BXP, Inc. BofA NY Global Real Estate Conference 2026

Great. Jana, thank you for having us. A couple opening things from me, which will suggest to you what our priorities are. A year ago this month, we had our investor day, and we outlined three execution priorities for the company: leasing space, selling assets, and advancing our developments. I just want to give a little bit of a report. I want to give a report card to all of you on how we're doing. On leasing, the first two quarters of this year, we leased 3 million square feet of space. This quarter, we're at about 950 so far, so that's going very well. Our occupancy at the end of the second quarter was 88.4%, and we gave you a target or a goal of 89% for year-end 2026, so we're well on our way.

All of our major markets are very strong in terms of leasing, and they're all improved over where they were a year ago. We have a high degree of confidence in our continued success in leasing, giving our strong pipeline. Sales, we're also doing great. We have closed $1.3 billion in sales. We have $200 million of additional sales under contract. One of those deals, which is about half of the $200 million, we think, is going to close this week. If all that gets done, we'll be at $1.5 billion. We have another $400 million that's in the market. Our goal, as you might recall, for a three-year period of time ending last September, was $1.9 billion, so we're well on our way to accomplishing our goals.

As a reminder, a significant component of our asset sales are land and apartments that we're selling at low cap rates, so the sales activity is less dilutive than selling office buildings at higher cap rates. Lastly, we've had a lot of excitement and success in our development pipeline. We have in the pipeline right now about 3.5 million square feet and about $3.2 billion of BXP investment. This is reasonably consistent to levels that we carried even before COVID. We announced recently the delivery of 290 Binney Street in Cambridge, which is 100% leased to AstraZeneca. This is a very large project that we sold a 45% interest in.

We delivered that project at an 8.9% development yield on cost, which is very high because of our execution, the savings we accomplished in the development, and also the sell down that we did. We have a major project going here in New York, as you know, 343 Madison. It's $2 billion. If you walk by the site, you'll see steel coming out of the ground. There's a couple of tower cranes up. We're now 56% leased. We launched this spec 13 months ago, and we have a letter of intent with another firm to take the bottom five floors. If we get that done, we'll be at 70% pre-leased after only 13 or 14 months. We also signed a 320,000 sq ft lease with Boston Dynamics on an empty building that we had in Waltham, Mass. So we've added that to the development pipeline.

Boston Dynamics is a hard tech company, so this is a great win for us. We have two buildings, one of which is under construction in D.C. and one we've committed to do. By the way, these are back-ended developments. We're not buying sites and taking risk. We're pre-leasing these developments before we even buy the real estate. We have a third one that is well along, although we haven't announced it yet. Anyway, if we continue down this path and we continue to have this success, we think we will accomplish our ultimate goals, which are to grow our FFO per share, reduce our leverage, all of which we think will be positive for our share value.

Sure. When we had our call at the end of the second quarter in July, we said we had 1.3 million sq ft of "active leases under negotiation." That number, as of today, is 1.8 million sq ft. Of that 1.8, 950, as Owen said, has been executed. To break those numbers down a little bit more, about 400,000 sq ft of that 1.8 is vacant space. When we lease vacant space, it all has flow through to the bottom line, and that's where we gain from an occupancy perspective. About 250,000 sq ft of that 1.8 is 2026 and 2027 expirations, so that's the renewal conversations that we're having. 170,000 sq ft is part of the 343. So we've executed our third lease at 343, which was a two-floor transaction in the lower stack of the building.

That is 55,000 sq ft, and as Owen said, we have another 120,000 sq ft client that is looking at another portion of that lower stack of the building. That means the rest of the space are deals that we are doing on leases that are 2028, 2029, and out to 2030, early renewals or takedowns of space that are known expirations. As an example, Owen said we are doing these two transactions in Washington, D.C. The first one is a building called 725 12th Street. That building is anchored by McDermott Will & Schulte. McDermott Will & Schulte is moving out of a building that we own called 500 North Capital. We have now backfilled 100% of the space that they are moving out of with Google, who is going to be moving into that building for 220,000 sq ft as soon as they move out.

We are actually getting them to move out of a few floors early, and then they are going to be moving into the rest of that space in 2028, when McDermott moves out of that space. Most of our activity on a going forward basis are going to be leases associated with 2028, 2029, and 2030. From an overall perspective, Midtown is so tight for us that we have very little left to do in our existing portfolio. In our Midtown East portfolio, we have a floor at 510 Madison, which I believe you all visited yesterday, where we have leased a tremendous amount of space. We have a floor at 599 Lex. We have no space at the General Motors building. We have no space at 601 Lex. We have no space at 399 Park until C.V. Starr moves out when they relocate over to 343 at the beginning of 2029.

In San Francisco, we have been highly successful leasing our space at 680 Folsom Street, where we had almost 300,000 sq ft of availability at the beginning of 2025. There, rents are starting to accelerate like they are in Manhattan. Everyone talks about the quote, unquote, "frothiness of the Park Avenue submarket," where rents are increasing at significant rates. As an example, we were leasing space at 510 Madison at the top of the building at $125 a sq ft a year ago. Now we are asking $175 to $200 a sq ft. That kind of an increase. At 680 Folsom Street, we were doing transactions in the mid-60s a year ago, and now we are doing transactions in the mid-80s. That is a market that has a 25% availability rate still.

Yet that submarket has gotten strong enough where we as an organization have been able to start to push on the economics. We are also starting our first round, believe it or not, of lease rollover at Salesforce Tower. The building was leased up between 2014 and 2016, and we have a 2027 and a 2028 expiration. In both of those cases, we expect a cash ending rate versus the new rate to be 30%-50% higher. We are going to have a roll-up of between 30% and 50%. Finally, in our Boston and our D.C. portfolios in Northern Virginia, we are almost 98% occupied and leased, and we are now working on 2028 and 2029 expirations. We have one available floor coming due in 2027 in a portfolio of about 4 million sq ft.

In Boston, we are doing all-time high rents in our Back Bay portfolio at 200 Clarendon Street and 888 Boylston Street in the Prudential Tower, where again, we are virtually fully leased. It is a very strong picture across the entire portfolio.