Good day and thank you for standing by. Welcome to BXP's Third Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please be advised that today's conference call is being recorded. I would now like to hand the conference call over to your first speaker, Helen Han, Vice President of Investor Relations. Please go ahead.

Good morning and welcome to BXP's third quarter 2024 earnings conference call. The press release and supplemental package were distributed last night, and furnished on Form 8-K. In the supplemental package, BXP has reconciled all non-GAAP financial measures to the most directly comparable GAAP measure in accordance with Reg G. If you did not receive a copy, these documents are available in the Investors section of our website at investors.bxp.com. A webcast of this call will be available for 12 months. At this time, we would like to inform you that certain statements made during this conference call, which are not historical, may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Although BXP believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, it can give no assurance that expectations will be attained. Factors and risks that could cause actual results to differ materially from those expressed or implied by forward-looking statements were detailed in yesterday's press release and from time-to-time in BXP's filings with the SEC. BXP does not undertake a duty to update any forward-looking statements. I'd like to welcome Owen Thomas, Chairman and Chief Executive Officer; Doug Linde, President; and Mike LaBelle, Chief Financial Officer. During the Q&A portion of our call, Ray Ritchie, Senior Executive Vice President, and our regional management teams will be available to address any questions. We ask that those of you participating in the Q&A portion of the call to please limit yourself to only one question. If you have an additional clarity or follow-up, please feel free to rejoin the queue. I would now like to turn the call over to Owen Thomas for his formal remarks.

