right down to the Concourse. And from there, this is a section looking north through our building on the left, 383 on the last, Grand Central on the right. And if you just go down from Grand Central, access to the Metro North, upper and lower tracks, access to the very, very deep Long Island railroad tracks that just opened, talked about for 40 years, 20 years under construction and those opened in January 23. And then we have direct and covered access to all that. And on top of that, once you're in the Madison Concourse, you have direct covered access to Grand Central itself to hit all the subway connections in that prime north, southeast, west subway intersection at Grand Central itself. Let's talk about workplace really quickly and then the product. So we focus heavily on all we've learned as office and workplace developers for many, many years to create efficient product for our clients, and this manifests itself in a couple of different ways. Basically, here's the building on the right-hand side, it is effectively 3 modules, 1/3, 1/3, 1/3, podium, mid- and high-rise with plates ranging from 27,000 square feet at the base, about 22,000 square feet at the top. 46 floors constructed, 40 leasable and 16-foot slab-to-slab in the podium, 14-foot slab-to-slab and the rest of the building with a number of specialty floors throughout that have extra high spaces in outdoor space as well. And then we'll get into sustainability a bit. Ben Myers has already touched on it. This will be a lead platinum building. It will be one of the most sustainable buildings we've built to date, including all the lessons we've learned through the years. Quickly on a floor plate, why does this matter? Why does workplace efficiency matter? We take great care to lay out our plates, column-free, column-free corners, Great Florida floor heights, and this happens to be a side core building. So we have the added benefit of pushing all the services to the top of the page, which is east, keeping a very clean, planable plate throughout, which attends value for efficiency. This is a view from the high-rise floors looking south west. You can see a bit of Hudson Yards, you can see Empire State. The thing to point out here is we have 10-foot finished ceilings, with a very low sill, 10-inch sills. So over 9 feet of vision glass, which is very appealing. This is 1 of the 6 outdoor spaces in the building. So we've scattered these throughout the elevator banks to drive bulk leasing. People would take a floor like this, use it as their town hall and reception area and then take more traditional floors above or below it. This is the 16th floor, great outdoor space, 6 of them are built into the design, 5 can be privatized. We're keeping 1 for our common amenity at the top. And Hilary is going to talk about. You want to talk about hospitality?

Yes, please. Thank you. Okay. So as Rich mentioned, we have taken all of our learnings from the developments that we've done over the last 20 years and the redevelopments that we've done of our existing assets and embedded it into the design of 343 Madison Avenue, in particular, with regards to the hospitality spaces in the building. One of the most unprecedented things that we've done is to put those amenities at the top of the building. So the top 2 floors of the building will be amenities that are available exclusively to the clients of the building. There are also some additional amenity spaces on the ground floor, and we'll touch on those as well. This is the lobby. You see here that we've incorporated biophelia and the lobby as you come in. That is a nod to what you will see throughout the rest of the building. There on the right-hand side in the distance, you can see that there is a cafe in the lobby of the building integrated so that clients of the building can grab a coffee or a small breakfast as they go into the building in the morning. The 45th and 46th floors comprised the main hospitality experience, and they are slightly different from each other. The 45th floor has a large and gracious auditorium that houses about 150 people for a conference. There is a lounge, a cafe, a bar and a landscape lounge and terrace that folks can use as pre and post function areas. And the 46th floor is a little bit more private. It includes salons for working, a boardroom setup, which can be set up for dining and/or meeting and then a collaboration loft. This is an image looking north on the 45th floor towards that auditorium where you can do conferencing. And here is basically standing in the same spot looking south toward the cafe, towards the pre-function area and towards the landscape terrace. This is a bird's eye view that shows how the 2 spaces interact with each other with 45 being the more public of the spaces and the 46th floor being meant more for meeting and breakouts. This is the collaboration loft on the 46th floor. And here, we have the terrace that serves the hospitality space.

From a sustainability perspective, this is indeed unprecedented for the market and for BXP, incorporating all of our learnings back from 2007 when we first deployed our efforts in the first lead USGBC, gold rated suburban, speculative office building in Waltham. We've come a long way since then, including thoughts about wellness and occupant health in the teams. And now we're incorporating decarbonization into what we do as well. So the 3 metrics here are leading us to lead platinum. It's an all-electric building. And I was talking about that earlier. We're working really hard on decarbonization, both during operations and embodied carbon in the initial construction and being really careful and thoughtful about reducing our embodied carbon and then clients space and comfort. This is a DOAS building, which has many, many benefits in terms of occupant wellness. But also embodied carbon, we can deliver a 14-foot floor-to-floor slab and still get 10-foot finished ceilings. We're using less concrete, less steel, less aluminum to get the same finished floor height that the market demands. Really important number in the bottom right-hand corner, we talked about energy use. This is energy use intensity as modeled at about 43. Without context, that's not particularly meaningful. If you look at all the average buildings in Midtown, and we took a big bulk average, average building and EUI use is about 90. So we are less than half of the average building in midtown in terms of energy use, which is a huge benefit to our clients. Let's talk about the basics of the development costs here. It's a 930,000 square foot rentable building, about a 30 FAR, plus or minus, 48-month construction schedule. We've already commenced in the field, we'll just show you in a second. A 28-month lease-up underwriting should be fully leased as of kind of mid-2030 and then fully cash flowing as of fourth quarter of 2031, excuse me. And then total budget is about $2,124 a foot, half of which, effectively half, about $1,000 a foot is hard costs. And layer on to that, our soft costs, overhead legal, A&E, True soft costs, like A&E and then tenant inducements TI, lease commissions is what -- how you get back to that $2,124 a foot, including an equity carry charge for our cost of capital. So roughly $2,100 a foot. You want to talk about leasing?

Sure. So all of the things that we've just described to you, the hospitality, sustainability, the way we've designed the floor plates and the location of the building have led us to an initial pre-lease from an investment-grade tenant of 30% of the building they elected to take the mid-rise portion of the building. We have presentations out to 27 different clients in the last 18 months. And we are currently in discussions with about 4 clients, including our anchor, those 4 clients exceed the square footage of the building, so we will not be able to accommodate all of them. But there is very, very strong interest, and we believe that we have the opportunity to land a second client in the building, which could comprise an additional meaningful commitment. So we're very excited about the progress we've made on leasing, and we are currently moving forward with the development. Here's the time line for the development. We expect to sign our anchor lease in the fourth quarter of this year. That will allow us to turn space over to the client in the second or third quarter of 2028, so that they can begin their build-out and move into the building in the third quarter of 2029 with us receiving our core and shell substantial completion just before that in the second quarter of 2029. And we thought that we would show you a live photo or as live as possible. It's only a couple of hours old of what's happening on the site. I'm going to advance it, I'm going to let Rich describe what's going on, on site.

Yes. This is a picture from this morning from our OxBlue camera across the street. We made a lot of progress relative to our obligation under the ground lease to deliver an entrance on what we call Phase 1. So that box that you see, steel and concrete box in the north corner is that transit entrance that I showed going down to the Grand Central Madison Concourse. That is -- we're probably about 10 or 11 months into a 16 months or 18-month schedule on that basis. Now we're moving through the buy process for Phase II, which is the full vertical. We are finding that this is a good time to make larger construction buys. We have a handshake deal with a provider for the curtain wall, and that has come in anywhere from 8% to 10% below budget. And we are just receiving numbers for steel, which is the second of the 5 big packages, received numbers last Friday, sifting through those as well. So we're finding that this is indeed a good time to make buys where these folks have less of a backlog than they did previously, and we're working through the process on that and seeing some really nice savings relative to our budget.

So that summarizes our presentation on 343. You've heard a lot from other folks in the company about various aspects of it over the course of the day, but we'd be happy to answer any questions that you have.

Whether it's financial. And I was just hoping you could give a little bit more color on the interest in 343 to the extent that you can, whether it's financial, tech, other tenant bases? And is it the podium? Is it the highrise? Is it the top floors? Just any would be great.

Sure. We -- I would say that generally speaking, the interest in 343 is very heavily dominated by financial services asset managers, hedge funds, wealth management, et cetera. We have had some, I would call it, tech adjacent companies show interest. The pre-lease client that we described is in the mid-rise section of the tower. And so the folks that we're talking to about the balance of the space, we're working around that mid-rise section, which is spoken for. We have one prospect that is interested in the base underneath the one that is the section that's spoken for. We have one that's interested in the base plus some floors above. So it's a bit of a mixed bag in terms of who's interested in what space, but there's strong interest in all of them, I'd say.

One of your close competitors just bought a couple of buildings across the street. Any views you can share on the timing or competitiveness of that space as you guys go through the lease-up of 343?

I believe that they are not finished with their site aggregation there. And so I have no information to verify that. This is just sort of my belief based on what I would do. I would try to buy the building immediately north of what they just bought so that they have the entire end cap between 44th Street and 45th Street because that allows them to control the entire environment that their clients use to access the building. If I'm right about that, it will take them some time to secure that building, figure out how to aggregate it all and demolish it. Rich, will they have to go through ULURP if they do that because of the skyPlane? I would think so.

If they want to achieve certain plate sizes, they would have to make ULURP process -- ULURP application.

They can build based on what they have already acquired. I just think to build a really premier building, which is what I expect them to do, they will want to own the building north of them as well. And they have an existing relationship with that owner. So I just think it's not an immediate demo and build because I think there's a little more work to be done there. But it's really a question better asked to them, I guess. There was a hand over here in the back.

Has the forthcoming mayor election in New York caused any of the would-be discussions with tenants? Any reason to pause?

Let me put it this way. The clients that are interested in paying over $200 a square foot in rent to secure space in the most premier development in Midtown, for the most part, are larger -- have larger balance sheets, right? And that tends to mean that they plan further out. They're better established companies. And I think they have the tendency to look beyond a mayoral cycle or a gubernatorial cycle or even a presidential cycle. In fact, our letter of intent with our prospect, which is 30% of the building, 275,000 square feet, plus or minus, happened after Liberation Day. So here you have an investment-grade client who made a decision to do that sort of in the face of some of the national geopolitical upheaval and we moved to lease notwithstanding the outcome of the Mayoral primary. I'll talk a little bit more about New York City and New York State politics in the regional overview. I have a slide on it. There was another hand.

I just had a general question of NAV values of Premier New York office. If this -- I think you said at $1,700 per square foot. I'm sorry...

$2,100.

$2,100. Okay. Is that -- how do you think about non-new buildings then in terms of the NAV and kind of the range there, if this is $2,100?

Rich, I mean, you can start, and I'll chip in on that one.

There is a recent mark -- very difficult to achieve kind of sustainability goals, but a good location, right? That just traded for $1,100 a foot, plus or minus. So we are achieving rents obviously double that they can achieve. And are there buyers and can you achieve valuations near or above the $2,100? I absolutely believe you can. And in fact, when the One Vanderbilt refinancing came into play, there was a mark on that basis, did that approach $3,000 a foot. Am I speaking out of turn?

What was the cap rate on that? It would have been in the range of -- yes. There are only a handful of existing assets that trade at numbers that approach new development in New York City. And I would say, for the most part, rest of the assets are not truly considered premier and therefore, trade at somewhat of a discount, up to half. We have 8 minutes. I don't know what we're going to do with ourselves within 8 in break.