Thank you, Helen and good morning everyone. Our performance in the third quarter demonstrated BXP's continued resilience and provided evidence of property and capital market recovery. Our FFO per share was $0.01 above our forecast and in line with market consensus for the third quarter. We completed over 1.1 million square feet of leasing in the quarter, 5% greater than the third quarter of 2023. And for the first three quarters of 2024, our leasing volume was 25% more than levels we achieved in the first three quarters of last year. Weighted average term for office leases signed this past quarter remained long at 7.2 years and we continue to receive awards for our industry-leading work in sustainability. In just the last quarter, Time Magazine and Statista named BXP one of the World's Most Sustainable Companies and NAREIT awarded BXP the Sustainable Design Impact Award for our 140 Kendrick Building A redevelopment project. Now, moving to the economic and operating environment. We believe the most important market forces for BXP, that being interest rates, corporate earnings, return to the office behavior, outperformance of premier workplaces, and valuation in the public and private markets are all currently working in our favor, serving as a tailwind for BXP's performance. The Federal Reserve cut the Fed funds rate 50 basis points at its most recent September meeting and has signaled for two more 25 basis point cuts in 2024 and additional reductions in 2025. The most recently released inflation and GDP growth economic data has signaled the economy is possibly stronger than previously believed and put into question the magnitude and timing of additional Fed funds rate cuts. No matter how this debate resolves itself, the facts are short-term interest rates are coming down, which is very positive for real estate valuations as well as corporate earnings growth, another important driver for BXP's performance given its correlation to leasing activity. After remaining flat for all of 2023, S&P 500 earnings as a proxy for corporate health, are expected to grow 9.9% in 2024. As mentioned before, companies with earnings growth are much more likely to invest, hire, and procure space as demonstrated in BXP's growing leasing volumes this year. We do not see evidence of a looming recession in the decision-making of our clients. While it is true that long-term interest rates, driven more by market forces than Fed behavior have recently been rising, many corporations, particularly smaller ones, use floating rate and shorter-term financing, which are becoming less expensive. Return to office behaviors are clearly improving across the cities where we operate. It has been highly publicized that Amazon is requiring all workers, including support staff to return to the office five days a week starting December 1. Given Amazon's scale and industry presence, this decision could be a harbinger for the future policies of other technology companies. Dell, Salesforce, Starbucks, and other companies have recently announced more stringent in-office work requirements for their employees. KPMG completed a survey this past summer of 1,300 CEOs regarding in-person work policies. 84% of the CEOs believe there will be a full return to office work at their companies within three years, up from 64% of those surveyed just one year ago. The reasons cited for the increase were concerns about diminished collaboration, innovation, and productivity, inadequate supervision and training for younger employees, and the cost of maintaining vacant offices. BXP competes primarily in the premier workplace segment of the office sector, which continues to demonstrate material outperformance. Premier workplaces are defined in CBR's research as the highest quality 6.5% of buildings, representing 13% of total space in our five CBD markets. Direct vacancy for premier workplaces is 13.2% versus 18.7% for the broader market. Likewise, net absorption for premier workplaces has been a positive 6.5 million square feet over the last three years versus a negative 16.7 million square feet for the broader market. Asking rents for premier workplaces are 50% higher than the broader market, a consistent gap from prior quarters. This outperformance is evident in BXP's portfolio where approximately 90% of our NOI comes from assets located in CBDs that are predominantly premier workplaces. These CBD assets are 90.1% occupied and 92.1% leased as of the end of the third quarter. Lastly, from a timing perspective, valuation changes in the public real estate industry, which are determined by daily trading, lead valuation changes in the private market, which are largely appraisal based. In the first three quarters of 2024, publicly-traded office companies generated a return of 30%. While in the private market, as measured by the NCREIF Index, which is the best proxy for unleveraged private market values, office returns were a negative 7% over the same period. In other words, public markets are trading higher based on expectations of a recovery in the office sector, while the private market appraisal-based marks are still dropping in an attempt to catch up to current market conditions. As a result, BXP has the opportunity to make increasingly accretive private market investments, both in acquisitions and in selective developments that underwrite to yield premiums versus pre-pandemic levels. Regarding the real estate private equity capital markets, office sales volume in the third quarter provided evidence of a pickup in activity. Specifically, volume for significant U.S. office sales was $8.2 billion, 15% greater than the second quarter of 2024 and 32% above the third quarter of last year. Lower short-term interest rates, increased leasing activity for certain assets and locations, and better access to debt financing were the drivers. An important change in the environment has been the increasing availability of debt financing at scale for office assets in the CMBS market with relatively attractive pricing. Very recent examples of CMBS execution include a $3.5 billion 57% loan-to-value five-year refinancing for Rockefeller Center at a fixed rate of 6.2% and a $750 million, 43% loan-to-value five-year refinancing of 277 Park Avenue at a fixed rate of 7%. Office sales this past quarter for assets with comparability to BXP's portfolio include 730/750 Main Street, a fully leased 219,000 square foot multi-use building in the Kendall Center District of Cambridge sold for $362 million or $1,650 a square foot and a 5.7% initial cap rate. A leasehold interest was conveyed from the landowner to a private life science real estate owner and developer. In Santa Monica, 2220 Colorado Avenue, a fully leased 225,000 square foot office building sold for $185 million or $819 a square foot and a 7.1% initial cap rate. A pension adviser was the seller and a fund manager of the buyer. 799 Broadway, a 177,000 square foot new office building located in Midtown South is under contract to sell for $255 million or $1,400 a square foot and a 5.3% initial cap rate. The building is 71% leased and the yield is estimated to be approximately 7% upon stabilization. A private REIT sold the building to a European family office. Moving to BXP's capital allocation activities. We remain active in pursuing acquisitions from both real estate owners and lenders. Our pipeline of potential opportunities is growing, including building and node acquisitions, sites with near-term pre-leasing potential, and new residential developments. No agreements are imminent, but we are encouraged by the activity. We are in active negotiations for the disposition of three non-income-producing sites, which, if successful, should close in 2025 and generate over $70 million of proceeds. For our development pipeline, we delivered into service 180 CityPoint, a 329,000 square foot lab building, which is 43% leased located in our CityPoint Park in Waltham. Though initial leasing completed exceeded our underwriting, the market softened before the asset was fully leased. The opening of Skymark, our 508-unit luxury residential tower development at Reston Town Center, continues to go well, having leased 35% of the units at the base of the building and we believe we are on track to achieve our underwriting in terms of rents and schedule. We have been able to accelerate the completion of 300 Binney Street, a fully leased 236,000 square foot lab redevelopment in Kendall Center in Cambridge, and we will deliver the project to our client and into service in the fourth quarter. We continue to push forward with several residential projects, primarily on land we control that are being entitled and designed and for which we intend to partially fund with joint venture equity capital. Lastly, we broke ground on the Grand Central Madison Concourse Access phase of 343 Madison Avenue, located two blocks south of JPMorgan's new headquarters building and one block north of One Vanderbilt. 343 Madison competes with the Park Avenue submarket of New York City, which, given its access to Grand Central Terminal one-stop commute is under 8% vacant with no block of direct space over 100,000 square feet available and is arguably the strongest office submarket in the United States. 343 Madison, which BXP has been working on for over 10 years, is the only fully entitled ready-to-commence workplace development located in the core of Midtown and we are having constructive conversations with a handful of potential anchor clients. When complete, the building will comprise 942,000 square feet and includes state-of-the-art sustainability features as well as direct escalator access into Grand Central Terminal. We hope to launch this approximately $2 billion project next year, where as a reminder, BXP owns a 55% interest. BXP continues to execute a significant development pipeline with nine office, lab, retail and residential projects underway as of the end of the third quarter, which we expect will contribute to BXP's external FFO per share growth over time. These projects aggregate approximately 2.7 million square feet and $2.1 billion of BXP investment with $1 billion remaining to be funded. So, in conclusion, BXP continues to leverage its key strengths, which are our commitment to premier workplaces and our clients as many competitors disinvest from the office sector; a strong balance sheet with ready access to capital in the public and private debt and equity markets; and one of the highest quality portfolios of premier workplaces in the U.S. assembled over several decades of intentional development, acquisitions, and dispositions. BXP continues to display resilience with a growing leasing pipeline as well as stability in FFO per share and dividend level, and we are well-positioned to continue to gain market share in both assets and clients, while benefiting from a constructive environment of lower interest rates, higher corporate earnings growth, more workers returning to their offices, continued outperformance of the premier workplace sector, and a very competitive cost of capital. Over to Doug.

Good morning, everybody. So, Owen noted that our leasing in 2024 through the end of the third quarter is 25% higher than 2023. And during this period, we have completed 3.3 million square feet of signed leases. Post Q3, our active pipeline of leases under documentation sits at 1.53 million square feet as compared to 1.39 million square feet post the second quarter. We've done about 315,000 square feet of that pool since October 1st, executed leases. If we execute most of the remaining leases during the fourth quarter, we will end the year at over 4.5 million square feet of transactions. Our January 2024 guidance assumed 3.5 million square feet. Exclusive of our leases in documentation, we also have additional transactions under discussion totaling just over 1.5 million square feet in the pipeline that will seed our 2025 activity, about 50% of that involves currently vacant space. As of September 30th, we have 1.04 million square feet of signed leases on vacant space that has not yet commenced. There is now a 210 basis point difference between our occupied space and our leased space. No doubt the analyst community is looking keenly towards 2025 and 2026 occupancy. We will provide our occupancy guidance for 2025 on our next call. However, we can provide the following inputs as you think about your own models. Our Q4 2024 and full year 2025 expirations totaled 3.7 million square feet. We have signed leases that we will recognize revenue on of 476,000 square feet during the fourth quarter of 2024 and 483,000 square feet for 2025, totaling 959,000, which creates an uncovered exposure, if you will, of 2.74 million square feet. Our pipeline of leases in negotiation covers an additional 305,000 square feet of currently vacant space and 395,000 square feet of renewals, all of this set to commence in 2024 and 2025. Obviously, the remainder involve early renewals with expirations after 2025. This leaves pro forma revenue commencing leasing for the next five quarters of about 2 million square feet for us to be flat for the in-service portfolio. Additional leasing with revenue starting in 2025 will be additive. Each of our regional EVPs are in the process of building their business plans for 2025, and this will be the basis for the total leasing volumes embedded in our guidance when we talk to you next time. If you're wondering about the large known 2024, 2025 expirations, which is often a question we get, the largest are 312,000 square feet at Weston Corporate Center, which has been leased by Biogen, but sublet for use, 200,000 square feet at 1000 Winter Street in Waltham; 350,000 square feet at 200 Fifth Avenue, we own 28% of that, two 70,000 square foot law firm leases at Embarcadero Center, and 260,000 square feet at Reston Corporate Center, which is leased to the GSA. This last building is the site for our next multiphase development in Reston Town Center, and the building will be taken out of service on January 1st, 2025. We also have active developments that will be added to our in-service portfolio in 2025 with availability that is noted in our supplemental materials, 360 Park Avenue South, 651 Gateway, and Reston NXT Phase 2. Our BXP regional teams are spending a lot of energy pursuing alternative uses for our suburban land portfolio, which includes vacant office buildings for which the highest and best use may not be waiting for a recovery in office leasing. We are now deep in a public re-permitting process for 17 Hartwell Avenue in Lexington to allow for 312 multifamily units. A similar process is underway for our site containing two office buildings at World Gate in Herndon, Virginia, where we are working on a rezoning for 359 units in 99 townhomes, and the Shady Grove Office Park in Rockville, Maryland, with the first phase including 360 multifamily units and 136 townhomes. Additional land sites in the Bay Area, Waltham, Northern Virginia, and Northern New Jersey are being actively evaluated. This quarter, we took two buildings out of service that we will work to re-entitle, in Waltham and in Northern Virginia. During our last call, I explained that we would see up to a 40 basis point decline in our occupancy for Q3 due to the addition of our partially leased development at 180 CityPoint, Owen noted that. With a slight reduction in the in-service portfolio, we only experienced a 10 basis point deterioration ending the quarter at 87%. We expect to improve by 20 to 30 basis points during the fourth quarter in spite of the delivery of 103 CityPoint, which is 100% available. This quarter, we completed 74 transactions with 32 lease renewals for 681,000 square feet and 42 with new clients encompassing 427,000 square feet. Activity was concentrated in Boston with more than 58% of our total leasing volumes. We completed 647,000 square feet in Boston, 143,000 square feet in New York, 155,000 square feet in D.C., and 163,000 on the West Coast. 10 clients expanded into 142,000 additional square feet, and we had four contractions totaling 100,000 square feet. The majority of the client expansions this quarter came from our Back Bay financial firms. The only significant contraction in the portfolio came from a tech company downsizing in Waltham, they were about 70,000 square feet and went to 150, and we have re-leased all of the space that they vacated. We continue to see downsizing of our legal firm clients on the West Coast and in D.C., and we experienced one in Embarcadero Center, which was a renewal and downsizing this quarter. We executed only one transaction over 55,000 square feet and two others in excess of 45,000 square feet. Our leasing activity this quarter was very granular. As reported in our supplemental, the mark-to-market of the leases that commenced this quarter, so they may have been signed in 2020 or 2021 or 2022 or 2023, 900,000 square feet was down about 4.5% and the transaction cost averaged $11.83 per year compared to about $11 last quarter. The overall mark-to-market of the starting cash rent on leases executed this quarter of the 1.1 million square feet relative to the previous in-place cash rents was actually up 9% with the primary contribution coming from the Boston area. The starting cash rents on leases we signed during this quarter on second-generation space were up 19% in Boston, 10% in New York and then down 11% in D.C. and 3% on the West Coast. Owen's comments about the state of the economy and the zeitgeist around the importance of in-person work with colleagues is translating into improvements in leasing activity. The level of improvement and the source of the incremental demand continue to vary greatly by market. I would also note that decision-making continues to be slow. And while more transactions are being completed, the process takes time, lots of time. Our views this quarter are pretty consistent with the commentary we provided during 2024. The submarkets with the largest concentration of users from financial institutions, alternative asset managers, professional service organizations, and law firms are showing the most consistent pickup in activity. And as we saw this quarter, in some circumstances, these clients are expanding absorption of space. Concessions are flat and taking market rents have risen during the year. So, if we think about New York City, the sub-8% availability in the Park Avenue submarket is a direct reflection of these users growing and competing for limited blocks of space. We have no availability at 399 Park Avenue or 601 Lexington. When clients need to expand in these buildings, we proactively discuss possible terminations with their neighbors. While 599 Lex has always been not quite Park Avenue, in strong markets like this, the building is one of the first to experience the spillover of Park Avenue tenants that are unable to find space. We are now in lease with a Park Avenue tenant that was unable to grow in its current building for a couple of floors. Our most active building in New York during the quarter was the General Motors Building. We completed 58,000 square feet of transactions, including the addition of a new private equity client and the expansion of another. Our other availability in this market is at 510 Madison, where we are in the middle of an amenity refresh. This building tends to lend itself to smaller financial firms given the 12,000 square foot floor plate. This particular market segment of demand has been slower to make decisions. Year-to-date, leases executed by technology tenants in Manhattan has still been pretty light. We have seen a pickup in activity among technology tenants touring the market, and this is encouraging given our current availability at 360 Park Avenue South and the availability we will have at 200 Fifth Avenue. We are in active conversations with tenants at both buildings, but none have progressed to a lease in negotiation. The most active building in Boston as well as in the entire BXP portfolio during the quarter was 200 Clarendon Street. We completed more than 460,000 square feet of leases. Virtually all the leases were with existing clients in the alternative asset management industry and 50% of those clients added additional space. We also completed over 116,000 square feet of leasing in our Boston Urban Edge portfolio. This was made up of eight separate transactions and seven were with new clients for BXP. Our portfolio is uniquely positioned both in terms of quality and availability of capital for investment in new tenant installations. Here, the demand came from a national retailer, a few life science companies with office requirements, a small technology firm, and a fund manager. We didn't execute any leases in our new life science developments this quarter. Life science clients in Greater Boston continue to display very little urgency about any potential new requirements or relocations. We have had tours from some larger users, but the requirements are for late 2026 and 2027 occupancy. Year-to-date, there have been a handful of leases signed on shelf space that total about 300,000 square feet in the markets outside of Cambridge and Boston. Our Reston portfolio was responsible for 55% of our executed leases during the quarter in the D.C. region. Leasing activity and tenant demand growth continues to come primarily from two industry areas, cybersecurity and defense contracting. This quarter, we had a growing cyber firm more than double its square footage. This client signed its initial lease in Reston Town Center for 9,000 square feet in 2020 and has grown six-fold in the last four years. One of the great advantages of BXP's large holdings in Reston is our ability to accommodate the growth of our clients. We saw a pickup of smaller requirements in our CBD D.C. portfolio this quarter, which was good news. We had two clients expand, one at 2200 Penn and another at Capital Gallery and completed leases with two new customers at 1330 Connecticut Avenue. The district's private sector tenant demand continues to be dominated by the legal industry. Many of these potential law firm clients are not satisfied with the existing inventory, either due to the product quality, condition, or the asset's financial condition. While in almost every case, the law firm renewal or relocation is resulting in a smaller requirement, which is leading to negative absorption, these firms prefer to be in the top refurbished amenity-rich, well-capitalized buildings, which is creating a tight micro market. There are limited opportunities in the market and no appetite from traditional lenders to finance any new construction, which has traditionally been the outlet for law firm lease expirations. Our availability at 2200 Penn and 901 New York Avenue will fare well, and we are actually in lease documentation for a late 2026 known expiration at 2200 Penn today. The San Francisco CBD also continues to act as the financial center of the West Coast with its own set of asset managers, including private equity, venture, hedge funds, and specialized fund managers and their financial and legal advisers. This is the source of the bulk of the transactions in the market today from a leasing perspective. Tour activity from these non-tech clients has improved during the year. On a comparative basis, San Francisco is seeing much more demand in 2024 than it did in 2023. There continue to be lots of small clients actively looking for space, and we are seeing these deals at 535 Mission and Embarcadero Center. We have completed or in negotiations on five leases totaling about 40,000 square feet at 535 Mission. This will cover a third of the availability of the building, but we still have another 80,000 square feet to go. At Embarcadero Center, we are in discussions with a number of existing and potentially relocating law firms. In each case, the requirement is a downsizing relative to the current footprint. We will retain the majority of our clients, albeit with space reductions. We are adding other new customers, but the transaction sizes are small, so gaining occupancy takes time. Additional lease reductions from larger tenants upon lease expiration in the market, JPMorgan is the latest, which is stemming from their acquisition of First Republic, continue to mute the positive demand emanating from the AI organizations that continue to look for additional space. During the quarter, the market got the long-awaited announcement of OpenAI's 300,000 square foot expansion in Mission Bay. And it's great that Airbnb renewed their headquarters at 888 Brannon, but expansion requirements from large technology tenants are still sparse in San Francisco. Tenant tour activity is improving at our Mountain View research R&D buildings where we have about 215,000 square feet of vacancy and it's uniquely attractive product. We are in lease for 26,000 square feet with a healthcare diagnostics company for a vacant building. We completed a renewal with an automotive company and recently have issued a multiple full building proposal. This is a significant improvement from last year and from last quarter. These buildings are designed for companies that are making some kind of device, be it a car sensor, a photovoltaic panel or a medical device. They don't compete with the large multi-storey office product that has flooded the market. In summary, 2024 is shaping up to be a better-than-expected year relative to overall leasing at BXP. Leasing in our development properties continues to lag, but these are some of the highest quality workplaces in their prospective markets, and they will lease. We may not be in a clear positive absorption market, but demand continues to grow, and we will continue to gain market share. Mike?