Can you talk about just how you all thought about selling a stake in this project while you're still in the process of creating all the value versus maybe looking elsewhere in the portfolio?

That's really a question for O.T. or Doug or Mike in the most broadest -- in the broadest sense. What I can say about the capitalization of 343 is that we have a lot of latitude as to when we think about doing it. The big dollars in the project are not going out in 2025 or 2026. So I think there remains the opportunity to engage with the leasing market, secure the lease with the anchor tenant, perhaps the second tenant, derisk the building. And as Rich alluded to, we've been getting some really, really great construction buys. So we are in the process of derisking it. And I think Doug and Owen and Mike will look for that sort of what's the efficient horizon around risk mitigation and capital raising to execute on that.

Yes, not speaking for you all, but with an executed lease for the LOI that we already have, moving through the buys, we should have an executed GMP with our construction manager, Turner, by the second quarter next year. And that puts us in good stead in terms of putting risk to bed and approaching the market.

Yes. I would just add, as has been described, the more we do what Hilary and Rich are talking about, the more the valuation of this building should depart from its cost. So our goal, particularly as time evolves is to bring in a partner that would not be at cost. I don't think it will be at a value that the building will be worth when it's completed because there will still be some development risk has to be constructed. It has to be partially leased. But we don't anticipate bringing in a partner at cost. And then if you look elsewhere in the portfolio, number one, yes, could we JV some of our New York assets at reasonable cap rates? Yes, we could. However, I think today, the more we're in New York, the better it will be for all of us as shareholders because New York is such a strong market. We're about 25% New York today. I'm not sure we want to reduce from that level. The other thing to think about is many of our New York buildings have a very low tax basis. So if we sell a whole or partial interest in them, most of the capital has to be sent to shareholders as a special dividend. So we don't keep it. That's great. The shareholders will receive capital, but the company doesn't keep the capital to deleverage. So that's also an obstacle for doing JVs. One last thing, while I got the mic, I just want to also talk about a little bit on building valuation and NAV. I think office buildings trade more on yield than on per foot because you can look at deals, and I talk about them every quarter on the earnings call, the cap rates are fairly unified within 100 basis points or so of each other. But the per foots are all over the place because it's based on the income. So we look at 343 and we say, well, wait a minute, we're going to deliver this at a 7.5%, maybe 8%, maybe a little bit above an 8% yield. And there's comps in the neighborhood in the 4s, maybe 5%. So that's tremendous value creation. And you can back into what the per foot is, but I think the way to look at it is on development yield versus what's the market value of the building when complete.

Great. It's time for a small break, and [ Loy ] will begin back with the Boston region at 2:50 p.m. [Break]

All right. Next up, we have the regional presentation. First is the Boston region with Bryan Koop, EVP of Boston; and Pat Mulvihill, our Senior Vice President of Leasing.

Thank you, Helen. Well, this is going to be a fun update because we've got a lot of good things going on for sure in our region. Yes, here we go. So what Pat and I want to do is briefly go through what's happening in the region. And maybe on our slides because you're going to get copies of all these things, really hit the headlines and really what's we see as important in terms of our market in general on these things. Give another one. Not moving ahead here, guys. Okay. Here's our agenda. Let's get right to it with our key objectives, let's bring those up. Okay. Occupancy, lease lease, lease. Of course, we're doing this all the time. This is how -- it's like breathing. But I would tell you, never in my career have I had such a mantra from our leadership, Doug and Owen. It is the mantra whenever we see them. How is leasing, where are we at, where are we at in occupancy. And I think the relevant point here is a story that we had with a deal that we were able to obtain with Welch's. Welch's headquarters was located in Concord, Mass. Maybe for 150 years, something like that, the Concord Grape. And there isn't, in the beginning of the year, much deal flow going on. And we heard about them looking in a market that we weren't in, a submarket we weren't in, and we just absolutely decided we're going to swarm the deal and get all over it. And because of a peculiar part of their use, which is a laboratory for their foods, we were able to just really take the deal over and drag it into our market, our submarket and give them a phenomenal deal. But I would tell you that the key on this that we've learned with occupancy. Occupancy is this. We are using the entire stack of disciplines within our organization like we never had before, and we're getting greater access to clients than we ever have before. I've never seen anything like it. And it's because of several different things. One, there is a concern in the market with brokers that there's no TI when they go to certain buildings and they underwrite it real heavily, they know that we do. The second is they know that most of these buildings, because it's absentee occupancy or ownership, they don't have the skill set to put together these peculiar deals. And in the urban edge market, we're seeing a lot of that, and that's where we have to get our occupancy. So some big wins there, but I would say the big differentiation is Pat and his team is using every department to swarm deals. On Kendall Square, we have good news, as many of you know and I have visited this project, huge project for us and 290 Binney, 572,000 square feet. The rent is $128 triple net. And I thought when Mike went over the numbers on this, at $75 million a year, I'd hear my gosh out there, but nothing from you guys. It is a huge NOI coming our way, and we're really excited about it. We're excited about the client as well. We're on time, we're under budget, and we hope to have that really maintain our course. We've got our best team in Boston's history on it, [ Jeff Lenberg ], John Randall, Mark Denman building this, very sophisticated, over $1 billion in development construction cost. And this will be coming online. And the other key part of this is we've got 3% bumps on this NOI each year. So this thing keeps going up. And I think in year 5 or 6, it starts approaching 8%. So that is awesome for us. That project is going really well. The reposition, we would add when I talked to Rich Ellis, reposition or sell with many of our assets that are in the urban edge. And that's where they mainly are. But we had some huge success on repositioning 860, 890 Winter Street and then also 1050 was mentioned today. This was a deal that never saw the market, and it really gets back to what Pat's doing, which is swarming these deals. The reposition part also we would include some of the rezoning we're doing that was mentioned. And what's happening in the state of Massachusetts is big focus, state level from the governor, big focus from these towns and communities we're in. And we think we're going to be able to pick up some residential on several of these repositioning assets for some extra value creation. And then last, our opportunities and acquisitions. In our market, it's not a huge market. We have 10 buildings that we know we want. We're not waiting for them to hit the books with an investment sales team. We're cold calling. We are spending time with owners that are stable and the assets that we like that aren't stable, we're going right to the lenders. So it's a real proactive approach. There hasn't been much movement yet. We anticipate the next 6 months that there could be a couple that move that we want to pounce on. But I'd say that, that portion has been slow. 171 Dartmouth, the story on 171 Dartmouth is we have high hopes that what we can achieve is what Washington, D.C. has achieved with their build-to-suits. And then also, it's very, very similar to what you saw Rich Monopoli and Hilary talk about with 343. 171 is a site right across the street from 200 Clarendon, Hancock building in the past, right on top of the Back Bay train station. We could deliver this building for $1,500 a foot. So it's a lower cost, maybe $1,600. We are seeing some construction costs come down, and this thing could yield some big numbers even at, let's say, $120 triple net. We have some clients we're focused on. So we think this phenomena that you're seeing in New York and D.C. will play out for us in the Back Bay. And when Pat goes through the occupancy and leasing in the Back Bay, you'll see even a greater reason why we're so optimistic about that. All right. Pat, take it away.

Thanks, Koop. Good afternoon, everybody. Good to see some familiar faces. So what I'm going to do today is cover 3 things. I'll try to go through them quickly. We've got a fair amount of slides. The first is just go through some market fundamentals, what we're seeing on the ground in Boston, mostly in the CBD of Boston. Then we're going to get into sort of what our short-term and medium-term exposure is across all 3 of our submarkets. Owen and Doug foreshadowed some of this in previous conversations. And then we'll also get into some more granular data in terms of what's going on in the ground in terms of actual leasing, where you can expect to see growth in the short term with our occupancy numbers. So with that, what I'll start with was really just some high-level trends. And again, all of the data in the slides that you see here moving forward is based only on the CBD of Boston, which are the traditional submarkets, the Back Bay, the Seaport, Financial District, et cetera. This is a common theme, obviously. We wanted to just point out really clearly the difference in what's taking place in the premier market and the overall CBD. And this is obviously a very simplified way of doing it. In the premier workplace market, supply is going down, demand is up and rents are up. In the overall CBD, it's just not the case. We'll get into more data on that as I go through some slides. And then, again, really high level, the Back Bay and the Seaport markets continue to outperform. We're very fortunate. We're by far the largest owner in the Back Bay. That's the market that has by far the lowest availability rate for a variety of reasons. Premier Back Bay rents are as high as they've ever been in my career. And it's due to extreme limited availability. We're fortunate to own 5 million or 6 million square feet of the best buildings in the Back Bay, very, very tight. And we're at the point where we have people competing for space, which is one of those immediate signs where there's upward pressure on rents. And then leasing momentum accelerates in new construction. So one of the dynamics that's happened in Boston post-COVID was speculative office construction. So there were actually towers that were kicked off post 2020 that have delivered in the past 2 or 3 years. That's had an impact on what the availability has been across the CBD. So I'll touch on that as well. So I'm going to go through a few of these slides. There's lots of data on it. I'm going to -- on these slides, I'm going to do my best to just sort of give you some anecdotes and talk about what the takeaway might be from these. These 3 charts here is really just outlining what the tenants in the market demand is as of the second quarter of 2025. It's about 4 million square feet of demand, which is approaching where we were in pre-COVID times, which is around 5 million square feet. The one thing that I think is the best takeaway from this slide is really the composition of the demand. So again, this has been repeated over and over. 55% of the demand in the CBD of Boston is coming from finance firms and legal firms. Fortunately, for us, most of the Back Bay of Boston and the financial district is where we're able to take advantage of that demand. So that's the takeaway there. Great momentum getting back to pre-COVID numbers. Again, this is just the CBD office leasing activity by year. So the previous slide was looking ahead. This is actually looking back. The 15-year average for the amount of space leased every year in Boston is about 2.27 million square feet. In 2024, we were over 2 million square feet. In 2025, I expect it to be right around those numbers. So we're crawling back to where we were, obviously, with tech demand not seeing the growth that we were seeing prior to COVID. I'll spend a little bit of time on this slide. So this is just availability, right? And it jumps off the page, 24% direct availability. That's a big number. I just want to talk a little bit about that. So in 2020 and Q2 of 2020, obviously, a pivotal time, you see that big jump from, call it, 15% of availability up to 20% and then 25%. Obviously, some of that was due to customer behavior, market fundamentals, et cetera. But as I mentioned before, this also is a supply dynamic. There were 3 or 4 buildings delivered in that time frame. And depending on what you're counting, that's upwards of 3 million, 3.5 million square feet. Unfortunately, those buildings, they were leased, which is the great news, but there was a game of musical chairs within Boston. So one winner created another loser. So we did have a little bit of negative absorption, which has resulted in that availability. It's not completely a demand dynamic. There's also a new construction dynamic that added to that as well. The sublease availability, I believe I read this morning, we're now in the seventh quarter of continued decrease in sublease availability in Boston. So that's a great trend. A lot of that is from tech users that are either taking sublease space off the market or in sublease space that's being absorbed. So a good trend that we're continuing to watch. And again, this is -- we wanted to really point this out. This wasn't in our original slides, but 24% direct availability, I'll get into this in more detail. Our CBD portfolio currently is 1% available as compared to 24% for the overall CBD, premier and non-premier. This is a slide that many of you, I'm sure, see quite a bit just showing absorption, leasing activity and vacancy. And again, the only thing I would point out here are those dips in 2022, 2023 and 2025. Those were deliveries of new buildings that took place in the CBD of Boston. Most of those are happening in the financial district, which I'll get into a little bit later. This is just showing availability rates by geographic submarket. So the Back Bay, downtown the Seaport are the primary submarkets in the CBD of Boston. The Back Bay at 18% is the overall Back Bay market, which is around 15 million square feet. I can tell you the premier workplace market in the Back Bay is probably 8 million square feet and the availability rates in that are probably less than 5%, maybe less than 4% or 3% in that very premier market.