Excellent. Thank you, Doug and good morning everybody. I'm going to start with a few comments on the debt markets, and then I'll plan to cover the details of our third quarter performance and the changes to our 2024 earnings guidance as well as provide some insight into several of the moving pieces that you should be aware of for 2025. We completed multiple transactions this quarter and continue to have strong access to the debt markets. This quarter, we exercised our right to extend our $334 million mortgage loan secured by 100 Causeway Street in Boston for an additional year at SOFR plus 148 basis points. We also extended $300 million of mortgage financing for Santa Monica Business Park that was scheduled to mature in July 2025 at attractive terms. We bifurcated the loan into a $100 million unsecured term loan and a $200 million mortgage loan. The unsecured loan is for one year with three one-year extensions, and we reduced the pricing at closing to SOFR plus 105 basis points, and the $200 million mortgage loan will be priced at SOFR plus 160 basis points and matures in 2028. The secured debt markets have shown meaningful improvement this quarter for high-quality, well-leased office buildings at leverage points of 50% or less. Credit spreads have compressed, and there is significantly more liquidity in the CMBS markets for both conduit and SASB executions. The SASB market, which is where most large loans in excess of $500 million are financed, was nonexistent in 2023. It reopened in early 2024, but with pricing for the AAA tranches at spreads in the low 200s. More recently, AAA spreads have improved into the mid-100s, which results in a significant improvement in overall pricing and conduit pricing can be even tighter. This trend is a strong signal of improved liquidity in the sector, while the financing market remains challenged for buildings with vacancy, short weighted average lease terms or higher leverage. We have several mortgage financings that are part of our 2025 capital plan, and we plan to take advantage of the improved conditions in the market and extend term. These deals include our $250 million loan for Marriott's new headquarters building in Bethesda and two mortgages totaling $487 million on our Hub on Causeway development in Boston. We own a 50% interest in each of these assets. In the unsecured market, we issued $850 million of 10-year bonds in late August at a 5.75% coupon. We're holding the cash proceeds pending repayment of an $850 million bond that is expiring in January 2025. As we described in our issuance press release in August, we reduced our 2024 FFO guidance by $0.02 per share to account for the incremental net interest expense associated with this bond issuance that was not in our prior earnings guidance. Now, turning to our earnings results for the quarter. We announced third quarter funds from operations of $1.81 per share, that's $0.01 ahead of the midpoint of our guidance as adjusted for our recent bond deal. The primary driver behind our earnings beat is from lower-than-projected G&A expenses. Our portfolio performed in line with our expectations for the quarter. Doug described the improvement in our leasing activity, both in signed leases and in our pipeline. As we get into the third and fourth quarters of the year, most of this activity will not have a revenue impact in 2024 due to the lag between signing a lease and achieving occupancy and revenue recognition. Renewals have an immediate impact, but we generally know who is renewing in advance and the revenue is included in our forecast. My point is that you should not be surprised that our portfolio performance is closely aligned with our 2024 forecast this late in the year. For the full year 2024, we're narrowing our guidance range for FFO to $7.09 to $7.11 per share. Adjusted for the $0.02 of dilution from our bond deal, our new range maintains the midpoint of our updated guidance. While we will provide full guidance for 2025 in January, there are a couple of items where we have seen variations in a number of the 2025 models from the analyst community that you should consider. First is interest income, where we project lower cash balances and interest rates next year. Since our bond offering in August, we have been holding $850 million in cash that we are going to utilize in January 2025 for the payoff of our expiring bond of the same size. We're also using cash balances in combination with operating cash flow to fund our developments. We expect our average cash holdings to be approximately $800 million lower in 2025 than they were in 2024. We expect our interest expense will be flat to modestly lower next year from the burn-off of fair value interest expense and the impact of lower SOFR rates on our floating rate debt portfolio. We also will be vacating Reston Corporate Center, which is the project Doug described in his comments. We will be taking these two older low-rise buildings totaling 260,000 square feet out of service on January 1st, 2025, when the full building lease expires. We have entitlements to build over 2 million square feet of mixed-use commercial and multifamily residential on the site as the next phase of our incredibly successful Reston Town Center. This will lead to a significant increase in density where we expect to create incremental value and earnings over time. From our development pipeline, we will have a full year of contribution from delivering 300 Binney Street this quarter and the Dick's House of Sports store we delivered in the second quarter. We will also have incremental income from the completion and lease-up of our Skymark Residential development in Reston, where our ownership is 20%. Overall, we had a solid quarter with a continuation of strong leasing momentum and our volumes year-to-date up 25% over last year. We modestly beat our FFO guidance for the quarter and maintained our full year earnings expectations. That completes our formal remarks. Operator, can you open the line for questions?