Yes, Pat, I would highlight that you've got a competitive set of 11 buildings that you focus on that you compete with in the Back Bay. That vacancy in his competitive set, which we really believe is going to be a real thing in the future because how much of the stuff that we used to compete with is now just obsolete and our clients aren't going to be going to it for sure. Could somebody upgrade a property? Yes, but we'll see it coming. It's only 3% in our competitive set. That's just amazing to me.

So this slide is just going along the theme that Owen talked about Premier versus non-Premier and just the vacancy in each of those. And if you notice on this slide, somewhere around Q2 of 2023, the vacancy rate for non-Premier increased consistently up till today and the vacancy rate for Premier is decreasing consistently up until today. So we've been talking about this for years now. It's now showing up consistently in the data in Boston. This slide is just showing that same point in another way. And I would argue that white line, which is the absorption for Premier space would be higher if there were more premier space in Boston to absorb. There's just a limited amount of it, specifically in the Back Bay where we spend most of our time. So I went through that quickly, but that's sort of the very high-level sort of market slides that we're -- or the market information that we're tracking. I'm not going to get into sort of our portfolio, what's going on in our portfolio, what's our exposure and then just kind of get into some really granular building by building, submarket by submarket. There's no need for us to spend a ton of time on this. This is just showing the occupancy and leased percentage of our CBD portfolio, which is about 8.4 million square feet. We're the largest owner of office space in the city of Boston. Headline here, we're 99% leased and 97% occupied. So we can get into a lot of detail on this, but it's a good headline to be sharing. So the next 3 slides, we're just going to walk through just our short-term exposure. I think we went through it on a macro level across the company. This is just for Boston. So the scaling on this graph may sort of make you think otherwise. But the vacancy for us in Boston right now is around 260,000 square feet, which is 3% of the overall portfolio. That's really just transitional vacancy, which is normal across our portfolio. At the rest of 2025, virtually no more exposure and then 3% and 2% in '26 and '27. So very, very manageable for us. And in our CBD portfolio, what we're spending more time on is we use the term manufacturing runs, right? We don't have a lot of space to increase earnings or get pops in rent. We are doing creative things taking space back from tenant A to grow tenant B. And in most cases, the mark-to-mark given the growth in rents, we're able to show a significant pop in earnings based on these deals.

Yes. Pat, one of the, call it, little weapons we've been using is something that Doug's worked on with IT, which is we now have really, really good analytics on each of our clients, especially in these urban buildings that we have clusters in. And we've been able to be tipped off by these analytics about who is really using their space highly efficiently and maybe more efficiently than they need to and then who's not using it. And Pat is using that to just get in there with our clients, talk to them, what are your needs? Did you know that you're at less than 2.5 average days for your workers? Well, that's really low compared to our average probably at the [ PU ] of close to 4. So they have no idea about these things, and they're using it to go talk to their leadership. And we've had several clients that are like, well, thank you. Could you lease a couple of floors? We think we can. It's been a really nice competitive advantage.

So Cambridge, we haven't spoken a ton about Cambridge, mostly because there's really 2 things going on. There's our Cambridge, the execution of a massive development project that our team in Boston is working on right now. We talked a little bit about 290 Binney Street in that particular development. Other than that, in Cambridge, we literally have 75,000 square feet of vacancy, which is a couple of spaces in one particular multi-tenant office building and then some retail space and virtually no rollover in the rest of '25, '26 and '27. So things are great there. We continue to stay in touch with our close clients there. The biggest one being Google. So not a ton to talk about in Cambridge. The Urban Edge, so I'm going to spend some time on this in a future slide because this is where the growth is going to come from in the Boston region in terms of occupancy. The one takeaway from this slide in 2025, '26 and '27, very manageable sort of transitional vacancy with the exposure in those years. But the thing that we will focus on is the 1.2 million square feet of current vacant space that me and my team have been actively working on this year. So getting into that, I'm going to fly through these slides because I want to make sure we leave time for questions. These are just going to be summary slides of some of our larger buildings in the Boston region portfolio. 100 Federal Street, this is a 97% leased building, large clients in this building, Bank of America, Franklin Templeton, TH Lee. We've done a lot of repositioning work on this building, but is in excellent shape right now. 101 Huntington, I won't spend time on it, literally 100% leased. This is the smaller building at the Prudential Center, 500,000 square feet. Blue Cross Blue Shield, the major tenant there. 111 Huntington Ave., this is a building that we developed in 2001. This is 100% leased right now. We are active with the exposure in 2027. That's one law firm that we're actively in discussion with at the moment. 200 Clarendon Street, this is a building that has been incredibly active for us over the last 3 years with large renewal expansion transactions with large financial institutions. So I won't get this number right, but probably 600,000 or 700,000 square feet of leasing taking place in that building over the last 2 or 3 years. In addition to that, one thing that we spent a lot of time on is the amenitization of this building. It's been talked about a couple of times in various presentations, but we've built what we call the 200 club, which has been incredibly well received. This is by far the highest end amenity in any office building in Boston. We'd love to host you if you come to Boston, and we can give you a tour. 800 Boylston Street, is the Prudential Tower, 98% leased, just sort of transitional vacancy there. The large thing that we worked on last year in that building was a major renewal with Ropes & Gray for just over 400,000 square feet in that building. They had a lease that expired in 2030. They wanted to stay, and we worked out a great deal for them to stay for another 10 years. 888 Boylston Street, this is a building that we built hard to imagine almost 10 years ago. So we're getting ready to start working on the 10-year lease roll. This has become one of the highest end buildings in the Back Bay, more of a boutique building, only about 400,000 square feet. Atlantic Wharf, another building that we developed in 2011. This is the headquarters of Wellington Management. I believe it was 2022. We did a major renewal and consolidation of Wellington at this building. So they're over 530,000 square feet now. This building is 100% leased with very limited exposure moving forward. And the Hub on Causeway. So we spent a lot of time on this in various presentations, but massive project that we developed over a course of years. This was a labor love for many people in the Boston region, but it is 98% leased. There's just a few units of office space in the lower part of the building that are just sort of transitional vacancy and really no exposure through 2027, nothing hits until 2029. So a very fun project. And then I'm going to pause for a second here and take a step back because I do want us all to focus on this slide because this is probably the most important slide as it relates to occupancy. So the Urban Edge, right? So we have 26 buildings. Urban Edge is what we call -- what we previously called the suburbs in Boston, primarily Waltham along the 95 128 corridor. It's about 4.4 million square feet for us, 72% occupied, just under 73% leased. So this is, by far, the most important goal for my team this year is to lease vacant space in the suburban Boston portfolio. So a couple of things. All of these numbers, I think Doug mentioned before, were as of June 30, 2025. So in the 2 months since then, we've leased an additional 50,000 square feet. So that percentage lease number is now 74%. And as we sit here today, we're actively negotiating leases for about 250,000 square feet of space. So when those are done, that percentage lease number will go from 74% to 80%. So over the next couple of months, I think it's a safe assumption to see meaningful increases to the percentage leased, not necessarily the percentage occupied of our suburban portfolio. And taking that a step further, so that will bring that 1.2 million square feet down to 900,000 square feet. 600,000 square feet of that exposure is in 3 buildings: the Westin Quarry, 103 CityPoint and 180 CityPoint. So I'll hit on all 3 of those. The Westin Quarry is a 400,000 square foot building that we developed that's been talked about in various presentations. I think Ben Myers talked about it from a sustainability perspective. We are in the very end of the repositioning of that building. It was leased through June 1 of this past year to Biogen. We're in the process of amenitizing that building, taking it from basically a corporate build-to-suit for a single user and turning it into a multi-tenanted, fully amenized suburban campus. So as we sit here today, we've got about 400,000 square feet of outstanding proposals on that building. It's by far the highest quality premier workplace in the suburbs of Boston. As it gets completed over the next couple of months, we fully expect that we'll be transacting on that building. The other 2, 180 CityPoint, that's probably where we spent the most time over the last couple of years in terms of leasing. We're actively working on a couple of leasing that building. We'll have 70,000 square feet or so left to go. This is a purpose-built R&D building that we've decided to lease to life sciences companies that don't necessarily need lab space. So they're using it as an office space, and we're more than happy to lease it to them on that basis. The final building, which mentioned previously, 103 CityPoint, which is a 115,000 square foot lab building, a little bit of a smaller boutique building that as soon as 180 CityPoint is leased, that will be the next one to go. So that 600,000 square feet is sort of the next thing on our list of things to tackle. We fully expect over the coming quarters that, that's where we're going to start to make some progress.

Yes. Pat, the footnote on the Quarry is that it's almost an identical opportunity to 140 Kendrick. Many of you have toured that with us. That was a repositioned asset once PTC, the original primary tenant of the whole complex left. We've re-leased it, and we actually have that in the market now with an investment sales team, Newmark. And the thing that's been really great has been the response on just the teaser going out. We've got 29 confidentiality agreements and tours lined up. So Pat's going to be busy out there. The response has been just outstanding. And what we did at 140 Kendrick is almost identical to what we're doing at the Quarry, same type of amenity base.

So the last thing that we have, Koop, I'll just kick it to you, is the political and legislative environment in Boston. We'll let you take that one.

There's only really one -- hit the slide there, do you have it? There we go. There's only really one big trend here to really focus on that you could see some results from us on, and that is this housing issue. There is an extraordinary amount of pressure from the State of Massachusetts to produce housing in the communities that we're in, which you know are very hard to get housing done. So we think we're going to be able to hopefully pull off some things where we can get some residential units out of these suburban projects that have, by nature, a lot of land because of the way zoning used to work that could be not only enhancing to the assets, but a great play for us on sales. And I'd just say, in summary, a couple of other things. We have less competitors than we've ever had before. Pat doesn't compete anymore against any particular owner that has a leasing team. Think of that. That just hasn't been the way for the last 20 years. Everything is outsourced. As Owen and Doug and probably Mike mentioned, clusters, so powerful in Boston. It is really working, i.e., the Peru. And then also capital. We're winning because we have capital and our competitors don't, and the brokers have really found out the hard way what that's like once you have a deal done and nobody posts for the TI or the commission.

So I know we went over time, but I think we are...

So we're going to bring up the next presenters. And then if anyone has any follow-up questions, please feel free to approach Koop and Pat at the cocktail reception.

Super.

Next up, we have the West Coast. Representing the West Coast, we have Rod Diehl, Executive Vice President for the West Coast regions; and Christine Yuen, our Senior Vice President of Leasing.