Thank you sir. Please hold while I open the line for questions.

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

So, I'll give a general statement, and then I'll let Rod and Bryan give their perspectives on San Francisco and the Boston suburbs in particular. In general, we need to see more technology and life science demand come back to the markets, which means we need to see both company formations with capital, be it private or public, right? A lot of biotech companies are sort of hoping to go public, but aren't able to go public. And then we need to sort of see the new ideas generated into new jobs and therefore, new kinds of businesses being formed. And that has really not been part of the sort of demand picture in either market in 2020, 2021, 2022, 2023, 2024. It's been sort of more of a retrenching of large tech and I would say, a slight downsizing from both technology and life science.

Yes. Thanks, Nick. Good morning Nick. I would just add to Doug's comment that I think what needs to happen, at least in San Francisco, the demand has picked up certainly. So, as you heard, we've got good activity from multiple sectors and the traditional tenants still dominate, but there's plenty of technology companies that are out in the market. But I think what needs to happen before you're going to see some meaningful change in some of the statistics is going to be a burn off of the sublease availability. That still is an overhang. There's about 8.2 million square feet of sublease space. I would say that the best space has been spoken for. There's still some buildings that are out there, but that's still causing us to compete with sublease space, which is difficult. So I think before you're going to see some changes in the direct vacancy and particularly in our buildings, some of those better sublease spaces need to be leased up, which is happening. So it's been happening for the last couple of years.

In Boston, I'd say, first off, no surprise, Doug did an excellent job of underwriting the total market and where we're at. So I encourage you to re-look at those things because it was spot on. I would say with our Urban Edge, and you've heard us say this before, the Urban Edge is much different than, let's say, the 495 Ring Road and then in particular, the P2 corridor, as we call it, between the Pike and Route 2 on I-95 is much different. The theme for us is drastic differences. So there's a drastic difference between the P2 corridor and anything else in the suburbs in terms of activity and also rental rates. And then the other is product. There's a drastic difference between our product at CityPoint, the premier space that all our leadership has talked about today and let's say, the rest of the market. And it's important to note that these markets product is vintage now over 50 years old. And there's a tremendous amount of that, that's dragging down things. But the difference between CityPoint premier office space at 77 CityPoint, 190, 230, 10 and 20 CityPoint is much different. And that includes what we see in Reston, which is the cluster of amenities. And that is the biggest difference that we're seeing. There's drastic differences between product and then also location.

Yeah. Thanks. Good morning. I guess, Owen, you sort of talked about 343 Madison and the work that you're doing there. But also you mentioned the disappointment in not seeing some of the leasing happening at places like 360 Park. So I guess the question is, how are you thinking about the pre-leasing and the risks that you take at 343 Madison to move forward in light of the fact that some of the development has been kind of slower to lease up than you would like?

Yes. I think I'm going to turn it over to Hilary. The big picture answer to your question, Steve, is that north of 42nd Street is primarily a financial services, legal services market and it's very strong and particularly with the access to Grand Central. You go south of 42nd Street, much more tech-driven with the issues that Doug described. But let me turn this over to Hilary.

Thank you, Owen. Hi, Steve. I would just echo what Owen has said, and I would add to that, that there have been several sizable leasing transactions completed in the third quarter in Midtown proper, meaning north of 42nd Street as well as a very large lease that printed post the end of the quarter. So Bloomberg signed a renewal for 1 million square feet. Ares signed a lease for 300,000 square feet. Willkie Farr signed a 315,000 square foot lease. All of these leases were in Midtown proper, and they're all at scale. So there is demand from larger tenants in the marketplace. And I think it's just a question of matching the right demand profile client with the premier workplace that we're planning to build. Very different proposition in Midtown South. The market, as Owen alluded to, is dominated by tech and media tenancy. We are starting to see some more traditional clients poke around in Midtown South as they are figuring out that there's very little high-quality space in Midtown available. But I would say the bulk of that leasing demand continues to be from the more traditional tenant base and tech and media simply have not been adding jobs and space the way that finance and the industries that support it have in Midtown proper.

Good morning. We're trying to figure out the occupancy trajectory going forward. Doug, you gave very helpful building blocks on what's the puts and takes over the next few quarters. But at the end of the day, you mentioned 2 million square feet of leases need to be signed over the next five quarters with commencements in the next five quarters for occupancy to remain flat. And I'm wondering how realistic that is. This year, you're on pace to sign 4.5 million square feet of leases and how much of that is commencing this year?

I can't answer your latter question because I don't know the actual number in terms of all the things that were signed this year, how much has commenced. We are, I would say, at this point, optimistic that we will sign 2-plus million square feet of leases that will have revenue commencing in 2024 and 2025 so that our occupancy will be at a minimum be flat. I'm hoping that when we go through our planning process with our EPs, we're going to see some opportunities that will be better than that. But again, we're not giving guidance for 2025 at the moment.

I recently returned from the West Coast, and I understand your presence there is limited. However, it's a critical topic, and while you've discussed it already, there's significant skepticism about the recent return-to-office mandates, particularly in the tech sector. Earlier this year during our tour, we heard that tech companies aren't using strict measures to bring employees back. Owen, you've mentioned this briefly, and Doug, you highlighted some challenges in San Francisco. Are there lessons we can draw from New York City, or should we avoid comparing New York to the West Coast? The dynamics on the West Coast are different, and it will take several years for tech companies to truly understand their space requirements.

So Jeff, my answer is I do think there is a cultural difference between the business community on the West Coast and the business community in cities like New York and Boston. And there is a differentiation. However, that differentiation, I don't believe, will result in any difference in terms of the utilization of space from the company's perspective. It may reduce the number of days any particular company demands their people come to work. And so we are seeing, as Owen said, a lot of organizations saying whatever we have been doing is no longer working for us. and we need to be more aggressive about asking our associates to be more present more of the time. I believe we will see month after month over the next number of months and years, a continual pick up on the West Coast. And clearly, the companies that are involved in the artificial intelligence industry, large scale have said the speed of which we are needing to do all of the work that's required to be 'on top and a winner means we need space and we need our people to be in that space.' And as that sector of the economy starts to dominate the culture out there, I would hope that we will see an even larger pickup in other companies responding to the need from a talent perspective relative to productivity. And Rod, you may have a different perspective.

I don't have a different perspective. I completely agree. I can tell you that it has picked up. Salesforce, in particular, implemented their policy for getting people back in the office on October 1. They are tracking that data closely with our team at the building. If you were in that building today and sat in the lobby, you would notice a different vibe compared to a year ago. Additionally, I have a small anecdote from the East Bay where I live. The BART system, our light rail train system, has seen changes at the train station I use, which has three parking lots. The third lot, which is the furthest away, has had very few cars for the last few years, but it is now filling up on Tuesdays, Wednesdays, and Thursdays, which didn't happen before. People are going somewhere, and they are heading into the city. I think we are seeing a shift.

Jeff, I'll add one more thing. This is very anecdotal, but in Seattle, we've signed two leases at Madison Center in 2024. Both were from branches of technology companies that returned space early during the pandemic. With their change in return-to-work policies, they needed more space and leased an additional floor at Madison Center in both instances. This doesn’t imply that these companies will require everyone to come back or start layoffs if they don't. We can't predict how that will play out. However, it’s clear that some organizations in the West Coast technology sector have decided that it’s important to have their employees in dedicated spaces and want to provide that space for them.

Thank you. Owen, you mentioned in your comments, public markets leading private markets and maybe alluding to opportunities to invest. So can you maybe give us a sense as to where you think or where you see BXP's capital cost being versus maybe what you think you might make on something like 343 Madison or on investment opportunities you might be getting shown? And if we should really start to think about external growth in 2025?

BXP's look-through cap rate at the current share price is in the mid-6s. Before the pandemic, development yields in New York were around 6%, and now I believe they are significantly higher, which will be our target. Regarding acquisitions, there have been very few transactions in this prime workplace segment, although there were a couple in the last quarter that I mentioned. The circumstances can vary depending on leasing status and ground lease arrangements. It seems that the bid is generally in the high 6% to 7% cap rate range on a stabilized basis. This reflects the current market conditions for acquisitions, with few sellers willing to accept these prices, which explains the limited number of transactions. However, this situation could change. I anticipate that transaction activity might increase in the upcoming quarters due to greater availability of financing, especially in the CMBS market that I mentioned.