Okay. Hello, everybody. Thanks to all of you for hanging out here. It's been a long day. We're really happy to see so many of your friendly faces here. We've got a lot to cover. So Christine and I are going to move through these slides quickly, and we're going to try to leave some time here at the end for some questions. So just jumping right into it. The key objectives. Look, you heard it from Koop. You've heard it from everybody else today. By far, the most important mantra and thing we've been focusing on this year and every year, but especially right now on the West Coast is the leasing. And Christine will walk through more of the specifics on each of these buildings. But in total, in San Francisco, so far this year, we've done about 480,000 square feet of leasing. We've got another 400,000 that's in LOIs or in leases, and that's consisting of about 18 deals. So we're seeing some momentum picking up, which is great, and we hope to continue that. So on the retail front, this is maybe not a big square footage number, but it's a super important piece of particularly what's happening at Embarcadero Center. Any of you who have been there knows that the front door to these buildings is the retail. And on top of that, it's an amenity and it's a differentiator for our property against some of the others. And so we've had a great program that we've been working on for the last couple of years where we've gone out. It's kind of a homegrown marketing program, frankly, where we've gone out into the market and we've asked our own employees in the building in our company, you know the best operators in your local areas. Why don't you go knock on their door, hand them a business card, go hit them up on a direct message or whatever and see if you can get them interested in coming down to Embarcadero Center. Well, it paid off, and we've done 8 deals so far this year, and our tenants love it. We're adding new restaurants, new retail amenities for other things. If you're curious more about it, NAREIT did a great article on this, and it's available online or you can give one of us an e-mail and ask for it. So the next one here on this list is this renovation of Embarcadero Plaza. And you may have heard us talk about this on other calls and things. But for any of you who haven't been out there and don't know what we're talking about, this is -- there's a public park that sits directly east of 4 Embarcadero Center, and it's between 4 Embarcadero and the Ferry Building. And it's 5 acres, and it's underutilized right now. In fact, ULI came into town during the pandemic, and it was a key spot that they identified as being a real catalyst that could turn around and help revitalize the downtown. Well, we took the next step. Our Head of Development on the West Coast, Aaron Fenton, kind of took the lead on this and got HOK to put together some conceptual plans on what this park could look like. And without getting into all the details, we've progressed this over the last 1.5 years. We now have a signed public-private partnership agreement with the city of San Francisco to build this wonderful park. The vision of it is something along the lines, if we execute it correctly, like you have here at Bryant Park or maybe Millennium Park in Chicago. And so it's an excellent opportunity for us to increase our front door. And so we're moving forward with that. I'm very excited about it. And then lastly, in terms of key objectives on the disposition front, as you've heard already, it's a company-wide initiative here to go make the best use out of some of the development sites, in particular, that may not be ripe for development anytime soon. So we've identified a few of those on the West Coast, and we've got 4 of those that are in play right now and perhaps a couple of them might close before the end of the year. Okay. So next slide here, just talking about more of a top level, just leasing trends and kind of what's going on in the market. By far, it's still a very segmented market. I mean you can hear it in different terms. Sometimes we refer to it as flight to quality, but it's just an absolute night and day between the premier buildings and the non-premier buildings in San Francisco. Fortunately, the buildings that we have compete generally up in that higher end of the category. The concessions, I would say they've stabilized. Christine can talk some more about this as she gets into the details. But it's -- TIs are still high. They're high at maybe over $200 a foot. That's basically $20 a square foot per year, but they're not going up as much. In fact, not at all. I mean, in fact, we've seen both free rent and TIs sort of stabilize in terms of what the asks have been, which is really great. So the market is trending properly in the right direction. There's a lot of deals getting done, and it's showing up in the statistics. We've gotten 3 positive net absorption quarters in the books already, and we're expecting to see more going forward. And then lastly, I think this is true across all the markets, there's no new supply. So I mean, as we continue to fill up our space and there's going to be continued demand, there's nothing else getting built. So that's very, very important. Real quickly on the return to work. It's definitely a different scene in San Francisco right now when you walk the streets. I think most companies have concluded that the fully remote or even partially remote is just not good for their business. And so we're seeing that trend shift, and it's taken a little bit longer. These are -- a lot of technology companies were really, really late to kind of make this shift back. And some of them really still haven't completely, but it's changed a lot in the city. It's showing up in different forms, but there was a recent report on that Placer AI data, which is the cellphone tracking, that the actual foot traffic around San Francisco was up, I think, 24% year-over-year, which was the most of any metropolitan area in the country. So that's very, very good news. Okay. AI demand. You guys are hearing all about it. You heard about it from Owen. You're going to keep hearing about it. And look, it's -- I can tell you there's some skepticism, right? Some people look at this and they go, it's just another -- it's just the next trend, it's this, it's that. So you might be skeptical, but I can tell you from being on the ground in San Francisco, we're living it every day, and it's real. It's happening right now, and it's super exciting because these companies are coming from different places, and we're hearing about new ones all the time. So I would say that the 6 million square feet that is already leased in San Francisco, we're going to see some more of it. This wave has started, and it's going to continue. And then lastly, I think the residential rents are increasing. And this is just another data point that is underscoring that the resurgence in the business activity in San Francisco has definitely picked up. I'll hand it over to Christine.

Good afternoon, everybody. I'm going to go through some market slides very quickly. Pat block at Boston, 24% available at [ high wealth ]. San Francisco's overall availability currently sits at 37%. 30% of that is direct availability and about 7% is sublease space. And sublease space is still very relevant in our market as there are still a lot of high-quality plug-and-play space that compete with direct space. But leasing activity is increasing. And although we have not yet reached our 15-year average of 10.5 million square feet, the first 2 quarters of 2025 has outpaced the first half of the last 5 years. And if you look on this chart, it's on pace with 2011 levels. And looking at that full year, we beat out our 15-year average. So we're looking forward to seeing those numbers at the end of the year. And most importantly, as Rod mentioned earlier, we have seen 3 consecutive quarters of positive net absorption. The majority of that space is being absorbed by the tech sector. Tenant demand is tracking at 5.9 million square feet. And if you look over the last 10 years, our peak in 2018 and 2019 was over 7 million square feet. In 2024, we almost reached that peak. 51% of this tenant demand is in the technology sector. San Francisco is a center of innovation, has a very entrepreneurial spirit. And in the 2000s, we saw the dot-com wave. In 2010, we saw the mobile app era. And right now, we really believe that we're in the beginning of up cycle, the AI era.

So continuing with the AI story. Again, as I mentioned a second ago, 6 million square feet has already been leased. And these are leases spread around all the submarkets throughout San Francisco. The financial districts garnered probably the largest proportion of it along with Mission Bay. But as you can see from this map, they're spread out across the whole city. And it's a large number of them. I mean there's been over 267 companies throughout this area here that have taken this down. So it's pretty impressive.

And some of them have not been companies prior to 2020.

Yes. No, exactly. You saw this slide when Owen was up there, and I would just like to comment on it again. The fact that San Francisco has taken the majority of the venture capital around this new funding is not news to the Bay Area. It's happened every cycle up until now, and it's happened again here, and it's clearly the fuel that drives a lot of the growth. Many of these VC companies, as you know, are based in San Francisco, and they're there for lots of different reasons, obviously, to spawn some of these new companies. But the collaboration with the great universities, Cal, Stanford and others, it's just -- it's the lifeblood that makes it happen. And so this is a very positive sign that you're going to see more growth from that. And this slide, I think, is just another one that sort of underscores the difference between the premier and the non-premier. In San Francisco, I mean, the premier assets, including all of the BXP assets, are just outperforming. I mean, this chart shows it very well, as does the one on net absorption. For most of the previous quarters, the net absorption in the premier has outpaced the non-premier. Okay. So switching over to our portfolio. This slide is basically just kind of showing each of the major regions, including Seattle and L.A. in terms of what is leased and what is occupied. And unlike some of the other slides that you've seen and are going to see, there's not as big a difference here. We haven't done as many leases with future commencements. So the spread between what is leased and not leased is not as big. Across all these markets, we're about 84% leased, which is better than the market average and pretty much all of those, but it's definitely below where we have historically been. So again, underscoring the need for leasing. And -- but most importantly, too, it's our opportunity. This is where you're going to see us be able to make the most immediate impact on earnings by getting some of the deals done in these markets.

All right. So I'll get into the specific properties. Salesforce Tower is our jewel in San Francisco. It's near 100% leased, and we don't have rollover in the next 2 years. And on a daily basis, we see about 5,000 visitors and employees coming through the building. And pre-pandemic, we were 5,500 to 6,000 visitors every day, and it's really busy at the building. And it's just another example of San Francisco being back at work. Embarcadero Center, this is our 3 million square feet 4-building project north of market. It is the project that brought BXP to the West Coast in 1998. It continues to be a real important piece of real estate for us in San Francisco. We just completed major capital improvements in the last 5 years to an aging complex. We remodeled and expanded all 4 building lobbies. We've added amenity offerings. Owen mentioned it before, including an ultra-high-end 11,000 square feet amenity center called the Mosaic. Some of you have been in meetings in that facility. It's been very well received. And we're reinvesting in the retail, like Rod said. It's a front door to our office space. We got to make sure it's vibrant and relevant and make that place for our clients to go to. And Embarcadero Center traditionally attracts traditional type users like law firms, financial companies and professional services firms. And those companies are looking for quality trophy space. 4 Embarcadero Center, which is the most highly desired of the 4 buildings just because of its proximity to the water, can command rents over $100 a foot on any floor. So it really showcases the flight to quality trend at Embarcadero Center. The majority of our availability is in that low-rise bank. That low-rise space has been challenging, but we're exercising different strategies to get those floors leased up, including designing and building full floor spec suites. We even put our own regional office on a lower floor to showcase how quality a low floor can be at Embarcadero. And we have examples of successfully convincing clients to consider a low floor by just touring through our office.

I'll just have to jump in here. Right before we got on stage, Christine showed me a text that we just got an offer on one of our better spaces at 4 EC. And this is a space that we actually have had multiple offers on. We haven't had that. We haven't had to manage that in a while, and it just came through, which is great.