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

Our strategy starts with establishing a perimeter, which includes the six markets we operate in, such as Waltham and Reston, which are outside the central business district. This is our overarching approach. However, when it comes to actual investments, we take a more granular, opportunistic view. We assess what is available and what our teams can generate, aiming for investments that present the best risk-return opportunities. While we do consider contributions from various regions to our overall results, our deal-making within the defined perimeter remains opportunistic. Lastly, there are investment opportunities in the West, although they are more difficult to underwrite. For instance, evaluating properties in New York or Boston tends to provide clearer insights into rents and leasing velocity, whereas the West presents challenges, particularly with slower leasing for certain asset types. This does not mean we will avoid pursuing deals in the West, but we recognize the increased complexity in underwriting there.

Great. Thanks. I'm curious if you can give any color just on the Bain renewal in Boston and whether or not they were a potential candidate for that development you've got potential in the Back Bay, 171 Dartmouth. Did you just need maybe more of a commitment in terms of rents or weighted average lease term to maybe justify moving them over to the new development? Just any color there would be helpful.

So I'm not going to comment about what Bain's decision-making process was. Suffice it to say that a new building construction in Boston today probably cost somewhere in the neighborhood of $1,400 to $1,600 a square foot depending on whether or not you want to include a value for land. And if you need a return and Owen described sort of our development expectations, that will create a rent that is materially higher than the rents that are achievable in existing both under construction and recently delivered new buildings in the financial district and the level of rents that we can currently command in the Back Bay. And so I think the timing at the moment for that new development in Boston doesn't really pencil relative to where existing rents are. Now, if the SOFR curve goes from 5.5% to 3% and lending conditions go from 350 to 400 to non-existent over to 150 basis points over and there is some softening in some of the inputs of the building and the building cost comes down, there's probably a different conversation that could happen at some point in the future with a number of tenants in our Back Bay portfolio about wanting to go to the new building at 170 Dartmment Street. And we hope to start that building at some point, but it's not sort of part of the calculus in 2025.

Good morning. I have a question about the D.C. market. You mentioned some positive developments in D.C., which aligns with our observations from our recent visit there. I have two inquiries. First, regarding the rents in D.C., are you seeing them trending upward or downward, especially in the district, considering its challenges over the past decade? Secondly, are tenants open to paying the rents required for new developments, or do you think this market is mostly focused on maximizing space in your existing properties?

Yes. So Alex, thanks for the question. I'm going to answer the first part, and then I'll let Jake Stroman answer the second part. So in the District of Columbia, every lease that we signed has somewhere between a 2.25% and a 3% annual bump. And generally, those leases are at a minimum of 10 years and generally 15 to 20 years. And so if you compound the rents that where we started with those rents, it is almost impossible to have a rent roll up in D.C. on a like building. However, and I'll let Jake describe sort of where the new market might be for rents in new buildings and how that might impact sort of what the opportunity might be for us.

Yes, thank you, Doug. Hello, Alex. It's clear that the demand for premier office space in the district is heavily influenced by the legal sector, as Doug mentioned. There are indeed opportunities available, and we have active prospects in the market seeking high-quality spaces that offer better amenities and prime locations. We believe that there will be chances for BXP to take advantage of these opportunities in the D.C. market.

Hey, Owen, thank you for taking my question. You mentioned earlier that some public office owners, like yourselves, are receiving approval to expand beyond the market. You're trading at a premium to consensus and estimated NAV, but there is also the issue of limited transactions in the market. What are your thoughts on the timing or potential catalysts needed for increased transaction activity? Additionally, how do you view your cost of equity for funding those potential transactions going forward?

Yes, I previously addressed the second question regarding our current look-through cap rate, which is in the mid-6s depending on various models. As for what might ignite new activity, several factors could contribute. First, lower interest rates would definitely be beneficial. Additionally, the reopening of the CMBS market for the office sector is a promising development that could provide buyers with the liquidity needed for acquisitions. This is likely to serve as a catalyst. Lastly, there is a sense of fatigue among sellers. As asset owners with specific business strategies, they may wish to reduce their office exposure, sell certain buildings, and reinvest the capital elsewhere in alignment with their objectives. Ultimately, this will factor into future decisions.

Hi. Good morning everyone. I know you aren't giving 2025 guidance, so you're probably less inclined to talk further out. But with that said, I guess, bigger picture, as you consider occupancy improving, development coming online, in-place debt being refinanced, any comments you can give on kind of the trajectory of FFO? Or could you quantify any of those building blocks?

I just want to say that we are an optimistic group, believing that the markets will continue to recover and that we will gradually increase our occupancy. Our average rent is approximately $80 per square foot, and we anticipate reaching a stabilized occupancy gain of over 400 basis points. This translates to 80 times a 50 million square foot portfolio, meaning every 100 basis points equates to 500,000 square feet. Therefore, we are looking at a significant growth potential in both occupancy and internally. Owen mentioned the possibility of engaging in some external transactions, which we think could be beneficial over the medium to long term, even if they don't yield immediate results. We are positive about our earnings growth in the future. While I may be somewhat of an outlier at BXP concerning long-term interest rates, it's evident that short-term rates are decreasing, which is favorable. I believe this will create a neutral effect for us in the coming years, as we have $1.8 billion in floating rate debt that will decrease. As we refinance, there may be some rise in our interest expenses on the fixed-rate side, but we feel confident about our long-term outlook.