535 Mission, this is our 300,000 square feet building, just half a block away from Salesforce Tower. We built it -- we opened it in 2014, and our anchor tenant was Trulia, now Zillow. In 2023, Zillow decided that they're going to downsize from 100,000 square feet to just over 25,000 square feet. So we were left with a large block of tech space. We realized really quickly that it was going to be very hard to compete in the market with all the sublease space available that many other blocks of great tech space available. So we decided that we needed to break up the block, even breaking up the floors to get it leased up. And that program has been very successful for us, and we have diversified the tenant base of this building, adding VC companies, private equity companies, small AI companies. We even got a government user. And we only have a couple of floors left available there, and we're going to continue leaning in on that strategy. 680 Folsom. This is our 3-building 550,000 square feet project on the corner of 3rd and Folsom in the SoMa District. We just completed a major repositioning project at this building, including modernizing our lobby. You can see a photo of that here, just giving it a more hospitality feel. We also converted retail space into amenity lounge space. That has been very well received. And we also negotiated with 5 of our clients to get back the rights to our roof. And we just completed major renovations to the roof just last week, adding a bar, seating, landscaping, sunshade, and we're opening that to our clients next week. We have a 200,000 square feet block of availability there. And this summer, we have seen more touring activity for this block than we had in the previous 12 months. And the reason for that, we think, is because we think 680 Folsom is situated in this AI corridor. Rod showed you a map of all the AI companies, OpenAI, the largest AI company, is in Mission Bay. Mission Bay is full. This building is very close to Mission Bay, and we're starting to see these AI companies sign up leases in the SoMa area. And we're actively pursuing that AI user for this block right now. In the South Bay, this is Mountain View. We have 2 projects there. We have 2440 West El Camino. That's our 145,000 square feet office building on El Camino Real. And then we have a 16-building office and R&D project in Southern Mountain View called Mountain View Research Park. Over the last 2 years, it's been very challenging in this submarket. There was very few leases being done. It was very quiet. But this year, in 2025, there has been an uptick of activity. I'm negotiating close to 200,000 square feet of LOIs at both projects, and we think we're going to land a few of these users. The majority of these tenants are tech and in particular, in Mountain View Research Park, we get a lot of automotive technology, and we house companies like Toyota and Honda doing their innovation at that project. Gateway Center. This is our 7 building, 1.3 million square feet project in South San Francisco, very close to the airport. We have a 50% ownership in this project. And as you all know, the life science market has been tough. We have an oversupply in the market and demand is low. But however, we think Gateway Center is the best location in South San Francisco with easy access to the freeway. And we also have brand-new plug-and-play spec lab space that is ready for that next lab user. So the goal here really is to just stay competitive with our -- with the market. And when that demand comes back, we're ready to make those next deals.

Okay. Moving to Los Angeles. I'll just say that Los Angeles has probably been one of the slower markets from a demand side for us. We have 2 great assets down there at Santa Monica Business Park and Colorado Center. And our occupancy is still holding up pretty well relative to the market. We've got some great tenants down in there in that building, some clients. We have Snap. We've got Hulu. We've got Kite Pharmaceuticals, to name just a few. So it just hasn't picked up quite yet. So we're hoping that it will hit pretty soon. And we're actively working on a few deals, but it has definitely lagged in terms of demand. Up in Seattle, I think the story is a little different. I mean it's -- Seattle hasn't quite kicked in on all cylinders yet like San Francisco has started. But historically, Seattle, the demand profile, first of all, in Seattle is very similar to what we have in San Francisco with a lot of the tech companies. And historically, it's lagged maybe 12 to 18 months when the demand picks up in the Bay Area, you see it follow up in Seattle. And I think that's starting. I mean we've already done up there 15 leases this year. 12 of those are with new clients into the building. These are not big leases, but they're meaningful leases and they're good leases for the buildings, both at Madison Centre and at Safeco Plaza. So we're encouraged by that momentum, and we think we're going to see it going forward. Okay. So we're going to wrap up here with just a comment quickly on the political and legislative climate. And I'll just speak primarily to San Francisco. This is a really good story for San Francisco. We've absolutely turned the corner in terms of just, I would say, the attitude. We've got great leadership now with Mayor Lurie. He's brought on some very, very business-savvy people around him to help as they're fellow named Ned Segal, you may know that name. He was the CFO at Twitter. There's many others that are in the group now that are doing quite well, getting everybody motivated. And I think he's got a big job ahead of him, for sure, the mayor does, but he's engaged with the business community, and the business community is engaged back, which is something you didn't see before. In fact, right before Mayor Lurie took office, there was an ad hoc group of real estate companies, BXP included, that put together a priority list that was presented to the mayor, and he reviewed it and sat down. We had a meeting with them, all of us did. And some of the stuff is getting executed. So this is a really, really good story, and we're very happy about it. I would just say on the housing front, this is more of a statewide comment and similar to maybe what Koop said about Massachusetts. Housing, we need more of it. And in the Bay Area and in Southern California and in California in general, there's been some good changes that have tried to break down some of the barriers having to do with just regulatory issues and the process that's been so cumbersome. And there's a lot of narrative around this now. A lot of people are focused on it. We got -- it's a project to get done, but it's going in the right direction. So I'm going to wrap up here just with one last comment, and we'd like to take some questions. But in conclusion, I can tell you, in San Francisco, this recovery has started. There are companies being formed one after another, and it's just so exciting to see them. They're all trying to vie for their piece of this new pie that's part of this AI, new wave of technology. I've been doing this in the Bay Area now for a long time. I've been through each of the last cycles of the tech going all the way past the dot-com period. And every single time, people questioned, was it real? Is it going to happen? And a lot of people were skeptical, and they were wrong because it happened every single time. It's happening again, okay? It's happening again right now. And the smart investors, they see this wave coming and they are paddling hard to catch it. So with that, we'll stop and take some questions.

No questions? Here we go.

I was just wondering if you think about sort of the previous cycles and sort of the big companies that are driving it in their space usage, just what have you guys sort of seen in terms of these AI companies and their space usage based on employees and so forth? Anything different that jumps out?

Yes. Actually, that's a great question. Please, Christine jump in. But the AI companies have an absolute preference to being in the office. And I've heard it for different reasons. I think the obvious one is that they feel that there's more collaboration, they get people working together. I've heard there's some security issues. They prefer to be all together as well. They don't want to have to worry about firewalls and things like that from people working remote. But it's -- so far, they are using the space. And if you were walking around in Mission Bay or in downtown San Francisco and you felt the vibe of more people, a lot of that's being driven by these folks being here.

I have a friend that works at OpenAI. He works 8 days a week.

Yes. Any other questions? We got one back here.

You mentioned before when you look at the lease percentage, I think this was San Francisco specific, the lease percentage versus occupied was quite tight unlike some other markets. I was wondering if you could describe why you think that happens? Is it the type of user, size or something else?

I think particularly, we don't have a lot of -- I don't have any new development. We have one project that we're trying to lease up in South San Francisco, which is 651 Gateway. I think you might see more of that spread when you've got future leasing that hasn't commenced yet like that. That's the best I can see. I don't know if you want to...

Yes. Another reason is so dominated by tech, the tech companies can't see that far ahead. They're thinking about the next 12 months or 18 months. They can't look a few years out. So you're always going to see that really tight spread.

Just-in-time real estate, right? Yes. Any other questions? Right there.

Can you maybe just talk about -- you mentioned TIs, but just the rental rate side of it?

Yes. Why don't you take that, Christine?

Yes. So I think if you have very high-end trophy space, you can command the rents. At Embarcadero Center, we're getting rents up in the $120, $125 range. But there are other buildings in the market that can get $160, $175 as well. And then on the lower end of the market at -- in our portfolio, we're kind of in the upper 70s to low 80s rent, but there are other landlords that can get into the 40s or 50s.

Here, Alex.

I guess, a 2-parter. One, we always hear these stories about the big tech companies sort of going back and forth. They dump a huge amount of space on the market and then they take a bunch. So what's going on with the big tech? And then second, San Francisco, we always, again, hear the stories of the view space is like that's the ultimate that stuff leases and then there's all the generic stuff. So can you just sort of -- of that 37% availability, how much of that is like view space versus how much of that is just generic?

Yes. Okay. We'll take the tech one first. So on the -- I would say that the big tech companies that I think you're referring to, the ones that had taken a lot of space in the last couple of cycles, I'd say they're still kind of retrenching. I mean they're not taking as much new space. But I don't think that's really the story. The story is what I spoke to earlier, which is there are new companies being formed that are taking the space. There's definitely still activity among those top bigger users. But I think particularly in the Bay Area, I mean, groups like Google had -- they had a lot of space, and they have space on the sublease market still. So that's maybe not true in every one of the other markets that they operate in. But in this location where their headquarters are, they definitely are probably long space. How about the second part?

So our market is, what, 90 million square feet. I would say 25 million square feet is considered trophy space. And there -- that segment is about 18% available versus the 37.

That's it for questions.

That's it.

Thanks so much. Next up, we have the Washington, D.C. region with Pete Otteni and Jake Stroman, the co-heads of Washington, D.C.

Good afternoon, everyone. As Helen mentioned, I'm Pete Otteni. This is Jake Stroman. We co-head the D.C. region. Thanks for your patience. We'll try to give back some time here if we can, if at all possible. Agenda will look familiar. I'm going to skip through that. In terms of our key objectives, I will not belabor the first point. It's the same. It's lease, lease, lease, and it's with particular focus on our vacant and pending expirations. We are, I think, probably among the leaders in terms of the selected land and building dispositions. We've got several things in the market right now, some of which we anticipate will close in 2025 and a couple that will likely trickle into 2026. So we are heavily focused on those assets. We've got, in some cases, the unique data center market to the west of us that's helping us. 901 New York Avenue is a great example of what we've been talking about, where we're in the process of completing a $25 million renovation. And think of that as a partnership between BXP and our major client in the building, Finnegan. Finnegan is essentially reinvesting the dollars that they would have gotten in the form of free rent in a new deal and investing that into the building so that we're redoing the lobby and adding an amenity space in the building that they and other clients will get the benefit of. And Jake will talk about the leasing success at that building, but we've seen already some momentum when the market sees that we are not only investing in that building, but have TIs to do new deals. We've talked a lot about 725 12th, and there's a slide on this, but we are actively under development there and really heavily focused on getting to the point where we can turn over the spaces to our clients. And then the later 2 slides are really sort of the moments, but obviously, focusing on efficient management. And we are looking, I would say, similarly a short list in D.C., but when we see acquisition opportunities for buildings that we'd like to own, either that are on the market or that we can go find off market, we are certainly seeking those selectively. The next thing is just 3 things I wanted to hit on quickly to try to be a little bit different than you might have heard from some of the other markets. Our Reston office, Jake is going to talk about this, but Reston continues to be a bright spot. It's our CBD, urban edge, suburban, urban, whatever you want to call it, portfolio. Jake and the team have done an amazing job of leasing up whatever availability was in the Reston market, and it continues to be an amazing bright spot in the D.C. portfolio. Not too different, but I think perhaps as pronounced as anywhere in our portfolio is the D.C. bifurcation between haves and have-nots. There is a major demand for new product. There is rent growth that is driving rent growth in the high-end A and trophy space. And on the other end of that spectrum, there are zombie buildings, which likely will never get leased again as office. Some of those are going to get converted to residential. Some of them are not, but there's really no different. There are buildings that are not being investigated by clients who are seeking space. And then similar to what Bryan Koop was mentioning, when you look at the new development market in D.C., you look at JBG Smith, which is essentially a residential developer. You look at Tishman Speyer and Brookfield, who have essentially pulled out of the market. And many of our historical competitors on the new development side are no longer our competitors in the D.C. market, which we think is a favorable market for BXP. 725 12th, we've talked about on a couple of earnings calls, but I'll just hit quickly. We were fortunate enough to do a great deal with the -- essentially the lender who was in possession of this building. We got it at what we think is a really attractive basis. We're going to be at about a little over $1,000 a square foot at the end of the day here. And the rents that we've achieved with our 87% pre-leasing to 2 major law firms gets us to just about an 8% return. We think that's a very attractive basis in the building. And obviously, we're very happy. We're essentially not leasing any additional space at this point in time. What's left is the sixth floor, which the clients have expansion opportunities on to in the next couple of months here. And then we have the retail space. Otherwise, there's essentially no space left to lease in the building. We have begun what I would call soft demolition in the building today, and we'll be under active demolition where you'll actually be able to see the building coming down here in the next few weeks. We will turn over spaces to our clients early in 2028, and they'll be occupying the building late '28 and early 2029. And then finally, on the development side, RTC Next. You see on the left-hand side of the screen, blocks A, B, C and D, which are all now complete, the Volkswagen headquarters, the Fannie Mae headquarters, the AC Hotel developed by our partners, the Donohoe Company on a ground lease; and Skymark, our 39-story 508 residential unit complex, which Rich talked about, which is also that Phase 2 75,000 square foot office building. On the right-hand side of the screen, you see our future development in Reston. Those future development blocks comprise about 900,000 square feet of premier workplace and over 1,000 residential units. You can also see a major organizing feature of the development, that Central Park. While the economics don't support new development today at RTC Next, we think that as the markets move and as new development is supportable in Northern Virginia more generally, Reston, as usual, we think will be the first beneficiary of that. So stay tuned for potential future announcements on the RTC Next side as well. This is CBRE data, and I'm going to go really quickly through this, just to give you some kind of overall flavors. On the left-hand side of the screen, you'll see almost 6 million square feet of tenants in the market. That's D.C. proper. On the right-hand side of the screen, CBRE tracks the tenants in the marketplace on the D.C. metro. So that's D.C., Maryland and Virginia. You'll see that same right-hand slide on the next screen, which is Virginia. And you'll -- if you do some math, you can quickly note that 5.7 and 5.0 on the next slide add up to more than 7.7, which is because if a tenant is looking at and open to both markets, they're in both numbers. So on the right-hand side of the screen, the point being we have not yet gotten back to where we were post pandemic, but at 7.7 million square feet in the marketplace, the market feels like there is some momentum there. The 5.7 million square feet of demand in D.C. is heavily driven by, not surprisingly, law firms, not-for-profits and the government. In Virginia, a similar number, very different demand base here. That's going to be heavily technology and defense subcontractors. On the leasing activity, 10-year average, 9.3 million square feet. We haven't gotten there post pandemic. Hard to say we will in 2025, if you look at the numbers there. Similar in Virginia, 10.6 million square feet average. We have not gotten back to the pre-pandemic number, which is almost 14 million square feet. And availability rates in the D.C. market, you see here are similarly challenging, 28% and 26%. Finally, on the premier workplace side, I think the takeaway here on the non-premier side, you'll see that number, the vacancy number is in excess of 18%. On the premier side, it's about 8%. So significant difference there, almost 10% or a little over 10%. And then finally, these absorption numbers are a little wacky, frankly, but we can tell you that the premier workplace buildings are absolutely outperforming whatever this slide may indicate. And obviously, there are some vagaries to that number. A stat we like to throw out also from CBRE is that 25% of the buildings in D.C. allocate 25% of the vacancy. So those are buildings that people are just not looking at, and you can really essentially ignore them. So with that, I'm going to turn it over to Jake.

Thanks, Pete. I'm going to spend some time specifically speaking to our portfolio in downtown Washington, D.C. And I know there's a lot of familiar faces in the room. Oftentimes, when the analyst community comes to visit Washington, D.C., we take out to Reston. Reston accounts for about 65% of our square footage in the region and about 65% of our NOI. It's 98% leased. It has very limited rollover in the next 3 years. So I'm not going to spend a whole lot of time talking about Reston today, but instead, I will be talking about Washington, D.C. So specific to our D.C. portfolio, it is 8 buildings totaling 2.7 million square feet, and it's nearly 90% leased as of June 30 of '25. As you can see from this slide, it stands in stark contrast to some of the market information that Pete was presenting earlier. It's just a furtherance of the argument that preeminent workspaces are successful in today's environment as is evidenced by what you see here on the slide. Okay. So this graphic is similar to the one that was just presented, but it's a forward forecast. It effectively shows what our downtown portfolio will look like by the end of 2025, which will be 7 buildings, 2.3 million square feet and 92.3% leased. And looking at this slide, I would just point out that the largest vacancy that we have in our portfolio is at 901 New York Avenue, where we have 99,000 square feet of space left to lease. This is the largest whole on our portfolio downtown, and I'll speak to that asset in just a few minutes. So in terms of our exposure and occupancy, this graph shows our current exposure, which incorporates, again, all 8 buildings in our portfolio and our known rollover from 2025 to 2027. And as you can see, the D.C. CBD portfolio is 88.3% leased as of today with limited rollover but for 2026. Fast forward, as of the end of this year, this graphic details the D.C. portfolio, which will be 7 buildings and our known rollover in 2025 through 2027, which is really de minimis. So what is the difference between those 2 slides? It's our intent by the end of the year to sell our interest in our partnership at Market Square North upon the maturity of an existing loan that we have, which matures in early November. No presentation from D.C. would be complete without at least a quick overview of Reston Town Center and the successes that we've enjoyed there. This is just a bird's eye view and an attempt to capture the 18-building, 5 million square foot environment that we created in Reston. Reston Town Center continues to be one of the most successful submarkets in the country. We house 36 corporate headquarters, many of them are household names, multiple full building tenants, and we have a weighted average lease term of just over 9 years. And as you can see, current vacancy and near-term rollover is very limited until 2027. And note that in 2027, we are already in discussions with a lot of the existing clients and/or new clients on most of the space that is projected to be in play. So now let's do a quick deep dive into our downtown Washington, D.C. assets, starting with 500 North Capitol. So 500 North Cap is a 230,000 square foot premier asset. It's located between Union Station and the U.S. Capitol with incredible views at Capitol Hill. It's a joint venture project. Our joint venture partner is the [ Massiveo Corporation ]. They own 70% of the asset. BXP owns 30% of the asset. McDermott Will & Emery is the anchor client, and their lease runs until the end of 2028. We are both working on a loan extension with the existing lender and a repositioning plan to put this building in a position to be leased when McDermott vacates to our 725 12th Street project in late 2028. 901 New York Avenue. As I noted, 901 New York Avenue is the asset with the largest vacancy in our portfolio. We are about 50% complete with a major building repositioning effort that Pete just referenced whereby we're spending $25 million, and we're reenvisioning the lobby, the entrances, the public spaces and the amenities for this asset. Of the 99,000 square feet of vacancy, we are at lease on roughly 22,000 square feet of that space right now. And we have really, really good lease activity and tour velocity on that remaining space. 1330 Connecticut Avenue is a 250,000 square foot asset in Dupont Circle. It's primarily leased to Steptoe, whose lease runs through 2032 for roughly 75% of the building. This is a sale candidate, as we've talked about earlier today, given the fact that we've completed a very significant building renovation years ago, and Steptoe has about 7 years of lease remaining on their term. 2100 Pennsylvania Avenue has been a total success for us. This building is 476,000 square feet. It sits 6 blocks west of the White House on Pennsylvania Avenue. The anchor client is WilmerHale, who occupies about 56% of the asset. We delivered this building in 2022 to rave reviews, and the remaining vacancy is encumbered, but still seeing great activity. 2200 Pennsylvania Avenue, this building is 97.5% leased and located one block away from 2100 Penn. An interesting fact about this building, we delivered this asset in 2011, and we have subsequently renewed all of the original clients in the building, including Hunton Andrews Kurth, Vinson & Elkins and Danaher Corporation. And as part of the renewal process with Hunton Andrews Kurth, we are getting some space back, but we have great activity on that space already. Capital Gallery. This is our asset in Southwest Washington, D.C. And if you recall, we sold over 70% of this building to the Smithsonian Institution in 2020 for a price of over $550 a square foot. Our remaining interest is about 30%, and it includes office space and the entirety of the parking garage. Note that we're currently building out roughly 21,000 square feet of additional space for the Smithsonian Institution. They're leasing from us. That lease commences in Q2 of 2026 and represents about 60% of the vacancy here that's listed. So better put, upon completion, we will be about 93% leased at Capital Gallery. And then lastly, Sumner Square. So Sumner is a series of 3 separate buildings we completed, thanks to Mr. Ritchie in 1985. Fast forward to today, we just completed a major lobby and amenity repositioning at the asset, and we are 94% leased with limited to no rollover for the foreseeable future. We have activity on the remainder of the space. This asset continues to perform really, really well in our market. We completed a renewal last year and an expansion for Kellogg, Hansen, which is leasing about 40% of the asset through 2036. And then lastly, let's just touch on the political and legislative environment in Washington, D.C. As many of you have seen and read and heard about, we have the National Guard deployed on our streets. We have about 2,300 troops that are occupying D.C. streets right now. The orders for the National Guard have been extended through November 30. My guess is they'll be extended beyond that date. There's a lot of debate and discussion about home rule and whether or not the surge in protection is really reducing crime and what it's doing to the unhoused population in the city. But suffice to say, what I would say is that the city didn't ever really feel unsafe. And today doesn't feel unsafe, particularly where our assets are located in town. The other hot -- but I'll just touch on before we close and take questions is DOGE. Everybody asked what's the impact of DOGE to the region. And DOGE, by some estimates, there's been about 30,000 jobs lost in our region. Primarily, a lot of those jobs are in Montgomery County, where we don't have a huge presence. But from a foot traffic perspective, what I will say is given the proclivity for back to work with the federal government, the boots on the ground and the activity on the street has increased immensely in the last 3 to 4 months. In Downtown Washington, it feels like a different city. It feels very active and vibrant. We continue to be really excited about the change that's coming to Washington, and we feel like the portfolio is positioned for success and continues to be. And as Pete alluded to, we continue to turn over every stone, looking for new opportunities that exist in the market. So with that, why don't we take some questions?

No questions.

Great. Well, thank you.

All right. Last but definitely not least is our host region, New York. We have Andy Levin, Heather Kahn, our SVPs of Leasing as well. We'll welcome you back, Hilary Spann, Executive Vice President of the New York region.

Thank you, Helen. Okay. You've seen the agenda. It's identical for the region, so I will not belabor it. I wanted to talk before I hand it over to Andy and Heather about some of the key objectives for the New York region for 2025. The largest of the objectives coming into 2025 was to secure an anchor tenant and commence development at 343 Madison Avenue. So we're very pleased that we've achieved that objective this year. We also had an objective to close 290 Coles Street in Jersey City, which is our 670-unit market rate residential building and commenced development on that. I'm pleased to say that we are ahead of schedule and under budget on that project. So we've achieved that objective as well. Like the rest of the regions, we have an objective to complete selected dispositions. We have a couple of land sites on the market, and we expect to put them under contract between now and the end of the year. We continue to canvass the market for tenant prospects. As Andy and Heather will describe to you, north of 42nd Street in Midtown Manhattan, our existing owned portfolio is largely spoken for. So what do we really mean when we talk about canvassing the market for tenant prospects? We are talking about 360 Park Avenue South. The project has recently signed 2 full floor leases that are both sort of AI-associated-type tenants, and we are continuing to canvass that market to improve the lease percentage of that building and ultimately, the occupancy and the revenue coming into that building. Also, we are continuing to canvass the market for additional prospects at 343 Madison Avenue, which we've described to you. Finally, one of the objectives that we had coming into the year was to complete the repositioning and the amenity upgrade of 510 Madison Avenue. Some of you have actually seen images of this if you were at the presentation we did at the GM Building a few months ago. It has been incredibly well received by the clients in the building. Every time you go over there, there are folks hanging out in the cafe, using the terrace, et cetera. And so we're very, very excited about the reaction that the clients have had to the repositioning, so much so that Heather can describe to you what the vacancy and availability in that building is, which is very, very little. I'm going to hand it over to Andy and Heather to talk about the leasing trends. I'll come back at the end to talk about the political landscape in New York.