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

The main issue with subleasing is primarily concentrated on the West Coast, especially in San Francisco and Seattle, with a significant drop-off thereafter. In New York City, particularly in our competitive markets, we do not face a sublease problem. Overall, in our portfolio, there are approximately 2 million to 3 million square feet of sublet space that is not currently available on the market. We have had transactions, such as Biogen subletting their space for an extended period and dealings involving the Riverbend space a couple of quarters ago. Additionally, we have a similar situation in Reston, Virginia, with the College Board. Overall, we don't see much competition with our own tenants regarding transactions in our buildings since most of these arrangements were made a long time ago. In the short term, there has been very little new sublet space added to our portfolio.

Yes. Thank you for taking my question. So you talked about the survey for CEOs. I think that something like 83% or 85% see their people coming back five days a week over the next couple of years. I guess just could you sort of square that with what you're seeing real-time sort of on-the-ground conversations? I know some of the tech tenants have been calling their folks back to the office five days a week. And you gave some helpful anecdotes there on the West Coast. But just kind of curious with how we square survey results like that with the reality of what your conversations are yielding.

Sure. When we talk about someone returning to the office five days a week, we have to recognize that they are rarely in the office every day. Back in 2019, our ideal scenario would have been if 80% of the seats in our best building were occupied on any given day. Currently in New York City, we're achieving that level. In Greater Boston and Washington, D.C., where we have been tracking these metrics, we're around 85% to 90% of that occupancy. However, in San Francisco on the West Coast, we're only at about 65% of that level. The data from our buildings shows that across all markets, those who do come into the office are doing so three or more days a week. The individual access logs indicate that when people are coming in, they're doing so quite frequently. The key will be increasing the number of individuals coming in regularly, which will drive more activity within these buildings.

Yes. To add to Doug's points, I have mentioned in previous calls that CEOs are not in favor of remote work. They prefer having employees return to the office but have hesitated due to competition. While remote work is a benefit that many employees desire, it does come at a cost, similar to compensation and other employee benefits. Notably, companies like Amazon, Salesforce, and many start-up AI firms are stating that they can no longer offer this benefit; they need employees back in the office. As these companies make such moves, it may encourage their competitors to follow suit as they all seek talent. Thus, I am not surprised by the survey results, as this aligns with what we hear from our CEO clients. I believe that over time, this issue will gradually resolve itself.

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

So I will let Hilary talk about the tech in New York, and I'll let Rod talk about the tech demand in San Francisco, and you can make your own conclusion. Hi, Dylan, this is Hilary. The tech demand, I would say, really started to perk up a little bit after Labor Day. And I think it was pretty close to coincident with the timing of the interest rate cut. And it just seems like businesses across the board are having an easier time making planning decisions at this point. That having been said, to Doug's point earlier, it is taking people an exceptionally long time to actually get through the process of making a decision about what space they want to take. So OpenAI recently committed to space in the market at the Puck building. There are other tech tenants that are touring in the marketplace, but I think it's too early to say that there is a solid trend toward them increasing the amount of space they're taking. Certainly, as we've been talking to executives amongst tech companies, they're more constructive on back to office and therefore, the amount of space they need. But I think we're still in the process of sorting out what that means for the actual amount of space that's going to be taken in the market, particularly in Midtown South.

I would just add that on the West Coast, in addition to the headlines from the AI companies, there is a greater variety of other technology companies, especially in the valley. I want to highlight the autonomous vehicle industry. We are in discussions with several tenants there, some of whom are already our clients, while others are potential new clients. So, it's not solely about AI.

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

I hope we've been clear that we were going to lose O'Melveny & Myers at Times Square Tower in the third quarter, and that is the only significant change in our occupancy in Manhattan. In fact, our other leasing activity in Manhattan is exceeding expectations. Many of these leases have not begun yet, so they are not reflected in occupancy. However, our buildings in Manhattan, aside from 360 Park Avenue South, are attracting a lot of interest. We have active discussions at buildings like Times Square Tower and 200 Fifth Avenue, as well as significant activity at 599 Lex. We feel very positive about the overall level of transactional demand that is expected for 2024 and 2025 in our Midtown area and hopefully in the Park Avenue South/Midtown South market as well.

Great. Thank you for taking my question. It sounds like you're potentially interested in acquiring more residential and you have some residential projects beginning the entitlement process. Just wondering if you could give us some color on what the playbook is there?

Yes, everything you mentioned is correct. We currently own nearly 2,000 units and have multiple projects on land we control that we are advancing. As Doug mentioned in his remarks, we're exploring additional sites that we previously considered suitable for office space, and we believe these could potentially be re-zoned for residential use. Our approach to residential development will differ from our office and life science strategies. For example, Skymark at Reston Town Center illustrates this; we own and have entitled the site, handled all the development work, and are overseeing the construction with an 80% capital partner. Additionally, we do not lease or manage these properties. Therefore, you can anticipate that our residential business will focus more on generating fees, profits from minority LP interests, and carried interest rather than long-term property holding.

I would like to provide some additional information about our land inventory. As I mentioned earlier, we have a significant amount of land that we are managing both from an operational and cost of capital standpoint. We are not going to simply wait for the markets to recover. Instead, we are actively exploring ways to utilize these resources effectively. This includes developing multifamily units, often with third-party funding, and selling townhouse parcels, as mentioned by Owen regarding a couple of parcels that may be sold. We also have potential sites for big box uses and have had discussions about data center projects. Our goal is to quickly create value from this land inventory since it is not reflected on our balance sheet and does not enhance our share price. We believe there is considerable opportunity here that we aim to capitalize on over the next few years, with some developments expected to be announced as early as the first quarter of 2025, starting with the project at 17 Hartwell Avenue in Lexington.

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

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

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