Thank you. We're going to start out with tenants in the market. So currently, there's almost 24 million square feet of tenants in the market. And that is just for tenants with requirements of 50,000 square feet and greater. So the total number of tenants in the market is even much higher than that. And consistent with what you saw in a lot of the other regions, it's those high-margin tenants that we see a lot of in our portfolio. The leasing activity for the first 2 quarters of the year has already reached 15 million square feet. We're expecting a year for Manhattan overall to reach over 30 million square feet. If you look on the chart above the white line, those years where we've reached above 30 were those really good pre-COVID years. So this is a very strong year for all of Manhattan. If you look at availability, similar to Pat's graph, it was sort of going along pretty steady in the teens. COVID hit and it jumped up pretty dramatically. It kept rising actually through 2024 thereabouts. Just in the last year, it's come down pretty dramatically. So 17.5% availability, that was June. It currently sits at 17% as of the end of August. It's down 240 basis points over just 1-year period. Manhattan is comprised of a few different markets, Downtown, Midtown South and Midtown. So Downtown and Midtown South, performing a little bit worse than the average, where Midtown is obviously considerably better. Just that Midtown number, that 15.5% is now down to 15.1%. That Midtown is down 300 bps for just that 1-year period. So really, really big improvement. All the leasing activity has been for the better space. The blue line, when it goes above the green dotted line, that's positive net absorption. So we've seen a lot of positive net absorption over this year. In fact, 3.8 million square feet of positive net absorption for Midtown alone, a lot of strong months of leasing activity. Every market in Midtown has done better. These are the submarkets in Midtown. So the white dash is where that submarket was last year in terms of availability. Everyone is down, and Park Avenue continues to lead the way.

I would just comment briefly on Park Avenue that the reason the vacancy rate is up over last year is that JPMorgan Chase is reoccupying 270 Park, and they have a bunch of leased space around the submarket. And the statistics assume that all of that leased space is going to come back on the market and be available. But conversations that we've had with JPMorgan indicate that, in fact, they're going to need to retain some of that space because they're going to be redeveloping 383 Madison Avenue. They have to move everybody out of that building. So I think that vacancy statistic for Park Avenue is probably a little bit overstated.

Even still, it's still sub-10%. We're the closest market. Sixth/Rock is well above that.

Yes.

So drilling down even further into the best space, starting rent performance for premier products. So premier product in Manhattan, it's the top 11% of the square footage in the market is considered premier by CBRE. That's 6% of the buildings, but 11% of the square footage. So if you look at the starting rent performance, 2018, it was 106. And today, it stands at 140. It's a 33% improvement. Sadly, the blue line is just straight across. The rest of the market is basically sitting at the same spot. So at the same time that rents have been improving, so has occupancy. The vacancy rate for the premier product in '18 -- 2018 was 23%. It's down 10 percentage points to 13% today, whereas the commodity product is just the opposite 10% up in terms of percentage points. Not surprising at the same time, we're seeing positive absorption for the premier and negative absorption for the rest of the market. And Heather is going to take you through our portfolio.

Great. Thank you, Andy. And I think with that, I'm very excited to be talking about leased percentages today because that's what we focus on as leasing people. We've got occupancy here as well. But again, looking at the lease percentage, I think the highlight for this slide in the New York portfolio is that 7 out of our 10 buildings are above the 90% mark when you're looking at it from a lease perspective. And we certainly expect that those leases, whether they've been executed since June 30 or we're working on them now, we'll have them executed by year-end. So that will take us from an 85% occupancy rate to a 90% -- 91% rate by year-end based on what we currently have in the pipeline, and that's not factoring maybe proposals or other activity that we're currently working on, which we'll hope to convert. Breaking it down and looking at the vacancy, we've got a 15.4% vacancy rate, which ties back to that 85% or comprised of about 1.6 million square feet currently. And then you can see our forward-looking roll is very light in New York through 2027. This is the slide I prefer to look at, again, being a leasing person, where we've chipped away at about half of that current vacancy. So the top part of that first bar is space that has either been leased or is out to lease at the moment. The other thing I like about this slide from a leasing perspective is we've pretty much done away with our remaining 2025 exposure, and '26 and '27 continue to be very light. So when you look at '25 to '27, we have about a 3% exposure rate in New York City. We'll drill down a little bit on the buildings and maybe explain where some of those differences are happening. We talked a little bit about GM earlier where we have quite a lot of activity. We're sitting at the 92% occupancy mark, but with our current leases out and leases signed since June 30, we're going to bring GM up to 100% by the end of the year. And Andy and team are really hitting some high watermarks on the rents. So this would be like the premier of the premier product. 399 Park, not a lot to talk about here, except for the fact that we're 100% leased, and we have an all-star tenant roster. Many of our tenants at 399 Park have expressed interest in growing. Right now, we can't accommodate that growth, but we'll see what the future brings. 601 Lex, not a lot going on near term with vacancy or 2025. So we started to chip away at 2026, where we've got a 47,000 square foot lease out, which will get signed by the end of the year and hitting a high watermark on the rents there as well. 599, we're starting to see some good activity at the building with the Park Avenue submarket really tightening up. We've got about 100,000 square feet in that leased or leased out category. So that will help us bring the current occupancy rate from the 90% up to 99% by the end of the year. And then, again, minimal roll in 2026 and 2027, but we'll keep chipping away at it. Hilary mentioned 510. One of the goals for the year was to complete our amenity offering. We also did a little bit of a lobby refresh at the building. And subsequent to introducing both of those to the market and now having them complete, you can see that we've had great success leasing our existing vacancy at the building and chipping away at that 2025 rollover. So we'll take this building from the low mark of 81% all the way up to 100% by the end of the year. 250 West 55th Street, not a lot to talk about, very stabilized asset. As we look at Times Square Tower, so this is a really great building and a bit of a challenged submarket. We're starting to see things turn around here, again, with some of the surrounding submarkets tightening up. So we do have the green bar, which reflects some of the space that we have leases out on or have leased. So we're hoping, at a minimum by the end of the year, we'll get this building up to the 87% leased mark. But I do want to note, we've started to see an uptick in activity. We're trading paper with about 160,000 square feet worth of prospects at the moment, 3 deals. We're going to chase them really hard so that we can try and bring this building back up above the 90% mark. Then 200 Fifth. We had great success in stabilizing this building this year. We brought in Goodwin Procter, bringing the building from 59% occupied up to 91% leased. So this will be a nice pop once we start to recognize the revenue. And then that brings us to 360 Park Avenue South, where we're starting to see a nice uptick in activity, particularly from the AI tech sector. So we signed 2 leases. We've got 2 more deals out to lease. So those 2 totaling 46,000 square feet. And we've got a couple of active proposals in the pipeline. But you can see here what the distribution of tenancy is like, very, very, very heavy in the technology sector. So it's nice to see those guys coming off the sidelines here in New York. And with that, I'll turn it back over to Hilary to talk about politics.

What can I say about New York politics? It is very fluid at the moment. So the New York City general election for mayor is in November of 2025. The candidate that won the Democratic primary, Mamdani, is generally expected to win the general election. However, even as recently as last week, you heard that the independent candidate dropped out, that maybe Eric Adams is going to take a position as the ambassador to Saudi Arabia. And so there's a lot of moving parts. I think for the moment, we should assume that Mamdani will be the next mayor of New York City. The gubernatorial election is in November of 2026. And Kathy Hochul will be running for reelection. It's possible that she gets primaried from the left, but we think maybe not likely. She will be competing with Elise Stefanik in the general election. Kathy Hochul is very centrist, and we think that she has a pretty good chance of getting reelected, especially because the western part of New York State is much less liberal than New York City and downstate. Why does this matter? It matters because going back to the 1970s when New York City was subject to a consent decree, the State of New York actually has a lot of control over what happens in New York City. For example, the State of New York controls the MTA. So security in the subways, whether the trains run on time, how much capital is invested, et cetera, is actually a state function, not a city function. Likewise, some of the things that Mamdani has said that he would like to do, such as increasing corporate tax rates, has to go across the governor's desk and get approved in order to become enacted into legislation, and she has said directly to us that, that will not happen. So some of the things that he's saying that are sort of alarming we think will not come to pass. So what can he do? He can certainly institute changes to the rent control guidelines Board. On the residential front, this is the Board that sets increases on rent stabilized in rent control apartments. The mayor appoint all 9 members of that Board. He said that he would like to put a cap on -- of 0 on rent increases in those units. I think if he wants to include an agenda of development, he's going to have to make some concessions to reality on whether or not that works. So a lot going on. We'll know a lot more in November of this year and then again in November of next year. The other thing that I would say is that I sort of reiterate what I mentioned earlier. BXP, as a company, has been in business for 50 years. We don't plan our strategy for our regions or our business plan and its execution around one political cycle, whether it be a mayoral election or gubernatorial election. National politics tend to matter somewhat less for us. And so like our clients, we are looking to the horizon for what's in the future for the company, and we're very, very confident about the future of New York and about what we're planning to do here. So with that, I would open it up to questions on the New York region.

I have a question on the 343 Madison development prospects. I think you guys mentioned there are 4 prospects right now. I think I remember you guys mentioned one or some of them are from existing tenant portfolio, which you guys also pointed to, there's other tenants want to grow within your buildings. So in a scenario one or multiple existing tenants move to 343, what is the plan for the space that's left behind? What's the mark-to-market like?

I'll take that. We did not say that. We did not say that the LOI that we signed is with an existing tenant. In general, however, the rents in the owned portfolio are approximately -- with the exception of the General Motors Building where rents are well over $200 a square foot, in most of the rest of the portfolio, the in-place rents are half of what they are at 343 Madison Avenue. And so should a client elect to go from a building in our owned portfolio to 343 Madison, we would be thrilled because we would have some really great value space available to lease in Midtown, which, as Heather pointed out, we currently don't have and can't accommodate expansions that we would really, really, really like to accommodate. So actually, we think it would be great. And we're not at all concerned about availability in Midtown north of 42nd Street.

If it were to happen, you're talking about 2029, 2030. So this is not tomorrow.

Other questions?

I think we're handing it back over to Owen and Doug for final comments, and Mike. Is that right? Okay. Thank you all.

Okay. You went the distance. So thank you. This was -- I know it's been a long day, and we just wanted to wrap things up and make ourselves available to answer any kind of final questions that you have. But before we do that, putting on something like this takes a lot of work. And we have a fantastic team at BXP that led the charge on this that I want to recognize, led by Helen Han. So Helen, thank you. And where is John? John Shanahan. John, there you go. Grant Buchanan. Where is Grace? Is Grace still here? Okay. Well, we'll recognize her when she comes in. And then Manny Carvalho. Is Manny still here? Thank you, Manny. Well, anyway, terrific. So thank you all for a great effort. And I hope today was informative and inspiring about BXP. Hopefully, we were able to communicate to you that we are very excited about and confident with our plan, and we're confident that we can execute this plan and that's going to create value for shareholders. And we're also confident we can execute this plan because of the fantastic team that we have deployed around the nation from BXP. And I'm delighted that you all were able to see many of those individuals in action today. So with that, I'd like to just open it up, and whether it's preferably Doug or Mike, but I'm also happy to answer any questions that you have here to finish up the day. Yes, sir.

Thanks so much for the day. We really appreciate it. I think about these Investor Days, they happen every 3 years, and it's a good chance for us to sort of think about the business longer term with development. I think you talked a lot about sort of the '26 interest costs, so on and so forth. But I guess I was just more curious on the back of that, right, as you get into '27, as you get into '28. Just any early indications of what are some of the tailwinds that you may see on the back of all that, right? Maybe interest cost is less of a headwind, maybe it's more NOI. Just how do you think a little bit more about -- if we're thinking about 3 years as opposed to sort of the '26 picture?

Well, I think that the leasing, right, we talked about getting to 91% by the end of '27. It's going to be not a straight line. And when we get there, right, that's when that run rate is going to hit in. So that's going to be -- I mean that '28, right, is going to be better than '27 because it's going to have a full year of that. We also have the development that we have consistently coming online over time. So I think we will continue to have positive growth from these developments, not only in '26, which we talked about from Binney Street and 1050. '27, I think 360 is going to start. '28, we've got 121 Broadway. And then we've got 725 12th, and then we've got 343 Madison. So the idea is for us every year to right have development hitting. I do think on an interest expense side, we're going to continue to need to be creative in figuring out how to refinance debt without having too much of a mark-to-market up because, look, rates were low for a really long time, and we took advantage of it, right? And we borrowed a lot of money at 3%. So that is something that every year, we're going to have $1 billion coming due that is somewhere between 3% and 4%. And depending on where interest rates are, we're going to have to deal with that. And we may use more floating that will help. We may use convertible debt that will help. We'll continue to be creative around mitigating kind of the risk of that exposure that we have. But I think the real -- the growth in the portfolio occupancy and the development is going to well outstrip kind of that annual headwind that we have from the refinancing activity.

Yes. I would just sort of -- just to put some meat on the carcass. So 2026, we have a full year of almost nothing. In 2027, we have a full year of 290 Binney Street. In 2028, we will have -- be in the lease-up period for the residential that we're doing in Cambridge at 121 and, fingers crossed, New York team, we'll be 100% leased at 360 Park Avenue. Right now, there is 300-plus thousand square feet of available space, assume $100 a square foot, it all falls to the bottom line. We own 2/3 of it, that's $20 million of incremental revenue. 2029, Jake and Pete said, we're going to be bringing online the 725 12th Street. That's a $300-plus million investment. We're talking about an 8% return. That's $24 million of NOI. 2030, 2031, we have $2 billion at the moment of income -- of investment at an 8% return. That's $160 million from 343 Madison Avenue. So each year, this stuff is going to happen. Our folks in D.C. are working on another potential development that would be virtually fully leased. Bryan and Pat have the opportunity potentially to get 171 Dartmouth Street going, that got going in 2026 or '27. It would be online in 2030, '31. So the embedded portfolio opportunities are there for dramatic amounts of incremental revenue regardless of having to do any other external acquisitions. And as Owen has sort of put on everyone's agenda, doing a deal is really important. It's got to be an accretive deal, it's got to be a premier deal, but doing something else is also important. And so we are actively looking for external events. All of this in the context of Mike is saying, we got to maintain the right leverage portfolio, right? So we have to figure out ways to do this in a way that reduces our leverage over time. And he obviously guided you to a 7x EBITDA. If we do some more things, we might not get there quite as quickly, but we are going to get there.

Yes. And just -- I mean, also, I would just add to what Mike and Doug are talking about, just bigger picture overlay. I mean we've participated in a sector that has been, shall we just say, very out of favor for the last 5 years. And one of the reasons we're so excited at the moment is for the first time in a very long time, we think the tailwinds that were going to benefit us certainly outweigh any headwinds that remain in front of us. So what do I mean by that? Well, that slide I showed you about development, when have we ever had an environment where there's been virtually 0 office development? And again, given that 50 million square feet that we own, we're going to see rental growth. I mean we're already seeing it in a big way in our tight markets like Midtown Manhattan and the Back Bay, and I think that's just going to spread around. And because you're just -- there are going to be a handful of developments that we and others come up with, but you're not going to have wholesale development. So this is going to be a huge plus for our business. Second, capital is coming back in. If you look at all of the private market data on office real estate, I mean the volumes of capital that are coming back into office is very strong. And we're seeing it also in the public world. We've had some nice share price movements of our peers. So clearly, some capital on the public side is also coming back into office real estate. And that's going to help us accomplish our goals because a lot of our goals are selling assets. And the better prices we get, the better we're going to do. And then, look, I'm not very confident that the long-term rate is going to come down, but I think the short term -- the Fed funds rate is going to come down. It's either going to be short term or it's going to be related to a new Fed chair. And when the short rate comes down, we've got floating rate debt, that's a direct benefit. The other thing we learned is many of our clients, maybe they don't have a lot of debt, they fund themselves short or shorter than we do. And so when rates are lower, that means corporate health is better. And when corporate health is better, that helps our leasing. So again, these are a lot of very positive factors I think that are going to help us, not only in the next couple of years, but over the longer term.

And I'd just make one other comment about -- the question was asked earlier today about the NAV. The one thing about 343 Madison that I think you need to appreciate is that we have an unusually low basis in our land. And we're buying the job in 2025, okay? The next building on Madison Avenue, the next building on Park Avenue, the next building on Lexington Avenue, the next building on Fifth Avenue, none of which have started yet, have a significantly higher land basis and they haven't started buying their buildings yet. So whatever the rents are that we are going to be able to achieve to get to our return, unless interest rates go to 3% again and all of the capital says, oh, we're only looking for a 5% cash-on-cash return on development. If that doesn't happen, the rents that everyone else is going to have to achieve in order to get anything comparable to what we are achieving from a return basis is going to be meaningfully higher. I mean, meaningfully. We've said the average rent in the building is in the mid-200s. That number is going to be significantly larger for everyone else. So the value creation associated with this investment is meaningful. And the NAV relative to other buildings, as Owen said, it's in a different stratosphere because the rents associated with the in-place income in a building in Manhattan are very different. And the other really important characteristic of the cash flows in these new developments is that it's an NOI cash flow, and it's a cash, cash flow. It's not an NOI cash flow with a CapEx associated with it for every single year where you have to do re-leasing because if you look at them, the "cash flow" from a new investment at 590 Madison, which has a rollover, a consistent rollover year in and year out, and you reduce the cash flow by the cost of those CapEx, tenant inducements, free rents, brokerage commissions, it takes off hundreds of basis points of return. When this building is brought into line in 2030 and '31, you will not see any cash flow degradation for 10 to 15 to 20 years, right? It's just a different profile of cash flow, which changes the whole mentality associated with how you value it from an NAV basis.

John?

One of the items that seem incrementally new or different, correct me if I'm wrong, is taking more of a merchant builder approach to multifamily. But the benefits of multifamily is it's not as cash flow intensive. It does provide more consistent earnings growth, which is one of your objectives. So can you just discuss if that has been a change or a pivot in your strategy and the weighting the benefits of keeping versus selling multifamily?

John, it's a good observation. I don't think it's a change. So I'll give you some history. Rich went through a little bit of this. The first residential project we built was The Avenue, which is behind 2200 Penn. And after we delivered that, we built it, we actually sold it and made a handsome profit. I can't remember, $100 million plus, it was on Rich's slide. So then we got to The Avant, which was the next one we built, and we actually sold that, too. And then what happened was interest rates shot up and the cap rates -- I mean these assets got sold with a -- Avenue was like a 4.5% and Avant was like a 5% or 5.1% cap. So then interest rates shot up and we built some more buildings, interest rates shot up. And so now cap rates were way into the 5s. So we said, look, these assets are our bank. We are going to be merchant with them, but this isn't the right time to sell them for two reasons. One, cap rates were high. And second, the income streams from these assets were growing faster than our office portfolio. So we wanted to capture that. So fast forward to today, that growth is still pretty strong. So we hate to give that up. But the cap rates now are in the 4s, maybe as high as 5%. So they've definitely come back down. And we're also at a point, given what we've all talked about today with the 343 funding need and the need to deleverage, we think now is the time to monetize those. So it's not a change. I do think one thing that is a change is that in the past, we actually would fund 100% of these developments and we're -- the change that we've made is we're now using partners on a more capital-light 80-20 or 50-50 kind of basis. Alex?

Just a question on development. Obviously, there's the Dock 72. There's like a complicated one like the Platform 16. I think you still have like Back Bay Station or one of the -- that's the project there. But there have been some complicated things that you guys have taken on that are like generational-type projects. In addition, then you have like the thing in Jersey or the Oakland deal. So my question is, if we think about sort of a new BXP and development, trying to prune or focus development, are we going to see less of those and more -- not that you can find a 343 every day, but more 343 types and less of those other types? Or are you guys going to still tackle those sort of either longer infrastructure projects or like the Jersey apartment one that's sort of just a fee deal?

Yes. I think what you'll see from us on the development side is the primary focus will be hopefully more 343-like developments that would be premier workplace in the CBD in our core markets. That's what we want to do. And then second, you will see a fair amount of housing development and probably a little bit of an acceleration of it. And that will be an acceleration in terms of the units under construction, but not necessarily our capital investment because we intend to do these capital light. And those may have a more geographic spread because one of the things that we're doing with our residential capabilities, we're monetizing our land. Rich went through the 17 Hartwell example. That was a tremendous example of how we took a legacy BXP building and created a lot of value through residential. We've got this going on in suburban Virginia right now at Worldgate. So we are going to build an apartment complex there. We're going to find an 80% partner. So these won't necessarily be in CBD buildings, but they're going to be associated with land holdings that we have because we're trying to monetize that land.

And I think we'll generate some fee income off of those residential opportunities that don't exist today. So you could see our fee income stream, which is not huge. It's about $40 million a year. But if we do a private equity deal on 343, and if we do some of these residential developments with partners, I think that we will continue to be able to recharge what's rolling off as we complete developments but also likely increase it a little bit.

Yes. Yes, In the back.

Can you talk about leasing spreads and how they'll impact the increase in cash flow going forward? I think in that $32 million quarterly estimate, did that include any benefit from leasing spread? Okay.

No, there was 0 there. So what we sort of said was, yes, on average, there is an incremental uptick in the sort of same-store from a cash basis, which means there's a larger one on a gross FFO basis because generally, we have bumps on an annualized basis in most of our leases. But we've got some negative downside on the West Coast right now. And so we sort of took a very conservative approach and said, we're going to ignore that, right? We're just going to -- we're going to assume that's not going to happen. So anything that happens from a same-store leasing spread basis that will be incrementally better. I don't think it's going to be meaningful in 2026 or 2027 on a "total portfolio" basis that you should sort of be modeling into your numbers.

Okay. Any other questions? All right. Well, I think that's a wrap. Thank you all very much for going the distance with us. Now importantly, we're getting to the fun part of the day. We're going to all meet for cocktails at Coco's, which is on the 37th floor at the GM Building. And the event starts, it's a beautiful view and it's a beautiful night, so it's going to be spectacular. The event starts at 5:30. And bring your name badge because that's your access. Anyway, thank you again.

Thanks.

Yes.